Sales volume declines at Polymer Group in first quarter
Polymer Group Inc (PGI) announced results of operations for the first quarter ended April 4, 2009.
Operational highlights included:
• Profitability improved significantly over the prior year with first quarter gross profit up 22.7% to $52.6 million, representing a gross profit margin of 23.2% compared to 15.7% for the first quarter of 2008. Operating income for the quarter was $22.2 million, 83.0% higher than the prior year period, and net income attributable to PGI was $9.6 million compared to $1.4 million in the first quarter of 2008;
• Sales of $227.2 million for the first quarter were 17.0% lower than the prior year period due primarily to a reduction in industrial sales volumes combined with changes in foreign currency exchange rates and lower selling prices reflecting lower raw material costs;
• Cash flows from operations for the first quarter of 2009 increased 56.8% over the first quarter of 2008 to $24.0 million, resulting in cash balances of $54.3 million at quarter end;
• The company successfully reduced debt through the repurchase of $15.0 million of principal amount of its senior secured term loan during the quarter, generating a gain of $2.4 million;
• Adjusted EBITDA, as defined in the company's credit agreement and which included the benefits of the $2.4 million gain from the repurchase of debt, was $40.5 million for the first quarter compared to $27.3 million the prior year. Adjusted EBITDA, a non-GAAP financial measure, is defined and reconciled to net income below; and
• During the month of April, the company completed the installation of its state-of-the-art spunmelt line in Mexico to serve the North American hygiene and medical markets.
Net sales for the first quarter of 2009 were $227.2 million compared to $273.8 million in the first quarter of 2008 and $280.0 million in the previous quarter. The decline in sales was primarily driven by the impact of lower product volume sales in the industrial markets coupled with lower overall selling prices to reflect lower raw material costs. Additionally, foreign currency translation rates impacted sales by approximately $11.0 million as most currencies weakened against the U.S. dollar.
In the Nonwovens segment, volumes declined $18.4 million, predominantly in the U.S. and Europe. The sales volume declines in the U.S. and Europe were primarily due to a U.S. plant closure in the third quarter of fiscal 2008, and recessionary impacts that are negatively affecting the industrial and wiping businesses located in the U.S. and European regions. However, U.S. nonwoven roll goods volume in the industrial markets was up 5% in aggregate year-over-year.
This was the net result of a 54% increase in spunbond industrial volumes and a 46% decrease in fiber-based product volumes representing the company's efforts to improve its profit profile in the U.S. industrial markets and develop new applications for existing technology.
Sales in the Nonwovens segment were also negatively impacted by lower selling prices of $11.9 million primarily due to price decreases resulting from the passthrough of lower raw material costs. The Oriented Polymers segment sales volumes were lower by $8.6 million and continued to be negatively impacted by reduced housing starts affecting the segment's industrial business, imported commodity products affecting lumberwrap volumes, and recessionary impacts.