PGI experiences benefit of lower raw material costs
Polymer Group Inc (PGI) reported results of operations for the third quarter ended October 2, 2010.
• Top Line Results Up in All Regions Year-over-Year on Improved Sales/Mix and Volume Growth
• Net sales were $297.4 million compared with sales from continuing operations of $223.0 million in the third quarter of 2009 and net sales of $289.7 million for the second quarter of 2010, reflecting year-over-year improvement in all regions and sequential growth in most regions. Volume gains in Europe, U.S., Asia and Latin America were especially strong with Spain continuing to generate results better than originally anticipated. Higher selling prices reflected the pass-through of higher raw material costs and increased medical sales.
• Profitability Improved Sequentially and Year-over-Year
• Gross profit improved to $59.5 million from $47.3 million in the prior-year period and $53.3 million in the second quarter of 2010.
• Favorable movements in raw material costs in late second quarter provided a positive impact to third quarter profitability. Raw material costs, however, began to increase slightly late in the third quarter.
• Adjusted EBITDA increased to $37.6 million compared with $33.4 million in the prior-year period and $32.4 million in the second quarter of 2010. Adjusted EBITDA, a non-GAAP financial measure, is defined and reconciled to net income below.
• Growth Investments On Track for Mid-2011 Commercialization
• The company's investments in proprietary high barrier spunmelt capacity in Suzhou, China and Waynesboro, Virginia remain on track to be online in mid-2011. The new state-of-the-art, custom-designed spunmelt machines will bring much needed capacity to the company's businesses in the U.S. and China.
• Strategic Review Process Culminates in Agreement to Sell the Company
• On October 4, 2010, the company announced it had entered into a definitive agreement to be acquired by an affiliate of Blackstone Capital Partners V L.P. for up to $18.16 in cash per share, which includes $2.91 per share to be held in escrow to cover potential tax liabilities, costs and expenses related to the previously disclosed personal holding company tax issue. The transaction is expected to close prior to the end of the first quarter of 2011.
PGI's chief executive officer, Veronica (Ronee) M. Hagen, stated, "The strong sales pace and operational improvements we established earlier in the year have continued through the third quarter with year-over-year growth across the business and better-than-expected results.
“As anticipated, we experienced the benefit of lower raw material costs from the preceding quarters, which translated into strong cash flow generation, Adjusted EBITDA growth and reduction in net debt. We are executing well with operational initiatives, extending our leadership and are on track with significant investments to meet growing demand for our products."
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Polymer Group Inc