Fourth Quarter Highlights
•Net sales of $230.4 million rose 13 percent compared with $203.6 million in the prior year.
•Adjusted earnings per share of $0.91 increased 18% compared with $0.77 in the prior year.
•On a GAAP basis, earnings per diluted share were $0.85 in the fourth quarter of 2015 and $1.59 in the same quarter of 2014. GAAP earnings in both 2015 and 2014 include tax credits related to prior periods ($0.07 and $1.00, respectively) and costs for acquisitions, restructuring and other items ($0.13 and $0.18, respectively).
Full Year Highlights
•Net sales of $887.7 million increased 6 percent compared with $839.7 million in the prior year.
•Adjusted earnings per share of $3.70 grew 15 percent from $3.21 in the prior year.
•On a GAAP basis, earnings per diluted share were $3.53 in 2015 and $3.99 in 2014. GAAP earnings in both 2015 and 2014 include tax credits related to prior periods ($0.07 and $1.00, respectively) and costs for acquisitions, restructuring and other items ($0.24 and $0.22, respectively).
•Cash provided by operations of $111.2 million was up 18 percent from $94.5 million in 2014.
•Key strategic initiatives were completed, including the acquisition of FiberMark on August 1 and the divestiture of the Lahnstein, Germany wall covering mill on October 31.
•The Company announced a sixth consecutive year of a double-digit increase in dividends.
“2015 marked another year of consistently improving results for Neenah and our shareholders. While the top line was challenged by currency headwinds, both businesses delivered impressive bottom line growth, helping to increase operating margins by more than 100 basis points and maintain our attractive double digit Return on Capital,” said John O’Donnell, Chief Executive Officer.
“We continued to prioritize the deployment of cash flows towards the best opportunities that generate profitable growth, with spending on a nice-returning organic investment to expand global filtration capacity and a value-adding acquisition. In addition, we returned over $25 million of cash directly to shareholders through a higher dividend and opportunistic share repurchases. Even with all of these activities, we maintained our strong balance sheet, and are well-positioned as we move forward in 2016 with added capabilities and scale. Our focus remains on creating added value for our shareholders as we build Neenah into a faster growing, high-returning diversified specialty materials company.”
Consolidated net sales of $230.4 million in the fourth quarter of 2015 grew 13 percent compared with the prior year. Growth in 2015 reflected acquired sales, higher net selling prices and increased shipments of Technical Products that more than offset negative impacts from currency translation and lower Fine Paper & Packaging shipments.
Selling, general and administrative (SG&A) expense of $24.9 million in the fourth quarter of 2015 increased $3.3 million as a result of the acquired business.
Adjusted operating income of $24.5 million in 2015 ($20.9 million of GAAP) increased 13 percent compared with $21.6 million ($17.0 million of GAAP) in the fourth quarter of 2014. Higher income in 2015 resulted from improved manufacturing efficiencies and lower input costs that offset unfavorable impacts from currency translation and higher SG&A. Adjusted operating income excluded costs of $3.6 million in 2015 for integration and restructuring, and costs of $4.6 million in 2014 for pension settlement, integration, restructuring and debt extinguishment.
Net interest expense of $2.8 million in the fourth quarter of 2015 compared with $2.7 million in the prior year.
The adjusted income tax rate in the fourth quarter of both years included Research and Development (R&D) tax credits (primarily federal) earned for the current year and approved by Congress in December. The net credits recognized and adjusted tax rates for the fourth quarter were $1.6 million and 26 percent in 2015 and $1.8 million and 28 percent in 2014. Full year adjusted tax rates were 34 percent in 2015 and 32 percent in 2014. Excluded from adjusted tax rates and adjusted earnings are R&D tax credits related to prior year periods of $1.1 million in 2015 and $16.9 million in 2014.