Neenah, Inc. (NYSE: NP) today reported 2018 fourth quarter and full-year results.
Fourth Quarter Highlights
•Revenues of $240.9 million decreased 1 percent versus the fourth quarter of 2017.
•Earnings per diluted share of $0.76 decreased from $1.10 in the fourth quarter of 2017, while adjusted earnings per share of $0.53 compared with $1.06 in the prior year.
•Cash generated from operations of $29.0 million increased from $18.4 million in the prior year.
•The Company’s manufacturing facility in Brattleboro, Vermont was sold on December 31, 2018 for a cash price of $5 million.
•The Company’s U.S. revolving credit facility was amended and extended, providing additional capacity, lower rates and added flexibility.
•Quarterly cash dividends paid of $0.41 per share were 11 percent higher than the prior year period. A ninth consecutive double-digit dividend increase was announced for payments beginning in March 2019.
Full Year Highlights
•Revenues of $1,034.9 million increased 6 percent versus 2017 and topped one billion dollars for the first time. A 13 percent increase in Technical Products sales was partly offset by 2 percent decline in Fine Paper & Packaging sales.
•Earnings per diluted share of $2.17 declined compared with earnings of $4.68 per share in 2017. In 2018, earnings included $1.37 per share of expense related to the impairment loss and subsequent sale of the Brattleboro facility. Adjusted earnings per share of $3.50 in 2018 compared with $4.32 per share in 2017.
•Key strategic activities completed in 2018 included the continued ramp up of U.S. transportation filtration operations, integration and synergies from the November 2017 Coldenhove acquisition, and sale of the Brattleboro facility.
•Cash returns to shareholders through dividends and share repurchases increased 12 percent to $38.6 million.
“Adjusted earnings” is a non-GAAP measure and is used to improve comparability of year-on-year results. Adjusted figures are reconciled to GAAP later in this release.
“Fourth quarter results were challenged by the largest quarterly input cost increase of the year and lower seasonal demand that was compounded by growing global economic uncertainty. As a result, our teams continue to combine significant pricing initiatives and aggressive cost management to restore margins,” said John O’Donnell, Chief Executive Officer. “In 2019, we will benefit from these actions, as well as from our recent footprint rationalization in Fine Paper, continued filtration expansion in the U.S. and planned growth in targeted niche markets. Our commitment towards executing on proven capital deployment priorities in ways that add value for our shareholders remains unwavering, and we’ll do this while maintaining our strong balance sheet.”
Quarterly Consolidated Results
Consolidated net sales of $240.9 million in the fourth quarter of 2018 decreased 1 percent compared with $244.0 million in the prior year. A 3 percent increase in Technical Products revenues, resulting from an improved mix of products sold and higher prices was more than offset by a 5 percent decline in Fine Paper & Packaging sales, primarily due to lower shipments, and a 1 percent unfavorable impact due to currency.
Selling, general and administrative (SG&A) expense of $20.3 million in the fourth quarter of 2018 decreased $4.6 million compared with 2017 as a result of reduced incentive accruals and lower spending.
Operating income of $17.8 million in 2018 decreased 7 percent compared with $19.1 million in the fourth quarter of 2017. Operating income in 2018 included favorable items totaling $4.1 million, primarily related to adjustments to the impairment loss of the Brattleboro facility based on terms of the sale. In 2017, operating income included costs of $1.0 million for integration and restructuring, and a pension settlement charge. Excluding these items, operating income of $13.7 million in 2018 decreased 32 percent compared with $20.1 million in 2017. The decline resulted primarily from more than $11.0 million of higher input costs in the quarter that were only partly offset by increased selling prices and lower SG&A expense.
Net interest expense of $3.2 million in the fourth quarter of 2018 was unchanged from the prior period, as lower debt levels were offset by slightly higher interest rates on short-term borrowings.
The effective tax rate in the fourth quarter of 2018 was 12 percent compared to a rate of negative 19 percent in the fourth quarter of 2017. In 2018, the rate reflected a lower U.S. statutory tax rate resulting from the Tax Cuts and Jobs Act of 2017 (“TCJA”) and an additional reduction in tax expense due to remeasurement of Neenah Coldenhove’s deferred tax liabilities following a recently enacted reduction in tax rates for the Netherlands. In 2017, the negative tax rate resulted primarily from the remeasurement of U.S. deferred tax liabilities following enactment of the TCJA. On an ongoing basis, the Company’s average effective tax rate is expected to be approximately 22 percent.
Cash Flow and Balance Sheet
Cash provided from operations in the fourth quarter of 2018 was $29.0 million compared with $18.4 million in the fourth quarter of 2017. The increased cash generation in 2018 resulted from a reduced investment in working capital and from the timing of contributions to pension plans that offset lower cash from earnings. Capital spending of $10.0 million in the fourth quarter of 2018 was below $15.5 million in the prior year.
Debt as of December 31, 2018 was $239.1 million and was down from $249.6 million at September 30, 2018 and $255.5 million on December 31, 2017. Cash and cash equivalents as of December 31, 2018 were $9.9 million, up from $7.4 million at September 30 and $4.5 million as of December 31, 2017. Net cash generated during the fourth quarter of 2018 was used to reduce debt, increase cash, and return cash to shareholders through $7.0 million of dividend payments and $4.5 million of share repurchases.
more detail at: https://ir.neenah.com/investors/press-releases/press-release-details/2019/Neenah-Reports-2018-Fourth-Quarter-and-Full-Year-Results/default.aspx