First Quarter Highlights
•Revenues increased 10 percent to a record $266.5 million compared with $242.1 million in the prior year.
•Earnings per diluted common share (E.P.S.) of $0.95 decreased 8 percent compared with $1.03 per share in 2017.
•Adjusted E.P.S. of $1.04 increased 1 percent compared with $1.03 in 2017. Adjusted E.P.S. in 2018 excluded $0.05 per share for true-up of estimated one-time taxes on foreign earnings under the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) and excluded a SERP settlement charge of $0.04 per share ($0.8 million pre-tax).
•Cash generated from operations of $8.1 million reflected normal working capital seasonality and decreased from $22.0 million in 2017 largely as a result of a favorable change in vendor payment terms in 2017 and, in 2018, accelerated timing of employee retirement plan contributions, a SERP payment and higher receivables associated with increased sales.
•Quarterly cash dividends of $0.41 per share increased 11 percent compared to the prior year and marked an eighth consecutive year of double-digit dividend increases.
•Today the Company announced that following an analysis of various initiatives to optimize the portfolio of products and the manufacturing footprint in the Fine Paper & Packaging segment, a process will be initiated to sell its manufacturing facility located in Brattleboro, Vermont. Historically, this mill has manufactured products primarily for the office supply category. Based on preliminary estimates, a second quarter non-cash impairment charge related to the mill and associated office and R&D facilities could be in the range of $30 to $40 million.
“Adjusted earnings” is a non-GAAP measure used to enhance understanding and comparability of year-on-year results and are reconciled to GAAP figures later in this release.
“Our results in the first quarter reflected very strong performance in our Technical Products businesses, tempered by expected near term cost headwinds in Fine Paper & Packaging. As we communicated in February, impacts from these higher input and freight costs would be most significant in the first half of this year. Changes in costs are a normal part of business and our teams are implementing improvements to offset them, just as we have in the past. This includes ongoing evaluations of our product portfolio and asset footprint which has led to the announcement of the sale process for our mill in Vermont,” said John O’Donnell, Chief Executive Officer. “The actions we’re taking to address costs will contribute to improved margins and profits as we move forward in the year. In addition, we’re successfully executing our top line strategies to expand in profitable and growing markets like filtration, premium packaging and performance materials. Our financial position is strong and our teams are engaged as we continue to transform the growth trajectory of our company in ways that can deliver the maximum value to our shareholders.”
Quarterly Consolidated Results
Consolidated net sales increased 10 percent to a record $266.5 million in the first quarter of 2018 compared with $242.1 million in the first quarter of 2017. Revenue gains resulted from higher volumes, both organic and with the November 2017 Coldenhove acquisition, a higher-priced sales mix, increased selling prices and favorable currency effects.
Selling, general and administrative (SG&A) expense of $26.8 million in the first quarter of 2018 increased from $24.6 million in the prior year primarily as a result of acquired SG&A.
Operating income of $24.1 million in 2018 decreased 11 percent from $27.0 million in 2017. Income benefited from volume growth, a higher value mix, increased selling prices and currency, but was more than offset by higher input and distribution costs.
Net interest expense of $3.3 million in the first quarter of 2018 increased slightly from $3.2 million in the first quarter of 2017. The increased expense in 2018 was primarily due to higher debt to finance the acquisition of Coldenhove.
The effective income tax rate of 22 percent in the first quarter of 2018 decreased from 26 percent in the first quarter of 2017. The decrease was primarily due to the Tax Act, which reduced the U.S. federal statutory corporate tax rate from 35% to 21% effective January 1, 2018. Income tax expense in the first quarter of 2017 was lower than the 35% statutory corporate tax rate primarily due to higher tax benefits related to stock compensation. In the first quarter of 2018, income tax expense was reduced by $0.5 million as a result of pension contributions that benefited from the Tax Act, and increased by $0.8 million to true-up estimated taxes on accumulated earnings of foreign subsidiaries following additional clarification of Tax Act regulations.
Income from continuing operations of $16.2 million decreased 8 percent compared with $17.6 million in the first quarter of 2017 and reflected lower operating income partly offset by benefits from the lower tax rate.
more detail at: http://ir.neenah.com/investors/press-releases/press-release-details/2018/Neenah-Reports-First-Quarter-2018-Results/default.aspx