January–September 2018 (1–9/2017) •Sales were EUR 4,290 million (3,712). •Operating result was EUR 635 million (397). Comparable operating result was EUR 641 million (381). •Result before tax was EUR 576 million (345). Comparable result before tax was EUR 582 million (330). •Comparable return on capital employed was 17.1% (11.2). •Cash flow from operations was EUR 591 million (611). President and CEO Ilkka Hämälä: “Strong demand for our products continued in the third quarter. The prices of different product groups remained stable or rose slightly. The market situation, combined with the high sales volume enabled by our development investments, led to an excellent financial result. Click read more below for additional detail.
Third Quarter Highlights
•Revenues increased 5 percent to $256.2 million compared with $245.1 million in the prior year.
•Earnings per diluted common share (E.P.S.) of $0.75 compared with earnings of $1.10 per share in 2017.
•Adjusted E.P.S. in 2018 of $0.76 compared with $1.02 per share in 2017. Adjusted E.P.S. excluded net costs of $0.01 per share in 2018 and in 2017 excluded a net benefit of $0.08 per share. Adjusting items are noted later in this release.
•Cash generated from operations of $23.9 million decreased from $36.2 million in the third quarter of 2017.
•Quarterly cash dividends of $0.41 per share were 11 percent higher compared with $0.37 per share in the prior year period.
“Adjusted E.P.S.” is a non-GAAP measure used to enhance understanding and comparability of year-on-year results and is reconciled to GAAP figures later in this release.
“Third quarter results were impacted by significantly higher operational costs in the quarter, as we took additional downtime for maintenance work and to manage global inventories. While the top line reflected normal seasonal slowing in the back half of the year, we continued to grow in our targeted, defensible markets of transportation filtration, premium packaging and digital transfer media,” said John O’Donnell, Chief Executive Officer. “Inflationary pressures in 2018 have been unprecedented, with rapid increases in both input and freight costs. Our business teams have responded admirably with market pricing activities and have stepped up cost reduction efforts. These actions, along with initiatives to improve our asset footprint and increase filtration sales in North America, will help restore profitability and margins in 2019.”
Quarterly Consolidated Results
Consolidated net sales of $256.2 million in the third quarter of 2018 increased 5 percent compared with $245.1 million in the third quarter of 2017. Incremental revenues resulted from higher Technical Products volumes (including volumes from the November 2017 Coldenhove Acquisition), increased selling prices in both segments and a higher value mix in Technical Products. These items more than offset lower Fine Paper and Packaging volumes and a lower value mix.
Selling, general and administrative (SG&A) expense of $23.6 million in the third quarter of 2018 increased from $21.3 million in the prior year primarily as a result of acquired SG&A.
Operating income of $16.5 million in the third quarter of 2018 compared to operating income of $29.0 million in 2017. After excluding a net $0.7 million of costs in 2018 and a net gain of $2.3 million in 2017, adjusted operating income decreased $9.5 million. The decrease was due to approximately $15 million of higher manufacturing costs, comprised of $9 million of higher input costs, and $6 million of increased costs reflecting operational inefficiencies and spending mostly related to incremental downtime for maintenance work and to manage global inventories. These increased costs were only partly offset by higher selling prices, volume growth and a higher value sales mix.
Net interest expense of $3.2 million in the third quarter of 2018 was consistent with the third quarter of 2017. The impact of incremental borrowings to finance the November 2017 acquisition of Coldenhove was offset by lower borrowing rates.
The effective income tax rate was 3 percent in the third quarter of 2018 and 27 percent in the third quarter of 2017. In addition to a lower tax rate in 2018 as a result of the Tax Cuts and Jobs Act of 2017, the tax rate in the third quarter of 2018 included incremental excess tax benefits from stock compensation, lower U.S. taxes on foreign earnings and a benefit from additional pension contributions. On an ongoing basis, the Company expects a tax rate of approximately 22 percent.
more detail at: https://ir.neenah.com/investors/press-releases/press-release-details/2018/Neenah-Reports-Third-Quarter-2018-Results/default.aspx