Fiscal Second Quarter 2019 Financial Highlights
- Sales of $326 million, Net Income of
$50 million, or diluted EPS of $0.46
- Adjusted EBITDA of $110 million, or
Adjusted EBITDA Margin of 34%
- Adjusted Net Income of $62 million,
or diluted EPS of $0.57
- Entered definitive merger agreement
with Merck KGaA
The results in this press release include Non-GAAP financial
measures. Refer to the section entitled “Non-GAAP Financial
Measures.”
Versum Materials, Inc. (NYSE: VSM), a leading specialty
materials and equipment supplier to the semiconductor industry,
today reported results for the fiscal second quarter ended March
31, 2019.
Sales were $326.2 million, compared to $340.7 million in the
prior year quarter. Net income was $50.4 million, or $0.46 per
diluted share, compared to $0.56 per diluted share in the prior
year, primarily due to softer revenue, transaction related expenses
and higher taxes. Adjusted Net Income was $62.4 million, or $0.57
per diluted share, compared to $0.59 in the prior year. Adjusted
EBITDA was $110.1 million, flat versus prior year, with favorable
costs offsetting the revenue softness.
Guillermo Novo, Versum Materials' President and Chief Executive
Officer said, "I am extremely proud of our team for delivering
solid adjusted EBITDA results in a moderating demand and investment
environment. Our results demonstrate the resiliency of our business
portfolio and our commitment to operating discipline. During the
quarter, we continued to advance our technology positions for new
nodes and executed on our capital projects, both which we believe
will accelerate our growth in Fiscal 2020."
On April 12, 2019, Versum Materials announced entry into a
definitive merger agreement with Merck KGaA. The business
combination is expected to create a leading electronic materials
player focused on the semiconductor and display industries. The
combined companies and their customers and employees will benefit
from increased scale, product portfolio, innovation and services
depth, globally.
Mr. Novo added, “We are all very excited about joining Merck
KGaA, a company with a long history of commitment to technology and
innovation. Like all of us at Versum, they share our belief in the
exciting future of the semiconductor industry. We look forward to
combining our technology and infrastructure capabilities to offer a
greater depth and breadth of materials technologies to our
customers. We expect to play an even more critical role in our
industry.”
No Fiscal Year 2019 Outlook or Earnings Conference
Call
In light of the announced transaction with Merck KGaA, Versum
Materials will not provide or update annual financial guidance and
will not hold a conference call to review quarterly earnings
results. The parties continue to work toward closing in the second
half of 2019 and the transaction is subject to the approval of
Versum stockholders at a Versum special meeting, regulatory
clearances and the satisfaction of other customary closing
conditions.
Table 1: Fiscal Second Quarter Fiscal
Year 2019 Financial Highlights
Three Months Ended March 31, 2019
2018 % Change
(In millions, except percentages and per share data) Sales $
326.2 $ 340.7 (4 )% Operating Income(A) 82.6 89.6 (8 )% Net Income
50.4 61.6 (18 )% Net Income Margin 15.5 % 18.1 % -260 bps Diluted
Earnings Per Share 0.46 0.56 (18 )% Adjusted Net Income 62.4 64.7
(4 )% Adjusted Net Income Margin 19.1 % 19.0 % 10 bps Adjusted
Diluted Earnings Per Share 0.57 0.59 (3 )%
Adjusted
EBITDA(A) 110.1 110.1 — %
Adjusted EBITDA Margin 33.8 %
32.3 % 150 bps Year to Date Cash Flows from Operations 73.3
56.5 30 % Year to Date Capital Expenditures 45.0 65.1 (31 )%
(A) - The fiscal second quarter ended
March 31, 2018 amounts have been recast to reflect the
retrospective application of the company’s change in classification
of the non-service components of net periodic pension cost.
Business Segment Results
Materials
Sales were $216.5 million, compared to $218.9 million in the
prior year as volume growth in the Materials segment was offset by
negative price/mix and currency impacts. Overall performance for
the quarter was impacted by softer demand in foundry and inventory
management by memory customers. We made further progress on the
introduction of new technologies for both new and legacy nodes,
including ION‐X dopant gas customer qualifications and strategic
Process of Record (POR) wins in aminosilane and cobalt precursors.
We continued to advance our capital projects, including starting
slurry production in Korea and advancing the qualification of new
Hometown NF3 production.
Operating income was $65.4 million, compared to $71.7 million in
the prior year. Segment Adjusted EBITDA was $78.2 million, compared
to $83.3 million in the prior year due primarily to negative
price/mix and increased manufacturing costs related to the start-up
of capital investments.
Delivery Systems & Services (DS&S)
Delivery Systems posted another strong quarter with sales of
$109.1 million, driven by the diversity of equipment, installation
projects and services portfolio. This compared to $121.1 million in
the prior year, impacted by softer demand and project timing.
Operating income was $34.9 million, compared to $32.9 million in
the prior year. Segment Adjusted EBITDA was $35.6 million, compared
to $33.3 million in the prior year, as favorable product mix,
installation project completions and disciplined cost management
more than offset softer equipment demand.
Table 2: Segment Sales
Three Months Ended March 31, 2019
2018 % Change
(In millions, except percentages) Materials $ 216.5 $ 218.9
(1 )% DS&S 109.1 121.1 (10 )% Corporate 0.6
0.7 (14 )% Total Versum Materials Sales $ 326.2
$ 340.7 (4 )%
Table 3: Segment Operating Income to
Segment Adjusted EBITDA
Three Months Ended March 31, 2019
2018 % Change (In millions,
except percentages) Materials Operating income(A) $ 65.4
$ 71.7 (9 )% Add: Depreciation and amortization 12.8
11.6 10 %
Segment Adjusted EBITDA(A) $ 78.2
$ 83.3 (6 )%
Segment Adjusted EBITDA
Margin(B) 36 % 38 %
DS&S Operating income $
34.9 $ 32.9 6 % Add: Depreciation and amortization 0.7
0.4 75 %
Segment Adjusted EBITDA $ 35.6
$ 33.3 7 %
Segment Adjusted EBITDA
Margin(B) 33 % 27 %
Corporate Operating loss(A) $
(3.9 ) $ (6.8 ) (43 )% Add: Depreciation and amortization
0.2 0.3 (33 )%
Segment Adjusted
EBITDA(A) $ (3.7 ) $ (6.5 ) (43 )%
(A) The fiscal second quarter ended March
31, 2018 amounts have been recast to reflect the retrospective
application of the company’s change in classification of the
non-service components of net periodic pension cost.
(B) Segment Adjusted EBITDA margin is
calculated by dividing Segment Adjusted EBITDA by sales.
Table 4: Reconciliation of Segment
Operating Income to Total Versum Materials Operating Income
Three Months Ended March 31, 2019
2018 % Change (In millions,
except percentages) Materials(A) $ 65.4 $ 71.7 (9 )% DS&S
34.9 32.9 6 % Corporate(A) (3.9 ) (6.8 ) (43 )% Total
Segment Operating Income(A) 96.4 97.8 (1 )% Less: Business
separation, restructuring and cost reduction actions 13.8
8.2 68 % Total Versum Materials Operating
Income(A) $ 82.6 $ 89.6 (8 )%
(A) - The fiscal second quarter ended
March 31, 2018 amounts have been recast to reflect the
retrospective application of the company’s change in classification
of the non-service components of net periodic pension cost.
About Versum Materials
Versum Materials, Inc. (NYSE: VSM) is a leading global specialty
materials company providing high-purity chemicals and gases,
delivery systems, services and materials expertise to meet the
evolving needs of the global semiconductor and display industries.
Derived from the Latin word for “toward,” the name “Versum”
communicates the company’s deep commitment to helping customers
move toward the future by collaborating, innovating and creating
cutting-edge solutions.
A global leader in technology, quality, safety and reliability,
Versum Materials is one of the world’s leading suppliers of
next-generation CMP slurries, ultra-thin dielectric and metal film
precursors, formulated cleans and etching products, and delivery
equipment that has revolutionized the semiconductor industry.
Versum reported fiscal year 2018 annual sales of about US $1.4
billion, has approximately 2,300 employees and operates fifteen
manufacturing and seven research and development facilities in Asia
and North America. It is headquartered in Tempe, Arizona. Versum
Materials had operated for more than three decades as a division of
Air Products and Chemicals, Inc. (NYSE: APD).
For additional information, please visit
http://www.versummaterials.com.
Non-GAAP Financial Measures
This earnings press release includes “non-GAAP financial
measures,” including Adjusted Net Income, Adjusted Net Income
Margin, Adjusted Diluted Earnings Per Share, Adjusted EBITDA,
Segment Adjusted EBITDA, Adjusted EBITDA margin, and Segment
Adjusted EBITDA margin. Adjusted Net Income is net income excluding
certain disclosed items which we do not believe to be indicative of
underlying business trends, including business separation,
restructuring and cost reduction actions, net of tax, the write-off
of financing costs, net of tax, and the impact of the Tax Act.
Adjusted Diluted Earnings Per Share uses Adjusted Net Income but
otherwise uses the same calculation used in arriving at diluted
earnings per share, the most directly comparable GAAP financial
measure. Adjusted EBITDA is net income excluding certain disclosed
items which we do not believe to be indicative of underlying
business trends, including interest expense, the write-off of
financing costs, non-service components of net periodic pension
cost, income tax provision, depreciation and amortization expense,
non-controlling interests, and business separation, restructuring
and cost reduction actions. Segment Adjusted EBITDA is segment
operating income excluding segment depreciation and amortization
expense. Adjusted Net Income Margin, Adjusted EBITDA margin and
Segment Adjusted EBITDA margin are calculated by dividing Adjusted
Net Income, Adjusted EBITDA and Segment Adjusted EBITDA,
respectively, by sales. In the accompanying tables, Versum
Materials has provided reconciliations of net income to Adjusted
EBITDA (see Appendix Table A-1), net income to Adjusted Net Income
(see Appendix Table A-2), diluted EPS to Adjusted Diluted EPS (see
Appendix A-3) and of segment operating income (loss) to Segment
Adjusted EBITDA by Quarter (see Appendix Table A-5), in each case
the most directly comparable GAAP financial measure. We encourage
investors to read these reconciliations.
The presentation of these non-GAAP financial measures is
intended to enhance the usefulness of financial information by
providing measures which management uses internally to evaluate our
operating performance. We use non-GAAP measures to assess our
operating performance by excluding certain disclosed items that we
believe are not representative of our underlying business.
Management may use these non-GAAP measures to evaluate our
performance period over period and relative to competitors in our
industry, to analyze underlying trends in our business and to
establish operational budgets and forecasts or for incentive
compensation purposes. We use Adjusted EBITDA to calculate
performance-based cash bonuses. We use Segment Adjusted EBITDA as
the primary measure to evaluate the ongoing performance of our
business segments.
We believe non-GAAP financial measures provide security
analysts, investors and other interested parties with meaningful
information to understand our underlying operating results and to
analyze financial and business trends; enables better comparison to
peer companies; and allows us to provide a long-term strategic view
of the business going forward. These non-GAAP financial measures
should not be viewed in isolation, are not a substitute for GAAP
measures, and have limitations which include but are not limited to
the following: (a) Adjusted Net Income and Adjusted EBITDA
exclude expenses related to business separation, restructuring and
cost reduction actions and the write-off of financing costs, each
of which we do not consider to be representative of our underlying
business operations, however, these disclosed items represent costs
to Versum Materials; (b) Adjusted EBITDA is not intended to be
a measure of cash available for management’s discretionary use, as
it does not consider certain cash requirements such as interest
payments, tax payments and debt service requirements;
(c) though not business operating costs, interest expense and
income tax provision represent ongoing costs of Versum Materials;
(d) depreciation and amortization charges represent the wear
and tear or reduction in value of the plant, equipment, and
intangible assets which permit us to manufacture and market our
products; and (e) other companies may define non-GAAP measures
differently than we do, limiting their usefulness as comparative
measures. A reader may find any one or all of these items important
in evaluating our performance. Management compensates for the
limitations of using non-GAAP financial measures by using them only
to supplement our GAAP results to provide a more complete
understanding of the factors and trends affecting our business. In
evaluating these non-GAAP financial measures, the reader should be
aware that we may incur expenses similar to those eliminated in
this presentation in the future.
A reconciliation of net income to Adjusted EBITDA as forecasted
for 2019 is not provided. Versum Materials does not forecast net
income as it cannot, without unreasonable effort, estimate or
predict with certainty various components of net income. These
components include restructuring and other income or charges to be
incurred in 2019 as well as the related tax impacts of these items.
Additionally, discrete tax items could drive variability in our
forecasted effective tax rate. All of these components could
significantly impact net income. Further, in the future, other
items with similar characteristics to those currently included in
Adjusted EBITDA that have a similar impact on comparability of
periods, and which are not known at this time, may exist and impact
Adjusted EBITDA.
Forward-Looking Information
This press release contains “forward-looking statements” within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be
identified by references to future periods and include statements
about our financial outlook or guidance; statements about our
expectations or predictions of future financial or business
performance or conditions; statements about our anticipated growth,
profitability and margins; our ability to compete successfully as a
leading materials supplier to the semiconductor industry and obtain
next generation node opportunities; and other matters. The words
“believe,” “expect,” “anticipate,” “estimate,” “continue,” “could,”
“intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,”
“forecast,” “guidance,” “outlook,” “opportunity” and similar
expressions, among others, generally identify forward-looking
statements, which are based on management’s reasonable expectations
and assumptions as of the date the statements were made. These
statements involve a number of risks, uncertainties and other
factors that could cause actual results to differ materially,
including without limitation the following: Merck KGaA’s ability to
successfully complete the proposed acquisition of Versum or realize
the anticipated benefits of the proposed transaction in the
expected time-frames or at all; Merck KGaA’s ability to
successfully integrate Versum’s operations into those of Merck
KGaA; such integration may be more difficult, time-consuming or
costly than expected; the failure to obtain Versum’s stockholders’
approval of the proposed transaction; the failure of any of the
conditions to the proposed transaction to be satisfied; revenues
following the proposed transaction may be lower than expected;
operating costs, customer loss and business disruption (including,
without limitation, difficulties in maintaining relationships with
employees, customers, clients or suppliers) may be greater than
expected following the proposed transaction; the retention of
certain key employees at Versum; risks associated with the
disruption of management’s attention from ongoing business
operations due to the proposed transaction; the outcome of any
legal proceedings related to the proposed transaction; the impact
of the proposed transaction on Versum’s credit rating; the parties’
ability to meet expectations regarding the timing and completion of
the proposed transaction; delays in obtaining any approvals
required for the proposed transaction or an inability to obtain
them on the terms proposed or on the anticipated schedule; the
impact of indebtedness incurred by Merck KGaA in connection with
the proposed transaction; the effects of the business combination
of Versum and Merck KGaA, including the combined company’s future
financial condition, operating results, strategy and plans; events
beyond our control such as acts of terrorism; product supply versus
demand imbalances in the semiconductor industry or in certain
geographic markets may decrease the demand for our goods and
services; our concentrated customer base; the dependence of our
DS&S segment upon the capital expenditure cycles of our
customers; our ability to continue technological innovation and
successfully introduce new products to meet the evolving needs of
our customers; our ability to protect and enforce our intellectual
property rights and to avoid violating any third party intellectual
property or technology rights; unexpected interruption of or
shortages in our raw material supply; inability of sole source,
limited source or qualified suppliers to deliver to us in a timely
manner or at all; hazards associated with specialty chemical
manufacturing, such as fires, explosions and accidents, could
disrupt operations; increased competition and new product
development by our competitors, changing customer needs and price
increases in materials and components; operational, political and
legal risks of our international operations; increased costs due to
trade wars and the implementation of tariffs; the impact of changes
in tax laws; the impact of changes in environmental and health and
safety regulations, anticorruption enforcement, sanctions,
import/export controls, tax and other legislation and regulations
in the U.S. and other jurisdictions in which Versum Materials and
its affiliates operate; our available cash and access to additional
capital may be limited by substantial leverage and debt service
obligations; possible liability for contamination, personal injury
or third party impacts if hazardous materials are released into the
environment; cyber security threats may compromise our data or
disrupt our information technology applications or services;
fluctuation of currency exchange rates; costs and outcomes of
litigation or regulatory investigations; the timing, impact, and
other uncertainties of future acquisitions or divestitures; and
other risks, uncertainties and factors discussed in the company’s
Form 10-Qs, Form 10-K and in the company’s other filings with the
U.S. Securities and Exchange Commission available at www.sec.gov or
in materials incorporated therein by reference or in Merck KGaA’s
public reports which are available on the Merck KGaA, Darmstadt,
Germany, website at www.emdgroup.com. Any forward-looking statement
in this press release speaks only as of the date on which it is
made. The company assumes no obligation to update or revise any
forward-looking statements.
Versum Materials, Inc.
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three Months Ended March 31, Six Months Ended
March 31, 2019 2018 % Change
2019 2018 % Change (In
millions, except per share data and percentages) Sales $ 326.2
$ 340.7 (4 )% $ 665.7 $ 671.5 (1 )% Cost of sales (A),(B) 189.8
195.8 (3 )% 385.9 387.0 — % Selling and administrative (B) 32.6
36.5 (11 )% 68.1 71.8 (5 )% Research and development 11.1 11.1 — %
24.0 23.8 1 % Business separation, restructuring and cost reduction
actions 13.8 8.2 68 % 14.9 10.0 49 % Other (income) expense, net
(3.7 ) (0.5 ) NM (5.6 ) — NM
Operating Income (B)
82.6 89.6 (8 )% 178.4 178.9 — % Interest expense 13.2 11.9 11 %
26.0 23.2 12 % Write-off of financing costs — — NM — 2.1 NM
Non-service components of net periodic pension cost(B) 0.2
0.2 — % 0.4 0.4 — %
Income Before Taxes
69.2 77.5 (11 )% 152.0 153.2 (1 )% Income tax provision (A) 18.1
14.2 27 % 37.8 69.2 (45 )%
Net
Income 51.1 63.3 (19 )% 114.2 84.0 36 %
Less: Net Income
Attributable to Non-Controlling Interests 0.7 1.7
(59 )% 2.7 3.7 (27 )%
Net Income Attributable to
Versum $ 50.4 $ 61.6 (18 )% $ 111.5 $ 80.3
39 % Net income attributable to Versum per common share:
Basic $ 0.46 $ 0.57 (19 )% $ 1.02 $ 0.74
38 % Diluted $ 0.46 $ 0.56 (18 )% $ 1.01
$ 0.73 38 % Shares used in computing per common share
amounts: Basic 109.1 108.9 — % 109.1 108.9 — % Diluted 110.0 109.7
— % 109.9 109.8 — % (A) - The fiscal year to date ended
March 31, 2018 amounts have been recast to reflect the
retrospective application of the company’s election to change its
inventory valuation method of accounting for its U.S. inventories
from the LIFO method to the FIFO method, which resulted in a
decrease in Cost of sales of $0.2 million for the fiscal year to
date ended March 31, 2018 and an increase in the Income tax
provision of $0.1 million for the fiscal year to date ended March
31, 2018. (B) - The fiscal second quarter and year to date
ended March 31, 2018 amounts have been recast to reflect the
retrospective application of the company’s change in classification
of the non-service components of net periodic pension cost. This
resulted in a decrease in Cost of sales of $0.1 million and $0.3
million for the fiscal second quarter and year to date ended March
31, 2018, respectively, a decrease in Selling and administrative of
$0.1 million for the fiscal second quarter and year to date ended
March 31, 2018, an increase to Operating Income of $0.2 million and
$0.4 million for the fiscal second quarter and year to date ended
March 31, 2018, respectively, and an increase to non-service
components of net periodic pension costs of $0.2 million and $0.4
million for the fiscal second quarter and year to date ended March
31, 2018, respectively.
Versum Materials, Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, 2019
September 30,2018
(In millions)
Assets
Current Assets Cash and cash items $ 390.8 $ 399.8
Short-term investment 11.4 — Trade receivables, net 188.1 184.4
Inventories 203.1 177.1 Contracts in progress, less progress
billings 32.0 20.3 Prepaid expenses 21.1 13.6 Other current assets
19.3 17.9
Total Current Assets 865.8
813.1 Plant and equipment, net 422.3 405.1 Goodwill 182.5
183.0 Intangible assets, net 60.7 63.5 Other non-current assets
35.9 40.6
Total Non-Current Assets 701.4
692.2
Total Assets $ 1,567.2 $ 1,505.3
Liabilities and
Stockholders’ Deficit
Current Liabilities Payables and accrued liabilities $ 122.8
$ 138.6 Accrued income taxes 35.4 43.3 Short-term borrowings 0.3 —
Current portion of long-term debt 5.8 5.8
Total
Current Liabilities 164.3 187.7 Long-term debt
972.2 974.2 Noncurrent income tax payable 32.3 37.3 Deferred tax
liabilities 38.9 41.3 Other non-current liabilities 53.6
52.4
Total Non-Current Liabilities 1,097.0
1,105.2
Total Liabilities 1,261.3 1,292.9
Stockholders’ Equity Common stock 109.2 109.0 Capital
in excess of par 8.7 6.1 Retained earnings 175.5 81.6 Accumulated
other comprehensive income (loss) (23.8 ) (18.2 )
Total Versum’s
Stockholders’ Equity 269.6 178.5
Non-Controlling
Interests 36.3 33.9
Total Stockholders'
Equity 305.9 212.4
Total Liabilities and
Stockholders’ Equity $ 1,567.2 $ 1,505.3
Versum Materials, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended March 31, 2019
2018 (In millions) Operating Activities Net
income $ 114.2 $ 84.0 Less: Net income attributable to
non-controlling interests 2.7 3.7 Net income
attributable to Versum 111.5 80.3 Adjustments to reconcile income
to cash provided by operating activities: Depreciation and
amortization 27.2 23.9 Deferred income taxes (0.9 ) (4.4 ) Gain on
sale of assets — (0.3 ) Share-based compensation 5.2 5.0 Other
adjustments 8.8 (1.2 ) Working capital changes that provided (used)
cash: Trade receivables (5.7 ) (16.9 ) Inventories (27.2 ) (10.8 )
Contracts in progress, less progress billings (11.7 ) (18.0 )
Payables and accrued liabilities (11.8 ) (46.4 ) Accrued income
taxes (18.2 ) 39.2 Other working capital (3.9 ) 6.1
Cash
Provided by Operating Activities 73.3 56.5
Investing Activities Additions to plant and equipment (45.0
) (65.1 ) Proceeds from sale of assets 0.7 1.0 Short-term
investment (11.4 ) —
Cash Used by Investing
Activities (55.7 ) (64.1 )
Financing Activities Payments
on long-term debt (2.9 ) (2.9 ) Short-term borrowings 0.3 —
Dividends paid to shareholders (17.6 ) (10.9 ) Other financing
activity (4.9 ) (2.8 )
Cash Used for Financing Activities
(25.1 ) (16.6 )
Effect of Exchange Rate Changes on Cash (1.5
) 7.2 Increase in Cash and Cash Items (9.0 ) (17.0 ) Cash
and Cash items - Beginning of Year 399.8 271.4 Cash
and Cash items - End of Period $ 390.8 $ 254.4
APPENDIX TABLE A-1: RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA
Three Months Ended
March 31, Six Months Ended March 31, 2019
2018 % Change 2019 2018
% Change (In millions, except percentages)
Net Income Attributable to Versum (A) $ 50.4 $ 61.6
(18 )% $ 111.5 $ 80.3 39 % Add: Interest expense 13.2 11.9 11 %
26.0 23.2 12 % Add: Write-off of financing costs — — NM — 2.1 NM
Add: Non-service components of net periodic pension cost (B) 0.2
0.2 — % 0.4 0.4 — % Add: Income tax provision
(A) 18.1 14.2
27 % 37.8 69.2 (45 )% Add: Depreciation and amortization 13.7 12.3
11 % 27.2 23.9 14 % Add: Non-controlling interests 0.7 1.7 (59 )%
2.7 3.7 (27 )% Add: Business separation, restructuring and cost
reduction actions 13.8 8.2 68 % 14.9 10.0
49 %
Adjusted EBITDA (B) $ 110.1 $
110.1 — % $ 220.5 $ 212.8 4 %
Adjusted
EBITDA Margin 34 % 32 % 33 % 32 % (A) - The fiscal year
to date ended March 31, 2018 amounts have been recast to reflect
the retrospective application of the company’s election to change
its inventory valuation method of accounting for its U.S.
inventories from the LIFO method to the FIFO method, which resulted
in an increase in Net Income Attributable to Versum of $0.1 million
and an increase in the Income tax provision of $0.1 million for the
fiscal year to date ended March 31, 2018. (B) - The fiscal
second quarter and year to date ended March 31, 2018 amounts have
been recast to reflect the retrospective application of the
company’s change in classification of the non-service components of
net periodic pension cost, which resulted in an increase to
non-service components of net periodic pension costs of $0.2
million and $0.4 million for the fiscal second quarter and year to
date ended March 31, 2018, respectively.
APPENDIX TABLE A-2: RECONCILIATION OF
NET INCOME TO ADJUSTED NET INCOME
Three Months Ended
March 31, Six Months Ended March 31, 2019
2018 2019 2018 (In millions)
Net Income Attributable to Versum(A) $ 50.4 $ 61.6 $
111.5 $ 80.3 Add: Business separation, restructuring and cost
reduction actions, net of tax(B) 12.0 6.8 12.8 8.2 Add: Write-off
of financing costs, net of tax(B) — — — 1.5 Add: Impact of Tax Act
— (3.7 ) (1.7 ) 33.9
Adjusted Net Income $ 62.4
$ 64.7 $ 122.6 $ 123.9 (A) - The fiscal
year to date ended March 31, 2018 amounts have been recast to
reflect the retrospective application of the company’s election to
change its inventory valuation method of accounting for its U.S.
inventories from the LIFO method to the FIFO method, which resulted
in an increase in Net Income Attributable to Versum of $0.1
million. (B) - See Appendix Table A-1 for amounts gross of
tax.
APPENDIX TABLE A-3: RECONCILIATON OF
DILUTED EPS TO ADJUSTED DILUTED EPS
Three Months Ended
March 31, Six Months Ended March 31, 2019
2018 2019 2018 (Per share data)
Diluted Earnings Per Share $ 0.46 $ 0.56 $ 1.01 $ 0.73 Add:
Business separation, restructuring and cost reduction actions per
diluted share, net of tax 0.11 0.06 0.13 0.07 Add: Write-off of
financing costs, net of tax — — — 0.01 Add: Impact of Tax Act —
(0.03 ) (0.02 ) 0.32
Adjusted Diluted Earnings Per
Share $ 0.57 $ 0.59 $ 1.12 $ 1.13
APPENDIX TABLE A-4: SALES BY
SEGMENT
For the Quarter Ended
December 31,2018 March 31,2019
Total (In millions) Sales Materials $
221.7 $ 216.5 $ 438.2 DS&S 117.2 109.1 226.3 Corporate 0.6
0.6 1.2 Total Versum Sales $ 339.5 $ 326.2
$ 665.7
For the Quarter Ended
December 31,2017 March 31,2018
June 30,2018 September
30,2018 Total (In millions)
Sales Materials $ 214.6 $ 218.9 $ 218.5 $ 233.6 $ 885.6
DS&S 115.3 121.1 130.7 116.6 483.7 Corporate 0.9 0.7
0.8 0.6 3.0 Total Versum Sales $ 330.8
$ 340.7 $ 350.0 $ 350.8 $ 1,372.3
APPENDIX TABLE A-5: SEGMENT OPERATING
INCOME TO SEGMENT ADJUSTED EBITDA BY QUARTER
For the Quarter Ended
OPERATING INCOME TO ADJ EBITDA December
31,2018 March 31,2019
Total (In millions, except percentages)
Materials Operating income $ 67.6 $ 65.4 $ 133.0 Add:
Depreciation and amortization 12.6 12.8 25.4
Segment Adjusted EBITDA $ 80.2 $ 78.2 $ 158.4
Segment Adjusted EBITDA Margin(C) 36 % 36 % 36
%
DS&S Operating income $ 34.7 $ 34.9 $ 69.6 Add:
Depreciation and amortization 0.7 0.7 1.4
Segment Adjusted EBITDA $ 35.4 $ 35.6 $ 71.0
Segment Adjusted EBITDA Margin(C) 30 % 33 % 31
%
Corporate Operating loss $ (5.4 ) $ (3.9 ) $ (9.3 ) Add:
Depreciation and amortization 0.2 0.2 0.4
Segment Adjusted EBITDA $ (5.2 ) $ (3.7 ) $ (8.9 )
Total Versum Materials Adjusted EBITDA $ 110.4
$ 110.1 $ 220.5
For
the Quarter Ended OPERATING INCOME TO ADJ EBITDA
December 31,2017 March 31,2018
June 30,2018 September 30,2018
Total (In millions, except percentages)
Materials Operating income(A),(B) $ 66.1 $ 71.7 $ 71.5 $
77.7 $ 287.0 Add: Depreciation and amortization 11.0 11.6
13.0 12.1 47.7
Segment Adjusted
EBITDA(A),(B) $ 77.1 $ 83.3 $ 84.5
$ 89.8 $ 334.7
Segment Adjusted EBITDA
Margin(C) 36 % 38 % 39 % 38 % 38 %
DS&S
Operating income(B) $ 33.5 $ 32.9 $ 37.2 $ 32.0 $ 135.6 Add:
Depreciation and amortization 0.3 0.4 0.7 0.7
2.1
Segment Adjusted EBITDA(B) $ 33.8
$ 33.3 $ 37.9 $ 32.7 $ 137.7
Segment Adjusted EBITDA Margin(C) 29 % 27 % 29 % 28 %
28 %
Corporate Operating loss(B) $ (8.5 ) $ (6.8 ) $ (5.7 )
$ (6.3 ) $ (27.3 ) Add: Depreciation and amortization 0.3
0.3 0.2 0.2 1.0
Segment Adjusted
EBITDA $ (8.2 ) $ (6.5 ) $ (5.5 ) $ (6.1 ) $ (26.3 )
Total Versum Materials Adjusted
EBITDA $ 102.7 $ 110.1 $ 116.9 $ 116.4
$ 446.1 (A) - The fiscal first quarter ended
December 31, 2018 amounts have been recast to reflect the
retrospective application of the company’s election to change its
inventory valuation method of accounting for its U.S. inventories
from the LIFO method to the FIFO method. This resulted in an
increase in operating income for the materials segment by $0.2
million for the fiscal first quarter ended December 31, 2018 and
the year ended September 30, 2018. (B) - The fiscal full
year ended September 30, 2018 amounts have been recast to reflect
the retrospective application of the company’s change in
classification of the non-service components of net periodic
pension cost. This resulted in an increase in operating income of
$0.5 million, $0.1 million and $0.1 million for the Materials,
DS&S and Corporate segments, respectively, for the fiscal year
ended September 30, 2018. All quarters have been updated to reflect
this change. (C) - Segment Adjusted EBITDA margin is
calculated by dividing Segment Adjusted EBITDA by sales.
APPENDIX TABLE A-6: CONSOLIDATED AND SEGMENT SALES MAJOR
FACTORS Versum Materials Total
Three Months Ended March 31,
2019
Six Months Ended March 31,
2019
Sales Volume (1 )% 2 % Price/Mix (2 )% (2 )% Currency (1 )%
(1 )%
Versum Materials Sales Change (4 )% (1 )%
Materials Segment
Three Months Ended March 31,
2019
Six Months Ended March 31,
2019
Sales Volume 3 % 4 % Price/Mix (3 )% (2 )% Currency (1 )% (1
)%
Materials Sales Change (1 )% 1 %
DS&S Segment
Three Months Ended March 31,
2019
Six Months Ended March 31,
2019
Sales Volume (9 )% (3 )% Currency (1 )% (1 )%
DS&S
Sales Change (10 )% (4 )%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190507005388/en/
Investor Inquiries:Soohwan Kim, CFA,
(602)-282-0957Soohwan.Kim@versummaterials.com
Media Inquiries:Tiffany Elle, (480)-282-6475Tiffany.Elle@versummaterials.com
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