Neenah Reports 2020 Fourth Quarter and Full Year Results
Neenah, Inc. (NYSE:NP) today reported 2020 fourth quarter and full year results.
Fourth Quarter Highlights
-
Consolidated revenues of
$206.9 million were 8 percent higher than the third quarter, but down 3 percent compared to the prior year. The sequential quarterly increase was due to a continued recovery in both segments with a pronounced rebound in Technical Products. -
Technical Products revenues of
$137.1 million were up 11 percent from the prior year, with record fourth quarter adjusted operating income of$18.0 million driven by record sales in the filtration business. -
Consolidated operating income of
$14.9 million compared with$22.1 million in the prior year. Operating income included adjusting items of$6.0 million in 2020 and$(1.2) million in 2019 as detailed further in this release. Excluding these items, adjusted operating income increased$5.0 million versus the third quarter, and equaled prior year at$20.9 million . -
Earnings per diluted common share of
$0.59 compared to$0.92 in the fourth quarter of 2019. -
Adjusted earnings per share of
$0.87 was equal with the prior year. Adjustments in 2020 were primarily for a non-cash impairment charge, pension and SERP settlements, costs associated with COVID-19, and income tax adjustments. In 2019, adjustments were primarily to eliminate a pension plan curtailment gain. Details on all adjusting items are included later in this release. -
Available liquidity of
$176 million remained strong, with cash generated from operations of$13.0 million . -
Quarterly cash dividends of
$0.47 per share increased 4 percent compared to$0.45 per share in the prior year.
Full Year Highlights
-
Revenues of
$792.6 million decreased 16 percent compared to 2019, as a result of lower volumes due to the COVID-19 pandemic. - Both revenues and adjusted operating income for the Technical Products filtration businesses increased versus the prior year and included the successful commercialization of high performance face mask media in Europe.
-
A loss per diluted common share in 2020 of (
$0.96) compared to earnings of$3.26 per share in 2019. On an adjusted basis, earnings per share of$2.46 in 2020 compared with$3.47 per share in 2019. -
In addition to new protocols implemented to protect the health and safety of employees, the Company began implementation of the Neenah Operating System, which will deliver improvements in efficiencies and safety and provide over
$20 million of annual cost savings when fully implemented. - In April, the Company published its annual Corporate Sustainability Report, highlighting initiatives and progress in addressing Environmental, Social and Governance matters.
-
In July, the Company successfully refinanced its Senior Notes and entered into a
$200 million Term B Loan due in 2027. -
The Company maintained strong liquidity throughout 2020 with careful management of working capital and spending, and ended the year with cash and equivalents of
$37 million and no borrowings against its$175 million revolving credit facility.
“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.
“In the fourth quarter, both business segments continued to deliver improving top and bottom line results, led by strong performance across our Technical Products businesses. Looking back over the past year, our teams have done a tremendous job rising to the unique challenges in 2020 as they focused on protecting the health and safety of our employees, serving the needs of our customers, and maintaining a strong financial position by successfully managing costs and working capital,” said Julie Schertell, Chief Executive Officer. “As we enter 2021, we’re building on this momentum with organic initiatives to drive sales growth and margin improvement as we expand in our four targeted growth platforms, and supplement this with a disciplined and robust M&A pipeline. I’m encouraged by our market and financial positions, our increasing capabilities and the opportunities ahead.”
Fourth Quarter Consolidated Results
Income Statement
Consolidated net sales of
Selling, general and administrative (SG&A) expense of
Operating income of
Net interest expense of
The effective tax rate in the fourth quarter of 2020 was 15 percent compared to a rate of 19 percent in the fourth quarter of 2019. In 2020, while excluded from adjusted earnings, the tax rate included a reduction in tax expense of
Cash Flow and Balance Sheet
Cash provided from operations in the fourth quarter of 2020 was
Debt as of December 31, 2020 was
Fourth Quarter Segment Results
Technical Products net sales of
Operating income of
Fine Paper & Packaging net sales of
Operating income of
Unallocated corporate costs in the fourth quarter of 2020 were
Full Year 2020 Consolidated Results
Consolidated net sales of
Consolidated operating income decreased to a loss of
Net income decreased
Earnings (loss) per diluted share of
Cash provided by operating activities of
Capital spending of
2021 Outlook
The following items are expected to impact 2021 results:
- Continued volume recovery in both segments.
- Rising input costs in the first half of the year, with pricing and other actions taken to mitigate this impact.
-
SG&A of approximately
$100 million , with unallocated corporate expense of$23 million . -
A stronger euro versus the 2020 average exchange rate of 1.14. Each five cent change impacts quarterly sales by approximately
$2.5 million and earnings per share by approximately$0.02 5. - An effective income tax rate of approximately 22 percent.
-
Capital spending of approximately
$35 million . -
The publishing business, previously managed as part of Technical Products, will become part of Fine Paper & Packaging effective January 2021. This business has annual net sales of approximately
$30 million , with mid single-digit operating margins.
Reconciliation to GAAP Measures
The Company will report adjustments to GAAP figures when they are believed to improve the comparability and understanding of results. In these instances, a reconciliation of adjusted income measures to comparable GAAP measures will be provided, as shown below and in the financial attachments:
Consolidated Statements of Operations ($ Millions) |
||||||||||||||||
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
GAAP Operating Income (Loss) |
|
$ |
14.9 |
|
|
$ |
22.1 |
|
|
$ |
(6.1 |
) |
|
$ |
78.3 |
|
Asset restructuring and impairment costs |
|
2.5 |
|
|
0.3 |
|
|
57.8 |
|
|
4.7 |
|
||||
Other restructuring and non-routine costs |
|
0.1 |
|
|
— |
|
|
4.2 |
|
|
1.5 |
|
||||
COVID-19 costs |
|
1.4 |
|
|
— |
|
|
3.5 |
|
|
— |
|
||||
Loss on debt extinguishment |
|
— |
|
|
— |
|
|
1.9 |
|
|
— |
|
||||
Pension and SERP adjustments |
|
1.6 |
|
|
(1.5 |
) |
|
1.6 |
|
|
(1.4 |
) |
||||
Acquisition due diligence costs |
|
0.4 |
|
|
— |
|
|
1.5 |
|
|
— |
|
||||
Total adjustments |
|
6.0 |
|
|
(1.2 |
) |
|
70.5 |
|
|
4.8 |
|
||||
Adjusted Operating Income |
|
$ |
20.9 |
|
|
$ |
20.9 |
|
|
$ |
64.4 |
|
|
$ |
83.1 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP Net Income (Loss) |
|
$ |
10.0 |
|
|
$ |
15.6 |
|
|
$ |
(15.8 |
) |
|
$ |
55.4 |
|
Asset restructuring and impairment costs |
|
2.5 |
|
|
0.2 |
|
|
44.5 |
|
|
3.5 |
|
||||
Other restructuring and non-routine costs |
|
— |
|
|
— |
|
|
3.1 |
|
|
1.1 |
|
||||
COVID-19 costs |
|
1.0 |
|
|
— |
|
|
2.6 |
|
|
— |
|
||||
Loss on debt extinguishment |
|
— |
|
|
— |
|
|
1.4 |
|
|
— |
|
||||
Pension and SERP adjustments |
|
1.2 |
|
|
(1.1 |
) |
|
1.2 |
|
|
(1.0 |
) |
||||
Acquisition due diligence costs |
|
0.4 |
|
|
— |
|
|
1.2 |
|
|
— |
|
||||
Income tax adjustments |
|
(0.3 |
) |
|
— |
|
|
3.7 |
|
|
— |
|
||||
Total adjustments |
|
4.8 |
|
|
(0.9 |
) |
|
57.7 |
|
|
3.6 |
|
||||
Adjusted Net Income |
|
$ |
14.8 |
|
|
$ |
14.7 |
|
|
$ |
41.9 |
|
|
$ |
59.0 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP Earnings (Loss) per Diluted Common Share |
|
$ |
0.59 |
|
|
$ |
0.92 |
|
|
$ |
(0.96 |
) |
|
$ |
3.26 |
|
Asset restructuring and impairment costs |
|
0.14 |
|
|
0.01 |
|
|
2.64 |
|
|
0.21 |
|
||||
Other restructuring and non-routine costs |
|
— |
|
|
— |
|
|
0.18 |
|
|
0.06 |
|
||||
COVID-19 costs |
|
0.06 |
|
|
— |
|
|
0.16 |
|
|
— |
|
||||
Loss on debt extinguishment |
|
— |
|
|
— |
|
|
0.08 |
|
|
— |
|
||||
Pension and SERP adjustments |
|
0.07 |
|
|
(0.06 |
) |
|
0.07 |
|
|
(0.06 |
) |
||||
Acquisition due diligence costs |
|
0.03 |
|
|
— |
|
|
0.07 |
|
|
— |
|
||||
Income tax adjustments |
|
(0.02 |
) |
|
— |
|
|
0.22 |
|
|
— |
|
||||
Total adjustments |
|
0.28 |
|
|
(0.05 |
) |
|
3.42 |
|
|
0.21 |
|
||||
Adjusted Diluted E.P.S. |
|
$ |
0.87 |
|
|
$ |
0.87 |
|
|
$ |
2.46 |
|
|
$ |
3.47 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted Shares |
16,832 |
16,901 |
16,834 |
16,906 |
|
|||||||||||
Conference Call
The company will hold a conference call to discuss earnings and business results at 11:00 AM (EST) on Thursday, February 18, 2021. Investors and participants who wish to actively participate in the call should register for the earnings call in advance by visiting http://www.directeventreg.com/registration/event/5367477. After registering, instructions will be shared on how to join the call.
Interested parties are invited to listen to the call live via webcast by visiting www.neenah.com and clicking on Investor Relations. An archive of the webcast will be available on the company's web site under Presentations & Events / Event Archive.
A replay of the call will be available until February 25, 2021 and can be accessed as follows:
Encore Dial In #: |
(800) 585-8367 or (416) 621-4642 |
Replay Access Code: |
5367477 |
Supplemental Information can be found on the Company’s web site under the Investor Relations - Presentations & Events section.
About Neenah, Inc.
Neenah is committed to manufacturing growth for its customers, end-users, shareholders, and employees. With manufacturing facilities in the United States, Europe, and the United Kingdom, we are a leading global manufacturer of specialty materials serving customers across six continents, with headquarters in Alpharetta, GA. We make filtration media, specialty coatings, custom-engineered solutions, as well as premium packaging and sustainable solutions, and our materials are found in a variety of products used every day, such as transportation and water filters, premium packaging of spirits, technology and beauty, industrial labels, tapes and abrasives, and digital printing for high-end apparel. To learn more, please visit www.neenah.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this press release may constitute “forward-looking” statements as defined under the federal securities laws. Statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of the federal securities laws and we caution investors that any forward-looking statements we make are not guarantees or indicative of future performance. These forward-looking statements rely on a number of assumptions concerning future events and are subject to risks, uncertainties and other factors, many of which are outside of our control and could cause actual results to materially differ from such statements. Such risks, uncertainties and other factors include, but are not necessarily limited to, those set forth under the captions “Forward-Looking Statements” and/or “Risk Factors” of our latest Form 10-K filed with the SEC as periodically updated by subsequently filed Form 10-Qs (these securities filings can be located on our website at www.neenah.com). Unless specifically required by law, we assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances. These cautionary statements are being made with the intention of obtaining the benefits of the “safe harbor” provisions for forward-looking statements under the federal securities laws.
NEENAH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except share and per share data) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net sales |
|
$ |
206.9 |
|
|
$ |
213.6 |
|
|
$ |
792.6 |
|
|
$ |
938.5 |
|
Cost of products sold |
|
164.3 |
|
|
169.3 |
|
|
639.4 |
|
|
755.1 |
|
||||
Gross profit |
|
42.6 |
|
|
44.3 |
|
|
153.2 |
|
|
183.4 |
|
||||
Selling, general and administrative expenses |
|
21.5 |
|
|
23.3 |
|
|
88.0 |
|
|
98.6 |
|
||||
Asset restructuring and impairment costs |
|
2.5 |
|
|
— |
|
|
57.8 |
|
|
4.7 |
|
||||
Other restructuring and non-routine costs |
|
0.1 |
|
|
0.3 |
|
|
4.2 |
|
|
1.5 |
|
||||
COVID-19 costs |
|
1.4 |
|
|
— |
|
|
3.5 |
|
|
— |
|
||||
Loss on debt extinguishment |
|
— |
|
|
— |
|
|
1.9 |
|
|
— |
|
||||
Pension & SERP adjustments |
|
1.6 |
|
|
(1.5 |
) |
|
1.6 |
|
|
(1.4 |
) |
||||
Acquisition due diligence costs |
|
0.4 |
|
|
— |
|
|
1.5 |
|
|
— |
|
||||
Other expense, net |
|
0.2 |
|
|
0.1 |
|
|
0.8 |
|
|
1.7 |
|
||||
Operating income (loss) |
|
14.9 |
|
|
22.1 |
|
|
(6.1 |
) |
|
78.3 |
|
||||
Interest expense, net |
|
3.1 |
|
|
2.8 |
|
|
12.6 |
|
|
11.8 |
|
||||
Income (loss) before income taxes |
|
11.8 |
|
|
19.3 |
|
|
(18.7 |
) |
|
66.5 |
|
||||
Provision (benefit) for income taxes |
|
1.8 |
|
|
3.7 |
|
|
(2.9 |
) |
|
11.1 |
|
||||
Net income (loss) |
|
$ |
10.0 |
|
|
$ |
15.6 |
|
|
$ |
(15.8 |
) |
|
$ |
55.4 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (Loss) Per Common Share: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
0.59 |
|
|
$ |
0.92 |
|
|
$ |
(0.96 |
) |
|
$ |
3.27 |
|
Diluted |
|
$ |
0.59 |
|
|
$ |
0.92 |
|
|
$ |
(0.96 |
) |
|
$ |
3.26 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Common Shares Outstanding (000s) |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
16,816 |
|
|
16,829 |
|
|
16,813 |
|
|
16,848 |
|
||||
Diluted |
|
16,832 |
|
|
16,901 |
|
|
16,813 |
|
|
16,906 |
|
||||
NEENAH, INC. AND SUBSIDIARIES BUSINESS SEGMENT DATA (In millions) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net Sales |
|
|
|
|
|
|
|
|
||||||||
Technical Products |
|
$ |
137.1 |
|
|
$ |
123.5 |
|
|
$ |
508.9 |
|
|
$ |
541.6 |
|
Fine Paper and Packaging |
|
69.8 |
|
|
90.1 |
|
|
283.7 |
|
|
396.9 |
|
||||
Consolidated |
|
$ |
206.9 |
|
|
$ |
213.6 |
|
|
$ |
792.6 |
|
|
$ |
938.5 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss) |
|
|
|
|
|
|
|
|
||||||||
Technical Products |
|
$ |
14.0 |
|
|
$ |
11.3 |
|
|
$ |
(4.8 |
) |
|
$ |
44.6 |
|
Fine Paper and Packaging |
|
6.6 |
|
|
15.2 |
|
|
23.3 |
|
|
53.2 |
|
||||
Unallocated corporate costs |
|
(5.7 |
) |
|
(4.4 |
) |
|
(24.6 |
) |
|
(19.5 |
) |
||||
Consolidated |
|
$ |
14.9 |
|
|
$ |
22.1 |
|
|
$ |
(6.1 |
) |
|
$ |
78.3 |
|
RECONCILIATION OF SEGMENT OPERATING INCOME (In millions) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Technical Products |
|
|
|
|
|
|
|
|
||||||||
GAAP operating income (loss) |
|
$ |
14.0 |
|
|
$ |
11.3 |
|
|
$ |
(4.8 |
) |
|
$ |
44.6 |
|
Asset restructuring and impairment costs |
|
2.5 |
|
|
— |
|
|
54.1 |
|
|
— |
|
||||
Other restructuring and non-routine costs |
|
0.2 |
|
|
(0.1 |
) |
|
0.7 |
|
|
0.3 |
|
||||
COVID-19 costs |
|
0.5 |
|
|
— |
|
|
1.4 |
|
|
— |
|
||||
Loss on debt extinguishment |
|
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
||||
Pension and SERP adjustments |
|
0.8 |
|
|
(1.5 |
) |
|
0.8 |
|
|
(1.5 |
) |
||||
Adjusted operating income |
|
$ |
18.0 |
|
|
$ |
9.7 |
|
|
$ |
52.3 |
|
|
$ |
43.4 |
|
|
|
|
|
|
|
|
|
|
||||||||
Fine Paper and Packaging |
|
|
|
|
|
|
|
|
||||||||
GAAP operating income |
|
$ |
6.6 |
|
|
$ |
15.2 |
|
|
$ |
23.3 |
|
|
$ |
53.2 |
|
Asset restructuring and impairment costs |
|
— |
|
|
0.3 |
|
|
3.7 |
|
|
4.7 |
|
||||
Other restructuring and non-routine costs |
|
0.2 |
|
|
0.1 |
|
|
2.2 |
|
|
1.0 |
|
||||
COVID-19 costs |
|
0.5 |
|
|
— |
|
|
1.5 |
|
|
— |
|
||||
Pension and SERP adjustments |
|
0.4 |
|
|
— |
|
|
0.4 |
|
|
— |
|
||||
Adjusted operating income |
|
$ |
7.7 |
|
|
$ |
15.6 |
|
|
$ |
31.1 |
|
|
$ |
58.9 |
|
|
|
|
|
|
|
|
|
|
||||||||
Other/Unallocated Corporate |
|
|
|
|
|
|
|
|
||||||||
GAAP operating costs |
|
$ |
(5
| |||||||||||||
