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Platform Specialty Products Corporation Announces First Quarter 2014 Financial Results

- Net sales of $184 million and Adjusted EBITDA rises 12% to $46 million

- Adjusted gross margin and Adjusted EBITDA reach record first-quarter levels

MIAMI, May 5, 2014 (GLOBE NEWSWIRE) --Platform Specialty Products Corporation (NYSE:PAH) ("Platform" or "the Company"), a global specialty chemicals company, announced today its first quarter 2014 financial results.

First Quarter 2014 Highlights

  • Net sales grew 1% organically year-over-year to $183.7 million.
  • Reported gross profit was $84.2 million. Adjusted gross profit reached $96.2 million, up 3% year-over-year, with an adjusted gross margin of 52.3%, a record high for the Company in the first quarter.
  • Reported net loss was $5.9 million vs. income of $15.3 million in 2013. Adjusted net income grew 15% year-over-year to $23.2 million
  • Adjusted EBITDA was up 12.2% year-over-year to a record first-quarter high of $45.9 million.
  • Reported earnings per diluted share was ($0.07). Adjusted earnings per diluted share was $0.17.
  • Adjusted net after tax Free Cash Flow (Cash from Operations less Capex) was $19.0 million.

Daniel H. Leever, Platform's Chief Executive Officer, commented, "We reported solid first quarter results, including double-digit organic adjusted earnings growth as we further enhanced our product mix and deepened our exposure to high-growth markets and geographies. Our free cash flow was solid. We expect cash flow to accelerate throughout the year. We are carrying momentum from the quarter, which we believe will produce another successful year for the underlying business. Our recently announced agreement to acquire Chemtura Corporation's AgroSolutions business facilitates our entry into the crop protection vertical, which, combined with our current operations, is a major step towards our goal of creating a truly world-class and world-scale organization. We continue to be opportunistic within our target-rich environment and, at the same time, remain steadfast in our disciplined approach to building a portfolio of true market leaders in niche verticals."

Frank J. Monteiro, Platform's Chief Financial Officer, added, "Our ability to successfully execute on our key operational initiatives paved the way for record level-first quarter gross margins and adjusted EBITDA performance. The highly cash generative nature of our business provides us with the agility to pursue growth initiatives, while preserving the overall strength and integrity of our balance sheet."

Financial Results

Net Sales

Platform reported net sales of $183.7 million for the first quarter of 2014, up 1.0% compared to $182.1 million in net sales for MacDermid, Incorporated ("MacDermid" or the "Predecessor") in the year-ago period. Within this, the Performance Materials segment reported sales of $143.1 million and sales within the Graphics Solutions segment totaled $40.6 million, representing a 3.1% increase and a 6.2% decrease, respectively, compared to sales for each of the Predecessor's businesses in the first quarter of 2013. The increase in net sales is primarily attributable to higher demand for electronic products in Asia, which was partially offset by lower sales of offshore fluids and anticipated lower demand for newspaper plate products.

Gross Profit

Gross profit for the first quarter of 2014 was $84.2 million, representing a gross margin of 45.8%. Excluding a one-time charge relating to the elimination of manufacturer's profit in inventory charged to cost of sales in connection with the acquisition of MacDermid on October 31, 2013, adjusted gross profit was $96.2 million, up 3.0% compared to MacDermid's adjusted gross profit in the first quarter of last year. Adjusted gross margin reached a first-quarter record high of 52.3%.

Operating Expenses

Operating expenses for the first quarter of 2014 were $80.2 million, compared to $63.6 million in the first quarter of 2013. Excluding one-time charges primarily related to a non-cash fair value adjustment to contingent consideration and to amortization expense on newly valued intangible assets associated with the MacDermid acquisition, combined operating expenses would have been $53.8 million, down 2.4% compared to MacDermid's adjusted operating expenses in the first quarter of 2013.

Net Income (Loss)

Net loss was $5.9 million in the first quarter of 2014 compared to net income of $15.3 million in the same period in 2013. Excluding one-time charges primarily related to the elimination of manufacturer's profit in inventory as well as a non-cash fair value adjustment to contingent consideration, at a normal tax rate of 33%, adjusted net income for the first quarter of 2014 was $23.2 million, a 15% year-over-year increase compared to MacDermid's adjusted net income in the first quarter of 2013. Adjusted earnings per diluted share was $0.17 for the first quarter of 2014.

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") for the first quarter of 2014 grew 12.2% to $45.9 million from $40.9 million in the first quarter of 2013, representing a record level for adjusted EBITDA in the first quarter compared to MacDermid's performance prior to its acquisition by Platform. Adjusted EBITDA margin climbed to 25.0% vs. 22.5% in Q1 2013.

Conference Call

Platform will host a webcast/dial-in conference call to discuss its first quarter 2014 financial results at 8:30 a.m. (Eastern Time) on Monday, May 5, 2014. Participants on the call will include Chief Executive Officer Daniel H. Leever and Chief Financial Officer Frank J. Monteiro.

To listen to the call by telephone, please dial (855) 357-3116 (domestic) or (484) 365-2867 (international) and provide the Conference ID: 36202254. The call will be simultaneously webcast at www.platformspecialtyproducts.com. A replay of the call and webcast will be available for three weeks shortly after completion of the live call at www.platformspecialtyproducts.com.

About Platform

Platform is a global producer of high-technology specialty chemical products and provider of technical services. The business involves the manufacture of a broad range of specialty chemicals, created by blending raw materials, and the incorporation of these chemicals into multi-step technological processes. These specialty chemicals and processes together encompass the products sold to customers in the electronics, metal and plastic plating, graphic arts, and offshore oil production and drilling industries. More information on Platform is available at www.platformspecialtyproducts.com.

Forward-Looking Statements

This release is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 as it contains "forward-looking statements" within the meaning of the federal securities laws, which include statements regarding Platform's adjusted earnings per share, expected or estimated revenue, the outlook for Platform's markets and the demand for its products, estimated sales, segment earnings, net interest expense, income tax provision, restructuring and other charges, cash flows from operations, consistent profitable growth, free cash flow, future revenues and gross operating and adjusted EBITDA margin improvement requirement and expansion, organic net sales growth, bank debt covenants, the success of new product introductions, growth in costs and expenses, the impact of commodities and currencies and Platform's ability to manage its risk in these areas, and the impact of acquisitions, divestitures, restructuring and other unusual items, including Platform's ability to successfully integrate and obtain the anticipated results and synergies from its consummated and future acquisitions. These projections and statements are based on management's estimates and assumptions with respect to future events and financial performance, and are believed to be reasonable, though are inherently difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in Platform's periodic and other reports filed with the Securities and Exchange Commission, including Platform's Annual Report on Form 10-K for the fiscal year ended December 31, 2013. Platform undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

PLATFORM SPECIALTY PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ In thousands)
March 31, 2014 December 31, 2013
Assets
Cash & cash equivalents $ 316,604 $ 123,040
Accounts receivable, net of allowance for doubtful accounts of $10,242 and $10,113 at March 31, 2014 and December 31, 2013, respectively 141,384 140,525
Inventories 79,870 89,618
Prepaid expenses & other current assets 21,347 30,056
Total current assets 559,205 383,239
Property, plant & equipment, net 135,743 139,670
Goodwill 1,001,748 1,002,886
Intangible assets, net 665,577 683,004
Other assets 31,957 33,089
Total assets 2,394,230 2,241,888
Liabilities & Stockholders' Equity
Accounts payable 54,230 56,156
Accrued salaries, wages and employee benefits 13,426 22,656
Current installments of long-term debt and capital lease obligations 7,911 7,958
Other current liabilities 31,559 32,650
Total current liabilities 107,126 119,420
Long-term debt and capital lease obligations 742,327 744,291
Long-term retirement benefits, less current portion 21,532 25,129
Long-term deferred income taxes 135,287 138,273
Long term contingent consideration 47,800 34,800
Other long-term liabilities 36,127 30,387
Total liabilities 1,090,199 1,092,300
Commitments and contingencies
Redeemable 401(k) plan interest -- 20,972
Stockholders' Equity
Preferred shares (2,000,000 designated as Series A), 5,000,000 shares authorized at March 31, 2014 and December 31, 2013, respectively; 2,000,000 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively 20 --
Common shares, 200,000,000 shares authorized, 120,239,236 and 103,571,941 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively 1,182 --
Additional paid-in capital 1,401,673 1,212,038
Accumulated deficit (201,639) (194,222)
Accumulated other comprehensive income (loss) 5,484 14,779
Total stockholders' equity 1,206,720 1,032,595
Income (deficit) in non-controlling interest 97,311 96,021
Total equity 1,304,031 1,128,616
Total liabilities, redeemable 401(k) interest and stockholders' equity $ 2,394,230 $ 2,241,888
PLATFORM SPECIALTY PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
($ In thousands, except per share amounts)
Three Months Ended
March 31,
2014
March 31,
2013
Successor Predecessor
Net sales $ 183,726 $ 182,132
Cost of sales 99,504 88,818
Gross profit 84,222 93,314
Operating expenses:
Selling, technical, general and administrative 74,032 55,980
Research and development 6,198 5,952
Restructuring -- 1,606
Total operating expenses 80,230 63,538
Operating profit 3,992 29,776
Other (expense) income:
Interest, net (7,742) (11,718)
Other (expense) income (89) 3,587
(7,831) (8,131)
(Loss) income from continuing operations before income taxes, non-controlling interest and accumulated payment-in-kind dividend on cumulative preferred shares (3,839) 21,645
Income tax provision (2,109) (6,308)
Net (loss) income (5,948) 15,337
Net income attributable to the non-controlling interest (1,469) (89)
Net (loss) income attributable to common shares
Shareholders (7,417) 15,248
Accrued payment-in-kind dividend on cumulative preferred shares -- (11,794)
Net (loss) income attributable to common shares $ (7,417) $ 3,454
Earnings (loss) per share
Basic $ (0.07) n/a
Diluted $ (0.07) n/a
Weighted average shares outstanding (In thousands)
Basic 107,160 n/a
Diluted 107,160 n/a
PLATFORM SPECIALTY PRODUCTS CORPORATION
NON-GAAP PRO FORMA INCOME STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,



Adjustments
As Adjusted
Three Months
Ended
March 31,

Three Months
Ended
March 31,



Adjustments
As Adjusted
Three Months
Ended
March 31,
2014 2014 2014 2013 2013 2013
Successor Successor Predecessor Predecessor
Net sales $ 183,726 $ -- $ 183,726 $ 182,132 $ -- $ 182,132
Cost of sales 99,504 (11,956) a 87,548 88,818 -- 88,818
Gross profit 84,222 11,956 96,178 93,314 -- 93,314
Operating expenses:
Selling, technical, general and administrative 74,032 (26,455) b,c 47,577 55,980 (6,914) b 49,066
Research and development 6,198 -- 6,198 5,952 -- 5,952
Restructuring -- -- -- 1,606 (1,606) --
Total operating expenses 80,230 (26,455) 53,775 63,538 (8,520) 55,018
Operating (loss) profit 3,992 38,411 42,403 29,776 8,520 38,296
Other income (expense):
Interest, net (7,742) -- (7,742) (11,718) 3,995 e (7,723)
Other (expense) (89) -- (89) 3,587 (4,151) f (564)
(7,831) -- (7,831) (8,131) (156) (8,287)
(Loss) income from continuing operations before income taxes, non-controlling interest and accumulated payment-in-kind dividend on cumulative preferred shares (3,839) 38,411 34,572 21,645 8,364 30,009
Income tax (provision) (2,109) (9,300) d (11,409) (6,308) (3,595) d (9,903)
Net (loss) income (5,948) 29,111 23,163 15,337 4,769 20,106
Net income attributable to the non-controlling interest (1,469) 1,314 g (155) (89) (89)
Net (loss) income attributable to common shares Shareholders (7,417) 30,425 23,008 15,248 4,769 20,017
Accrued payment-in-kind dividend on cumulative preferred shares -- -- -- (11,794) 11,794 h --
Net (loss) income attributable to common shares $ (7,417) $ 30,425 $ 23,008 $ 3,454 $ 16,563 $ 20,017
Earnings (loss) per share
Basic $ (0.07) -- $ 0.21 -- -- $ 0.19
Diluted $ (0.07) -- $ 0.17 -- -- $ 0.15
Weighted average shares outstanding
Basic 107,160 -- 107,160 -- -- 107,160
Diluted 107,160 -- 132,519 i -- -- 132,519
a Adjustment to reverse manufacturer's profit in inventory purchase accounting adjustment associated with MacDermid Acquisition.
b Includes $13.3m in Q1 2014 and $8.0m in Q1 2013 for intangible amortization expense that is added back in the "As Adjusted" Income Statement.
c Adjustment to reverse contingent consideration fair value adjustment of $13 million in connection with the MacDermid Acquisition.
d Adjustment to use an estimated effective tax rate of 33%.
e Adjustment to eliminate interest associated with debt not assumed with the MacDermid Acquisition.
f Reversal of non-cash, mark-to-market gains on foreign debt.
g Adjustment for reversal of the income attributable to the non-controlling interest resulting from the MacDermid Acquisition.
h Reversal of accrued accretion on Predecessor preferred stock dividends that were not paid until the MacDermid Acquisition.
i Adjusted Diluted weighted average shares outstanding assumes conversion and issuance of all outstanding warrants, conversion of exchange rights held by selling stockholders of MacDermid, common shares equivalent of founder's preferred shares and vested stock options (Non-GAAP Basis). Associated cash may not be reflected in the Balance Sheet.
PLATFORM SPECIALTY PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In thousands)
Three Months Ended
March 31,
2014
March 31,
2013
Successor Predecessor
Cash flows from operating activities:
Net (loss) income $ (5,948) $ 15,337
Adjustments to reconcile net (loss) income from operations to net cash flows provided by operating activities:
Depreciation & amortization 16,890 9,887
Non-cash fair value adjustment to contingent consideration 13,000 --
Manufacturer's profit in inventory adjustment 11,956 --
Other, net (2,132) 625
Changes in assets & liabilities (12,701) (2,733)
Net cash flows provided by operating activities 21,065 23,116
Cash flows from investing activities:
Capital expenditures, net (2,025) (1,331)
Acquisition of business, net 5,941 --
Other, net (1,114) (1,290)
Net cash flows provided by (used in) investing activities 2,802 (2,621)
Cash flows from financing activities:
Repayments of borrowings (2,013) (19,868)
Proceeds from issuance of common stock, net 172,463 --
Other, net (191) (156)
Net cash flows provided by (used in) financing activities 170,259 (20,024)
Effect of exchange rate changes on cash and cash equivalents (562) (781)
Net increase (decrease) in cash and cash equivalents 193,564 (310)
Cash and cash equivalents at beginning of period 123,040 143,351
Cash and cash equivalents at end of period $ 316,604 $ 143,041
PLATFORM SPECIALTY PRODUCTS CORPORATION
RECONCILIATION OF NON-GAAP MEASURES
Includes Predecessor and Successor data
Predecessor Successor
(in millions) Q1 2013 Q1 2014
Net income (loss) $ 15.2 $ (7.4)
Adjustments to reconcile to net income (loss):
Income tax expense (benefit) 6.3 2.1
Interest expense 11.8 7.8
Depreciation and amortization expense 9.9 16.9 (1)
Unrealized gain on foreign currency denominated debt (4.1) -- (2)
Restructuring and related expenses 1.6 -- (3)
Manufacturer's profit in inventory (purchase accounting) -- 12.0 (4)
Non-cash fair value adjustment to contingent consideration -- 13.0 (5)
Other expense (income) 0.2 1.5 (6)
-- --
Adjusted EBITDA $ 40.9 $ 45.9
2013 Footnotes:
(1) Includes $13.3m in Q1 2014 and $6.7m in Q1 2013 for amortization expense that is added back in the "As Adjusted" Income Statement.
(2) Predecessor adjustment to other income for non-cash gain on foreign denominated debt.
(3) Includes restructuring expenses of $1.6m of reorganization costs adjusted out of operating expenses for Q1 2013.
(4) Adjustment to reverse manufacturer's profit in inventory purchase accounting adjustment associated with MacDermid Acquisition.
(5) Adjustment to fair value of contingent consideration in connection with the MacDermid Acquisition primarily associated with achieving the share price target.
(6) Adjustment in 2014 for reversal of the income attributable to the non-controlling interest resulting from the MacDermid Acquisition.

CONTACT: Source/Investor Relations Contact: Frank J. Monteiro +1-203-575-5850 Media Contacts: Liz Cohen Weber Shandwick +1-212-445-8044 Kelly Gawlik Weber Shandwick +1-212-445-8368Source:Platform Specialty Products Corporation

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