Is Greif (GEF) a Great Value Stock Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

Greif (GEF Free Report) is a stock many investors are watching right now. GEF is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 13.93. This compares to its industry’s average Forward P/E of 15.35. Over the last 12 months, GEF’s Forward P/E has been as high as 19.53 and as low as 13.74, with a median of 16.36.

Investors should also recognize that GEF has a P/B ratio of 2.25. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 5.64. Over the past 12 months, GEF’s P/B has been as high as 2.96 and as low as 2.12, with a median of 2.52.

Finally, we should also recognize that GEF has a P/CF ratio of 8.43. This data point considers a firm’s operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock’s P/CF looks attractive against its industry’s average P/CF of 12.15. Over the past 52 weeks, GEF’s P/CF has been as high as 13.43 and as low as 8.17, with a median of 10.36.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Greif is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GEF feels like a great value stock at the moment.

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Herbalife Nutrition Achieves Net Sales Growth of 12% in the Second Quarter with All-Time Record High Volume Points

LOS ANGELES–()–Herbalife Nutrition Ltd. (NYSE: HLF) today reported financial results for the second quarter ended June 30, 2018:

QUARTER HIGHLIGHTS

  • Reported net sales of $1.3 billion increased 12% compared to second quarter 2017.
  • Local currency net sales growth in all six regions.
  • Volume points of 1.5 billion, the highest amount to be recorded in a quarter in Company history, increased 12% compared to the prior year period, above the guidance range of 4.0% – 8.0%.
  • Reported diluted EPS of $0.62 and adjusted1 earnings of $0.80 per adjusted2 diluted share, compared to $0.81 and $0.76, respectively, for the second quarter last year.
  • Raising FY 2018 volume point guidance range to 6.0% – 9.0% growth, as well as updating reported and adjusted1 diluted EPS guidance to $1.95 – $2.15 and $2.60 – $2.80, respectively.

About Herbalife Nutrition Ltd.

Herbalife Nutrition is a global nutrition company whose purpose is to make the world healthier and happier. The Company has been on a mission for nutrition – changing people’s lives with great nutrition products & programs – since 1980. Together with our Herbalife Nutrition independent distributors, we are committed to providing solutions to the worldwide problems of poor nutrition and obesity, an aging population, and skyrocketing public healthcare costs, while supporting the rise in entrepreneurs of all ages. Herbalife Nutrition offers high-quality, science-backed products, most of which are produced in Company-operated facilities, one-on-one coaching with an Herbalife Nutrition independent distributor, and a supportive community approach that inspires customers to embrace a healthier, more active lifestyle.

Herbalife Nutrition’s targeted nutrition, weight-management, energy and fitness and personal care products are available exclusively to and through dedicated Herbalife Nutrition distributors in more than 90 countries.

Through its corporate social responsibility efforts, Herbalife Nutrition supports the Herbalife Nutrition Foundation (HNF) and its Casa Herbalife Nutrition programs to help bring good nutrition to children in need. Herbalife Nutrition is also proud to sponsor more than 190 world-class athletes, teams and events around the globe, including Cristiano Ronaldo, the LA Galaxy, and numerous Olympic teams.

Herbalife Nutrition has over 8,000 employees worldwide, and its shares are traded on the New York Stock Exchange (NYSE: HLF) with net sales of approximately $4.4 billion in 2017. To learn more, visit Herbalife.com or IAmHerbalife.com.

Herbalife Nutrition also encourages investors to visit its investor relations website at ir.Herbalife.com as financial and other information is updated and new information is posted.

1 Adjusted diluted EPS is a non-GAAP measure and, for the purpose of guidance, excludes the impact of: non-cash interest expense associated with the Company’s convertible notes, expenses related to regulatory inquiries, China grant income, contingent value rights revaluation, loss on extinguishment of convertible debt, and Venezuela currency devaluation. Adjusted diluted EPS, for the purpose of reported results, excludes the impact of the foregoing as well as expenses relating to challenges to the Company’s business model, and expenses relating to FTC Consent Order implementation. See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a detailed reconciliation of adjusted net income to net income calculated in accordance with GAAP and a reconciliation of adjusted diluted EPS to diluted EPS calculated in accordance with GAAP and a discussion of why we believe these non-GAAP measures are useful.

2 See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of adjusted diluted share count to reported diluted share count and a discussion of why the share count has been adjusted for purposes of calculating adjusted diluted EPS for the second quarter of 2018

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DexCom Executive Chairman and Director Terry Gregg Retires

SAN DIEGO–()–DexCom, Inc. (NASDAQ:DXCM), the leader in continuous glucose monitoring for people with diabetes, announced today that Terry Gregg has retired as the Company’s Executive Chairman and from the Company’s Board of Directors after 13 years with Dexcom. Kevin Sayer has been appointed Chairman of the Board, in addition to his current duties as President and CEO.

“My retirement and today’s transition represent the final steps of the vision we established several years ago. The Company is ideally positioned to drive Continuous Glucose Monitoring (“CGM”) to the objectives we always contemplated – the standard of care for all insulin-using patients and ultimately a key technology across healthcare. Our Board is strong and very excited for Kevin to assume these additional responsibilities,” said Terry Gregg.

Mr. Gregg joined the Dexcom Board of Directors in 2005 and served as Dexcom’s CEO from June 2007 through January 2015. He has been the Company’s Executive Chairman since January 2015. During his tenure, the Company launched six generations of CGM technologies and grew from nominal revenues to a currently estimated $925 million in 2018 revenues (based upon the Company’s updated financial guidance). Dexcom’s footprint has expanded to more than 40 countries around the world and to approximately 2,300 full-time employees worldwide.

“We all want to express a heartfelt thank you and congratulations to Terry for his many years of dedication to Dexcom,” said Kevin Sayer, Dexcom’s Chairman, President and CEO. “His commitment to ’patients first’ and intense drive to advance CGM technology leave an indelible imprint on Dexcom’s culture. We all understand and participate in his vision for Dexcom. We look forward to achieving those goals and going much further.”

About DexCom, Inc.

DexCom, Inc., headquartered in San Diego, CA, is dedicated to helping people better manage their diabetes by developing and marketing continuous glucose monitoring (CGM) systems for use by people with diabetes and healthcare providers. With exceptional performance, patient comfort and lifestyle flexibility at the heart of its technology, users have consistently ranked DexCom highest in customer satisfaction and loyalty. For more information on the Dexcom CGM, visit www.dexcom.com.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements that are not purely historical regarding DexCom’s or its management’s intentions, beliefs, expectations and strategies for the future. All forward-looking statements and reasons why results might differ included in this press release are made as of the date of this release, based on information currently available to DexCom, deal with future events, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in those forward looking statements. The risks and uncertainties that may cause actual results to differ materially from DexCom’s current expectations are more fully described in DexCom’s quarterly report on Form 10-Q for the period ended June 30, 2018, as filed with the Securities and Exchange Commission on August 1, 2018. Except as required by law, DexCom assumes no obligation to update any such forward-looking statement after the date of this report or to conform these forward-looking statements to actual results.

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Clipper Realty Inc. to Report Second Quarter 2018 Financial Results

NEW YORK–()–Clipper Realty Inc. (NYSE:CLPR) (the “Company”), an owner and operator of multifamily residential and commercial properties in the New York metropolitan area, today announced that it will release financial results for the quarter ended June 30, 2018, after the market closes on Wednesday, August 8, 2018. The Company will host a conference call the next day, Thursday, August 9, 2018, at 10:00 AM (ET) to discuss the financial results.

The conference call can be accessed by dialing (800) 346-7359 or (973) 528-0008, conference entry code 707103. A replay of the call will be available from August 9, 2018, following the call, through August 23, 2018, by dialing (800) 332-6854 or (973) 528-0005, replay conference ID 707103.

About Clipper Realty

Clipper Realty is a self-administered and self-managed real estate company that acquires, owns, manages, operates and repositions multifamily residential and commercial properties in the New York metropolitan area, with a portfolio in Manhattan and Brooklyn. For more information on the Company, please visit www.clipperrealty.com.

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Diligent CEO Brian Stafford Receives National Recognition for Leadership in Governance

NEW YORK–()–The National Association of Corporate Directors (NACD) announced its annual list of the 100 most influential individuals in the boardroom. Among the honorees is Diligent CEO Brian Stafford. Diligent, the leader in Enterprise Governance Management, is one of the fastest-growing software-as-a-service (SaaS) companies and provides secure governance and collaboration solutions for boards and leadership teams across the globe.

The NACD Directorship 100 seeks to recognize the most influential leaders in corporate governance. This year’s list is composed of 50 public company directors and 50 governance professionals and institutions that demonstrate knowledge, leadership and excellence.

At the helm of the company since 2015, Stafford has driven Diligent to new heights. Under his leadership, Diligent has brought the only integrated and secure enterprise governance management solution to market with Governance Cloud. Stafford’s leadership has not only catalyzed greater value for clients, but has also driven Diligent’s revenue from $80 million to $200 million annually — making it one of today’s most successful SaaS companies.

“I’m honored to be included on the NACD Directorship 100,” said Stafford. “Diligent is an incredible organization made up of world-class employees. Over the past three years, we have experienced immense growth and continue to evolve to meet the needs of governance leaders, helping them achieve good governance. Diligent continues to solidify itself as the leader in Enterprise Governance Management board software, and I’m humbled to work for such an organization. I would like to thank Peter Gleason and the NACD organization for the great work they do, and for this recognition.”

Throughout his career, Stafford has served as a constant engine for growth generation, consistently devising unique approaches to accelerate scalable business and managing seamless growth for his clients. Previously serving as a Partner at McKinsey & Company, Stafford found and led the organization’s Growth Stage Tech Practice, where he focused on growth strategy and SaaS companies.

Diligent provides tailored services to meet the needs of every boardroom, spanning industry sectors and individualized preferences. With over a decade of experience as the market leader in corporate governance software and over 14,000 clients and 450,000 users around the globe, Diligent works with clients to provide solutions addressing today’s disruptive business environment. Visit www.diligent.com to learn more.

About Diligent

Diligent is the leading Enterprise Governance Management provider of secure corporate governance and collaboration solutions for boards and senior executives. Over 14,000 clients in more than 90 countries and on all seven continents rely on Diligent for secure distribution of board materials, as well as secure messaging, integrated compliance, board evaluation and entity management. Governance Cloud is the only solution that meets the evolving governance needs of leading organizations. Visit www.diligent.com to learn more.

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Westinghouse Sale to Brookfield Complete

CRANBERRY TOWNSHIP, Pa.–()–Westinghouse Electric Company, the global leader in nuclear technology, fuels and services, today announced the completion of its previously announced sale to Brookfield Business Partners L.P. (NYSE:BBU) (TSX:BBU.UN) together with institutional partners (collectively, “Brookfield”) and emergence from Chapter 11 as a reorganized company. Announced on Jan. 4, 2018, the transaction was closed and became effective today.

The close of this transaction marks an exciting milestone for Westinghouse as we have successfully emerged from Chapter 11, and continue to navigate a significant transformation that positions us for long-term sustainable success. With the support of Brookfield, Westinghouse will continue to build on its legacy of leading the nuclear industry. Our focus is on strengthening the business, capitalizing on our global footprint and excelling in client service and innovation,” said Westinghouse President & CEO José Emeterio Gutiérrez.

Westinghouse Electric Company is the world’s pioneering nuclear energy company and is a leading supplier of nuclear plant products and technologies to utilities throughout the world. Westinghouse supplied the world’s first commercial pressurized water reactor in 1957 in Shippingport, Pa., U.S. Today, Westinghouse technology is the basis for approximately one-half of the world’s operating nuclear plants.

Brookfield Business Partners is a business services and industrials company focused on owning and operating high-quality businesses that benefit from barriers to entry and/or low production costs. Brookfield Business Partners is listed on the New York and Toronto stock exchanges. Important information may be disseminated exclusively via the website; investors should consult the site to access this information.

Brookfield Business Partners is the flagship listed business services and industrials company of Brookfield Asset Management Inc. (NYSE:BAM) (TSX:BAM.A) (EURONEXT:BAMA), a leading global alternative asset manager with approximately $285 billion of assets under management, of which approximately $150 billion are in the U.S. For more information, please visit our website at https://bbu.brookfield.com.

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Williams Partners Reports Second Quarter 2018 Financial Results

TULSA, Okla.–()–Williams Partners L.P. (NYSE: WPZ) today announced its financial results for the three and six months ended June 30, 2018.

Second-Quarter 2018 Highlights

  • 2Q 2018 Net Income of $426 Million; Up $106 Million over 2Q 2017
  • 2Q 2018 Adjusted EBITDA of $1.097 Billion
  • 2Q 2018 DCF of $705 Million, Up $7 Million over 2Q 2017
  • Transco Transportation Revenues Up $50 Million in 2Q 2018; Up $114 Million Year-to-Date or 16% – Driven by Big 5 Expansion Projects Placed In Service in 2017 as well as Mainline Service on Atlantic Sunrise in 2018
  • Current Business Segments Increased Adjusted EBITDA by $18 Million in 2Q 2018 vs. 2Q 2017; Year-to-Date, Current Business Segments Up $71 Million
  • Year-to-Date, Cash Distribution Coverage Ratio of 1.25x.
   
Summary Financial Information 2Q YTD
Amounts in millions, except per-unit amounts. Per unit amounts are reported on a diluted basis. All amounts are attributable to Williams Partners L.P. 2018   2017 2018   2017
   
GAAP Measures
Cash Flow from Operations $ 958 $ 913 $ 1,710 $ 1,765
Net income (loss) $ 426 $ 320 $ 786 $ 954
Net income (loss) per common unit $ 0.44 $ 0.33 $ 0.81 $ 1.00
 
Non-GAAP Measures (1)
Adjusted EBITDA $ 1,097 $ 1,104 $ 2,219 $ 2,221
DCF attributable to partnership operations $ 705 $ 698 $ 1,489 $ 1,450
Cash distribution coverage ratio 1.17 x 1.22 x 1.25 x 1.27 x
 
(1) Adjusted EBITDA, distributable cash flow (DCF) and cash distribution coverage ratio are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.
 

Second-Quarter 2018 Financial Results

Williams Partners reported unaudited second-quarter 2018 net income attributable to controlling interests of $426 million, a $106 million improvement from second-quarter 2017. The favorable change was driven primarily by a $68 million increase in operating income due primarily to an increase in service revenues and NGL margins partially offset by the absence of $25 million of operating income earned in second-quarter 2017 by our former olefins operations. Other Investing Income for the quarter was favorably impacted by a $62 million gain on the deconsolidation of the partnership’s interests in the Jackalope Gas Gathering System. Partially offsetting the improvements was a $33 million decrease in equity earnings primarily driven by lower earnings at Discovery Producer Services.

Year-to-date, Williams Partners reported unaudited net income of $786 million, a $168 million decrease from the same period in 2017. The unfavorable change was driven primarily by a $202 million decrease in Other Investing Income due largely to the absence of a $269 million gain in first-quarter 2017 associated with a transaction involving certain joint-venture interests in the Permian Basin and Marcellus Shale, partially offset by a $62 million gain on the partnership’s interests in the Jackalope Gas Gathering System. The unfavorable change also reflects a $58 million decrease in equity earnings primarily driven by lower earnings at Discovery Producer Services. Partially offsetting the decrease was a $110 million improvement in operating income, due primarily to an increase in service revenues and NGL margins overcoming the absence of $57 million of operating income earned in the first half of 2017 by our former olefins operations.

Williams Partners reported second-quarter 2018 Adjusted EBITDA of $1.097 billion, a $7 million decrease from second-quarter 2017. The change was driven by a $37 million decrease in proportional EBITDA from joint ventures due primarily to less production on the Discovery system, the absence of $23 million Adjusted EBITDA earned in second-quarter 2017 from the NGL & Petchem Services segment primarily as a result of the sale of the Geismar olefins facility, and $28 million increased operating & maintenance (O&M) expenses at the partnership’s continuing businesses primarily due to increased reliability and integrity costs at Transco. Partially offsetting these decreases was a $46 million increase in service revenues, driven primarily by expansion projects brought online by Transco in 2017 and 2018. Second-quarter 2018 service revenues would have increased by $67 million over second-quarter 2017 if revenue-recognition standards adopted in 2018 had been applied to second-quarter 2017 results. Additionally, NGL and Marketing margins improved by $35 million. Williams Partners’ current business segments increased Adjusted EBITDA by $18 million in second quarter 2018 vs. second-quarter 2017.

Year-to-date, Williams Partners reported Adjusted EBITDA of $2.219 billion, a decrease of $2 million from the same six-month reporting period in 2017. The modest change was driven by the absence of $72 million Adjusted EBITDA earned in 2017 from the NGL & Petchem Services segment primarily as a result of the sale of the Geismar olefins facility, a $60 million decrease in proportional EBITDA from joint ventures due primarily to less production on the Discovery system, $42 million increased O&M expenses at the partnership’s continuing businesses primarily due to increased reliability and integrity costs at Transco, and a $12 million regulatory charge per approved pipeline transportation rates associated with the Tax Reform Act. Partially offsetting these decreases was $125 million of increased service revenues, driven primarily by expansion projects brought online by Transco in 2017 and 2018. Service revenue would have increased by $165 million over first half of 2017 if revenue-recognition standards adopted in 2018 had been applied to first-half 2017 results. Additionally, NGL and Marketing margins improved by $49 million. Year-to-date, Williams Partners’ current business segments increased Adjusted EBITDA by $71 million vs. the same reporting period in 2017.

Distributable Cash Flow and Distributions

For second-quarter 2018, Williams Partners generated $705 million in distributable cash flow (DCF) attributable to partnership operations, compared with $698 million in DCF attributable to partnership operations for second-quarter 2017. DCF was unfavorably impacted by the partnership’s change in Adjusted EBITDA and by a $52 million increase in maintenance capital expenditures primarily due to accelerated inspections and other key maintenance needs moved into this quarter to take advantage of timing of outages associated with expansion construction work. Beginning with first-quarter 2018 results, the partnership has discontinued the adjustment which removed the DCF associated with 2016 contract restructuring prepayments in the Barnett Shale and Mid-Continent region. For second-quarter 2018, the cash distribution coverage ratio was 1.17x.

Year-to-date, Williams Partners generated $1.489 billion in DCF, a $39 million increase over the same period in 2017. The adjustment described in the previous paragraph involving the removal of DCF associated with 2016 contract restructuring prepayments in the Barnett Shale and MId-Continent region positively impacted year-to-date DCF results. DCF was unfavorably impacted by a $99 million increase in maintenance capital expenditures primarily due to accelerated inspections and other key maintenance needs moved into the first half of 2018 to take advantage of timing of outages associated with expansion construction work. The cash distribution coverage ratio for the first six-month reporting period was 1.25x.

Williams Partners recently announced a regular quarterly cash distribution of $0.629 per unit, payable Aug. 10, 2018, to its common unitholders of record at the close of business on Aug. 3, 2018.

CEO Perspective

Alan Armstrong, chief executive officer of Williams Partners’ general partner, made the following comments:

Our consistent strategy of connecting growing natural gas demand to growing low-cost gas production delivered results which slightly exceeded our business plan for second quarter, and we look forward to an even stronger second half of the year as the Atlantic Sunrise project nears completion and producer activity on our systems in the Northeast and Wyoming is ramping up. We are also excited about the transactions announced earlier this week. Selling assets in a maturing basin at attractive multiples, and redeploying that capital to higher growth basins enhances our position to capitalize on future growth opportunities and follows our strategy to connect the best supplies to the best markets.

It is clear that our focus on natural gas volume growth combined with our advantaged infrastructure and the continued confidence in low-price natural gas continues to drive demand for services on our systems. Placing the Transco expansion projects into service in 2017 and 2018 is now delivering exceptional fee-based revenue growth – a $50 million increase for second-quarter 2018 over second-quarter 2017 for Transco transportation revenues thanks to those expansion projects coming online. Our growth was not limited to Transco as Williams Partners’ current business segments posted year-over-year increases in Adjusted EBITDA for the quarter and year-to-date.

I’m pleased our teams were able to complete so much maintenance work this quarter, especially in our high-growth areas where we accelerated inspections and other key maintenance needs into this quarter to take advantage of the timing of outages associated with expansion construction work and project work – particularly important in association with a project like Atlantic Sunrise, which is preparing to bring additional loads on to that system. I’m proud of our team’s exceptional focus on safety and environmental compliance throughout the construction and commissioning process on this large and complex project.

We are also making great progress on several other projects. In Wyoming, we just announced an expansion on our Jackalope Gas Gathering System and associated Bucking Horse gas processing facility in the Powder River Basin, Niobrara Shale play that will increase processing capacity to 345 million cubic feet per day (‘MMcf/d’) by the end of 2019 to meet growing customer demand in this underserved growth basin. We also completed major modifications to our Mobile Bay processing plant to enable the handling of large volumes of gas liquids from Shell’s Norphlet fields in the Eastern Gulf of Mexico. Additionally, a major expansion of our Oak Grove gas-processing facility in West Virginia is also underway. Construction is going well on Transco’s Gulf Connector project, and we realized great progress on the permitting of several other Transco projects in the Northeast and Northwest Pipeline in Seattle.”

Business Segment Results

For second-quarter 2018 results, Williams Partners’ operations are comprised of the following reportable segments: Atlantic-Gulf, West, and Northeast G&P. Following the sale of Williams Partners’ ownership interest in the Geismar olefins plant on July 6, 2017, the partnership’s NGL & Petchem Services segment no longer contained any operating assets.

       
Amounts in millions 2Q 2018 2Q 2017 YTD 2018 YTD 2017
Modified
EBITDA
  Adjust.   Adjusted
EBITDA
Modified
EBITDA
  Adjust.   Adjusted

EBITDA

Modified

EBITDA

  Adjust.   Adjusted

EBITDA

Modified

EBITDA

  Adjust.   Adjusted

EBITDA

Atlantic -Gulf $ 475   ($19 )   $ 456 $ 454   $ 8   $ 462 $ 926   ($4 )   $ 922 $ 904   $ 11   $ 915
West 389 389 356 16 372 802 (7 ) 795 741 20 761
Northeast G&P 255 255 247 1 248 505 505 473 2 475
NGL & Petchem Services 30 (7 ) 23 81 (9 ) 72
Other   (4 )   1       (3 )   (11 )     10       (1 )   (11 )   8       (3 )   9     (11 )     (2 )
Total $ 1,115     ($18 )   $ 1,097   $ 1,076     $ 28     $ 1,104   $ 2,222     ($3 )   $ 2,219   $ 2,208   $ 13     $ 2,221  
 
Williams Partners uses Modified EBITDA for its segment reporting. Definitions of Modified EBITDA and Adjusted EBITDA and schedules reconciling these measures to net income are included in this news release.
 

Atlantic-Gulf

This segment includes the partnership’s interstate natural gas pipeline, Transco, and significant natural gas gathering and processing and crude oil production handling and transportation assets in the Gulf Coast region, including a 51 percent interest in Gulfstar One (a consolidated entity), which is a proprietary floating production system, and various petrochemical and feedstock pipelines in the Gulf Coast region, as well as a 50 percent equity-method investment in Gulfstream, a 41 percent interest in Constitution (a consolidated entity) which is developing a pipeline project, and a 60 percent equity-method investment in Discovery.

The Atlantic-Gulf segment reported Modified EBITDA of $475 million for second-quarter 2018, compared with $454 million for second-quarter 2017. Adjusted EBITDA decreased by $6 million to $456 million for the same time period. The improvement in Modified EBITDA reflects $43 million increased service revenues driven primarily by Transco’s ‘Big 5’ expansion projects placed into service in 2017 as well as mainline service on Atlantic Sunrise in 2018. The quarter was also favorably impacted by a $20 million benefit associated with the Tax Reform Act. Partially offsetting these increases were a $36 million decrease in proportional EBITDA from joint ventures due primarily to a significant decline in volumes on the deepwater Discovery system’s Hadrian field and a $16 million increase in O&M expenses mainly related to pipeline integrity program costs. The adjustment associated with the Tax Reform Act discussed in this paragraph is excluded from Adjusted EBITDA.

Year-to-date, the Atlantic-Gulf segment reported Modified EBITDA of $926 million, an increase of $22 million over the same six-month period in 2017. Adjusted EBITDA increased $7 million to $922 million. The improvement in Modified EBITDA reflects $116 million increased service revenues due primarily to Transco expansion projects led by the ‘Big 5’ placed into service in 2017 as well as mainline service on Atlantic Sunrise in 2018. Partially offsetting this increase was a $65 million decrease in proportional EBITDA from joint ventures due primarily to a significant decline in volumes on the deepwater Discovery system’s Hadrian field and a $39 million increase in O&M expenses mainly related to pipeline integrity program costs.

West

This segment includes the partnership’s interstate natural gas pipeline, Northwest Pipeline, and natural gas gathering, processing, and treating operations in New Mexico, Colorado, and Wyoming, as well as the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of south Texas, the Haynesville Shale region of northwest Louisiana, and the Mid-Continent region which includes the Anadarko, Arkoma, Delaware and Permian basins. This reporting segment also includes an NGL and natural gas marketing business, storage facilities, and an undivided 50 percent interest in an NGL fractionator near Conway, Kansas, a 50 percent equity-method investment in OPPL and a 50 percent interest in Jackalope Gas Gathering Services, L.L.C. (Jackalope) (an equity-method investment following deconsolidation as of June 30, 2018). The partnership completed the sale of its 50 percent equity-method investment in a Delaware Basin gas gathering system in the Mid-Continent region during first-quarter 2017.

The West segment reported Modified EBITDA of $389 million for second-quarter 2018, compared with $356 million for second-quarter 2017. Adjusted EBITDA increased by $17 million to $389 million. The increase in Adjusted EBITDA was driven primarily by a $37 million improvement in NGL and marketing margins due to favorable prices. Partially offsetting the increases was a $10 million unfavorable change in other income and expense primarily driven by a $6 million regulatory charge per approved pipeline transportation rates associated with the Tax Reform Act. Additionally, service revenue declined by $7 million, primarily due to lower rates at Northwest Pipeline per its 2017 rate settlement agreement, while the favorable impact of higher volumes was offset by an unfavorable change in recognition of deferred revenue driven by the adoption of new accounting standards in 2018. Second-quarter 2018 service revenues would have increased by $14 million over second-quarter 2017 if the new revenue-recognition standards adopted in 2018 had been applied to second-quarter 2017 results, which would have reduced second-quarter 2017 results by $21 million. The variance in Adjusted EBITDA between the periods was $16 million less favorable than the variance in Modified EBITDA primarily due to the fact that Adjusted EBITDA for both periods included estimated minimum volume commitments (MVCs). While estimated MVCs were not recognized in Modified EBITDA until the fourth quarter in 2017, with the adoption of new accounting standards, estimated MVC revenue is recognized earlier in 2018 Modified EBITDA.

Year-to-date, the West segment reported Modified EBITDA of $802 million, an increase of $61 million over the same six-month period in 2017. Adjusted EBITDA increased by $34 million to $795 million. The increase in Adjusted EBITDA was driven primarily by $52 million increased NGL and marketing margins. Partially offsetting this increase was a $12 million regulatory charge per approved pipeline transportation rates associated with the Tax Reform Act, and a $9 million decline in service revenue, which includes the favorable impact of higher volumes offset by the unfavorable change in recognition of deferred revenue driven by the adoption of new accounting standards in 2018. First-half 2018 service revenues would have increased by $31 million over first-half 2017 results if revenue-recognition standards adopted in 2018 had been applied to first half 2017 results, which would have reduced first half 2017 results by $40 million. The variance in Adjusted EBITDA between the periods was $27 million less favorable than the variance in Modified EBITDA primarily due to the fact that Adjusted EBITDA for both periods included estimated MVCs. While estimated MVCs were not recognized in Modified EBITDA until the fourth quarter in 2017, with the adoption of new accounting standards, estimated MVC revenue is recognized earlier in 2018 Modified EBITDA.

Northeast G&P

This segment includes the partnership’s natural gas gathering and processing, compression and NGL fractionation businesses in the Marcellus Shale region primarily in Pennsylvania, New York, and West Virginia and Utica Shale region of eastern Ohio, as well as a 66 percent interest in Cardinal (a consolidated entity), a 62 percent equity-method investment in UEOM, a 69 percent equity-method investment in Laurel Mountain, a 58 percent equity-method investment in Caiman II, and Appalachia Midstream Services, LLC, which owns an approximate average 66 percent equity-method investment in multiple gas gathering systems in the Marcellus Shale.

The Northeast G&P segment reported Modified EBITDA of $255 million for second-quarter 2018, compared with $247 million for second-quarter 2017. Adjusted EBITDA increased by $7 million to $255 million. The improvement in both measures was driven primarily by $15 million increased service revenues due to higher volumes at the Susquehanna and Ohio River systems.

Year-to-date, the Northeast G&P segment reported Modified EBITDA of $505 million, an increase of $32 million over the same six-month period in 2017. Adjusted EBITDA increased by $30 million to $505 million. The improvements in both measures was driven primarily by $26 million increased service revenues due to higher volumes at the Susquehanna and Ohio River systems, and a $9 million increase in proportional EBITDA of joint ventures due largely to the partnership’s increase in ownership in two Marcellus Shale gathering systems in first-quarter 2017. Partially offsetting these improvements was a $4 million increase in O&M expenses.

NGL & Petchem Services

In second-quarter 2017, this segment produced $30 million in Modified EBITDA and $23 million in Adjusted EBITDA. For the first six-month reporting period of 2017, this segment produced $81 million in Modified EBITDA and $72 million in Adjusted EBITDA. As of July 7, 2017, this segment no longer contained any operating assets following the sale of the Geismar olefins facility on July 6, 2017.

Williams and Williams Partners Announce Meeting and Record Dates for Williams Special Meeting

On July 12, 2018, Williams and Williams Partners announced that, in connection with the previously announced merger transaction between Williams and Williams Partners (the “Merger”), the registration statement on Form S-4 (the “Registration Statement”) has been declared “effective” by the U.S. Securities and Exchange Commission (“SEC”). Following effectiveness of the Registration Statement, on July 13, 2018, Williams Gas Pipeline Company, LLC, which owns units representing approximately 73.8 percent of the outstanding units of Williams Partners, delivered a written consent approving and adopting the Merger Agreement and the Merger. As a result, no further action by any unitholder of Williams Partners is required to adopt the Merger Agreement and the Merger. The closing of the Merger remains subject to customary closing conditions, including approval by the Williams stockholders. On July 12, 2018, Williams announced that it has scheduled a special meeting of Williams stockholders on Aug. 9, 2018, to vote on the proposed Merger and related amendment of Williams Amended and Restated Certificate of Incorporation to increase the number of shares of Williams common stock.

Williams Companies Inc. Updates Guidance

Williams Partners unitholders interested in updates to financial guidance, should refer to the second-quarter 2018 earnings news release issued today by Williams Companies Inc. (“Williams”) (NYSE: WMB).

Williams Partners’ Second-Quarter 2018 Materials to be Posted Shortly; Q&A Webcast Scheduled for Tomorrow

Williams Partners’ second-quarter 2018 financial results package will be posted shortly at www.williams.com. The materials will include the analyst package.

Williams Partners and Williams will host a joint Q&A live webcast on Thursday, Aug. 2, 2018, at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). A limited number of phone lines will be available at (877) 260-1479. International callers should dial (334) 323-0522. The conference ID is 1766230. The link to the webcast, as well as replays of the webcast, will be available for at least 90 days following the event at www.williams.com.

Form 10-Q

The partnership plans to file its second-quarter 2018 Form 10-Q with the Securities and Exchange Commission (SEC) this week. Once filed, the document will be available on both the SEC and Williams Partners websites.

Definitions of Non-GAAP Measures

This news release and accompanying materials may include certain financial measures – Adjusted EBITDA, distributable cash flow and cash distribution coverage ratio – that are non-GAAP financial measures as defined under the rules of the SEC.

Our segment performance measure, Modified EBITDA, is defined as net income (loss) before income tax expense, net interest expense, equity earnings from equity-method investments, other net investing income, impairments of equity investments and goodwill, depreciation and amortization expense, and accretion expense associated with asset retirement obligations for nonregulated operations. We also add our proportional ownership share (based on ownership interest) of Modified EBITDA of equity-method investments.

Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes these measures provide investors meaningful insight into results from ongoing operations.

We define distributable cash flow as Adjusted EBITDA less maintenance capital expenditures, cash portion of net interest expense, income attributable to noncontrolling interests and cash income taxes, plus WPZ restricted stock unit non-cash compensation expense and certain other adjustments that management believes affects the comparability of results. Adjustments for maintenance capital expenditures and cash portion of interest expense include our proportionate share of these items of our equity-method investments.

We also calculate the ratio of distributable cash flow to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio using the most directly comparable GAAP measure, net income (loss).

This news release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the Partnership’s assets and the cash that the business is generating.

Neither Adjusted EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

About Williams Partners

Williams Partners is an industry-leading, large-cap natural gas infrastructure master limited partnership with a strong growth outlook and major positions in key U.S. supply basins. Williams Partners has operations across the natural gas value chain including gathering, processing and interstate transportation of natural gas and natural gas liquids. Williams Partners owns and operates more than 33,000 miles of pipelines system wide – including the nation’s largest volume and fastest growing pipeline – providing natural gas for clean-power generation, heating and industrial use. Williams Partners’ operations touch approximately 30 percent of U.S. natural gas. Tulsa, Okla.-based Williams (NYSE: WMB), a premier provider of large-scale U.S. natural gas infrastructure, owns approximately 74 percent of Williams Partners.

Forward-Looking Statements

The reports, filings, and other public announcements of Williams Partners L.P. (WPZ) may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters.

All statements, other than statements of historical facts, included herein that address activities, events or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements. Forward-looking statements can be identified by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,” “in-service date” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

  • The closing and expected timing of, and anticipated financial results following, the merger of Williams’ wholly owned subsidiary, SCMS LLC, with and into us (WPZ Merger);
  • Levels of cash distributions with respect to limited partner interests;
  • Our and our affiliates’ future credit ratings;
  • Amounts and nature of future capital expenditures;
  • Expansion and growth of our business and operations;
  • Expected in-service dates for capital projects;
  • Financial condition and liquidity;
  • Business strategy;
  • Cash flow from operations or results of operations;
  • Seasonality of certain business components;
  • Natural gas and natural gas liquids prices, supply, and demand;
  • Demand for our services.

Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results to be materially different from those stated or implied herein. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

  • Satisfaction of the conditions to the completion of the WPZ Merger, including receipt of the Williams stockholder approval, and our ability to close the WPZ Merger;
  • Whether we will produce sufficient cash flows to provide expected levels of cash distributions;
  • Whether we elect to pay expected levels of cash distributions;
  • Whether we will be able to effectively execute our financing plan;
  • Availability of supplies, market demand, and volatility of prices;
  • Inflation, interest rates, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers);
  • The strength and financial resources of our competitors and the effects of competition;
  • Whether we are able to successfully identify, evaluate, and timely execute investment opportunities;
  • Our ability to successfully expand our facilities and operations;
  • Development and rate of adoption of alternative energy sources;
  • The impact of operational and developmental hazards and unforeseen interruptions;
  • The impact of existing and future laws (including, but not limited to, the Tax Cuts and Jobs Act of 2017), regulations, the regulatory environment, environmental liabilities, and litigation, as well as our ability to obtain necessary permits and approvals, and achieve favorable rate proceeding outcomes;
  • Our costs for defined benefit pension plans and other postretirement benefit plans sponsored by our affiliates;
  • Changes in maintenance and construction costs;
  • Changes in the current geopolitical situation;
  • Our exposure to the credit risk of our customers and counterparties;
  • Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by nationally-recognized credit rating agencies and the availability and cost of capital;
  • The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;
  • Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities;
  • Acts of terrorism, including cybersecurity threats, and related disruptions;
  • Additional risks described in our filings with the Securities and Exchange Commission (SEC).

Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those statements of intention set forth herein. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.

Limited partner units are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. You should carefully consider the risk factors discussed above in addition to the other information contained herein. If any of such risks were actually to occur, our business, results of operations, and financial condition could be materially adversely affected. In that case, we might not be able to pay distributions on our common units, the trading price of our common units could decline, and unitholders could lose all or part of their investment.

Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K filed with the SEC on February 22, 2018 and in Part II, Item 1A. Risk Factors in our Quarterly Reports on Form 10-Q.

 
Williams Partners L.P.
Reconciliation of Non-GAAP Measures
(UNAUDITED)
  2017     2018  
(Dollars in millions, except coverage ratios)   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year   1st Qtr   2nd Qtr   Year
                                 
Williams Partners L.P.            
Reconciliation of “Net Income (Loss)” to “Modified EBITDA”, Non-GAAP “Adjusted EBITDA” and “Distributable cash flow”
 
Net income (loss) $ 660 $ 348 $   284 $   (317 ) $   975 $   384 $   449 $   833
Provision (benefit) for income taxes 3 1 (1 ) 3 6
Interest expense 214 205 202 201 822 209 211 420
Equity (earnings) losses (107 ) (125 ) (115 ) (87 ) (434 ) (82 ) (92 ) (174 )
Other investing (income) loss – net (271 ) (2 ) (4 ) (4 ) (281 ) (4 ) (67 ) (71 )
Proportional Modified EBITDA of equity-method investments 194 215 202 184 795 169 178 347
Depreciation and amortization expenses 433 423 424 420 1,700 423 426 849
Accretion expense associated with asset retirement obligations for nonregulated operations   6       11     8     8     33   8     10     18  
Modified EBITDA 1,132 1,076 1,000 408 3,616 1,107 1,115 2,222
Adjustments
Estimated minimum volume commitments 15 15 18 (48 )
Severance and related costs 9 4 5 4 22
Settlement charge from pension early payout program 35 35
Regulatory adjustments resulting from Tax Reform 713 713 4 (20 ) (16 )
Share of regulatory charges resulting from Tax Reform for equity-method investments 11 11 2 2
ACMP Merger and transition costs 4 3 4 11
Constitution Pipeline project development costs 2 6 4 4 16 2 1 3
Share of impairment at equity-method investment 1 1
Geismar Incident adjustment (9 ) 2 8 (1 )
Gain on sale of Geismar Interest (1,095 ) (1,095 )
Impairment of certain assets 1,142 9 1,151
Ad valorem obligation timing adjustment 7 7
Organizational realignment-related costs 4 6 6 2 18
(Gain) loss related to Canada disposition (3 ) (1 ) 4 4 4
(Gain) loss on asset retirement (5 ) 5
Gains from contract settlements and terminations (13 ) (2 ) (15 )
Accrual for loss contingency 9 9
(Gain) loss on early retirement of debt (30 ) 3 (27 ) 7 7
Gain on sale of RGP Splitter (12 ) (12 )
Expenses associated with Financial Repositioning 2 2
Expenses associated with strategic asset monetizations 1 4 5
WPZ Merger costs                           1     1  
Total EBITDA adjustments   (15 )     28     101     742     856   15     (18 )   (3 )
Adjusted EBITDA 1,117 1,104 1,101 1,150 4,472 1,122 1,097 2,219
 
Maintenance capital expenditures (1) (53 ) (100 ) (136 ) (154 ) (443 ) (100 ) (152 ) (252 )
Interest expense – net (2) (224 ) (216 ) (207 ) (208 ) (855 ) (212 ) (215 ) (427 )
Cash taxes (5 ) (1 ) (4 ) (2 ) (12 ) (1 ) (1 ) (2 )
Income attributable to noncontrolling interests (3) (27 ) (32 ) (27 ) (27 ) (113 ) (25 ) (24 ) (49 )
WPZ restricted stock unit non-cash compensation 2 1 1 1 5
Amortization of deferred revenue associated with certain 2016 contract restructurings (4)   (58 )     (58 )   (59 )   (58 )   (233 )          
Distributable cash flow attributable to Partnership Operations   752       698     669     702     2,821   784     705     1,489  
 
Total cash distributed (5) $ 567 $ 574 $ 574 $ 574 $ 2,289 $ 588 $ 603 $ 1,191
 
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed   1.33       1.22     1.17     1.22     1.23   1.33     1.17     1.25  
Net income (loss) divided by Total cash distributed   1.16       0.61     0.49     (0.55 )   0.43   0.65     0.74     0.70  
 
(1) Includes proportionate share of maintenance capital expenditures of equity investments.
(2) Includes proportionate share of interest expense of equity investments.
(3) Excludes allocable share of certain EBITDA adjustments.
(4) Beginning first quarter 2018, as a result of the extended deferred revenue amortization period under the new GAAP revenue standard, we have discontinued the adjustment associated with these 2016 contract restructuring payments. The adjustments would have been $32 million and $31 million for the first and second quarters of 2018, respectively.
(5) Cash distributions for the first quarter of 2017 have been decreased by $6 million to reflect the amount paid by WMB to WPZ pursuant to the January 2017 Common Unit Purchase Agreement.
 
Williams Partners L.P.
Reconciliation of “Modified EBITDA” to Non-GAAP “Adjusted EBITDA”
(UNAUDITED)
  2017     2018
(Dollars in millions)   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year   1st Qtr   2nd Qtr   Year
                                 
Modified EBITDA:            
Northeast G&P $ 226 $ 247 $ 115 $ 231 $ 819 $ 250 $ 255 $ 505
Atlantic-Gulf 450 454 430 (96 ) 1,238 451 475 926
West 385 356 (615 ) 286 412 413 389 802
NGL & Petchem Services 51 30 1,084 (4 ) 1,161
Other   20       (11 )     (14 )     (9 )     (14 )   (7 )     (4 )     (11 )
Total Modified EBITDA $ 1,132     $ 1,076     $ 1,000     $ 408     $ 3,616   $ 1,107     $ 1,115     $ 2,222  
 
Adjustments:

Northeast G&P

Share of impairment at equity-method investments $ $ $ 1 $ $ 1 $ $ $
Impairment of certain assets 121 121
Ad valorem obligation timing adjustment 7 7
Settlement charge from pension early payout program 7 7
Organizational realignment-related costs   1       1       2             4                  

Total Northeast G&P adjustments

1 1 131 7 140
Atlantic-Gulf
Constitution Pipeline project development costs 2 6 4 4 16 2 1 3
Settlement charge from pension early payout program 15 15
Regulatory adjustments resulting from Tax Reform 493 493 11 (20 ) (9 )
Share of regulatory charges resulting from Tax Reform for equity-method investments 11 11 2 2
Organizational realignment-related costs 1 2 2 1 6
(Gain) loss on asset retirement               (5 )     5                        
Total Atlantic-Gulf adjustments 3 8 1 529 541 15 (19 ) (4 )

West

Estimated minimum volume commitments 15 15 18 (48 )
Impairment of certain assets 1,021 9 1,030
Settlement charge from pension early payout program 13 13
Regulatory adjustments resulting from Tax Reform 220 220 (7 ) (7 )
Organizational realignment-related costs 2 3 2 1 8
Gains from contract settlements and terminations   (13 )     (2 )                 (15 )                
Total West adjustments 4 16 1,041 195 1,256 (7 ) (7 )

NGL & Petchem Services

(Gain) loss related to Canada disposition (3 ) (1 ) 4 4 4
Expenses associated with strategic asset monetizations 1 4 5
Geismar Incident adjustments (9 ) 2 8 (1 )
Gain on sale of Geismar Interest (1,095 ) (1,095 )
Gain on sale of RGP Splitter (12 ) (12 )
Accrual for loss contingency   9                         9                  
Total NGL & Petchem Services adjustments (2 ) (7 ) (1,083 ) 3 (1,089 )

Other

Severance and related costs 9 4 5 4 22
ACMP Merger and transition costs 4 3 4 11
Expenses associated with Financial Repositioning 2 2
(Gain) loss on early retirement of debt (30 ) 3 (27 ) 7 7
WPZ Merger costs                                     1       1  
Total Other adjustments (21 ) 10 11 8 8 7 1 8
                           
Total Adjustments $ (15 )   $ 28     $ 101     $ 742     $ 856   $ 15     $ (18 )   $ (3 )
 
Adjusted EBITDA:
Northeast G&P $ 227 $ 248 $ 246 $ 238 $ 959 $ 250 $ 255 $ 505
Atlantic-Gulf 453 462 431 433 1,779 466 456 922
West 389 372 426 481 1,668 406 389 795
NGL & Petchem Services 49 23 1 (1 ) 72
Other   (1 )     (1 )     (3 )     (1 )     (6 )         (3 )     (3 )
Total Adjusted EBITDA $ 1,117     $ 1,104     $ 1,101     $ 1,150     $ 4,472   $ 1,122     $ 1,097     $ 2,219  

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Fresh Del Monte Produce’s Board of Directors Declares Cash Dividend

CORAL GABLES, Fla.–()–Fresh Del Monte Produce Inc. (NYSE: FDP) today announced that its board of directors declared an interim cash dividend of fifteen cents ($0.15) per share, payable on September 7, 2018, to shareholders of record on August 15, 2018.

About Fresh Del Monte Produce Inc.

Fresh Del Monte Produce Inc. is one of the world’s leading vertically integrated producers, marketers and distributors of high-quality fresh and fresh-cut fruit and vegetables, as well as a leading producer and distributor of prepared food in Europe, Africa and the Middle East. Fresh Del Monte markets its products worldwide under the Del Monte® brand, a symbol of product innovation, quality, freshness and reliability for more than 125 years.

Forward-looking Information

This press release contains certain forward-looking statements regarding the intents, beliefs or current expectations of the Company or its officers with respect to various matters. These forward-looking statements are based on information currently available to the Company and the Company assumes no obligation to update these statements. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The Company’s actual results may differ materially from those in the forward-looking statements as a result of various important factors, including those described under the caption “Key Information – Risk Factors” in Fresh Del Monte Produce Inc.’s Annual Report on Form 10-K for the year ended December 29, 2017, along with other reports that the Company has on file with the Securities and Exchange Commission.

Note to the Editor: This release and other press releases are available on the Company’s web site, www.freshdelmonte.com.

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Aimco Announces Quarterly Common Dividend of $0.38 Per Share

DENVER–()–Apartment Investment and Management Company (“Aimco”) (NYSE: AIV) announced today that its Board of Directors declared a quarterly cash dividend of $0.38 per share of Class A Common Stock for the quarter ended June 30, 2018, an increase of 6% compared to the dividends paid during 2017. This dividend is payable on August 31, 2018, to stockholders of record on August 17, 2018.

Aimco is a real estate investment trust that is focused on the ownership and management of quality apartment communities located in the largest markets in the United States. Aimco is one of the country’s largest owners and operators of apartments, with 134 communities in 17 states and the District of Columbia. Aimco common shares are traded on the New York Stock Exchange under the ticker symbol AIV, and are included in the S&P 500. For more information about Aimco, please visit our website at www.aimco.com.

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Cherry Hill Mortgage Investment Corporation Sets Date for Second Quarter 2018 Earnings Release and Conference Call

FARMINGDALE, N.J.–()–Cherry Hill Mortgage Investment Corporation (NYSE: CHMI) today announced that the Company will release second quarter 2018 financial results after the market closes on Wednesday, August 8, 2018. A conference call will be held the same day at 5:00 pm Eastern Time to review the Company’s second quarter, discuss recent events and conduct a question-and-answer period.

Webcast:

The conference call will be available in the investor relations section of the Company’s website at www.chmireit.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.

To Participate in the Telephone Conference Call:
Dial in at least 5 minutes prior to start time:
Domestic: 1-877-407-9716
International: 1-201-493-6779

Conference Call Playback:
Domestic: 1-844-512-2921
International: 1-412-317-6671
Replay Pin Number: 13681869
The playback can be accessed through September 8, 2018.

About Cherry Hill Mortgage Investment Corporation

Cherry Hill Mortgage Investment Corporation is a real estate finance company that acquires, invests in and manages residential mortgage assets in the United States. For additional information, visit www.chmireit.com.

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iQor Names Gary Praznik as President & CEO

ST. PETERSBURG, Fla.–()–iQor, a managed services provider of customer engagement and technology-enabled BPO solutions, today announced that Gary Praznik will become chief executive officer of the company, effective immediately.

Praznik, a 34-year industry veteran who previously served as iQor’s chief operating officer, has held various global leadership roles in Operations and Business Development since joining the company in 2000.

Under his operational leadership, Praznik led a dramatic increase in iQor’s client base and revenues, helped develop and deploy a suite of CX service solutions covering the complete customer lifecycle, and implemented the industry’s first all-digital customer engagement platform. During his tenure as COO, iQor’s employee base has expanded by more than 25,000 employees.

“As brands continue to grow more digital and customers raise their expectations for a seamless, personalized experience across an increasing number of touchpoints, Gary is an excellent choice to lead iQor,” said Gary Crittenden, chairman at iQor. “In his 18 years with the company, Gary has not only proven that he is an outstanding and inspiring leader, he is also a superb operational executive with the strategic vision and client focus to ensure iQor’s success.”

“It is a great honor to be asked to lead iQor at this stage of its growth,” said Praznik. “Digital transformation is changing business models, disrupting industries, and creating new ways to support products and service customers. Now, more than ever, we can deepen our partnerships with some of the world’s most innovative brands to help them engage, grow and drive deeper loyalty with their customers leveraging technology, analytics, and insights that drive results.”

Praznik will lead iQor as it continues to gain industry recognition for the significant investments it is making to expand its strategic footprint, extend its leadership in digital technologies, and implement innovative solutions in machine learning and artificial intelligence, voice and interaction analytics, and augmented agent assistants.

In the last year alone, the business has invested to support growth and new capabilities in key markets, adding almost half a million square feet of capacity and more than 7,000 domestic, nearshore, and offshore contact center seats.

Praznik replaces Hartmut Liebel who will take on an advisory role at the company and remain on the Board of Directors. “The Board very much appreciates Hartmut’s leadership as CEO in the transformation of iQor to a broader customer service delivery platform with a very capable management team,” said Crittenden.

About iQor

iQor is a managed services provider of customer engagement and technology-enabled BPO solutions. With 45,000 employees in 18 countries, we partner with many of the world’s best-known brands to deliver product and customer support solutions that span the consumer value chain, from customer care and receivables management to product diagnostics and repair services. Our award-winning technology, logistics, and analytics platforms enable us to measure, monitor, and analyze brand interactions, improve business processes, and find operational efficiencies that lead to superior outcomes for our partners across the customer and product life cycles. For more information, please visit us at www.iqor.com or follow us at www.twitter.com/iqor.

http://www.businesswire.com/news/home/20180801005254/en/iQor-Names-Gary-Praznik-President-CEO/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

PerkinElmer Announces Financial Results for the Second Quarter of 2018

WALTHAM, Mass.–()–PerkinElmer, Inc. (NYSE: PKI), a global leader committed to innovating for a healthier world, today reported financial results for the second quarter ended July 1, 2018.

The Company reported GAAP earnings per share from continuing operations of $0.58, as compared to GAAP earnings per share from continuing operations of $0.57 in the second quarter of 2017. GAAP revenue for the quarter was $703.4 million, as compared to $547.0 million in the second quarter of 2017. GAAP operating income from continuing operations for the quarter was $88.1 million, as compared to $74.2 million in the second quarter of 2017. GAAP operating profit margin was 12.5% as a percentage of revenue.

Adjusted earnings per share from continuing operations for the quarter was $0.91, as compared to $0.67 in the second quarter of 2017. Adjusted revenue for the quarter was $703.6 million, as compared to $547.1 million in the second quarter of 2017. Adjusted operating income from continuing operations for the quarter was $138.3 million, as compared to $97.8 million for the same period a year ago. Adjusted operating profit margin was 19.7% as a percentage of adjusted revenue.

Adjustments for the Company’s non-GAAP financial measures have been noted in the attached reconciliations.

“We saw continued momentum in the business as both segments experienced double-digit organic revenue growth in the second quarter,” said Robert Friel, chairman and chief executive officer of PerkinElmer.  “Our focus on bringing innovative new product offerings to market, while targeting attractive end markets where our capabilities are well differentiated, continues to drive solid revenue and adjusted earnings growth.  As a result, we are once again raising our full year organic revenue outlook and adjusted earnings per share guidance.”

Financial Overview by Reporting Segment for the Second Quarter of 2018

Discovery & Analytical Solutions

  • Revenue was $430.6 million, as compared to $383.1 million for the second quarter of 2017. Reported revenue increased 12% and organic revenue increased 10%.
  • Operating income from continuing operations was $64.7 million, as compared to $51.1 million for the comparable prior period.
  • Adjusted operating income was $76.4 million, as compared to $63.6 million in the second quarter of 2017.

Diagnostics

  • Revenue was $272.7 million, as compared to $163.8 million for the second quarter of 2017. Reported revenue increased 66% and organic revenue increased 10%.
  • Operating income from continuing operations was $38.8 million, as compared to $36.9 million for the comparable prior period.
  • Adjusted operating income was $77.2 million, as compared to $48.1 million in the second quarter of 2017.

Raises Financial Guidance – Full Year 2018

For the full year 2018, the Company previously forecast GAAP earnings per share from continuing operations of $2.25 and, on a non-GAAP basis, adjusted earnings per share of $3.60. The Company now forecasts GAAP earnings per share from continuing operations of $2.39, and on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of $3.65.

Conference Call Information

The Company will discuss its second quarter results and its outlook for business trends in a conference call on August 1, 2018 at 5:00 p.m. Eastern Time. To access the call, please dial (541) 797-2422 prior to the scheduled conference call time and provide the access code 6379206.

A live audio webcast of the call will be available on the Investor section of the Company’s Web site, www.perkinelmer.com. Please go to the site at least 15 minutes prior to the call in order to register, download, and install any necessary software. An archived version of the webcast will be posted on the Company’s Web site for a two week period beginning approximately two hours after the call.

Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures. The reasons that we use these measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included below following our GAAP financial statements.

Factors Affecting Future Performance

This press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to estimates and projections of future earnings per share, cash flow and revenue growth and other financial results, developments relating to our customers and end-markets, and plans concerning business development opportunities, acquisitions and divestitures. Words such as “believes,” “intends,” “anticipates,” “plans,” “expects,” “projects,” “forecasts,” “will” and similar expressions, and references to guidance, are intended to identify forward-looking statements. Such statements are based on management’s current assumptions and expectations and no assurances can be given that our assumptions or expectations will prove to be correct. A number of important risk factors could cause actual results to differ materially from the results described, implied or projected in any forward-looking statements. These factors include, without limitation: (1) markets into which we sell our products declining or not growing as anticipated; (2) fluctuations in the global economic and political environments; (3) our failure to introduce new products in a timely manner; (4) our ability to execute acquisitions and license technologies, or to successfully integrate acquired businesses such as EUROIMMUN and licensed technologies into our existing business or to make them profitable, or successfully divest businesses; (5) our failure to adequately protect our intellectual property; (6) the loss of any of our licenses or licensed rights; (7) our ability to compete effectively; (8) fluctuation in our quarterly operating results and our ability to adjust our operations to address unexpected changes; (9) significant disruption in third-party package delivery and import/export services or significant increases in prices for those services; (10) disruptions in the supply of raw materials and supplies; (11) the manufacture and sale of products exposing us to product liability claims; (12) our failure to maintain compliance with applicable government regulations; (13) regulatory changes; (14) our failure to comply with healthcare industry regulations; (15) economic, political and other risks associated with foreign operations; (16) our ability to retain key personnel; (17) significant disruption in our information technology systems; (18) our ability to obtain future financing; (19) restrictions in our credit agreements; (20) the United Kingdom’s intention to withdraw from the European Union; (21) our ability to realize the full value of our intangible assets; (22) significant fluctuations in our stock price; (23) reduction or elimination of dividends on our common stock; and (24) other factors which we describe under the caption “Risk Factors” in our most recent quarterly report on Form 10-Q and in our other filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.

About PerkinElmer

PerkinElmer, Inc. is a global leader focused on innovating for a healthier world. The Company reported revenue of approximately $2.3 billion in 2017, has about 11,000 employees serving customers in more than 150 countries, and is a component of the S&P 500 Index. Additional information is available through 1-877-PKI-NYSE, or at www.perkinelmer.com.

                 

 PerkinElmer, Inc. and Subsidiaries

 CONDENSED CONSOLIDATED INCOME STATEMENTS

 

Three Months Ended

Six Months Ended

(In thousands, except per share data)

July 1, 2018

 

July 2, 2017

July 1, 2018

July 2, 2017

 
 
Revenue $ 703,362 $ 546,962 $ 1,347,334 $ 1,061,077
 
Cost of revenue 363,222 289,360 714,972 563,719
Selling, general and administrative expenses 204,880 149,859 404,605 296,867
Research and development expenses 47,196 33,560 93,180 66,846
Restructuring and contract termination charges, net           6,578     9,651  
 
Operating income from continuing operations 88,064 74,183 127,999 123,994
 
Interest income (173 ) (490 ) (438 ) (710 )
Interest expense 16,411 10,672 34,061 21,536
Loss on disposition of businesses and assets, net 301 301
Other expense (income), net   118     (7,092 )   (5,837 )   (7,908 )
 
Income from continuing operations, before income taxes 71,708 70,792 100,213 110,775
 
Provision for income taxes   7,035     8,066     9,505     11,987  
 
Income from continuing operations 64,673 62,726 90,708 98,788
 
(Loss) income from discontinued operations, before income taxes (3,109 ) 650
(Loss) gain on disposition of discontinued operations, before income taxes (551 ) 180,377 (551 ) 180,377
Provision for income taxes on discontinued operations and dispositions   59     35,925     70     37,143  
 
(Loss) gain from discontinued operations and dispositions   (610 )   141,343     (621 )   143,884  
 
Net income $ 64,063   $ 204,069   $ 90,087   $ 242,672  
 
 
Diluted earnings per share:
Income from continuing operations $ 0.58 $ 0.57 $ 0.81 $ 0.89
 
(Loss) gain from discontinued operations and dispositions   (0.01 )   1.28     (0.01 )   1.30  
 
Net income $ 0.57   $ 1.84   $ 0.81   $ 2.20  
 
 
Weighted average diluted shares of common stock outstanding 111,452 110,762 111,391 110,484
 
 
ABOVE PREPARED IN ACCORDANCE WITH GAAP
 
         
Additional Supplemental Information (1):
(per share, continuing operations)
 
GAAP EPS from continuing operations $ 0.58 $ 0.57 $ 0.81 $ 0.89
Amortization of intangible assets 0.29 0.16 0.59 0.31
Purchase accounting adjustments 0.14 0.02 0.23 0.05
Significant litigation matters (0.00 ) 0.04
Acquisition and divestiture-related costs 0.02 (0.02 ) 0.03 0.01
Disposition of businesses and assets, net 0.00 0.00
Mark to market on postretirement benefits (0.00 ) (0.00 )
Restructuring and contract termination charges, net 0.06 0.09
Tax on above items (0.12 ) (0.06 ) (0.24 ) (0.14 )
Impact of tax act           0.01      
Adjusted EPS $ 0.91   $ 0.67   $ 1.54   $ 1.21  
                                                 
                   
PerkinElmer, Inc. and Subsidiaries
REVENUE AND OPERATING INCOME (LOSS)
 
 
 

Three Months Ended

Six Months Ended

(In thousands, except percentages)

July 1, 2018

July 2, 2017

July 1, 2018

July 2, 2017

 
 
DAS Reported revenue $ 430,628 $ 383,128 $ 827,153 $ 744,888
 
Reported operating income from continued operations 64,665 51,124 100,862 81,346
OP% 15.0 % 13.3 % 12.2 % 10.9 %
Amortization of intangible assets 11,472 12,377 23,183 24,627
Purchase accounting adjustments 15 16 30 32
Acquisition and divestiture-related expenses 33 110 71 348
Significant litigation matters 232 4,417
Restructuring and contract termination charges, net     5,676   7,987  
Adjusted operating income 76,417   63,627   134,239   114,340  
Adjusted OP% 17.7 % 16.6 % 16.2 % 15.3 %
 
Diagnostics Reported revenue 272,734 163,834 520,181 316,189
Purchase accounting adjustments 188   186   375   371  
Adjusted Revenue 272,922   164,020   520,556   316,560  
 
Reported operating income from continued operations 38,780 36,947 57,174 69,663
OP% 14.2 % 22.6 % 11.0 % 22.0 %
Amortization of intangible assets 21,045 5,161 42,234 9,957
Purchase accounting adjustments 16,103 2,362 25,631 5,549
Acquisition and divestiture-related expenses 1,616 3,593 4,151 5,951
Significant litigation matters (322 ) (172 )
Restructuring and contract termination charges, net     902   1,664  
Adjusted operating income 77,222   48,063   129,920   92,784  
Adjusted OP% 28.3 % 29.3 % 25.0 % 29.3 %
 
Corporate Reported operating loss (15,381 ) (13,888 ) (30,037 ) (27,015 )
 
Continuing Operations Reported revenue $ 703,362 $ 546,962 $ 1,347,334 $ 1,061,077
Purchase accounting adjustments 188   186   375   371  
Adjusted Revenue 703,550   547,148   1,347,709   1,061,448  
 
Reported operating income from continued operations 88,064 74,183 127,999 123,994
OP% 12.5 % 13.6 % 9.5 % 11.7 %
Amortization of intangible assets 32,517 17,538 65,417 34,584
Purchase accounting adjustments 16,118 2,378 25,661 5,581
Acquisition and divestiture-related expenses 1,649 3,703 4,222 6,299
Significant litigation matters (90 ) 4,245
Restructuring and contract termination charges, net     6,578   9,651  
Adjusted operating income $ 138,258   $ 97,802   $ 234,122   $ 180,109  
Adjusted OP% 19.7 % 17.9 % 17.4 % 17.0 %
 
 

REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP

           
PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
(In thousands)

July 1, 2018

December 31, 2017

 
Current assets:
Cash and cash equivalents $ 163,392 $ 202,134
Accounts receivable, net 564,041 552,304
Inventories, net 366,961 351,675
Other current assets   108,019     93,842  
Total current assets   1,202,413     1,199,955  
 
Property, plant and equipment:
At cost 706,566 630,919
Accumulated depreciation   (402,028 )   (332,853 )
Property, plant and equipment, net 304,538 298,066
Intangible assets, net 1,270,867 1,346,940
Goodwill 2,940,825 3,002,198
Other assets, net   239,135     244,304  
Total assets $ 5,957,778   $ 6,091,463  
 
Current liabilities:
Current portion of long-term debt $ 17,315 $ 217,306
Accounts payable 197,128 222,093
Accrued restructuring and contract termination charges 7,443 8,759
Accrued expenses and other current liabilities 488,642 500,642
Current liabilities of discontinued operations   2,165     2,102  
Total current liabilities   712,693     950,902  
 
Long-term debt 1,983,953 1,788,803
Long-term liabilities   743,955     848,570  
Total liabilities   3,440,601     3,588,275  
 
Total stockholders’ equity   2,517,177     2,503,188  
Total liabilities and stockholders’ equity $ 5,957,778   $ 6,091,463  
 
 
PREPARED IN ACCORDANCE WITH GAAP
 
                   
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 

Three Months Ended

Six Months Ended

July 1, 2018

July 2, 2017

July 1, 2018

July 2, 2017

(In thousands) (In thousands)
 
Operating activities:
Net income $ 64,063 $ 204,069 $ 90,087 $ 242,672
Loss (gain) from discontinued operations and dispositions, net of income taxes   610     (141,343 )   621     (143,884 )
Income from continuing operations   64,673     62,726     90,708     98,788  
Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:
Stock-based compensation 6,816 6,840 12,148 11,767
Restructuring and contract termination charges, net 6,578 9,651
Depreciation and amortization 43,772 24,758 88,225 49,505
Change in fair value of contingent consideration 6,948 98 7,065 909
Amortization of deferred debt financing costs and accretion of discounts 904 646 1,519 1,231
Losses (gains) on disposition of businesses and assets, net 301 301
Amortization of acquired inventory revaluation 8,952 2,064 18,160 4,240
Changes in assets and liabilities which provided (used) cash, excluding
effects from companies acquired:
Accounts receivable, net (8,488 ) (19,878 ) (18,768 ) 5,215
Inventories (17,965 ) (3,075 ) (42,993 ) (9,913 )
Accounts payable (14,358 ) (6,972 ) (24,384 ) (20,855 )
Accrued expenses and other   (18,268 )   (13,062 )   (79,831 )   (55,193 )
Net cash provided by operating activities of continuing operations 72,986 54,446 58,427 95,646
Net cash (used in) provided by operating activities of discontinued operations       (6,328 )       6,207  
Net cash provided by operating activities   72,986     48,118     58,427     101,853  
 
Investing activities:
Capital expenditures (16,956 ) (5,492 ) (39,608 ) (11,473 )
Proceeds from surrender of life insurance policies 45 72 45
Proceeds from disposition of investments 173 173
Activity related to acquisitions and investments, net of cash and cash equivalents acquired   (39,470 )       (40,557 )   (123,578 )
Net cash used in investing activities of continuing operations (56,253 ) (5,447 ) (79,920 ) (135,006 )
Net cash provided by investing activities of discontinued operations       277,262         276,982  
Net cash (used in) provided by investing activities   (56,253 )   271,815     (79,920 )   141,976  
 
Financing Activities:
Payments on borrowings (520,000 ) (667,000 ) (145,950 )
Proceeds from borrowings 138,000 342,000 146,952
Proceeds from sale of senior debt 369,340 369,340
Payments of debt issuance costs (2,634 ) (2,634 )
Settlement of cash flow hedges 3,458 (2,745 ) (32,711 ) (4,314 )
Net payments on other credit facilities (7,147 ) (291 ) (10,154 ) (577 )
Payments for acquisition-related contingent consideration (8,940 )
Proceeds from issuance of common stock under stock plans 881 8,596 8,348 13,223
Purchases of common stock (95 ) (138 ) (4,649 ) (3,265 )
Dividends paid   (7,744 )   (7,690 )   (15,471 )   (15,363 )
Net cash used in financing activities of continuing operations (25,941 ) (2,268 ) (12,931 ) (18,234 )
Net cash used in financing activities of discontinued operations       (319 )       (533 )
Net cash used in financing activities (25,941 ) (2,587 ) (12,931 ) (18,767 )
 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   (8,201 )   8,583     (4,351 )   14,928  
 
Net decrease in cash, cash equivalents, and restricted cash (17,409 ) 325,929 (38,775 ) 239,990
Cash, cash equivalents, and restricted cash at beginning of period   181,005     290,629     202,371     376,568  
Cash, cash equivalents, and restricted cash at end of period $ 163,596   $ 616,558   $ 163,596   $ 616,558  
 
 
Supplemental disclosure of cash flow information:
Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total shown in the consolidated statements of cash flows:
Cash and cash equivalents $ 163,392 616,308 $ 163,392 616,308
Restricted cash included in other current assets   204     250     204     250  
Total cash, cash equivalents and restricted cash $ 163,596   $ 616,558   $ 163,596   $ 616,558  
 
PREPARED IN ACCORDANCE WITH GAAP
                 
PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
 
(In millions, except per share data and percentages) PKI
Three Months Ended

July 1, 2018

July 2, 2017

 
Adjusted revenue:
Revenue $ 703.4 $ 547.0
Purchase accounting adjustments   0.2               0.2        
Adjusted revenue $ 703.6             $ 547.1        
 
Adjusted gross margin:
Gross margin $ 340.1 48.4 % $ 257.6 47.1 %
Amortization of intangible assets 11.6 1.6 % 7.1 1.3 %
Purchase accounting adjustments   9.2       1.3 %       2.3       0.4 %
Adjusted gross margin $ 360.9       51.3 %     $ 267.0       48.8 %
 
Adjusted SG&A:
SG&A $ 204.9 29.1 % $ 149.9 27.4 %
Amortization of intangible assets (20.9 ) -3.0 % (10.4 ) -1.9 %
Purchase accounting adjustments (7.0 ) -1.0 % (0.1 ) 0.0 %
Acquisition and divestiture-related expenses (1.6 ) -0.2 % (3.7 ) -0.7 %
Significant litigation matters   0.1       0.0 %             0.0 %
Adjusted SG&A $ 175.5       24.9 %     $ 135.7       24.8 %
 
Adjusted R&D:
R&D $ 47.2 6.7 % $ 33.6 6.1 %
Amortization of intangible assets   (0.1 )     0.0 %       (0.1 )     0.0 %
Adjusted R&D $ 47.1       6.7 %     $ 33.5       6.1 %
 
Adjusted operating income:
Operating income $ 88.1 12.5 % $ 74.2 13.6 %
Amortization of intangible assets 32.5 4.6 % 17.5 3.2 %
Purchase accounting adjustments 16.1 2.3 % 2.4 0.4 %
Acquisition and divestiture-related expenses 1.6 0.2 % 3.7 0.7 %
Significant litigation matters (0.1 ) 0.0 % 0.0 %
Restructuring and contract termination charges, net         0.0 %             0.0 %
Adjusted operating income $ 138.3       19.7 %     $ 97.8       17.9 %
 
                   
PKI
Three Months Ended

July 1, 2018

July 2, 2017

 
Adjusted EPS:
GAAP EPS $ 0.57 $ 1.84
Discontinued operations, net of income taxes   (0.01 )             1.28        
GAAP EPS from continuing operations 0.58 0.57
Amortization of intangible assets 0.29 0.16
Purchase accounting adjustments 0.14 0.02
Significant litigation matters (0.00 )
Acquisition and divestiture-related expenses 0.02 (0.02 )
Gain on disposition of businesses and assets, net 0.00
Mark to market on postretirement benefits (0.00 )
Tax on above items   (0.12 )             (0.06 )      
Adjusted EPS $ 0.91             $ 0.67        
 
                   
DAS
Three Months Ended

July 1, 2018

July 2, 2017

 
Revenue $ 430.6 $ 383.1
 
Adjusted operating income:
Operating income $ 64.7 15.0 % $ 51.1 13.3 %
Amortization of intangible assets 11.5 2.7 % 12.4 3.2 %
Purchase accounting adjustments 0.0 0.0 % 0.0 0.0 %
Acquisition and divestiture-related expenses 0.0 0.0 % 0.1 0.0 %
Significant litigation matters   0.2       0.1 %             0.0 %
Adjusted operating income $ 76.4       17.7 %     $ 63.6       16.6 %
 
                   
Diagnostics
Three Months Ended

July 1, 2018

July 2, 2017

 
Adjusted revenue:
Revenue $ 272.7 $ 163.8
Purchase accounting adjustments   0.2               0.2        
Adjusted revenue $ 272.9             $ 164.0        
 
Adjusted operating income:
Operating income $ 38.8 14.2 % $ 36.9 22.6 %
Amortization of intangible assets 21.0 7.7 % 5.2 3.2 %
Purchase accounting adjustments 16.1 5.9 % 2.4 1.4 %
Acquisition and divestiture-related expenses 1.6 0.6 % 3.6 2.2 %
Significant litigation matters   (0.3 )     -0.1 %             0.0 %
Adjusted operating income $ 77.2       28.3 %     $ 48.1       29.3 %
 
 
(1) amounts may not sum due to rounding
                 
PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
 
(In millions, except per share data and percentages) PKI
Six Months Ended

July 1, 2018

July 2, 2017

 
Adjusted revenue:
Revenue $ 1,347.3 $ 1,061.1
Purchase accounting adjustments   0.4               0.4        
Adjusted revenue $ 1,347.7             $ 1,061.4        
 
Adjusted gross margin:
Gross margin $ 632.4 46.9 % $ 497.4 46.9 %
Amortization of intangible assets 23.3 1.7 % 14.2 1.3 %
Purchase accounting adjustments   18.6       1.4 %       4.6       0.4 %
Adjusted gross margin $ 674.2       50.0 %     $ 516.2       48.6 %
 
Adjusted SG&A:
SG&A $ 404.6 30.0 % $ 296.9 28.0 %
Amortization of intangible assets (42.0 ) -3.1 % (20.2 ) -1.9 %
Purchase accounting adjustments (7.1 ) -0.5 % (0.9 ) -0.1 %
Acquisition and divestiture-related expenses (4.2 ) -0.3 % (6.3 ) -0.6 %
Significant litigation matters   (4.2 )     -0.3 %             0.0 %
Adjusted SG&A $ 347.0       25.8 %     $ 269.4       25.4 %
 
Adjusted R&D:
R&D $ 93.2 6.9 % $ 66.8 6.3 %
Amortization of intangible assets   (0.2 )     0.0 %       (0.2 )     0.0 %
Adjusted R&D $ 93.0       6.9 %     $ 66.7       6.3 %
 
Adjusted operating income:
Operating income $ 128.0 9.5 % $ 124.0 11.7 %
Amortization of intangible assets 65.4 4.9 % 34.6 3.3 %
Purchase accounting adjustments 25.7 1.9 % 5.6 0.5 %
Acquisition and divestiture-related expenses 4.2 0.3 % 6.3 0.6 %
Significant litigation matters 4.2 0.3 % 0.0 %
Restructuring and contract termination charges, net   6.6       0.5 %       9.7       0.9 %
Adjusted operating income $ 234.1       17.4 %     $ 180.1       17.0 %
 
                   
PKI
Six Months Ended

July 1, 2018

July 2, 2017

 
Adjusted EPS:
GAAP EPS $ 0.81 $ 2.20
Discontinued operations   (0.01 )             1.30        
GAAP EPS from continuing operations 0.81 0.89
Amortization of intangible assets 0.59 0.31
Purchase accounting adjustments 0.23 0.05
Significant litigation matters 0.04
Acquisition and divestiture-related expenses 0.03 0.01
Gain on disposition of businesses and assets, net 0.00
Mark to market on postretirement benefits (0.00 )
Restructuring and contract termination charges, net 0.06 0.09
Tax on above items (0.24 ) (0.14 )
Impact of tax act   0.01                      
Adjusted EPS $ 1.54             $ 1.21        
 
 
PKI
Twelve Months Ended

December 30, 2018

Adjusted EPS: Projected
GAAP EPS from continuing operations $ 2.39
Amortization of intangible assets 1.20
Purchase accounting adjustments 0.31
Significant litigation matters 0.04
Acquisition and divestiture-related expenses 0.06
Restructuring and contract termination charges, net 0.06
Tax on above items (0.42 )
Impact of tax act               0.01        
Adjusted EPS             $ 3.65        
 
                   
DAS
Six Months Ended

July 1, 2018

July 2, 2017

 
Revenue $ 827.2 $ 744.9
 
Adjusted operating income:
Operating income $ 100.9 12.2 % $ 81.3 10.9 %
Amortization of intangible assets 23.2 2.8 % 24.6 3.3 %
Purchase accounting adjustments 0.0 0.0 % 0.0 0.0 %
Acquisition and divestiture-related expenses 0.1 0.0 % 0.3 0.0 %
Significant litigation matters 4.4 0.5 % 0.0 %
Restructuring and contract termination charges, net   5.7       0.7 %       8.0       1.1 %
Adjusted operating income $ 134.2       16.2 %     $ 114.3       15.3 %
 
 
Diagnostics
Six Months Ended

July 1, 2018

July 2, 2017

 
Adjusted revenue:
Revenue $ 520.2 $ 316.2
Purchase accounting adjustments   0.4               0.4        
Adjusted revenue $ 520.6             $ 316.6        
 
Adjusted operating income:
Operating income $ 57.2 11.0 % $ 69.7 22.0 %
Amortization of intangible assets 42.2 8.1 % 10.0 3.1 %
Purchase accounting adjustments 25.6 4.9 % 5.5 1.8 %
Acquisition and divestiture-related expenses 4.2 0.8 % 6.0 1.9 %
Significant litigation matters (0.2 ) 0.0 % 0.0 %
Restructuring and contract termination charges, net   0.9       0.2 %       1.7       0.5 %
Adjusted operating income $ 129.9       25.0 %     $ 92.8       29.3 %
 
 
(1) amounts may not sum due to rounding
     
PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 
 

PKI

Three Months Ended

July 1, 2018

Core Organic revenue growth:

Reported revenue growth 29%
Less: effect of foreign exchange rates 3%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 16%

Core Organic revenue growth

10%
 
 

DAS

Three Months Ended

July 1, 2018

Organic revenue growth:
Reported revenue growth 12%
Less: effect of foreign exchange rates 2%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 0%
Organic revenue growth 10%
 
 
Diagnostics
Three Months Ended

July 1, 2018

Organic revenue growth:
Reported revenue growth 66%
Less: effect of foreign exchange rates 3%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 53%
Organic revenue growth 10%

Explanation of Non-GAAP Financial Measures

We report our financial results in accordance with GAAP. However, management believes that, in order to more fully understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash, non-recurring or other items, which result from facts and circumstances that vary in frequency and impact on continuing operations. Accordingly, we present non-GAAP financial measures as a supplement to the financial measures we present in accordance with GAAP. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by adjusting for certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management’s ability to make useful forecasts. Management believes these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors.

We use the term “adjusted revenue” to refer to GAAP revenue, including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We use the related term “adjusted revenue growth” to refer to the measure of comparing current period adjusted revenue with the corresponding period of the prior year.

We use the term “organic revenue” to refer to GAAP revenue, excluding the effect of foreign currency changes and including acquisitions growth from the comparable prior period, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We also exclude the impact of sales from divested businesses by deducting the effects of divested business revenue from the current and prior periods. We use the related term “organic revenue growth” to refer to the measure of comparing current period organic revenue with the corresponding period of the prior year.

We use the term “core organic revenue” to refer to GAAP revenue excluding Euroimmun, excluding the effect of foreign currency changes and including acquisitions growth from the comparable prior period, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We also exclude the impact of sales from divested businesses by deducting the effects of divested business revenue from the current and prior periods. We use the related term “core organic revenue growth” to refer to the measure of comparing current period organic revenue with the corresponding period of the prior year.

We use the term “adjusted gross margin” to refer to GAAP gross margin, excluding amortization of intangible assets and inventory fair value adjustments related to business acquisitions, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to business combination accounting rules. We use the related term “adjusted gross margin percentage” to refer to adjusted gross margin as a percentage of adjusted revenue.

We use the term “adjusted SG&A expense” to refer to GAAP SG&A expense, excluding amortization of intangible assets, purchase accounting adjustments, acquisition and divestiture-related expenses, significant litigation matters and significant environmental charges. We use the related term “adjusted SG&A percentage” to refer to adjusted SG&A expense as a percentage of adjusted revenue.

We use the term “adjusted R&D expense” to refer to GAAP R&D expense, excluding amortization of intangible assets. We use the related term “adjusted R&D percentage” to refer to adjusted R&D expense as a percentage of adjusted revenue.

We use the term “adjusted operating income,” to refer to GAAP operating income, including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding amortization of intangible assets, other purchase accounting adjustments, acquisition and divestiture-related expenses, significant litigation matters, significant environmental charges, and restructuring and contract termination charges. We use the related terms “adjusted operating profit percentage,” “adjusted operating profit margin,” or “adjusted operating margin” to refer to adjusted operating income as a percentage of adjusted revenue.

We use the term “adjusted earnings per share,” or “adjusted EPS,” to refer to GAAP earnings per share, including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding discontinued operations, amortization of intangible assets, other purchase accounting adjustments, acquisition and divestiture-related expenses, significant litigation matters, significant environmental charges, disposition of businesses and assets, net, and restructuring and contract termination charges. We also exclude adjustments for mark-to-market accounting on post-retirement benefits, therefore only our projected costs have been used to calculate our non-GAAP measure. We also adjust for any tax impact related to the above items.

Management includes or excludes the effect of each of the items identified below in the applicable non-GAAP financial measure referenced above for the reasons set forth below with respect to that item:

  • Amortization of intangible assets— purchased intangible assets are amortized over their estimated useful lives and generally cannot be changed or influenced by management after the acquisition. Accordingly, this item is not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.
  • Revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules—accounting rules require us to account for the fair value of revenue from contracts assumed in connection with our acquisitions. As a result, our GAAP results reflect the fair value of those revenues, which is not the same as the revenue that otherwise would have been recorded by the acquired entity. We include such revenue in our non-GAAP measures because we believe the fair value of such revenue does not accurately reflect the performance of our ongoing operations for the period in which such revenue is recorded.
  • Other purchase accounting adjustments—accounting rules require us to adjust various balance sheet accounts, including inventory and deferred rent balances to fair value at the time of the acquisition. As a result, the expenses for these items in our GAAP results are not the same as what would have been recorded by the acquired entity. Accounting rules also require us to estimate the fair value of contingent consideration at the time of the acquisition, and any subsequent changes to the estimate or payment of the contingent consideration and purchase accounting adjustments are charged to expense or income. We exclude the impact of any changes to contingent consideration from our non-GAAP measures because we believe these expenses or benefits do not accurately reflect the performance of our ongoing operations for the period in which such expenses or benefits are recorded.
  • Acquisition and divestiture-related expenses—we incur legal, due diligence, stay bonuses, interest expense, foreign exchange gains and losses, significant acquisition integration expenses and other costs related to acquisitions and divestitures. We exclude these expenses from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations.
  • Restructuring and contract termination charges—restructuring and contract termination expenses consist of employee severance and other exit costs as well as the cost of terminating certain lease agreements or contracts. Management does not believe such costs accurately reflect the performance of our ongoing operations for the period in which such costs are reported.
  • Adjustments for mark-to-market accounting on post-retirement benefits—we exclude adjustments for mark-to-market accounting on post-retirement benefits, and therefore only our projected costs are used to calculate our non-GAAP measures. We exclude these adjustments because they do not represent what we believe our investors consider to be costs of producing our products, investments in technology and production, and costs to support our internal operating structure.
  • Significant litigation matters—we incur expenses related to significant litigation matters. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred.
  • Significant environmental charges—we incur expenses related to significant environmental charges. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred.
  • Disposition of businesses and assets, net—we exclude the impact of gains or losses from the disposition of businesses and assets from our adjusted earnings per share. Management does not believe such gains or losses accurately reflect the performance of our ongoing operations for the period in which such gains or losses are reported.
  • Impact of foreign currency changes on the current period—we exclude the impact of foreign currency from these measures by using the prior period’s foreign currency exchange rates for the current period because foreign currency exchange rates are subject to volatility and can obscure underlying trends.

The tax effect for discontinued operations is calculated based on the authoritative guidance in the Financial Accounting Standards Board’s Accounting Standards Codification 740, Income Taxes. The tax effect for amortization of intangible assets, inventory fair value adjustments related to business acquisitions, changes to the fair values assigned to contingent consideration, other costs related to business acquisitions and divestitures, significant litigation matters, significant environmental charges, adjustments for mark-to-market accounting on post-retirement benefits, disposition of businesses and assets, net, restructuring and contract termination charges, and the revenue from contracts acquired with various acquisitions is calculated based on operational results and applicable jurisdictional law, which contemplates tax rates currently in effect to determine our tax provision. The tax effect for the impact from foreign currency exchange rates on the current period is calculated based on the average rate currently in effect to determine our tax provision.

The non-GAAP financial measures described above are not meant to be considered superior to, or a substitute for, our financial statements prepared in accordance with GAAP. There are material limitations associated with non-GAAP financial measures because they exclude charges that have an effect on our reported results and, therefore, should not be relied upon as the sole financial measures by which to evaluate our financial results. Management compensates and believes that investors should compensate for these limitations by viewing the non-GAAP financial measures in conjunction with the GAAP financial measures. In addition, the non-GAAP financial measures included in this earnings announcement may be different from, and therefore may not be comparable to, similar measures used by other companies.

Each of the non-GAAP financial measures listed above is also used by our management to evaluate our operating performance, communicate our financial results to our Board of Directors, benchmark our results against our historical performance and the performance of our peers, evaluate investment opportunities including acquisitions and discontinued operations, and determine the bonus payments for senior management and employees.

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Tredegar Reports Second-Quarter 2018 Results

RICHMOND, Va.–()–Tredegar Corporation (NYSE:TG, also the “Company” or “Tredegar”) today reported second-quarter financial results for the period ended June 30, 2018.

Second quarter 2018 net income was $14.7 million ($0.44 per share) compared with net income of $44.2 million ($1.34 per share) in the second quarter of 2017. Net income from ongoing operations, which excludes special items, was $11.5 million ($0.35 per share) in the second quarter of 2018 compared with $8.3 million ($0.25 per share) in the second quarter of 2017. A reconciliation of net income, a financial measure calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), to net income from ongoing operations, a non-GAAP financial measure, for the three and six months ended June 30, 2018 and 2017, is provided in Note (a) of the Notes to the Financial Tables in this press release.

Highlights for ongoing operations for the second quarter of 2018 include:

  • Operating profit from ongoing operations for PE Films of $8.7 million was $2.0 million lower than the second quarter of 2017
  • Operating profit from ongoing operations for Flexible Packaging Films was $1.3 million, which was favorable by $1.6 million versus the operating loss in the second quarter of 2017
  • Operating profit from ongoing operations for Bonnell Aluminum of $13.2 million was $1.4 million higher than the second quarter of 2017

John Gottwald, Tredegar’s president and chief executive officer, said, “Our PE Films segment had a solid first six months, but recent discussions with customers firmed up the timing of previously disclosed product transitions away from certain products in personal care and surface protection films. Our future earnings will be adversely impacted in a meaningful way by these transitions.”

Mr. Gottwald continued, “Terphane’s profit improvement was mainly due to lower depreciation and amortization expenses as a consequence of the impairment charge taken in the fourth quarter of last year. Bonnell Aluminum showed good profit improvement despite continued inefficiencies at our facility in Niles, Michigan.”

Mr. Gottwald further stated, “I’m especially pleased to see our debt, net of cash, at $60.7 million, which reflects a decline of approximately $55 million this year.”

OPERATIONS REVIEW

PE Films

PE Films is composed of personal care materials, surface protection films, polyethylene overwrap films and films for other markets. A summary of second-quarter and year-to-date operating results from ongoing operations for PE Films is provided below:

                 
  Three Months Ended   Favorable/
(Unfavorable)
% Change
  Six Months Ended   Favorable/
(Unfavorable)
% Change
(In Thousands, Except Percentages) June 30, June 30,
  2018   2017   2018   2017  
Sales volume (lbs) 30,099   34,166 (11.9 )%   64,922   69,222 (6.2 )%
Net sales $ 82,457 $ 89,639 (8.0 )% $ 175,707 $ 176,050 (0.2 )%
Operating profit from ongoing operations   $ 8,678     $ 10,682     (18.8 )%   $ 22,712     $ 19,713     15.2

%

 

Second-Quarter 2018 Results vs. Second-Quarter 2017 Results

Net sales (sales less freight) in the second quarter of 2018 decreased by $7.2 million versus 2017 primarily due to lower volume in Personal Care. The sales decline in Personal Care was primarily related to lower demand for topsheet from its largest customer and, due to timing, lower sales of elastic materials in the second quarter of 2018 versus 2017. The Company believes it is making inroads with customers for new elastic products in Europe. In addition, the company is spending $25 million at its plant in Terre Haute, Indiana to expand elastics capacity to serve customers in North America, which is expected to begin production in the middle of 2019.

Sales volume in the second quarter of 2018 in Surface Protection was comparable to the prior year with strong demand for components of flat panel displays continuing through the first half of 2018. Looking forward, there are indications that sales volume in Surface Protection during the third quarter of 2018 may decline sequentially and when compared to last year due to a combination of factors. These factors include a possible inventory build-up by customers during the first half of 2018 and partial customer product transitions, which have already begun, to alternative processes or materials as further discussed in the last two paragraphs of this section.

Operating profit from ongoing operations in the second quarter of 2018 decreased by $2.0 million versus the second quarter of 2017 primarily due to:

  • Lower contribution to profits from personal care films, primarily due to lower volume as noted above ($2.0 million) and higher variable costs due to timing of resin pass-through ($0.3 million), partially offset by improved pricing on certain products ($0.6 million), net favorable impact from the change in U.S. Dollar value of currencies for operations outside of the U.S. ($0.6 million) and lower sales, general and administrative costs ($0.5 million);
  • Lower contribution to profits from surface protection films, primarily due to a sales return reserve for a quality claim ($1.5 million), manufacturing inefficiencies ($0.8 million) and inventory adjustments ($0.3 million), partially offset by improved mix ($0.9 million);
  • Additional costs of $0.5 million associated with business development activities related to optical films; and
  • Realized cost savings associated with the previously announced project to consolidate domestic manufacturing facilities in PE Films ($0.8 million).

In June 2018, the Company announced plans to close its facility in Shanghai, China, which primarily produces topsheet films used as components for personal care products. Production is expected to cease at this plant by the end of 2018. The Company expects to recognize costs associated with exit and disposal activities of $7.1 million comprised of: (i) retention, severance and related costs ($3.6 million), (ii) customer-related costs ($1.1 million), and (iii) legal, asset disposal and other cash costs ($2.4 million). In addition, the Company expects non-cash asset write-offs and accelerated depreciation of $0.9 million. Net annual cash savings from consolidating operations of $1.7 million is expected. Proceeds from expected property disposals are uncertain. The Company anticipates that these activities, including property disposals, will require 12-18 months to execute, and the costs are expected to be incurred during this period. See additional information on current year-to-date costs in Note (b) in the Notes to Financial Statements.

The Company continues to anticipate a significant customer product transition in the Personal Care component of PE Films. The Company now expects that customer product transition to begin in the fourth quarter of 2018. The Company currently estimates that, when fully implemented, this will adversely impact the annual sales of the business unit by $70 million and will materially impact earnings. Ongoing discussions with this customer will determine the full implementation schedule. The loss of this business without replacement with new business could trigger an impairment of Personal Care’s long-lived assets and goodwill. As of June 30, 2018, the goodwill balance carried by Personal Care was $47 million. Personal Care has been increasing its R&D spending (an increase of $5 million in 2017 versus 2014), is investing capital, and is accelerating sales and marketing efforts to capture growth and diversify its customer base and product offerings in personal care products. The overall timing and net change in Personal Care’s revenues and profits and capital expenditures needed to support these efforts during this transition period are uncertain at this time.

The Surface Protection component of PE Films supports manufacturers of optical and other specialty substrates used in flat panel display products. These films are primarily used by customers to protect components of displays in the manufacturing and transportation process and then discarded.

The Company previously reported the risk over the next few years that a portion of its film used in surface protection applications will be made obsolete by possible future customer product transitions to less costly alternative processes or materials. The Company estimates that the customer product transitions will be fully implemented by the fourth quarter of 2019. When fully implemented, the Company estimates that the annualized adverse impact on future ongoing operating profit from this customer shift will be approximately $10 million. The Company is aggressively pursuing new surface protection products, applications and customers.

Year-To-Date 2018 Results vs. Year-To-Date 2017 Results

Net sales (sales less freight) in the first six months of 2018 decreased by $0.3 million versus 2017 primarily due to lower topsheet and elastics volume in Personal Care, partially offset by an increase in Surface Protection volume. The factors impacting sales for PE Films during the first half of 2018 versus last year are similar to the factors described above in the quarterly comparison.

Operating profit from ongoing operations in the first six months of 2018 increased by $3.0 million versus the first six months of 2017 primarily due to:

  • Higher contribution to profits from surface protection films, primarily due to higher volume and improved mix ($3.8 million), partially offset by a sales return reserve for a quality claim ($1.5 million);
  • Lower contribution to profits from personal care films, primarily due to lower volume in topsheet, elastics and other products ($3.4 million), partially offset by improved pricing on certain products ($1.3 million), net favorable impact from the change in U.S. Dollar value of currencies for operations outside of the U.S. ($0.9 million) and lower sales, general and administrative costs ($0.5 million);
  • Additional costs of $0.5 million associated with business development activities related to optical films; and
  • Realized cost savings associated with the previously announced project to consolidate domestic manufacturing facilities in PE Films ($1.8 million).

Capital Expenditures, Depreciation & Amortization

Capital expenditures in PE Films were $7.4 million in the first six months of 2018 compared to $7.8 million in the first six months of 2017. Capital expenditures are projected to be $32 million in 2018, including: $15 million of a total $25 million expected for North American capacity expansion for elastics products in Personal Care; new capacity for next generation products in Surface Protection ($6 million); and approximately $10 million for routine capital expenditures required to support operations. Depreciation expense was $7.6 million in the first six months of 2018 and $6.9 million in the first six months of 2017. Depreciation expense is projected to be $16 million in 2018.

Flexible Packaging Films

Flexible Packaging Films, which is also referred to as Terphane, produces polyester-based films for use in packaging applications that have specialized properties, such as heat resistance, strength, barrier protection and the ability to accept high-quality print graphics. A summary of second quarter operating results from ongoing operations for Flexible Packaging Films is provided below:

                     
  Three Months Ended  

Favorable/
(Unfavorable)
% Change

  Six Months Ended  

Favorable/
(Unfavorable)
% Change

(In Thousands, Except Percentages) June 30, June 30,
  2018   2017   2018   2017
Sales volume (lbs) 23,701   21,966

7.9

%

  47,018   44,028

6.8

%

Net sales $ 28,304 $ 26,588

6.5

%

$ 56,741 $ 53,297

6.5

%

Operating profit (loss) from ongoing operations   $ 1,294     $ (319 )  

NA

    $ 3,008     $ (2,317 )  

NA

 
 

Second-Quarter 2018 Results vs. Second-Quarter 2017 Results

Net sales and volume increased in the second quarter of 2018 compared with the second quarter of 2017 due to higher demand. Terphane was operating at full capacity utilization during the second quarter. To increase capacity, Terphane is spending approximately $1.8 million (including capital expenditures of $1 million and project expenses of $0.8 million) on a previously idled production line which was restarted in mid-June. Also during the second quarter, a nationwide trucking strike caused a disruption of shipments, lowering sales volume by approximately 0.9 million pounds.

Terphane’s operating results from ongoing operations in the second quarter of 2018 increased by $1.6 million versus the second quarter of 2017 primarily due to:

  • Significantly lower depreciation and amortization of $2.2 million resulting from the $101 million non-cash asset impairment loss recognized in the fourth quarter of 2017;
  • A benefit of $0.6 million primarily from higher volume and favorable foreign currency translation of Real-denominated operating costs, partially offset by a $0.4 million loss on foreign currency forward contracts that partially hedged Real-denominated operating costs;
  • One-time costs of $0.4 million related to the restarting of the idled production line referenced above; and
  • Net foreign currency transaction losses of $0.5 million (losses of $0.3 million in 2018 versus gains of $0.2 million in 2017).

Terphane’s quarterly financial results have been volatile, and the Company expects continued uncertainty and volatility until industry capacity utilization and the competitive dynamics in Latin America improve.

Year-To-Date 2018 Results vs. Year-To-Date 2017 Results

Net sales and volume increased in the first six months of 2018 compared with the first six months of 2017 due to higher demand.

Terphane’s operating results from ongoing operations in the first six months of 2018 increased by $5.3 million versus the first six months of 2017 primarily due to:

  • Significantly lower depreciation and amortization of $4.5 million resulting from the $101 million non-cash asset impairment loss recognized in the fourth quarter of 2017;
  • A benefit of $1.9 million primarily from higher volume and favorable foreign currency translation of Real-denominated operating costs, partially offset by a $0.4 million loss on foreign currency forward contracts that partially hedged Real-denominated operating costs;
  • One-time costs of $0.5 million related to the restarting of the idled production line referenced above; and
  • Net foreign currency transaction losses of $0.3 million (losses of $0.4 million in 2018 versus $0.1 million in 2017).

Capital Expenditures, Depreciation & Amortization

Capital expenditures in Terphane were $1.4 million in the first six months of 2018 compared to $1.2 million in the first six months of 2017. Terphane currently estimates that total capital expenditures in 2018 will be $5 million, including approximately $1 million to re-start the idled production line referenced above and $4 million for routine capital expenditures required to support operations. Depreciation expense was $0.4 million in the first six months of 2018 and $3.7 million in the first six months of 2017. Depreciation expense is projected to be $1.0 million in 2018. Amortization expense was $0.2 million in the first six months of 2018 and $1.5 million in the first six months of 2017, and is projected to be $0.5 million in 2018. Aggregate depreciation and amortization expense is projected at $1.5 million in 2018, down significantly from $10.5 million in 2017 due to the write-down of Terphane’s long-lived assets during the fourth quarter of 2017.

Aluminum Extrusions

Aluminum Extrusions, which includes Bonnell Aluminum and its operating divisions, AACOA and Futura, produces high-quality, soft-alloy and medium-strength aluminum extrusions primarily for the following markets: building and construction, automotive, and specialty, which consists of consumer durables, machinery and equipment, electrical and distribution end-use products.

A summary of second-quarter results from ongoing operations for Aluminum Extrusions is provided below:

                 
  Three Months Ended   Favorable/
(Unfavorable)
% Change
  Six Months Ended   Favorable/
(Unfavorable)
% Change
(In Thousands, Except Percentages) June 30, June 30,
  2018   2017   2018   2017  
Sales volume (lbs) * 55,057   51,976 5.9 %   91,174   87,357 4.4 %
Net sales $ 144,558 $ 123,208 17.3 % $ 272,793 $ 222,807 22.4 %
Operating profit from ongoing operations   $ 13,156     $ 11,772     11.8 %   $ 23,355     $ 21,601     8.1 %

*

 

Sales volume for the six months ended June 30, 2018 and 2017 excludes sales volume associated with Futura Industries Corporation (“Futura”), acquired on February 15, 2017.

Second-Quarter 2018 Results vs. Second-Quarter 2017 Results

Net sales in the second quarter of 2018 increased versus 2017 primarily due to higher sales volume and an increase in average selling prices primarily due to the pass-through to customers of higher market-driven raw material costs.

Sales volume in the second quarter of 2018 increased by 5.9% versus 2017 due to higher volume in the nonresidential building and construction and specialty markets. Higher average net selling prices, primarily attributed to an increase in aluminum market prices, had a favorable impact on net sales of $14.4 million, and higher volume improved net sales by $6.9 million. Bookings and backlog remain strong.

Operating profit from ongoing operations in the second quarter of 2018 increased by $1.4 million in comparison to the second quarter of 2017, primarily due to higher volume and inflation-related sales prices ($2.4 million), partially offset by increased operating costs, including employee-related expenses and higher depreciation ($1.0 million). Bonnell Aluminum’s Niles, Michigan facility continued to experience inefficiencies. Without these inefficiencies, the Company estimates that operating profit from ongoing operations in the second quarter of 2018 would have been higher by $1 million.

On March 8, 2018, the U.S. imposed tariffs of 10% on aluminum ingot and semi-finished aluminum imported into the U.S. from certain countries, including countries from which Bonnell Aluminum has historically sourced aluminum supplies. On April 6, 2018, the U.S. announced sanctions on certain Russian individuals and on companies controlled by those individuals, including United Company RUSAL Plc, Russia’s largest aluminum producer and a substantial supplier of primary aluminum to the U.S. market. Collectively, these events have resulted in a significant increase in the cost of aluminum ingot used by Bonnell Aluminum to make its products. The average U.S. Midwest Transaction price, the benchmark price for P1020 high-grade aluminum ingot delivered, averaged $1.24 per pound in the second quarter of 2018, up $0.28 from $0.96 per pound in the first quarter of 2017. This price has exceeded $1.35 per pound on certain days in the second quarter of 2018. In 2017, aluminum raw materials comprised 43% of Bonnell Aluminum’s average selling price when the U.S. Midwest Transaction price averaged $0.98 per pound. For the vast majority of its business, Bonnell Aluminum expects to be able to pass through higher aluminum costs to customers. However, sustained higher costs for aluminum extrusions could result in reduced demand and product substitutions in place of aluminum extrusions, which could materially and negatively affect Bonnell Aluminum’s business and results of operations. In addition, continued sanctions on RUSAL Plc could result in aluminum billet supply shortages in the U.S. aluminum extrusion market, although Bonnell does not currently anticipate any impact of such potential shortages on its access to aluminum.

Year-To-Date 2018 Results vs. Year-To-Date 2017 Results

Net sales in the first six months of 2018 increased versus 2017 primarily due to the addition of Futura and higher volume. Futura contributed $47.3 million of net sales in the first six months of 2018 versus $29.4 million for the 131 days owned during the first six months of 2017 (acquired on February 15, 2017). Excluding the impact of Futura, net sales improved due to higher sales volume and an increase in average selling prices primarily due to the pass-through to customers of higher market-driven raw material costs.

Volume on an organic basis (which excludes the impact of the Futura acquisition) in the second quarter of 2018 increased by 4.4% versus 2017 due to higher volume in the nonresidential building and construction and specialty markets. Higher average net selling prices, primarily attributed to an increase in aluminum market prices, had a favorable impact on net sales of $24.7 million, and higher volume improved net sales by $6.9 million.

Operating profit from ongoing operations in the first six months of 2018 increased by $1.8 million in comparison to the first six months of 2017. Excluding the favorable profit impact of Futura ($1.4 million), operating profit from ongoing operations increased $0.4 million, primarily due to:

  • Higher volume, improved mix and inflation-related sales prices ($5.1 million), partially offset by increased operating costs, including employee-related expenses and higher depreciation ($3.2 million); and
  • Continued inefficiencies associated with the new extrusion line at the Niles, Michigan plant ($1.5 million).

Capital Expenditures, Depreciation & Amortization

Capital expenditures in Bonnell Aluminum were $5.6 million in the first six months of 2018 (including $1.1 million associated with Futura), compared to $17.7 million in the first six months of 2017. Capital expenditures in 2017 included the extrusions capacity expansion project at the facility in Niles, Michigan. Capital expenditures are projected to be $14 million in 2018, including approximately $7 million for infrastructure upgrades and expanded fabrication and machining capabilities, and approximately $7 million for routine items required to support operations. Depreciation expense was $6.6 million in the first six months of 2018 compared to $5.3 million in the first six months of 2017, and is projected to be $13 million in 2018. Amortization expense was $1.8 million in the first six months of 2018 and $1.4 million in the first six months of 2017, and is projected to be $4 million in 2018.

Corporate Expenses, Interest, Taxes & Other

Pension expense was $5.1 million in the first six months of 2018, versus $5.2 million in the first six months of 2017. The impact on earnings from pension expense is reflected in “Corporate expenses, net” in the Net Sales and Operating Profit by Segment table. Pension expense is projected to be $10.2 million in 2018. Corporate expenses, net, increased in the first six months of 2018 versus 2017 primarily due to higher stock-based employee benefit costs and professional fees for services rendered early in the first quarter of 2018 associated with the Terphane non-cash asset impairment loss that was recognized in the fourth quarter of 2017.

Interest expense was $3.2 million in the first six months of 2018 in comparison to $2.8 million in the first six months of 2017, primarily due to higher interest rates.

The effective tax rate used to compute income tax expense from continuing operations was 23.0% in the first six months of 2018, compared to 9.9% in the first six months of 2017. The effective tax rate from ongoing operations comparable to the earnings reconciliation table provided in Note (a) of the Notes to Financial Tables in this press release was 22.2% for the first six months of 2018 versus 39.1% in 2017 (see also Note (e) of the Notes to Financial Tables). The effective tax rates benefited from the U.S. Tax Cuts and Jobs Act enacted in December 2017, which, among other impacts, reduced the U.S. federal corporate income tax rate from 35% to 21% beginning in 2018. An explanation of additional significant differences between the effective tax rate for income from continuing operations and the U.S. federal statutory rate for 2018 and 2017 will be provided in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018 (“Form 10-Q”).

Tredegar’s approximately 20% ownership in kaleo, Inc. (“kaléo”), which is accounted for under the fair value method, was estimated at a value of $68 million at June 30, 2018, versus $54 million at December 31, 2017 and $62 million at March 31, 2018. The changes in the estimated fair value of the Company’s investment in kaléo, which are included in net income under GAAP, have consistently been excluded from net income from ongoing operations as shown in the reconciliation table in Note (a) of the Notes to the Financial Tables in this press release. Kaléo’s stock is not publicly traded. The Company’s valuation estimate is based on projection assumptions that have a wide range of possible outcomes. Ultimately, the true value of Tredegar’s ownership interest in kaléo will be determined if and when a liquidity event occurs.

CAPITAL STRUCTURE

Total debt was $123.0 million at June 30, 2018, compared to $152.0 million at December 31, 2017. Net debt (debt in excess of cash and cash equivalents) was $60.7 million at June 30, 2018, compared to $104.9 million at March 31, 2018 and $115.5 million at December 31, 2017. The decline in net debt of $44.2 million from March 31 to June 30, 2018 included the impact of a U.S. federal income tax refund received in June of approximately $19 million. Net debt is a financial measure that is not calculated or presented in accordance with GAAP. See Note (d) of the Notes to the Financial Tables in this press release for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

Some of the information contained in this press release may constitute “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. When we use the words “believe,” “estimate,” “anticipate,” “expect,” “project,” “plan,” “likely,” “may” and similar expressions, we do so to identify forward-looking statements. Such statements are based on our then current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. It is possible that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these forward-looking statements. Factors that could cause actual results to differ from expectations include, without limitation, the following:

  • loss or gain of sales to significant customers on which our business is highly dependent;
  • inability to achieve sales to new customers to replace lost business;
  • ability to develop, efficiently manufacture and deliver new products at competitive prices;
  • failure of our customers to achieve success or maintain market share;
  • failure to protect our intellectual property rights;
  • risks of doing business in countries outside the U.S. that affect our substantial international operations;
  • political, economic, and regulatory factors concerning our products;
  • uncertain economic conditions in countries in which we do business;
  • competition from other manufacturers, including manufacturers in lower-cost countries and manufacturers benefiting from government subsidies;
  • impact of fluctuations in foreign exchange rates;
  • a change in the amount of our underfunded defined benefit (pension) plan liability;
  • an increase in the operating costs incurred by our operating companies, including, for example, the cost of raw materials and energy;
  • inability to successfully identify, complete or integrate strategic acquisitions; failure to realize the expected benefits of such acquisitions and assumption of unanticipated risks in such acquisitions;
  • disruption to our manufacturing facilities;
  • occurrence or threat of extraordinary events, including natural disasters and terrorist attacks;
  • an information technology system failure or breach;
  • volatility and uncertainty of the valuation of our cost-basis investment in kaléo;
  • the impact of the imposition of tariffs and sanctions on imported aluminum ingot used in our aluminum extrusions;

and the other factors discussed in the reports Tredegar files with or furnishes to the Securities and Exchange Commission (the “SEC”) from time to time, including the risks and important factors set forth in additional detail in Part I, Item 1A of Tredegar’s Annual Report on Form 10-K for the year ended December 31, 2017. Readers are urged to review and consider carefully the disclosures Tredegar makes in its filings with the SEC.

Tredegar does not undertake, and expressly disclaims any duty, to update any forward-looking statement made in this press release to reflect any change in management’s expectations or any change in conditions, assumptions or circumstances on which such statements are based, except as required by applicable law.

To the extent that the financial information portion of this press release contains non-GAAP financial measures, it also presents both the most directly comparable financial measures calculated and presented in accordance with GAAP and a quantitative reconciliation of the difference between any such non-GAAP measures and such comparable GAAP financial measures. Reconciliations of non-GAAP financial measures are provided in the Notes to the Financial Tables included with this press release and can also be found within “Presentations” in the “Investors” section of our website, www.tredegar.com.

Tredegar uses its website as a channel of distribution of material company information. Financial information and other material information regarding Tredegar is posted on and assembled in the “Investors” section of its website.

Tredegar Corporation is a manufacturer of plastic films and aluminum extrusions. A global company headquartered in Richmond, Virginia, Tredegar had 2017 sales of $961 million. With approximately 3,200 employees, the company operates manufacturing facilities in North America, South America, Europe, and Asia.

 
Tredegar Corporation
Condensed Consolidated Statements of Income
(In Thousands, Except Per-Share Data)
(Unaudited)
         
  Three Months Ended   Six Months Ended
June 30, June 30,
    2018   2017   2018   2017
Sales $ 263,759   $ 247,347 $ 522,470   $ 468,372
Other income (expense), net (b)(c)   5,857     34,735     14,089     38,022
269,616 282,082 536,559 506,394
 
Cost of goods sold (b) 210,667 195,286 413,856 375,047
Freight 8,440 7,912 17,229 16,218
Selling, R&D and general expenses (b) 25,592 26,198 51,732 50,705
Amortization of intangibles 1,025 1,652 2,054 2,893
Pension and postretirement benefits 2,578 2,632 5,156 5,264
Interest expense 1,577 1,642 3,221 2,822
Asset impairments and costs associated with exit and disposal activities, net of adjustments (b)   468     (271 )   590     293
    250,347     235,051     493,838     453,242
Income before income taxes 19,269 47,031 42,721 53,152
Income taxes   4,547     2,827     9,834     5,246
Net income   $ 14,722     $ 44,204     $ 32,887     $ 47,906
 
Earnings per share:
Basic $ 0.45 $ 1.34 $ 1.00 $ 1.45
Diluted   $ 0.44     $ 1.34     $ 1.00     $ 1.45
 
Shares used to compute earnings per share:
Basic 33,074 32,961 33,028 32,941
Diluted   33,108     33,051     33,048     32,999
 
Tredegar Corporation
Net Sales and Operating Profit by Segment
(In Thousands)
(Unaudited)
         
  Three Months Ended   Six Months Ended
June 30, June 30,
    2018   2017   2018   2017
Net Sales    
PE Films $ 82,457 $ 89,639 $ 175,707 $ 176,050
Flexible Packaging Films 28,304 26,588 56,741 53,297
Aluminum Extrusions   144,558     123,208     272,793     222,807  
Total net sales 255,319 239,435 505,241 452,154
Add back freight   8,440     7,912     17,229     16,218  
Sales as shown in the Condensed Consolidated Statements of Income   $ 263,759     $ 247,347     $ 522,470     $ 468,372  
 
Operating Profit (Loss)
PE Films:
Ongoing operations $ 8,678 $ 10,682 $ 22,712 $ 19,713
Plant shutdowns, asset impairments, restructurings and other (b) (1,135 ) (904 ) (2,187 ) (2,972 )
Flexible Packaging Films:
Ongoing operations 1,294 (319 ) 3,008 (2,317 )
Plant shutdowns, asset impairments, restructurings and other (b) 11,856 11,856
Aluminum Extrusions:
Ongoing operations 13,156 11,772 23,355 21,601
Plant shutdowns, asset impairments, restructurings and other (b)   (46 )   1,571     (99 )   (2,769 )
Total 21,947 34,658 46,789 45,112
Interest income 228 55 284 129
Interest expense 1,577 1,642 3,221 2,822
Gain (loss) on investment in kaleo accounted for under fair value method (c) 5,800 21,500 14,000 24,800
Stock option-based compensation costs 305 38 391 41
Corporate expenses, net (b)   6,824     7,502     14,740     14,026  
Income before income taxes 19,269 47,031 42,721 53,152
Income taxes   4,547     2,827     9,834     5,246  
Net income   $ 14,722     $ 44,204     $ 32,887     $ 47,906  
 
Tredegar Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
         
    June 30, 2018   December 31, 2017
Assets    
Cash & cash equivalents $ 62,321 $ 36,491
Accounts & other receivables, net 128,301 120,135
Income taxes recoverable 5,572 32,080
Inventories 84,890 86,907
Prepaid expenses & other   8,776     8,224
Total current assets 289,860 283,837
Property, plant & equipment, net 217,296 223,091
Investment in kaléo (cost basis of $7,500) 68,000 54,000
Identifiable intangible assets, net 38,225 40,552
Goodwill 128,205 128,208
Deferred income taxes 3,946 16,636
Other assets   8,957     9,419
Total assets   $ 754,489     $ 755,743
Liabilities and Shareholders’ Equity
Accounts payable $ 121,266 $ 108,391
Accrued expenses   40,192     42,433
Total current liabilities 161,458 150,824
Long-term debt 123,000 152,000
Pension and other postretirement benefit obligations, net 94,335 98,837
Deferred income taxes 2,123
Other noncurrent liabilities 8,287 8,179
Shareholders’ equity   367,409     343,780
Total liabilities and shareholders’ equity   $ 754,489     $ 755,743
 
Tredegar Corporation
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
     
  Six Months Ended
June 30,
    2018   2017
Cash flows from operating activities:  
Net income $ 32,887 $ 47,906
Adjustments for noncash items:
Depreciation 14,688 15,993
Amortization of intangibles 2,054 2,893
Deferred income taxes 8,996 2,000
Accrued pension income and post-retirement benefits 5,156 5,264
(Gain)/loss on investment accounted for under the fair value method (14,000 ) (24,800 )
(Gain)/loss on asset impairments and divestitures 50
Net (gain)/loss on sale of assets (109 ) 307
Changes in assets and liabilities, net of effects of acquisitions and divestitures:
Accounts and other receivables (15,205 ) (20,197 )
Inventories (810 ) (7,261 )
Income taxes recoverable/payable 26,277 (6,120 )
Prepaid expenses and other (2,057 ) 735
Accounts payable and accrued expenses 13,879 6,178
Pension and postretirement benefit plan contributions (2,912 ) (2,106 )
Other, net   2,926     1,126  
Net cash provided by operating activities 71,770 21,968
Cash flows from investing activities:
Capital expenditures (14,528 ) (26,692 )
Acquisition (87,110 )
Return of escrowed funds relating to acquisition earn-out 4,250
Proceeds from the sale of assets and other   1,095     95  
Net cash used in investing activities (9,183 ) (113,707 )
Cash flows from financing activities:
Borrowings 28,000 148,750
Debt principal payments (57,000 ) (56,500 )
Dividends paid (7,293 ) (7,268 )
Proceeds from exercise of stock options and other   926     695  
Net cash provided by (used in) financing activities (35,367 ) 85,677
Effect of exchange rate changes on cash   (1,390 )   577  
Increase (decrease) in cash and cash equivalents 25,830 (5,485 )
Cash and cash equivalents at beginning of period   36,491     29,511  
Cash and cash equivalents at end of period   $ 62,321     $ 24,026  

Notes to the Financial Tables

(Unaudited)

 
(a) Tredegar’s presentation of net income and earnings per share from ongoing operations are non-GAAP financial measures that exclude the effects of gains or losses associated with plant shutdowns, asset impairments and restructurings, gains or losses from the sale of assets, goodwill impairment charges and other items (which includes unrealized gains and losses for an investment accounted for under the fair value method), which have been presented separately and removed from net income and diluted earnings per share as reported under GAAP. Net income and earnings per share from ongoing operations are key financial and analytical measures used by management to gauge the operating performance of Tredegar’s ongoing operations. They are not intended to represent the stand-alone results for Tredegar’s ongoing operations under GAAP and should not be considered as an alternative to net income or earnings per share from continuing operations as defined by GAAP. They exclude items that management believes do not relate to Tredegar’s ongoing operations. A reconciliation to net income from ongoing operations for the three and six months ended June 30, 2018 and 2017 is shown below:
         
(in millions, except per share data)  

Three Months Ended
June 30,

 

Six Months Ended
June 30,

    2018   2017   2018   2017
Net income as reported under GAAP $ 14.7   $ 44.2 $ 32.9   $ 47.9
After-tax effects of:
Losses associated with plant shutdowns, asset impairments and restructurings 0.6 0.7 0.6
(Gains) losses from sale of assets and other:
Unrealized (gain) loss associated with the investment in kaléo (4.5 ) (15.7 ) (10.9 ) (18.2 )
Gain associated with the settlement of an escrow agreement (11.9 ) (11.9 )
Income tax benefit associated with the write-off of the stock basis of a certain U.S. subsidiary (8.1 ) (8.1 )
Other   0.7     (0.2 ) 1.8     4.0  
Net income from ongoing operations   $ 11.5     $ 8.3     $ 24.5     $ 14.3  
 
Earnings per share as reported under GAAP (diluted) $ 0.44 $ 1.34 $ 1.00 $ 1.45
After-tax effects per diluted share of:
Losses associated with plant shutdowns, asset impairments and restructurings 0.02 0.02 0.02
(Gains) losses from sale of assets and other:
Unrealized (gain) loss associated with the investment in kaléo (0.14 ) (0.47 ) (0.33 ) (0.55 )
Gain associated with the settlement of an escrow agreement (0.36 ) (0.36 )
Income tax benefit associated with the write-off of the stock basis of a certain U.S. subsidiary (0.25 ) (0.25 )
Other   0.03     (0.01 ) 0.05     0.12  
Earnings per share from ongoing operations (diluted)   $ 0.35     $ 0.25     $ 0.74     $ 0.43  

Reconciliations of the pre-tax and post-tax balances attributed to net income are shown in Note (e).

(b)   Losses associated with plant shutdowns, asset impairments, restructurings and other items for continuing operations in the first six months of 2018 and 2017 detailed below are shown in the statements of net sales and operating profit by segment and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the condensed consolidated statements of income, unless otherwise noted.

Plant shutdowns, asset impairments, restructurings and other items in the second quarter of 2018 include:

  • Pretax charges of $0.6 million related to estimated excess costs associated with the ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects by PE Films (included in “Cost of goods sold” in the condensed consolidated statements of income); and
  • Pretax charges of $0.7 million associated with the shutdown of PE Films’ manufacturing facility in Shanghai, China, which consists of severance and other employee-related accrued costs of $0.4 million, accelerated depreciation of $0.1 million (included in “Cost of goods sold” in the condensed consolidated statements of income) and other facility consolidation-related expenses of $0.2 million.

Plant shutdowns, asset impairments, restructurings and other items in the first six months of 2018 include:

  • Pretax charges of $1.5 million related to estimated excess costs associated with the ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects by PE Films (included in “Cost of goods sold” in the condensed consolidated statements of income);
  • Pretax charges of $0.3 million for professional fees associated with the Terphane Limitada worthless stock deduction, the impairment of assets of Flexible Packaging Films and determining the effect of the new U.S. federal income tax law (included in “Selling, R&D and general expenses” in the statements of net sales and operating profit by segment and “Corporate expenses, net” in the statements of net sales and operating profit by segment); and
  • Pretax charges of $0.7 million associated with the shutdown of PE Films’ manufacturing facility in Shanghai, China, which consists of severance and other employee-related accrued costs of $0.4 million, accelerated depreciation of $0.1 million (included in “Cost of goods sold” in the condensed consolidated statements of income) and other facility consolidation-related expenses of $0.2 million.

Plant shutdowns, asset impairments, restructurings and other items in the second quarter of 2017 include:

  • Pretax income of $11.9 million related to the settlement of an escrow arrangement established upon the acquisition of Terphane in 2011 (included in “Other income (expense), net” in the condensed consolidated statements of income). In settling the escrow arrangement, the Company assumed the risk of the claims (and associated legal fees) against which the escrow previously secured the Company. While the ultimate amount of such claims is unknown, the Company believes that it is reasonably possible that it could be liable for some portion of these claims, and currently estimates the amount of such future claims at approximately $3.5 million;
  • Pretax charges of $1.0 million related to estimated excess costs associated with the ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects by PE Films of $0.9 million and by Bonnell of $0.1 million (included in “Cost of goods sold” in the condensed consolidated statements of income);
  • Pretax income of $0.9 million related to the explosion that occurred in the second quarter of 2016 at the aluminum extrusions manufacturing facility in Newnan, Georgia, for the expected recovery of excess production costs of $0.6 million incurred in 2016 and $0.3 million incurred in the first quarter of 2017 for which recovery from insurance carriers was not previously considered to be reasonably assured (included in “Cost of goods sold” in the condensed consolidated statements of income);
  • Pretax income of $0.7 million related to the fair valuation of an earnout provision from the acquisition of Futura (included in “Other income (expense), net” in the condensed consolidated statements of income);
  • Pretax charges of $0.6 million associated with a business development project (included in “Selling, R&D and general expenses” in the condensed consolidated statements of income and “Corporate expenses, net” in the statements of net sales and operating profit by segment); and
  • Pretax charges of $0.3 million associated with the consolidation of domestic PE Films’ manufacturing facilities, which consists of facility consolidation-related expenses of $0.2 million and accelerated depreciation of $0.1 million (included in “Cost of goods sold” in the condensed consolidated statements of income), offset by pretax income of $0.3 million related to a reduction of severance and other employee-related accrued costs.

Plant shutdowns, asset impairments, restructurings and other items in the first six months of 2017 include:

  • Pretax income of $11.9 million related to the settlement of an escrow arrangement established upon the acquisition of Terphane in 2011 (included in “Other income (expense), net” in the condensed consolidated statements of income). In settling the escrow arrangement, the Company assumed the risk of the claims (and associated legal fees) against which the escrow previously secured the Company. While the ultimate amount of such claims is unknown, the Company believes that it is reasonably possible that it could be liable for some portion of these claims, and currently estimates the amount of such future claims at approximately $3.5 million;
  • Pretax charges of $3.3 million related to the acquisition of Futura, i) associated with accounting adjustments of $1.7 million made to the value of inventory sold by Aluminum Extrusions after its acquisition of Futura (included in “Cost of goods sold” in the condensed consolidated statements of income), ii) acquisition costs of $1.5 million and iii) integration costs of $0.1 million (both ii and iii included in “Selling, R&D and general expenses” in the condensed consolidated statements of income), offset by pretax income of $0.7 million related to the fair valuation of an earnout provision (included in “Other income (expense), net” in the condensed consolidated statements of income);
  • Pretax charges of $2.8 million related to estimated excess costs associated with the ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects by PE Films of $2.4 million and by Aluminum Extrusions of $0.4 million (included in “Cost of goods sold” in the condensed consolidated statements of income);
  • Pretax income of $0.5 million related to the explosion that occurred in the second quarter of 2016 at the aluminum extrusions manufacturing facility in Newnan, Georgia, which includes the expected recovery of excess production costs of $0.6 million incurred in 2016 for which recovery from insurance carriers was not previously considered to be reasonably assured (included in “Cost of goods sold” in the condensed consolidated statements of income), partially offset by legal and consulting fees of $0.1 million (included in “Selling, R&D and general expenses” in the condensed consolidated statements of income);
  • Pretax charges of $0.7 million associated with the consolidation of domestic PE Films’ manufacturing facilities, which consists of asset impairments of $0.1 million, accelerated depreciation of $0.2 million (included in “Cost of goods sold” in the condensed consolidated statements of income) and other facility consolidation-related expenses of $0.4 million ($0.3 million is included in “Cost of goods sold” in the condensed consolidated statements of income), offset by pretax income of $0.1 million related to a reduction of severance and other employee-related accrued costs;
  • Pretax charges of $0.3 million related to expected future environmental costs at the aluminum extrusions manufacturing facility in Carthage, Tennessee (included in “Cost of goods sold” in the condensed consolidated statements of income);
  • Pretax charges of $0.9 million associated with a business development project (included in “Selling, R&D and general expenses” in the condensed consolidated statements of income and “Corporate expenses, net” in the statements of net sales and operating profit by segment); and
  • Pretax charges of $0.3 million for severance and other employee-related costs associated with restructurings in Corporate (included in “Corporate expenses, net” in the statements of net sales and operating profit by segment).
(c)   Unrealized gains on the Company’s investment in kaléo of $5.8 million and $14.0 million were recognized in the second quarter and first six months of 2018, respectively (included in “Other income (expense), net” in the condensed consolidated statements of income), compared to unrealized gains of $21.5 million and $24.8 million in the second quarter and first six months of 2017. An unrealized loss on the Company’s investment in the Harbinger Capital Partners Special Situations Fund, L.P. of $0.1 million was recognized in the second quarter and first six months of 2018 (included in “Other income (expense), net” in the condensed consolidated statements of income) (none in 2017).
 
(d) Net debt is calculated as follows:
                                 
(in millions)   June 30,   December 31,
    2018   2017
Debt $ 123.0 $ 152.0
Less: Cash and cash equivalents   62.3     36.5
Net debt   $ 60.7     $ 115.5
 

Net debt is not intended to represent total debt as defined by GAAP. Net debt is utilized by management in evaluating the Company’s financial leverage and equity valuation, and management believes that investors also may find net debt to be helpful for the same purposes.

 
(e) Tredegar’s presentation of net income and earnings per share from ongoing operations are non-GAAP financial measures that exclude the effects of gains or losses associated with plant shutdowns, asset impairments and restructurings, gains or losses from the sale of assets, goodwill impairment charges and other items (which includes unrealized gains and losses for an investment accounted for under the fair value method), which have been presented separately and removed from net income and diluted earnings per share as reported under GAAP. Net income and earnings per share from ongoing operations are key financial and analytical measures used by management to gauge the operating performance of Tredegar’s ongoing operations. They are not intended to represent the stand-alone results for Tredegar’s ongoing operations under GAAP and should not be considered as an alternative to net income or earnings per share as defined by GAAP. They exclude items that we believe do not relate to Tredegar’s ongoing operations. A reconciliation of the pre-tax and post-tax balances attributed to net income from ongoing operations for the three and six months ended June 30, 2018 and 2017 are shown below in order to show the impact on the effective tax rate:
                   
(In Millions)   Pre-tax  

Taxes Expense
(Benefit)

  After-Tax  

Effective
Tax Rate

Three Months Ended June 30, 2018   (a)   (b)     (b)/(a)
Net income reported under GAAP   $ 19.3     $ 4.5       $ 14.7   23.6 %
Losses associated with plant shutdowns, asset impairments and restructurings 0.6 0.6
(Gains) losses from sale of assets and other   (5.0 )   (1.2 )     (3.8 )  
Net income from ongoing operations   $ 14.8     $ 3.3       $ 11.5     22.4 %
Three Months Ended June 30, 2017                
Net income reported under GAAP   $ 47.0     $ 2.8       $ 44.2   6.0 %
Losses associated with plant shutdowns, asset impairments and restructurings
(Gains) losses from sale of assets and other   (33.4 )   2.5       (35.9 )  
Net income from ongoing operations   $ 13.6     $ 5.3       $ 8.3     38.9 %
Six Months Ended June 30, 2018                  
Net income reported under GAAP   $ 42.7     $ 9.8       $ 32.9   23.0 %
Losses associated with plant shutdowns, asset impairments and restructurings 0.7 0.7
(Gains) losses from sale of assets and other (12.0 ) (2.9 ) (9.1 )
Goodwill impairment charge                
Net income from ongoing operations   $ 31.4     $ 6.9       $ 24.5    

22.2

%
Six Months Ended June 30, 2017                
Net income reported under GAAP   $ 53.2     $ 5.3       $ 47.9   9.9 %
Losses associated with plant shutdowns, asset impairments and restructurings 0.9 0.3 0.6
(Gains) losses from sale of assets and other (30.6 ) 3.6 (34.2 )
Goodwill impairment charge                
Net income from ongoing operations   $ 23.5     $ 9.2       $ 14.3     39.1 %

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GTIS Partners LP erweitert Geschäftsmodell und meldet Einrichtung einer brasilianischen Infrastrukturinvestitionsplattform mit Plänen für vertikal integriertes Team

NEW YORK–()–GTIS Partners LP („GTIS”), eine Immobilieninvestmentgesellschaft mit Sitz in New York City und Niederlassungen in São Paulo, San Francisco, Los Angeles, Atlanta, Paris und München, gab heute bekannt, dass das Unternehmen seinen Tätigkeitsbereich um Infrastrukturinvestitionen in Brasilien erweitert. Gleichzeitig meldete das Unternehmen, dass es Eduardo Klepacz, vormals CEO von Cubico Brazil, einem der größten Erzeuger erneuerbarer Energie in Brasilien, zum Leiter des neuen in Sao Paulo stationierten Infrastruktur-Investment-Teams von GTIS ernannt hat.

GTIS zählt zu den am längsten tätigen und größten Private-Equity-Investoren im brasilianischen Immobiliensektor und hat seit 2005 rund 2,5 Mrd. US-Dollar an Eigenkapital in Wohn-, Büro-, Hotel- und Industrie-/Logistik-Bauprojekten eingesetzt.

„Die brasilianische Wirtschaft ist dabei sich zu erholen. Dies wiederum hat zu einem Anstieg des Bedarfs an zusätzlicher Infrastruktur geführt“, so Joshua Pristaw, Senior Managing Director und Co-Head von GTIS Brazil. „Mehr als je zuvor in der jüngsten Vergangenheit besteht jetzt ein Bedarf an Energie, Rechenzentren, Breitband und weiteren infrastrukturbezogenen Ressourcen, aber durch die brasilianische Finanzkrise ist es der brasilianischen Bundesregierung nur eingeschränkt möglich, diesen Ausbau der Infrastruktur zu finanzieren. Daraus ergeben sich Chancen für Investitionen aus dem Privatsektor. Angesichts unserer bestehenden Beziehungen mit Technologie- und Telekommunikationsunternehmen in unserer Geschäftsbüroimmobilien-Sparte, sind wird davon überzeugt, dass wir für eine Erkundung wichtiger Chancen im Bereich Infrastruktur mit diesen Geschäftspartnern gut aufgestellt sind.”

Joao Teixeira, Co-Head von GTIS Brazil, kommentierte: „Die Regierung von Präsident Michel Temer hat eine Reihe von aufsichtsrechtlichen Reformen beschlossen, die Investitionen aus dem Privatsektor in die brasilianische Infrastruktur stimulieren sollen. Damit ist es für Unternehmen wie GTIS attraktiver geworden, sich an der wirtschaftlichen Erholung des Landes zu beteiligen. Etablierten Anbieter, darunter lokale Bauunternehmen, die in der Vergangenheit den Infrastruktursektor dominiert haben, wurden in der Folge des Korruptionsskandals „Operation Autowäsche“ in den Hintergrund gedrängt. Wir sehen enorme Chancen für erneuerbare Energien (Wind- und Solarenergie) und haben diesen Bereich seit Langem im Rahmen unserer Bemühungen, die Kosten- und Nachhaltigkeitsziele der Mieter unserer Immobilien zu erreichen, studiert.“

„Investitionen in Infrastruktur und Immobilien haben eine Menge gemeinsam“, so Tom Shapiro, President und Chief Investment Officer bei GTIS. „Beide benötigen Kapital sowie Betriebs- und Entwicklungs-Know-how und beide erfordern ein Insider-Verständnis der Komplexität, der Erfüllung gesetzlicher Auflagen und der Risikosteuerung in diesem Markt. Auch muss man in der Lage sein, die klarsten Investitionsmöglichkeiten zu erkennen. Angesichts unserer langen Erfahrung in Brasilien können wir von Anfang an bei der Einrichtung einer institutionellen Infrastrukturinvestitionsplattform für unsere weltweiten institutionellen Anleger aus einer Position der Stärke heraus operieren.”

GTIS baut zurzeit unter der Führung von Eduardo Klepacz ein vertikal integriertes Team aus in Brasilien ansässigen speziellen Infrastruktur-Experten mit Know-how in der Entwicklung und im Betrieb von Infrastrukturanlagen auf. Das Team wird Investitionsmöglichkeiten im Bereich Energieerzeugung und –übertragung, insbesondere erneuerbare Energien, sowie im Bereich Schlüsselkomponenten für die Technologie- und Telekommunikations-Branche, darunter Rechenzentren, digitales Breitband und Mobilfunkmasten, ausfindig machen.

„Gegenwärtig befindet sich Brasilien in einer ganz besonderen Phase“, so Klepacz. „Die Wirtschaft erwacht aus dem Winterschlaf. Wir beobachten eine steigende Nachfrage nach Energie, Daten, digitalem Speicher und Breitband. Gleichzeitig ist auf unseren Straßen und in unseren Häfen mehr los als je zuvor. Die Widrigkeiten, mit denen die Regierung bei der Finanzierung des Ausbaus der brasilianischen Infrastruktur zu kämpfen hat, haben für uns eine Fülle von Chancen aufgetan. Ich freue mich, in dieser spannenden Zeit bei GTIS Partners tätig zu werden, einem Unternehmen, das bereits zu den führenden vertikal integrierten Immobilieninvestitionsplattformen in Brasilien zählt, und das Unternehmen beim Eintritt in seine nächste Phase des Wachstums zu unterstützen. Die Fähigkeit von GTIS, vor Ort tätig zu sein und Risiken zu steuern und dabei gleichzeitig weltweiten Zugang zu Kapital zu haben, machen das Unternehmen zum idealen Platz, dieses Geschäft aufzubauen.”

Über Eduardo Klepacz

Unmittelbar vor seinem Wechsel zu GTIS Partners war Klepacz der Brazil CEO von Cubico Sustainable Investments, einem global tätigen Unternehmen im Bereich erneuerbare Energie mit einer installierten Kapazität von 2,5 GW und Anlagen in acht Ländern.

Bei Cubico verwaltete Klepacz ein Beteiligungsportfolio an Projekten im Bereich erneuerbare Energie in Höhe von 350 Mio. US-Dollar und leitete ein Team von über 90 Mitarbeitern. In dieser Zeit schloss er eine Schlüsseltransaktion ab: den Erwerb eines Portfolios von Windenergieprojekten im Wert von 620 Mio. US-Dollar von Casa dos Ventos. Er war außerdem auch Mitglied des Global Investment Committee und des Global Risk/HSE Committee von Cubico Sustainable Investments.

Über GTIS Partners

GTIS Partners ist eine weltweit tätige Immobilieninvestmentgesellschaft mit Hauptsitz in New York und Niederlassungen in Los Angeles (USA), San Francisco (USA), Atlanta (USA), São Paulo (Brasilien), Paris (Frankreich) und München (Deutschland). GTIS Partners wurde im Jahr 2005 gegründet und befindet sich unter der Leitung von President Tom Shapiro und den Senior Managing Directors Josh Pristaw, Rob Vahradian, Tom Feldstein, Joao Teixeira und Amy Boyle. GTIS Partners beschäftigt 94 Mitarbeiter und verwaltet derzeit ein Brutto-Immobilienvermögen von rund 4,7 Milliarden US-Dollar. Das Unternehmen tätigt opportunistische Immobilien-Investitionen durch direkte Kapitalbeteiligungen und nicht traditionelle Darlehenstätigkeiten. Bisher hat das Unternehmen in Wohn- und Einzelhandelsimmobilien, Industrie- und Bürogebäude, Hotels und Mischnutzungsprojekte in den USA und Brasilien investiert und es gehört zu den größten Immobilien-Private-Equity-Gesellschaften in Brasilien. Weitere Informationen finden Sie unter www.gtispartners.com.

Die Ausgangssprache, in der der Originaltext veröffentlicht wird, ist die offizielle und autorisierte Version. Übersetzungen werden zur besseren Verständigung mitgeliefert. Nur die Sprachversion, die im Original veröffentlicht wurde, ist rechtsgültig. Gleichen Sie deshalb Übersetzungen mit der originalen Sprachversion der Veröffentlichung ab.

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Verkoop van Westinghouse aan Brookfield voltooid

CRANBERRY TOWNSHIP, Pa.–()–Westinghouse Electric Company, de wereldleider in nucleaire technologie, brandstoffen en diensten, heeft vandaag de voltooiing aangekondigd van de eerder bekendgemaakte verkoop aan Brookfield Business Partners L.P. (NYSE: BBU) (TSX: BBU.UN) samen met institutionele partners (gezamenlijk ‘Brookfield’) en van haar opnieuw verschijnen als gereorganiseerd bedrijf na afsluiting van Chapter 11. De transactie, die werd aangekondigd op 4 januari 2018, is gesloten en werd vandaag van kracht.

Het afsluiten van deze transactie markeert een boeiende mijlpaal voor Westinghouse nu we met succes Chapter 11 achter ons hebben gelaten en doorgaan met een belangrijke transformatie die ons positioneert voor duurzaam succes op de lange termijn. Met de steun van Brookfield zal Westinghouse voortbouwen op haar erfgoed van het leiden van de nucleaire industrie. Onze focus ligt op het versterken van onze activiteiten, profiteren van onze wereldwijde aanwezigheid en excelleren in klantenservice en innovatie,” aldus José Emeterio Gutiérrez, President en CEO van Westinghouse.

Westinghouse Electric Company is ‘s werelds pioniersbedrijf op het gebied van kernenergie en is een toonaangevende leverancier van nucleaire fabrieksproducten en -technologieën voor nutsbedrijven over de hele wereld. Westinghouse leverde ‘s werelds eerste commerciële drukwaterreactor in 1957 in Shippingport, Pennsylvania, VS. Tegenwoordig is de technologie van Westinghouse de basis voor ongeveer de helft van de wereldwijd opererende kerncentrales.

Brookfield Business Partners is een bedrijf voor zakelijke dienstverlening en industrie dat zich richt op het bezitten en exploiteren van bedrijven van hoge kwaliteit die profiteren van toegangsbelemmeringen en/of lage productiekosten. Brookfield Business Partners is genoteerd aan de beurzen van New York en Toronto. Belangrijke informatie mag uitsluitend via de website worden verspreid; beleggers moeten de site raadplegen om toegang te krijgen tot deze informatie.

Brookfield Business Partners is het toonaangevende beursgenoteerde bedrijf voor zakelijke dienstverlening en industrie van Brookfield Asset Management Inc. (NYSE: BAM) (TSX: BAM.A) (EURONEXT: BAMA), een vooraanstaande wereldwijde alternatieve vermogensbeheerder met ongeveer $ 285 miljard aan beheerd vermogen, waarvan ongeveer $ 150 miljard in de VS. Ga voor meer informatie naar onze website op https://bbu.brookfield.com.

Deze bekendmaking is officieel geldend in de originele brontaal. Vertalingen zijn slechts als leeshulp bedoeld en moeten worden vergeleken met de tekst in de brontaal, die als enige rechtsgeldig is.

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HNA Group Announces Changes to Management Team and Portfolio Company Board Representation

HAIKOU, China–()–Consistent with its organizational changes and efforts to refocus its strategy around its core aviation, tourism and logistics businesses, HNA Group today announced the following changes to its management team and portfolio company board representation, effective immediately.

  • Xiangdong (Adam) Tan has been appointed Chairman of HNA International, a position formerly held by Wang Jian; Mr. Tan will continue in his roles as Vice Chairman and Chief Executive Officer of HNA Group;
  • Chao (Dennis) Chen has been appointed Chief Investment Officer of HNA Group, succeeding Shuang (James) Wang; Mr Chen has also been named Executive Chairman of HNA International;
  • Guang Yang, who had previously signaled his intention to depart HNA to form a new business venture, has stepped down as President of HNA Group North America and as a Trustee of the Hainan Cihang Charity Foundation; and
  • Ling Zhang, Xiaofeng (Daniel) Chen, Chao (Dennis) Chen and Daoqui Liu have been elected to the Swissport Board of Directors with Mr. Zhang as Chairman and Xiaofeng (Daniel) Chen as Vice-Chairman. Messrs. Zhang, Chen and Liu replace HNA Group’s previous representatives on the Board, Xiangdong (Adam) Tan, Hongyu (Leo) Liao, Weiliang (William) Zhang and Jing Li.

Chen Feng, Chairman of HNA Group, said, “These changes will help us meet our commitment to refocus around our core aviation and tourism and logistics businesses. We are grateful to these individuals for their unwavering commitment to our Company. The depth and breadth of our talented leadership team has been a critical factor in our success and I look forward to working with them to build a stronger, more focused HNA Group.

I would also like to thank Guang for his significant contributions to our business and our growth in North America. We wish him great success in his future endeavors.”

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Is Banco Bilbao (BBVA) a Great Value Stock Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Banco Bilbao (BBVA Free Report) . BBVA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.75. This compares to its industry’s average Forward P/E of 9.37. BBVA’s Forward P/E has been as high as 12.58 and as low as 8.06, with a median of 10.94, all within the past year.

We also note that BBVA holds a PEG ratio of 0.83. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. BBVA’s PEG compares to its industry’s average PEG of 0.86. Within the past year, BBVA’s PEG has been as high as 1.32 and as low as 0.51, with a median of 1.12.

Investors should also recognize that BBVA has a P/B ratio of 0.75. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 1.41. Within the past 52 weeks, BBVA’s P/B has been as high as 1.04 and as low as 0.69, with a median of 0.88.

Finally, we should also recognize that BBVA has a P/CF ratio of 11.39. This data point considers a firm’s operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. BBVA’s P/CF compares to its industry’s average P/CF of 13.40. Over the past 52 weeks, BBVA’s P/CF has been as high as 11.57 and as low as 9.62, with a median of 10.20.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Banco Bilbao is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BBVA feels like a great value stock at the moment.

http://www.zacks.com/stock/news/315165/is-banco-bilbao-bbva-a-great-value-stock-right-now?cid=CS-ZC-FT-315165http://www.zacks.com/stock/news/315165/is-banco-bilbao-bbva-a-great-value-stock-right-now?cid=CS-ZC-FT-315165

Is Alliance Data Systems (ADS) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Alliance Data Systems (ADS Free Report) . ADS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 9.21. This compares to its industry’s average Forward P/E of 23.74. ADS’s Forward P/E has been as high as 14.56 and as low as 8.25, with a median of 10.58, all within the past year.

Investors will also notice that ADS has a PEG ratio of 0.71. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. ADS’s PEG compares to its industry’s average PEG of 1.59. Over the past 52 weeks, ADS’s PEG has been as high as 1.08 and as low as 0.48, with a median of 0.79.

Another notable valuation metric for ADS is its P/B ratio of 6.23. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. This stock’s P/B looks attractive against its industry’s average P/B of 9.38. ADS’s P/B has been as high as 9.43 and as low as 5.39, with a median of 7.62, over the past year.

Finally, we should also recognize that ADS has a P/CF ratio of 8.75. This data point considers a firm’s operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. ADS’s current P/CF looks attractive when compared to its industry’s average P/CF of 25.97. Within the past 12 months, ADS’s P/CF has been as high as 14.27 and as low as 8.05, with a median of 10.70.

These are just a handful of the figures considered in Alliance Data Systems’s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ADS is an impressive value stock right now.

http://www.zacks.com/stock/news/315163/is-alliance-data-systems-ads-stock-undervalued-right-now?cid=CS-ZC-FT-315163http://www.zacks.com/stock/news/315163/is-alliance-data-systems-ads-stock-undervalued-right-now?cid=CS-ZC-FT-315163

Garmin (GRMN) Beats Earnings & Revenue Estimates in Q2

Garmin Ltd. (GRMN Free Report) reported better-than-expected results in the second quarter of 2018, with revenues and earnings both surpassing the Zacks Consensus Estimate.

Earnings of 99 cents per share beat the consensus mark by 12 cents. Earnings were up 46% sequentially and 13% year over year.

Management focuses on continued innovation, diversification and market expansion to explore growth opportunities in all its business segments. However, macroeconomic challenges remain part of the operating environment.

We observe that shares of Garmin have gained 24.9% in the past 12 months, outperforming the industry’s 6.8% rally.

Let’s delve deeper into the numbers.

Revenues

Garmin’s second-quarter revenues of $894.5 million beat the Zacks Consensus Estimate of $852.2 million, increasing 25.8% sequentially and 7.6% from the prior-year quarter. The increase was backed by higher demand across fitness, outdoor, marine and aviation segments.

Segmental Revenues

Garmin’s Outdoor, Fitness, Marine, Auto/Mobile and Aviation segments generated 23%, 25%, 15%, 20% and 17% of quarterly revenues, respectively. Seasonality resulted in considerable variations in Garmin’s quarterly revenues.

Outdoor revenues were up 39.8% sequentially and 3.5% year over year. The year-over-year increase was driven mainly by robust demand for wearables.

The Fitness segment increased 35.6% sequentially and 24.3% from the year-ago quarter. The year-over-year increase was driven by strength in advanced wearables and cycling.

The Marine segment increased 18.5% sequentially and 24% year over year. The year-over-year growth was driven by strength in new products. Also, Navionics’ acquisition added to the growth.

The Auto/Mobile segment was up 27.5% sequentially but down 19.3% on a year-over-year basis. The year-over-year decrease was mainly due to shrinking of the personal navigation device (PND) market.

Aviation segment revenues were up 5% sequentially and 23.3% from the prior-year quarter. The increase was mainly driven by new product introductions such as the G5 indicator system, TXi displays and GFCTM 500/600 autopilots.

Revenues by Geography

While America generated 49% (up 26.3% sequentially and 8.9% year over year) of the total revenues, EMEA and APAC contributed 35% (up 25.7% on a sequential basis but down 1.8% on a year-over-year basis) and 16% (up 24.6% sequentially and 28.4% from the year-ago quarter), respectively.

Operating Results

Gross margin was 58.5%, up 30 basis points from the year-ago quarter. Stronger demand across all segments led to gross margin expansion on a year-over-year basis.

Operating expenses of $305.8 million were up 12% from $274.5 million in the year-ago quarter.

GAAP net income was $190.3 million compared with $177 million a year ago.

Balance Sheet

Inventories were down 8.4% sequentially to $501.5 million. Cash and marketable securities were approximately $1.12 billion compared with $1.07 billion in the last reported quarter. The company has no long-term debt.

As the end of the second quarter, the company generated cash flow of $223.9 million from operating activities and free cash flow of $157.1 million.

2018 Guidance

For full-year 2018, management raised its revenues to $3.3 billion from prior expectation of $3.2 billion and pro-forma earnings to $3.30 per share versus earlier projection of $3.05.

The Zacks Consensus Estimate for 2018 revenues and earnings is pegged at $3.25 billion and $3.14 per share, respectively.

Zacks Rank and Other Stocks to Consider

Currently, Garmin carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same industry include Groupon (GRPN Free Report) , IAC/InterActiveCorp (IAC Free Report) and Integrated Device Technology, Inc. (IDTI Free Report) . While Groupon and IAC/InterActiveCorp sport a Zacks Rank #1 (Strong Buy), Integrated Device Technology holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Groupon, IAC/InterActiveCorp and Integrated Device Technology is currently projected to be 3%, 7.5% and 10.9%, respectively.

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Will Refining Segment Drive Andeavor’s (ANDV) Q2 Earnings?

Andeavor (ANDV Free Report) is set to release second-quarter 2018 results on Aug 6 after the closing bell. The Zacks Consensus Estimate for earnings stands at $2.96 a share on revenues of $12,356 million.

San Antonio, TX-based Andeavor is a refining and marketing company of petroleum products. In the last reported quarter, the company delivered a positive earnings surprise of 12.07% on stellar show from the refining and logistics segment.

Coming to its earnings surprise history, Andeavor missed estimates in two out of the last four quarters, delivering an average negative surprise of 11.46%.

Let’s see how things are shaping up for this announcement.

Which Way are Estimates Trending?

The Zacks Consensus Estimate for earnings of $2.96 for the to-be-reported quarter has been revised downward by 16 cents in the past 30 days. However, the consensus estimate reflects an increase of 51% from second-quarter 2017. Further, estimated revenues of $12,356 million also compares favorably with $7,849 million recorded in the year-ago quarter.

Factors at Play

The oil benchmark in the United States attained its highest settlement since November 2014 in the second quarter, despite record high domestic production. Per the conventional wisdom, oil price rally should make the input cost higher for the refiners, thereby impacting their performance. However, since the crude oil and refined products’ prices don’t always move in lockstep, the recent crude uptick will not likely act as a negative catalyst in the quarter to be reported.

Further, crack differentials are also widening, leading to margin expansion and higher refining capacity rate for the refiners. Refiners are also reaping the benefit of increased demand for their products. As such, the refining segment of Andeavor is expected to record an improvement in results.

The company had earlier projected throughput volumes within 1,055-1,110 thousand barrels per day (MBbl/d), higher than the year-ago quarter’s 893 MBbl/d. Earnings are likely to be driven by higher volumes processed. The Logistics segment of the company is set to benefit from the positive contributions from the Western Refining Logistics buyout.

However, rising expenses over the past few quarters remain a concern. In the last reported quarter, Andeavor’s operating, depreciation as well as general & administrative costs increased 32%, 24.7% and 28.5% year over year, respectively.  If the trend continues in the to-be-reported quarter, it will adversely affect profitability.

Earnings Whispers

Our proven model does not show that Andeavor is likely to beat earnings estimates in the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate both stand at $2.96.

Zacks Rank: Andeavor currently holds a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.

Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

While an earnings beat seems uncertain for Andeavor, here are some companies from the energy sector, which according to our model, have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Penn Virginia Corporation (PVAC Free Report) has an Earnings ESP of +6.72% and sports a Zacks Rank #1. The company is anticipated to report second-quarter earnings on Aug 7. You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy Oil Corporation (MUR Free Report) has an Earnings ESP of +5.99% and a Zacks Rank #2. The company is anticipated to report second-quarter earnings on Aug 8.

Sanchez Energy Corporation (SN Free Report) has an Earnings ESP of +3.41% and a Zacks Rank #3. The firm is expected to announce second-quarter earnings on Aug 7.

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