PolyOne's Q4 net income down 86% year-over-year to US$12.3M on revenues of US$640.4M, up 4%; results include US$83.8M mark-to-market adjustment for pension actuarial losses

CLEVELAND , February 17, 2012 (press release) – Fourth Quarter Results

Earnings per share of $0.13; earnings per share as adjusted of $0.18
Adjusted earnings per share expand 20% over $0.15 for fourth quarter 2010
Completed acquisition of ColorMatrix on December 21, accelerating specialty transformation


Full Year Results

Earnings per share of $1.83 versus $1.69 in 2010
Adjusted earnings per share of $1.02 increased 29% from $0.79 in the prior year
Record performances in all three strategic platforms


PolyOne Corporation (NYSE: POL) today reported $640.4 million of revenues for the fourth quarter of 2011, a 4% increase compared to $617.8 million in the fourth quarter of 2010.

Diluted earnings per share totaled $0.13 in the fourth quarter of 2011 compared to diluted earnings per share of $0.92 in the fourth quarter of 2010. Adjusted earnings per share increased 20% to $0.18 for the fourth quarter of 2011 up from $0.15 recorded in the fourth quarter last year.

Full year revenues in 2011 increased 9% to $2.9 billion, compared to $2.6 billion in the prior year. Diluted earnings per share totaled $1.83 for the full year 2011, compared to $1.69 per diluted share in 2010. Adjusted earnings per share increased 29% to $1.02 per diluted share for full year 2011 compared with $0.79 per diluted share recorded in the prior year.

"I am pleased with our fourth quarter results, as we expanded adjusted EPS by 20% over the fourth quarter of 2010 and completed the acquisition of ColorMatrix," said Stephen D. Newlin, chairman, president and chief executive officer. "The fourth quarter marks the end of another record-breaking year for PolyOne. For the year, both our Specialty Platform and PolyOne Distribution achieved record levels of operating income, while Performance Products and Solutions reached a new record return on sales of 7.2%."

Newlin added, "I look back on 2011 as a critical inflection point in our transformation toward becoming a specialty company. We divested our equity investment in SunBelt, a commodity manufacturer of chlorine and caustic soda, and, among other important initiatives, completed the acquisitions of Uniplen in Brazil and ColorMatrix, a global leader in additive and liquid colorant technologies."

The company said the acquisition of ColorMatrix had a negligible impact on earnings in 2011 as it was completed on December 21.

"With respect to ColorMatrix, we are increasing accretion guidance for 2012 and 2013," Newlin said. "Net of deal-related financing costs, we expect ColorMatrix will add income of $0.04 to $0.06 per share in 2012 and $0.12 to $0.15 per share in 2013. Integration is well underway, and our confidence in this acquisition has grown as we plan to leverage each other's strengths to accelerate growth."

Commenting on the company's outlook, Newlin said "Looking at 2012, we expect another year of record adjusted earnings per share. However, growth rates may decelerate given the current economic environment." Newlin added, "While a slowdown in the European economy and a weaker Euro pose near term headwinds, we remain extremely optimistic about our medium to long-term growth prospects."

"Our acquisitions in 2011 would not have been possible if it were not for the divestiture of commodity investments and prudent cash management," said Robert M. Patterson, executive vice president and chief financial officer. "In addition to the upfront proceeds generated from the sale of our investment in SunBelt in February of 2011, we further expect to benefit from the transaction's three year earn-out structure. During the fourth quarter of 2011 we recorded a gain of $18.1 million related to the first year of the earn-out, which we expect to collect in the first quarter of 2012."

Patterson added, "We ended the year with $192 million of cash on the balance sheet after the purchase of ColorMatrix and related financing. This, coupled with $148 million of availability under our new asset-based revolver, leaves us with more than ample cash to fund our future growth initiatives."

The company also said that during the fourth quarter it repurchased two million shares of PolyOne common stock in the open market.

To facilitate a comparison of current period results with prior-year amounts, net income and earnings per share have been adjusted to exclude special items, tax adjustments and equity income from the now divested SunBelt joint venture. The chart below identifies the adjustments related to the fourth quarter of 2011 and 2010, respectively.


The company recorded special items in the fourth quarter of 2011, the largest of which included an $83.8 million ($52.0 million after tax; $0.57 per share) mark-to-market adjustment for pension actuarial losses, partially offset by an earn-out from the sale of its SunBelt joint venture of $18.1 million ($11.2 million after tax; $0.12 per share). The company also recorded $40.9 million of favorable tax adjustments, including a $29.5 million ($0.32 per share) benefit associated with the prior divestiture of its investment in O'Sullivan Engineered Films, and valuation allowance reversals. Special items for the fourth quarter 2010 included the company's $16.3 million ($10.1 million after tax; $0.10 per share) gain on the sale of its BayOne joint venture investment, offset partially by environmental remediation costs. Additionally in the fourth quarter 2010 the company recorded $75.3 million ($0.77 per share) of favorable tax adjustments primarily related to the reversal of its U.S. deferred tax asset valuation allowance.

About PolyOne

PolyOne Corporation, with 2011 revenues of $2.9 billion, is a premier provider of specialized polymer materials, services and solutions. Headquartered outside Cleveland, Ohio USA, PolyOne has operations around the world. Consistent with the company's strategy of specialty growth and global expansion, in December of 2011 PolyOne acquired ColorMatrix Group, Inc., a highly specialized company with a premier suite of additive technologies and a leading market position in liquid colorants. For additional information on PolyOne, visit our Web site at www.polyone.com.

 


Attachment 3


PolyOne Corporation and Subsidiaries

Consolidated Statements of Operations (Unaudited)

(In millions, except per share data)

 
 

Three Months Ended
December 31,

 

Year Ended December 31,

 
 

2011

 

Adjusted 2010 (b)

 

2011

 

Adjusted 2010 (b)

 

Sales

$ 640.4

 

$ 617.8

 

$ 2,863.5

 

$ 2,621.9

 

Cost of sales

543.6

 

530.8

 

2,400.8

 

2,193.1

 

Gross margin

96.8

 

87.0

 

462.7

 

428.8

 

Selling and administrative expense

154.7

 

79.4

 

381.7

 

296.2

 

Income related to equity affiliates

18.1

 

22.2

 

152.0

 

42.0

 

Operating (loss) income

(39.8)

 

29.8

 

233.0

 

174.6

 

Interest expense, net

(8.5)

 

(8.3)

 

(33.7)

 

(31.5)

 

Premium on early extinguishment of debt

(0.9)

 

(0.1)

 

(0.9)

 

(29.5)

 

Other (expense) income, net

(0.2)

 

(0.1)

 

0.3

 

(2.3)

 

(Loss) Income before income taxes

(49.4)

 

21.3

 

198.7

 

111.3

 

Income tax benefit (expense)

61.7

 

68.6

 

(26.1)

 

51.3

 

Net income

$ 12.3

 

$ 89.9

 

$ 172.6

 

$ 162.6

 
                 

Earnings per common share:

               

Basic earnings

$ 0.14

 

$ 0.96

 

$ 1.87

 

$ 1.75

 

Diluted earnings

$ 0.13

 

$ 0.92

 

$ 1.83

 

$ 1.69

 
                 

Cash dividends declared per common share

$ 0.04

 

$ –

 

$ 0.16

 

$ –

 
                 

Weighted-average shares used to compute earnings per share:

               

Basic

89.9

 

93.7

 

92.2

 

93.1

 

Diluted

91.9

 

97.4

 

94.3

 

96.0

 
                 
                 

Equity affiliates earnings recorded by PolyOne:

               

SunBelt

$ 18.1

 

$ 5.5

 

$ 152.0

 

$ 23.1

 

Other equity affiliates

 

16.7

 

 

18.9

 

Income related to equity affiliates

$ 18.1

 

$ 22.2

 

$ 152.0

 

$ 42.0

 
   
               

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