Feb 13, 2019 4:41 PM
Fourth quarter 2018 net income was
The unadjusted earnings for both the full year and fourth quarter 2017 and 2018 include a Gain on Bargain Purchase in 2017 and the related adjustments in 2018. A reconciliation of net income to adjusted net income and the related impact on diluted earnings per share can be found on Schedule F.
“We achieved two significant objectives in 2018: the successful
completion of our
Full Year and Fourth Quarter 2018 Operating Results
In the following tables, the Company’s net sales and operating income
results for the three and twelve month periods ended
Net sales comprised the following for the periods presented:
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||
Net sales |
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Combined1 |
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Combined1 |
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High Purity Cellulose | $ | 317 | $ | 255 | $ | 312 | $ | 1,192 | $ | 867 | $ | 1,250 | |||||||||||||||||||
Forest Products | 73 | 34 | 80 | 356 | 34 | 346 | |||||||||||||||||||||||||
Pulp | 81 | 38 | 81 | 346 | 38 | 298 | |||||||||||||||||||||||||
Paper | 72 | 29 | 70 | 310 | 29 | 299 | |||||||||||||||||||||||||
Eliminations | (17 | ) | (7 | ) | (18 | ) | (70 | ) | (7 | ) | (71 | ) | |||||||||||||||||||
Total net sales | $ | 526 | $ | 349 | $ | 525 | $ | 2,134 | $ | 961 | $ | 2,122 | |||||||||||||||||||
Operating income comprised the following for the periods presented:
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||
Operating income (loss) |
|
|
Combined1 |
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Combined1 |
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High Purity Cellulose | $ | 29 | $ | 24 | $ | 37 | $ | 112 | $ | 120 | $ | 180 | |||||||||||||||||||
Forest Products | (10 | ) | — | 13 | 25 | — | 40 | ||||||||||||||||||||||||
Pulp | 20 | 4 | 19 | 95 | 4 | 50 | |||||||||||||||||||||||||
Paper | 8 | (1 | ) | 11 | 31 | (1 | ) | 43 | |||||||||||||||||||||||
Corporate | (18 | ) | (26 | ) | (7 | ) | (65 | ) | (62 | ) | (61 | ) | |||||||||||||||||||
Total operating income | $ | 29 | $ | 1 | $ | 73 | $ | 198 | $ | 61 | $ | 252 | |||||||||||||||||||
1 Combined net sales and operating income (loss) represents
the combination of Tembec’s net sales and adjusted operating earnings as
of
High Purity Cellulose
Operating income for the three month period ended
On a combined basis, operating income for the three and twelve month
periods ended
Forest Products
Operating income for the three month period ended
On a combined basis, operating income decreased
On a combined basis, for the twelve month periods ended
Pulp
Operating income for the three and twelve month periods ended
On a combined basis, operating income for the three and twelve month
periods ended
Paper
Operating income for the three and twelve month periods ended
On a combined basis, operating income decreased
Corporate
Operating expense for the three month period ended
On a combined basis, operating expense increased
2015 Cost Transformation Initiative
In 2015, with nearly
Strategic Pillars of Growth
With the acquisition of
Non-Operating Expenses
Interest expense was
Interest income and other expenses, net, increased in the current year primarily due to the favorable impact of Tembec’s pension plans on other components of net periodic pension costs as well as the foreign exchange gain on the re-measurement of certain debt instruments.
Non-operating expenses for the year ended
Income Tax Expense
The 2018 effective tax rate was 25 percent for 2018, compared to 6
percent in the prior year period. The 2018 effective rate differs from
the federal statutory rate of 21 percent primarily due to different
statutory tax rates of foreign operations and
Cash Flows and Liquidity
During 2018, the Company generated operating cash flows of
During 2018, the Company invested
The Company made principal payments or repurchased
The Company maintains a disciplined capital allocation strategy focused on maintaining its manufacturing assets, followed by reducing debt levels to a targeted 2.5 times net debt to EBITDA leverage ratio. Adjusted free cash flow is then deployed opportunistically between strategic capital investment, external investments and returning capital to shareholders through dividends and stock buybacks.
Outlook
High Purity Cellulose
In 2019, the Company expects stability in its cellulose specialties
markets. Cellulose specialty sales prices are anticipated to decline
approximately 1 percent from 2018 primarily due to a contract acquired
from
Forest Products
Lumber futures prices have improved from their lows in December and our
lumber prices are expected to improve as the year progresses.
Longer-term, the
Pulp
High-yield pulp prices are expected to be lower in the first quarter of
2019 compared to fourth quarter of 2018 due to weaker demand,
specifically from
Paper
In 2019, paperboard prices are expected to remain stable while newsprint sales prices are expected to decline as a result of the reversal of duties in 2018.
Capital Allocation and Investment
The Company anticipates that it will spend approximately
The Company also expects to increase the percentage of its cash flow directed toward debt repayment due to weaker commodity forest products and paper markets. The Company anticipates the continued return of capital to shareholders through its common stock dividend and the opportunistic repurchase of common shares.
“We see a substantial opportunity to drive higher value in our business through the execution of our strategic plan by focusing on achieving our cost savings goals, developing new products, optimizing existing markets and delivering a balanced capital allocation strategy that is prudent and maximizes the returns for our stockholders,” concluded Boynton. “We have made significant progress in stabilizing our High Purity Cellulose business. Our goal is to enhance cellulose specialties margins by launching a new go-to-market strategy focused on commercial and asset optimization to more than offset inflation so that the benefits from the strategic pillars fall to the bottom line. We plan to detail this strategic path forward at our upcoming Investor Day.”
The Company has planned an investor day for
Conference Call Information
About
Forward-Looking Statements
Certain statements in this document regarding anticipated financial, business, legal or other outcomes including business and market conditions, outlook and other similar statements relating to Rayonier Advanced Materials’ future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “forecast,” “anticipate,” “guidance,” and other similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. While we believe these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance these expectations will be attained and it is possible actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties.
Our operations are subject to a number of risks and uncertainties
including, but not limited to, those listed below. When considering an
investment in our securities, you should carefully read and consider
these risks, together with all other information in our Annual Report on
Form 10-K and our other filings and submissions to the
Other important factors that could cause actual results or events to
differ materially from those expressed in forward-looking statements
that may have been made in this document are described or will be
described in our filings with the
Non-GAAP Financial Measures
This earnings release and the accompanying schedules contain certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted free cash flows, adjusted operating income, adjusted net income and adjusted net debt. These non-GAAP measures are reconciled to each of their respective most directly comparable GAAP financial measures on Schedules D - F of this earnings release. We believe these non-GAAP measures provide useful information to our board of directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes.
We do not consider these non-GAAP measures an alternative to financial measures determined in accordance with GAAP. The principal limitations of these non-GAAP financial measures are that they may exclude significant expenses and income items that are required by GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expenses and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management provides reconciliations of the non-GAAP financial measures we use to their most directly comparable GAAP measures. Non-GAAP financial measures should not be relied upon, in whole or part, in evaluating the financial condition, results of operations or future prospects of the Company.
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Condensed Consolidated Statements of Income | ||||||||||||||||||||||||||
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(millions of dollars, except per share information) |
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Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
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2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
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$ | 526 | $ | 544 | $ | 349 | $ | 2,134 | $ | 961 | ||||||||||||||||
Cost of Sales (a) | (460 | ) | (448 | ) | (310 | ) | (1,790 | ) | (818 | ) | ||||||||||||||||
Gross Margin | 66 | 96 | 39 | 344 | 143 | |||||||||||||||||||||
Selling, general & administrative expenses |
(29 | ) | (31 | ) | (39 | ) | (108 | ) | (79 | ) | ||||||||||||||||
Duties | (5 | ) | (1 | ) | (1 | ) | (26 | ) | (1 | ) | ||||||||||||||||
Other operating income (expense), net | (3 | ) | (8 | ) | 2 | (12 | ) | (2 | ) | |||||||||||||||||
Operating Income | 29 | 56 | 1 | 198 | 61 | |||||||||||||||||||||
Interest expense | (15 | ) | (15 | ) | (13 | ) | (60 | ) | (40 | ) | ||||||||||||||||
Interest income and other, net (a) | 3 | 2 | — | 14 | (1 | ) | ||||||||||||||||||||
Gain on bargain purchase | — | 6 | 317 | 20 | 317 | |||||||||||||||||||||
Gain (loss) on derivative instruments | — | — | (8 | ) | — | 8 | ||||||||||||||||||||
Income Before Income Taxes | 17 | 49 | 297 | 172 | 345 | |||||||||||||||||||||
Income tax expense | (4 | ) | (11 | ) | (2 | ) | (44 | ) | (20 | ) | ||||||||||||||||
Net Income Attributable to |
$ | 13 | $ | 38 | $ | 295 | $ | 128 | $ | 325 | ||||||||||||||||
Mandatory convertible stock dividends | (4 | ) | (3 | ) | (4 | ) | (14 | ) | (14 | ) | ||||||||||||||||
Net Income Available to |
$ | 9 | $ | 35 | $ | 291 | $ | 115 | $ | 311 | ||||||||||||||||
Earnings Per Share of Common Stock | ||||||||||||||||||||||||||
Basic earnings per share | $ | 0.18 | $ | 0.68 | $ | 6.31 | $ | 2.27 | $ | 7.17 | ||||||||||||||||
Diluted earnings per share | $ | 0.18 | $ | 0.60 | $ | 5.01 | $ | 1.96 | $ | 5.81 | ||||||||||||||||
Adjusted net income per share (b) | $ | 0.19 | $ | 0.54 | $ | 0.50 | $ | 1.69 | $ | 0.97 | ||||||||||||||||
Shares Used for Determining | ||||||||||||||||||||||||||
Basic EPS | 49,583,842 | 50,603,498 | 46,179,253 | 50,602,480 | 43,416,868 | |||||||||||||||||||||
Diluted EPS | 50,955,652 | 63,245,424 | 58,937,310 | 65,397,259 | 55,902,452 | |||||||||||||||||||||
(a) The Company adopted Accounting Standards Update (“ASU”) No. 2017-07, Compensation-Retirement
Benefits, on
(b) Adjusted net income per share is a non-GAAP measure. See Schedule F for a reconciliation to the nearest GAAP measure.
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Condensed Consolidated Balance Sheets | |||||||||
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(millions of dollars) |
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Assets | |||||||||
Cash and cash equivalents | $ | 109 | $ | 96 | |||||
Other current assets | 607 | 550 | |||||||
Property, plant and equipment, net | 1,381 | 1,408 | |||||||
Other assets | 582 | 589 | |||||||
$ | 2,679 | $ | 2,643 | ||||||
Liabilities and Stockholders’ Equity | |||||||||
Current maturities of long-term debt | $ | 15 | $ | 9 | |||||
Other current liabilities | 355 | 298 | |||||||
Long-term debt and capital lease obligations | 1,173 | 1,232 | |||||||
Non-current liabilities for disposed operations | 149 | 151 | |||||||
Other non-current liabilities | 280 | 259 | |||||||
Total stockholders’ equity | 707 | 694 | |||||||
$ | 2,679 | $ | 2,643 | ||||||
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Condensed Consolidated Statements of Cash Flows | |||||||||||
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(millions of dollars) | |||||||||||
Twelve Months Ended | |||||||||||
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Cash Provided by Operating Activities: | |||||||||||
Net income | $ | 128 | $ | 325 | |||||||
Gain on bargain purchase | (19 | ) | (317 | ) | |||||||
Depreciation and amortization | 148 | 97 | |||||||||
Other items to reconcile net income to cash provided by operating activities | 42 | 52 | |||||||||
Changes in working capital and other assets and liabilities | (52 | ) | (27 | ) | |||||||
247 | 130 | ||||||||||
Cash Used for Investing Activities: | |||||||||||
Capital expenditures | (132 | ) | (75 | ) | |||||||
Proceeds from sale of resins operations | 16 | — | |||||||||
Acquisition | — | (210 | ) | ||||||||
Other | — | 8 | |||||||||
(116 | ) | (277 | ) | ||||||||
Cash Used for Financing Activities: | |||||||||||
Changes in debt | (45 | ) | (50 | ) | |||||||
Dividends paid | (29 | ) | (26 | ) | |||||||
Common stock repurchased | (43 | ) | — | ||||||||
Other | 1 | (8 | ) | ||||||||
(116 | ) | (84 | ) | ||||||||
Cash and Cash Equivalents: | |||||||||||
Change in cash and cash equivalents |
15 | (231 | ) | ||||||||
Net effect of foreign exchange on cash and cash equivalents | (2 | ) | 1 | ||||||||
Balance, beginning of year | 96 | 326 | |||||||||
Balance, end of period | $ | 109 | $ | 96 | |||||||
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Sales Volumes and Average Prices | |||||||||||||||||||||||||
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Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||
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Combined1 |
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Combined1 |
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Average Sales Prices: | |||||||||||||||||||||||||
High Purity Cellulose |
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Cellulose Specialties | $ | 1,303 | $ | 1,471 | $ | 1,422 | $ | 1,334 | $ | 1,460 | $ | 1,389 | |||||||||||||
Commodity Products | $ | 827 | $ | 721 | $ | 741 | $ | 818 | $ | 733 | $ | 778 | |||||||||||||
Forest Products |
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Lumber | $ | 379 | $ | 460 | $ | 460 | $ | 471 | $ | 460 | $ | 418 | |||||||||||||
Pulp |
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High-Yield pulp | $ | 662 | $ | 616 | $ | 616 | $ | 665 | $ | 616 | $ | 548 | |||||||||||||
Paper |
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Paperboard | $ | 1,112 | $ | 1,132 | $ | 1,132 | $ | 1,130 | $ | 1,132 | $ | 1,119 | |||||||||||||
Newsprint | $ | 600 | $ | 513 | $ | 513 | $ | 592 | $ | 513 | $ | 472 | |||||||||||||
Sales Volumes: | |||||||||||||||||||||||||
High Purity Cellulose |
|||||||||||||||||||||||||
Cellulose Specialties | 158 | 122 | 152 | 624 | 453 | 641 | |||||||||||||||||||
Commodity Products | 109 | 83 | 88 | 298 | 250 | 307 | |||||||||||||||||||
Forest Products |
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Lumber | 147 | 56 | 137 | 604 | 56 | 636 | |||||||||||||||||||
Pulp |
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High-Yield pulp | 114 | 58 | 124 | 482 | 58 | 503 | |||||||||||||||||||
Paper |
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Paperboard | 43 | 17 | 41 | 174 | 17 | 184 | |||||||||||||||||||
Newsprint | 41 | 21 | 47 | 191 | 21 | 197 | |||||||||||||||||||
1 Combined net sales and operating income (loss) represents
the combination of Tembec’s net sales and adjusted operating earnings as
of
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Reconciliation of Non-GAAP Measures | ||||||||||||||||||||||||||||||
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(in millions) | ||||||||||||||||||||||||||||||
EBITDA and Adjusted EBITDA by Segment (a): |
Three Months Ended |
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Forest |
Pulp | Paper |
High Purity |
Corporate & |
Total | |||||||||||||||||||||||||
Net Income | $ | (13 | ) | $ | 20 | $ | 10 | $ | 20 | $ | (24 | ) | $ | 13 | ||||||||||||||||
Depreciation and amortization | 2 | 1 | 4 | 34 | — | 41 | ||||||||||||||||||||||||
Interest expense, net | — | — | — | — | 15 | 15 | ||||||||||||||||||||||||
Income tax expense | — | — | — | — | 4 | 4 | ||||||||||||||||||||||||
EBITDA | (11 | ) | 21 | 14 | 54 | (5 | ) | 73 | ||||||||||||||||||||||
Gain on bargain purchase | 2 | — | — | 8 | (10 | ) | — | |||||||||||||||||||||||
Adjusted EBITDA | $ | (9 | ) | $ | 21 | $ | 14 | $ | 62 | $ | (15 | ) | $ | 73 | ||||||||||||||||
Three Months Ended |
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Forest |
Pulp | Paper |
High Purity |
Corporate & |
Total | |||||||||||||||||||||||||
Net Income | $ | — | $ | 4 | $ | — | $ | 24 | $ | 267 | $ | 295 | ||||||||||||||||||
Depreciation and amortization | 1 | — | 2 | 29 | — | 32 | ||||||||||||||||||||||||
Interest expense, net | — | — | — | — | 13 | 13 | ||||||||||||||||||||||||
Income tax expense | — | — | — | — | 2 | 2 | ||||||||||||||||||||||||
EBITDA | 1 | 4 | 2 | 53 | 282 | 342 | ||||||||||||||||||||||||
Acquisition related costs | — | — | — | — | 21 | 21 | ||||||||||||||||||||||||
Inventory write-up to fair value | 5 | 6 | 6 | 6 | — | 23 | ||||||||||||||||||||||||
Gain on bargain purchase | — | — | — | — | (317 | ) | (317 | ) | ||||||||||||||||||||||
Gain on derivative instrument | — | — | — | — | 8 | 8 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 6 | $ | 10 | $ | 8 | $ | 59 | $ | (6 | ) | $ | 77 | |||||||||||||||||
EBITDA and Adjusted EBITDA by Segment (a): |
Twelve Months Ended |
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Forest |
Pulp | Paper |
High Purity |
Corporate & |
Total | |||||||||||||||||||||||||
Net Income | $ | 22 | $ | 96 | $ | 40 | $ | 118 | $ | (148 | ) | $ | 128 | |||||||||||||||||
Depreciation and amortization | 7 | 4 | 18 | 119 | — | 148 | ||||||||||||||||||||||||
Interest expense, net | — | — | — | — | 60 | 60 | ||||||||||||||||||||||||
Income tax expense | — | — | — | — | 44 | 44 | ||||||||||||||||||||||||
EBITDA | 29 | 100 | 58 | 237 | (44 | ) | 380 | |||||||||||||||||||||||
Gain on bargain purchase | 2 | — | — | (2 | ) | (20 | ) | (20 | ) | |||||||||||||||||||||
Severance expense | — | — | — | — | 4 | 4 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 31 | $ | 100 | $ | 58 | $ | 235 | $ | (60 | ) | $ | 364 | |||||||||||||||||
Twelve Months Ended |
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Forest |
Pulp | Paper |
High Purity |
Corporate & |
Total | |||||||||||||||||||||||||
Net Income | $ | — | $ | 4 | $ | — | $ | 117 | $ | 204 | $ | 325 | ||||||||||||||||||
Depreciation and amortization | 1 | 1 | 2 | 93 | — | 97 | ||||||||||||||||||||||||
Interest expense, net | — | — | — | — | 38 | 38 | ||||||||||||||||||||||||
Income tax expense | — | — | — | — | 20 | 20 | ||||||||||||||||||||||||
EBITDA | 1 | 5 | 2 | 210 | 262 | 480 | ||||||||||||||||||||||||
Acquisition related costs | — | — | — | — | 34 | 34 | ||||||||||||||||||||||||
Inventory write-up to fair value | 5 | 6 | 6 | 6 | — | 23 | ||||||||||||||||||||||||
Gain on bargain purchase | — | — | — | — | (317 | ) | (317 | ) | ||||||||||||||||||||||
Gain on derivative instrument | — | — | — | — | (8 | ) | (8 | ) | ||||||||||||||||||||||
Adjusted EBITDA | $ | 6 | $ | 11 | $ | 8 | $ | 216 | $ | (29 | ) | $ | 212 | |||||||||||||||||
(a) EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing stockholders and potential stockholders to measure how the Company is performing relative to the assets under management. Adjusted EBITDA is defined as EBITDA adjusted for items management believes do not represent core operations. Management believes this measure is useful to evaluate the Company's performance.
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Reconciliation of Non-GAAP Measures (Continued) | |||||||||||
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(millions of dollars, except per share information) |
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Twelve Months Ended | |||||||||||
Adjusted Free Cash Flows (a): |
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Cash provided by operating activities | $ | 247 | $ | 130 | |||||||
Capital expenditures | (95 | ) | (65 | ) | |||||||
Adjusted Free Cash Flows | $ | 152 | $ | 65 | |||||||
(a) Adjusted free cash flows is defined as cash provided by operating activities adjusted for capital expenditures excluding strategic capital. Adjusted free cash flows is a non-GAAP measure of cash generated during a period which is available for dividend distribution, debt reduction, strategic acquisitions and repurchase of our common stock. Adjusted free cash flows is not necessarily indicative of the adjusted free cash flows that may be generated in future periods.
Adjusted Net Debt (a): |
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Current maturities of long-term debt | $ | 15 | $ | 9 | |||||||
Long-term debt & capital lease obligation | 1,173 | 1,232 | |||||||||
Total debt | 1,188 | 1,241 | |||||||||
Original issue discount, premiums and debt issuance costs | 5 | 5 | |||||||||
Cash and cash equivalents | (109 | ) | (96 | ) | |||||||
Adjusted Net Debt | $ | 1,084 | $ | 1,150 | |||||||
(a) Adjusted net debt is defined as the amount of debt after the consideration of the original issue discount, premiums, and debt issuance costs, less cash. Adjusted net debt is a non-GAAP measure of debt and is not necessarily indicative of the adjusted net debt that may occur in future periods.
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Reconciliation of Non-GAAP Measures (Continued) | |||||||||||||||||||||||||||||||||||||||||||||||||
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(millions of dollars, except per share information) |
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Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Adjusted Operating Income and Adjusted Net Income (a): |
$ |
Per |
$ |
Per |
$ |
Per |
$ |
Per |
$ |
Per |
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Operating Income (b) | $ | 29 | $ | 56 | $ | 1 | $ | 198 | $ | 61 | |||||||||||||||||||||||||||||||||||||||
Severance expense | — | 4 | — | 4 | — | ||||||||||||||||||||||||||||||||||||||||||||
Acquisition related costs | — | — | 21 | — | 34 | ||||||||||||||||||||||||||||||||||||||||||||
Inventory write-up to fair value | — | — | 23 | — | 23 | ||||||||||||||||||||||||||||||||||||||||||||
Adjusted Operating Income (b) | $ | 29 | $ | 60 | $ | 45 | $ | 201 | $ | 118 | |||||||||||||||||||||||||||||||||||||||
Net Income | $ | 13 | $ | 0.18 | $ | 38 | $ | 0.60 | $ | 295 | $ | 5.01 | $ | 128 | $ | 1.96 | $ | 325 | $ | 5.81 | |||||||||||||||||||||||||||||
Severance expense | — | — | 4 | 0.06 | — | — | 4 | 0.06 | — | — | |||||||||||||||||||||||||||||||||||||||
Gain on bargain purchase | — | 0.01 | (6 | ) | (0.10 | ) | (317 | ) | (5.37 | ) | (20 | ) |
(0.32 |
) | (317 | ) | (5.66 | ) | |||||||||||||||||||||||||||||||
Acquisition related costs | — | — | — | — | 21 | 0.36 | — | — | 34 | 0.61 | |||||||||||||||||||||||||||||||||||||||
Inventory write-up to fair value | — | — | — | — | 23 | 0.39 | — | — | 23 | 0.41 | |||||||||||||||||||||||||||||||||||||||
Loss (gain) on derivative instrument |
— | — | — | — | 8 | 0.14 | — | — | (8 | ) | (0.14 | ) | |||||||||||||||||||||||||||||||||||||
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— | — | — | — | 11 | 0.19 | — | — | 11 | 0.20 | |||||||||||||||||||||||||||||||||||||||
Tax effects of adjustments | — | — | (1 | ) | (0.02 | ) | (12 | ) | (0.22 | ) | (1 | ) | (0.01 | ) | (11 | ) | (0.21 | ) | |||||||||||||||||||||||||||||||
Dilutive impact of Preferred Stock | — | — | — | — | — | — | — | — | — | (0.05 | ) | ||||||||||||||||||||||||||||||||||||||
Adjusted Net Income | $ | 13 | $ | 0.19 | $ | 35 | $ | 0.54 | $ | 29 | $ | 0.50 | $ | 111 | $ | 1.69 | $ | 57 | $ | 0.97 | |||||||||||||||||||||||||||||
(a) Adjusted operating income is defined as operating income adjusted
for severance expense, acquisition related costs and fair market
valuation of inventory. Adjusted net income is defined as net income
adjusted net of tax for gain on bargain purchase, acquisition related
costs, severance expense, fair market valuation of inventory,
(b) Operating income increased by
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