Polypore Internation (NYSE:PPO)
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Polypore Announces Second Quarter Results
CHARLOTTE, N.C., Aug. 19 /PRNewswire-FirstCall/ -- Polypore, Inc. announces
net sales for the quarter ended July 3, 2004 of $127.9 million, representing an
increase of 19% compared to net sales of $107.5 million for the same quarter in
2003. This $20.4 million increase in net sales was attributable to a $15.1
million, or 22%, increase in energy storage net sales and a $5.3 million, or
14%, increase in separations media net sales. Net sales for the six months
ended July 3, 2004 was $268.0 million, a 28% increase compared to $210.0
million in the first half of 2003.
Net income for the second quarter of 2004 was $8.7 million compared to $7.9
million in the second quarter of 2003. Net income includes the effect of
non-cash charges related to the application of purchase accounting in
connection with the acquisition of the Company by, and subsequent merger with,
PP Acquisition Corporation on May 13, 2004. The non-cash charges consist of
the write-off of in-process research and development costs of $3.6 million (net
of income taxes of $1.7 million) and the sale of inventory written up to fair
value, less costs to sell, of $5.7 million (net of income taxes of $2.8
million). Net income before these non-cash charges was $18.0 million in the
second quarter, a 128% increase over the second quarter a year ago. Net income
for the first half of 2004 was $29.5 million, an 80% increase over the first
half of 2003. Net income before the non-cash charges was $38.7 million in the
first half of 2004, a 136% improvement over the first half of 2003.
Operating income for the second quarter of 2004 was $22.2 million, an 11%
increase over the $19.9 million in operating income in the second quarter of
2003. For the second quarter of 2004, operating income before the non-cash
charges related to purchase accounting described above was $35.9 million, an
80% increase over the $19.9 million in the second quarter of 2003. For the six
months ended July 3, 2004, operating income was $57.0 million, an improvement
of 49% over the first half of 2003. For the first half of 2004, operating
income before the non-cash charges was $70.7 million, an 84% improvement over
the first half of 2003.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") was
$33.7 million in the second quarter, a 15% increase over the $29.2 million
recorded in the second quarter of 2003. EBITDA for the first half of 2004 was
$81.2 million, a 41% increase over the first half of 2003. Under our credit
agreement, certain non-cash and non-recurring items are excluded from EBITDA in
order to calculate adjusted EBITDA, which is a measure used to calculate
certain ratios for determining compliance with our debt covenants. Adjusted
EBITDA, as defined in our credit agreement, was $45.9 million and $94.2 million
for the second quarter of 2004 and the first half of 2004, respectively. This
represents a 48% and 54% improvement over the second quarter of 2003 and the
first half of 2003, respectively. The last four quarters adjusted EBITDA was
$164.0 million.
As of July 3, 2004 Polypore Inc. had total debt of $825.8 million and cash of
$20.8 million.
Polypore, Inc., a subsidiary of Polypore International, Inc., is a worldwide
developer, manufacturer and marketer of highly specialized polymer- based
membranes used in separation and filtration processes. Due to Polypore
International, Inc. being in a quiet period in connection with its planned
initial public offering, the Company will not be hosting an earnings call this
quarter. For more information, contact: Lynn Amos at Polypore, Inc., 13800
South Lakes Drive, Charlotte, NC 28273: (704) 587-8409.
This release contains statements that are forward-looking in nature. Statements
that are predictive in nature, that depend upon or refer to future events or
conditions or that include words such as "expects," "anticipates," "intends,"
"plans," "believes," "estimates," and similar expressions are forward-looking
statements. These statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results and performance to be
materially different from any future results or performance expressed or
implied by these forward-looking statements. These factors include the
following: the highly competitive nature of the markets in which we sell our
products; the failure to continue developing innovative products; the increased
use of synthetic hemodialysis filtration membranes by our customers; the loss
of our customers; the vertical integration by our customers of the production
of our products into their own manufacturing process; increases in prices for
raw materials or the loss of key supplier contracts; employee slowdowns,
strikes or similar actions; product liability claims exposure; risks in
connection with our operations outside the United States; the incurrence of
substantial costs to comply with, or as a result of violations of, or
liabilities under environmental laws; the failure in protecting our
intellectual property; the failure to replace lost senior management; the
incurrence of additional debt, contingent liabilities and expenses in
connection of future acquisitions; the failure to effectively integrate newly
acquired operations; and absence of expected returns from the amount of
intangible assets we have recorded. Additional information concerning these
and other important factors can be found within the Polypore International's
filings with the Securities and Exchange Commission. Statements in this release
should be evaluated in light of these important factors. Although we believe
that these statements are based upon reasonable assumptions, we cannot
guarantee future results. Given these uncertainties, the forward-looking
statements discussed in this press release might not occur.
Polypore, Inc.
Condensed Consolidated Statements of Income
(Unaudited, in thousands)
Three Months Three Months
Ended Ended
July 3, 2004* June 28, 2003
Net Sales $127,882 $ 107,516
Cost of goods sold 81,938 70,549
Gross profit 45,944 36,967
Selling, general and
administrative expenses 23,782 17,070
Operating income 22,162 19,897
Other (income) expense:
Interest expense, net 9,889 6,161
Foreign currency and other 541 504
Unrealized (gain) loss on
derivative interest (1,308) 136
Income before income taxes 13,040 13,096
Income taxes 4,303 5,238
Net income $8,737 $7,858
Polypore, Inc.
Condensed Consolidated Statements of Income
(Unaudited, in thousands)
Six Months Six Months
Ended Ended
July 3, 2004* June 28, 2003
Net Sales $268,002 $210,018
Cost of goods sold 168,234 138,885
Gross profit 99,768 71,133
Selling, general and
administrative expenses 42,789 32,854
Operating income 56,979 38,279
Other (income) expense
Interest expense, net 14,420 10,618
Foreign currency and other (581) 513
Unrealized (gain) loss on
derivative interest (1,321) (163)
Income before income taxes 44,461 27,311
Income taxes 14,986 10,924
Net income $29,475 $16,387
* The income statement for the three and six months ended July 3, 2004
includes the effect of the application of purchase accounting for the
acquisition by and merger with PP Acquisition, Inc. The purchase price
allocation is based on preliminary estimates and may be adjusted based on
the finalization of independent appraisals and certain accruals to be
recorded in connection with the transaction. For accounting purposes,
the Transaction was accounted for as if it occurred on the last day of
the Company's fiscal month ended May 2, 2004, which is the closest month
end to the Transaction date of May 13, 2004.
Polypore, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
July 3, 2004* January 3, 2004
Assets
Current assets 207,422 181,938
Property, plant and equipment, net 483,740 480,602
Intangibles, loan acquisition
and other costs, net 248,368 17,735
Goodwill 518,456 32,200
Other assets 19,108 18,167
Total assets $1,477,094 $730,642
Liabilities and shareholders' equity
Current liabilities 71,913 100,988
Debt, less current portion 823,796 250,519
Deferred income taxes & other 251,468 173,157
Redeemable preferred stock and
cumulative dividends payable - 16,221
Shareholders' equity 329,917 189,757
Total liabilities and shareholders' equity $1,477,094 $730,642
* Polypore, Inc. was purchased by PP Acquisition Corporation on May 13,
2004. At the time of the closing of the acquisition, PP Acquisition
merged with and into Polypore, Inc., with Polypore, Inc. as the
surviving corporation. The total cost of the merger of PP Acquisition
with and into Polypore has been allocated as a change in basis to the
tangible and intangible assets acquired and liabilities assumed based
on their respective fair values as of May 13, 2004, the date of the
merger. The purchase price allocation is based on preliminary
estimates and may be adjusted based on the finalization of independent
appraisals and certain accruals to be recorded in connection with the
transaction. For accounting purposes, the Transaction was accounted
for as if it had occurred on the last day of the Company's fiscal month
ended May 2, 2004, which is the closest month end to the Transaction
date of May 13, 2004.
EBITDA
EBITDA represents net income before interest, taxes, depreciation and
amortization. EBITDA is not a recognized term under GAAP and does not
purport to be an alternative to net income as a measure of operating
performance or to cash flows from operating activities as a measure of
liquidity. Additionally, EBITDA is not intended to be a measure of free
cash flow for management's discretionary use, as it does not consider
certain cash requirements such as interest payments, tax payments, debt
service requirements and capital expenditures. Our calculation of EBITDA
may not be comparable to the calculation of similarly titled measures
reported by other companies. The following is a reconciliation of EBITDA
to net income for the periods indicated.
Reconciliation of EBITDA
Three Months Three Months
Ended Ended
July 3, 2004 June 29, 2003
Net income $8,737 $7,858
+ Interest expense 9,889 6,161
+ Income taxes 4,303 5,238
+ Depreciation and amortization expense 10,809 9,968
EBITDA 33,738 29,225
+ Write-off in process R&D 5,280 -
+ Sale of inventory written-up to fair value 8,490 -
+ Other (1,636) 1,697
Adjusted EBITDA as defined in credit agreement* $45,872 $ 30,922
Six Months Six Months
Ended Ended
July 3, 2004 June 29, 2003
Net income $29,475 $ 16,387
+ Interest expense 14,420 10,618
+ Income taxes 14,986 10,924
+ Depreciation and amortization expense 22,350 19,637
EBITDA 81,231 57,566
+ Write-off in process R&D 5,280 -
+ Sale of inventory written-up to fair value 8,490 -
+ Other (835) 3,535
Adjusted EBITDA as defined in credit agreement* $94,166 $61,101
* Under our senior credit facility, compliance with the minimum interest
coverage ratio and maximum leverage ratio tests is determined based on a
calculation of adjusted EBITDA in which certain items are added back to
EBITDA. These items include non-cash charges, impairments and expenses
other than depreciation and amortization, cash charges resulting from the
acquisition of Polypore, Inc. that arise within six months of the closing
of the transaction, restructuring and acquisition integration costs and
certain salary and bonus payments made to former officers of Polypore,
Inc. prior to the closing of the transaction, who are no longer
affiliated with us as a result of the transaction.
DATASOURCE: Polypore, Inc.
CONTACT: Lynn Amos of Polypore, Inc., +1-704-587-8409
Web site: http://www.polypore.net/