Ferro Meets Expectations in 2015 Third Quarter
Ferro Corp. recently reported results for the third quarter ended September 30, 2015. Third quarter income from continuing operations attributable to common shareholders was $0.17 per diluted share, compared with a loss of $0.03 per diluted share in the third quarter of 2014. On an adjusted basis, earnings per diluted share were $0.24, vs. $0.16 for the third quarter of 2014. The results in both years include charges relating to restructuring activities and other one-time items; in the third quarter of 2014, results include costs associated with the refinancing of the company’s debt.
Third quarter 2015 net sales were $279 million, compared with $276 million in the third quarter of 2014. Value-added sales, which exclude precious metal sales, were $271 million in the third quarter of 2015, an increase of 2% vs. the same period last year. The increase in value-added sales was primarily driven by sales from the recently acquired Vetriceramici and Nubiola businesses, which contributed approximately $45 million in sales. The sales contribution from the acquisitions was largely offset by the adverse impact of foreign currency translation.
On a constant currency basis, adjusting for the impact of changes in foreign currency, value-added sales increased by 18%, with sales from the recent acquisitions accounting for much of the increase. Excluding the contribution from acquisitions, value-added sales for Ferro’s legacy business declined by 2%, due to lower sales in the Performance Coatings segment. On a constant currency basis, gross profit improved by approximately $13 million, with both the legacy business and the acquisitions contributing to the growth. Adjusted earnings for the third quarter of 2015 benefited from increased sales and improved gross profit, lower selling, general and administrative expenses, and lower interest expense.
“Results for the quarter were generally in line with our expectations, despite difficult economic conditions and continuing challenges in certain markets where we do business,” said Peter Thomas, chairman, president and CEO. “We continue to hold the line on costs while pursuing both organic and inorganic growth opportunities, resulting in a 50% increase in adjusted diluted earnings per share for the third quarter. Looking ahead to the fourth quarter, we anticipate a continuation of the recent challenging economic conditions. In addition, we expect customers in certain regions will reduce manufacturing activity near the end of the year and reduce their inventory levels. Given this outlook, we expect the legacy business, on a constant currency basis, will be down 1-2% in the fourth quarter, primarily due to lower sales in the Performance Coatings segment, driven by weak demand in our legacy tile coatings business. We expect this modest decline to be offset by $40 million - $45 million in sales from our recent acquisitions of Vetriceramici and Nubiola. Given the difficult business conditions anticipated in the fourth quarter, we expect full-year adjusted diluted EPS will be at the low-to-mid point of the range of our prior guidance of $0.82 - $0.87.”
On September 3, 2015, the company announced that it had signed a definitive agreement to acquire 100% of the equity of Egypt-based tile coatings manufacturer Al Salomi for Frits and Glazes on a cash-free and debt-free basis, for approximately $39 million in cash, subject to working capital and other customary adjustments. The transaction is expected to close in the fourth quarter, subject to customary closing conditions.
For more information, visit www.ferro.com.