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A. Schulman Inc. beats earnings estimates and reauthorizes stock repurchases

By Jim Mackinnon
Beacon Journal business writer

A. Schulman Inc. says it may spend up to $55 million over the next three years to buy back shares of its stock.

The Fairlawn polymer and specialty chemicals company announced the share buyback program — basically a three-year extension of a program that expired March 31 — on Tuesday following the release of its second quarter financial report on Monday.

The new share repurchase program expires April 2, 2017, the company said.

Schulman executives told industry analysts in a conference call Tuesday morning they were pleased with the company’s performance for its fiscal 2014 second quarter that ended on Feb. 28.

Company revenue and adjusted net income beat earnings estimates even though net income was down from a year ago. Schulman raised its adjusted earnings expectations for the full fiscal year to $2.23 to $2.28 per share, about 25 percent higher than its previous forecast.

Shares of Schulman on Tuesday rose 13 cents to $36.45. Shares are up 4 percent, including dividends, since Jan. 1 and are up 25.8 percent from a year ago.

“These results were largely driven by the dedicated work of our European associates,” Joseph Gingo, chairman, president and chief executive officer, said in opening comments. “On a consolidated basis, we delivered a 14 percent increase in net sales and an 18 percent increase in gross profits over the prior year quarter.”

Schulman reported after the stock market closed Monday that it earned $6.9 million, or 23 cents per share, on revenue of $588.5 million. Net income was down from $11.8 million, or 40 cents per share, on revenue of $515.4 million for the second quarter a year ago.

Adjusted net income from continuing operations was $11.3 million, or 39 cents per share, up from $8.2 million, or 28 cents per share a year ago, the company reported.

Joseph Levanduski, chief financial officer, said Schulman continues to have a strong balance sheet even as net debt increased to $233.5 million at the end of the second quarter from $81.8 million as of Aug. 31, 2013.

“We continue to operate from a strong financial position to support our strategy of organic growth and bolt-on acquisitions,” he said. “We increased leverage to fund recent acquisitions, capital expenditures, dividend payments and seasonal working capital needs.”

Schulman was helped overseas by its $52 million purchase last year of thermoplastic manufacturer Perrite Group, executives said. Perrite has operations in the United Kingdom, France and Malaysia.

Schulman also has benefited by the introduction of new products, including an environmentally safe specialty powder increasingly being used for drilling by the North American oil and gas industry, said Bernard Rzepka, chief operating officer.

Schulman is hosting an investor day conference on Thursday in New York City where senior executives will discuss future plans for the company including global growth opportunities, financial strength, acquisition strategy, marketing initiatives and strategic goals.

Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com



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