The top executives at Fairlawn-based A. Schulman Inc. expect a decent year for the $2.1 billion specialty polymer company.
A. Schulman remains on target to hit its earnings goal for fiscal 2013 even though profits for the first quarter were down compared to a year ago, executives said Friday in a morning conference call with industry analysts.
Also, A. Schulman has the money to continue to make what it calls “bolt-on” acquisitions that fit strategic goals, said Joe Gingo, chairman, president and chief executive officer.
“During the fiscal 2013 first quarter, we experienced a difficult economic environment,” Gingo said in opening comments. Schulman’s first quarter ended Nov. 30.
Even with that, Schulman revenue rose from a year ago as it sold more of its specialty and niche compounds and resins.
A. Schulman reported earning $11.8 million, or 40 cents per share, on revenue of $540.6 million for the first quarter after the stock market closed Thursday. Net income was down from $13.6 million, or 46 cents per share, on revenue of $517.3 million for the first quarter of 2012.
In other company events, construction continues at Schulman’s new corporate headquarters at Ridgewood and Cleveland-Massillon roads in Fairlawn. The building is expected to be finished in May and the company will move in shortly thereafter.
Shares of Schulman on Friday rose $1.22, or 4.2 percent, to $30.32. Shares are up 44 percent, including dividends, from a year ago.
Schulman’s customer base is showing more confidence, based on their order patterns, Gingo said. For instance, Europe “is as steady as we have seen it since the crisis started,” he said, referring to a general business slump on the continent.
A. Schulman is fortunate that it does business with German automakers that are still exporting and not as much with automakers in France or Italy, Gingo said.
Europe’s automotive market “is obviously over capacity and there’s going to be a downsizing in that market,” he said.
Gingo said he suspects most of the downsizing will take place in France and Italy.
Gingo also said in response to A. Schulman’s hiring of a new chief marketing executive that the company is making progress sifting through large amounts of data and better identifying markets in which it participates.
“I would have to say to you I am 80 percent confident of what I have seen personally,” Gingo said. “The next step in that process is we are defining the profitability of those markets so we understand a little bit better of where we are making our profits and which would be the more attractive areas to look for not only in terms of new products but potential acquisitions. ... 80 percent confidence can give you a lot of decision-making ability.”
Gingo cited a number of accomplishments in the first quarter, including the completion of the sale of the company’s Bellevue, Ohio, factory.
“This marks the completion of our transformation away from legacy plants that primarily served the commodity automotive market,” Gingo said. “Our focus, especially in the U.S., will be to continue to improve our product mix as we shift to niche and specialty products.”
The company also started a Web-based and hands-on training program for all of its global employees involving return investment capital, Gingo said.
The program “will allow our associates to drive increased returns through their daily activity,” Gingo said.
The training is modeled on a similar employee program A. Schulman instituted a few years ago regarding working capital, he said.
“Controlling what we can control remains our mantra,” Gingo said. “While we anticipated that our 2013 first-quarter financials would not be as strong as our exceptional first quarter of 2012, I am very pleased with our results.”
A. Schulman remains on track to earn $2.14 to $2.19 per share this year, he said. That would mark the fourth consecutive year of adjusted earnings per share growth for the company, he said.
The company increased its quarterly dividend by 2.6 percent to 19.5 cents per share in the first quarter.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com
