DENVER--Feb. 9, 2005-- MacDermid, Incorporated, a worldwide manufacturer of proprietary specialty chemical products and materials for the electronics, metal finishing and graphic arts industries, today reported fourth quarter sales of $ 172.1 million, a 6% increase over the same period in 2003. Revenues reflected strong demand in its Advanced Surface Finishing business, combined with the favorable impact of foreign currency.
Sales for the year ended December 31, 2004 were $ 660.8 compared with $ 619.9 in the prior year, a 7% increase.
Diluted earnings per share of $0.48 were $0.03 more than the $0.45 per share from continuing operations in 2003. Earnings from continuing operations for the quarter of $14.9 million were 9% more than a year ago.
Total reported earnings per share for the fourth quarter last year was $0.63. This included earnings of $0.18 per share from discontinued operations arising from the gain on the disposal of Eurocir. Our reported earnings per share for the year ended December 2003 of $1.80 included the abovementioned $0.18 per share and also the favorable cumulative effect of an accounting change amounting to $0.03 per share. Management continues to believe these items are not representative of the performance of the business. In the case of the gain in discontinued operations this is a partial recovery of a previously written-off item. The gain from the accounting change resulted from a stock buy back transaction that was completely non-operational and non-continuing. Hence our earnings in last year from continuing operations and before the cumulative effect of the accounting change were $0.45 for the quarter and $1.59 for the year.
Earnings for the year of $53.2 million are up 7% over last year's $49.8 million and earnings per share for the year of $1.72 are 8% higher than the prior year's $1.59 earnings per share from continuing operations and before the cumulative effect of accounting change in last year. *Owner Earnings, a measure of free cash flow (defined below and shown in BOLD in the attached Condensed Consolidated Summary of Cash Flows), were $22.8 million for the quarter ended December 31, 2004. Owner Earnings for the year were $76.7 million. Cash retained as of December 31, 2004 is $137.8 million.
Several items affected the current quarter.
The tax rate was adjusted to reflect a year to date 31.5% effective tax rate, down from the 32 % in the first two quarters of the year and down from the 33% rate used in the third quarter of the year. This resulted from an overseas tax planning initiative late in this year. This increased earnings by $0.03 per share in the quarter.
The Printing Solutions Americas direct selling strategy noted last quarter and restructuring costs in Europe impacted the quarter unfavorably by $0.05 per share.
Dan Leever, Chairman and CEO, said, "This quarter was similar to the recent quarters we have experienced. We are gratified that the Advanced Surface Finishing unit performed very well. In our printing business we celebrated the dramatic turn around in the ColorSpan unit. ColorSpan has enjoyed two very successful product launches. Our biggest challenge is keeping up with the demand. This is a testament to the will and motivation of the ColorSpan team. We experienced costs related to restructuring in printing Europe and were still working through inventory in the supply chain in printing Americas. Whereas these items hurt us this quarter, we expect they will benefit us in the longer term. Our Owner Earnings were a solid $22.8 million for the quarter and $76.7 million for the year leaving us with $137.8 million in cash. We have shown our cash generation is predictable and sustainable. This gives us significant options to consider. Currently we are leaning towards holding the cash in anticipation of mid 2006 when the premium on our bonds reduces dramatically. We continue to invest heavily in growth initiatives. We are hoping 2005 is the year we start to see the impact of these initiatives on revenues."
Comments on Fourth Quarter Income Statement.
Sales in Advanced Surface Finishing of $100.7 million were up 9.4% (4.4% after currency) over the same period in 2003, primarily driven by strong revenue growth in demand in Asia and North America. Operating profit of $16.0 million was 18.2% higher than the prior year reflecting expected earnings leverage on higher revenue.
Printing Solutions sales of $71.4 million were up 2.0% (down 0.8% after currency) with growth in key business segments in North America, weak demand in Europe and the inventory effect of the direct marketing strategy in North America. Operating profit of $10.2 million was down 21.6% from the prior period due to restructuring charges incurred in Europe, the margin affect of weaker sales in Europe and the direct strategy in North America.
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