DENVER--May 4, 2005-- MacDermid, Incorporated a worldwide manufacturer of proprietary specialty chemical products and materials for the electronics, metal finishing and graphic arts industries today reported first quarter sales of $ 170.2 million, a 5.1% increase over the same period in 2004. Revenues reflected strong demand in its Advanced Surface Finishing business in Asia, combined with the favorable impact of foreign currency.
Diluted earnings per share of $0.38 were $0.04 less than the $0.42 per share from continuing operations in 2004. Earnings for the quarter of $11.8 million were 8.6% less than a year ago.
Owner Earnings, a measure of free cash flow (defined below and shown in BOLD in the attached Condensed Consolidated Summary of Cash Flows), were a negative $ 1 million for the quarter ended March 31 2005, due to increases in working capital. Cash retained as of March 31, 2005 is $133.7 million.
Advanced Surface Finishing (ASF) segment
Sales in our ASF segment for the quarter increased by $5.7 million or 6.0%. In Asia we started the year with new installations in both the Electronics as well as the Industrial products business, increasing our proprietary sales by 16.6% over the prior year quarter. Sales were down in the USA and Europe due mainly to continued weakness in our Electronics business in these areas.
Our gross profit percentage declined by 2.6 percentage points due to factors such as a change in the product mix, a temporary shut down at one of our plants which we are upgrading which caused an under-recovery of overheads, low start up margins on new installations in China, and higher non-proprietary sales at a much lower margin.
Our operating expenses in ASF were higher than last year due mainly to the added head count in Asia to support the increased level of sales.
Printing Solutions segment
Our Printing Solutions business showed increased sales but a decline in operating profit over the first quarter last year. Our sales are suffering from the unfavorable comparison with last year which was before we implemented the direct marketing strategy in the packaging business in North America. In Europe our distributors built inventory last year in the first quarter in anticipation of a recovery, but no such large ramp up in orders occurred this year.
Our gross profit in $ terms was flat to last year, which means that the gross profit % is lower because this business has higher overheads which need to be absorbed.
Our operating expenses were higher than the prior year due to increased R & D expenditure, direct selling staff in Packaging in North America and higher costs in Colorspan to support the increased business.
Dan Leever Chairman and CEO said, "This quarter is disappointing as we failed to meet our standards for growth in earnings. Our Owner Earnings were also disappointing. Whereas there were seasonal and timing issues that masked what would have been better performance, we have to admit we did not execute as well as we should. We are committed to improving our performance throughout the year, but now are less confident we will be able to grow earnings for the year. We expect Owner Earnings will return closer to historic levels as the year progresses."
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