WATERBURY, Conn.--April 26, 2004-- MacDermid, Incorporated, a worldwide manufacturer of proprietary specialty chemical products and materials for the electronics, metal finishing and graphic arts industries, today reports earnings for its first quarter ended March 31, 2004.
Quarter ended March 31, 2004 compared to March 31, 2003
Net earnings for the first quarter were $12.9 million or $0.42 per diluted share compared to net earnings of $11.6 million or $0.36 per share in the prior year quarter.
Proprietary sales of $152.2 million increased by 6% or $8.5 million, and total sales were $162.0 million up $9.2 million or 6%. Favorable currency exchange rates aided total sales by $11.1 million, proprietary sales by $9.8 million, and net earnings by $0.9 million or $0.03 per share. Owner Earnings, a measure of free cash flow, were $6.4 million. The March quarter included a semi-annual bond interest payment of $13.8 million. Cash retained ended at $66.6 million.
Dan Leever Chairman and CEO stated "This quarter appears very similar to the December 2003 quarter. The main difference was the acceleration in revenues as the quarter progressed. Demand as the quarter ended was quite robust, especially in our Advanced Surface Finishing business.
Cash generation and hence Owner Earnings of $6.4 million was not at the level we have come to expect. Part of the shortfall is timing such as the semi-annual bond interest payment and accelerating revenues during the quarter. However, even after considering those items we were short of our expectation. We are assured by our operating managers that we continue to stay focused on cash flow generation, and that we will improve as the year continues. If revenues are strong, any improvement we make will be offset, in part, by the need to fund additional working capital. We certainly hope this is the case! In any event, our drive for cash flow generation is derived from our desire to create value, as opposed to necessity. With $66.6 million in cash and a ratio of net debt to gross cash flow (EBITDA) of 1.9 to 1, we have ample liquidity. We are in no rush to deploy the cash, although we do look at acquisition candidates from time to time.
Whereas we are pleased with the performance of our Advanced Surface Finishing Business, especially in the US and Asia, there are still significant soft spots. The European economy continues to lag, and our Printing business is facing difficult end markets. Given that we are not "firing on all cylinders" we are pleased with the underlying performance and optimistic about the prospects for the rest of the year."
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