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Versum Materials Reports Record Third Quarter 2018 Financial Results

Narrows Fiscal Year 2018 Guidance

Fiscal Third Quarter 2018 Financial Highlights Versus Third Quarter 2017

  • Sales of $350 million, up 20%
  • Net Income of $63.3 million, or diluted EPS of $0.58, up 20%
  • Adjusted EBITDA of $116.8 million, up 20%
  • Adjusted Net Income of $68.9 million, up 22%
  • Adjusted diluted EPS of $0.63, up 21%

Narrows Fiscal Year 2018 Guidance

  • Estimated Sales of $1,330 - $1,360 million, up 18% to 21% versus fiscal year 2017
  • Estimated Adjusted EBITDA of $430 - $445 million, up 16% to 20% versus fiscal year 2017

The results and guidance in this press release include Non-GAAP financial measures. Refer to the section entitled “Non-GAAP Financial Measures.”

TEMPE, Ariz.--(BUSINESS WIRE)--Aug. 7, 2018-- Versum Materials, Inc. (NYSE:VSM), a leading global materials and equipment supplier to the semiconductor industry, reported results today for the fiscal third quarter ended June 30, 2018. Sales of $350 million were up 20% from the fiscal third quarter ended June 30, 2017, driven by growth from both the Delivery Systems & Services ("DS&S") and Materials segments. Net income for the fiscal third quarter ended June 30, 2018 was $63.3 million, or $0.58 per diluted share, up $10.6 million from the fiscal third quarter ended June 30, 2017, resulting in Net Income Margin of 18%. Excluding the one-time charges primarily related to separation, restructuring and cost reduction actions, Adjusted Net Income for the fiscal third quarter ended June 30, 2018 of $68.9 million or $0.63 per diluted share, increased 22% from the fiscal third quarter ended June 30, 2017 and resulted in an Adjusted Net Income Margin of 20%. Adjusted EBITDA for the fiscal third quarter ended June 30, 2018 of $116.8 million increased 20% from the fiscal third quarter ended June 30, 2017, resulting in an Adjusted EBITDA margin of 33%.

Guillermo Novo, Versum Materials' President and Chief Executive Officer said “We are pleased to report record revenue and earnings for our fiscal third quarter. Our diverse product portfolio again delivered twenty percent year-on-year top line growth and sequential margin improvement."

"Our end markets remain resilient and we continue to develop exciting technology and investment opportunities which we believe will produce above market growth and continued margin expansion in the coming years. Having completed the final steps of our separation from Air Products, our entire team is now focused on driving profitable future growth."

Table 1: Third Quarter Fiscal Year 2018 Financial Highlights

      Three Months Ended June 30,
2018   2017   % Change
(In millions, except percentages and per share data)
Sales $ 350.0 $ 290.8 20 %
Operating Income 96.2 81.0 19 %
Net Income 63.3 52.7 20 %
Net Income Margin 18 % 18 %
Diluted Earnings Per Share 0.58 0.48 21 %
Adjusted Net Income 68.9 56.6 22 %
Adjusted Net Income Margin 20 % 19 %
Adjusted Diluted Earnings Per Share 0.63 0.52 21 %
Adjusted EBITDA 116.8 97.7 20 %
Adjusted EBITDA Margin 33 % 34 %
 
Year to Date Cash Flows from Operations 135.6 186.8 (27 )%
Year to Date Capital Expenditures 90.0 41.4 117 %
 

Sales for the fiscal third quarter ended June 30, 2018 were $350.0 million versus $290.8 million in the fiscal third quarter ended June 30, 2017. This 20% year-on-year increase was driven by robust volume growth in our DS&S segment and double-digit volume growth in our Advanced Materials product portfolio.

Net Income for the fiscal third quarter ended June 30, 2018 was $63.3 million, or $0.58 per diluted share versus $52.7 million, or $0.48 per diluted share, in the fiscal third quarter ended June 30, 2017, a 20% increase. Excluding one-time charges of $5.6 million, net of tax, primarily related to separation, restructuring and cost reduction actions, Adjusted Net Income for the fiscal third quarter ended June 30, 2018 was $68.9 million, or $0.63 per diluted share, versus $56.6 million, or $0.52 per diluted share, for the fiscal third quarter ended June 30, 2017.

Adjusted EBITDA for the fiscal third quarter ended June 30, 2018 was $116.8 million versus $97.7 million in the fiscal third quarter ended June 30, 2017, a 20% increase year-on-year primarily due to volume growth in both DS&S and Materials.

Year to date cash flow from operations was $135.6 million, with cash invested for capital spending of $90.0 million, including $27.8 million of capital spending related to restructuring activities.

Business Segment Results

Versum Materials reports results for its two operating business segments, Materials and DS&S, and a Corporate segment.

 

Table 2: Segment Sales

 
Three Months Ended June 30,
2018 2017   % Change
(In millions, except percentages)
Materials $ 218.5 $ 206.4 6 %
DS&S 130.7 83.5 57 %
Corporate 0.8   0.9   (11 )%
Total Versum Materials Sales $ 350.0   $ 290.8   20 %
 

Table 3: Segment Operating Income to Segment Adjusted EBITDA

 
Three Months Ended June 30,
2018 2017 % Change
(In millions, except percentages)
Materials
Operating income $ 71.4 $ 69.6 3 %
Add: Depreciation and amortization 13.0   10.1   29 %
Segment Adjusted EBITDA $ 84.4   $ 79.7   6 %
Segment Adjusted EBITDA Margin(A) 39 % 39 %
DS&S
Operating income $ 37.2 $ 24.0 55 %
Add: Depreciation and amortization 0.7   0.3   133 %
Segment Adjusted EBITDA $ 37.9   $ 24.3   56 %
Segment Adjusted EBITDA Margin(A) 29 % 29

%

Corporate
Operating loss $ (5.7 ) $ (6.6 ) (14 )%
Add: Depreciation and amortization 0.2   0.3   (33 )%
Segment Adjusted EBITDA $ (5.5 ) $ (6.3 ) (13 )%

(A) Segment Adjusted EBITDA margin is calculated by dividing Segment Adjusted EBITDA by sales.

 

Table 4: Reconciliation of Segment Operating Income to Total Versum Materials Operating Income

 
Three Months Ended June 30,
2018 2017 % Change
(In millions, except percentages)
Materials $ 71.4 $ 69.6 3 %
DS&S 37.2 24.0 55 %
Corporate (5.7 ) (6.6 ) (14 )%
Total Segment Operating Income 102.9 87.0 18 %
Less: Business separation, restructuring and cost reduction actions 6.7   6.0   12 %
Total Versum Materials Operating Income $ 96.2   $ 81.0   19 %
 

Materials:

Sales for the fiscal third quarter ended June 30, 2018 were $218.5 million, up 6% from the fiscal third quarter ended June 30, 2017. This increase was driven by double-digit volume growth in Advanced Materials with more modest growth in Process Materials.

Operating income for the fiscal third quarter ended June 30, 2018 was $71.4 million, up 3% from the fiscal third quarter ended June 30, 2017. Segment Adjusted EBITDA for the fiscal third quarter ended June 30, 2018 was $84.4 million, up 6% from the fiscal third quarter ended June 30, 2017. Strong volumes were partially offset by price mix.

Delivery Systems & Services (DS&S):

Sales for the fiscal third quarter ended June 30, 2018 were $130.7 million, up 57% from the fiscal third quarter ended June 30, 2017, driven by continued strong equipment and installation project growth, especially in Korea and China.

Operating income for the fiscal third quarter ended June 30, 2018 was $37.2 million, up 55% from the fiscal third quarter ended June 30, 2017. Segment Adjusted EBITDA for the fiscal third quarter ended June 30, 2018 of $37.9 million was up 56%, driven by strong equipment and installation activity.

Fiscal Year 2018 Outlook

For fiscal year 2018, Versum Materials is narrowing its outlook to estimated sales of $1,330 to $1,360 million and Adjusted EBITDA of $430 to $445 million from prior guidance of $1,320 to $1,360 million and $425 to $445 million, respectively. The fiscal year 2018 Adjusted EBITDA outlook excludes approximately $15 to $20 million of estimated one-time stand-up costs related to the implementation of our own enterprise resource planning (ERP) system and relocation of certain administrative and research and development personnel to Versum Materials sites.

Conference Call and Webcast Details

On Tuesday August 7, 2018 at 11:00 am Eastern Time, Versum Materials plans to host its conference call and webcast to discuss these results.

Investors may listen to the conference call live via telephone by dialing 1-(877) 883-0383 (domestic) or 1-(412) 902-6506 (international) and use the participant code 6400825.

An audio-only live webcast of the conference call and presentation materials can be accessed through the “Investors” section of our website at www.versummaterials.com. Presentation materials will be posted to the “Investors” section of the website prior to the call.

A replay of the conference call/webcast will be available under “Events & Presentations” on the “Investors” section of the Versum Materials website.

About Versum Materials

Versum Materials, Inc. (NYSE: VSM) is a leading global specialty materials company providing high-purity chemicals and gases, delivery systems, services and materials expertise to meet the evolving needs of the global semiconductor and display industries. Derived from the Latin word for “toward,” the name “Versum” communicates the company’s deep commitment to helping customers move toward the future by collaborating, innovating and creating cutting-edge solutions.

A global leader in technology, quality, safety and reliability, Versum Materials is one of the world’s leading suppliers of next-generation CMP slurries, ultra-thin dielectric and metal film precursors, formulated cleans and etching products, and delivery equipment that has revolutionized the semiconductor industry. Versum reported fiscal year 2017 annual sales of about US $1.1 billion, has approximately 2,200 employees and operates 12 major facilities in Asia and North America. It is headquartered in Tempe, Arizona. Versum Materials had operated for more than three decades as a division of Air Products and Chemicals, Inc. (NYSE: APD).

For additional information, please visit http://www.versummaterials.com

Non-GAAP Financial Measures

This earnings press release includes “non-GAAP financial measures,” including Adjusted Net Income, Adjusted Net Income Margin, Adjusted Diluted Earnings Per Share, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted EBITDA margin and Segment Adjusted EBITDA margin. Adjusted Net Income is net income excluding certain disclosed items which we do not believe to be indicative of underlying business trends, including business separation, restructuring and cost reduction actions, net of tax, the write-off of financing costs, net of tax, and the impact of the Tax Act. Adjusted Diluted Earnings Per Share uses Adjusted Net Income but otherwise uses the same calculation used in arriving at diluted earnings per share, the most directly comparable GAAP financial measure. Adjusted EBITDA is net income excluding certain disclosed items which we do not believe to be indicative of underlying business trends, including interest expense, the write-off of financing costs, income tax provision, depreciation and amortization expense, non-controlling interests, and business separation, restructuring and cost reduction actions. Segment Adjusted EBITDA is segment operating income excluding segment depreciation and amortization expense. Adjusted Net Income Margin, Adjusted EBITDA margin and Segment Adjusted EBITDA margin are calculated by dividing Adjusted Net Income, Adjusted EBITDA and Segment Adjusted EBITDA, respectively, by sales. In the accompanying tables, Versum Materials has provided reconciliations of net income to Adjusted EBITDA (see Appendix Table A-2), net income to Adjusted Net Income (see Appendix Table A-3), diluted EPS to Adjusted Diluted EPS (see Appendix A-4) and of segment operating income (loss) to Segment Adjusted EBITDA (see Appendix Table A-6), in each case the most directly comparable GAAP financial measure. We encourage investors to read these reconciliations.

The presentation of these non-GAAP financial measures is intended to enhance the usefulness of financial information by providing measures which management uses internally to evaluate operating performance. We use these non-GAAP measures to assess our operating performance by excluding certain disclosed items that we believe are not representative of our underlying business. Management may use these non-GAAP measures to evaluate our performance period over period and relative to competitors in our industry, to analyze underlying trends in our business and to establish operational budgets and forecasts or for incentive compensation purposes. We use Adjusted EBITDA to calculate performance-based cash bonuses. We use Segment Adjusted EBITDA to evaluate the ongoing performance of our business segments.

We believe non-GAAP financial measures provide security analysts, investors and other interested parties with meaningful information to understand our underlying operating results and to analyze financial and business trends. These non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures, and have limitations which include but are not limited to the following: (a) Adjusted Net Income and Adjusted EBITDA exclude the write-off of financing costs and other expenses related to business separation, restructuring and cost reduction actions which we do not consider to be representative of our underlying business operations, however, these disclosed items represent costs to Versum Materials; (b) Adjusted EBITDA is not intended to be a measure of cash available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements; (c) though not business operating costs, interest expense and income tax provision represent ongoing costs of Versum Materials; (d) depreciation and amortization charges represent the wear and tear or reduction in value of the plant, equipment, and intangible assets which permit us to manufacture and market our products; and (e) other companies may define non-GAAP measures differently than we do, limiting their usefulness as comparative measures. A reader may find any one or all of these items important in evaluating our performance. Management compensates for the limitations of using non-GAAP financial measures by using them only to supplement our GAAP results and to provide a more complete understanding of the factors and trends affecting our business. In evaluating these non-GAAP financial measures, the reader should be aware that we may incur expenses similar to those eliminated in this presentation in the future.

A reconciliation of net income to Adjusted EBITDA as forecasted for 2018 is not provided. Versum Materials does not forecast net income as it cannot, without unreasonable effort, estimate or predict with certainty various components of net income. These components include further restructuring and other income or charges to be incurred in 2018 as well as the related tax impacts of these items. Additionally, discrete tax items could drive variability in our forecasted effective tax rate. All of these components could significantly impact net income. Further, in the future, other items with similar characteristics to those currently included in Adjusted EBITDA that have a similar impact on comparability of periods, and which are not known at this time, may exist and impact Adjusted EBITDA.

Forward-Looking Information

This press release contains, and management may make, certain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by references to future periods, and include our fiscal year 2018 financial guidance; statements about our business strategies, operating plans, anticipated growth rates, anticipated profitability and margins, sales expectations, future operating income and Adjusted EBITDA; our ability to continue successfully providing innovative solutions to customers through technology; estimates regarding future capital requirements; estimates of expenses and cost reduction efforts; estimates of future tax liability and effective tax rates; our ability to execute on our strategy and deliver on our commitments to customers and stakeholders; our ability to meet customer demand; anticipated cash flows; estimates of the size of the market for our products; forecasted industry capital spending and anticipated demand for our products; inorganic growth opportunities; our ability to compete successfully as a leading materials supplier to the semiconductor industry; our successful and timely completion of various capital projects; and other matters. The words “believe,” “expect,” “anticipate,” “project,” “estimate,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “objective,” “forecast,” “goal,” “guidance,” “outlook,” “target,” and similar expressions, among others, generally identify forward-looking statements, which are based on management’s reasonable expectations and assumptions as of the date the statements were made. Actual results and the outcomes of future events may differ materially from those expressed or implied in the forward-looking statements because of a number of risks and uncertainties, including, without limitation, product supply versus demand imbalances in the semiconductor industry or in certain geographic markets may decrease the demand for our goods and services; our concentrated customer base; our dependence upon the capital expenditure cycles of our customers; our ability to continue technological innovation and successfully introduce new products to meet the evolving needs of our customers; our ability to protect and enforce our intellectual property rights and to avoid violating any third party intellectual property or technology rights; unexpected interruption of or shortages in our raw material supply; inability of sole source, limited source or qualified suppliers to deliver to us in a timely manner or at all; hazards associated with specialty chemical manufacturing, such as fires, explosions and accidents, could disrupt our operations or the operations of our suppliers or customers; increased competition and new product development by our competitors, changing customer needs and price changes in materials and components could result in declining demand for our products; operational, political and legal risks of our international operations, including government actions such as trade wars; recent changes in U.S. tax laws; the impact of changes in environmental and health and safety regulations, anticorruption enforcement, sanctions, import/export controls, tax and other legislation and regulations in jurisdictions in which Versum Materials and its affiliates operate; our available cash and access to additional capital may be limited by substantial leverage and debt service obligations; uncertainty regarding the availability of financing to us in the future and the terms of such financing; agreements governing our indebtedness may restrict our current and future operations, and hamper our ability to respond to changes or to take certain actions; government regulation of raw materials, products and facilities may impact our product manufacturing processes, handling, storage, transportation, uses and applications; possible liability for contamination, personal injury or third party impacts if hazardous materials are released into the environment; cyber security threats may compromise our data or disrupt our information technology applications or services; fluctuation of currency exchange rates; costs and outcomes of litigation or regulatory investigations; the timing, impact, and other uncertainties of future acquisitions or divestitures; restrictions in our governing documents and of Delaware law may prevent or delay an acquisition of us; tax and other potential liabilities to Air Products assumed in connection with the separation and spin-off; restrictions against engaging in certain corporate transactions for two years following the separation and spin-off; potential conflicts of interest between us and Air Products by our directors and officers; potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements with respect to the separation and spin-off and related internal reorganization transactions; and other risk factors described in our filings with the Securities and Exchange Commission, including in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017, and in our other periodic filings. Versum Materials assumes no obligation to update any forward-looking statements or information in this press release to reflect any subsequent change in assumptions, beliefs or expectations, or any change in circumstances upon which such forward-looking statements are based.

       
Versum Materials, Inc.
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
 
Three Months Ended June 30, Nine Months Ended June 30,
2018   2017   % Change 2018   2017   % Change

(In millions, except per share data and
percentages)

Sales $ 350.0 $ 290.8 20 % $ 1,021.5 $ 832.4 23 %
Cost of sales 200.4 159.6 26 % 587.9 465.0 26 %
Selling and administrative 35.2 34.5 2 % 107.1 94.2 14 %
Research and development 12.4 11.9 4 % 36.2 33.1 9 %
Business separation, restructuring and cost
reduction actions 6.7 6.0 12 % 16.7 15.3 9 %
Other (income) expense, net (0.9 ) (2.2 ) (59 )% (0.9 ) (5.2 ) (83 )%
Operating Income 96.2 81.0 19 % 274.5 230.0 19 %
Interest expense 12.5 11.9 5 % 35.7 35.0 2 %
Write-off of financing costs

-

 

-

  NM 2.1  

-

 

NM

Income Before Taxes 83.7 69.1 21 % 236.7 195.0 21 %
Income tax provision 19.6   14.4   36 % 88.7   41.2   115 %
Net Income 64.1 54.7 17 % 148.0 153.8 (4 )%
Less: Net Income Attributable to Non-
Controlling Interests 0.8   2.0   (60 )% 4.5   5.4   (17 )%
Net Income Attributable to Versum $ 63.3   $ 52.7   20 % $ 143.5   $ 148.4   (3 )%
Net income attributable to Versum per
common share:
Basic $ 0.58   $ 0.48   21 % $ 1.32   $ 1.36   (3 )%
Diluted $ 0.58   $ 0.48   21 % $ 1.31   $ 1.36   (4 )%
Shares used in computing per common
share amounts:
Basic 108.9 108.8

-

% 108.9 108.7

-

%
Diluted 109.8 109.5

-

% 109.7 109.3

-

%
 
       
Versum Materials, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30, September 30,
2018 2017
(In millions)

Assets

Current Assets
Cash and cash items $ 289.5 $ 271.4
Trade receivables, net 194.8 145.3
Inventories 167.5 151.6
Contracts in progress, less progress billings 37.3 15.6
Prepaid expenses 15.5 12.2
Other current assets 12.7   10.8  
Total Current Assets 717.3   606.9  
Plant and equipment, net 391.3 330.3
Goodwill 183.6 182.6
Intangible assets, net 65.3 70.8
Other non-current assets 51.3   56.2  
Total Non-Current Assets 691.5   639.9  
Total Assets $ 1,408.8   $ 1,246.8  
 

Liabilities and Stockholders’ Deficit

Current Liabilities
Payables and accrued liabilities $ 112.5 $ 120.8
Accrued income taxes 43.7 31.4
Current portion of long-term debt 5.8   5.8  
Total Current Liabilities 162.0   158.0  
Long-term debt 975.2 977.0
Noncurrent income tax payable 29.2

-

Deferred tax liabilities 31.5 37.3
Other non-current liabilities 53.6   49.9  
Total Non-Current Liabilities 1,089.5   1,064.2  
Total Liabilities 1,251.5   1,222.2  
Stockholders’ Equity (Deficit)
Common stock 108.9 108.8
Capital in excess of par 2.4 4.8
Retained earnings (accumulated deficit) 28.6 (105.2 )
Accumulated other comprehensive income (loss) (15.6 ) (18.4 )
Total Versum’s Stockholders’ Equity (Deficit) 124.3 (10.0 )
Non-Controlling Interests 33.0   34.6  
Total Stockholders Equity 157.3   24.6  
Total Liabilities and Stockholders’ Equity $ 1,408.8   $ 1,246.8  
 
     
Versum Materials, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended June 30,
2018   2017
(In millions)
Operating Activities
Net income $ 148.0 $ 153.8
Less: Net income attributable to non-controlling interests 4.5   5.4  
Net income attributable to Versum 143.5 148.4
Adjustments to reconcile income to cash provided by operating activities:
Depreciation and amortization 37.8 32.5
Deferred income taxes (4.0 ) 5.8
Gain on sale of assets (0.3 ) (1.8 )
Share-based compensation 7.4 5.6
Other adjustments 11.4 3.6
Working capital changes that provided (used) cash:
Trade receivables (52.3 ) (27.8 )
Inventories (14.4 ) (5.9 )
Contracts in progress, less progress billings (21.8 ) 5.1
Payables and accrued liabilities (7.7 ) 1.5
Accrued income taxes 35.9 (4.5 )
Other working capital 0.1   24.3  
Cash Provided by Operating Activities 135.6   186.8  
Investing Activities
Additions to plant and equipment (90.0 ) (41.4 )
Proceeds from sale of assets 1.1 3.0
Short-term investment

-

  (10.0 )
Cash Used by Investing Activities (88.9 ) (48.4 )
Financing Activities
Payments on long-term debt (4.3 ) (4.3 )
Short-term borrowings

-

1.5
Payments on short-term borrowings

-

(1.5 )
Debt issuance costs

-

(1.7 )
Dividends paid to shareholders (17.4 ) (5.4 )
Dividends paid to non-controlling interests (6.1 ) (1.2 )
Other financing activity (3.2 ) 2.1  
Cash Used for Financing Activities (31.0 ) (10.5 )
Effect of Exchange Rate Changes on Cash 2.4   1.0  
Increase in Cash and Cash Items 18.1 128.9
Cash and Cash items - Beginning of Year 271.4   105.6  
Cash and Cash items - End of Period $ 289.5   $ 234.5  
 
       
APPENDIX TABLE A-1: CONSOLIDATED AND SEGMENT SALES MAJOR FACTORS
 
Versum Materials Total
 
Three Months Ended Nine Months Ended
June 30, 2018 June 30, 2018
Sales
Volume 21 % 25 %
Price/Mix (2 )% (3 )%
Currency 1 % 1 %
Versum Materials Sales Change 20 % 23 %
 

Materials Segment

Three Months Ended Nine Months Ended
June 30, 2018 June 30, 2018
Sales
Volume 8 % 10 %
Price/Mix (3 )% (5 )%
Currency 1 % 1 %
Materials Sales Change 6 % 6 %
 

DS&S Segment

Three Months Ended Nine Months Ended
June 30, 2018 June 30, 2018
Sales
Volume 55 % 67 %
Currency 2 % 2 %
DS&S Sales Change 57 % 69 %
 
       

APPENDIX TABLE A-2: RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

 
Three Months Ended June 30, Nine Months Ended June 30,
2018   2017   % Change 2018   2017   % Change
(In millions, except percentages)
Net Income Attributable to Versum $ 63.3 $ 52.7 20 % $ 143.5 $ 148.4 (3 )%
Add: Interest expense 12.5 11.9 5 % 35.7 35.0 2 %
Add: Write-off of financing costs

-

-

NM

2.1

-

NM

Add: Income tax provision 19.6 14.4 36 % 88.7 41.2 115 %
Add: Depreciation and amortization 13.9 10.7 30 % 37.8 32.5 16 %
Add: Non-controlling interests 0.8 2.0 (60 )% 4.5 5.4 (17 )%
Add: Business separation, restructuring
and cost reduction actions 6.7   6.0   12 % 16.7   15.3   9 %
Adjusted EBITDA $ 116.8   $ 97.7   20 % $ 329.0   $ 277.8   18 %
Adjusted EBITDA Margin 33 % 34 % 32 % 33 %
 
   

APPENDIX TABLE A-3: RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME

 
Three Months Ended June 30, Nine Months Ended June 30,
2018   2017 2018   2017
(In millions)
Net Income Attributable to Versum $ 63.3 $ 52.7 $ 143.5 $ 148.4
Add: Business separation, restructuring and cost
reduction actions, net of tax* 4.9 3.9 13.0 9.0
Add: Write-off of financing costs, net of tax*

-

-

1.5

-

Add: Impact of Tax Act 0.7  

-

  34.6  

-

Adjusted Net Income $ 68.9   $ 56.6   $ 192.6   $ 157.4
 

*See Appendix Table A-2 for amounts gross of tax

 

APPENDIX TABLE A-4: RECONCILIATON OF DILUTED EPS TO ADJUSTED DILUTED EPS

 
Three Months Ended June 30, Nine Months Ended June 30,
2018 2017 2018 2017
(Per share data)
Diluted Earnings Per Share $ 0.58 $ 0.48 $ 1.31 $ 1.36
Add: Business separation, restructuring and cost
reduction actions per diluted share, net of tax 0.04 0.04 0.12 0.08
Add: Write-off of financing costs, net of tax

-

-

0.01

-

Add: Impact of Tax Act 0.01  

-

  0.32  

-

Adjusted Diluted Earnings Per Share $ 0.63   $ 0.52   $ 1.76   $ 1.44
 
 

APPENDIX TABLE A-5: FISCAL YEAR 2017 SALES BY SEGMENT

 
For the Quarter Ended
December 31, March 31, June 30, September 30,
2016 2017 2017 2017 Total
(In millions)
Sales
Materials $ 208.0 $ 198.3 $ 206.4 $ 217.0 $ 829.7
DS&S 61.9 71.7 83.5 76.5 293.6
Corporate 0.9   0.8   0.9   1.0   3.6  
Total Versum Sales $ 270.8   $ 270.8   $ 290.8   $ 294.5   $ 1,126.9  
 

APPENDIX TABLE A-6: FISCAL YEAR 2018 RECONCILIATIONS OF SEGMENT OPERATING INCOME TO SEGMENT ADJUSTED EBITDA

 
For the Quarter Ended
December 31, March 31, June 30,
OPERATING INCOME TO ADJ EBITDA 2017 2018 2018 Q318 YTD
(In millions, except percentages)
Materials
Operating income $ 65.8 $ 71.6 $ 71.4 $ 208.8
Add: Depreciation and amortization 11.0   11.6   13.0   35.6  
Segment Adjusted EBITDA $ 76.8   $ 83.2   $ 84.4   $ 244.4  
Segment Adjusted EBITDA Margin(A) 36 % 38 % 39 % 37 %
DS&S
Operating income $ 33.4 $ 32.9 $ 37.2 $ 103.5
Add: Depreciation and amortization 0.3   0.4   0.7   1.4  
Segment Adjusted EBITDA $ 33.7   $ 33.3   $ 37.9   $ 104.9  
Segment Adjusted EBITDA Margin(A) 29 % 27 % 29 % 29 %
Corporate
Operating loss $ (8.5 ) $ (6.9 ) $ (5.7 ) $ (21.1 )
Add: Depreciation and amortization 0.3   0.3   0.2   0.8  
Segment Adjusted EBITDA $ (8.2 ) $ (6.6 ) $ (5.5 ) $ (20.3 )
       
Total Versum Materials Adjusted EBITDA $ 102.3   $ 109.9   $ 116.8   $ 329.0  
 

(A) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by sales.

 

APPENDIX TABLE A-7: FISCAL YEAR 2017 RECONCILIATIONS OF SEGMENT OPERATING INCOME TO SEGMENT ADJUSTED EBITDA

 
For the Quarter Ended
December 31, March 31, June 30, September 30,
OPERATING INCOME TO ADJ EBITDA 2016 2017 2017 2017 Total
(In millions, except percentages)
Materials
Operating income $ 72.9 $ 65.1 $ 69.6 $ 66.8 $ 274.4
Add: Depreciation and amortization 10.2   10.1   10.1   12.7   43.1  
Segment Adjusted EBITDA $ 83.1   $ 75.2   $ 79.7   $ 79.5   $ 317.5  
Segment Adjusted EBITDA Margin(A) 40 % 38 % 39 % 37 % 38 %
DS&S
Operating income $ 12.4 $ 17.7 $ 24.0 $ 17.6 $ 71.7
Add: Depreciation and amortization 0.3   0.4   0.3   0.4   1.4  
Segment Adjusted EBITDA $ 12.7   $ 18.1   $ 24.3   $ 18.0   $ 73.1  
Segment Adjusted EBITDA Margin(A) 21 % 25 % 29 % 24 % 25 %
Corporate
Operating loss $ (3.0 ) $ (6.8 ) $ (6.6 ) $ (4.1 ) $ (20.5 )
Add: Depreciation and amortization 0.4   0.4   0.3   0.4   1.5  
Segment Adjusted EBITDA $ (2.6 ) $ (6.4 ) $ (6.3 ) $ (3.7 ) $ (19.0 )
         
Total Versum Materials Adjusted EBITDA $ 93.2   $ 86.9   $ 97.7   $ 93.8   $ 371.6  
 

(A) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by sales.

 

APPENDIX TABLE A-8: FISCAL YEAR 2017 CONSOLIDATED INCOME STATEMENT

 
For the Quarter Ended
December 31, March 31, June 30, September 30,
2016 2017 2017 2017 Total
(In millions, except per share data)
Sales $ 270.8 $ 270.8 $ 290.8 $ 294.5 $ 1,126.9
Cost of sales 150.9 154.5 159.6 171.9 636.9
Selling and administrative 30.2 29.5 34.5 31.5 125.7
Research and development 10.3 10.9 11.9 12.0 45.1
Business separation, restructuring and cost
reduction actions 3.2 6.1 6.0 10.2 25.5
Other (income) expense, net (2.9 ) (0.1 ) (2.2 ) (1.2 ) (6.4 )
Operating Income 79.1 69.9 81.0 70.1 300.1
Interest expense 11.5   11.6   11.9   12.4   47.4  
Income Before Taxes 67.6 58.3 69.1 57.7 252.7
Income tax provision 15.3   11.5   14.4   11.6   52.8  
Net Income 52.3 46.8 54.7 46.1 199.9
Less: Net Income Attributable to Non-
Controlling Interests 1.5   1.9   2.0   1.5   6.9  
Net Income Attributable to Versum $ 50.8   $ 44.9   $ 52.7   $ 44.6   $ 193.0  
Net income attributable to Versum per
common share:
Basic $ 0.47   $ 0.41   $ 0.48   $ 0.41   $ 1.78  
Diluted $ 0.47   $ 0.41   $ 0.48   $ 0.41   $ 1.76  
Shares used in computing per common share
amounts:
Basic 108.7 108.7 108.8 108.8 108.7
Diluted 109.2 109.3 109.5 109.6 109.4
 

Source: Versum Materials, Inc.

Versum Materials, Inc.
Investor Inquiries:
Soohwan Kim, CFA, (602)-282-0957
VSMIR@versummaterials.com
or
Media Inquiries:
Tiffany Zinn, (480)-282-6475
Tiffany.Zinn@versummaterials.com