Neenah Paper has reported 2016 second quarter results.
Second Quarter Highlights
Revenues of $246.0 million increased 16 percent with organic and acquisition-driven growth.Operating income grew 22 percent to $33.9 million ($35.3 million after excluding $1.4 million of integration and restructuring costs). Earnings per diluted share from continuing operations of $1.21 compared with $0.96 per share in 2015. Excluding 2016 integration and restructuring costs of $0.05 per share, adjusted E.P.S. of $1.26 increased 31 percent.Cash generated from operations of $40.3 million was used for filtration capacity expansion, debt reduction and direct returns to shareholders.
"Adjusted earnings" is a non-GAAP measure used to improve understanding and comparability of year-on-year results. Adjusted figures are reconciled to GAAP later in this release.
"Quarterly comparisons accelerated in both segments in the second quarter with improved organic volume growth, continued positive impacts from the August 2015 FiberMark acquisition and lower input costs," said John O'Donnell, Chief Executive Officer. "Key strategic initiatives remain on track, with a project to add filtration capacity in the U.S., growth in our premium packaging business, and the synergies anticipated as we execute the integration plans with FiberMark. Our substantial operational cash flow provides us the flexibility to execute these initiatives while maintaining a strong balance sheet and a meaningful return of cash to shareholders."
Quarterly Consolidated Results
Income Statement
Consolidated net sales increased 16 percent to $246.0 million compared with $211.3 million in the second quarter of 2015. Revenues increased as a result of acquired sales in all segments and organic volume growth in Technical Products, partly offset by lower average prices in both segments primarily due to a product mix which lowered revenue but had minimal bottom line impact.
Selling, general and administrative (SG&A) expense of $24.4 million in the second quarter of 2016 increased from $19.6 million in the prior year. The increase in 2016 included SG&A from acquired operations, as well as timing of other spending.
Operating income of $33.9 million in 2016 increased 22 percent compared with $27.7 million in 2015. Higher income in 2016 resulted primarily from revenue growth, lower input costs, synergies and other cost efficiencies that more than offset increased SG&A and lower selling prices. Excluding $1.4 million of costs in 2016 for integration and restructuring, adjusted operating income of $35.3 million increased 27 percent compared with the prior year.
Net interest expense of $2.7 million in the second quarter of 2016 decreased slightly from $2.9 million in the second quarter of 2015 as a result of lower average interest rates which more than offset higher average debt levels. The effective income tax rate of 34 percent in the second quarter of 2016 was equivalent to the rate in the second quarter of 2015.
Income from continuing operations of $20.7 million increased 26 percent compared with $16.4 million in the second quarter of 2015 primarily as a result of higher operating income.
During the second quarter of 2016, a net loss of $0.4 million was recognized in Discontinued Operations for settlement of final closing items following the sale of the Lahnstein mill on October 31, 2015.
