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Article Excerpt
* Full-year sales and earnings per share set records
* Full-year gross margin increases 0.8 percentage point versus 2005
* Debt and leverage ratio reductions continue, driven by record cash generation
* International sales improve 14 percent compared with 2005
* Fourth-quarter earnings decline primarily reflects softening in Resin and Intermediates segment demand
PolyOne Summary Results - Unaudited
4Q06 4Q05 % Change 2006 2005 % Change
Sales, millions $595.2 $606.8 (2) $2,622.4 $2,450.6 7
Operating income, millions $22.4 $38.0 (41) $190.2 $140.3 36
Earnings per share $0.15 $0.24 (38) $1.33 $0.51 161
CLEVELAND, Jan. 30 /PRNewswire-FirstCall/ -- PolyOne Corporation , a leading global provider of specialized polymer materials, services and solutions, today reported unaudited results for the fourth quarter and full year of 2006.
Net income for full-year 2006 was $123.2 million, or $1.33 per share, compared with $46.9 million, or $0.51 per share, in full-year 2005, an increase of $0.82 per share.
Strong first-half demand and improved gross margins were the principal drivers of year-over-year earnings and sales improvement. For the year, gross margin as a percent of sales increased 0.8 percentage point compared with 2005. International Color and Engineered Materials sales grew 14 percent, with sales growth in Asia approaching 30 percent. Despite a significant decline in the second half, Resin and Intermediates reported record earnings for the year.
"We are pleased with the overall strength of our 2006 financial performance and the progress in mapping out and implementing our strategic initiatives," said Stephen D. Newlin, chairman, president and chief executive officer. "The fourth-quarter swing in our Resin and Intermediates segment reflects the volatile nature of a commodity business, and underscores the importance of our drive to improve our core businesses through our strategy of specialization, global growth, and commercial and operational excellence."
For the fourth quarter ended December 31, 2006, sales were $595.2 million, a decrease of 2 percent compared with fourth-quarter 2005 sales. The Company reported net income of $14.4 million, or $0.15 per share, in the fourth quarter of 2006, compared with $21.7 million, or $0.24 per share, in the same period last year. Included in the fourth-quarter 2006 results are a $15.8 million non-cash benefit to net income associated with the reversal of the deferred tax allowance, which was partially offset by a $3.8 million pretax charge associated with the Company's early retirement of $43.6 million of debt during the quarter.
For the quarter, PolyOne's core operating businesses demonstrated double- digit income growth compared with the fourth quarter of 2005. The increase in Corporate and eliminations was due to higher benefits realized in 2005 from non-recurring adjustments. Also noteworthy, International Color and Engineered Materials sales grew 24 percent compared with the fourth quarter of 2005, reflecting the Company's strategic drive for global expansion. The overall decline of $15.6 million in quarterly operating income is attributable to the $16.7 million drop in Resin and Intermediates.
Net cash provided by operating activities for full-year 2006 improved substantially to $110.5 million compared with $62.0 million in 2005. Similarly, operating cash flow for 2006 was $86.5 million compared with $31.9 million for 2005. Improved earnings and working capital efficiency were the primary drivers of this increase in cash flow. Including proceeds of $17.3 million from the sale of the Engineered Films business, cash flow in 2006 exceeded $100 million.
Highlights of Progress on Strategic Initiatives * Investment in sales, marketing and innovation resources - In January 2007, Dr. Cecil Chappelow joined PolyOne as vice president of research and innovation and chief innovation officer, charged with accelerating global development of technologies and services. The Company has hired 52 people in sales, marketing, and research and development as it moves toward its goal of roughly 100 global commercial hires in 18 months. PolyOne has begun training the commercial organization in value-based selling, and sales leadership. * Global expansion - During the fourth quarter, PolyOne announced that it had signed a definitive agreement to acquire the assets and operations of Ngai Hing PlastChem Company Ltd., a vinyl compounder in South China. The Company also opened a business development office in Mumbai, India, to serve global customers expanding into this region and to cultivate opportunities with Indian customers. PolyOne added color compounding lines at its manufacturing facility in Thailand and a new line to manufacture high-growth low-smoke, halogen-free compounds...
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