HIGHLIGHTS – Q3 2018 vs. Q3 2017
GAAP Financials
Revenue of $78.92 million, up $14.02 million, or 22%, from $64.90 million
Operating income of $16.96 million, up $1.87 million, or 12%, from $15.09 million
Net income of $13.54 million, up $1.69 million, or 14%, from $11.86 million
Earnings per diluted share (“EPS”) of $1.43, up $0.17, or 13%, from $1.26
Non-GAAP Financial Measures *
Adjusted diluted EPS of $1.32, up $0.29, or 28%, from $1.03
EBITDA of $23.51 million, up $2.71 million, or 13%, from $20.80 million
Adjusted EBITDA of $22.03 million, up $3.24 million, or 17%, from $18.79 million
Adam P. Chase, President and Chief Executive Officer, commented, "Strong sales growth, both organic and inorganic, defined our third fiscal quarter, but so too did the effects of rising raw material prices and their continued pressure on margins in certain areas. We also continued to experience a comparatively less favorable product mix in the period, further curtailing results. Our second quarter acquisition, Zappa Stewart, delivered on the top and bottom lines, producing margins accretive to our relative average. Despite contracted margins on a percentage basis, the growth in overall sales volume in the third quarter produced increased operating income over the prior year. Our overall earnings were also aided by the sale of our structural composites rod business in April, which continued our divestment of non-core businesses, while both providing us with a one-time gain and securing a royalty agreement to provide for future cash inflows.
"Price increases have gone into effect for those products most impacted by rising raw material costs, with more possible in the near term. While these price increases began to stem the negative effects of inflating raw material costs in the third quarter, we anticipate them to more fully take hold in the fourth quarter and into our next fiscal year. Increasing inflationary pressures from higher commodity prices, supply and demand imbalances and tariffs have been felt across the business, most palpably in our Industrial Materials segment.
"Beyond price increases, Chase has also made other moves to address rising costs with tangible progress in our facilities rationalization and consolidation initiative. In June, after the third quarter, we announced the future closure of our Pawtucket, RI manufacturing plant. Manufacturing operations will transition to our Oxford, MA and Lenoir, NC locations. This ties to our strategic need to achieve structural cost reductions where required given market dynamics. The Pawtucket, RI operation primarily services the wire and cable industry with specialty tapes. This industry has continued to experience customer consolidation, and our tactics match the needs dictated by the market."
Mr. Chase continued, "The Industrial Materials segment revenue increased over the prior year on a same store' basis, beyond the additional revenue provided by the newly-acquired superabsorbent polymers business, Zappa Stewart, and offsetting business divestitures. Our pulling and detection and electronic and industrial coatings product lines continued to outpace prior year sales results. With telecom infrastructure build and repair continuing nationwide, and North American and international automotive and appliance use of our products growing, these product lines are poised to continue their success in the fourth quarter. Our cable materials product line surpassed its prior year third quarter results, narrowing the comparable deficit in sales seen in the first half of the year."
"Our Construction Materials segment continued the favorable year-to-date momentum gained in the second quarter" noted Mr. Chase. "Middle East sales of water and waste water pipeline products and North American sales of our domestically-produced oil and gas pipeline products grew over the prior year. While our bridge and highway product line could not repeat the results obtained in the prior year third quarter, it remains ahead on a year-to-date basis and is now in the midst of its historically highest sales period. Having effectively addressed cost increases through price increases earlier in the year, the effects of rising raw material costs have not had as dramatic a result on the margins in this segment."
Chase Corporation | Investor Relations | Annual Report
