For the fourth quarter ended January 3, 2009:
Sales were $145.6 million compared with $144.6 million in the fourth quarter of 2007;
Adjusted Operating Income was $26.9 million compared with $31.3 million in the prior-year period;
Adjusted Net Income and Adjusted EPS were $9.9 million and $0.22 per diluted share, compared with $10.9 million and $0.27 per diluted share in the prior-year period.
Robert B. Toth, president and chief executive officer, stated, Performance was consistent with our guidance despite the effect of the economic downturn experienced late in the quarter. We are pleased with the progress we made on our strategic priorities and the ongoing application development we see in our markets. We have a solid liquidity position, and we are keenly focused on managing our business to maintain it.
For the year ended January 3, 2009:
Sales were $610.5 million, up 14% from $534.7 million in 2007;
Adjusted Operating Income increased to $116.0 million compared with $103.4 million in the prior year;
Adjusted Net Income and Adjusted EPS increased to $41.3 million and $0.96 per diluted share, compared with $17.2 million and $0.52 per diluted share in the prior year.
Adjusted EBITDA:
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), as defined in the company’s senior secured credit facility, is defined and reconciled to net income as noted in the attached table. Adjusted EBITDA was $41.9 million in the fourth quarter of 2008 compared with $44.2 million in the fourth quarter of 2007. Adjusted EBITDA for the twelve months ended January 3, 2009 was $175.7 million, up from $155.2 million in the comparable prior-year period.
Energy Storage:
In the quarter, sales for the Energy Storage segment were $108.8 million, an increase of $8.3 million, or 8%, over the prior-year period (up 11% net of the effect of the euro to dollar exchange rate).
For the fourth quarter:
Sales of lead-acid battery separators grew 7%, driven primarily by the acquisition of Microporous Holding Corporation (Microporous), offset by the negative impact of the euro to dollar exchange rate;
Lithium battery separator sales grew 15%, primarily driven by volume;
Segment operating income was $20.1 million and 19% of sales compared with $21.8 million and 22% of sales for the prior-year period. The decline in operating income margin was primarily related to the Microporous and Yurie-Wide acquisitions as well as raw material and energy cost escalation experienced in 2008;
For the year, Energy Storage segment sales were $450.2 million, an increase of $70.8 million, or 19%, over the prior year (15% net of the effect of the euro to dollar exchange rate).
For the full year:
Sales of lead-acid battery separators grew 20%, primarily attributed to the acquisition of Microporous and the positive impact of the euro to dollar exchange rate;
Lithium battery separator sales grew 16%, primarily driven by volume;
Segment operating income was $89.7 million and 20% of net sales compared with $81.5 million and 22% of net sales for the prior year.
Separations Media:
In the quarter, sales for the Separations Media segment were $36.8 million, down $7.3 million, or 17%, from the fourth quarter of 2007. The prior-year period included $5.3 million in sales of cellulosic hemodialysis membranes, which were discontinued in 2007. Excluding those sales and the impact of the euro to dollar exchange rate, sales increased by 1%.
For the fourth quarter:
Excluding sales of cellulosic hemodialysis membranes, healthcare products experienced an 8% decline in sales due to the negative impact of the euro to dollar exchange rate;
Sales of filtration and specialty products declined 2%, with the increased demand for high performance filtration applications offset by the negative impact of the euro to dollar exchange rate;
Segment operating income was $7.0 million and 19% of sales compared with $9.5 million and 22% of sales for the prior-year period. The decline in operating income margin was primarily associated with production timing and customer mix.
For the year, Separations Media segment sales were $160.3 million, an increase of $5.0 million, or 3%, over the prior year. The prior-year period included $18.3 million in sales of cellulosic hemodialysis membranes, which were discontinued in 2007. Excluding those sales and the effect of the euro to dollar exchange rate, sales increased by 10%.
For the full year:
Excluding sales of cellulosic hemodialysis membranes, healthcare products increased 20% due to growth in synthetic hemodialysis membranes and the positive impact of the euro to dollar exchange rate;
Sales of filtration and specialty products grew 10%, with the increased demand for high performance filtration applications and the positive impact of the euro to dollar exchange rate;
Segment operating income was $27.3 million and 17% of net sales compared with $22.2 million and 14% of net sales for the prior year.
Lead-Acid Battery Separator Business Restructuring Update:
As disclosed in October 2008, the company implemented a restructuring plan in the fourth quarter to align lead-acid battery separator production capacity with demand, reduce costs, and position the company to meet future growth opportunities. The plan included closing the company’s facility in Potenza, Italy and streamlining production at the company’s facility in Owensboro, Kentucky.
The total estimated cost of the plan is $61.7 million, including estimated cash charges of $32.8 million for severance benefits, site clean-up and remediation and other costs and an estimated non-cash impairment charge of $28.9 million primarily for buildings and equipment that will no longer be used in Potenza, Italy. During the fourth quarter, the company recorded a $59.9 million restructuring charge (about $53.2 million net of income tax), or $1.20 per fully diluted share. The timing, scope and costs of these restructuring measures (including income tax considerations) are subject to change as the company implements the plan and continue to evaluate its business needs and costs.
Liquidity:
As of the end of fiscal 2008, the company had total liquidity of about $170.0 million including cash on hand and availability under its revolving credit facility. Additionally, there are no material debt maturities until 2012 and the company expects to continue to generate positive cash flow.
Outlook:
While we have a large base of recurring revenue and our businesses continue to generate cash, we are not completely immune to economic conditions, added Toth. We expect the near-term environment to be challenging and, like most companies today, we cannot predict the full impact and duration of the economic downturn. We have a solid capital structure, and we remain confident in the long-term demand drivers of our businesses due to the growing global need for mobile power and high performance filtration.
