Platform Specialty Products (PAH) Tops Q3 EPS by 1c, Revenues Miss; Affirms FY18 Adj. EBITDA Outlook

Platform Specialty Products (NYSE: PAH) reported Q3 EPS of $0.04, $0.01 better than the analyst estimate of $0.03. Revenue for the quarter came in at $489 million versus the consensus estimate of $501.29 million.

• Net sales from continuing operations increased 2% on a reported basis to $489 million; growth of 3% on an organic basis
• GAAP diluted loss per share from continuing operations of $0.02; adjusted earnings per share from continuing operations of $0.04
• Reported net loss from continuing operations of $4.3 million; improved from a loss of $36.9 million in the same period last year
• Adjusted EBITDA from continuing operations grew 1% to $108 million; growth of 3% on a constant currency basis
• Reaffirming 2018 adjusted EBITDA guidance, excluding discontinued operations (Arysta LifeScience), expected to be in the range of $425 million to $445 million, which includes $5 million of reorganizational cost savings realized in 2018; expect an additional $20 million of run-rate savings from the sale of Arysta LifeScience and the associated reduction of corporate costs in 2019
• Sale of Arysta LifeScience targeted to close at year-end 2018, subject to receipt of regulatory clearances

Platform’s CEO Rakesh Sachdev said, “Our third quarter results demonstrate another quarter of growth in both net sales and adjusted EBITDA. The Performance Solutions businesses in continuing operations - the Element Solutions portfolio - achieved positive organic sales growth in all end markets, despite macro challenges. We experienced softness in certain of our end-markets, particularly in Asia, and we see this trend continuing in the fourth quarter. On a reported basis, currency fluctuations, particularly the Brazilian Real and Chinese Yuan, had a negative impact on our results. From an Adjusted EBITDA perspective, our positive topline growth was partially offset by unfavorable product mix pressure as the higher margin Asian electronics end-market experienced slower growth. Despite these pressures and some increased raw material prices, the business showed resilience around the world. This resilience is a testament to the quality of the businesses and the strength of our diversified business model.”

“We are pleased to report that we have made significant progress towards completing the announced sale of our Agricultural Solutions segment, Arysta. In coordination with UPL, we have filed with all necessary regulatory bodies and have already received several key merger control approvals including in the United States (“HSR”) and Brazil. Both parties are hopeful that we will be able to close the transaction on December 31, 2018, although the exact timing will be controlled by the outstanding regulatory clearances. In addition to regulatory filings, both sides have been working expeditiously to prepare for a smooth transition and integration. There is a lot of excitement for the next chapter within both companies. For our Performance Solutions segment, which will form the foundation of the new Element Solutions, we are well advanced with our targeted initiatives including a comprehensive strategy review and the transition to a one company structure with its associated efficiencies and cost savings. We have already begun realizing a portion of these savings and are enthusiastic about the more nimble company we will become. We look forward to sharing our progress on this further in the coming weeks and months.”

Sachdev continued, “We are reaffirming our previously announced adjusted EBITDA guidance range, excluding Arysta, of $425 million to $445 million, which includes $5 million of savings that will be realized in 2018 associated with the reorganization into a one-company structure. We expect the remaining $20 million of estimated savings we communicated when we announced the Arysta sale to be realized on a run-rate basis in 2019. Given the significant realized and anticipated currency headwinds and a degree of market softness, particularly in Asia, we currently expect to be at the lower-end of our 2018 guidance range. Achieving our expected financial and operating results and finalizing our restructuring plans are key priorities for the rest of the year.”

For earnings history and earnings-related data on Platform Specialty Products (PAH) click here.

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