Schweitzer-Mauduit (SWM) Tops Q3 EPS by 18c

Schweitzer-Mauduit (NYSE: SWM) reported Q3 EPS of $1.01, $0.18 better than the analyst estimate of $0.83. Revenue for the quarter came in at $256.4 million versus the consensus estimate of $258.38 million.

Third Quarter 2019 Financial Results Summary

• Total sales were $256.4 million, down 2%, and flat excluding currency impact
• GAAP operating profit was $34.6 million, or 13.5% of sales, up 11%
• Adjusted operating profit was $41.9 million, or 16.3% of sales, up 14%
• GAAP EPS was $0.90, down from $1.33; prior year quarter included $0.68 of one-time benefits
• Adjusted EPS was $1.01, up 29%

Third Quarter 2019 Business Highlights

• AMS segment sales increased 4%, or 5% absent currency impacts, driven by continued strong gains in transportation and filtration products, as well as growth in medical
• AMS GAAP and adjusted operating profit margin expanded 540 and 480 basis points, respectively, due to strong organic sales growth, fixed cost reductions, and favorable resin input costs; adjusted operating profit increased 39%
• EP segment sales decreased 7%, or 4% absent currency impacts; positive price/mix performance partially offset lower volumes
• EP GAAP operating profit and adjusted operating profit margin expanded 130 and 290 basis points, respectively, due to positive price/mix benefits and lower wood pulp input costs; adjusted operating profit increased 7%

Dr. Jeff Kramer, Chief Executive Officer, commented, "Third quarter Adjusted EPS increased nearly 30%, highlighted by strong organic sales growth in AMS, solid execution across both businesses, and favorable raw material costs contributing to healthy profit growth."

"AMS segment profits grew nearly 40% versus last year when raw material costs had a significant margin impact. With rising polypropylene costs no longer clouding our results, we can see the benefits of strong organic growth and cost efficiency efforts as we delivered nearly 500 basis points of margin expansion. Top-line strength was generally balanced across our core end-markets. Filtration and transportation continued to demonstrate positive momentum and our medical business also increased, driving solid overall sales growth. EP segment profits increased 7% as our focus on higher-value products, good operational execution, and lower wood pulp input costs helped drive margin expansion. Our continued strategic de-emphasis on lower-margin non-tobacco products coupled with slightly higher attrition rates in the US weighed on volumes."

Dr. Kramer concluded, "We continue to deliver on our vision of profit stability in our paper business and growth in our AMS platform that was the basis of our 2019 earnings outlook. To date, results are on plan, cash flow generation is robust, and we continue to execute against our strategic initiatives of new product innovations, global capacity additions in our fastest growing technologies and products, and projects to further improve our cost structure and efficiency."

For earnings history and earnings-related data on Schweitzer-Mauduit (SWM) click here.

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