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Delaware
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20-1308307
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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3460 Preston Ridge Road
Alpharetta, Georgia
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30005
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer x
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Accelerated filer ¨
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Non-accelerated filer ¨
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Smaller reporting company ¨
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(Do not check if a smaller reporting company)
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Emerging growth company ¨
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Three Months Ended March 31,
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||||||
'[
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2019
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2018
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||||
Net sales
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$
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239.7
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$
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266.5
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Cost of products sold
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196.0
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214.1
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Gross profit
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43.7
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52.4
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Selling, general and administrative expenses
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25.3
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26.8
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SERP settlement loss (Note 7)
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—
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0.8
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Other expense - net
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1.0
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0.7
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Operating income
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17.4
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24.1
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Interest expense - net
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3.2
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3.3
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Income from continuing operations before income taxes
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14.2
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20.8
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Provision for income taxes
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2.4
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4.6
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Net income
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$
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11.8
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$
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16.2
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Earnings Per Common Share
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Basic
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$
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0.70
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$
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0.96
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Diluted
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$
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0.69
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$
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0.95
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Weighted Average Common Shares Outstanding (in thousands)
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Basic
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16,862
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16,847
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Diluted
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16,921
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17,006
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Cash Dividends Declared Per Share of Common Stock
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$
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0.45
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$
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0.41
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Three Months Ended March 31,
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2019
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2018
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Net income
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$
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11.8
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$
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16.2
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Unrealized foreign currency translation gain (loss)
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(3.2
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)
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5.5
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Reclassification of amortization of adjustments to pension and other postretirement benefit liabilities recognized in net periodic benefit cost (Note 7)
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1.7
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1.6
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Reclassification of SERP settlement loss (Note 7)
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—
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0.8
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Net gain from pension and other postretirement benefit plans
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—
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0.4
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Income (loss) from other comprehensive income items
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(1.5
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)
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8.3
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Provision for income taxes
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0.2
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1.0
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Other comprehensive income (loss)
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(1.7
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)
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7.3
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Comprehensive income
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$
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10.1
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$
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23.5
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March 31, 2019
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December 31, 2018
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||||
ASSETS
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Current Assets
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Cash and cash equivalents
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$
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7.6
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$
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9.9
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Accounts receivable (less allowances of $1.4 million and $1.3 million)
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126.5
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114.8
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Inventories
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135.3
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131.6
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Prepaid and other current assets
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16.4
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21.6
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Total Current Assets
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285.8
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277.9
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Property, Plant and Equipment
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Property, plant and equipment, at cost
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838.8
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840.2
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Less accumulated depreciation
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449.3
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444.0
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Property, Plant and Equipment—net
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389.5
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396.2
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Lease Right-of-Use Assets (Note 11)
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16.2
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—
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Deferred Income Taxes
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15.6
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16.4
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Goodwill
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83.1
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84.0
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Intangible Assets—net
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69.6
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70.7
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Other Noncurrent Assets
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16.1
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16.0
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TOTAL ASSETS
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$
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875.9
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$
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861.2
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current Liabilities
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Debt payable within one year
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$
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2.7
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$
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2.3
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Lease liabilities payable within one year (Note 11)
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3.1
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—
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Accounts payable
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59.6
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63.3
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|
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Accrued expenses
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49.3
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55.2
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Total Current Liabilities
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114.7
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120.8
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Long-term Debt
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243.4
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236.8
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Deferred Income Taxes
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14.1
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14.4
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Noncurrent Employee Benefits
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91.5
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92.9
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Noncurrent Lease Liabilities (Note 11)
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13.9
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—
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Other Noncurrent Obligations
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4.1
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6.1
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TOTAL LIABILITIES
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481.7
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471.0
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Contingencies and Legal Matters (Note 10)
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—
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—
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TOTAL STOCKHOLDERS’ EQUITY
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394.2
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390.2
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
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875.9
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$
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861.2
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Three Months Ended March 31, 2019
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|||||||||||||||||||||||
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Common Stock
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Shares
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Amount
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Treasury
Stock |
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Additional
Paid-In Capital |
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Retained
Earnings |
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Accumulated
Other Comprehensive Loss |
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Total
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|||||||||||||
Balance, December 31, 2018
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18,597
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$
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0.2
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$
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(76.6
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)
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$
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328.5
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$
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243.2
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$
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(105.1
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)
|
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$
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390.2
|
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Net income
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—
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—
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—
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—
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11.8
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—
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11.8
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|
||||||
Other comprehensive loss, after income tax benefit
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—
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—
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—
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—
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—
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(1.7
|
)
|
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(1.7
|
)
|
||||||
Dividends declared
|
|
—
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—
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—
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|
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—
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(7.6
|
)
|
|
—
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(7.6
|
)
|
||||||
Shares purchased (Note 9)
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|
—
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—
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(0.3
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)
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—
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—
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—
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(0.3
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)
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||||||
Stock options exercised
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9
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—
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—
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—
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—
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—
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—
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||||||
Restricted stock vesting (Note 9)
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3
|
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—
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(0.1
|
)
|
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—
|
|
|
—
|
|
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—
|
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(0.1
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
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1.9
|
|
|
—
|
|
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—
|
|
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1.9
|
|
||||||
Other/Currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
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|
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—
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|
||||||
Balance, March 31, 2019
|
|
18,609
|
|
|
$
|
0.2
|
|
|
$
|
(77.0
|
)
|
|
$
|
330.4
|
|
|
$
|
247.4
|
|
|
$
|
(106.8
|
)
|
|
$
|
394.2
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|||||||||||||||||||||||
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
|||||||||||||
Balance, December 31, 2017
|
|
18,458
|
|
|
$
|
0.2
|
|
|
$
|
(65.8
|
)
|
|
$
|
323.9
|
|
|
$
|
235.7
|
|
|
$
|
(94.1
|
)
|
|
$
|
399.9
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16.2
|
|
|
—
|
|
|
16.2
|
|
||||||
Other comprehensive income, after income tax benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.3
|
|
|
7.3
|
|
||||||
Reclassification of the unrealized loss on "available-for-sale" securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
0.3
|
|
|
—
|
|
||||||
Reclassification of deferred income taxes on intra-entity asset transfers
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
(0.8
|
)
|
||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.0
|
)
|
|
—
|
|
|
(7.0
|
)
|
||||||
Shares purchased (Note 9)
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
||||||
Stock options exercised
|
|
20
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
||||||
Other/Currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, March 31, 2018
|
|
18,478
|
|
|
$
|
0.2
|
|
|
$
|
(71.1
|
)
|
|
$
|
325.8
|
|
|
$
|
243.8
|
|
|
$
|
(86.5
|
)
|
|
$
|
412.2
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
||
Net income
|
|
$
|
11.8
|
|
|
$
|
16.2
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
8.8
|
|
|
9.4
|
|
||
Stock-based compensation
|
|
1.9
|
|
|
1.8
|
|
||
Deferred income tax provision
|
|
0.5
|
|
|
2.3
|
|
||
SERP settlement loss (Note 7)
|
|
—
|
|
|
0.8
|
|
||
Non-cash effects of changes in liabilities for uncertain income tax positions
|
|
(0.4
|
)
|
|
0.1
|
|
||
Increase in working capital
|
|
(20.9
|
)
|
|
(18.9
|
)
|
||
Pension and other postretirement benefits
|
|
1.5
|
|
|
(3.5
|
)
|
||
Other
|
|
(0.2
|
)
|
|
(0.1
|
)
|
||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
3.0
|
|
|
8.1
|
|
||
|
|
|
|
|
||||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
||
Capital expenditures
|
|
(4.3
|
)
|
|
(7.6
|
)
|
||
Purchase of marketable securities
|
|
(0.2
|
)
|
|
—
|
|
||
Other
|
|
(0.2
|
)
|
|
(0.3
|
)
|
||
NET CASH USED IN INVESTING ACTIVITIES
|
|
(4.7
|
)
|
|
(7.9
|
)
|
||
|
|
|
|
|
||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
||
Long-term borrowings (Note 6)
|
|
62.9
|
|
|
104.2
|
|
||
Repayments of long-term debt (Note 6)
|
|
(55.5
|
)
|
|
(90.5
|
)
|
||
Debt issuance costs
|
|
(0.2
|
)
|
|
—
|
|
||
Cash dividends paid
|
|
(7.6
|
)
|
|
(7.0
|
)
|
||
Shares purchased (Note 9)
|
|
(0.3
|
)
|
|
(5.3
|
)
|
||
Proceeds from exercise of stock options
|
|
—
|
|
|
0.1
|
|
||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
(0.7
|
)
|
|
1.5
|
|
||
|
|
|
|
|
||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
|
0.1
|
|
|
0.2
|
|
||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
(2.3
|
)
|
|
1.9
|
|
||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
9.9
|
|
|
4.5
|
|
||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
7.6
|
|
|
$
|
6.4
|
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
||
Cash paid during period for interest, net of interest expense capitalized
|
|
$
|
0.6
|
|
|
$
|
0.8
|
|
Cash paid during period for income taxes
|
|
$
|
4.3
|
|
|
$
|
2.4
|
|
Non-cash investing activities:
|
|
|
|
|
|
|
||
Liability for equipment acquired
|
|
$
|
2.6
|
|
|
$
|
3.0
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Income from continuing operations
|
|
$
|
11.8
|
|
|
$
|
16.2
|
|
Amounts attributable to participating securities
|
|
—
|
|
|
(0.1
|
)
|
||
Net income available to common stockholders
|
|
$
|
11.8
|
|
|
$
|
16.1
|
|
|
|
|
|
|
||||
Weighted-average basic shares outstanding
|
|
16,862
|
|
|
16,847
|
|
||
|
|
|
|
|
|
|
||
Basic earnings per share
|
|
$
|
0.70
|
|
|
$
|
0.96
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Income from continuing operations
|
|
$
|
11.8
|
|
|
$
|
16.2
|
|
Amounts attributable to participating securities
|
|
—
|
|
|
(0.1
|
)
|
||
Net income available to common stockholders
|
|
$
|
11.8
|
|
|
$
|
16.1
|
|
|
|
|
|
|
||||
Weighted-average basic shares outstanding
|
|
16,862
|
|
|
16,847
|
|
||
Add: Assumed incremental shares under stock compensation plans (a)
|
|
59
|
|
|
159
|
|
||
Weighted-average diluted shares
|
|
16,921
|
|
|
17,006
|
|
||
|
|
|
|
|
|
|
||
Diluted earnings per share
|
|
$
|
0.69
|
|
|
$
|
0.95
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Carrying
Value
|
|
Fair Value (a)
|
|
Carrying
Value
|
|
Fair Value (a)
|
||||||||
2021 Senior Notes (5.25% fixed rate)
|
|
$
|
175.0
|
|
|
$
|
171.5
|
|
|
$
|
175.0
|
|
|
$
|
170.5
|
|
Global Revolving Credit Facilities (variable rates)
|
|
65.3
|
|
|
65.3
|
|
|
57.9
|
|
|
57.9
|
|
||||
German loan agreement (2.45% fixed rate)
|
|
4.4
|
|
|
4.6
|
|
|
4.8
|
|
|
5.1
|
|
||||
German loan agreement (1.45% fixed rate)
|
|
4.8
|
|
|
4.8
|
|
|
4.9
|
|
|
4.9
|
|
||||
Total debt
|
|
$
|
249.5
|
|
|
$
|
246.2
|
|
|
$
|
242.6
|
|
|
$
|
238.4
|
|
|
|
Three Months Ended March 31,
|
||||
|
|
2019
|
|
2018
|
||
United States
|
|
71
|
%
|
|
70
|
%
|
Germany
|
|
22
|
%
|
|
23
|
%
|
Rest of Europe
|
|
7
|
%
|
|
7
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Raw materials
|
|
$
|
35.8
|
|
|
$
|
35.6
|
|
Work in progress
|
|
29.6
|
|
|
30.1
|
|
||
Finished goods
|
|
81.5
|
|
|
78.3
|
|
||
Supplies and other
|
|
3.4
|
|
|
3.0
|
|
||
|
|
150.3
|
|
|
147.0
|
|
||
Adjust FIFO inventories to LIFO cost
|
|
(15.0
|
)
|
|
(15.4
|
)
|
||
Total
|
|
$
|
135.3
|
|
|
$
|
131.6
|
|
|
|
Net Unrealized Foreign
Currency Translation
Gain (Loss)
|
|
Net Gain (Loss) from
Pension and Other
Postretirement
Liabilities
|
|
Accumulated Other
Comprehensive Income
(Loss)
|
||||||
AOCI — December 31, 2018
|
|
$
|
(15.5
|
)
|
|
$
|
(89.6
|
)
|
|
$
|
(105.1
|
)
|
Other comprehensive loss before reclassifications
|
|
(3.2
|
)
|
|
—
|
|
|
(3.2
|
)
|
|||
Amounts reclassified from AOCI
|
|
—
|
|
|
1.7
|
|
|
1.7
|
|
|||
Income (loss) from other comprehensive income items
|
|
(3.2
|
)
|
|
1.7
|
|
|
(1.5
|
)
|
|||
Provision (benefit) for income taxes
|
|
(0.2
|
)
|
|
0.4
|
|
|
0.2
|
|
|||
Other comprehensive income (loss)
|
|
(3.0
|
)
|
|
1.3
|
|
|
(1.7
|
)
|
|||
AOCI — March 31, 2019
|
|
$
|
(18.5
|
)
|
|
$
|
(88.3
|
)
|
|
$
|
(106.8
|
)
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
2021 Senior Notes (5.25% fixed rate) due May 2021
|
|
$
|
175.0
|
|
|
$
|
175.0
|
|
Global Revolving Credit Facilities (variable rates) due December 2023
|
|
65.3
|
|
|
57.9
|
|
||
German loan agreement (2.45% fixed rate) due in quarterly installments ending September 2022
|
|
4.4
|
|
|
4.8
|
|
||
German loan agreement (1.45% fixed rate) due in quarterly installments from June 2019 through March 2023
|
|
4.8
|
|
|
4.9
|
|
||
Deferred financing costs
|
|
(3.4
|
)
|
|
(3.5
|
)
|
||
Total debt
|
|
246.1
|
|
|
239.1
|
|
||
Less: Debt payable within one year
|
|
2.7
|
|
|
2.3
|
|
||
Long-term debt
|
|
$
|
243.4
|
|
|
$
|
236.8
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
Other than Pensions
|
||||||||||||
|
|
Three Months Ended March 31,
|
||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
|
$
|
1.3
|
|
|
$
|
1.7
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Interest cost
|
|
4.1
|
|
|
4.0
|
|
|
0.4
|
|
|
0.3
|
|
||||
Expected return on plan assets (a)
|
|
(5.0
|
)
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
||||
Recognized net actuarial loss
|
|
1.5
|
|
|
1.3
|
|
|
0.2
|
|
|
0.2
|
|
||||
Amortization of prior service benefit
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||||
Amount of settlement loss recognized (b)
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
$
|
—
|
|
|||
Net periodic benefit cost
|
|
$
|
2.0
|
|
|
$
|
2.6
|
|
|
$
|
0.9
|
|
|
$
|
0.8
|
|
|
|
|
|
|
|
|
|
|
Options granted
|
1,338
|
|
|
Per share weighted average exercise price
|
$
|
69.20
|
|
Per share weighted average grant date fair value
|
$
|
11.50
|
|
Expected term in years
|
5.0
|
|
Risk free interest rate
|
2.6
|
%
|
Volatility
|
22.9
|
%
|
Dividend yield
|
3.0
|
%
|
Options vested
|
104,577
|
|
|
Aggregate grant date fair value of Options vested (in millions)
|
$
|
1.5
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Options outstanding
|
|
437,539
|
|
|
451,081
|
|
||
Aggregate intrinsic value (in millions)
|
|
$
|
3.3
|
|
|
$
|
2.7
|
|
Per share weighted average exercise price
|
|
$
|
68.81
|
|
|
$
|
67.46
|
|
Exercisable Options
|
|
333,235
|
|
|
240,903
|
|
||
Aggregate intrinsic value (in millions)
|
|
$
|
3.3
|
|
|
$
|
2.6
|
|
Unvested Options
|
|
104,304
|
|
|
210,178
|
|
||
Per share weighted average grant date fair value
|
|
$
|
14.43
|
|
|
$
|
14.21
|
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
|
2019
|
|
2018
|
||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
||||||
2019 Stock Purchase Plan
|
|
4,285
|
|
|
$
|
0.3
|
|
|
—
|
|
|
$
|
—
|
|
2018 Stock Purchase Plan
|
|
—
|
|
|
—
|
|
|
66,724
|
|
|
5.3
|
|
Contract Expiration Date
|
Location
|
Union
|
Number of
Employees
|
|
May 2019 (b)
|
Appleton, WI
|
USW
|
116
|
|
April 2020
|
Eerbeek, Netherlands
|
CNV, FNV
|
(a)
|
|
August 2020
|
Neenah Germany
|
IG BCE
|
(a)
|
|
January 2021
|
Whiting, WI
|
USW
|
210
|
|
June 2021
|
Neenah, WI
|
USW
|
266
|
|
July 2021
|
Munising, MI
|
USW
|
192
|
|
November 2021
|
Lowville, NY
|
USW
|
102
|
|
|
|
Three Months Ended March 31, 2019
|
||
|
|
|||
Operating lease cost
|
|
$
|
0.9
|
|
Short-term lease cost
|
|
0.5
|
|
|
Variable lease cost (a)
|
|
0.4
|
|
(a)
|
The variable lease costs consist mainly of a warehouse lease where the cost is determined based on the square footage used each month.
|
|
|
Three Months Ended March 31, 2019
|
||
|
|
|||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
0.9
|
|
Right-of-use assets obtained in exchange for lease liabilities:
|
|
|
||
Operating leases
|
|
0.8
|
|
|
|
Three Months Ended March 31, 2019
|
|
|
|
||
Weighted average remaining lease term
|
|
|
|
Operating leases
|
|
8.4 years
|
|
Weighted average discount rate
|
|
|
|
Operating leases
|
|
4.8
|
%
|
Year Ending December 31,
|
|
Operating Leases
|
||
2019 (excluding the three months ended March 31, 2019)
|
|
$
|
2.5
|
|
2020
|
|
2.7
|
|
|
2021
|
|
2.6
|
|
|
2022
|
|
2.3
|
|
|
2023
|
|
2.1
|
|
|
Thereafter
|
|
9.0
|
|
|
Total lease payments
|
|
21.2
|
|
|
Less: Imputed interest
|
|
4.2
|
|
|
Total lease liabilities
|
|
$
|
17.0
|
|
•
|
The Technical Products segment is an aggregation of the Company’s filtration and performance materials businesses which are similar in terms of economic characteristics, nature of products, processes, customer class and product distribution methods. The segment is an international producer of fiber-formed, coated and/or saturated specialized media that delivers high performance benefits to customers. Included in this segment are transportation and other filtration media, tape and abrasives backings products, digital image transfer, durable label and other specialty substrate products.
|
•
|
The Fine Paper and Packaging segment is a leading supplier of premium printing and other high-end specialty papers, and premium packaging, primarily in North America.
|
•
|
The Other segment was composed of papers sold to converters for end uses such as covering materials for datebooks, diaries, yearbooks and traditional photo albums. These product lines represented an operating segment which did not meet the quantitative threshold for a reportable segment, however, due to the dissimilar nature of these products, they were previously not managed as part of either the Fine Paper and Packaging or Technical Products segments.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net sales
|
|
|
|
|
|
|
||
Technical Products
|
|
$
|
140.0
|
|
|
$
|
153.5
|
|
Fine Paper and Packaging
|
|
99.7
|
|
|
111.6
|
|
||
Other
|
|
—
|
|
|
1.4
|
|
||
Consolidated
|
|
$
|
239.7
|
|
|
$
|
266.5
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018 (a)
|
||||
Operating income (loss)
|
|
|
|
|
|
|
||
Technical Products
|
|
$
|
11.3
|
|
|
$
|
17.5
|
|
Fine Paper and Packaging
|
|
11.9
|
|
|
12.8
|
|
||
Other
|
|
—
|
|
|
—
|
|
||
Unallocated corporate costs
|
|
(5.8
|
)
|
|
(6.2
|
)
|
||
Consolidated
|
|
$
|
17.4
|
|
|
$
|
24.1
|
|
(a)
|
Consolidated operating income for three months ended March 31, 2018 includes a SERP settlement loss of $0.8 million in Unallocated corporate costs.
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Total Assets (a)
|
|
|
|
|
|
|
||
Technical Products
|
|
$
|
604.8
|
|
|
$
|
599.3
|
|
Fine Paper and Packaging
|
|
235.5
|
|
|
234.7
|
|
||
Corporate (b)
|
|
35.6
|
|
|
27.2
|
|
||
Consolidated
|
|
$
|
875.9
|
|
|
$
|
861.2
|
|
(a)
|
Segment identifiable assets are those that are directly used in the segments operations.
|
(b)
|
Corporate assets are primarily deferred income taxes and lease ROU assets.
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
|
2019
|
|
2018
|
||||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Technical Products
|
|
$
|
140.0
|
|
|
58
|
%
|
|
$
|
153.5
|
|
|
57
|
%
|
Fine Paper and Packaging
|
|
99.7
|
|
|
42
|
%
|
|
111.6
|
|
|
42
|
%
|
||
Other
|
|
—
|
|
|
—
|
%
|
|
1.4
|
|
|
1
|
%
|
||
Consolidated
|
|
$
|
239.7
|
|
|
100
|
%
|
|
$
|
266.5
|
|
|
100
|
%
|
|
|
Three Months Ended March 31,
|
|
Change in Net Sales Compared to Prior Period
|
||||||||||||||||||||
|
|
|
|
|
Change Due To
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
Total Change
|
|
Volume
|
|
Net Price (a)
|
|
Currency
|
||||||||||||
Technical Products
|
|
$
|
140.0
|
|
|
$
|
153.5
|
|
|
$
|
(13.5
|
)
|
|
$
|
(13.0
|
)
|
|
$
|
5.2
|
|
|
$
|
(5.7
|
)
|
Fine Paper and Packaging
|
|
99.7
|
|
|
111.6
|
|
|
$
|
(11.9
|
)
|
|
(13.8
|
)
|
|
1.9
|
|
|
—
|
|
|||||
Other
|
|
—
|
|
|
1.4
|
|
|
$
|
(1.4
|
)
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
|||||
Consolidated
|
|
$
|
239.7
|
|
|
$
|
266.5
|
|
|
$
|
(26.8
|
)
|
|
$
|
(28.2
|
)
|
|
$
|
7.1
|
|
|
$
|
(5.7
|
)
|
•
|
Net sales in our technical products business decreased $13.5 million (9%) from the prior year period. The revenue decline resulted from lower volumes due to weaker global market conditions and negative foreign currency impacts, partly offset by higher net selling prices and a higher value mix.
|
•
|
Net sales in our fine paper and packaging business decreased $11.9 million (11%) from the prior year period. Approximately half of the decline was due to the sale of Brattleboro, with the remainder mostly due to lower commercial print volume. These items were partly offset by higher selling prices.
|
|
|
Three Months Ended March 31,
|
||||
|
|
2019
|
|
2018
|
||
Net sales
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
|
81.8
|
|
|
80.3
|
|
Gross profit
|
|
18.2
|
|
|
19.7
|
|
Selling, general and administrative expenses
|
|
10.6
|
|
|
10.1
|
|
SERP settlement loss
|
|
—
|
|
|
0.3
|
|
Other expense - net
|
|
0.3
|
|
|
0.3
|
|
Operating income
|
|
7.3
|
|
|
9.0
|
|
Interest expense - net
|
|
1.4
|
|
|
1.2
|
|
Income from continuing operations before income taxes
|
|
5.9
|
|
|
7.8
|
|
Provision for income taxes
|
|
1.0
|
|
|
1.6
|
|
Income from continuing operations
|
|
4.9
|
%
|
|
6.1
|
%
|
|
|
|
|
|
|
Change in Operating Income Compared to Prior Period
|
||||||||||||||||||||||||||
|
|
Three Months Ended March 31,
|
|
|
|
Change Due To
|
||||||||||||||||||||||||||
|
|
|
Total
|
|
|
|
Net
|
|
Input
|
|
|
|
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
Change
|
|
Volume
|
|
Price (a)
|
|
Costs (b)
|
|
Currency
|
|
Other (c)
|
||||||||||||||||
Technical Products
|
|
$
|
11.3
|
|
|
$
|
17.5
|
|
|
$
|
(6.2
|
)
|
|
$
|
(3.6
|
)
|
|
$
|
4.5
|
|
|
$
|
(3.6
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
(2.8
|
)
|
Fine Paper and Packaging
|
|
11.9
|
|
|
12.8
|
|
|
(0.9
|
)
|
|
(0.6
|
)
|
|
2.8
|
|
|
(4.1
|
)
|
|
—
|
|
|
1.0
|
|
||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Unallocated corporate costs
|
|
(5.8
|
)
|
|
(6.2
|
)
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||||||
Consolidated
|
|
$
|
17.4
|
|
|
$
|
24.1
|
|
|
$
|
(6.7
|
)
|
|
$
|
(4.2
|
)
|
|
$
|
7.3
|
|
|
$
|
(7.7
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
(1.4
|
)
|
•
|
Operating income for our technical products business decreased $6.2 million from the prior year period. Operating income decreased as increased selling prices and a higher-value mix were more than offset by the impacts of lower sales and $7.1 million of higher manufacturing costs, including equal amounts of higher input costs and operational inefficiencies mostly related to lower volumes. Negative foreign currency impacts due to a weaker euro additionally reduced operating income by $0.7 million.
|
•
|
Operating income for our fine paper and packaging business decreased $0.9 million from the prior year period, due to $4.1 million of higher input costs that were mostly offset by benefits from higher selling prices, lower SG&A and distribution costs, and the sale of the Brattleboro mill.
|
•
|
Unallocated corporate expenses for the three months ended March 31, 2019 of $5.8 million decreased $0.4 million from the prior year period. The costs for 2018 included $0.8 million for a SERP settlement loss.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Technical Products
|
|
|
|
|
|
|
||
GAAP Operating Income
|
|
$
|
11.3
|
|
|
$
|
17.5
|
|
Adjustments
|
|
—
|
|
|
—
|
|
||
Adjusted Operating Income
|
|
11.3
|
|
|
17.5
|
|
||
|
|
|
|
|
||||
Fine Paper and Packaging
|
|
|
|
|
|
|
||
GAAP Operating Income
|
|
11.9
|
|
|
12.8
|
|
||
Adjustments
|
|
—
|
|
|
—
|
|
||
Adjusted Operating Income
|
|
11.9
|
|
|
12.8
|
|
||
|
|
|
|
|
||||
Other/Unallocated Corporate
|
|
|
|
|
|
|
||
GAAP Operating Loss
|
|
(5.8
|
)
|
|
(6.2
|
)
|
||
SERP Settlement Loss
|
|
—
|
|
|
0.8
|
|
||
Adjusted Operating Loss
|
|
(5.8
|
)
|
|
(5.4
|
)
|
||
|
|
|
|
|
||||
Consolidated
|
|
|
|
|
|
|
||
GAAP Operating Income
|
|
17.4
|
|
|
24.1
|
|
||
SERP Settlement Loss
|
|
—
|
|
|
0.8
|
|
||
Adjusted Operating Income
|
|
$
|
17.4
|
|
|
$
|
24.9
|
|
|
|
|
|
|
|
|
|
|
•
|
SG&A expense of $25.3 million for the three months ended March 31, 2019 was $1.5 million lower than SG&A expense of $26.8 million in the prior year period. For the three months ended March 31, 2019, SG&A expense as a percent of sales increased to 10.6% from 10.1% in the prior year period due to lower sales and timing of SG&A costs.
|
•
|
For the three months ended March 31, 2019, we incurred net interest expense of $3.2 million compared with $3.3 million in the prior year period.
|
•
|
Historically, our effective tax rate has differed from the U.S. statutory tax rate primarily due to the proportion of pre-tax income in jurisdictions with marginal tax rates that differ from the U.S. statutory tax rate, research and development and other tax credits and excess tax benefits from stock compensation. For the three months ended March 31, 2019 and 2018, we recorded an income tax expense of $2.4 million and $4.6 million, respectively. The effective income tax rate was 17% for the three months ended March 31, 2019 and 22% for the three months ended March 31, 2018. The effective income tax rate for the three months ended March 31, 2018 included an unfavorable adjustment to the provisional estimates of the impacts of the TCJA, while the rate in the first quarter of 2019 reflected a favorable adjustment to the reserve for uncertain tax positions following completion of a German tax audit.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net cash flow provided by (used in):
|
|
|
|
|
|
|
||
Operating activities
|
|
$
|
3.0
|
|
|
$
|
8.1
|
|
|
|
|
|
|
||||
Investing activities:
|
|
|
|
|
|
|
||
Capital expenditures
|
|
(4.3
|
)
|
|
(7.6
|
)
|
||
Other investing activities
|
|
(0.4
|
)
|
|
(0.3
|
)
|
||
Total
|
|
(4.7
|
)
|
|
(7.9
|
)
|
||
|
|
|
|
|
||||
Financing activities:
|
|
|
|
|
||||
Net borrowing of long-term debt
|
|
7.4
|
|
|
13.7
|
|
||
Cash dividends paid
|
|
(7.6
|
)
|
|
(7.0
|
)
|
||
Shares purchased
|
|
(0.3
|
)
|
|
(5.3
|
)
|
||
Other financing activities
|
|
(0.2
|
)
|
|
0.1
|
|
||
Total
|
|
(0.7
|
)
|
|
1.5
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
0.1
|
|
|
0.2
|
|
||
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(2.3
|
)
|
|
$
|
1.9
|
|
•
|
Cash provided by operating activities of $3.0 million for the three months ended March 31, 2019 was $5.1 million lower than cash provided by operating activities of $8.1 million in the prior year period. The reduction in cash flows resulted primarily from lower operating income and higher foreign income tax payments, partly offset by accelerated contributions to U.S. pension plans and a SERP payment in 2018. Both periods reflected expected seasonal increases in working capital, as receivables and inventories grew from from year-end lows.
|
•
|
For the three months ended March 31, 2019 and 2018, cash used by investing activities was $4.7 million and $7.9 million, respectively. For the full year 2019, we expect aggregate annual capital expenditures to be within our normal range of approximately 3% to 5% of net sales.
|
•
|
For the three months ended March 31, 2019 and 2018, cash used in/provided by financing activities was $(0.7) million and $1.5 million, respectively. Cash related to financing activities consists primarily of net borrowings of long-term debt, dividends paid and share repurchases.
|
•
|
Availability under our revolving credit facility varies over time depending on the value of our inventory, receivables and various capital assets. As of March 31, 2019, we had $65.3 million outstanding under our Global Revolving Credit Facilities and $159.1 million of available credit (based on exchange rates at March 31, 2019).
|
•
|
We have required debt principal payments through March 31, 2020 of $2.7 million for principal payments on the two German loan agreements.
|
•
|
For the three months ended March 31, 2019, cash and cash equivalents decreased $2.3 million to $7.6 million at March 31, 2019 from $9.9 million at December 31, 2018. Total debt increased $7.0 million to $246.1 million at March 31, 2019 from $239.1 million at December 31, 2018. Net debt (total debt minus cash and cash equivalents) increased by $9.3 million.
|
•
|
As of March 31, 2019, our cash balance of $7.6 million consists of $0.5 million in the U.S. and $7.1 million held at entities outside of the U.S. As of March 31, 2019, there were no restrictions regarding the repatriation of our non-U.S. cash.
|
•
|
In November 2018, our Board of Directors approved a 10% increase in the quarterly dividend on our Common Stock, to $0.45 per share, effective with the March 2019 dividend payment. For the three months ended March 31, 2019 and 2018, we paid cash dividends of $0.45 per common share or $7.6 million and $0.41 per common share or $7.0 million, respectively.
|
•
|
Purchases under the 2019 Stock Purchase Plan will be made from time to time in the open market or in privately negotiated transactions in accordance with the requirements of applicable law. The timing and amount of any purchases will depend on share price, market conditions and other factors. The 2019 Stock Purchase Plan does not require us to purchase any specific number of shares and may be suspended or discontinued at any time. For the three months ended March 31, 2019 and 2018, we repurchased 4,285 shares of Common Stock at a cost of $0.3 million and 66,724 shares of Common Stock at a cost of $5.3 million, respectively. For further details on our Stock Purchase Plans refer to Note 9, "Stockholders' Equity" of Notes to Condensed Consolidated Financial Statements.
|
•
|
As of March 31, 2019, we had $46.5 million of state net operating losses ("NOLs"). Our state NOLs may be used to offset approximately $2.9 million in state income taxes. If not used, substantially all of the state NOLs will expire in various amounts between 2019 and 2039. In addition, as of March 31, 2019, we had $20.8 million of U.S. federal and $7.2 million of U.S. state R&D Credits which, if not used, will expire between 2029 and 2039 for the U.S. federal R&D Credits and between 2020 and 2034 for the state R&D Credits.
|
•
|
We adopted the new accounting standards for leases effective January 1, 2019 by recognizing $16.2 million of lease right-of-use assets and $17.0 million of lease liabilities on our Condensed Consolidated Balance Sheets. The new standard did not have an impact on our results of operations or cash flows. See Note 11, "Leases" of Notes to Condensed Consolidated Financial Statements for further discussion.
|
•
|
changes in market demand for our products due to global economic and political conditions;
|
•
|
the impact of competition, both domestic and international, changes in industry production capacity, including the construction of new mills or new machines, the closing of mills and incremental changes due to capital expenditures or productivity increases;
|
•
|
the loss of current customers or the inability to obtain new customers;
|
•
|
increases in commodity prices, (particularly for pulp, energy and latex);
|
•
|
our ability to control costs, including transportation, and implement measures designed to enhance operating efficiencies;
|
•
|
the availability of raw materials and energy;
|
•
|
the enactment of adverse federal, state or foreign tax or other legislation or changes in government policy or regulation, including the recent Tax Act;
|
•
|
the impact of increased trade protectionism and tariffs on our business, results of operations and financial condition;
|
•
|
unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;
|
•
|
fluctuations in (i) exchange rates (in particular changes in the U.S. dollar/Euro currency exchange rates) and (ii) interest rates;
|
•
|
increases in the funding requirements for our pension and postretirement liabilities;
|
•
|
our ability to identify attractive acquisition targets and to successfully integrate acquired businesses into our existing operations;
|
•
|
changes in asset valuations including write-downs of assets including property, plant and equipment; inventory, accounts receivable, deferred tax assets or other assets for impairment or other reasons;
|
•
|
loss of key personnel;
|
•
|
strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and unions;
|
•
|
capital and credit market volatility and fluctuations in global equity and fixed-income markets;
|
•
|
our existing and future indebtedness;
|
•
|
our net operating losses may not be available to offset our tax liability and other tax planning strategies may not be effective; and
|
•
|
other risks that are detailed from time to time in reports we file with the SEC.
|
Month
|
|
Total Number of
Shares Purchased
|
|
Average Price Paid
Per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (a)
|
|
Approximate Dollar
Value of Shares that May
Yet Be Purchased Under
Publicly Announced
Plans or Programs (a)
|
January
|
|
5,208
|
|
$59.29
|
|
4,285
|
|
$24,745,942
|
February
|
|
—
|
|
$—
|
|
—
|
|
$24,745,942
|
March
|
|
—
|
|
$—
|
|
—
|
|
$24,745,942
|
Exhibit
Number
|
|
Exhibit
|
|
|
|
|
|
10.1
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema Document (filed herewith).
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
|
|
|
NEENAH, INC.
|
|
|
|
|
By:
|
/s/ John P. O'Donnell
|
|
|
John P. O’Donnell
|
|
|
President, Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Bonnie C. Lind
|
|
|
Bonnie C. Lind
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
|
|
|
|
|
/s/ Larry N. Brownlee
|
|
|
Larry N. Brownlee
|
|
|
Vice President — Controller (Principal Accounting Officer)
|
|
|
|
May 3, 2019
|
|
|
Date: May 3, 2019
|
|
|
/s/ John P. O’Donnell
|
|
John P. O’Donnell
|
|
President, Chief Executive Officer, and Director (Principal Executive Officer)
|
Date: May 3, 2019
|
|
|
/s/ Bonnie C. Lind
|
|
Bonnie C. Lind
|
|
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
|
|
/s/ John P. O’Donnell
|
|
John P. O’Donnell
|
|
President, Chief Executive Officer and Director
|
|
(Principal Executive Officer)
|
|
Date: May 3, 2019
|
|
/s/ Bonnie C. Lind
|
|
Bonnie C. Lind
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
(Principal Financial Officer)
|
|
Date: May 3, 2019
|