CCF Chase Corp

Revenue Increased by 12.7% to $88 Million in Q4 FY22 compared to Q4 FY21

Gross Margin improved from first half of fiscal 2022 ending the year at 37.8%

Declares Dividend of $1.00 Per Share

Chase Corporation (NYSE American: CCF), a global specialty chemicals company that is a leading manufacturer of protective materials for high-reliability applications across diverse market sectors, announced financial results for the fourth fiscal quarter ended August 31, 2022. The Company also announced a cash dividend of $1.00 per share to shareholders of record on November 30, 2022, payable on December 9, 2022.

Fiscal Fourth Quarter Financial and Recent Operational Highlights

• Total Revenue grew 12.7% to $88 million, as implemented sales price increases gained against inflationary cost pressures, compared to Q4 FY21
• Gross Margin of 38.6%, compared to 38.8% in Q4 FY21 — Inventory investments, cost controls and sales price adjustments were utilized to counteract margin compression, with realization of benefits achieved in the current quarter, which had been lagging in the first half of the fiscal year
• Net Income was $10.3 million, or $1.08 per diluted share, compared to $10.6 million, or $1.12 per diluted share, for Q4 FY21
• EBITDA was $17.5 million, compared to $18.4 million in Q4 FY21 and Adjusted EBITDA was $22.2 million, compared to $20 million in Q4 FY21
• Free Cash Flow was $13.7 million, compared to Free Cash Flow of $17.5 million in Q4 FY21 — reduction primarily due to continued strategic inventory build (an increase of $4.9 million in Q4 FY22) to meet customer demand and address increased backlog
• Effective Income Tax Rate of 25.4%, compared to 24.2% in Q4 FY21

Adam P. Chase, President and Chief Executive Officer of Chase Corporation, said, “Our performance during this fiscal year was rooted in our commitment to driving long-term growth and optimization, and meeting our customers’ sustained demand, while also maintaining our financial discipline within the broader macroeconomic environment, particularly related to supply chain disruptions and raw material costs. Our team worked tirelessly to complete our previously announced consolidation initiatives to streamline businesses, minimize our corporate footprint, and reduce fixed costs. Additionally, the integration of our NuCera Solutions acquisition is going well, and the business is performing as expected. As we begin fiscal year 2023, these combined efforts put us in a position of strength to capture additional market share and to leverage our scale to improve our margins.”

Mr. Chase continued, “Our Adhesives, Sealants and Additives and Industrial Tapes segments drove a year-over-year increase in revenue during the fourth quarter. Our results were driven by our strategic pricing actions to mitigate raw material cost headwinds, contributions from our accretive acquisition of Emerging Technologies (“ETi”) within the Adhesives, Sealants and Additives business, and heightened price and volume-driven growth within our Industrial Tapes segment. Corrosion Protection and Waterproofing revenue moderately decreased year-over-year during the fourth quarter as a result of softening demand in the Middle East and Asian markets impacting the coating and lining systems and pipeline coatings product lines.”

Mr. Chase added, “Despite challenging operating conditions, increased input costs, and a less favorable sales mix over the year, we improved our gross margin from the first half of fiscal 2022 of 36.8%, to end the year at 37.8%. Our progressive margin growth attests to our diligence in operating with financial discipline and mitigating global macro-headwinds. We continue to work with our customers as a trusted business partner in an effort to proactively address global raw material inflationary pressures, supply chain constraints, and the competitive labor market. In addition to diligently monitoring raw material and commodity pricing markets, strategic price increases will continue to serve as a primary mitigation effort against rising input costs. As we move into fiscal 2023, we remain dedicated to strengthening our margins, meeting consumer demand and driving value for our shareholders through further progressing our strategic growth initiatives. I would like to thank our dedicated team for their work throughout the past year, as their consistent efforts have been vital in ensuring Chase’s continued success.”

Michael J. Bourque, Chase Corporation’s Treasurer and Chief Financial Officer stated, “We are pleased with and encouraged by the sustained demand of our dedicated customers throughout this year’s challenging macro-environment. Our balance sheet remains strong with a $315.5 million cash balance, including funding of $180 million in revolver debt used for our previously announced NuCera Solutions acquisition. Chase remains well positioned to pay back its debt through both accretive inorganic and sustained organic growth. Further, continuing our commitment to a balanced approach of capital allocation to shareholders, the announced dividend is $1.00 per share which is in-line with the prior year, will be paid in December 2022.”

Segment Results

Adhesives, Sealants and Additives

 

 

For the Three Months Ended August 31,

 

For the Year Ended August 31,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

36,170

 

 

$

31,357

 

 

$

135,770

 

 

$

126,864

 

Cost of products and services sold

 

 

20,791

 

 

 

19,344

 

 

 

80,619

 

 

 

71,805

 

Gross Margin

 

$

15,379

 

 

$

12,013

 

 

$

55,151

 

 

$

55,059

 

Gross Margin %

 

 

43%

 

 

38%

 

 

41%

 

 

43%

Revenue in the Adhesives, Sealants and Additives segment increased $4.8 million, or 15% in the fourth quarter ended August 31, 2022. The revenue increase for the quarter was primarily due to sales price increases to counteract margin compression for our North American-focused functional additives product line, which includes year-to-date inorganic growth attributable to the ETi superabsorbent polymers business and revenue increase for the quarter for our electronic and industrial coatings product line.

Industrial Tapes

 

 

For the Three Months Ended August 31,

 

For the Year Ended August 31,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

39,534

 

 

$

33,788

 

 

$

143,954

 

 

$

120,873

 

Cost of products and services sold

 

 

26,287

 

 

 

21,160

 

 

 

96,132

 

 

 

77,013

 

Gross Margin

 

$

13,247

 

 

$

12,628

 

 

$

47,822

 

 

$

43,860

 

Gross Margin %

 

 

34%

 

 

37%

 

 

33%

 

 

36%

The Industrial Tapes segment’s revenue increased $5.7 million, or 17% in the fourth quarter ended August 31, 2022. The segment’s wire and cable, specialty products, and pulling and detection product lines were up due to sales price and volume-driven sales increases in the fourth fiscal quarter. Revenue growth in the quarter was slightly tapered by a quarter-to-quarter reduction in sales volume from the electronic materials product line due decreased demand in the Asian-end market.

Corrosion Protection and Waterproofing

 

 

For the Three Months Ended August 31,

 

For the Year Ended August 31,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

12,374

 

 

$

12,975

 

 

$

45,936

 

 

$

45,599

 

Cost of products and services sold

 

 

7,000

 

 

 

7,324

 

 

 

25,957

 

 

 

25,842

 

Gross Margin

 

$

5,374

 

 

$

5,651

 

 

$

19,979

 

 

$

19,757

 

Gross Margin %

 

 

43%

 

 

44%

 

 

43%

 

 

43%

Revenue from the Corrosion Protection and Waterproofing segment decreased by $.6 million, or 5% in the fourth quarter ended August 31, 2022. The segment’s decrease in fourth quarter revenue was primarily due to sales price increases to counteract margin compression within the building envelope and bridge and highway product lines offset by decreased demand in both our pipeline coatings and our coatings and lining systems product lines. The decrease in revenue was primarily due to COVID-19 overhang delays in products sold into Middle East and Asian markets outpacing North American sales gains in oil and gas pipeline repair and construction markets.

About Chase Corporation

Chase Corporation, a global specialty chemicals company that was founded in 1946, is a leading manufacturer of protective materials for high-reliability applications throughout the world. More information can be found on our website https://chasecorp.com/.

Use of Non-GAAP Financial Measures

The Company has used non-GAAP financial measures in this press release. Adjusted net income, Adjusted diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow are non-GAAP financial measures. The Company believes that Adjusted net income, Adjusted diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow are useful performance measures as they are used by its executive management team to measure operating performance, to allocate resources to enhance the financial performance of its business, to evaluate the effectiveness of its business strategies and to communicate with its board of directors and investors concerning its financial performance. The Company believes Adjusted net income, Adjusted diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow are commonly used by financial analysts and others in the industries in which the Company operates, and thus provide useful information to investors. However, Chase’s calculation of Adjusted net income, Adjusted diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow may not be comparable to similarly-titled measures published by others. Non-GAAP financial measures should be considered in addition to, and not as an alternative to, the Company’s reported results prepared in accordance with GAAP. This press release provides reconciliations from the most directly comparable financial measure presented in accordance with U.S. GAAP to each non-GAAP financial measure.

Cautionary Note Concerning Forward-Looking Statements

Certain statements in this press release are forward-looking. These may be identified by the use of forward-looking words or phrases including, but not limited to, “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated” and “potential.” These forward-looking statements are based on Chase Corporation’s current expectations. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for such forward-looking statements. To comply with the terms of the safe harbor, the Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties which may affect the operations, performance, development and results of the Company's business include, but are not limited to, the following: uncertainties relating to economic conditions; uncertainties relating to customer plans and commitments; the pricing and availability of equipment, materials and inventories; technological developments; performance issues with suppliers and subcontractors; economic growth; delays in testing of new products; the Company’s ability to successfully integrate acquired operations; the effectiveness of cost-reduction plans; rapid technology changes; the highly competitive environment in which the Company operates; as well as expected impact of the coronavirus disease (COVID-19) pandemic on the Company's businesses. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company does not assume any obligation to update or revise any forward-looking statement made in this release or that may from time to time be made by or on behalf of the Company. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in the Company’s filings with the Securities and Exchange Commission, including the risks and uncertainties identified in Part I, Item 1A - Risk Factors of the Company’s Annual Report on Form 10-K for the year ended August 31, 2022.

The following table summarizes the Company’s unaudited financial results for the three months and year ended August 31, 2022 and 2021.

 

 

For the Three Months Ended August 31,

 

For the Year Ended August 31,

All figures in thousands, except per share figures

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

88,078

 

 

$

78,120

 

 

$

325,660

 

 

$

293,336

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products and services sold

 

 

54,078

 

 

 

47,828

 

 

 

202,708

 

 

 

174,660

 

Selling, general and administrative expenses

 

 

14,131

 

 

 

13,540

 

 

 

54,438

 

 

 

52,100

 

Research and product development costs

 

 

1,141

 

 

 

1,022

 

 

 

4,415

 

 

 

4,056

 

Operations optimization costs

 

 

135

 

 

 

857

 

 

 

842

 

 

 

977

 

Acquisition-related costs

 

 

4,000

 

 

 

—

 

 

 

4,000

 

 

 

128

 

Write-down on certain assets under construction

 

 

—

 

 

 

100

 

 

 

—

 

 

 

100

 

Loss on contingent consideration

 

 

631

 

 

 

669

 

 

 

432

 

 

 

1,664

 

Operating income

 

 

13,962

 

 

 

14,104

 

 

 

58,825

 

 

 

59,651

 

Interest expense

 

 

(163

)

 

 

(93

)

 

 

(425

)

 

 

(297

)

Other income (expense)

 

 

(33

)

 

 

(2

)

 

 

198

 

 

 

(760

)

Income before income taxes

 

 

13,766

 

 

 

14,009

 

 

 

58,598

 

 

 

58,594

 

Income taxes

 

 

3,493

 

 

 

3,386

 

 

 

13,927

 

 

 

13,674

 

Net income

 

$

10,273

 

 

$

10,623

 

 

$

44,671

 

 

$

44,920

 

Net income per diluted share

 

$

1.08

 

 

$

1.12

 

 

$

4.70

 

 

$

4.73

 

Weighted average diluted shares outstanding

 

 

9,431

 

 

 

9,433

 

 

 

9,434

 

 

 

9,428

 

Reconciliation of net income to EBITDA and adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

10,273

 

 

$

10,623

 

 

$

44,671

 

 

$

44,920

 

Interest expense

 

 

163

 

 

 

93

 

 

 

425

 

 

 

297

 

Income taxes

 

 

3,493

 

 

 

3,386

 

 

 

13,927

 

 

 

13,674

 

Depreciation expense

 

 

893

 

 

 

1,021

 

 

 

3,547

 

 

 

3,946

 

Amortization expense

 

 

2,659

 

 

 

3,292

 

 

 

11,751

 

 

 

12,858

 

EBITDA

 

$

17,481

 

 

$

18,415

 

 

$

74,321

 

 

$

75,695

 

(Gain) loss on contingent consideration

 

 

631

 

 

 

669

 

 

 

432

 

 

 

1,664

 

Operations optimization costs

 

 

135

 

 

 

857

 

 

 

842

 

 

 

977

 

Acquisition-related costs

 

 

4,000

 

 

 

—

 

 

 

4,000

 

 

 

128

 

Write-down of certain assets under construction

 

 

—

 

 

 

100

 

 

 

—

 

 

 

100

 

Adjusted EBITDA

 

$

22,247

 

 

$

20,041

 

 

$

79,595

 

 

$

78,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended August 31,

 

For the Year Ended August 31,

 

 

2022

 

2021

 

2022

 

2021

Reconciliation of net income to adjusted net income

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

10,273

 

 

$

10,623

 

 

$

44,671

 

 

$

44,920

 

Excess tax loss (gain) related to ASU No. 2016-09

 

 

10

 

 

 

47

 

 

 

20

 

 

 

(114

)

(Gain) loss on contingent consideration

 

 

631

 

 

 

669

 

 

 

432

 

 

 

1,664

 

Operations optimization costs

 

 

135

 

 

 

857

 

 

 

842

 

 

 

977

 

Acquisition-related costs

 

 

4,000

 

 

 

—

 

 

 

4,000

 

 

 

128

 

Write-down of certain assets under construction

 

 

—

 

 

 

100

 

 

 

—

 

 

 

100

 

Income taxes *

 

 

(1,001

)

 

 

(341

)

 

 

(1,108

)

 

 

(602

)

Adjusted net income

 

$

14,048

 

 

$

11,955

 

 

$

48,857

 

 

$

47,073

 

Adjusted net income per diluted share (Adjusted diluted EPS)

 

$

1.48

 

 

$

1.26

 

 

$

5.14

 

 

$

4.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* For the three and year ended August 31, 2022 and 2021, represents the aggregate tax effect assuming a 21% tax rate for the items impacting pre-tax income, which is our effective U.S. statutory Federal tax rate for fiscal 2022 and 2021.

 

 

For the Three Months Ended August 31,

 

For the Year Ended August 31,

 

 

2022

 

2021

 

2022

 

2021

Reconciliation of cash provided by operating activities to free cash flow

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

14,573

 

 

$

18,217

 

 

$

34,859

 

 

$

61,217

 

Purchases of property, plant and equipment

 

 

(835

)

 

 

(692

)

 

 

(3,938

)

 

 

(2,441

)

Free cash flow

 

$

13,738

 

 

$

17,525

 

 

$

30,921

 

 

$

58,776

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221110005665/en/

Investors & Media: Michael Cummings or Jackie Marcus Alpha IR Group Phone: (617) 982-0475 E-mail: CCF@alpha-ir.com or Shareholder & Investor Relations Department Phone: (781) 332-0700 E-mail: investorrelations@chasecorp.com Website: www.chasecorp.com