HOUSTON, July 28, 2021 /PRNewswire/ -- Kraton Corporation
(NYSE: KRA), a leading global sustainable producer
of specialty polymers and high-value biobased products derived
from pine wood pulping co-products, announces financial results for
the quarter ended June 30, 2021.
SECOND QUARTER 2021 SUMMARY
- Consolidated net income of $38.4
million, compared to consolidated net loss of $7.1 million in the second quarter of 2020.
- Adjusted EBITDA(1) of $61.8
million, down $7.7 million or
11.1%, compared to the second quarter of 2020.
-
- The $7.7 million decline in
Adjusted EBITDA(1) reflects $16.9
million of costs associated with a significant turnaround at
the Berre, France, site.
- Polymer segment operating income of $42.0 million, compared to $16.8 million in the second quarter of 2020, and
Adjusted EBITDA(1) of $26.3
million, down $27.5 million or
51.1% compared to $53.8 million in
the second quarter of 2020.
-
- The $27.5 million decline in
Adjusted EBITDA(1) reflects $16.9
million of costs associated with the aforementioned
turnaround, higher raw materials costs, and the benefit of
favorable raw material trends in the year ago quarter, partially
offset by improved demand fundamentals and higher sales
volumes.
- Chemical segment operating income of $22.0 million, compared to an operating loss of
$3.9 million in the second quarter of
2020, and Adjusted EBITDA(1) of $35.5 million, up 126.2% compared to $15.7 million in the second quarter of 2020.
-
- Adjusted EBITDA(1) increase reflects factors
including higher sales volumes associated with improved demand and
continued favorable market fundamentals resulting in higher average
selling prices, partially offset by higher costs for raw
materials.
- Reduced consolidated debt during the quarter by $14.1 million and consolidated net
debt(1) by $11.5 million,
including the unfavorable effect of foreign currency(1)
of $6.3 million.
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In thousands,
except percentages and per share amounts)
|
Revenue
|
$
|
493,623
|
|
|
$
|
355,679
|
|
|
$
|
930,894
|
|
|
$
|
782,948
|
|
Polymer segment
operating income
|
$
|
41,968
|
|
|
$
|
16,762
|
|
|
$
|
81,827
|
|
|
$
|
34,687
|
|
Chemical segment
operating income (loss)
|
$
|
22,039
|
|
|
$
|
(3,931)
|
|
|
$
|
35,553
|
|
|
$
|
6,385
|
|
Consolidated net
income (loss)
|
$
|
38,351
|
|
|
$
|
(7,081)
|
|
|
$
|
72,944
|
|
|
$
|
201,939
|
|
Adjusted EBITDA
(non-GAAP)(1)(3)
|
$
|
61,820
|
|
|
$
|
69,536
|
|
|
$
|
129,539
|
|
|
$
|
147,415
|
|
Adjusted EBITDA
margin (non-GAAP)(2)(3)
|
12.5
|
%
|
|
19.6
|
%
|
|
13.9
|
%
|
|
18.8
|
%
|
Diluted earnings
(loss) per share
|
$
|
1.11
|
|
|
$
|
(0.25)
|
|
|
$
|
2.14
|
|
|
$
|
6.20
|
|
Adjusted diluted
earnings per share (non-GAAP)(1)
|
$
|
0.32
|
|
|
$
|
0.30
|
|
|
$
|
0.86
|
|
|
$
|
0.57
|
|
____________________________________
|
(1)
|
See non-GAAP
reconciliations included in the accompanying financial tables for
the reconciliation of each non-GAAP measure to its most directly
comparable GAAP measure.
|
(2)
|
Defined as Adjusted
EBITDA as a percentage of revenue. Adjusted EBITDA margin reflects
approximately 340 and 210 basis points reduction for costs
associated with the Berre turnaround for the three and six months
ended June 30, 2021, respectively.
|
(3)
|
Includes $10.3
million contribution from the Cariflex business prior to its sale
in March 2020.
|
"We are pleased with our financial results for the second
quarter of 2021, which were in line with our overall expectations.
On a consolidated basis, second quarter Adjusted EBITDA was
$61.8 million, and while this was
down $7.7 million compared to the
second quarter of 2020, during the quarter, we incurred costs of
$16.9 million associated with a
significant statutory turnaround at our Berre, France, site, that occurs approximately every
six years. Excluding the $16.9
million of turnaround costs, Adjusted EBITDA would have been
up compared to the year ago quarter. During the second quarter of
2021, continued favorability in global demand contributed to a
strong rebound in sales volume in both our Polymer and Chemical
segments, compared to the second quarter of 2020, in which demand
was adversely impacted by COVID-19. Thus far in 2021, we have
successfully implemented price increases intended to address
inflation in raw materials and transportation and logistics costs.
While inflation in raw material costs continued to be a factor in
the second quarter of 2021, partially offsetting the benefit of
higher sales volume and higher average selling prices achieved thus
far, we continue to actively address inflationary pressures through
price increases, consistent with our Price Right strategy. As such,
we expect further price realization and margin improvement in the
second half of this year," said Kevin M.
Fogarty, Kraton's President and Chief Executive Officer.
Second quarter 2021 Adjusted EBITDA for the Polymer segment was
$26.3 million, down $27.5 million compared to the second quarter of
2020. While second quarter 2021 sales volume for the Polymer
segment was up 11% compared to the second quarter of 2020,
reflecting strong post-COVID demand recovery, it is important to
appreciate there were three major, but transitory, drivers that
contributed to the decline in quarterly segment financial
performance that we believe will not significantly impact results
for the second half of 2021. Firstly, and as previously noted,
$16.9 million of the $27.5 million decline in Adjusted EBITDA is
associated with costs of the significant statutory turnaround at
the Berre, France, site. Secondly,
and in contrast to a deflationary raw material environment that
contributed to margin favorability in the second quarter of 2020,
second quarter 2021 margins reflect continued inflation in raw
material and transportation and logistics costs, which we are
addressing through increases in selling prices. Lastly, second
quarter 2020 Adjusted EBITDA benefitted from favorable fixed cost
absorption associated with a strategic inventory build to leverage
historically low raw materials costs in the quarter. Specialty
Polymer sales volume increased 15%, compared to the second quarter
of 2020, with higher sales volume in all regions, particularly into
consumer durable and automotive applications in North America and Europe. Sales volume for Performance Products
was up 13% compared to the second quarter of 2020, primarily due to
higher sales into paving and roofing applications in North America and continued demand growth
globally within adhesives applications.
Chemical segment Adjusted EBITDA for the second quarter of 2021
was $35.5 million, up $19.8 million compared to the second quarter of
2020. The significant increase in Adjusted EBITDA was driven by a
32% increase in sales volume, compared to the second quarter of
2020, reflecting a continued improvement of the Chemical segment's
overall demand fundamentals, a healthy post-COVID demand recovery
for TOFA and Rosin and Rosin derivatives and higher average selling
prices, partially offset by higher raw materials and transportation
and logistics costs. Performance Chemicals sales volume was up 37%
compared to the second quarter of 2020, reflecting strong demand
for TOFA and TOFA upgrades. Adhesive sales volume was up 17%
compared to the second quarter of 2020 on strong global adhesive
demand, and sales volume for Tires was up 108% compared to the
year-ago quarter, in which sales of tread enhancement agents were
significantly impacted as tire customers idled capacity due to
COVID-19.
"As evidence of progress in continuing to promote responsible
and sustainable business practices throughout our organization, we
are proud to note that Kraton recently achieved a Platinum rating
for our sustainability management system from EcoVadis. The
Platinum rating is the highest distinction in the EcoVadis supplier
sustainability rating structure, and the Platinum rating places
Kraton in the top one percent of all companies evaluated in its
sector," said Fogarty. "In terms of innovation-based products that
are facilitating the circular economy, during the second quarter,
we continued to see favorable customer response and positive
momentum for our REvolutionTM and
CirKular+TM platforms that are addressing growing market
needs for sustainable solutions. Moreover, Kraton's CirKular+
additives recently received Critical Guidance Recognition from the
Association of Plastics Recyclers in recognition of Kraton's
ongoing commitment to provide sustainable, high-performance
solutions to address the plastics industry's needs for design
recyclability," added Fogarty.
"Our expectations for the balance of 2021 remain positive. We
currently expect demand trends to remain favorable, and with
continued implementation of our Price Right strategy expected to
address raw material and logistics price increases, we anticipate
meaningful margin improvement over the course of the third and
fourth quarters. As we have now successfully completed the Berre
turnaround, with costs known, and with better visibility into
activity levels in the important summer paving season as we move
into the third quarter, we now expect Adjusted EBITDA for the
full-year 2021 to fall within the range of $280 - $300
million," said Fogarty.
Polymer Segment
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In thousands,
except percentages)
|
Performance
Products
|
$
|
177,154
|
|
|
$
|
118,339
|
|
|
$
|
305,099
|
|
|
$
|
237,099
|
|
Specialty
Polymers
|
101,069
|
|
|
76,305
|
|
|
197,808
|
|
|
154,222
|
|
Cariflex(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
36,930
|
|
Isoprene
Rubber(1)
|
(26)
|
|
|
8,744
|
|
|
15,930
|
|
|
15,603
|
|
Other
|
249
|
|
|
464
|
|
|
759
|
|
|
378
|
|
Polymer Segment
Revenue
|
$
|
278,446
|
|
|
$
|
203,852
|
|
|
$
|
519,596
|
|
|
$
|
444,232
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
41,968
|
|
|
$
|
16,762
|
|
|
$
|
81,827
|
|
|
$
|
34,687
|
|
Adjusted EBITDA
(non-GAAP)(1)(2)
|
$
|
26,321
|
|
|
$
|
53,845
|
|
|
$
|
63,786
|
|
|
$
|
105,014
|
|
Adjusted EBITDA
margin (non-GAAP)(3)
|
9.5
|
%
|
|
26.4
|
%
|
|
12.3
|
%
|
|
23.6
|
%
|
________________________________________
|
(1)
|
Our Cariflex revenue
includes sales through March 6, 2020. We continue to sell Isoprene
Rubber to Daelim Industrial Co, Ltd. ("Daelim") under the Isoprene
Rubber Supply Agreement ("IRSA"). Sales under the IRSA are
transacted at cost and include the amortization of non-cash
deferred income of $3.9 million for the three months ended June 30
2020, and $7.6 million and $7.2 million for the six months ended
June 30, 2021 and 2020, respectively, which represents revenue
deferred until the products are sold under the IRSA.
|
(2)
|
See non-GAAP
reconciliations included in the accompanying financial tables for
the reconciliation of each non-GAAP measure to its most directly
comparable GAAP measure.
|
(3)
|
Defined as Adjusted
EBITDA as a percentage of revenue. Adjusted EBITDA margin reflects
approximately 600 and 380 basis points reduction for costs
associated with the Berre turnaround for the three and six months
ended June 30, 2021, respectively.
|
Q2 2021 VERSUS Q2 2020 RESULTS
Revenue for the Polymer segment was $278.4 million for the three months ended
June 30, 2021 compared to
$203.9 million for the three months
ended June 30, 2020. The increase was
driven by higher average sales prices implemented in response to
significantly higher raw material costs, as well as demand recovery
versus the second quarter of 2020, which was impacted by COVID-19,
driving higher sales volumes in our Specialty Polymers and
Performance Products business lines. This was partially offset by a
decrease in Isoprene Rubber sales volumes due to the timing of
production, which will occur in the second half of 2021. The
positive effect from changes in currency exchange rates between the
periods was $14.0 million.
Polymer Segment
Sales Volume % Change
|
Three Months Ended
June 30, 2021
|
Performance
Products
|
12.6
|
%
|
Specialty
Polymers
|
14.6
|
%
|
Isoprene
Rubber
|
(100.0)
|
%
|
Total
|
10.9
|
%
|
Sales volumes of 83.8 kilotons for the three months ended
June 30, 2021 increased 10.9%
compared to the three months ended June 30,
2020. Specialty Polymers sales volumes increased 14.6%
driven by strong post-COVID-19 demand recovery across all regions,
particularly in consumer durable and automotive applications in
North America and Europe. Performance Products sales volumes
increased 12.6%, primarily driven by improved sales into paving and
roofing applications largely in North
America, and higher sales into adhesive applications
associated with continued demand strength.
For the three months ended June 30,
2021, the Polymer segment generated Adjusted EBITDA
(non-GAAP) of $26.3 million compared
to $53.8 million for the three months
ended June 30, 2020. The lower
Adjusted EBITDA is a result of $16.9
million associated with a significant statutory turnaround
at our Berre, France, location,
lower relative fixed cost absorption compared to the second quarter
of 2020 associated with a strategic inventory build, and timing
associated with Isoprene Rubber production. The inflation in raw
material and transportation costs, which we continue to address
through increases in selling prices consistent with our Price Right
strategy, is partially offset by the contribution from higher sales
volumes. The negative effect from changes in currency exchange
rates between the periods was $0.1
million. See a reconciliation of GAAP operating income to
non-GAAP Adjusted EBITDA below.
Chemical Segment
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In thousands,
except percentages)
|
Adhesives
|
$
|
74,330
|
|
|
$
|
60,993
|
|
|
$
|
146,056
|
|
|
$
|
125,888
|
|
Performance
Chemicals
|
126,164
|
|
|
84,848
|
|
|
237,339
|
|
|
195,590
|
|
Tires
|
14,683
|
|
|
5,986
|
|
|
27,903
|
|
|
17,238
|
|
Chemical Segment
Revenue
|
$
|
215,177
|
|
|
$
|
151,827
|
|
|
$
|
411,298
|
|
|
$
|
338,716
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
22,039
|
|
|
$
|
(3,931)
|
|
|
$
|
35,553
|
|
|
$
|
6,385
|
|
Adjusted EBITDA
(non-GAAP)(1)
|
$
|
35,499
|
|
|
$
|
15,691
|
|
|
$
|
65,753
|
|
|
$
|
42,401
|
|
Adjusted EBITDA
margin (non-GAAP)(2)
|
16.5
|
%
|
|
10.3
|
%
|
|
16.0
|
%
|
|
12.5
|
%
|
____________________________________
|
(1)
|
See non-GAAP
reconciliations included in the accompanying financial tables for
the reconciliation of each non-GAAP measure to its most directly
comparable GAAP measure.
|
(2)
|
Defined as Adjusted
EBITDA as a percentage of revenue.
|
Q2 2021 VERSUS Q2 2020 RESULTS
Revenue for the Chemical segment was $215.2 million for the three months ended
June 30, 2021 compared to
$151.8 million for the three months
ended June 30, 2020. The increase in
revenue was attributable to higher sales volume driven by the
demand recovery from COVID-19 and higher average sales prices from
continued favorable market fundamentals. The positive effect from
changes in currency exchange rates between the periods was
$9.6 million.
Chemical Segment
Sales Volume % Change
|
Three Months Ended
June 30, 2021
|
Adhesives
|
17.4
|
%
|
Performance
Chemicals
|
37.5
|
%
|
Tires(1)
|
108.0
|
%
|
Total
|
32.3
|
%
|
____________________________________
|
(1)
|
Tires volumes are
less than 5% of total Chemical segment volumes.
|
Sales volumes were 115.3 kilotons for the three months ended
June 30, 2021, an increase of 28.1
kilotons, or 32.3%, related to higher TOFA and TOR and related
derivatives sales, due to a significant recovery of demand across
most end use markets compared to the second quarter of 2020, which
was adversely affected by COVID-19, as well as increases in raw
material sales volume.
For the three months ended June 30,
2021, the Chemical segment generated $35.5 million of Adjusted EBITDA (non-GAAP)
compared to $15.7 million for the
three months ended June 30, 2020. The
increase in Adjusted EBITDA was primarily driven by the significant
recovery in demand compared to the second quarter of 2020, which
was adversely affected by COVID-19, and favorable market
fundamentals, resulting in higher sales volumes and expanded unit
margins across all product groups, partially offset by higher
average raw material and logistics costs. The negative effect from
changes in currency exchange rates between the periods was
$0.1 million. See a reconciliation of
GAAP operating income to non-GAAP Adjusted EBITDA below.
CASH FLOW AND CAPITAL STRUCTURE
During the second quarter of 2021, we reduced consolidated debt
by $14.1 million and consolidated net
debt by $11.5 million, including the
unfavorable effect of foreign currency of $6.3 million. For the first half of 2021, we
reduced our consolidated debt by $21.1
million and increased our consolidated net debt by
$6.6 million, including the favorable
effect of foreign currency of $13.9
million. The first half of 2021 increase in our consolidated
net debt was driven primarily by increases in working capital,
including the seasonal inventory build for the paving and roofing
season and the impacts of higher raw material costs. Further,
we had approximately $291.2 million of available
liquidity, comprised of $58.1
million of cash on hand and a remaining available borrowing
base of $233.1 million on our ABL
Facility as of June 30, 2021.
Summary of principal amounts for indebtedness and a
reconciliation of Kraton debt to consolidated net debt (non-GAAP)
and consolidated net debt, excluding the effect of foreign currency
(non-GAAP):
|
June 30,
2021
|
|
March 31,
2021
|
|
December 31,
2020
|
|
(In
thousands)
|
Kraton
debt
|
$
|
848,704
|
|
|
$
|
859,334
|
|
|
$
|
860,360
|
|
KFPC
loans(1)(2)
|
80,255
|
|
|
83,771
|
|
|
89,733
|
|
Consolidated
debt
|
928,959
|
|
|
943,105
|
|
|
950,093
|
|
|
|
|
|
|
|
Kraton
cash
|
56,371
|
|
|
59,220
|
|
|
82,804
|
|
KFPC
cash(1)(3)
|
1,761
|
|
|
1,561
|
|
|
3,097
|
|
Consolidated
cash
|
58,132
|
|
|
60,781
|
|
|
85,901
|
|
|
|
|
|
|
|
Consolidated net
debt
|
$
|
870,827
|
|
|
$
|
882,324
|
|
|
$
|
864,192
|
|
|
|
|
|
|
|
Effect of foreign
currency on consolidated net debt
|
13,918
|
|
|
20,186
|
|
|
|
Consolidated net
debt, excluding effect of foreign currency
|
$
|
884,745
|
|
|
$
|
902,510
|
|
|
|
_____________________________________
|
(1)
|
Kraton Formosa
Polymers Corporation ("KFPC") joint venture, located in Mailiao,
Taiwan, which we own a 50% stake in and consolidate within our
financial statements.
|
(2)
|
KFPC executed the
KFPC Revolving Facilities to provide funding for working capital
requirements and/or general corporate purposes. These are in
addition to the 5.5 billion NTD KFPC Loan Agreement.
|
(3)
|
Cash at our KFPC
joint venture.
|
OUTLOOK
During the second quarter of 2021, we saw a continuation of
favorable global demand fundamentals across the majority of our end
markets. While we remain mindful of the potential for COVID-19 to
adversely impact global demand in the second half of 2021, we
currently expect demand trends to remain positive. We expect
further realization of price increases over the course of the
third and fourth quarters, and therefore, we expect these price
increases to contribute to unit margin improvement for both our
Polymer and Chemical segments, compared to the first half of
2021.
As a result of the successful completion of the significant
statutory turnaround at our Berre, France, site, during the second quarter, with
costs known, and given our current expectations for the 2021 paving
and roofing season, as well as for overall demand trends as we move
into the third quarter of the year, we now expect Adjusted EBITDA
for the full year to fall in the range of $280 - $300
million, inclusive of the $19.7
million of full year costs associated with the Berre,
France, turnaround.
We have not reconciled Adjusted EBITDA guidance to net income
(loss) because we do not provide guidance for net income (loss) or
for items that we do not consider indicative of our on-going
performance, including, but not limited to, transaction and
restructuring costs, costs associated with extinguishment of debt,
and the spread between FIFO and ECRC, as certain of these items are
out of our control and/or cannot be reasonably predicted.
Accordingly, a reconciliation of the Adjusted EBITDA guidance to
the corresponding U.S. GAAP measure is not available without
unreasonable effort.
USE OF NON-GAAP FINANCIAL MEASURES
This press release includes the use of both GAAP and non-GAAP
financial measures. The non-GAAP financial measures used are
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Diluted
Earnings per Share, Consolidated Net Debt (including as adjusted to
exclude the effect of foreign currency), Adjusted Gross Profit, and
Adjusted Gross Profit Per Ton. Tables included in this earnings
release reconcile each of these non-GAAP financial measures with
the most directly comparable U.S. GAAP financial measure. For
additional information on the impact of the spread between
first-in-first-out ("FIFO") and Estimated Current Replacement Cost
("ECRC"), see Management's Discussion and Analysis of Financial
Condition and Results of Operations in our Annual Report on Form
10-K for the fiscal year ended December 31, 2020.
We consider these non-GAAP financial measures to be important
supplemental measures of our performance and believe they are
frequently used by investors, securities analysts, and other
interested parties in the evaluation of our performance including
period-to-period comparisons and/or that of other companies in our
industry. Further, management uses these measures to evaluate
operating performance, and our incentive compensation plan based
incentive compensation payments on our Adjusted EBITDA performance
and attainment of net debt reduction, along with other factors.
These non-GAAP financial measures have limitations as analytical
tools and in some cases can vary substantially from other measures
of our performance. You should not consider them in isolation, or
as a substitute for analysis of our results under U.S. GAAP in
the United States.
EBITDA, Adjusted EBITDA, Adjusted EBITDA excluding Cariflex,
and Adjusted EBITDA Margin: For our consolidated results,
EBITDA represents net income (loss) before interest, taxes,
depreciation, and amortization. For each reporting segment, EBITDA
represents operating income (loss) before depreciation and
amortization, and earnings of unconsolidated joint ventures. Among
other limitations EBITDA does not: reflect the significant interest
expense on our debt or reflect the significant depreciation and
amortization expense associated with our long-lived assets; and
EBITDA included herein should not be used for purposes of assessing
compliance or non-compliance with financial covenants under our
debt agreements, which can vary from the terms used herein. The
calculation of EBITDA in our debt agreements includes adjustments,
such as extraordinary, non-recurring or one-time charges, proforma
cost savings, certain non-cash items, turnaround costs, and other
items included in the definition of EBITDA in the debt agreements.
Other companies in our industry may calculate EBITDA differently
than we do, limiting its usefulness as a comparative measure. As an
analytical tool, Adjusted EBITDA is subject to all the limitations
applicable to EBITDA. We prepare Adjusted EBITDA by eliminating
from EBITDA the impact of a number of items we do not consider
indicative of our on-going performance, including the spread
between FIFO and ECRC, but you should be aware that in the future
we may incur expenses similar to the adjustments in this
presentation. Our presentation of Adjusted EBITDA should not be
construed as an inference that our future results will be
unaffected by unusual or non-recurring items. In addition, due to
volatility in raw material prices, Adjusted EBITDA may, and often
does, vary substantially from EBITDA and other performance
measures, including net income calculated in accordance with U.S.
GAAP. We prepare Adjusted EBITDA excluding Cariflex by eliminating
from Adjusted EBITDA Cariflex sales, cost of sales, and direct
specific fixed costs incurred from January
1, 2020 through March 6, 2020.
We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage
of revenue (for each reporting segment or on a consolidated basis,
if applicable). Because of these and other limitations, EBITDA and
Adjusted EBITDA should not be considered as a measure of
discretionary cash available to us to invest in the growth of our
business.
Adjusted Gross Profit, Adjusted Gross Profit Per Ton, and
Adjusted Gross Profit Per Ton, excluding the Berre turnaround:
We define Adjusted Gross Profit Per Ton as Adjusted Gross Profit
divided by total sales volume (for each reporting segment or on a
consolidated basis, as applicable). We further calculate Adjusted
Gross Profit Per Ton, excluding the Berre turnaround, by deducting
out of gross profit costs associated with the Berre turnaround. We
define Adjusted Gross Profit as gross profit excluding certain
charges and expenses. Adjusted Gross Profit is limited because it
often varies substantially from gross profit calculated in
accordance with U.S. GAAP due to volatility in raw material
prices.
Adjusted Diluted Earnings Per Share: We prepare
Adjusted Diluted Earnings per Share by eliminating from Diluted
Earnings per Share the impact of a number of non-recurring items we
do not consider indicative of our on-going performance, including
the spread between FIFO and ECRC.
Consolidated Net Debt and Consolidated Net Debt, excluding
the effect of foreign currency: We define Consolidated Net Debt
as total consolidated debt (including debt of KFPC) less
consolidated cash and cash equivalents. Management uses
Consolidated Net Debt to determine our outstanding debt obligations
that would not readily be satisfied by its cash and cash
equivalents on hand. Management believes that using Consolidated
Net Debt is useful to investors in determining our leverage since
we could choose to use cash and cash equivalents to retire debt. We
also present Consolidated Net Debt, as adjusted for foreign
exchange impact accounts for the foreign exchange effect on our
foreign currency denominated debt agreements.
CONFERENCE CALL AND WEBCAST INFORMATION
Kraton has scheduled a conference call on Thursday,
July 29, 2021 at 9:00 a.m. (Eastern
Time) to discuss second quarter 2021 financial results.
Kraton invites you to listen to the conference call, which will be
broadcast live over the internet and will be available at
www.kraton.com, by selecting the "Investor Relations" link
at the top of the home page and then selecting "Events" from the
Investor Relations menu on the Investor Relations page.
You may also listen to the conference call by telephone by
contacting the conference call operator 5 to 10 minutes prior to
the scheduled start time and asking for the Kraton Conference Call
– Passcode: 8680118. U.S./Canada
dial-in 800-857-6511. International dial-in #: 210-839-8886.
For those unable to listen to the live call, a replay will be
available beginning at approximately 11:00
a.m. (Eastern Time) on July 29, 2021 through
1:59 a.m. (Eastern Time) on
August 12, 2021. To hear a replay of
the call over the Internet, access Kraton's Website at
www.kraton.com by selecting the "Investor Relations" link at the
top of the home page and then selecting "Events" from the Investor
Relations menu on the Investor Relations page. To hear a telephonic
replay of the call, dial 800-391-9846 (toll free).
ABOUT KRATON CORPORATION
Kraton Corporation (NYSE: KRA) is a leading global sustainable
producer of specialty polymers and high-value biobased
products derived from pine wood pulping co-products. Kraton's
polymers are used in a wide range of applications, including
adhesives, coatings, consumer and personal care products, sealants
and lubricants, and medical, packaging, automotive, paving and
roofing applications. As the largest global provider in the pine
chemicals industry, the company's pine-based specialty products are
sold into adhesives, roads and construction, and tire markets, and
it produces and sells a broad range of performance chemicals into
markets that include fuel additives, oilfield chemicals, coatings,
metalworking fluids and lubricants, inks, flavors and fragrances,
and mining. Kraton offers its products to a diverse customer base
in numerous countries worldwide.
Kraton, the Kraton logo and design, REvolution, and
CirKular+ are all trademarks of Kraton Polymers LLC or its
affiliates.
FORWARD LOOKING STATEMENTS
This press release contains "forward-looking statements" within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995 that reflect our plans, beliefs, expectations, and current
views with respect to, among other things, future events and
financial performance. Forward-looking statements are often
characterized by the use of words such as "outlook," "believes,"
"target," "estimates," "reflect," "remain," "expects," "projects,"
"may," "intends," "plans," "on track", "forsees", "future," or
"anticipates," or by discussions of strategy, plans, or intentions.
The statements in this press release that are not historical
statements, including, but not limited to, statements regarding our
expectations as to the continued impact of the COVID-19 pandemic
(including governmental and regulatory actions) on demand for our
products, on the national and global economy and on our customers,
suppliers, employees, business and results of operations, our
expectations for our business demand, margin improvements, and
growth in 2021, market factors and transportation and logistics
trends, our 2021 Adjusted EBITDA, the timing of the incurrence of
costs associated with our Berre, France, turnaround, the impact of our
diversified portfolio and broad geographic exposure, the impact of
and expected realization of announced and future price increases,
continued momentum for our REvolution and CirKular+
platforms, and the information and the matters described under the
caption "Outlook," are forward-looking statements.
All forward-looking statements in this press release are made
based on management's current expectations and estimates, which
involve known and unknown risks, uncertainties, assumptions and
other important factors that could cause actual results to differ
materially from those expressed in forward-looking statements.
Additional information concerning factors that could cause actual
results to differ materially from those expressed in
forward-looking statements is contained in our most recently filed
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in
other filings made by us with the U.S. Securities and Exchange
Commission (the "SEC"), and include, but are not limited to, risks
related to: our ability to repay or re-finance indebtedness and
risk associated with incurring additional indebtedness; our
reliance on third parties for the provision of significant
operating and other services; the impact of extraordinary events,
including health epidemics or pandemics such as COVID-19 (including
governmental and regulatory actions relating thereto), natural
disasters and other weather conditions and terrorist attacks;
conditions in the global economy and capital markets; fluctuations
in raw material costs; limitations in the availability of raw
materials; competition in our end-use markets; fluctuations in
global tariffs and energy, transportation, and logistics costs; the
potential for charges related to our goodwill or other assets; and
other factors of which we are currently unaware or deem immaterial.
Many of these risks and uncertainties are currently amplified by
and will continue to be amplified by, or in the future may be
amplified by, the COVID-19 pandemic. To the extent any
inconsistency or conflict exists between the information included
in this press release and the information included in our prior
reports and other filings with the SEC, the information contained
in this press release updates and supersede such information.
Readers are cautioned not to place undue reliance on
forward-looking statements. Forward-looking statements contained
herein speak only as of the date of this press release, and we
assume no obligation to publicly update or revise such
forward-looking statements in light of new information or future
events.
KRATON
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenue
|
$
|
493,623
|
|
|
$
|
355,679
|
|
|
$
|
930,894
|
|
|
$
|
782,948
|
|
Cost of goods
sold
|
354,098
|
|
|
262,635
|
|
|
655,336
|
|
|
570,704
|
|
Gross
profit
|
139,525
|
|
|
93,044
|
|
|
275,558
|
|
|
212,244
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
9,723
|
|
|
9,912
|
|
|
19,243
|
|
|
20,704
|
|
Selling, general, and
administrative
|
34,037
|
|
|
38,402
|
|
|
75,316
|
|
|
87,460
|
|
Depreciation and
amortization
|
31,716
|
|
|
31,342
|
|
|
63,273
|
|
|
62,515
|
|
Loss on disposal of
fixed assets
|
42
|
|
|
557
|
|
|
346
|
|
|
493
|
|
Operating
income
|
64,007
|
|
|
12,831
|
|
|
117,380
|
|
|
41,072
|
|
Other income
(expense)
|
(2,493)
|
|
|
251
|
|
|
(1,685)
|
|
|
578
|
|
Disposition and exit
of business activities
|
—
|
|
|
(25)
|
|
|
—
|
|
|
175,189
|
|
Loss on
extinguishment of debt
|
—
|
|
|
(141)
|
|
|
—
|
|
|
(14,095)
|
|
Earnings of
unconsolidated joint venture
|
135
|
|
|
128
|
|
|
255
|
|
|
229
|
|
Interest expense,
net
|
(10,417)
|
|
|
(13,466)
|
|
|
(21,364)
|
|
|
(30,927)
|
|
Income (loss) before
income taxes
|
51,232
|
|
|
(422)
|
|
|
94,586
|
|
|
172,046
|
|
Income tax benefit
(expense)
|
(12,881)
|
|
|
(6,659)
|
|
|
(21,642)
|
|
|
29,893
|
|
Consolidated net
income (loss)
|
38,351
|
|
|
(7,081)
|
|
|
72,944
|
|
|
201,939
|
|
Net income
attributable to noncontrolling interest
|
(1,940)
|
|
|
(887)
|
|
|
(3,304)
|
|
|
(1,821)
|
|
Net income (loss)
attributable to Kraton
|
$
|
36,411
|
|
|
$
|
(7,968)
|
|
|
$
|
69,640
|
|
|
$
|
200,118
|
|
Earnings (loss) per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.13
|
|
|
$
|
(0.25)
|
|
|
$
|
2.17
|
|
|
$
|
6.29
|
|
Diluted
|
$
|
1.11
|
|
|
$
|
(0.25)
|
|
|
$
|
2.14
|
|
|
$
|
6.20
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
32,146
|
|
|
31,782
|
|
|
32,037
|
|
|
31,698
|
|
Diluted
|
32,679
|
|
|
31,782
|
|
|
32,569
|
|
|
32,133
|
|
KRATON
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In thousands,
except par value)
|
|
|
June 30,
2021
|
|
December 31,
2020
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
58,132
|
|
|
$
|
85,901
|
|
Receivables, net of
allowance for doubtful accounts of $765 and $598
|
257,567
|
|
|
180,258
|
|
Inventories of
products, net
|
364,329
|
|
|
318,885
|
|
Inventories of
materials and supplies, net
|
34,658
|
|
|
34,164
|
|
Prepaid
expenses
|
16,202
|
|
|
11,844
|
|
Other current
assets
|
17,150
|
|
|
15,338
|
|
Total current
assets
|
748,038
|
|
|
646,390
|
|
Property, plant, and
equipment, net of accumulated depreciation of $763,649 and
$732,279
|
937,544
|
|
|
942,703
|
|
Goodwill
|
374,089
|
|
|
375,061
|
|
Intangible assets,
net of accumulated amortization of $350,031 and $330,070
|
276,166
|
|
|
294,734
|
|
Investment in
unconsolidated joint venture
|
12,201
|
|
|
12,723
|
|
Deferred income
taxes
|
79,531
|
|
|
83,534
|
|
Long-term operating
lease assets, net
|
86,274
|
|
|
84,042
|
|
Other long-term
assets
|
21,019
|
|
|
21,770
|
|
Total
assets
|
$
|
2,534,862
|
|
|
$
|
2,460,957
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt
|
$
|
80,974
|
|
|
$
|
72,347
|
|
Accounts
payable-trade
|
211,571
|
|
|
176,229
|
|
Other payables and
accruals
|
166,981
|
|
|
167,364
|
|
Due to related
party
|
16,086
|
|
|
17,147
|
|
Total current
liabilities
|
475,612
|
|
|
433,087
|
|
Long-term debt, net
of current portion
|
836,804
|
|
|
865,516
|
|
Deferred income
taxes
|
128,191
|
|
|
125,559
|
|
Long-term operating
lease liabilities
|
70,748
|
|
|
67,898
|
|
Deferred
income
|
140,375
|
|
|
151,329
|
|
Other long-term
liabilities
|
157,217
|
|
|
168,566
|
|
Total
liabilities
|
1,808,947
|
|
|
1,811,955
|
|
|
|
|
|
Equity:
|
|
|
|
Kraton stockholders'
equity:
|
|
|
|
Preferred stock, $0.01
par value; 100,000 shares authorized; none issued
|
—
|
|
|
—
|
|
Common stock, $0.01
par value; 500,000 shares authorized; 32,148 shares issued
and outstanding at June 30, 2021; 31,873 shares issued and
outstanding at December
31, 2020
|
321
|
|
|
319
|
|
Additional paid in
capital
|
407,189
|
|
|
401,445
|
|
Retained
earnings
|
309,038
|
|
|
240,464
|
|
Accumulated other
comprehensive loss
|
(38,947)
|
|
|
(37,865)
|
|
Total Kraton
stockholders' equity
|
677,601
|
|
|
604,363
|
|
Noncontrolling
interest
|
48,314
|
|
|
44,639
|
|
Total
equity
|
725,915
|
|
|
649,002
|
|
Total liabilities and
equity
|
$
|
2,534,862
|
|
|
$
|
2,460,957
|
|
KRATON
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
thousands)
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
Consolidated net
income
|
$
|
72,944
|
|
|
$
|
201,939
|
|
Adjustments to
reconcile consolidated net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
63,273
|
|
|
62,515
|
|
Lease
amortization
|
12,082
|
|
|
12,428
|
|
Amortization of debt
original issue discount
|
—
|
|
|
148
|
|
Amortization of debt
issuance costs
|
1,240
|
|
|
1,724
|
|
Amortization of
deferred income
|
(8,103)
|
|
|
(7,799)
|
|
Loss on disposal of
property, plant, and equipment
|
346
|
|
|
108
|
|
Loss on extinguishment
of debt
|
—
|
|
|
14,095
|
|
Earnings from
unconsolidated joint venture, net of dividends received
|
211
|
|
|
279
|
|
Deferred income tax
(benefit) provision
|
2,693
|
|
|
(66,441)
|
|
Release of uncertain
tax positions
|
—
|
|
|
(3,316)
|
|
Gain on disposition
and exit of business activities
|
—
|
|
|
(175,189)
|
|
Share-based
compensation
|
5,519
|
|
|
4,745
|
|
Decrease (increase)
in:
|
|
|
|
Accounts
receivable
|
(77,466)
|
|
|
1,859
|
|
Inventories of
products, materials, and supplies
|
(50,008)
|
|
|
(36,024)
|
|
Other
assets
|
(6,092)
|
|
|
(4,366)
|
|
Increase (decrease)
in:
|
|
|
|
Accounts
payable-trade
|
40,609
|
|
|
(14,765)
|
|
Other payables and
accruals
|
(14,703)
|
|
|
30,767
|
|
Other long-term
liabilities
|
(9,589)
|
|
|
(2,824)
|
|
Due to related
party
|
143
|
|
|
(888)
|
|
Net cash provided by
operating activities
|
33,099
|
|
|
18,995
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
Kraton purchase of
property, plant, and equipment
|
(43,012)
|
|
|
(39,122)
|
|
KFPC purchase of
property, plant, and equipment
|
(345)
|
|
|
(3,224)
|
|
Purchase of software
and other intangibles
|
(3,938)
|
|
|
(3,456)
|
|
Cash proceeds
(payments) from disposition and exit of business
activities
|
(876)
|
|
|
510,500
|
|
Net cash provided by
(used in) investing activities
|
(48,171)
|
|
|
464,698
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
Proceeds from
debt
|
43,000
|
|
|
77,000
|
|
Repayments of
debt
|
(43,000)
|
|
|
(437,174)
|
|
KFPC proceeds from
debt
|
32,004
|
|
|
49,967
|
|
KFPC repayments of
debt
|
(42,157)
|
|
|
(59,769)
|
|
Finance lease
payments
|
(616)
|
|
|
(88)
|
|
Purchase of treasury
stock
|
(4,931)
|
|
|
(744)
|
|
Proceeds from the
exercise of stock options
|
4,092
|
|
|
—
|
|
Settlement of interest
rate swap
|
—
|
|
|
(1,295)
|
|
Debt issuance
costs
|
—
|
|
|
(1,234)
|
|
Net cash used in
financing activities
|
(11,608)
|
|
|
(373,337)
|
|
Effect of exchange
rate differences on cash
|
(1,089)
|
|
|
(8,024)
|
|
Net increase
(decrease) in cash and cash equivalents
|
(27,769)
|
|
|
102,332
|
|
Cash and cash
equivalents, beginning of period
|
85,901
|
|
|
35,033
|
|
Cash and cash
equivalents, end of period
|
$
|
58,132
|
|
|
$
|
137,365
|
|
KRATON
CORPORATION
|
RECONCILIATION OF
NET INCOME ATTRIBUTABLE TO KRATON AND OPERATING INCOME TO NON-
GAAP FINANCIAL MEASURES
|
(Unaudited)
|
(In
thousands)
|
|
|
Three Months Ended
June 30, 2021
|
|
Three Months Ended
June 30, 2020
|
|
Polymer
|
|
Chemical
|
|
Total
|
|
Polymer
|
|
Chemical
|
|
Total
|
Net income (loss)
attributable to Kraton
|
|
|
|
|
$
|
36,411
|
|
|
|
|
|
|
$
|
(7,968)
|
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
1,940
|
|
|
|
|
|
|
887
|
|
Consolidated net
income (loss)
|
|
|
|
|
38,351
|
|
|
|
|
|
|
(7,081)
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
|
|
12,881
|
|
|
|
|
|
|
6,659
|
|
Interest expense,
net
|
|
|
|
|
10,417
|
|
|
|
|
|
|
13,466
|
|
Earnings of
unconsolidated joint venture
|
|
|
|
|
(135)
|
|
|
|
|
|
|
(128)
|
|
Loss on extinguishment
of debt
|
|
|
|
|
—
|
|
|
|
|
|
|
141
|
|
Other (income)
expense
|
|
|
|
|
2,493
|
|
|
|
|
|
|
(251)
|
|
Disposition and exit
of business activities
|
|
|
|
|
—
|
|
|
|
|
|
|
25
|
|
Operating income
(loss)
|
$
|
41,968
|
|
|
$
|
22,039
|
|
|
64,007
|
|
|
$
|
16,762
|
|
|
$
|
(3,931)
|
|
|
12,831
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
12,776
|
|
|
18,940
|
|
|
31,716
|
|
|
12,948
|
|
|
18,394
|
|
|
31,342
|
|
Disposition and exit
of business activities
|
—
|
|
|
—
|
|
|
—
|
|
|
(25)
|
|
|
—
|
|
|
(25)
|
|
Other income
(expense)
|
(3,015)
|
|
|
522
|
|
|
(2,493)
|
|
|
(16)
|
|
|
267
|
|
|
251
|
|
Loss on extinguishment
of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(141)
|
|
|
—
|
|
|
(141)
|
|
Earnings of
unconsolidated joint venture
|
135
|
|
|
—
|
|
|
135
|
|
|
128
|
|
|
—
|
|
|
128
|
|
EBITDA (a)
|
51,864
|
|
|
41,501
|
|
|
93,365
|
|
|
29,656
|
|
|
14,730
|
|
|
44,386
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
|
|
|
Transaction,
acquisition related costs,
restructuring, and other costs (b)
|
(103)
|
|
|
780
|
|
|
677
|
|
|
1,551
|
|
|
468
|
|
|
2,019
|
|
Disposition and exit
of business activities (c)
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
25
|
|
Loss on extinguishment
of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
141
|
|
|
—
|
|
|
141
|
|
Non-cash compensation
expense
|
2,595
|
|
|
—
|
|
|
2,595
|
|
|
1,897
|
|
|
—
|
|
|
1,897
|
|
Spread between FIFO
and ECRC
|
(28,035)
|
|
|
(6,782)
|
|
|
(34,817)
|
|
|
20,575
|
|
|
493
|
|
|
21,068
|
|
Adjusted
EBITDA
|
$
|
26,321
|
|
|
$
|
35,499
|
|
|
$
|
61,820
|
|
|
$
|
53,845
|
|
|
$
|
15,691
|
|
|
$
|
69,536
|
|
_____________________________________________
|
(a)
|
Included in EBITDA
are Isoprene Rubber sales to Daelim under the IRSA. Sales under the
IRSA are transacted at cost and include the amortization of
non-cash deferred income of $3.9 million for the three months ended
June 30, 2020, which represents revenue deferred until the products
are sold under the IRSA.
|
(b)
|
Charges related to
the evaluation of acquisition transactions, severance expenses, and
other restructuring related charges.
|
(c)
|
Reflects adjustment
to assets disposed of in the Cariflex transaction.
|
|
Six Months Ended
June 30, 2021
|
|
Six Months Ended
June 30, 2020
|
|
Polymer
|
|
Chemical
|
|
Total
|
|
Polymer
|
|
Chemical
|
|
Total
|
Net income
attributable to Kraton
|
|
|
|
|
$
|
69,640
|
|
|
|
|
|
|
$
|
200,118
|
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
3,304
|
|
|
|
|
|
|
1,821
|
|
Consolidated net
income
|
|
|
|
|
72,944
|
|
|
|
|
|
|
201,939
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
|
|
|
|
21,642
|
|
|
|
|
|
|
(29,893)
|
|
Interest expense,
net
|
|
|
|
|
21,364
|
|
|
|
|
|
|
30,927
|
|
Earnings of
unconsolidated joint venture
|
|
|
|
|
(255)
|
|
|
|
|
|
|
(229)
|
|
Loss on extinguishment
of debt
|
|
|
|
|
—
|
|
|
|
|
|
|
14,095
|
|
Other (income)
expense
|
|
|
|
|
1,685
|
|
|
|
|
|
|
(578)
|
|
Disposition and exit
of business activities
|
|
|
|
|
—
|
|
|
|
|
|
|
(175,189)
|
|
Operating
income
|
$
|
81,827
|
|
|
$
|
35,553
|
|
|
117,380
|
|
|
$
|
34,687
|
|
|
$
|
6,385
|
|
|
41,072
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
25,600
|
|
|
37,673
|
|
|
63,273
|
|
|
26,295
|
|
|
36,220
|
|
|
62,515
|
|
Disposition and exit
of business activities
|
—
|
|
|
—
|
|
|
—
|
|
|
175,189
|
|
|
—
|
|
|
175,189
|
|
Other income
(expense)
|
(2,733)
|
|
|
1,048
|
|
|
(1,685)
|
|
|
39
|
|
|
539
|
|
|
578
|
|
Loss on extinguishment
of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,095)
|
|
|
—
|
|
|
(14,095)
|
|
Earnings of
unconsolidated joint venture
|
255
|
|
|
—
|
|
|
255
|
|
|
229
|
|
|
—
|
|
|
229
|
|
EBITDA (a)
|
104,949
|
|
|
74,274
|
|
|
179,223
|
|
|
222,344
|
|
|
43,144
|
|
|
265,488
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
|
|
|
Transaction,
acquisition related costs,
restructuring, and other costs (b)
|
2,228
|
|
|
2,752
|
|
|
4,980
|
|
|
11,699
|
|
|
1,230
|
|
|
12,929
|
|
Disposition and exit
of business activities
|
—
|
|
|
—
|
|
|
—
|
|
|
(175,189)
|
|
|
—
|
|
|
(175,189)
|
|
Loss on extinguishment
of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
14,095
|
|
|
—
|
|
|
14,095
|
|
Non-cash compensation
expense
|
5,519
|
|
|
—
|
|
|
5,519
|
|
|
4,745
|
|
|
—
|
|
|
4,745
|
|
Spread between FIFO
and ECRC
|
(48,910)
|
|
|
(11,273)
|
|
|
(60,183)
|
|
|
27,320
|
|
|
(1,973)
|
|
|
25,347
|
|
Adjusted
EBITDA
|
$
|
63,786
|
|
|
$
|
65,753
|
|
|
$
|
129,539
|
|
|
$
|
105,014
|
|
|
$
|
42,401
|
|
|
$
|
147,415
|
|
Adjusted EBITDA
excluding Cariflex
|
$
|
63,786
|
|
|
$
|
65,753
|
|
|
$
|
129,539
|
|
|
$
|
94,670
|
|
|
$
|
42,401
|
|
|
$
|
137,071
|
|
______________________________________
|
(a)
|
Included in EBITDA
are Isoprene Rubber sales to Daelim under the IRSA. Sales under the
IRSA are transacted at cost and include the amortization of
non-cash deferred income of $7.6 million and $7.2 million for the
six months ended June 30, 2021 and 2020, respectively, which
represents revenue deferred until the products are sold under the
IRSA.
|
(b)
|
Charges related to
the evaluation of acquisition transactions, severance expenses, and
other restructuring related charges.
|
KRATON
CORPORATION
|
RECONCILIATION OF
DILUTED EARNINGS PER SHARE TO ADJUSTED DILUTED EARNINGS PER
SHARE
|
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Diluted Earnings
(Loss) Per Share
|
$
|
1.11
|
|
|
$
|
(0.25)
|
|
|
$
|
2.14
|
|
|
$
|
6.20
|
|
Transaction,
acquisition related costs, restructuring, and
other costs (a)
|
0.02
|
|
|
0.05
|
|
|
0.12
|
|
|
0.31
|
|
Disposition and exit
of business activities
|
—
|
|
|
0.02
|
|
|
—
|
|
|
(4.94)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
0.34
|
|
Tax
restructuring
|
—
|
|
|
(0.09)
|
|
|
—
|
|
|
(2.03)
|
|
Spread between FIFO
and ECRC
|
(0.81)
|
|
|
0.57
|
|
|
(1.40)
|
|
|
0.69
|
|
Adjusted Diluted
Earnings Per Share (non-GAAP)
|
$
|
0.32
|
|
|
$
|
0.30
|
|
|
$
|
0.86
|
|
|
$
|
0.57
|
|
____________________________________________
|
(a)
|
Charges related to
the evaluation of acquisition transactions, severance expenses, and
other restructuring related charges.
|
POLYMER SEGMENT
RECONCILIATION OF GROSS PROFIT TO NON-GAAP FINANCIAL
MEASURES
(Unaudited)
(In
thousands)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Gross
profit
|
$
|
79,436
|
|
|
$
|
57,845
|
|
|
$
|
161,421
|
|
|
$
|
126,576
|
|
|
|
|
|
|
|
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
Transaction,
acquisition related costs, restructuring, and
other costs
|
—
|
|
|
—
|
|
|
—
|
|
|
387
|
|
Non-cash compensation
expense
|
130
|
|
|
114
|
|
|
276
|
|
|
285
|
|
Spread between FIFO
and ECRC
|
(28,035)
|
|
|
20,575
|
|
|
(48,910)
|
|
|
27,320
|
|
Adjusted gross profit
(non-GAAP)
|
$
|
51,531
|
|
|
$
|
78,534
|
|
|
$
|
112,787
|
|
|
$
|
154,568
|
|
|
|
|
|
|
|
|
|
Sales volume
(kilotons)
|
83.8
|
|
|
75.5
|
|
|
158.5
|
|
|
146.3
|
|
Adjusted gross profit
per ton (non-GAAP)(a)
|
$
|
615
|
|
|
$
|
1,040
|
|
|
$
|
711
|
|
|
$
|
1,056
|
|
______________________________________
|
(a)
|
Adjusted gross profit
per ton for the three months ended June 30, 2021, excluding $16.9
million of costs associated with the Berre turnaround ($202), would
have been $817 and for the six months ended June 30, 2021,
excluding $19.7 million of costs associated with the Berre
turnaround ($125), would have been $836.
|
For further information:
H. Gene Shiels
Director of Investor Relations
281 504-4886
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SOURCE Kraton Corporation