Houston, TX. - August 12, 2008 - Kraton Polymers LLC (Kraton or the Company), a leading global producer of highly engineered polymers, announces results for the three and six months ended June 30, 2008.
Total revenues amounted to $345.4 million for the three months ended June 30, 2008, an increase of $50.5 million, or 17%, from $294.9 million in the three months ended June 30, 2007. For the six months ended June 30, 2008, total revenues amounted to $612.2 million, an increase of $70.5 million, or 13%, from $541.7 million for the six months ended June 30, 2007.
Gross profit amounted to $62.6 million for the three months ended June 30, 2008, an increase of $11.1 million, or 22%, from $51.4 million in the three months ended June 30, 2007. For the six months ended June 30, 2008, gross profit amounted to $111.3 million compared to $83.8 million for the same period in 2007, an increase of $27.6 million, or 33%.
Net income amounted to $10.2 million and $0.8 million for the three and six months ended June 30, 2008, respectively, compared to net income of $6.2 million and a net loss of $7.0 million in the comparable 2007 periods, respectively.
Through June 30, 2008, the Company incurred approximately $7.9 million of restructuring and related charges, largely severance and other staffing-related costs associated with senior executive and other management changes, and the realignment of the research and technical service organizations. In the six months ended June 30, 2007, the Company incurred $0.3 million of similar charges associated with 2007 initiatives.
Last Twelve Months (LTM) Bank EBITDA, a measurement used to determine compliance with our debt covenants, totaled $115.8 million for the period ended June 30, 2008, an increase of $11.6 million and $16.9 million from the LTM periods ended March 31, 2008 and December 31, 2007, respectively. A reconciliation of net income (loss) to LTM Bank EBITDA is attached. The Company was in compliance with its debt covenants at June 30, 2008.
"While we are generally pleased with our 2008 progress, headwinds associated with rising energy and feedstock costs continued in the second quarter and, as such, necessary price increases were implemented to recover these unprecedented cost increases," said Kevin M. Fogarty, President and Chief Executive Officer. "At the same time, we remain committed to fully optimizing our production assets to improve overall efficiencies. To that end, we are pleased to have recently approved an important series of capital projects to upgrade infrastructure at our world-scale Belpre, Ohio site, and are developing additional improvement projects for our other global manufacturing locations. By combining responsive pricing with an aggressive cost improvement strategy, we intend to restore Kraton to an acceptable, sustainable level of profitability."
*Announced additional price increases effective September 1.
*Approved capital spending to upgrade certain systems and operating controls which will improve the effectiveness, competitiveness and operating efficiency of the flagship Belpre, Ohio site.
*$10 million voluntary prepayment of bank debt in June 2008; cash-on-hand at June 30, 2008 amounted to $21 million with nothing drawn on the $76 million revolving credit facility.
*Signed new building lease to house our Houston-based research and technical service organization. The facility, designed specifically to enhance the effectiveness of our research and technical service team, will be occupied in early 2009 and will yield cost savings as compared to our current leased facility.
Kraton has scheduled a conference call for Wednesday, August 13, 2008 to discuss these earnings. The call will begin at 9:00 a.m. central time, 10:00 a.m. eastern time. To listen to the conference call and view the slide presentation, which will be broadcast live over the Internet, go to Kraton's website at www.kraton.com, click on Investor Relations, and then go to Presentations and select "Second Quarter 2008 Earnings Presentation Webcast." You may also listen to the analyst conference call by telephone by contacting the conference call operator 5-10 minutes prior to the scheduled start time and asking for the "Kraton Conference Call - Passcode: Earnings Call". US/Canada Dial-In #: (888) 577-8992 or International Dial-In #: (312) 470-7060. For those unable to listen to the live call, a replay will be available 24 hours a day beginning at approximately 5:00 p.m. central time August 13th through 5:00 p.m. central time on August 27th. To hear a telephonic replay of the call, dial (800) 873-2102 or (402) 220-5069 for international callers. To hear a replay of the call over the Internet, please access Kraton's website at www.kraton.com.
Kraton is a leading global producer of engineered polymers and, we believe, the world's largest producer of styrenic block copolymers (SBCs), a family of products whose chemistry was pioneered by us over forty years ago. SBCs are highly-engineered thermoplastic elastomers, which enhance the performance of numerous products by delivering a variety of attributes, including greater flexibility, resilience, strength, durability, and processability. Kraton polymers are used in a wide range of applications including adhesives, coatings, consumer and personal care products, sealants, lubricants, medical, packaging, automotive, paving, roofing, and footwear products. Kraton has the leading position in nearly all of its core markets and is the only producer of SBCs with global manufacturing capability. Its production facilities are located in the United States, Germany, France, The Netherlands, Brazil, and Japan.
Kraton, the Kraton logo and design, and "Giving Innovators their Edge" tagline are trademarks of Kraton Polymers LLC.
This press release includes "forward-looking statements" as that term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that could be deemed forward-looking statements and are often characterized by the use of words such as "believes," "expects," "estimates," "projects," "may," "will," "intends," "plans" or "anticipates," or by discussions of strategy, plans or intentions. In this press release, forward-looking information relates to covenant compliance, pricing trends, cost savings, production rates and other similar matters. All forward-looking statements in this press release are made based on management's current expectations and estimates, which involve risks, uncertainties and other factors that could cause results to differ materially from those expressed in forward-looking statements. Such risks include, but are not limited to, competitive pressures in the specialty chemical industry, changes in prices or availability of raw materials used in our business, changes in levels of consumer spending or preferences, overall economic conditions, the level of our indebtedness and exposure to interest rate and currency fluctuations, governmental regulations and trade restrictions, acts of war or terrorism in the United States or worldwide, political or financial instability in countries where our goods are manufactured and sold, and other risks and uncertainties described in this report and the Company's other reports and documents. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information.
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