Platform Specialty Products Corporation
Aug 6, 2014
PDF
Add to Briefcase

Platform Specialty Products Corporation Announces Second Quarter 2014 Financial Results

- Net sales of $189 million and Adjusted EBITDA of $48 million

- Adjusted gross margin and Adjusted EBITDA reach record levels

MIAMI, Aug. 6, 2014 (GLOBE NEWSWIRE) -- Platform Specialty Products Corporation (NYSE:PAH) ("Platform" or "the Company"), a global specialty chemicals company, announced today its financial results for the three and six months ended June 30, 2014.

For the three months ended June 30, 2014:

For the six months ended June 30, 2014:

Daniel H. Leever, Platform's Chief Executive Officer, commented, "We have accomplished a great deal so far in 2014. We exceeded our expectations financially in terms of earnings and cash generation. In April we announced an agreement to acquire Chemtura Corporation's CAS business. We are tracking to close this transaction in Q4. Our enthusiasm for the Agro chemical space is evidenced by our announcement earlier today to acquire Agriphar Group, a premier European Agro chemical business. This high quality bolt-on is expected to generate operating synergies and that combining CAS and Agriphar is expected to strengthen both businesses. We continue to evaluate compelling acquisition opportunities and remain steadfast in our disciplined approach to building a portfolio of true market leaders in niche verticals."

Frank J. Monteiro, Platform's Chief Financial Officer, added, "Our ability to successfully execute our asset-lite/high-touch business model has proven itself once again. Despite headwinds in our South American businesses and the continuing anticipated reductions in our Publication and Coating Plates business, we generated record EBITDA and $33.6 million of recurring free cash flow this quarter. This represented more than 70% conversion of adjusted EBITDA into cash. In addition to our strong financial performance in the quarter and the two announced acquisitions, we completed a successful equity offering, finalized our bank financing, reduced our effective tax rate and added key personnel to strengthen our management bench strength."

On May 21st Platform successfully completed a $300.2 million PIPE (Private Placement) equity offering where an additional 15.8 million shares of common stock were issued at $19.00 per share and proceeds being used for general corporate purposes. All adjusted earnings per diluted share calculations for the three-month and six-month periods ending June 30th take this issuance into account accordingly.

Platform is in the process of negotiating an amendment with respect to its existing Amended and Restated Credit Agreement dated October 31, 2013 with Barclays Bank PLC and other lenders. If signed, this amendment would : (i) amend and restate the Company's existing Amended and Restated Credit Agreement to provide the Company with additional flexibility with respect to permitted acquisitions and certain limiting covenants and (ii) provide for certain prospective amendments to be made to the credit agreement upon the consummation of the CAS acquisition and satisfaction of certain other conditions, which would allow for an incremental expansion of Platform's senior credit facilities by increasing its USD Tranche B Facility by $130 million ,establishing a €205 million Euro Tranche Facility (approximately $275 million), and by upsizing its undrawn Revolving Credit Facility from its previous limit of $50 million to a new limit of $175 million. The further details of this transaction will be reported under a Current Report on Form 8-K if and when closed. There can be no assurances that the foregoing amendments will become effective either on these terms or at all.

During the quarter, Platform successfully reduced its effective tax rate (ETR) from 33% to 25% and on a 6-month basis, from 33% to 29%. Platform is focused on optimizing its' ETR and cash paid taxes and will be introducing more efficient tax structures in the near term.

The company has presented both US GAAP and adjusted financials to better provide investors with measures that allow them to more readily compare the performance of the Company. These adjusted amounts will provide investors insight into the cash generated from operations after taking into consideration reinvestment in the business for Free Cash Flow, Recurring Free Cash Flow, and Adjusted EBITDA.

Financial Results

Net Sales

For the three months ended June 30, 2014:

Net sales were $189 million for the second quarter 2014, a decrease of $0.9 million, or 0.5%, compared to MacDermid's (the Predecessor) prior year period. Net sales of new products, which represent opportunities to enter markets adjacent to those we currently serve, were $22.4 million for the three months ended June 2014 compared to $18.6 million for the same period in 2013.

Net sales in the Performance Materials segment increased by $1.8 million, or 1.2%, as compared to the same period in 2013. The increase in net sales is primarily attributable to strong demand for core Industrial Solutions products in North America and Europe during the three month period which were partially offset by a reduction in sales of Offshore Solutions and Industrial Solutions products in South America. Net sales in the Graphic Solutions segment decreased by $2.7 million, or 6.1%, as compared to the Predecessor Quarterly Period. The decrease in net sales is primarily attributable to continuing lower demand for newspaper plating products.

For the six months ended June 30, 2014:

Net sales were $373 million for the six months ended 2014, an increase of $0.7 million, or 0.2%, compared to MacDermid's (the Predecessor) prior year period. Net sales of new products, which represent opportunities to enter markets adjacent to those we currently serve, were $43.7 million for the six months ended June 2014, compared to $36.4 million for the same period in 2013.

Net sales in the Performance Materials segment increased by $6.1 million, or 2.1%, as compared to the same period in 2013. The increase in net sales is primarily attributable to strong demand for core Industrial Solutions products in North America and Europe and higher sales of Electronic Solutions products in Asia during the period and were partially offset by lower sales of Offshore Fluids and Industrial Solutions products in South America. Net sales in the Graphic Solutions segment decreased by $5.4 million, or 6.1%, as compared to the same period in 2013. The decrease in net sales is primarily attributable to lower demand for newspaper plating products.

Gross Profit

For the three months ended June 30, 2014:

Gross profit of $96.7 million increased in the period by $0.1 million, or 0.2%, as compared to the same period in 2013 and was favorably impacted by foreign currency translation of approximately $1.0 million as compared to the same period in 2013. Gross profit was 51.1% in the period as compared to 50.8% for the prior year.

For the six months ended June 30, 2014:

Gross profit of $181 million decreased by $8.9 million, or 4.7%, as compared to the same period in 2013. The decrease in gross profit is primarily attributable to the elimination of manufacturer's profit in inventory charged to cost of sales in connection with the previously discussed acquisition of MacDermid by Platform on October 31, 2013 (the "MacDermid Acquisition"). Adjusted gross profit of $193 million increased by $3.0 million or 1.6% with a margin percentage of 51.7% in the period as compared to 51.0% for the same period in 2013 with the increase primarily due to favorable changes in product mix.

Operating Expenses

For the three months ended June 30, 2014:

Operating expense increased in the period by $31.2 million, or 52.0%, as compared to the same period in the prior year. The increase in operating expenses is primarily attributable to a fair value adjustment to the long-term contingent consideration liability of $10.8 million and incremental amortization expense on newly valued intangible assets associated with the MacDermid Acquisition of approximately $9.3 million. Additionally, we incurred transaction costs in connection with the Chemtura Acquisition of approximately $10.1 million in the period. Excluding these items, operating expenses on an adjusted basis increased $0.1 million or 0.2% vs. the same period in the prior year.

For the six months ended June 30, 2014:

Operating expense increased in the period by $47.9 million, or 38.8%, as compared to the same period in the prior year. The increase in operating expenses is primarily attributable to a fair value adjustment to the long-term contingent consideration liability of $23.8 million and incremental amortization expense on newly valued intangible assets associated with the MacDermid Acquisition of approximately $15.9 million. Additionally, we incurred transaction costs in connection with the Chemtura Acquisition of approximately $10.1 million in the period. Excluding these items, operating expenses on an adjusted basis decreased $1.1 million or 1.1% vs. the same period in the prior year, respectively.

Net Income (Loss)

For the three months ended June 30, 2014:

Net loss in the period decreased to $0.4 million, as compared to the same period in the prior year of a net loss of $15.1 million. On an adjusted basis, we are reporting net income of $26.6 million vs. $23.8 million for the same period in the prior year. The increase in net income year over year is primarily attributed to favorable product mix, variable operating expense management, and increased work in the company's long term tax planning. Specifically in regards to tax planning, the company was able to reduce its' expected effective tax rate to 25% for 2014 as compared to 33% for 2013. Adjusted earnings per diluted share increased to $0.18 vs. $0.16 in the prior year period.

For the six months ended June 30, 2014:

Net loss in the period decreased to $7.8 million, as compared to the same period in the prior year of a net loss of $11.7 million. On an adjusted basis, we reported net income of $49.7 million vs. $43.8 million for the same period in the prior year, an increase of $5.8 million or 13.3%. The increase in net income year over year is primarily attributed to favorable product mix, variable operating expense management, and increased work in the company's long term tax planning. Specifically in regards to tax planning, the company was able to reduce its' effective tax rate to 29% in the period as compared to 33% for the same period in the prior year. Adjusted earnings per diluted share increased to $0.33 vs. $0.29 in the prior year period.

Adjusted EBITDA

For the three months ended June 30, 2014:

Adjusted EBITDA for the period grew 2.3% to $48.2 million from $47.1 million in the same period of 2013, representing a record level for adjusted EBITDA in the quarter compared to MacDermid's performance prior to its acquisition by Platform. Adjusted EBITDA margin climbed to 25.5% vs. 24.8% in the prior year period.

Adjusted EBITDA in the Performance Materials segment for the period grew 5.7% to $37.1 million from $35.1 million in the same period of 2013, with adjusted EBITDA margin climbing to 25.2% vs. 24.2% in the prior year period. For the Graphic Solutions Segment, adjusted EBITDA decreased 7.5% to $11.1 million from $12.0 million in the same period of 2013, representing an adjusted EBITDA margin of 26.4% vs. 26.8% in the prior year period.

For the six months ended June 30, 2014:

Adjusted EBITDA for the period grew 6.9% to $94.1 million from $88.0 million in the same period of 2013, representing a record level for adjusted EBITDA in the measurement period as compared to MacDermid's performance prior to its acquisition by Platform. Adjusted EBITDA margin climbed to 25.2% vs. 23.7% in the prior year period.

Adjusted EBITDA in the Performance Materials segment for the period grew 10.4% to $71.2 million from $64.5 million in the same period of 2013, with adjusted EBITDA margin climbing to 24.5% vs. 22.7% in the prior year period. For the Graphic Solutions Segment, adjusted EBITDA decreased 2.6% to $22.9 million from $23.5 million in the same period of 2013, representing an adjusted EBITDA margin of 27.7% vs. 26.7% in the prior year period.

Conference Call

Platform will host a webcast/dial-in conference call to discuss its three month and six month ended June 30, 2014 financial results at 9:00 a.m. (Eastern Time) on Wednesday August 6, 2014. Participants on the call will include Chief Executive Officer Daniel H. Leever and Chief Financial Officer Frank J. Monteiro.

To listen to the call by telephone, please dial (855) 357-3116 (domestic) or (484) 365-2867 (international) and provide the Conference ID: 78039701. The call will be simultaneously webcast at www.platformspecialtyproducts.com. A replay of the call and webcast will be available for three weeks shortly after completion of the live call at www.platformspecialtyproducts.com.

About Platform

Platform is a global producer of high-technology specialty chemical products and provider of technical services. The business involves the manufacture of a broad range of specialty chemicals, created by blending raw materials, and the incorporation of these chemicals into multi-step technological processes. These specialty chemicals and processes together encompass the products sold to customers in the electronics, metal and plastic plating, graphic arts, and offshore oil production and drilling industries. More information on Platform is available at www.platformspecialtyproducts.com.

Forward-Looking Statements

This release is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 as it contains "forward-looking statements" within the meaning of the federal securities laws, which include statements regarding Platform's expected closing and terms of the amendments to its existing amended and restated credit agreement, adjusted earnings per share, expected or estimated revenue, the outlook for Platform's markets and the demand for its products, estimated sales, segment earnings, net interest expense, income tax provision, restructuring and other charges, cash flows from operations, consistent profitable growth, free cash flow, future revenues and gross operating and adjusted EBITDA margin improvement requirement and expansion, organic net sales growth, bank debt covenants, the success of new product introductions, growth in costs and expenses, the impact of commodities and currencies and Platform's ability to manage its risk in these areas, and the impact of acquisitions, divestitures, restructuring and other unusual items, including Platform's ability to successfully consummate the acquisitions of each of CAS and Agriphar and integrate and obtain the anticipated results and synergies from its consummated and future acquisitions. These projections and statements are based on management's estimates and assumptions with respect to future events and financial performance, and are believed to be reasonable, though are inherently difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in Platform's periodic and other reports filed with the Securities and Exchange Commission, including Platform's Annual Report on Form 10-K for the fiscal year ended December 31, 2013. Platform undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

—FINANCIAL TABLES TO FOLLOW—

     
     
PLATFORM SPECIALTY PRODUCTS CORPORATION    
CONDENSED CONSOLIDATED BALANCE SHEETS    
(Unaudited)    
     
 ($ In thousands)  
     
 June 30, 2014December 31, 2013
     
Assets    
Cash & cash equivalents  $ 642,760 $ 123,040
Accounts receivable, net of allowance for doubtful accounts of $10,430 and $10,113 at June 30, 2014 and December 31, 2013, respectively  142,011  140,525
Inventories  80,511  89,618
Prepaid expenses & other current assets  24,262  30,269
Total current assets  889,544  383,452
     
Property, plant & equipment, net  133,641  136,166
Goodwill  1,004,354  989,808
Intangible assets, net  699,443  720,302
Other assets  39,707  30,426
Total assets  2,766,689  2,260,154
     
Liabilities & Stockholders' Equity    
Accounts payable  56,990  56,156
Accrued salaries, wages and employee benefits  17,136  22,656
Current installments of long-term debt and capital lease obligations  7,953  7,958
Other current liabilities  33,246  32,903
Total current liabilities  115,325  119,673
     
Long-term debt and capital lease obligations  740,497  744,291
Long-term retirement benefits, less current portion  23,812  25,129
Long-term deferred income taxes  166,298  169,800
Long term contingent consideration  58,600  34,800
Other long-term liabilities  35,956  30,387
Total liabilities   1,140,488  1,124,080
     
Commitments and contingencies     
Redeemable 401(k) plan interest  --  20,972
     
Stockholders' Equity    
Preferred shares (2,000,000 designated as Series A), 5,000,000 shares authorized at June 30, 2014 and December 31, 2013, respectively; 2,000,000 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively  20  --
Common shares, 400,000,000 shares authorized, 137,290,980 and 103,571,941 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively  1,353  --
Additional paid-in capital  1,703,483  1,212,038
Accumulated deficit  (202,016)  (194,222)
Accumulated other comprehensive income  24,372  1,265
Total stockholders' equity  1,527,212  1,019,081
Income (deficit) in non-controlling interest  98,989  96,021
Total equity  1,626,201  1,115,102
     
Total liabilities, redeemable 401(k) interest and stockholders' equity $ 2,766,689 $ 2,260,154
 
 
PLATFORM SPECIALTY PRODUCTS CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
             
 ($ In thousands)            
             
 

For the three months ended
June 30, 2014
Period from
Inception
(April 23, 2013) through
June 30, 2013


For the three months ended
June 30, 2013


For the six months ended
June 30, 2014
Period from Inception
(April 23, 2013) through
June 30, 2013


For the six months ended
June 30, 2013
 SuccessorSuccessorPredecessorSuccessorSuccessorPredecessor
             
Net sales $ 189,132 $ -- $ 189,992 $ 372,858 $ -- $ 372,124
Cost of sales  92,445  --  93,451  191,949  --  182,269
Gross profit  96,687  --  96,541  180,909  --  189,855
             
Operating expenses:            
Selling, technical, general and administrative  84,779  97  53,989  158,811  97  109,969
Research and development  5,898  --  5,874  12,096  --  11,826
Restructuring  404  --  46  404  --  1,652
Total operating expenses  91,081  97  59,909  171,311  97  123,447
             
Operating profit (loss)  5,606  (97)  36,632  9,598  (97)  66,408
             
Other (expense) income:            
Interest, net  (7,662)  17  (12,849)  (15,404)  17  (24,567)
Loss on extinguishment of debt  --  --  (18,788)  --  --  (18,788)
Other (expense) income, net  (512)  --  (2,999)  (601)  --  588
   (8,174)  17  (34,636)  (16,005)  17  (42,767)
(Loss) income before income taxes, non controlling interests and accrued payment-in-kind dividends on cumulative preferred shares  (2,568)  (80)  1,996  (6,407)  (80)  23,641
Income tax benefit (provision)  4,056  --  (7,760)  1,947  --  (14,068)
Net income (loss)  1,488  (80)  (5,764)  (4,460)  (80)  9,573
Net income attributable to the non-controlling interests  (1,864)  --  (91)  (3,334)  --  (180)
Net (loss) income attributable to common shareholders  (376)  (80)  (5,855)  (7,794)  (80)  9,393
Accrued payment-in-kind dividend on cumulative preferred shares  --  --  (9,278)  --  --  (21,072)
Net loss attributable to common shares $ (376) $ (80) $ (15,133) $ (7,794) $ (80) $ (11,679)
             
Earnings (loss) per share            
Basic $ (0.00) $ (0.00)  n/a  $ (0.07) $ (0.00)  n/a 
Diluted $ (0.00) $ (0.00)  n/a  $ (0.07) $ (0.00)  n/a 
             
Weighted average shares outstanding (In thousands)            
Basic  128,595  88,529  n/a   117,937  88,529  n/a 
Diluted  128,595  88,529  n/a   117,937  88,529  n/a 
   
   
PLATFORM SPECIALTY PRODUCTS CORPORATION  
NON-GAAP AS ADJUSTED INCOME STATEMENTS   
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013  
                       
                       
 (In thousands, except per share amounts)                    
 

Three Months Ended
     As Adjusted 
Three Months Ended
 

Three Months Ended
   As
Adjusted 
Three Months Ended
 
(Unaudited) June 30,  Adjustments  June 30,  June 30,Adjustments  June 30,  
 2014  2014  2014  20132013  2013  
 Successor      Successor  Predecessor    Predecessor  
                       
Net sales $ 189,132   $ --   $ 189,132   $ 189,992 $ --   $ 189,992  
Cost of sales  92,445    --    92,445    93,451  --    93,451  
Gross profit  96,687    --   96,687    96,541  --    96,541  
                       
Operating expenses:                     
Selling, technical, general and administrative  84,779    (37,407)a,b,c  47,372    53,989  (6,692)  47,297  
Research and development  5,898    --    5,898    5,874  --    5,874  
Restructuring  404    (404)    --    46  (46)    --  
Total operating expenses  91,081    (37,811)    53,270    59,909  (6,738)    53,171  
                      
Operating (loss) profit  5,606    37,811    43,417    36,632  6,738    43,370  
                       
Other income (expense):                     
Interest, net  (7,662)    --    (7,662)    (12,849)  5,150  (7,699)  
Loss on extinguishment of debt  --    --    --    (18,788)  18,788  --  
Other (expense)  (512)    512g  --    (2,999)  3,000  1  
   (8,174)    512    (7,662)    (34,636)  26,938    (7,698)  
(Loss) income from continuing operations before income taxes, non-controlling interest and accumulated  payment-in-kind dividend on cumulative preferred shares  (2,568)    38,323    35,755    1,996  33,676    35,672  
Income tax benefit (provision)  4,056    (13,042)d  (8,986)    (7,760)  (4,012)  (11,772)  
Net income (loss)  1,488    25,281    26,769    (5,764)  29,664    23,900  
Net income attributable to the non-controlling interest  (1,864)    1,754h  (110)    (91)      (91)  
Net (loss) income attributable to common shares                      
Shareholders  (376)    27,035    26,659    (5,855)  29,664    23,809  
Accrued payment-in-kind dividend on cumulative preferred shares  --    --    --    (9,278)  9,278  --  
Net (loss) income attributable to common shares $ (376)   $ 27,035   $ 26,659   $ (15,133) $ 38,942   $ 23,809  
                       
Earnings (loss) per share                      
Basic $ (0.00)    --   $ 0.21    --  --   $ 0.19  
Diluted $ (0.00)    --   $ 0.18    --  --   $ 0.16  
                       
Weighted average shares outstanding                       
Basic  128,595    --    128,595    --  --    128,595  
Diluted  128,595    --    150,397  --  --    150,397
                       
                       
a Includes $10.6m in Q2 2014 for costs primarily associated with the Chemtura Acquisition.  
b Includes $16.0m in Q2 2014 and $6.7m in Q2 2013 for intangible amortization expense that is added back in the "As Adjusted" Income Statement.  
c Adjustment to reverse contingent consideration fair value adjustment of $10.8 million in connection with the MacDermid Acquisition.  
d Adjustment to calculation of estimated effective tax rate of 25% in 2014 and 33% in 2013.  
e Adjustment to eliminate interest associated with debt not assumed with the MacDermid Acquisition.  
f Adjustment to eliminate extinguishment of debt associated with recapitalization of MacDermid in Q2 2013.  
g 2013- Reversal of non-cash, mark-to-market gains on foreign debt. 2014- relates to currency hedges within the Industrial Solutions product line.  
h Adjustment for reversal of the income attributable to the non-controlling interest resulting from the MacDermid Acquisition.  
i Reversal of accrued accretion on Predecessor preferred stock dividends that were not paid until the MacDermid Acquisition.  
j GAAP Diluted Shares adjusted to assume each of the following issuances occurred in 2014 (only GAAP shares weighted) :  
                       
Outstanding shares at June 30, 2014 137,291                    
Conversion of exchange rights held by selling stockholders of MacDermid  8,775                    
Common shares equivalent of founder's preferred shares  2,000                    
Expected share issuance for CAS acquisition  2,000                    
Vested Director stock options  250                    
Equity awards granted in 2014  81                    
Adjusted Diluted shares at June 30, 2104 150,397                    
   
   
PLATFORM SPECIALTY PRODUCTS CORPORATION  
NON-GAAP AS ADJUSTED INCOME STATEMENTS   
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013  
                     
                     
 (In thousands, except per share amounts)                    
 

Six Months Ended
   As Adjusted 
Six Months Ended
 

Six Months Ended
   As
Adjusted 
Six Months Ended
 
(Unaudited) June 30,Adjustments  June 30,  June 30,Adjustments  June 30,  
 20142014  2014  20132013  2013  
 Successor    Successor  Predecessor    Predecessor  
                     
Net sales  $ 372,858  $ --    $ 372,858    $ 372,124  $ --   $ 372,124  
Cost of sales  191,949  (11,956)a  179,993    182,269  --    182,269  
Gross profit  180,909  11,956   192,865    189,855  --    189,855  
                     
Operating expenses:                   
Selling, technical, general and administrative  158,811  (63,862)b,c,d  94,949    109,969  (13,606)  96,363  
Research and development  12,096  --    12,096    11,826  --    11,826  
Restructuring  404  (404)    --    1,652  (1,652)    --  
Total operating expenses  171,311  (64,266)   107,045    123,447  (15,258)    108,189  
                    
Operating (loss) profit  9,598  76,222   85,820    66,408  15,258    81,666  
                     
Other income (expense):                   
Interest, net  (15,404)  --   (15,404)    (24,567)  9,145  (15,422)  
Loss on extinguishment of debt  --  --    --    (18,788)  18,788  --  
Other (expense)  (601)  512h  (89)    588  (1,151)  (563)  
   (16,005)  512    (15,493)    (42,767)  26,782    (15,985)  
(Loss) income from continuing operations before income taxes, non-controlling interest and accumulated  payment-in-kind dividend on cumulative preferred shares  (6,407)  76,734   70,327    23,641  42,040    65,681  
Income tax benefit (provision)  1,947  (22,334)e  (20,387)    (14,068)  (7,607)  (21,675)  
Net (loss) income  (4,460)  54,400   49,940    9,573  34,433    44,006  
Net income attributable to the non-controlling interest  (3,334)  3,068i  (266)    (180)  --    (180)  
Net (loss) income attributable to common shares                    
Shareholders  (7,794)  57,468    49,674    9,393  34,433    43,826  
Accrued payment-in-kind dividend on cumulative  preferred shares  --  --    --    (21,072)  21,072  --  
Net (loss) income attributable to common shares  $ (7,794)  $ 57,468     $ 49,674    (11,679)  55,505    $ 43,826  
                     
Earnings (loss) per share                    
Basic  $ (0.07)  --    $ 0.42    --  --    $ 0.37  
Diluted  $ (0.07)  --    $ 0.33    --  --    $ 0.29  
                     
Weighted average shares outstanding                     
Basic  117,937  --    117,937    --  --    117,937  
Diluted  117,937  --    150,397  --  --    150,397
                     
                     
a Adjustment to reverse manufacturer's profit in inventory purchase accounting adjustment associated with the MacDermid Acquisition. 
b Includes $10.6m in 2014 for costs primarily associated with the Chemtura Acquisition.
c Includes $29.3m in 2014 and $13.4m in 2013 for intangible amortization expense that is added back in the "As Adjusted" Income Statement.
d Adjustment to reverse contingent consideration fair value adjustment of $23.8 million in connection with the MacDermid Acquisition.
e Adjustment to calculation of estimated blended effective tax rate of 29% in 2014 and 33% in 2013.
f Adjustment to eliminate interest associated with debt not assumed with the MacDermid Acquisition.
g Adjustment to eliminate extinguishment of debt associated with recapitalization of MacDermid in Q2 2013.
h 2013- Reversal of non-cash, mark-to-market gains on foreign debt. 2014- relates to currency hedges within the Industrial Solutions product line.
i Adjustment for reversal of the income attributable to the non-controlling interest resulting from the MacDermid Acquisition.
j Reversal of accrued accretion on Predecessor preferred stock dividends that were not paid until the MacDermid Acquisition.
k GAAP Diluted Shares adjusted to assume each of the following issuances occurred in 2014 (only GAAP shares weighted) :
                     
Outstanding shares at June 30, 2014 137,291                  
Conversion of exchange rights held by selling stockholders of MacDermid  8,775                  
Common shares equivalent of founder's preferred shares  2,000                  
Expected share issuance for CAS acquisition  2,000                  
Vested Director stock options  250                  
Equity awards granted in 2014  81                  
Adjusted Diluted shares at June 30, 2104 150,397                  
 
 
PLATFORM SPECIALTY PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
       
($ In thousands)      
       
 

For the six months ended June 30, 2014
Period from
Inception
(April 23, 2013) through June 30, 2013


For the six months ended June 30, 2013
 SuccessorSuccessorPredecessor
       
Cash flows from operating activities:      
Net (loss) income $ (4,460) $ (80) $ 9,573
Adjustments to reconcile net (loss) income from operations to net cash flows provided by operating activities:      
Depreciation and amortization  38,286  --  19,741
Deferred income taxes  (13,801)  --  4,954
Non-cash fair value adjustment to contingent consideration  23,800  --  --
Manufacturer's profit in inventory adjustment  11,956  --  --
Loss on extinguishment of debt  --  --  18,788
Other, net   1,568  27  3,153
       
Changes in assets & liabilities, net of acquisitions:      
Accounts receivable  (1,990)  --  (10,620)
Inventories  (1,700)  --  (2,818)
Accrued expenses  (5,415)  --  (3,351)
Other assets and liabilities  970  (2)  (2,173)
Net cash flows provided by (used in) operating activities  49,214  (55)  37,247
       
Cash flows from investing activities:      
Capital expenditures, net  (4,587)  --  (3,687)
Purchases of marketable securities  --  (359,933)  --
Acquisition of business, net  4,827  --  --
Other, net  --  --  1,057
Net cash flows provided by (used in) investing activities  240  (359,933)  (2,630)
       
Cash flows from financing activities:      
Proceeds from issuance of debt, net of discount and fees  --  --  1,109,513
Repayments of borrowings  (3,795)  --  (624,396)
Repurchase of Predecessor Series A preferred stock  --  --  (270,167)
Payment of Predecessor Series A preferred stock  --  --  (229,833)
Escrowed funds for debt repayment  --  --  (105,864)
Proceeds from issuance of common stock, net   473,625  861,218  --
Proceeds from issuance of preferred stock, net  --  20,000  --
Payment of debt financing fees  --  --  (12,571)
Other, net  136  --  (287)
Net cash flows provided by (used in) financing activities  469,966  881,218  (133,605)
       
Effect of exchange rate changes on cash and cash equivalents  300  --  (1,455)
       
Net increase (decrease) in cash and cash equivalents  519,720  521,230  (100,443)
       
Cash and cash equivalents at beginning of period  123,040  --  143,351
Cash and cash equivalents at end of period $ 642,760 $ 521,230 $ 42,908
   
   
PLATFORM SPECIALTY PRODUCTS CORPORATION  
RECONCILIATION OF NON-GAAP MEASURES  
Includes Predecessor and Successor data  
 PredecessorSuccessor  PredecessorSuccessor  
(in millions) Q2 2013 Q2 2014   YTD 2013 YTD 2014  
Net income (loss)  $ (5.9)  $ (0.4)    $ 9.3  $ (7.8)  
             
Adjustments to reconcile to net income (loss):             
Income tax expense (benefit)  7.8  (4.1)    14.1  (2.0)  
Interest expense  12.8  7.6    24.6  15.4  
Depreciation and amortization expense  9.8  21.4 (1)  19.7  38.3 (1)
Unrealized (gain) loss on foreign currency denominated debt  3.0  --  (2)  (1.1)  --  (2)
Restructuring and related expenses  0.1  0.4    1.7  0.4 (3)
Manufacturer's profit in inventory (purchase accounting)  --   --     --   12.0 (4)
Non-cash fair value adjustment to contingent consideration  --   10.8    --   23.8 (5)
Acquisition costs   --   10.6    --   10.6 (6)
Debt Extinguishment  18.8  --  (7)  18.8  --  (7)
Other expense (income)  0.7  1.9 (8)  0.9  3.4 (8)
             
Adjusted EBITDA   $ 47.1  $ 48.2    $ 88.0  $ 94.1  
             
             
Footnotes:            
(1) Includes $16.0m in Q2 2014 and $6.7m in Q2 2013 and $29.3m in YTD 2014 and $13.4m in YTD 2013 for amortization expense that is added back in the "As Adjusted" Income Statement.
(2) Predecessor adjustment to other income for non-cash gain on foreign denominated debt.
(3) Includes restructuring expenses of $1.6m of reorganization costs adjusted out of operating expenses for YTD 2013.
(4) Adjustment to reverse manufacturer's profit in inventory purchase accounting adjustment associated with the MacDermid Acquisition. 
(5) Adjustment to fair value of contingent consideration in connection with the MacDermid Acquisition primarily associated with achieving the share price targets.
(6) Adjustment to reverse deal costs primarily in connection with the Chemtura Acquisition. 
(7) Adjustment to reverse debt extinguishment charge in connection with debt from Predecessor recapitalization. 
(8) Adjustment for 2014 primarily for reversal of the income attributable to the non-controlling interest resulting from the MacDermid Acquisition. For 2013, adjustment to reverse miscellaneous non-recurring charges.
 
 
Non-GAAP Free Cash Flow Schedule
           
 Q2'14Q2'13YTD'14YTD'13LTM
Net Income (Loss) 1  $ 1,488  $ (5,764)  $ (4,460)  $ 9,573  $(196,144)
Plus: D&A  21,396  9,854  38,286  19,741  64,158
Plus: Other Non-Cash Expenses 2  1,015  26,270  23,839  26,895  215,841
Less: Change in Working Capital 3  1,645  685  (3,242)  (9,317)  604
Cash Flow from Operations  $ 25,544  $ 31,045  $ 54,423  $ 46,892  $ 84,459
Less: Capex 4  (2,562)  (2,356)  (4,587)  (3,687)  (12,094)
Free Cash Flow  $ 22,982  $ 28,689  $ 49,836  $ 43,205  $ 72,365
Plus: Acquisition-Related Expenses 5  10,604  --  10,604  --  42,729
Recurring Free Cash Flow $ 33,586  $ 28,689  $ 60,440  $ 43,205  $ 115,094
% of EBITDA 70% 61% 64% 49% 62%
           
Adjusted EBITDA  $ 48,216  $ 47,132  $ 94,104  $ 88,021  $ 186,189
           
Adjusted Diluted Shares Outstanding  150,397  150,397  150,397  150,397  150,397
           
Recurring Free Cash Flow per Share  $ 0.22  $ 0.19  $ 0.40  $ 0.29  $ 0.77
           
1 Represents net income (loss) prior to non-controlling interest allocation and PIK dividend accrual for 2013.
2 Other Non-Cash expenses by Period represent the following:
           
 Q2'14Q2'13YTD'14YTD'13LTM
Non-Cash charge for PS Dividend Rights  $ --  $ --  $ --  $ --  $ 172,006
Manufacturer's profit in inventory Adj.  --  --  11,956  --  35,868
Non-cash MTM charge to Contingent Consideration  10,800  --  23,800  --  23,800
Deferred income tax (benefit) provision  (11,352)  3,847  (13,801)  4,954  (31,081)
Loss on Extinguishment of Debt  --  18,788  --  18,788  --
Equity Compensation Expense  316  112  394  151  9,633
Other  1,251  3,523  1,490  3,002  5,615
   $ 1,015  $ 26,270  $ 23,839  $ 26,895  $ 215,841
           
3 Change in working capital reflects changes in accounts receivable, inventories and accounts payable
4 Reflects gross capital expenditures excluding asset disposals
5 Reflects deal costs in connection with the Chemtura acquisition in Q2 and YTD 2014 and the MacDermid acquisition in the LTM period. 
 
 
Non-GAAP Free Cash Flow Schedule
           
 Q2'14Q1'14Q4'13Q3'13LTM
Net Income (Loss)  $ 1,488  $ (5,948)  $(206,320)  $ 14,636  $(196,144)
Plus: D&A  21,396  16,890  16,155  9,717  64,158
Plus: Other Non-Cash Expenses  1,015  22,824  192,567  (565)  215,841
Less: Change in Working Capital  1,645  (4,887)  3,961  (115)  604
Cash Flow from Operations  $ 25,544  $ 28,879  $ 6,363  $ 23,673  $ 84,459
Less: Capex  (2,562)  (2,025)  (4,026)  (3,481)  (12,094)
Free Cash Flow  $ 22,982  $ 26,854  $ 2,337  $ 20,192  $ 72,365
Plus: Acquisition-Related Expenses¹  10,604  --  32,125  --  42,729
Recurring Free Cash Flow $ 33,586  $ 26,854  $ 34,462  $ 20,192  $ 115,094
% of EBITDA 70% 59% 77% 42% 62%
           
Adjusted EBITDA  $ 48,216  $ 45,888  $ 44,471  $ 47,614  $ 186,189
           
Adjusted Diluted Shares Outstanding  150,397  150,397  150,397  150,397  150,397
           
Recurring Free Cash Flow per Share  $ 0.22  $ 0.18  $ 0.23  $ 0.13  $ 0.77
 
 
Non-GAAP Free Cash Flow Schedule
             
 Q2'14Q1'14YTD' 14Q2'13Q1'13YTD' 13
Net Income (Loss)  $ 1,488  $ (5,948)  $ (4,460)  $ (5,764)  $ 15,337  $ 9,573
Plus: D&A  21,396  16,890  38,286  9,854  9,887  19,741
Plus: Other Non-Cash Expenses  1,015  22,824  23,839  26,270  625  26,895
Less: Change in Working Capital  1,645  (4,887)  (3,242)  685  (10,002)  (9,317)
Cash Flow from Operations  $ 25,544  $ 28,879  $ 54,423  $ 31,045  $ 15,847  $ 46,892
Less: Capex  (2,562)  (2,025)  (4,587)  (2,356)  (1,331)  (3,687)
Free Cash Flow  $ 22,982  $ 26,854  $ 49,836  $ 28,689  $ 14,516  $ 43,205
Plus: Acquisition-Related Expenses¹  10,604  --  10,604  --  --  --
Recurring Free Cash Flow $ 33,586  $ 26,854  $ 60,440  $ 28,689  $ 14,516  $ 43,205
% of EBITDA 70% 59% 64% 61% 36% 49%
             
Adjusted EBITDA  $ 48,216  $ 45,888  $ 94,104  $ 47,132  $ 40,889  $ 88,021
             
Adjusted Diluted Shares Outstanding  150,397  150,397  150,397  150,397  150,397  150,397
             
Recurring Free Cash Flow per Share  $ 0.22  $ 0.18  $ 0.40  $ 0.19  $ 0.10  $ 0.29
CONTACT: Source/Investor Relations Contact:



         Frank J. Monteiro

         Chief Financial Officer

         Platform Specialty Products Corporation

         +1-203-575-5850



         Media Contacts:

         Liz Cohen

         Weber Shandwick

         +1-212-445-8044



         Kelly Gawlik

         Weber Shandwick

         +1-212-445-8368