2nd Quarter 2005 Conference Call - PowerPoint PPT Presentation

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2nd Quarter 2005 Conference Call

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... in Item 1 (Business, under the headings Raw Materials, Seasonality, Competition, ... and Utilize Capital Expenditures to Create World Class Cost Structure ... – PowerPoint PPT presentation

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Title: 2nd Quarter 2005 Conference Call


1
June 7, 2005
  • 2nd Quarter 2005 Conference Call

2
Presentation Content
  • Safe Harbor For Forward-Looking Statements
  • Statements in this Form 10-Q that are not purely
    historical, including statements which express
    the Companys belief, anticipation or expectation
    about future events, are forward-looking
    statements. Forward looking statements involve
    certain risks and uncertainties that could cause
    actual results to differ materially from such
    statements. In addition to the risk factors
    discussed in Item 1 (Business, under the headings
    Raw Materials, Seasonality, Competition,
    Government Regulation and Environmental Matters,
    and International Operations) of the Companys
    2004 Annual Report on Form 10-K other important
    factors which have impacted and could impact the
    Companys operations and results, include
  • The Companys financial leverage and the
    operating and financial restrictions imposed by
    the instruments governing its indebtedness may
    limit or prohibit its ability to incur additional
    indebtedness, create liens, sell assets, engage
    in mergers, acquisitions or joint ventures, pay
    cash dividends, or make certain other payments
    the Companys leverage and such restrictions
    could limit its ability to respond to changing
    business or economic conditions, inability to
    meet debt obligations when due could impair its
    ability to finance operations and could result in
    default
  • -continued-

3
Presentation Content
(2) The successful expansion through
acquisitions, in which Spartech looks for
candidates that can complement its existing
product lines, expand geographic coverage, and
provide superior shareholder returns, is not
assured. Acquiring businesses that meet these
criteria continues to be an important element of
the Companys business strategy. Some of the
Companys major competitors have similar growth
strategies. As a result, competition for
qualifying acquisition candidates is increasing
and there can be no assurance that such future
candidates will exist on terms agreeable to the
Company. Furthermore, integrating acquired
businesses requires significant management time
and skill and places additional demands on
Company operations and financial resources. If
we are unable to achieve the anticipated
synergies, the interest and other expenses from
our acquisitions could exceed the net income we
derive from the acquired operations, which could
reduce our net income. (3) Our products are sold
in a number of end markets which tend to be
cyclical in nature, including transportation,
building and construction, bath/pool and spa, and
electronics and appliances. A downturn in one or
more of these end markets could have a material
adverse effect on our sales and operating profit
and (4) Our implementation of planned
restructurings will impact our ability to realize
estimated cost savings. The actual cost savings
may differ from our estimates depending upon the
level of success of the implementation.
4
Investment Highlights2nd Quarter 2005 Results
  • Investment Highlights
  • Market Leader in Sheet
  • Diversified Products End-Use Markets
  • New Focus on Cost Control
  • Accelerate Cash Flow and Utilize Capital
    Expenditures to Create World Class Cost Structure
  • New Technologies Product Developments

2nd Quarter 2005 Results Net Sales 378
mil. 31 increase over 04 Op. Earnings 6.3
mil. 24.3 excluding special items Diluted
EPS (. - )/sh. vs .41/sh last yr Quarterly
Dividend .12/share
5
Sales Fluctuations (Last Six Quarters). . .
Internal Volume/Acquisition/Price-Mix
6
Company Overview Diversity
of Products Markets
Key Base Materials... Comprehensive Product
Portfolio Full Year Estimate
Customer End Markets...Packaging Largest Sector
2nd Qtr Actual
Appliances Electronics 6
Other9
Other--Specialty 20
Polyethylene 25
Packaging24
Sign Advertising 6
ABS 10
Lawn Garden 7
PVC 10
Polystyrene 20
Rec. Leisure12
Transportation23
Polypropylene 15
Bldg. Const.13
2005 2nd Quarter Sales of 378 Million and 388
Million Pounds
7
Sales Outlook
By End Market Application
The following represents rough guidelines for
the Outlook Ratings above Strong 3 or
higher growth Flat /-2 change Weak
-3 or more decline
8
Focused GrowthOrganic Growth Via Innovative New
Products

Introduced New Class of Ten Alloy Plastics--April
2004 Introduced Volume II of Product
Transformations Brochure--June 2003
9
Growth Thru Product Transformations

Recognizable PTs Over Last 8 Years
Packaging
Recreation Leisure
Transportation
Building Construction
Appliance Hardware
10
Business Partnership Enhancement EffortNew
Centralized Product Development Center - 04
  • A Spartech Centralized Product Development
    Center Located at Our Warsaw, Indiana Facility
    Opened June 2004
  • Purpose To Develop New Products In One Plant
    Alleviating Stress On Manufacturing Sites
  • To Double As Development Centers
  • Structure Will House Two Sheet Lines, VEC Cell,
    Two Test Thermoformers To Allow For The Testing
    Of Various Materials
  • Benefits Of Centralized R D Location Will
    Include
  • Improved Production EfficienciesAt Current
    Manufacturing Sites
  • Centralized Knowledge BaseOn New Product
    Development
  • Further IntegrationOf S R And C C Groups
  • Accelerate New Products To MarketBoth Potential
    PTs Samples

11
Total Debt to Total Debt and Equity...Current
1.1 To 1.0 Ratio
2nd Qtr
12
Operating Results for 2nd Qtr '05 Versus
'04Sales Up 31, Net Loss 80K
13
Spartech Investment Highlights
Market Leader With Solid Improvement Strategy
  • Leader In Key Custom Markets
  • North American leader in Sheet with more than 30
    share of custom market
  • Top 5 In Compounding segment
  • Diversified End-Use Markets
  • Largest is non-cyclical Packaging market 23 of
    sales
  • Largest customer represents less than 5 of sales
  • Continuing to expand end markets and product
    offerings
  • New Focus on Cost Control
  • Synergistic acquisitions
  • Restructuring of operating locations
  • Continuous cost improvement and Lean Enterprise
    initiative
  • Renewed Focus on Return on Capital
  • Emphasis on working capital management
  • Capital expenditures for productivity cost
    improvement
  • Accelerate cash flow to pay down debt
  • New Technologies Development
  • Invest in new technology at development centers
    Products (PDC) Materials (MDC)

14
June 7, 2005
  • 2nd Quarter 2005 Conference Call
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