By: Frank Esposito
January 29, 2014
Driven by a pair of acquisitions, materials firm PolyOne Corp. posted major gains in sales and profit in 2013.
PolyOne — the Avon Lake, Ohio-based firm that ranks as North America's largest plastics compounder — posted sales of almost $3.8 billion in 2013, up almost 32 percent vs. the prior year. The firm's profit also more than tripled to $242.7 million.
Most of the sales growth came from PolyOne's $393 million acquisition of Spartech Corp., a maker of plastic sheet, compounds and concentrates. That deal was announced in late 2012 and became official in early 2013. PolyOne's $34 million acquisition of Glasforms Inc. — a maker of glass and carbon fiber-reinforced polymers and advanced composite products — in late 2012 also boosted 2013 results.
In a Jan. 28 news release, PolyOne Chairman, President and CEO Stephen Newlin said that he was "extremely pleased with [PolyOne's] fourth quarter performance, which brings to a close another record year." The firm now has posted 17 quarters of consecutive double-digit growth in adjusted earnings per share, he added, describing that as "a distinguished performance that all of our associates are justifiably proud of."
In the release, Executive Vice President And Chief Operating Officer Robert Patterson said that the addition of Spartech added 12 cents to PolyOne's adjusted earnings per share in 2013. "We're very pleased with the speed at which we have been able to capture initial synergies [from the Spartech acquisition] and deliver operating income growth beyond our preliminary expectations," he said.
Spartech directly added almost $600 million to PolyOne's 2013 sales through the formation of a new Designed Structures & Solutions unit. Among previous PolyOne units, Performance Products & Solutions – including PVC compounds – led the firm's 2013 growth parade, with sales up almost 23 percent to $773.2 million. Sales in Global Specialty Engineered Materials grew more than 13 percent to $615.5 million.
For Global Color, Additives & Inks, the addition of some Spartech businesses contributed to sales growth of almost 10 percent to $852.3 million. The firm's PolyOne Distribution unit — one of North America's largest resin distributors — also saw sales grow more than 4 percent to almost $1.1 billion in 2013.
The Spartech deal, however, has faced some challenges in the form of the planned closing of six former Spartech plants and an administrative office. Those moves will result in the elimination of 270 jobs.
Market analyst Kevin Hocevar said he was impressed with PolyOne's performance in 2013.
PolyOne "continues to execute on their specialty strategy," said Hocever, who's with Northcoast Research in Cleveland. "Spartech looks like a home-run acquisition for them."
Hocevar pointed out that the 12-cent adjusted earnings per-share that PolyOne reported from Spartech in 9½ months was expected to be only 2 cents for the full year.
"In the first half, there were still some headwinds to organic growth, but that turned around in the second half and Europe became positive," he added. "PolyOne has a keen eye for what specialty products are."
PolyOne's per-share stock price has performed well on Wall Street in the last year. It was under $25 in early 2013 but was near $35.80 in early trading Jan. 30 for an increase of more than 40 percent.