FAIRLAWN, OHIO (July 7, 3 p.m. ET) — A. Schulman Inc. has reported lower third-quarter earnings because of a sizable tax benefit in the year-earlier quarter.
The Fairlawn-based resin distributor and compounder said its net income in the quarter that ended May 31 slid 27 percent, to $18.8 million from $25.8 million in the year-earlier third quarter. Diluted per-share profits declined even more, falling 34 percent to 60 cents from 91 cents, because of more shares outstanding this year.
Schulman said its earnings in the year-earlier quarter included net after-tax benefits of $12.2 million, which primarily were related to a tax valuation allowance release as part of the April 30, 2010, acquisition of ICO Inc. That benefit partially was offset by asset impairments, acquisition-related costs and restructuring expenses.
Schulman said its income from continuing operations before taxes nearly doubled, to $25.1 million in the latest third quarter from $13 million in the year-earlier period.
Sales at Schulman climbed 45 percent, to $611.1 million from $420.3 million. The company said the majority of the increase was due to the impact of the acquisition of ICO, which was completed during the third quarter of fiscal 2010.
In commenting on the results, Chairman, President and CEO Joseph Gingo said in a statement, “Gross profit and operating income improved from a year ago in each of our three regions as our efforts to focus on a higher-margin product mix continue to bear fruit in the Americas, Europe and Asia.
“We continue to see opportunities to expand our presence in high-value-added products in the current economic environment, which will position us well to serve the needs of our customers,” Gingo said.
Based upon year-to-date results, the company said it was reaffirming its fiscal 2011 net income guidance in the range of $57 million to $62 million. The guidance assumes a euro exchange rate of $1.35.
“The guidance range reflects our current view of customer demand, and our commitment to delivering upon our global growth strategies,” Gingo said. “While we are confident with this range, we proceed with a sense of caution given the continuous flow of outside economic data that is signaling global economic softness as we approach our next fiscal year. The uncertainty in the nature and timing of this softness leads us to view the lower end of our range with a higher degree of confidence.”