Atotech Reports Third Quarter 2021 Results and Narrows 2021 Full-Year Guidance Range
Atotech (NYSE: ATC) reported Q3 2021 revenue of $383 million, up 18% year-over-year, with chemistry organic revenue growth of 6%. Net income soared 75% to $19 million. Adjusted EBITDA increased 10% to $112 million, with a margin of 29%. The company confirmed full-year organic revenue growth guidance of 13%-14% and narrowed Adjusted EBITDA guidance to $440-$450 million. The MKS Instruments acquisition is underway, pending regulatory approvals, expected to close in Q4 2021.
- Third quarter revenue increased by 18% year-over-year to $383 million.
- Net income rose by 75% to $19 million.
- Adjusted EBITDA grew by 10% to $112 million, indicating operational efficiency.
- Management confirmed full-year organic revenue growth guidance of 13%-14%.
- Narrowed Adjusted EBITDA guidance to $440-$450 million, reflecting improved forecasts.
- Adjusted EBITDA margin decreased to 29% due to inflationary pressures.
- General Metal Finishing segment's revenue growth slowed with an 8% decline in adjusted EBITDA.
- Generates third quarter revenue of
$383 million , an increase of18% over the prior-year period, including chemistry organic revenue growth of6% - Reports net income of
$19 million , an increase of75% compared to Q3 2020 - Delivers Adjusted EBITDA of
$112 million , a10% increase over the prior-year period - Net leverage decreased to 3.1x
- Confirms guidance for full year 2021 organic revenue growth, which is expected to be in the range of
13% to14% , including full year chemistry organic revenue growth of approximately10% - Narrows guidance for full year 2021 Adjusted EBITDA1, which is anticipated to be in the range of
$440 million to$450 million .
BERLIN, Germany, Nov. 09, 2021 (GLOBE NEWSWIRE) -- Atotech (NYSE: ATC), a leading specialty chemicals technology company and a market leader in advanced electroplating solutions, today reported financial results for the third quarter of 2021. The company maintained its revenue guidance and narrowed the Adjusted EBITDA guidance range for the full year 2021. Chemistry organic revenue growth, a key performance indicator for the Company, increased
Management Commentary
Geoff Wild, Atotech’s Chief Executive Officer said, “We are pleased by our strong third quarter performance. Atotech delivered results fully in-line with our expectations and our nine-months results are at record levels, despite the continuing disruption of global supply chains. The strength of demand and the resilience of our business model enables us to feel comfortable reiterating our full-year guidance.
“This quarter, we saw strong demand in our Electronics segment for our semiconductor-related businesses as well as IC-substrates. In our GMF segment, we experienced good demand for construction-related products, partially offset by a slowdown in demand from the automotive OEMs, which was primarily felt towards the end of the quarter. We also observed increasing demand for our sustainability-related products.
“As expected, in Q3 we saw freight costs decline from the first half; however, this improvement was counter-balanced by broad-based inflationary pressure, including raw material price increases. As a result, we have implemented price increases to our customers to mitigate those effects and will be rolling those price increases out over the coming months.”
Third-quarter 2021 Results
Total revenue was
Adjusted EBITDA was
Diluted earnings per share was
Adjusted EBITDA margin was
Third-quarter 2021 Segment Highlights
Electronics: Revenue for the third quarter of 2021 in our Electronics segment was
The Electronics organic revenue increase was driven by continued demand for the Company’s advanced semiconductor packaging and IC-substrate solutions. End-market demand for computing applications and automobile electrification continued to gain momentum, but the overall slowdown in the Automobile sector for Electronics was also noticeable. As in prior quarters this year, the global build-out of production capacity for PCBs and semiconductors translated into strong demand for our equipment.
Adjusted EBITDA for our Electronics segment was
General Metal Finishing: Revenue for the third quarter of 2021 in our GMF segment was
Chemistry organic revenue growth was primarily a function of continued recovery from the pandemic-depressed markets of 2020, supported by continued strength in sanitary and construction end-markets as well as sustainability projects. Automotive end-market demand slowed towards the end of the quarter.
Adjusted EBITDA for our GMF segment was
Full Year 2021 Guidance
Regarding the Company’s 2021 outlook, Peter Frauenknecht, Atotech’s Chief Financial Officer said, “As a result of our solid third quarter, we reiterate our revenue guidance. We continue to expect full year 2021 total organic revenue growth to be in the range of
MKS Transaction
On July 1, 2021, MKS Instruments, Inc. (“MKS”), a global provider of technologies that enable advanced processes and improve productivity, and Atotech Limited announced that they had entered into a definitive agreement pursuant to which MKS will acquire Atotech for
The MKS Transaction has been unanimously approved by the MKS and Atotech boards of directors and each of the resolutions put to the Company’s shareholders at the court meeting and the general meeting convened in connection with the MKS Transaction, which were each held on November 3, 2021, were passed by the requisite majority of votes. The closing of the MKS Transaction remains subject to the approval of the Royal Court of Jersey, regulatory approvals, and other customary closing conditions, and is expected to close by the fourth quarter of 2021.
Conference Call
In light of the pending transaction with MKS, the Company will not host a conference call today.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” and similar expressions and variations or negatives of these words.
These forward-looking statements, which are subject to risks, uncertainties, and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies, and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, and such differences could be material. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.
More information on potential factors that could affect Atotech’s financial results is available in “Forward-Looking Statements”, the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Atotech’s most recent Annual Report on Form 20-F, and in other documents that we have filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”), and such factors include, but are not limited to: the uncertainty of the magnitude, duration, geographic reach, impact on the global economy of the COVID-19 pandemic, as well as the current and potential travel restrictions, stay-at-home orders, and other economic restrictions implemented to address it; uncertainty, downturns, and changes in our target markets; foreign currency exchange rate fluctuations; reduced market acceptance and inability to keep pace with evolving technology and trends; loss of customers; increases in costs or reductions in the supplies of raw materials that may materially adversely affect our business, financial condition, and results of operations; our ability to provide products and services in light of changing environmental, health and safety, product liability, financial, and other legislation and regulation; our failure to compete successfully in product development; our ability to successfully execute our growth initiatives, business strategies, and operating plans; whether the secular trends we expect to drive growth in our business materialize to the degree we expect them to, or at all; material costs relating to environmental and health-and-safety requirements or liabilities; underfunded defined benefit pension plans; risk that the insurance we maintain may not fully cover all potential exposures; failure to comply with the anti-corruption laws of the United States and various international jurisdictions; tariffs, border adjustment taxes, or other adverse trade restrictions and impacts on our customers’ value chains; political, economic, and legal uncertainties in China, the Chinese government’s control of currency conversion and expatriation of funds, and the Chinese government’s policy on foreign investment in China; regulations around the production and use of chemical substances that affect our products; the United Kingdom’s withdrawal from the European Union; weak intellectual property rights in jurisdictions outside the United States; intellectual property infringement and product liability claims; our substantial indebtedness; our ability to obtain additional capital on commercially reasonable terms may be limited; risks related to our derivative instruments; our ability to attract, motivate, and retain senior management and qualified employees; increased risks to our global operations including, but not limited to, political instability, acts of terrorism, taxation, and unexpected regulatory and economic sanctions changes, among other things; natural disasters that may materially adversely affect our business, financial condition, and results of operations; the inherently hazardous nature of chemical manufacturing that could result in accidents that disrupt our operations and expose us to losses or liabilities; damage to our brand reputation; Carlyle’s ability to control our common shares; risks relating to the proposed MKS Transaction, including that such transaction may not be consummated, any statements of belief and any statements of assumptions underlying any of the foregoing; and other factors beyond our control.
Additional Information and Where to Find It
Shareholders may obtain a free copy of the scheme document published by Atotech on September 28, 2021 in relation to the MKS Transaction (the “Scheme Document”) and other documents Atotech files with the SEC (when available) through the website maintained by the SEC at www.sec.gov. The Scheme Document is also available free of charge on Atotech’s investor relations website at investors.atotech.com together with copies of materials it files with, or furnishes to, the SEC.
No Offer or Solicitation
This communication is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the proposed MKS Transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.
The proposed MKS Transaction will be implemented solely pursuant to the scheme of arrangement, subject to the terms and conditions of the definitive agreement between MKS and Atotech, dated July 1, 2021, which contains the full terms and conditions of the proposed MKS Transaction.
Non-IFRS Financial Measures
This communication contains certain non-IFRS financial measures designed to complement the financial information presented in accordance with IFRS because management believes such measures are useful to investors. However, our use of these non-IFRS financial measures may vary from that of others in our industry. Our non-IFRS metrics have limitations as analytical tools, and you should not consider them in isolation or as alternatives to consolidated net income (loss) or other performance measures derived in accordance with IFRS as measures of operating performance, operating cash flows or liquidity. The Company believes that these measures are important and supplement discussions and analysis of its results of operations and enhances an understanding of its operating performance. See the Appendix for a reconciliation of the non-IFRS financial measures.
About Atotech
Atotech is a leading specialty chemicals technology company and a market leader in advanced electroplating solutions. Atotech delivers chemistry, equipment, software, and services for innovative technology applications through an integrated systems-and-solutions approach. Atotech solutions are used in a wide variety of end-markets, including smartphones and other consumer electronics, communications infrastructure, and computing, as well as in numerous industrial and consumer applications such as automotive, heavy machinery, and household appliances.
Atotech, headquartered in Berlin, Germany, is a team of 4,000 experts in over 40 countries generating annual revenues of
Financial Statement Tables
ATOTECH LIMITED
Income Statement
| Three months ended (unaudited) | ||||||
| ($ in millions), except earnings per share | Sept 30, 2021 | Sept 30, 2020 | ||||
| Revenue | $ | 383.0 | $ | 325.4 | ||
| Cost of sales, excluding depreciation and amortization | (193.2 | ) | (142.9 | ) | ||
| Depreciation and amortization | (44.0 | ) | (44.3 | ) | ||
| Selling, general and administrative expenses | (72.2 | ) | (71.3 | ) | ||
| Research and development expenses | (14.2 | ) | (13.2 | ) | ||
| Restructuring benefit (expenses) | (0.1 | ) | (0.1 | ) | ||
| Operating profit (loss) | 59.3 | 53.7 | ||||
| Interest expense | (14.5 | ) | (36.2 | ) | ||
| Other income (expense), net | (2.1 | ) | 10.8 | |||
| Income (loss) before income taxes | 42.7 | 28.3 | ||||
| Income tax expense | (23.3 | ) | (17.3 | ) | ||
| Consolidated net income (loss) | $ | 19.4 | $ | 11.1 | ||
| Earnings per share | ||||||
| Basic earnings (loss) per share | 0.10 | (0.25 | ) | |||
| Diluted earnings (loss) per share | 0.10 | (0.25 | ) | |||
| Three months ended (unaudited) | ||||||
| ($ in millions) | Sept 30, 2021 | Sept 30, 2020 | ||||
| Consolidated net income (loss) | $ | 19.4 | $ | 11.1 | ||
| Other comprehensive income (loss) | ||||||
| Actuarial gains and losses | 1.5 | (4.7 | ) | |||
| Tax effect | (0.5 | ) | 1.4 | |||
| Items not potentially reclassifiable to statement of income | 1.1 | (3.3 | ) | |||
| Currency translation adjustment | (35.2 | ) | 65.5 | |||
| Hedge reserve | (0.1 | ) | (3.6 | ) | ||
| Thereof: Income (cost) of Hedging (OCI II) | 0.3 | 3.7 | ||||
| Items potentially reclassifiable to statement of income (loss), net of tax | (35.3 | ) | 61.9 | |||
| Total other comprehensive income (loss), net amount | $ | (34.3 | ) | $ | 58.7 | |
| Comprehensive loss | $ | (14.9 | ) | $ | 69.7 | |
ATOTECH LIMITED
Condensed Consolidated Balance Sheets
| As of (unaudited) | ||||
| ($ in millions) | Sept 30, 2021 | Dec. 31, 2020 | ||
| Assets | ||||
| Non-current assets | ||||
| Property, plant and equipment | $ | 330.5 | $ | 359.4 |
| Intangible assets | 1,369.2 | 1,471.0 | ||
| Goodwill | 786.6 | 804.1 | ||
| Right-of-use assets | 87.4 | 104.1 | ||
| Other financial assets | 5.3 | 70.3 | ||
| Other non-financial assets | 3.1 | 2.7 | ||
| Total non-current assets | 2,582.2 | 2,811.6 | ||
| Current assets | ||||
| Inventories | 182.5 | 145.4 | ||
| Trade receivables | 272.4 | 262.0 | ||
| Other financial assets | 17.3 | 24.9 | ||
| Other non-financial assets | 31.8 | 24.1 | ||
| Tax assets | 49.4 | 46.4 | ||
| Cash and cash equivalents | 286.4 | 320.1 | ||
| Total current assets | 839.8 | 822.9 | ||
| Total assets | $ | 3,422.0 | $ | 3,634.5 |
| Liabilities & shareholders’ equity | ||||
| Shareholders’ equity | ||||
| Common shares and preferred shares | 19.5 | 102.1 | ||
| Paid-in surplus and retained earnings | 795.0 | 261.6 | ||
| Currency translation adjustment and other reserves | 57.0 | 120.0 | ||
| Total shareholders’ equity | 871.5 | 483.7 | ||
| Non-current liabilities | ||||
| Borrowings | $ | 1,548.6 | $ | 2,065.7 |
| Deferred tax liabilities | 313.4 | 340.8 | ||
| Employee benefits | 155.7 | 176.2 | ||
| Provisions | 12.8 | 13.2 | ||
| Lease liabilities | 54.6 | 67.7 | ||
| Other financial liabilities | 0.0 | 1.5 | ||
| Total non-current liabilities | 2,085.1 | 2,665.1 | ||
| Current liabilities | ||||
| Borrowings | 10.7 | 0.5 | ||
| Trade payables | 225.5 | 221.0 | ||
| Tax liabilities | 84.6 | 99.2 | ||
| Lease liabilities | 13.0 | 13.8 | ||
| Other financial liabilities | 17.7 | 38.5 | ||
| Other non-financial liabilities | 99.8 | 89.7 | ||
| Provisions | 14.1 | 23.0 | ||
| Total current liabilities | 465.5 | 485.8 | ||
| Total liabilities & shareholders’ equity | $ | 3,422.0 | $ | 3,634.5 |
ATOTECH LIMITED
Consolidated Statement of Cash Flows
| Nine months ended (unaudited) | ||||||
| ($ in millions) | Sept 30, 2021 | Sept 30, 2020 | ||||
| Operating activities | ||||||
| Consolidated net income (loss) | $ | (22.5 | ) | $ | (311.8 | ) |
| Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||||||
| Depreciation and amortization | 132.4 | 404.9 | ||||
| Income taxes and changes in non-current provisions | 51.5 | 35.3 | ||||
| (Gains)/losses on disposals of assets | (0.3 | ) | 0.8 | |||
| Net (gain)/loss on financial instruments at fair value | 40.3 | (2.0 | ) | |||
| Accrued financial interest costs | 58.6 | 95.3 | ||||
| Amortization of deferred financing cost, including original issuance discounts | 56.2 | 12.8 | ||||
| Interest paid | (56.5 | ) | (95.4 | ) | ||
| Taxes paid | (95.4 | ) | (48.8 | ) | ||
| Other | (10.7 | ) | (0.1 | ) | ||
| (Increase)/decrease in inventories | (42.5 | ) | (15.3 | ) | ||
| (Increase)/decrease in trade receivables | (13.5 | ) | 0.7 | |||
| Increase/(decrease) in trade payables | 15.0 | (14.6 | ) | |||
| Changes in other assets and liabilities | (12.8 | ) | 1.7 | |||
| Cash flow provided by operating activities | 99.6 | 63.4 | ||||
| Investing activities | ||||||
| Acquisition of subsidiaries, net of cash acquired | — | (2.7 | ) | |||
| Intangible assets and property, plant and equipment additions | (35.1 | ) | (38.4 | ) | ||
| Increase in non-current loans | (0.1 | ) | — | |||
| Proceeds from disposals of intangible assets and property, plant and equipment | 4.4 | 0.1 | ||||
| Repayments of non-current loans | 0.3 | 0.4 | ||||
| Cash flow used in investing activities | (30.5 | ) | (40.6 | ) | ||
| Financing activities | ||||||
| Issuance of shares | 473.4 | — | ||||
| Issuance of non-current debt | 130.1 | 175.0 | ||||
| Repayment of non-current debt | (682.3 | ) | (187.0 | ) | ||
| Changes in current borrowings and bank debt | — | (1.6 | ) | |||
| Changes in current financial assets and liabilities | (1.2 | ) | (0.4 | ) | ||
| Payment of lease liabilities | (11.6 | ) | (11.3 | ) | ||
| Payment of deferred finance costs | — | (9.2 | ) | |||
| Cash flow used in financing activities | (91.6 | ) | (34.6 | ) | ||
| Net decrease in cash and cash equivalents | (22.4 | ) | (11.7 | ) | ||
| Effect of exchange rates | (11.2 | ) | 9.4 | |||
| Cash and cash equivalents at the beginning of the period | 320.0 | 302.7 | ||||
| Cash and cash equivalents at the end of the period | $ | 286.4 | $ | 300.4 | ||
ATOTECH LIMITED
Revenue Data
| Three months ended (unaudited) | ||||
| ($ in millions) | Sept 30, 2021 | Sept 30, 2020 | ||
| Type of goods or service | ||||
| Chemistry revenue | $ | 339.7 | $ | 296.4 |
| Equipment revenue | 43.3 | 28.9 | ||
| Total revenue from contracts with customers | 383.0 | 325.4 | ||
| Geographical market | ||||
| Asia | 285.6 | 235.7 | ||
| Europe | 67.6 | 62.0 | ||
| Americas | 29.9 | 27.6 | ||
| Total revenue from contracts with customers | $ | 383.0 | $ | 325.4 |
ATOTECH LIMITED
Segment Data
| Three months ended (unaudited) | ||||||||
| Sept 30, 2021 | Sept 30, 2020 | |||||||
| ($ in millions) | EL | GMF | Total | EL | GMF | Total | ||
| Revenue | 254.4 | 128.6 | $ | 383.0 | 207.5 | 117.9 | $ | 325.4 |
| thereof Chemistry revenue | 214.0 | 125.7 | 339.7 | 182.6 | 113.8 | 296.4 | ||
| thereof Equipment revenue | 40.4 | 3.0 | 43.3 | 24.9 | 4.0 | 28.9 | ||
| Segment Adjusted EBITDA | 84.2 | 27.7 | 112.0 | 71.5 | 30.0 | 101.5 | ||
ATOTECH LIMITED
Reconciliation of Adjusted EBITDA to Consolidated Net Income (Loss)
| Three months ended (unaudited) | ||||||
| ($ in millions) | Sept 30, 2021 | Sept 30, 2020 | ||||
| Consolidated net income (loss) | $ | 19.4 | $ | 11.1 | ||
| Interest expense, net | 14.4 | 34.3 | ||||
| Income taxes | 23.3 | 17.3 | ||||
| Depreciation and amortization (excluding impairment charges) | 42.8 | 41.7 | ||||
| EBITDA | $ | 99.9 | $ | 104.3 | ||
| Non-cash adjustments(a) | 6.8 | (7.3 | ) | |||
| Foreign exchange loss(b) | (3.8 | ) | 0.9 | |||
| Restructuring(c) | 0.1 | 0.1 | ||||
| Transaction related costs(d) | 8.3 | 2.7 | ||||
| Management fee(e) | 0.5 | 0.5 | ||||
| COVID-19 adjustment(f) | 0.2 | 0.3 | ||||
| Adjusted EBITDA | $ | 112.0 | $ | 101.5 | ||
| thereof EL Segment Adjusted EBITDA | $ | 84.2 | $ | 71.5 | ||
| thereof GMF Segment Adjusted EBITDA | $ | 27.7 | $ | 30.0 | ||
(a) Eliminates the non-cash impact of (1) share-based compensation, (2) losses on the sale of fixed assets, (3) impairment charges and (4) mark-to-market adjustments related to our foreign currency derivatives entered into in connection with certain redenomination transactions not linked to underlying individual transactions and bifurcated embedded derivatives related to certain redemption features of the
| Three months ended (unaudited) | |||||||
| ($ in millions) | Sept 30, 2021 | Sept 30, 2020 | |||||
| Share based compensation | $ | 3.6 | $ | 0.1 | |||
| Losses on the sale of fixed assets | (0.8 | ) | 0.7 | ||||
| Impairment charges | 1.2 | 2.5 | |||||
| Mark-to-market adjustments | 2.7 | (10.6 | ) | ||||
| Valuation adjustments | 0.0 | (0.0 | ) | ||||
| Non-cash adjustments | $ | 6.8 | $ | (7.3 | ) | ||
(b) Eliminates net foreign currency transactional gains and losses on balance sheet items.
(c) Eliminates charges resulting from restructuring activities principally from the Company’s cost-reduction efforts.
(d) Reflects an adjustment to eliminate (1) IPO-related costs linked to the existing equity, (2) professional fees paid to third-party advisors in connection with the implementation of strategic initiatives and (3) for the three and nine months ended September 30, 2021 the increased expenses of the D&O insurance in connection with the IPO.
(e) Reflects an adjustment to eliminate fees paid to Carlyle. The consulting agreement pursuant to which management fees are paid to Carlyle will terminate on the earlier of (i) the third anniversary of the IPO and (ii) the date upon which Carlyle ceases to own more than ten percent of the outstanding voting securities of the Company. Management does not view these fees as indicative of the Company’s operational performance and the removal of these fees from Adjusted EBITDA is consistent with the calculation of similar measures under our old senior secured credit facilities and our new credit agreement as well as the indentures that previously governed the Holdco Notes and Opco Notes. For a description of the consulting agreement with Carlyle, see Item 7.B. “Major Shareholders and Related Party Transactions—Related Party Transactions” in our Annual Report on Form 20-F.
(f) Eliminates charges in connection with masks, sanitizers, and other COVID-19 related expenses at certain plant and office locations.
ATOTECH LIMITED
Chemistry Revenue Growth Reconciliation
| Three months ended Sept 30, 2021 (unaudited) | ||||||||
| Reported Revenue Growth | Impact of Currency | Palladium Pass-Through | Organic Growth | |||||
| Electronics | 17 | % | (4 | %) | (6 | %) | 7 | % |
| General Metal Finishing | 10 | % | (3 | %) | (1 | %) | 6 | % |
| Total | 15 | % | (4 | %) | (4 | %) | 6 | % |
1 Adjusted EBITDA is a non-IFRS financial measure. Adjusted EBITDA should be considered in addition to, but not as a substitute for, the information provided in accordance with IFRS. A reconciliation for adjusted EBITDA to the most directly comparable IFRS financial measure is provided in the Reconciliation of Adjusted EBITDA to Consolidated Net Income (Loss) table. We are not able to forecast Consolidated net income (loss) on a forward-looking basis without unreasonable efforts due to the high variability and difficulty in predicting certain items that affect Consolidated net income (loss), including, but not limited to, Income taxes, Interest expense, and Foreign exchange income (loss).
FAQ
What were Atotech's Q3 2021 revenue figures?
How did Atotech perform in terms of net income in Q3 2021?
What is the Adjusted EBITDA for Atotech in Q3 2021?
What is Atotech's guidance for full-year organic revenue growth for 2021?
When is the expected closing date for the MKS Instruments acquisition of Atotech?
