Chase Corporation Announces Fiscal Second Quarter 2023 Results
Chase Corporation (NYSE American: CCF) reported a 27.5% year-over-year revenue increase for the second fiscal quarter ending February 28, 2023, reaching $94.3 million. Net income stood at $8.5 million ($0.89 per diluted share), down from $9.1 million ($0.96 per diluted share) due to $3.1 million in additional amortization expenses linked to the NuCera business. The gross margin improved slightly to 36.8%. Furthermore, free cash flow surged to $10 million, a significant increase from $1.6 million a year earlier. Despite challenges from customer de-stocking and seasonal factors affecting sales, especially in Asia, the company noted success in its inventory reduction strategy and ongoing ERP upgrade. The financial performance underscores Chase's resilience and focus on growth, particularly through its NuCera acquisition.
- Total revenue increased 27.5% year-over-year to $94.3 million.
- Free cash flow improved significantly to $10 million from $1.6 million a year ago.
- Adjusted EBITDA rose 31.4% to $22 million in the second quarter.
- Gross margin increased slightly to 36.8%.
- Net income decreased to $8.5 million from $9.1 million due to higher amortization expenses.
- Sales impacted by customer de-stocking initiatives across all business segments.
- Revenue decreases in the Corrosion Protection and Waterproofing segment.
Quarterly Revenue Increased
Increase in Gross Margin and Free Cash Flow drive debt reduction
Customer de-stocking initiatives impacting sales
Fiscal Second Quarter and Year-to-Date Financial and Recent Operational Highlights
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Total Revenue grew
27.5% to , and$94.3 million 32.4% to , in the second quarter and first six-months of fiscal 2023, respectively$197.2 million -
Gross Margin of
36.8% (39.7% excluding our NuCera business) in the second quarter of fiscal 2023, compared to36.6% in the second quarter of fiscal 2022; Gross Margin of35.8% (39.2% excluding our NuCera business) in the first six-months of fiscal 2023, compared to36.8% in the first-six months of fiscal 2022 -
Net Income was
, or$8.5 million per diluted share, compared to$0.89 , or$9.1 million per diluted share in the second quarter of fiscal 2022, – with the reduction primarily due to additional$0.96 ($3.1 million per diluted share) incremental amortization expense related to the NuCera business$0.29 -
Free Cash Flow was
and$10.0 million in the second quarter and first-six months of fiscal 2023, respectively, compared to Free Cash Flow of$14.7 million and$1.6 million in the second quarter and first-six months of fiscal 2022, respectively$7.0 million -
Adjusted EBITDA grew
31.4% to and$22.0 million 36.9% to in the second quarter and first-six months of fiscal 2023, respectively, compared to Adjusted EBITDA of$47.2 million and$16.8 million in the second quarter and first-six months of fiscal 2022, respectively$34.5 million
Segment Results
Adhesives, Sealants and Additives
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Three Months Ended |
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Six Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenue |
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$ |
48,734 |
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$ |
31,780 |
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$ |
104,287 |
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$ |
62,829 |
Cost of products and services sold |
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30,769 |
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19,838 |
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67,001 |
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38,755 |
Gross Margin |
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$ |
17,965 |
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$ |
11,942 |
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$ |
37,286 |
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$ |
24,074 |
Gross Margin % |
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Revenue for our Adhesives, Sealants and Additives segment increased in the second quarter and year-to-date periods against the comparable prior year periods. The segment revenue increased
Industrial Tapes
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Three Months Ended |
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Six Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenue |
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$ |
36,983 |
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$ |
33,330 |
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$ |
76,060 |
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$ |
66,091 |
Cost of products and services sold |
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23,477 |
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21,790 |
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49,196 |
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44,009 |
Gross Margin |
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$ |
13,506 |
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$ |
11,540 |
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$ |
26,864 |
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$ |
22,082 |
Gross Margin % |
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Revenue for our Industrial Tapes segment surpassed the prior year quarter and year-to-date periods against the comparable prior year periods. The segment revenue increased
Corrosion Protection and Waterproofing
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Three Months Ended |
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Six Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenue |
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$ |
8,563 |
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$ |
8,843 |
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$ |
16,826 |
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$ |
20,043 |
Cost of products and services sold |
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5,375 |
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5,283 |
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10,424 |
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11,428 |
Gross Margin |
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$ |
3,188 |
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$ |
3,560 |
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$ |
6,402 |
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$ |
8,615 |
Gross Margin % |
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Revenue in the Company’s Corrosion Protection and Waterproofing segment decreased in the current quarter and year-to-date period against the comparable prior year periods. The segment revenue decreased
About
Use of Non-GAAP Financial Measures
The Company has used non-GAAP financial measures in this press release. Adjusted net income, Adjusted diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow are non-GAAP financial measures. The Company believes that Adjusted net income, Adjusted diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow are useful performance measures as they are used by its executive management team to measure operating performance, to allocate resources to enhance the financial performance of its business, to evaluate the effectiveness of its business strategies and to communicate with its board of directors and investors concerning its financial performance. The Company believes Adjusted net income, Adjusted diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow are commonly used by financial analysts and others in the industries in which the Company operates, and thus provide useful information to investors. However, Chase’s calculation of Adjusted net income, Adjusted diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow may not be comparable to similarly-titled measures published by others. Non-GAAP financial measures should be considered in addition to, and not as an alternative to, the Company’s reported results prepared in accordance with GAAP. This press release provides reconciliations from the most directly comparable financial measure presented in accordance with
Cautionary Note Concerning Forward-Looking Statements
Certain statements in this press release are forward-looking. These may be identified by the use of forward-looking words or phrases including, but not limited to, “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated” and “potential.” These forward-looking statements are based on Chase Corporation’s current expectations. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for such forward-looking statements. To comply with the terms of the safe harbor, the Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties which may affect the operations, performance, development and results of the Company's business include, but are not limited to, the following: uncertainties relating to economic conditions; uncertainties relating to customer plans and commitments; the pricing and availability of equipment, materials and inventories; technological developments; performance issues with suppliers and subcontractors; economic growth; delays in testing of new products; the Company’s ability to successfully integrate acquired operations; the effectiveness of cost-reduction plans; rapid technology changes; the highly competitive environment in which the Company operates; as well as expected impact of the coronavirus disease (COVID-19) pandemic on the Company's businesses. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company does not assume any obligation to update or revise any forward-looking statement made in this release or that may from time to time be made by or on behalf of the Company. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in the Company’s filings with the
The following table summarizes the Company’s unaudited financial results for the three and six months ended
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Three Months Ended |
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Six Months Ended |
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All figures in thousands, except per share figures |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenue |
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$ |
94,280 |
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$ |
73,953 |
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$ |
197,173 |
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$ |
148,963 |
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Costs and Expenses |
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Cost of products and services sold |
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59,621 |
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46,911 |
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126,621 |
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94,192 |
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Selling, general and administrative expenses |
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18,436 |
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13,125 |
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40,043 |
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26,500 |
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Research and product development costs |
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1,463 |
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1,095 |
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2,954 |
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2,088 |
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Operations optimization costs |
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638 |
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589 |
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1,291 |
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648 |
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Acquisition-related costs |
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— |
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— |
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29 |
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— |
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Loss on impairment/write-off of right-of-use lease asset |
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314 |
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— |
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862 |
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— |
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Loss (Gain) on contingent consideration |
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128 |
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(200 |
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434 |
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275 |
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Operating income |
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13,680 |
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12,433 |
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24,939 |
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25,260 |
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Interest expense |
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(2,387 |
) |
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(86 |
) |
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(4,525 |
) |
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(173 |
) |
Other income (expense) |
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(301 |
) |
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20 |
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(822 |
) |
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397 |
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Income before income taxes |
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10,992 |
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12,367 |
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19,592 |
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25,484 |
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Income taxes |
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2,489 |
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3,241 |
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4,365 |
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6,631 |
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Net income |
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$ |
8,503 |
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$ |
9,126 |
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$ |
15,227 |
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$ |
18,853 |
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Net income per diluted share |
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$ |
0.89 |
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$ |
0.96 |
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$ |
1.60 |
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$ |
1.98 |
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Weighted average diluted shares outstanding |
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9,445 |
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9,436 |
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9,444 |
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9,437 |
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Reconciliation of net income to EBITDA and adjusted EBITDA |
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Net income |
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$ |
8,503 |
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$ |
9,126 |
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$ |
15,227 |
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$ |
18,853 |
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Interest expense |
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2,387 |
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86 |
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4,525 |
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173 |
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Income taxes |
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2,489 |
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3,241 |
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4,365 |
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6,631 |
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Depreciation expense |
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2,206 |
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|
899 |
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4,536 |
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1,776 |
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Amortization expense |
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5,380 |
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3,042 |
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13,780 |
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6,167 |
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EBITDA |
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$ |
20,965 |
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$ |
16,394 |
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$ |
42,433 |
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$ |
33,600 |
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Loss (Gain) on contingent consideration |
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128 |
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(200 |
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434 |
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275 |
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Operations optimization costs |
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638 |
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589 |
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1,291 |
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648 |
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Acquisition-related costs |
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— |
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— |
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29 |
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— |
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Purchase accounting adjustments |
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— |
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— |
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2,200 |
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— |
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Loss on impairment/write-off of right-of-use lease asset |
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314 |
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— |
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862 |
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— |
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Adjusted EBITDA |
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$ |
22,045 |
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$ |
16,783 |
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$ |
47,249 |
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$ |
34,523 |
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Three Months Ended |
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Six Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Reconciliation of net income to adjusted net income |
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Net income |
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$ |
8,503 |
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$ |
9,126 |
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$ |
15,227 |
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$ |
18,853 |
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Stock based compensation excess tax loss (gain) |
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10 |
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10 |
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(131 |
) |
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10 |
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Loss on contingent consideration |
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128 |
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(200 |
) |
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434 |
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275 |
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Operations optimization costs |
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|
638 |
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589 |
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1,291 |
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|
648 |
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Acquisition-related costs |
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— |
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— |
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29 |
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|
— |
|
Purchase accounting adjustments |
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— |
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— |
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2,200 |
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— |
|
Loss on impairment/write-off of right-of-use lease asset |
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314 |
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|
|
— |
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|
862 |
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|
|
— |
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Income taxes * |
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(227 |
) |
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(82 |
) |
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(1,011 |
) |
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(194 |
) |
Adjusted net income |
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$ |
9,366 |
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$ |
9,443 |
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$ |
18,901 |
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$ |
19,592 |
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Adjusted net income per diluted share (Adjusted diluted EPS) |
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$ |
0.98 |
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$ |
0.99 |
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$ |
1.98 |
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$ |
2.06 |
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* For the three and six months ended
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Three Months Ended |
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Six Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Reconciliation of cash provided by operating activities to free cash flow |
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Net cash provided by operating activities |
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$ |
12,433 |
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$ |
2,854 |
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$ |
19,191 |
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$ |
8,757 |
|
Purchases of property, plant and equipment |
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(2,408 |
) |
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(1,273 |
) |
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(4,460 |
) |
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(1,769 |
) |
Free cash flow |
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$ |
10,025 |
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$ |
1,581 |
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$ |
14,731 |
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$ |
6,988 |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20230406005738/en/
Investor & Media Contact:
Phone: (617) 466-9257
E-mail: CCF@alpha-ir.com
or
Shareholder & Investor Relations Department
Phone: (781) 332-0700
E-mail: investorrelations@chasecorp.com
Website: www.chasecorp.com
Source:
FAQ
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