FOE
$14.70
Ferro
($.21)
(1.41%)
Earnings Details
4th Quarter December 2016
Wednesday, March 01, 2017 5:07:00 PM
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Summary

Ferro Beats but Guides Lower

Ferro (FOE) reported 4th Quarter December 2016 earnings of $0.27 per share on revenue of $281.3 million. The consensus earnings estimate was $0.21 per share on revenue of $277.0 million. The Earnings Whisper number was $0.22 per share. Revenue grew 6.2% on a year-over-year basis.

The company said it expects 2017 earnings of $1.12 to $1.17 per share. The current consensus earnings estimate is $1.24 per share for the year ending December 31, 2017.

Ferro Corp is a producer of specialty materials and chemicals that are sold to the manufacturers who, in turn, make products for many end-use markets. It offers electronic materials, color and glass performance materials, pigments, powders & oxides.

Results
Reported Earnings
$0.27
Earnings Whisper
$0.22
Consensus Estimate
$0.21
Reported Revenue
$281.3 Mil
Revenue Estimate
$277.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Ferro Reports Strong Fourth-Quarter and Full Year Results; Driven by Higher-value Portfolio as Growth Strategy Continues

Strong margin expansion continued in the fourth quarter and for the full year, driven by higher volumes, improved business mix and lean initiatives

Full-year net sales increased 6.5% to $1.15 billion, up from $1.08 billion in the prior year On a constant currency basis, sales increased 11.1%

Full-year earnings per diluted share from continuing operations of $0.51 Adjusted earnings per diluted share from continuing operations of $1.09

Five acquisitions completed in 2016; recent refinancing positions Company for continued growth

The results and guidance in this release, including in the highlights above, contain references to non-GAAP measures from continuing operations, which are identified by the word "adjusted" preceding the measure. A reconciliation of GAAP to non-GAAP results can be found at the end of this release.

Ferro Corporation (FOE, THE "COMPANY") today reported results for the fourth quarter and full year ended December 31, 2016.

Peter Thomas, Ferro’s Chairman, President and CEO, said, "Ferro delivered another strong quarter, capping a year that illustrates the success of our strategy to transform Ferro into a focused functional coatings and color solutions company that provides high-value products, technical solutions and services to our customers.

"In the quarter, our global team delivered increased sales volumes and gross profit margins in all three business segments while maintaining a strong cost optimization focus. We met or exceeded our full-year 2016 targets for sales growth, gross margin, adjusted free cash flow from operations, adjusted EBITDA and adjusted EPS. Growth in sales and profitability was achieved organically and through acquisitions, with the team completing five acquisitions during the year.

"Looking ahead, we are excited about the opportunities for Ferro in 2017. We have additional opportunities for organic growth and a robust pipeline of potential acquisition targets. In February, we closed a very successful refinancing, which positions us to execute our growth strategy with greater capacity and flexibility. We intend to continue strengthening our product and technology portfolios, enhancing our market positions, and expanding our global reach to drive shareholder value."

Mr. Thomas continued, "Our organic growth profile has improved over the course of 2016 as new product development and geographic expansion initiatives have taken root. In addition, acquisitions integrated over the past 12 months, including Nubiola and Al Salomi, are making significant contributions to consolidated results.

"I am extremely proud of our global team and the commitment they have shown executing our acquisition, integration, cost optimization and innovation priorities. With their continuing efforts, the business infrastructure we have in place, and our enhanced financial flexibility, we’re ready to take the Company to the next stage of growth."

2016 Consolidated Fourth Quarter Results from Continuing Operations

Fourth quarter net sales grew 6.2% to $281.3 million from $265.0 million in the prior year. On a constant currency basis, fourth quarter net sales increased 11.0% compared to the prior year. Gross profit increased to $79.6 million from $76.4 million. Ferro reported a net loss from continuing operations in the fourth quarter of $20.6 million, or $(0.25) per diluted share, compared with net income of $59.0 million and earnings per diluted share of $0.67 for the same quarter in the prior year. On an adjusted basis, earnings per diluted share from continuing operations were $0.27, an increase of 42.1% over the $0.19 delivered in the prior-year fourth quarter.

Continuing Operations
Q4 2016
Q4 2015
Earnings/(Loss) Per Diluted Share
GAAP
$ (0.25 )
$
0.67
Adjusted (Non-GAAP)
$
0.27
$
0.19

In the fourth quarter of 2016, organic net sales (excluding acquisitions) increased 3.9%, on a constant currency basis, and the gross profit margin on organic net sales increased 220 basis points to 30.9%.

Fourth Quarter Segment Performance

In the fourth quarter, Ferro delivered improved performance in all three of its reporting segments.

Pigments, Powders and Oxides (PPO) delivered a robust 17.4% sales increase, to $59.0 million, and the gross profit margin expanded nearly 70 basis points to 31.3%.

Performance Color & Glass (PCG) sales improved 9.4%, to $94.6 million, while the gross profit margin expanded by 160 basis points to 34.8%.

Performance Coatings sales were relatively flat at $127.8 million, while gross profit margin improved to 27.0% from 24.0%.

Full-year 2016 Consolidated Results from Continuing Operations

For the year ended December 31, 2016, net sales increased to $1.15 billion, a 6.5% improvement compared to $1.08 billion generated in 2015. On a constant currency basis, net sales increased 11.1%. Gross profit increased to $351.2 million from $301.7 million and the gross margin expanded 260 basis points, to 30.7% from 28.1% in the prior year. Reported gross profit for both years includes certain purchase accounting adjustments associated with recent acquisitions, pension and other postretirement benefit mark-to-market adjustments, and currency-related items in Venezuela in 2015 prior to the sale of our interest in the business. Adjusting for these items, the gross profit margins in 2016 and 2015 would have been 31.4% and 28.1%, respectively.

Ferro reported 2016 income from continuing operations of $44.6 million, or $0.51 per diluted share, compared with $99.9 million, or $1.14 per diluted share, in the prior year. On an adjusted basis, 2016 full-year earnings per diluted share increased to $1.09 from $0.85, a 28.2% improvement over the prior year. Adjusted EBITDA improved to $194.6 million, a conversion of 17.0% of sales, up from 14.4% in 2015.

Continuing Operations
FY 2016
FY 2015
Earnings/(Loss) Per Diluted Share
GAAP)
$ 0.51
$
1.14
Adjusted (Non-GAAP)
$ 1.09
$
0.85

For the full year, organic net sales increased approximately 1.0%, on a constant currency basis, while the gross profit margin on organic net sales increased by 280 basis points to 31.3%.

Net cash provided by operating activities was $62.6 million, compared to $51.2 million in the prior year, an increase of 22.3%. Ferro generated adjusted free cash flow from continuing operations of $84.5 million, compared to $75.5 million in the prior year, an improvement of 11.9%. Adjusted free cash flow from continuing operations is defined as adjusted EBITDA from continuing operations less cash items used to operate the businesses, including cash taxes and interest, changes in working capital, capital expenditures and other cash items.

2017 Outlook

Ferro provided the following 2017 outlook:

-- Consolidated sales growth of 7% - 8%

-- Gross margin of 31.4% - 31.9%

-- SG&A Expense of 18.2% - 18.5%

-- Total Interest Expense of $26 million - $27 million

-- Tax Rate 27% - 28%

-- Adjusted EPS of $1.12 - $1.17 per share

-- Adjusted EBITDA of $207 million - $212 million

Adjusted free cash flow from operating activities of $80 million - $90 million

Note: The above guidance assumes no additional acquisitions or divestitures are made in 2017 and reflects foreign currency exchange rates as of December 31, 2016.

Commenting on the outlook, Mr. Thomas said, "We are pleased to see the momentum generated in the second half of 2016 carrying into 2017. Results in the early part of 2017 are encouraging, and we are expecting another year of solid growth with constant currency sales growth of 11% - 12%. We expect the base business to continue the growth momentum it generated in the latter part of 2016, adding to our growth through acquisitions. To capitalize on the recent organic growth momentum, we will be making additional investments in sales, technical service and research and development programs.

"The year won’t be without its challenges, however, as the raw material cost increases of the last several months are expected to continue. We expect to offset these cost increases through pricing actions, product reformulations and optimization actions, but due to competitive dynamics and the lag in the timing between announced pricing actions and raw materials increases, we may see gross profit margin pressures from quarter to quarter. In addition, foreign currency exchange rates continue to be volatile, and we anticipate changes in rates will again adversely impact reported results. Based on 2016 year-end rates, we estimate that foreign currency translation will adversely impact reported EBITDA by approximately $7 million, or approximately $0.04 from an EPS perspective."

Ferro’s outlook assumes an average exchange rate of 1.05 USD/EUR for the year, compared with an average of approximately 1.10 USD/EUR in 2016. Ferro generates approximately 30% - 35% of its revenue in Euros, and approximately 25% - 30% in U.S. Dollars. Ferro also generates revenue in foreign currencies other than the Euro, although no other single currency accounts for more than 5% of our exposure, as shown in the table below. The Company estimates that a 1% overall change in foreign currency exchange rates, weighted for the countries where we do business, would impact sales and operating profit by approximately $8.3 million and $1.2 million, respectively.

Revenue FX Exposure 2016 Weighting
Currency Name
Weighting
EUR - Euro
30% to 35%
CNY - Yuan Renminbi
2% to 5%
EGP - Egyptian Pound
2% to 5%

Adjusted Guidance: Earnings, EBITDA and Free Cash Flow from Continuing Operations

Management has provided the adjusted diluted EPS, adjusted EBITDA and adjusted free cash flow from operations guidance on a continuing operations basis. While it is likely that Ferro could incur charges, or have cash flows for items excluded from adjusted diluted EPS, adjusted EBITDA and adjusted free cash flow from continuing operations [such as mark-to-market adjustments of pension and other postretirement benefit obligations, restructuring and impairment charges, and legal and professional expenses related to certain business development activities], it is not possible, without unreasonable effort, to identify the amount or significance of these items or the potential for other transactions that may impact future GAAP net income and cash flow from operating activities. Management does not believe these items to be representative of underlying business performance. Management is unable to reconcile, without unreasonable effort, the Company’s forecasted range of adjusted EPS, adjusted EBITDA and adjusted free cash from continuing operations to a comparable GAAP range.

Financing Transaction

On February 14, 2017, the Company announced that it completed a successful refinancing of its debt structure, which increased liquidity, extended debt maturities, and provided improved operating flexibility. The refinancing positions Ferro to continue its value creation strategy with flexible financing options to support both organic and inorganic growth opportunities. See Table 14 for an illustration of the Company’s capitalization on a proforma basis, as if the refinancing was completed on December 31, 2016.

Constant Currency

Constant currency results reflect the remeasurement of 2015 reported and adjusted local currency results using 2016 exchange rates, resulting in constant currency comparative figures to 2016 reported and adjusted results. The non-GAAP financial measures presented should not be considered as a substitute for the measures of financial performance prepared in accordance with GAAP.

Conference Call

The Company will host a conference call to discuss its fourth quarter and full-year financial results and its current outlook for 2017 on Thursday, March 2, 2017, at 10:00 a.m. Eastern Time. To listen to the call, dial 888-222-3913 if calling from the United States or Canada, or dial 303-223-2686 if calling from outside North America. Please call approximately 10 minutes before the conference call is scheduled to begin.

A replay will be available from 12 Noon Eastern Time on March 2, 2017, until 12 Noon Eastern Time on March 9, 2017. To access the replay, dial 800-633-8284 (toll-free) if calling from the United States or Canada, or dial 402-977-9140 if calling from outside North America. Use the program ID #21843082 to access the audio replay. The Webcast replay will also be available by clicking on the Investor Information link on the Ferro corporate Web site at http://www.ferro.com, beginning at approximately 12 Noon Eastern Time on March 2, 2017.

The conference call also will be broadcast live over the Internet and will be available for replay for 30 days. The live broadcast, replay and earnings presentation material can be accessed through the Investor Information portion of the Company’s Web site at www.ferro.com. A podcast of the conference call also will be available on the site.

About Ferro Corporation

Ferro Corporation (http://www.ferro.com) is a leading global functional coatings and color solutions company that supplies technology-based performance materials, including glass-based coatings, pigments and colors, and polishing materials. Ferro products are sold into the building and construction, automotive, appliances, electronics, household furnishings, and industrial products markets. Headquartered in Mayfield Heights, Ohio, the Company has approximately 5,125 employees globally and reported 2016 sales of $1.15 billion.

Cautionary Note on Forward-Looking Statements

Certain statements in this press release may constitute "forward-looking statements" within the meaning of federal securities laws. These statements are subject to a variety of uncertainties, unknown risks, and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following:

demand in the industries into which Ferro sells its products may be unpredictable, cyclical, or heavily influenced by consumer spending;

Ferro’s ability to successfully implement and/or administer its optimization initiatives, including its restructuring programs, and to produce the desired results;

currency conversion rates and economic, social, political, and regulatory conditions in the U.S. and around the world;

Ferro’s ability to identify suitable acquisition candidates, complete acquisitions, effectively integrate the businesses and achieve the expected synergies (including, but not limited to, the Cappelle Pigments, Electro-Science Laboratories, Delta Performance Products, Pinturas Benicarlo, Ferer, Al Salomi, Nubiola and Vetriceramici transactions), as well as the acquisitions being accretive and Ferro achieving the expected returns on invested capital;

the effectiveness of the Company’s efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques;

Ferro’s ability to successfully introduce new products or enter into new growth markets;

the impact of interruption, damage to, failure, or compromise of the Company’s information systems;

restrictive covenants in the Company’s credit facilities could affect its strategic initiatives and liquidity;

Ferro’s ability to access capital markets, borrowings, or financial transactions;

the availability of reliable sources of energy and raw materials at a reasonable cost;

increasingly aggressive domestic and foreign governmental regulations on hazardous materials and regulations affecting health, safety and the environment;

-- competitive factors, including intense price competition;

Ferro’s ability to protect its intellectual property, including trade secrets, or to successfully resolve claims of infringement brought against it;

-- sale of products and materials into highly regulated industries;

the impact of operating hazards and investments made in order to meet stringent environmental, health and safety regulations;

limited or no redundancy for certain of the Company’s manufacturing facilities and possible interruption of operations at those facilities;

-- management of Ferro’s general and administrative expenses;

Ferro’s multi-jurisdictional tax structure and its ability to reduce its effective tax rate, including the impact of the Company’s performance on its ability to utilize significant deferred tax assets;

the effectiveness of strategies to increase Ferro’s return on invested capital, and the short-term impact that acquisitions may have on return on invested capital;

stringent labor and employment laws and relationships with the Company’s employees;

the impact of requirements to fund employee benefit costs, especially post-retirement costs;

implementation of new business processes and information systems, including the outsourcing of functions to third parties;

risks associated with the manufacture and sale of material into industries making products for sensitive applications;

-- exposure to lawsuits in the normal course of business;

-- risks and uncertainties associated with intangible assets;

Ferro’s borrowing costs could be affected adversely by interest rate increases;

liens on the Company’s assets by its lenders affect its ability to dispose of property and businesses;

Ferro may not pay dividends on its common stock in the foreseeable future;

-- amount and timing of any repurchase of Ferro’s common stock; and

other factors affecting the Company’s business that are beyond its control, including disasters, accidents and governmental actions.

The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition and results of operations.

This release contains time-sensitive information that reflects management’s best analysis only as of the date of this release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information, or circumstances that arise after the date of this release. Additional information regarding these risks can be found in our Annual Report on Form 10-K for the period ended December 31, 2016.

Table 1
Ferro Corporation and Subsidiaries
Consolidated
Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
Twelve Months Ended
December 31, (Unaudited)
December 31,
2016
2015
2016
2015
Net sales
$
281,337
$
264,990
$ 1,145,292
$
1,075,341
Cost of sales
201,703
188,613
794,075
773,661
Gross profit
79,634
76,377
351,217
301,680
Selling, general and administrative expenses
75,597
66,331
241,702
216,899
Restructuring and impairment charges
14,213
4,186
15,907
9,655
Other expense (income):
Interest expense
5,968
5,026
21,547
15,163
Interest earned
(216)
(172)
(630)
(363)
Foreign currency losses (gains), net
10,039
(1,263)
12,906
4,495
Miscellaneous (income) expense, net
(581)
343
(2,660)
1,048
(Loss) income before income taxes
(25,386)
1,926
62,445
54,783
Income tax (benefit) expense
(4,791)
(57,030)
17,868
(45,100)
(Loss) income from continuing operations
(20,595)
58,956
44,577
99,883
(Loss) from discontinued operations, net of income taxes
-
(8,091)
(64,464)
(36,779)
Net (loss) income
(20,595)
50,865
(19,887)
63,104
Less: Net income (loss) attributable to noncontrolling interests
341
275
930
(996)
Net (loss) income attributable to Ferro Corporation common
$ (20,936)
$
50,590
$
(20,817)
$
64,100
shareholders
(Loss) earnings per share attributable to Ferro Corporation
common shareholders:
Basic (loss) earnings:
Continuing operations
$
(0.25)
$
0.69
$
0.52
$
1.16
Discontinued operations
-
(0.09)
(0.77)
(0.42)
$
(0.25)
$
0.59
$
(0.25)
$
0.74
Diluted (loss) earnings:
Continuing operations
$
(0.25)
$
0.67
$
0.51
$
1.14
Discontinued operations
-
(0.09)
(0.76)
(0.42)
$
(0.25)
$
0.58
$
(0.25)
$
0.72
Shares outstanding:
Weighted-average basic shares
83,405
85,363
83,298
86,718
Weighted-average diluted shares
83,405
87,049
84,910
88,433
End-of-period basic shares
83,439
84,005
83,439
84,005
Table 2
Ferro Corporation and Subsidiaries
Segment
Net Sales and Gross Profit (unaudited)
(Dollars in thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
Segment Net Sales
Performance Coatings
$
127,815
$ 128,379
$
526,981
$
533,370
Performance Colors and Glass
94,568
86,408
371,464
376,769
Pigments, Powders and Oxides
58,954
50,203
246,847
165,202
Total segment net sales
$
281,337
$ 264,990
$ 1,145,292
$
1,075,341
Segment Gross Profit
Performance Coatings
$
34,469
$
30,819
$
139,454
$
126,945
Performance Colors and Glass
32,891
28,669
133,716
128,209
Pigments, Powders and Oxides
18,425
15,353
84,293
45,678
Other costs of sales
(6,151)
1,536
(6,246)
848
Total gross profit
$
79,634
$
76,377
$
351,217
$
301,680
Selling, general and administrative expenses
Strategic services
30,006
28,428
116,807
107,729
Functional services
40,072
34,168
106,798
95,320
Incentive compensation
3,553
2,318
10,852
4,982
Stock-based compensation
1,966
1,417
7,245
8,868
Total selling, general and administrative expenses
$
75,597
$
66,331
$
241,702
$
216,899
Restructuring and impairment charges
14,213
4,186
15,907
9,655
Other expense, net
15,210
3,934
31,163
20,343
(Loss) income before income taxes
$ (25,386)
$
1,926
$
62,445
$
54,783
Table 3
Ferro Corporation and Subsidiaries
Consolidated
Balance Sheets
(Dollars in thousands)
December 31,
December 31,
2016
2015
ASSETS
Current assets
Cash and cash equivalents
$
45,582
$
58,380
Accounts receivable, net
259,687
231,970
Inventories
229,847
184,854
Deferred income taxes
-
12,088
Other receivables
37,814
34,088
Other current assets
9,087
15,695
Current assets held-for-sale
-
16,215
Total current assets
582,017
553,290
Other assets
Property, plant and equipment, net
262,026
260,429
Goodwill
148,296
145,669
Intangible assets, net
137,850
106,633
Deferred income taxes
106,454
87,385
Other non-current assets
47,126
48,767
Non-current assets held-for-sale
-
23,178
Total assets
$ 1,283,769
$
1,225,351
LIABILITIES AND EQUITY
Current liabilities
Loans payable and current portion of long-term debt
$
17,310
$
7,446
Accounts payable
127,655
120,380
Accrued payrolls
35,859
28,584
Accrued expenses and other current liabilities
65,203
54,664
Current liabilities held-for-sale
-
7,156
Total current liabilities
246,027
218,230
Other liabilities
Long-term debt, less current portion
557,175
466,108
Postretirement and pension liabilities
162,941
148,249
Other non-current liabilities
62,594
66,990
Non-current liabilities held-for-sale
-
1,493
Total liabilities
1,028,737
901,070
Equity
Total Ferro Corporation shareholders’ equity
247,113
316,459
Noncontrolling interests
7,919
7,822
Total liabilities and equity
$ 1,283,769
$
1,225,351
Table 4
Ferro Corporation and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(Dollars in thousands)
Three Months Ended
Twelve Months Ended
December 31, (Unaudited)
December 31,
2016
2015
2016
2015
Cash flows from operating activities
Net (loss) income
$
(20,595)
$
50,865
$
(19,887)
$
63,104
Loss (gain) on sale of assets
695
548
(2,764)
1,836
Depreciation and amortization
13,206
9,059
46,805
41,061
Interest amortization
362
250
1,353
1,125
Restructuring and impairment charges
13,695
1,988
50,868
13,270
Accounts receivable
22,477
23,230
(21,893)
20,208
Inventories
10,182
7,788
(10,271)
6,562
Accounts payable
4,371
(4,960)
1,162
(14,605)
Other current assets and liabilities, net
(859)
(13,643)
8,620
(19,400)
Other adjustments, net
12,354
(55,421)
8,637
(61,959)
Net cash provided by operating activities
55,888
19,704
62,630
51,202
Cash flows from investing activities
Capital expenditures for property, plant and equipment and other
(6,728)
(6,836)
(24,945)
(43,087)
long-lived assets
Proceeds from sale of assets
36
498
3,634
642
Business acquisitions, net of cash acquired
(118,094)
(35,158)
(129,511)
(202,155)
Net cash (used in) investing activities
(124,786)
(41,496)
(150,822)
(244,600)
Cash flows from financing activities
Net borrowings (repayments) under loan payable
1,990
(9,052)
4,596
(7,261)
Proceeds from revolving credit facility
142,837
95,617
355,743
242,390
Principal payments on revolving credit facility
(64,492)
(41,653)
(214,188)
(72,390)
Principal payments on term loan facility
(750)
(750)
(53,000)
(3,000)
Payment of debt issuance costs
(50)
--
(711)
--
Purchase of treasury stock
-
(31,573)
(11,429)
(38,571)
Other financing activities
570
(282)
986
(1,442)
Net cash provided by financing activities
80,105
12,307
81,997
119,726
Effect of exchange rate changes on cash and cash equivalents
(6,181)
(1,628)
(6,603)
(8,448)
Increase (decrease) in cash and cash equivalents
5,026
(11,113)
(12,798)
(82,120)
Cash and cash equivalents at beginning of period
40,556
69,493
58,380
140,500
Cash and cash equivalents at end of period
$
45,582
$
58,380
$
45,582
$
58,380
Cash paid during the period for:
Interest
$
2,454
$
5,047
$
17,486
$
16,188
$
6,805
$
3,860
$
19,734
$
21,364
Income taxes
Table 5
Ferro Corporation and Subsidiaries
Supplemental
Information
Reconciliation of Reported Income to
Adjusted Income
For the Three Months Ended December 31
(unaudited)
(Dollars in thousands, except per share amounts)
Cost of sales
Selling general and
Restructuring and
Other expense
Income tax
Net (loss) income
Diluted (loss)
administrative expenses
impairment charges
(income), net
(benefit) expense(4)
attributable to
earnings per
common shareholders
share
2016
As reported
$ 201,703
$ 75,597
$ 14,213
$ 15,210
$ (4,791)
$ (20,936)
$ (0.25)
Special items:
Restructuring
--
--
(14,213)
--
356
13,857
0.16
Pension(1)
(4,548)
(15,595)
--
--
6,713
13,430
0.16
Other(2)
(3,792)
(7,661)
--
(10,305)
5,441
16,317
0.19
Discontinued operations
--
--
--
--
--
-
-
Total special items(5)
(8,340)
(23,256)
(14,213)
(10,305)
12,510
43,604
0.51
As adjusted
$ 193,363
$ 52,341
$ --
$ 4,905
$ 7,719
$ 22,668
$ 0.27
2015
As reported
$ 188,613
$ 66,331
$ 4,186
$ 3,934
$ (57,030)
$ 50,590
$ 0.58
Special items:
Restructuring
--
--
(4,186)
--
1,277
2,909
0.03
Pension(1)
1,697
(10,428)
--
--
--
8,731
0.10
Other(3)
--
(6,391)
--
(1,328)
61,830
(54,111)
(0.62)
Discontinued operations
--
--
--
--
--
8,091
0.09
Total special items(5)
1,697
(16,819)
(4,186)
(1,328)
63,107
(34,380)
(0.39)
As adjusted
$ 190,310
$ 49,512
$ --
$ 2,606
$ 6,077
$ 16,210
$ 0.19
(1)
The adjustment relates to pension and other postretirement benefit
mark-to-market adjustments.
(2)
The adjustments to "Cost of Sales" primarily include the
amortization of purchase accounting adjustments related to our
recent acquisitions. The adjustments to "Selling general and
administrative expenses" primarily include legal, professional and
other expenses related to certain business development activities.
The adjustments to "Other expense (income), net" primarily relate to
impacts of currency-related items in Egypt and the impact of the
loss on a foreign currency contract associated with the purchase of
Cappelle.
(3)
The adjustments to "Selling general and administrative expenses"
primarily include legal, professional and other expenses related to
certain business development activities. The adjustments to "Other
expense (income), net" primarily relate to the impacts of foreign
currency related items in Argentina and loss on sale of assets.
(4)
The tax rate reflects the reported tax rate, adjusted for non-GAAP
adjustments being tax effected at the respective statutory rate
where the item originated.
(5)
Due to rounding, total earnings per share related to special items
does not always add to the total adjusted earnings per share.
It should be noted that adjusted income, earnings per share and
other adjusted items referred to above are financial measures not
required by, or presented in accordance with, accounting principles
generally accepted in the United States (U.S. GAAP). These non-GAAP
financial measures should be considered as a supplement to, and not
as a substitute for, the financial measures prepared in accordance
with U.S. GAAP and a reconciliation of these financial measures to
the most comparable U.S. GAAP financial measures is presented. The
adjusted income, earnings per share and other adjusted items
presented above exclude certain special items including
restructuring charges, certain business development activities,
gains/loss on sale of assets, the overall financial impact of
currency related items in Egypt and Argentina, pension and other
postretirement benefit mark-to-market adjustments, certain purchase
accounting adjustments and discontinued operations. We believe this
data provides investors with additional information on the
underlying operations and trends of the business and enables
period-to-period comparability of financial performance.
Table 6
Ferro Corporation and Subsidiaries
Supplemental
Information
Reconciliation of Reported Income to
Adjusted Income
For the Twelve Months Ended December
31 (unaudited)
(Dollars in thousands, except per share amounts)
Cost of sales
Selling general and
Restructuring and
Other expense
Income tax
Net (loss) income
Diluted (loss)
administrative expenses
impairment charges
(income), net
expense (benefit)(4)
attributable to common
earnings per share
shareholders
2016
As reported
$ 794,075
$ 241,702
$ 15,907
$ 31,163
$ 17,868
$ (20,817)
$ (0.25)
Special items:
Restructuring
--
--
(15,907)
--
878
15,029
0.2
Pension(1)
(4,548)
(15,595)
--
--
6,713
13,430
0.2
Other(2)
(3,792)
(18,000)
--
(7,240)
8,205
20,827
0.3
Discontinued operations
--
--
--
--
--
64,464
0.8
Total special items(5)
(8,340)
(33,595)
(15,907)
(7,240)
15,796
113,750
1.34
As adjusted
$ 785,735
$ 208,107
$ --
$ 23,923
$ 33,664
$ 92,933
$ 1.09
2015
As reported
$ 773,661
$ 216,899
$ 9,655
$ 20,343
$ (45,100)
$ 64,100
$ 0.72
Special items:
Restructuring
--
--
(9,655)
--
3,132
6,523
0.07
Pension(1)
1,697
(10,428)
--
--
--
8,731
0.10
Other(3)
(2,470)
(17,633)
--
(6,091)
66,017
(39,823)
(0.45)
Discontinued operations
--
--
--
--
--
36,779
0.42
Noncontrolling interest
--
--
--
--
--
(1,453)
(0.02)
Total special items(5)
(773)
(28,061)
(9,655)
(6,091)
69,149
10,757
0.12
As adjusted
$ 772,888
$ 188,838
$ --
$ 14,252
$ 24,049
$ 74,857
$ 0.85
(1)
The adjustment relates to pension and other postretirement benefit
mark-to-market adjustments.
(2)
The adjustments to "Cost of Sales" primarily include amortization of
purchase accounting adjustments related to our recent acquisitions.
The adjustments to "Selling general and administrative expenses"
include legal, professional and other expenses related to certain
business development activities, as well as fees associated with
certain reorganization projects; and, the adjustments to "Other
expense (income), net" primarily relate to the gain on an asset sale
that was recognized during the year, to the finalization of the
purchase price for the acquisition of Vetriceramici, impacts of
currency-related items in Egypt, and the impact of the loss on a
foreign currency contract associated with the purchase of Cappelle.
(3)
The adjustments to "Cost of sales" relate to impacts of
currency-related items in Venezuela; the adjustments to "Selling
general and administrative expenses" primarily include legal,
professional and other expenses related to certain business
development activities, as well as fees associated with certain
reorganization projects; and, the adjustments to "Other expense
(income), net" primarily relate to impacts of currency-related items
in Venezuela and Argentina, loss on sale of assets and the impact of
the loss on a foreign currency contract associated with the purchase
of Nubiola.
(4)
The tax rate reflects the reported tax rate, adjusted for non-GAAP
adjustments being tax effected at the respective statutory rate
where the item originated.
(5)
Due to rounding, total earnings per share related to special items
does not always add to the total adjusted earnings per share.
It should be noted that adjusted income, earnings per share and
other adjusted items referred to above are financial measures not
required by, or presented in accordance with, accounting principles
generally accepted in the United States (U.S. GAAP). These non-GAAP
financial measures should be considered as a supplement to, and not
as a substitute for, the financial measures prepared in accordance
with U.S. GAAP and a reconciliation of these financial measures to
the most comparable U.S. GAAP financial measures is presented. The
adjusted income, earnings per share and other adjusted items
presented above exclude certain special items including
restructuring charges, certain business development activities,
gains/loss on sale of assets, the overall financial impact of
currency related items in Venezuela, Argentina and Egypt, pension
and other postretirement benefit mark-to-market adjustments,
purchase accounting adjustments and discontinued operations. We
believe this data provides investors with additional information on
the underlying operations and trends of the business and enables
period-to-period comparability of financial performance.
Table 7
Ferro Corporation and Subsidiaries
Supplemental
Information
Reconciliation of Adjusted Gross Profit
(unaudited)
(Dollars in thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
Performance Coatings
$ 127,815
$ 128,379
$
526,981
$
533,370
Performance Colors and Glass
94,568
86,408
371,464
376,769
Pigments, Powders and Oxides
58,954
50,203
246,847
165,202
Total net sales
$ 281,337
$ 264,990
$ 1,145,292
$ 1,075,341
Total net sales
$ 281,337
$ 264,990
$ 1,145,292
$ 1,075,341
Adjusted cost of sales(1)
193,363
190,310
785,735
772,888
Adjusted gross profit
$
87,974
$
74,680
$
359,557
$
302,453
Adjusted gross profit percentage
31.3 %
28.2 %
31.4 %
28.1 %
(1)
Refer to Table 5 and Table 6 for the reconciliation of cost of sales
to adjusted cost of sales for the three and twelve months ended
December 31, 2016 and 2015, respectively.
It should be noted that adjusted cost of sales and adjusted gross
profit are financial measures not required by, or presented in
accordance with, accounting principles generally accepted in the
United States (U.S. GAAP). These non-GAAP financial measures should
be considered as a supplement to, and not as a substitute for, the
financial measures prepared in accordance with U.S. GAAP and a
reconciliation of these financial measures to the most comparable
U.S. GAAP financial measures is presented. Adjusted gross profit and
adjusted cost of sales exclude certain items, primarily comprised of
the cost of goods sold portion of the pension and other
postretirement benefit mark-to-market adjustments in the three and
twelve months ended December 31, 2016 and 2015, the amortization of
purchase accounting adjustments related to our recent acquisitions
in the three and twelve months ended December 31, 2016 and the
impact of currency-related items in Venezuela in the twelve months
ended December 31, 2015. We believe this data provides investors
with additional information on the underlying operations and trends
of the business and enables period-to-period comparability of
financial performance.
Table 8
Ferro Corporation and Subsidiaries
Supplemental
Information
Constant Currency Schedule of Adjusted
Operating Profit (unaudited)
Three Months Ended
(Dollars in thousands)
December 31,
2015
Adjusted
2016
2016 vs
2015(1)
Adjusted 2015
Segment net sales
Performance Coatings
$ 128,379
$ 118,231
$ 127,815
$
9,584
Performance Colors and Glass
86,408
85,353
94,568
9,215
Pigments, Powders and Oxides
50,203
49,870
58,954
9,084
Total segment net sales
$ 264,990
$ 253,454
$ 281,337
$
27,883
Segment adjusted gross profit
Performance Coatings
$
30,819
$
28,679
$
34,469
$
5,790
Performance Colors and Glass
28,669
28,301
35,540
7,239
Pigments, Powders and Oxides
15,353
15,267
18,589
3,322
Other costs of sales
(161)
(161)
(624)
(463)
Total adjusted gross profit(2)
$
74,680
$
72,086
$
87,974
$
15,888
Adjusted selling, general and administrative expenses
Strategic services
28,403
27,496
29,331
1,835
Functional services
17,374
16,924
17,491
567
Incentive compensation
2,318
2,246
3,553
1,307
Stock-based compensation
1,417
1,417
1,966
549
Total adjusted selling, general and administrative expenses(3)
$
49,512
$
48,083
$
52,341
$
4,258
Adjusted operating profit
$
25,168
$
24,003
$
35,633
$
11,630
Adjusted operating profit as a % of net sales
9.5%
9.5%
12.7%
(1)
Reflects the remeasurement of 2015 reported and adjusted local
currency results using 2016 exchange rates, resulting in constant
currency comparative figures to 2016 reported and adjusted results.
See Table 5 for non-GAAP adjustments applicable to the three-month
comparative periods, respectively.
(2)
Refer to Table 7 for the reconciliation of gross profit to adjusted
gross profit for the three months ended December 31, 2016 and 2015,
respectively.
(3)
Refer to Table 5 for the reconciliation of SG&A expenses to adjusted
SG&A expenses for the three months ended December 31, 2016 and 2015,
respectively.
It should be noted that the adjusted 2015 results is a financial
measure not required by, or presented in accordance with, accounting
principles generally accepted in the United States (U.S. GAAP).
These non-GAAP financial measures should be considered as a
supplement to, and not as a substitute for, the financial measures
prepared in accordance with U.S. GAAP and a reconciliation of these
financial measures to the most comparable U.S. GAAP financial
measures is presented. We believe this data provides investors with
additional information on the underlying operations and trends of
the business and enables period-to-period comparability of financial
performance.
Table 9
Ferro Corporation and Subsidiaries
Supplemental
Information
Constant Currency Schedule of Adjusted
Operating Profit (unaudited)
Twelve Months Ended
(Dollars in thousands)
December 31,
2015
Adjusted
2016
2016 vs
2015(1)
Adjusted 2015
Segment net sales
Performance Coatings
$
533,370
$
494,902
$
526,981
$
32,079
Performance Colors and Glass
376,769
371,828
371,464
(364)
Pigments, Powders and Oxides
165,202
164,379
246,847
82,468
Total segment net sales
$ 1,075,341
$ 1,031,109
$ 1,145,292
$
114,183
Segment adjusted gross profit
Performance Coatings
$
129,583
$
121,761
$
139,454
$
17,693
Performance Colors and Glass
128,209
126,573
136,365
9,792
Pigments, Powders and Oxides
45,678
45,492
84,457
38,965
Other costs of sales
(1,017)
(1,017)
(719)
298
Total adjusted gross profit(2)
$
302,453
$
292,809
$
359,557
$
66,748
Adjusted selling, general and administrative expenses
Strategic services
107,704
105,059
116,132
11,073
Functional services
67,284
65,371
73,878
8,507
Incentive compensation
4,982
4,763
10,852
6,089
Stock-based compensation
8,868
8,868
7,245
(1,623)
Total adjusted selling, general and administrative expenses(3)
$
188,838
$
184,061
$
208,107
$
24,046
Adjusted operating profit
$
113,615
$
108,748
$
151,450
$
42,702
Adjusted operating profit as a % of net sales
10.6%
10.5%
13.2%
(1)
Reflects the remeasurement of 2015 reported and adjusted local
currency results using 2016 exchange rates, resulting in constant
currency comparative figures to 2016 reported and adjusted results.
See Table 6 for non-GAAP adjustments applicable to the twelve-month
comparative periods, respectively.
(2)
Refer to Table 7 for the reconciliation of gross profit to adjusted
gross profit for the twelve months ended December 31, 2016 and 2015,
respectively.
(3)
Refer to Table 6 for the reconciliation of SG&A expenses to adjusted
SG&A expenses for the twelve months ended December 31, 2016 and
2015, respectively.
It should be noted that the adjusted 2015 results is a financial
measure not required by, or presented in accordance with, accounting
principles generally accepted in the United States (U.S. GAAP).
These non-GAAP financial measures should be considered as a
supplement to, and not as a substitute for, the financial measures
prepared in accordance with U.S. GAAP and a reconciliation of these
financial measures to the most comparable U.S. GAAP financial
measures is presented. We believe this data provides investors with
additional information on the underlying operations and trends of
the business and enables period-to-period comparability of financial
performance.
Table 10
Ferro Corporation and Subsidiaries
Supplemental
Information
Reconciliation of Net (loss) income
attributable to Ferro Corporation common shareholders to Adjusted
EBITDA (unaudited)
(Dollars in thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
Net (loss) income attributable to Ferro Corporation common
$ (20,936)
$
50,590
$
(20,817)
$
64,100
shareholders
Less: Net income (loss) attributable to noncontrolling interests
341
275
930
(996)
Loss from discontinued operations, net of income taxes
-
8,091
64,464
36,779
Restructuring and impairment charges
14,213
4,186
15,907
9,655
Other expense (income), net
9,242
(1,092)
9,616
5,180
Interest expense
5,968
5,026
21,547
15,163
Income tax (benefit) expense
(4,791)
(57,030)
17,868
(45,100)
Depreciation and amortization(2)
13,568
9,309
48,158
42,186
Less: interest amortization expense and other
(362)
(250)
(1,353)
(1,125)
Cost of sales adjustments(1)
4,721
(1,697)
4,721
773
SG&A adjustments(1)
23,256
16,819
33,595
28,061
Adjusted EBITDA
$
45,220
$
34,227
$
194,636
$
154,676
Net sales
$
281,337
$
264,990
$ 1,145,292
$ 1,075,341
Adjusted EBITDA as a % of net sales
16.1 %
12.9 %
17.0 %
14.4 %
(1)
For details of Non-GAAP adjustments, refer to Table 5 and Table 6
for the reconciliation of cost of sales to adjusted cost of sales
and SG&A to adjusted SG&A for the three and twelve months ended
December 31, 2016 and 2015, respectively.
It should be noted that adjusted EBITDA is a financial measure not
required by, or presented in accordance with, accounting principles
generally accepted in the United States (U.S. GAAP). This non-GAAP
financial measure should be considered as a supplement to, and not
as a substitute for, the financial measures prepared in accordance
with U.S. GAAP and a reconciliation of these financial measures to
the most comparable U.S. GAAP financial measures is presented.
Adjusted EBITDA is net income attributable to Ferro Corporation
common shareholders before the effects of net income (loss)
attributable to noncontrolling interest, discontinued operations,
restructuring and impairment charges, other expense (income), net,
interest expense, income tax expense, depreciation and amortization,
non-GAAP adjustments to cost of sales and non-GAAP adjustments to
SG&A. We believe this data provides investors with additional
information on the underlying operations and trends of the business
and enables period-to-period comparability of financial performance.
Table 11
Ferro Corporation and Subsidiaries
Supplemental
Information
Return on Invested Capital
For
the Rolling Twelve Months Ended (unaudited)
(Dollars in thousands)
December 31,
December 31,
2016
2015(4)
Gross profit
$
351,217
$
301,680
Selling, general and administrative expenses
241,702
216,899
Total operating profit
109,515
84,781
Non-GAAP adjustments(1)
42,688
29,539
Adjusted operating profit before tax
152,203
114,320
Less: Tax expense(2)
(40,182)
(29,723)
Net adjusted operating profit after tax
$
112,021
$
84,597
Recent acquisitions(3) NOPAT gain
2,535
11,083
Net adjusted operating profit after tax excluding recent acquisitions
$
109,486
$
73,514
Equity
255,032
324,281
Equity - discontinued operations
-
(30,744)
Debt
574,485
473,554
Off balance sheet precious metal leases
28,743
20,464
Postretirement and pension liabilities
162,941
148,249
Environmental liabilities
15,531
13,824
Cash
(45,582)
(58,380)
Invested capital
$
991,150
$
891,248
Return on invested capital
11.3%
9.5%
Less: recent acquisitions invested capital
143,047
292,543
Invested capital excluding recent acquisitions
$
848,103
$
598,705
Return on invested capital excluding recent acquisitions
12.9%
12.3%
(1)
The "Non-GAAP adjustments" include non-GAAP adjustments to cost of
sales and non-GAAP adjustments to SG&A which are presented in Table
6. The "Non-GAAP adjustments" also includes precious metal lease
fees which were $0.8 million and $0.8 million for the year ended
December 31, 2016 and 2015, respectively.
(2)
Operating profit for 2016 and 2015 is tax effected at 26.4% and
26.0%, respectively.
(3)
For the rolling twelve months ended December 31, 2016, the recent
acquisitions include Ferer, Pinturas, Delta Performance Products,
ESL and Cappelle. For the rolling twelve months ended December 31,
2015, the recent acquisitions include Vetriceramici, Nubiola and Al
Salomi. Acquisitions are removed from being included in the recent
acquisitions line item after the acquisitions are included in the
Company for a full year.
(4)
For the year ended December 31, 2015, the "Release of valuation
allowance" adjustment was removed from the Return on Invested
Capital calculation to provide comparability to 2016.
It should be noted that net adjusted operating profit after tax and
return on invested capital are financial measures not required by,
or presented in accordance with, accounting principles generally
accepted in the United States (U.S. GAAP). These non-GAAP financial
measures should be considered as a supplement to, and not as a
substitute for, the financial measures prepared in accordance with
U.S. GAAP and a reconciliation of these financial measures to the
most comparable U.S. GAAP financial measures is presented. Net
adjusted operating profit after tax is operating profit from
continuing operations, adjusted for non-GAAP adjustments to cost of
sales and non-GAAP adjustments to SG&A tax effected. We believe this
data provides investors with additional information on the
underlying operations and trends of the business and enables
period-to-period comparability of financial performance. In
addition, these measures are used in the calculation of certain
incentive compensation programs for selected employees.
Table 12
Ferro Corporation and Subsidiaries
Supplemental
Information
Change in Net Debt (unaudited)
(Dollars in thousands)
Three Months Ended
Twelve Months Ended
December 31, 2016
December 31, 2015
December 31, 2016
December 31, 2015
Beginning of period
Total debt
$
487,321
$
421,544 (1)
$
473,554
$
306,667
(1)
Cash
40,556
69,493
58,380
140,500
Net Debt
446,765
352,051
415,174
166,167
End of period
Total debt
574,485
473,554
574,485
473,554
Cash
45,582
58,380
45,582
58,380
Net Debt
528,903
415,174
528,903
415,174
Period change in net debt
$
(82,138)
$
(63,123)
$
(113,729)
$
(249,007)
(1)
Reflects adjustment for debt issuance costs for term loan that are
now presented in the balance sheet as a reduction of the related
debt liability rather than an asset. This change was due to ASU
2015-03 which was adopted by the Company as of December 31, 2015.
The adoption resulted in the reclassification of unamortized debt
issuance costs related to the term loan from other non-current
assets to a reduction in long-term debt, less current portion of
$5.3 million as of December 31, 2014 and $4.7 million as of
September 30, 2015.
We believe that given the significant cash and cash equivalents on
its balance sheet that net cash against outstanding debt, net debt,
between periods is a meaningful measure. The majority of the
Company’s cash and cash equivalents reside in international
jurisdictions for all periods presented.
Table 13
Ferro Corporation and Subsidiaries
Supplemental
Information
Adjusted Free Cash Flow from Continuing
Operations (unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2016
December 31, 2015
December 31, 2016
December 31, 2015
As Adjusted
Adjusted EBITDA(1)
$
45,220
$
34,227
$
194,636
$
154,676
Capital expenditures
(6,729)
(6,195)
(24,025)
(20,322)
Working capital
29,015
15,910
(33,280)
(5,374)
Cash income taxes
(6,805)
(3,860)
(19,734)
(21,364)
Cash interest
(2,454)
(5,047)
(17,486)
(16,188)
Pension
(2,415)
(1,262)
(5,336)
(4,086)
Incentive compensation payments
-
-
(8,802)
(14,584)
Other
(3,526)
5,631
(1,435)
2,724
Adjusted free Cash Flow from Continuing Operations
52,306
39,404
84,538
75,482
Discontinued operations
-
(17,970)
(32,534)
(46,342)
Restructuring/Other
(1,887)
(7,392)
(5,152)
(16,273)
(Outflows) from M&A activity
(132,557)
(45,592)
(149,152)
(223,303)
Stock repurchase
-
(31,573)
(11,429)
(38,571)
Change in Net Debt(2)
$
(82,138)
$
(63,123)
$
(113,729)
$
(249,007)
(1)
See Table 10 for the reconciliation of net income attributable to
Ferro Corporation common shareholders to adjusted EBITDA.
(2)
See Table 12 for the reconciliation of net debt.
It should be noted that adjusted EBITDA and adjusted free cash flow
from continuing operations are financial measures not required by,
or presented in accordance with, accounting principles generally
accepted in the United States (U.S. GAAP). These non-GAAP financial
measures should be considered as a supplement to, and not as a
substitute for, the financial measures prepared in accordance with
U.S. GAAP and a reconciliation of these financial measures to the
most comparable U.S. GAAP financial measures is presented. Adjusted
EBITDA is net income before the effects of income (loss)
attributable to noncontrolling interest, discontinued operations,
restructuring and impairment charges, other expense (income) net,
interest expense, income tax expense, depreciation and amortization,
non-GAAP adjustments to cost of sales, and non-GAAP adjustments to
SG&A. Adjusted Free Cash Flow from Continuing Operations is adjusted
EBITDA less capital expenditures, changes in working capital, cash
income taxes, cash interest, pension contributions, incentive
compensation payments, and other continuing operations cash items.
We believe this data provides investors with additional information
on the underlying operations and trends of the business and enables
period-to-period comparability of financial performance. In
addition, these measures are used in the calculation of certain
incentive compensation programs for selected employees.
Table 14
Ferro Corporation and Subsidiaries
Supplemental
Information
Capitalization Restated as if Refinancing
Occurred on December 31, 2016 (unaudited)
(Dollars in thousands)
Twelve Months Ended
Adjusted Twelve Months Ended
December 31, 2016
Adjustment
December 31, 2016
Cash
$
45,582
$
54,842
$
100,424
Revolving credit facility
311,555
(311,555)
-
Term loan facility
243,250
(243,250)
-
New revolving credit facility
-
-
-
New term loan facility(1)
-
625,000
625,000
Other Debt(2)
19,680
-
19,680
Total Debt
$
574,485
$
644,680
Net Debt
$
528,903
$
544,256
New Revolver Availability
New revolving credit facility - Size
$
400,000
Less: Borrowings
-
Less: Letters of credit
4,370
New revolver availability - Size
$
395,630
(1)
Comprised of $357.5 million tranche and EUR250 million euro tranche.
(2)
"Other debt" is comprised of capital leases and short and long-term
notes payable.
It should be noted that adjusted Net Debt for the twelve months
ended December 31, 2016 is a financial measure not required by, or
presented in accordance with, accounting principles generally
accepted in the United States (U.S. GAAP). This non-GAAP financial
measure should be considered as a supplement to, and not as a
substitute for, the financial measure prepared in accordance with
U.S. GAAP and a reconciliation of this financial measure to the most
comparable U.S. GAAP financial measure is presented. Adjusted Net
Debt for the twelve months ended December 31, 2016 is our debt
balances outstanding at December 31, 2016 as presented on our
consolidated balance sheet adjusted for the refinancing of the
Credit Facility that occurred on February 14, 2017. We believe this
data provides investors with additional information on the amount of
liquidity available to Ferro.

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SOURCE: Ferro Corporation

Ferro Corporation
Investor Contact:
Kevin Cornelius Grant, 216-875-5451
Manager of Investor Relations
kevincornelius.grant@ferro.com
or
Media Contact:
Mary Abood, 216-875-5401
Director, Corporate Communications
mary.abood@ferro.com