A. Schulman Reports Strong Fiscal 2014 Fourth-Quarter And Full-Year Results

• Full-year fiscal 2014 net income from continuing operations was $53.0 million, or $1.80 per diluted share, compared with $32.8 million, or $1.12 per diluted share, in fiscal 2013
• Adjusted net income from continuing operations for fiscal 2014, excluding certain items, was $69.3 million, or $2.36 per diluted share, a 29% improvement over the prior year
• Company announces fiscal 2015 adjusted net income guidance of $2.60 to $2.65 per diluted share, a double-digit increase compared with fiscal 2014 results

A. Schulman, Inc. (Nasdaq-GS: SHLM) announced today earnings for the fiscal fourth quarter and full fiscal year ended August 31, 2014.

Joseph M. Gingo, Chairman, President and Chief Executive Officer, said, "I want to thank our global teams in helping us to achieve a record year in fiscal 2014.  Our successful acquisitions and organic growth strategy, combined with our ongoing focus on improving operational performance and efficiency, enabled us to deliver strong double-digit sales and income growth in 2014. While we are very pleased with these results, our focus is on the future.  Despite anticipated slow growth globally, I am very confident that our seasoned team, which has weathered many challenging conditions in Europe and other parts of the world in the recent past, will take the proactive steps necessary to drive double-digit adjusted earnings-per-share growth in fiscal 2015.  I am also encouraged that our recent acquisitions over the past year in the U.S. are performing well and are helping us offset global economic slowdowns.  Through successful execution of our strategy, we are improving our position in target markets, diversifying our product mix and increasing our prospects for sustainable and profitable growth."

Bernard Rzepka, Chief Operating Officer, stated, "Net sales and operating income increased for the full year in each of our operating regions, as our recent acquisitions and organic growth contributed to our improved results in all three regions.  Our team is highly focused and executing on our safety, smart sales, smart savings initiatives and our 2014 results demonstrate what we can achieve.  Our acquisition of Compco in September and the recently announced restructuring program in Europe are examples of the proactive actions we are taking to drive profitable growth."

Fiscal Fourth-Quarter Results
Net sales for the fiscal 2014 fourth quarter were $627.4 million, an increase of 16.8% compared with $537.3 million in the prior-year quarter.

Net sales in the EMEA segment were $388.6 million, an increase of 11.2% or $39.2 million in the fourth quarter compared with the same period last year.  Volume increased 7.7% or 22.6 million pounds for the quarter to 314.8 million pounds in the fourth quarter of 2014.  During the quarter, the incremental contribution of the two acquisitions in the EMEA segment was $26.6 million and 17.4 million pounds in net sales and volume, respectively.  Foreign currency translation favorably impacted the segment's net sales by $9.6 million.  EMEA gross profit was $50.0 million for the quarter, an increase of $4.5 million or 9.9% compared with the same three-month period last year. Foreign currency translation positively impacted EMEA gross profit by $1.2 million.

Net sales for the Americas were $188.3 million, an increase of 21.9% or $33.8 million in the fourth quarter compared with the prior-year period.  Volume increased 3.8% or 6.7 million pounds during the quarter.  During the quarter, the incremental net sales and volume contribution of the three acquisitions in the Americas segment was $32.9 million and 21.2 million pounds, respectively.  Foreign currency translation negatively impacted the segment's net sales by $2.3 million. Gross profit for the Americas was $28.6 million in the quarter, an increase of $7.4 million or 35.1% compared with the same period last year.

Net sales for APAC were $50.4 million, an increase of 50.8% or $17.0 million in the fourth quarter compared with the prior-year period. Volume increased 52.6% or 13.8 million pounds during the quarter.  The contribution of the Perrite acquisition in APAC was $14.9 million and 11.1 million pounds in net sales and volume, respectively.  Gross profit for APAC for the quarter increased $0.4 million or 6.5% compared with the prior-year period.

Fiscal 2014 Results
Net sales for the fiscal year ended August 31, 2014, were approximately $2.5 billion, an increase of $313.6 million or 14.7% compared with fiscal 2013.  Volume increased 8.7% or 167.4 million pounds during the year.  Incremental net sales and volume from the Company's recent acquisitions contributed $217.0 million and 147.8 million pounds, respectively, in fiscal 2014.  Excluding the impact of recent acquisitions, net sales were positively affected by a 3.5% increase in price per pound and a 1% increase in volume.  Foreign currency translation favorably impacted net sales by $38.1 million.

The Company's SG&A expenses, excluding certain items, increased $32.7 million compared with the prior year, to $232.7 million.  The increase was primarily attributable to incremental SG&A expense of $12.1 million from recent acquisitions, higher variable incentive compensation expense of $11.5 million attributable to the Company's fiscal performance and unfavorable foreign currency translation of $3.0 million.  SG&A expense, excluding certain items, was 9.5% of net sales for fiscal 2014. Operating income increased $19.2 million for fiscal 2014 compared with the prior year. Total operating income, before certain items, was $99.9 million, an increase of $17.0 million or 20.5% compared with fiscal 2013.

Working Capital/Cash Flow From Operations
Cash provided from operations was $113.1 million in fiscal 2014 compared with $83.7 million in fiscal 2013.  Working capital was 57 days at the end of fiscal 2014 compared with 58 days at the end of fiscal 2013.

Capital expenditures for fiscal 2014 were $35.1 million compared with $26.6 million for the prior year, and were primarily related to the regular and ongoing investment in the Company's global manufacturing facilities.

During the fourth quarter and full year ended August 31, 2014, the Company declared and paid cash dividends of $0.20 and $0.80 per common share, respectively. The total amount of these dividends was $5.9 million for the fourth quarter and $23.7 million for the full year.

Business Outlook
Rzepka said, "With 10 acquisitions in the past four years and our numerous value-added organic growth initiatives, we continue to aggressively drive profits. We are actively focusing on pricing, cross-selling, attractive markets and driving profitable new products. Through our acquisition strategy, we will continue to expand our footprint, engage new customers and strengthen our ability to serve local and global customers.  In combination, we believe we can be successful despite weak macroeconomic conditions especially in Europe. As we continue to focus on execution, we expect this progress to continue in fiscal 2015."

Rzepka continued, "Our goal remains to control what we can control, manage our operational footprint proactively and efficiently, execute on our acquisition strategy, support sales and marketing initiatives, and drive year-over-year growth in adjusted earnings per diluted share.  As a result, we anticipate that our fiscal 2015 adjusted net income will increase to a range of $2.60 to $2.65 per diluted share."

www.aschulman.com

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