EX-99.1 2 a20210930ex991.htm EX-99.1 Document

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FERRO CORPORATION REPORTS THIRD QUARTER 2021 RESULTS
Third Quarter Continuing Operations*  
Year to Date Continuing Operations*
•Net Sales increased 14.6% to 277.2M, or 13.3% on a constant currency basis
•Gross Profit increased 18.8% to $83.4M, Gross Profit Margin improved 110 bps to 30.1%
•Adjusted Gross Profit Margin improved 80 bps to 30.5%
•GAAP diluted EPS of $0.13, Adjusted diluted EPS of $0.24
•Income from continuing operations of $11.7M, Adjusted EBITDA increased 19.5% to $44.0M
•Adjusted EBITDA Margin improved to 15.9%
 
•Net Sales increased 23.0% to $859.9M, or 19.3% on a constant currency basis 
•Gross Profit increased 27.3% to $273.3M, Gross Profit Margin improved 110 bps to 31.8%
•Adjusted Gross Profit Margin improved 90 bps to 32.4%
•GAAP diluted EPS of $0.56, Adjusted diluted EPS of $0.97
•Income from continuing operations of $47.7M, Adjusted EBITDA increased 48.0% to $160.5M
•Adjusted EBITDA Margin improved 320 bps to 18.7%
*Comparative information is relative to prior-year third quarter and prior-year to September 30 for Continuing Operations
Ferro will not host a Third Quarter 2021 Earnings teleconference call
Key Results from Continuing Operations*    (amounts in thousands, except EPS)
Sales and Gross ProfitsQ3 2021% ChangeYTD 2021% Change
Net Sales$277,22814.6%$859,91723.0%
Net Sales (Constant Currency)277,22813.3%859,91719.3%
Gross Profit (GAAP)83,37818.8%273,31627.3%
Gross Profit Margin30.1%110bps31.8%110bps
Adjusted Gross Profit (Constant Currency)$84,62916.3%$278,41822.7%
Adjusted Gross Profit Margin32.4%80bps32.4%90bps
Income from Continuing Operations, Adjusted EBITDA
and Adjusted EPS		Q3 2021% ChangeYTD 2021% Change
Income from Continuing Operations$11,67922.3%$47,664102.5%
Adjusted EBITDA44,04619.5%160,53348.0%
Adjusted EBITDA Margin15.9%70bps18.7%320bps
GAAP diluted EPS$0.1318.2%$0.56107.4%
Adjusted EPS0.2426.7%0.9774.3%
*Comparative information is relative to prior-year third quarter and prior-year to September 30 for Continuing Operations.

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Third Quarter 2021 Highlights
Net sales in the third quarter of 2021 increased 14.6% to $277.2 million and increased 13.3% on a constant currency basis, primarily due to higher demand across all business segments. For the quarter, gross profit increased 18.8% to $83.4 million and, on a constant currency basis, increased 16.3% to $84.6 million compared to the prior year quarter. Gross Profit Margin in the third quarter of 2021 increased 110 basis points to 30.1% compared to the prior year. The increase in gross profit was primarily driven by favorable sales volume and mix and higher product pricing partially offset by higher raw material costs.
GAAP diluted EPS from continuing operations improved 18.2% to $0.13 from the prior year quarter and Adjusted diluted EPS increased by 26.7% to $0.24. Net Income from continuing operations increased to $11.7 million compared to the prior year quarter of $9.5 million. Adjusted EBITDA improved 19.5% to $44.0 million. Adjusted EBITDA margin improved to 15.9%.
Segment Results Continuing Operations * (amounts in thousands, except EPS)
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Functional CoatingsQ3 2021% ChangeYTD 2021% Change
Net Sales$179,56816.4%$559,29926.7%
Net Sales
(Constant Currency)
179,56815.0%559,29922.9%
Gross Profit (GAAP)51,09421.9%172,49137.1%
Gross Profit Margin28.5%130 bps30.8%230 bps
Adjusted Gross Profit
(Constant Currency)
51,66720.1%175,92331.3%
Adj. Gross Profit Margin
(Constant Currency)
28.8%120bps31.5%210bps
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Color SolutionsQ3 2021% ChangeYTD 2021% Change
Net Sales$97,66011.4%$300,61816.7%
Net Sales
(Constant Currency)
97,66010.4%300,61813.3%
Gross Profit (GAAP)32,79015.3%103,15015.6%
Gross Profit Margin33.6%110bps34.3%(30) bps
Adjusted Gross Profit
(Constant Currency)
32,85411.8%103,78511.9%
Adj. Gross Profit Margin
(Constant Currency)
33.6%40 bps34.5%(40) bps
*Comparative information is relative to prior-year third quarter and prior-year to September 30 for Continuing Operations
Transaction Update
As previously announced, on May 11, 2021, Ferro Corporation entered into a definitive agreement to be acquired by an affiliate of Prince International Corporation (“Prince”), a portfolio company of American Securities LLC. The transaction was overwhelmingly approved at a special meeting of Ferro shareholders on September 9, 2021. The transaction is subject to customary closing conditions and is anticipated to close in the first quarter of 2022.


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Due to the pending transaction, Ferro will not host a third quarter 2021 earnings teleconference.
Constant currency
Constant currency results reflect the remeasurement of 2020 reported and adjusted local currency results using 2021 exchange rates, which produces constant currency comparatives for 2021 reported and adjusted results. These non-GAAP financial measures should not be considered as a substitute for the measures of financial performance prepared in accordance with GAAP.
About Ferro Corporation
Ferro Corporation (www.ferro.com) is a leading global supplier of technology-based functional coatings and color solutions. Ferro supplies functional coatings for glass, metal, ceramic and other substrates and color solutions in the form of specialty pigments and colorants for a broad range of industries and applications. Ferro products are sold into the building and construction, automotive, electronics, industrial products, household furnishings and appliance markets. The Company’s reportable segments include: Functional Coatings and Color Solutions. Headquartered in Mayfield Heights, Ohio, the Company has approximately 3,600 associates globally and reported 2020 sales of $959 million.

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Cautionary Note on Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We intend for these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws relating to forward-looking statements. These forward-looking statements include statements relating to the expected timing, completion and effects of the proposed merger, as well as other statements representing management’s beliefs about, future events, transactions, strategies, operations and financial results, including, without limitation, our expectations with respect to the costs and other anticipated financial impacts of the merger; future financial and operating results of Ferro Corporation (“Ferro”); Ferro’s plans, objectives, expectations and intentions with respect to future operations and services; required approvals to complete the merger by our shareholders and by governmental regulatory authorities, and the timing and conditions for such approvals; the stock price of Ferro prior to the consummation of the transactions; and the satisfaction of the closing conditions to the proposed merger. Such forward-looking statements often contain words such as “assume,” “will,” “anticipate,” “believe,” “predict,” “project,” “potential,” “contemplate,” “plan,” “forecast,” “estimate,” “expect,” “intend,” “is targeting,” “may,” “should,” “would,” “could,” “goal,” “seek,” “hope,” “aim,” “continue” and other similar words or expressions or the negative thereof or other variations thereon. Forward-looking statements are made based upon management’s current expectations and beliefs and are not guarantees of future performance. Such forward-looking statements involve numerous assumptions, risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. Our actual business, financial condition or results of operations may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties which include, among others, those risks and uncertainties described in any of our filings with the Securities and Exchange Commission (the “SEC”). Certain other factors which may impact our business, financial condition or results of operations or which may cause actual results to differ from such forward-looking statements are discussed or included in our periodic reports filed with the SEC and are available on our website at www.ferro.com under “Investors.” You are urged to carefully consider all such factors. Although it is believed that the expectations reflected in such forward-looking statements are reasonable and are expressed in good faith, such expectations may not prove to be correct and persons reading this communication are therefore cautioned not to place undue reliance on these forward-looking statements which speak only to expectations as of the date of this communication. We do not undertake or plan to update or revise forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this communication, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. If we make any future public statements or disclosures which modify or impact any of the forward-looking statements contained in or accompanying this communication, such statements or disclosures will be deemed to modify or supersede such statements in this communication.
Ferro Corporation
Investor & Media Contact:
Kevin Cornelius Grant, 216.875.5451
Director of Investor Relations and Corporate Communications
kevincornelius.grant@ferro.com


Table 1
Ferro Corporation and Subsidiaries
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except per share amounts)Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Net sales$277,228 $241,877 $859,917 $699,004 
Cost of sales193,850 171,711 586,601 484,356 
Gross profit83,378 70,166 273,316 214,648 
Selling, general and administrative expenses54,520 47,820 167,384 154,407 
Restructuring and impairment charges602 2,447 7,756 12,231 
Other expense (income):
Interest expense5,436 4,767 19,879 16,474 
Interest earned(88)(474)(737)(1,035)
Foreign currency losses (gains), net426 1,450 4,793 1,278 
Loss on extinguishment of debt— — 1,981 — 
Miscellaneous income, net(2,997)(438)(5,350)(2,604)
Income before income taxes25,479 14,594 77,610 33,897 
Income tax expense13,800 5,047 29,946 10,364 
Income from continuing operations11,679 9,547 47,664 23,533 
Income (loss) from discontinued operations, net of income taxes(822)5,367 87,484 2,350 
Net income10,857 14,914 135,148 25,883 
Less: Net income attributable to noncontrolling interests482 440 1,301 826 
Net income attributable to Ferro Corporation common shareholders$10,375 $14,474 $133,847 $25,057 
Earnings (loss) per share attributable to Ferro Corporation common shareholders:
Basic earnings:
Continuing operations0.14 0.11 0.56 0.28 
Discontinued operations(0.01)0.07 1.06 0.03 
    
Diluted earnings:    
Continuing operations0.13 0.11 0.56 0.27 
Discontinued operations(0.01)0.06 1.05 0.03 
    
Shares outstanding:    
Weighted-average basic shares82,719 82,261 82,627 82,201 
Weighted-average diluted shares83,687 82,771 83,520 82,891 
End-of-period basic shares82,742 82,291 82,742 82,291 


Table 2
Ferro Corporation and Subsidiaries
Segment Net Sales, Gross Profit and SG&A (unaudited)
(Dollars in thousands)Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Segment Net Sales
Functional Coatings$179,568 $154,218 $559,299 $441,325 
Color Solutions97,660 87,659 300,618 257,679 
Total segment net sales$277,228 $241,877 $859,917 $699,004 
    
Segment Gross Profit    
Functional Coatings$51,094 $41,906 $172,491 $125,842 
Color Solutions32,790 28,450 103,150 89,222 
Other costs of sales(506)(190)(2,325)(416)
Total gross profit$83,378 $70,166 $273,316 $214,648 
    
Selling, general and administrative expenses    
Strategic services$23,488 $22,363 $71,616 $69,474 
Functional services21,209 21,831 77,230 72,274 
Incentive compensation8,404 2,018 12,404 6,109 
Stock-based compensation1,419 1,608 6,134 6,550 
Total selling, general and administrative expenses$54,520 $47,820 $167,384 $154,407 


Table 3
Ferro Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(Dollars in thousands)September 30,
2021		December 31,
2020
ASSETS
Current assets
Cash and cash equivalents$148,754 $174,077 
Accounts receivable, net157,610 137,008 
Inventories267,994 260,332 
Other receivables65,654 72,272 
Other current assets20,835 18,261 
Current assets held-for-sale— 307,854 
Total current assets660,847 969,804 
Other assets
Property, plant and equipment, net326,982 330,045 
Goodwill172,968 175,351 
Intangible assets, net110,049 119,500 
Deferred income taxes108,426 115,962 
Operating leased assets13,387 15,446 
Other non-current assets26,604 80,618 
Non-current assets held-for-sale— 154,207 
Total assets$1,419,263 $1,960,933 
LIABILITIES AND EQUITY
Current liabilities
Loans payable and current portion of long-term debt$8,888 $8,839 
Accounts payable127,526 135,296 
Accrued payrolls38,642 27,166 
Accrued expenses and other current liabilities147,456 124,770 
Current liabilities held-for-sale— 107,545 
Total current liabilities322,512 403,616 
Other liabilities
Long-term debt, less current portion352,695 791,509 
Postretirement and pension liabilities161,548 181,610 
Operating leased non-current liabilities8,624 10,064 
Other non-current liabilities51,882 62,050 
Non-current liabilities held-for-sale— 71,149 
Total liabilities897,261 1,519,998 
Equity
Total Ferro Corporation shareholders’ equity512,781 429,967 
Noncontrolling interests9,221 10,968 
Total liabilities and equity$1,419,263 $1,960,933 


Table 4
Ferro Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Dollars in thousands)Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Cash flows from operating activities
Net income$10,857 $14,914 $135,148 $25,883 
Loss (gain) on sale of assets— (428)(98,746)78 
Depreciation and amortization10,281 9,799 30,098 30,653 
Interest amortization499 1,071 1,601 2,866 
Restructuring and impairment— 28 124 6,944 
Loss on extinguishment of debt— — 1,981 — 
Accounts receivable(26,495)(56,534)(122,547)(107,551)
Inventories(11,874)44,793 (21,057)10,022 
Accounts payable(6,921)(33,487)775 (78,576)
Other current assets and liabilities, net4,225 12,396 29,983 10,750 
Other adjustments, net889 5,528 (22,309)(7,550)
Net cash used in operating activities(18,539)(1,920)(64,949)(106,481)
Cash flows from investing activities    
Capital expenditures for property, plant and equipment and other long-lived assets(5,110)(6,699)(25,684)(21,681)
Collections of financing receivables31,33634,71990,662 97,299 
Proceeds from sale of businesses, net——415,230 — 
Business acquisitions, net of cash acquired— —(2,200)— 
Other investing activities20025436 803 
Net cash provided by investing activities26,42628,045478,444 76,421 
Cash flows from financing activities  
Net borrowings (payments) under loans payable81 (12,103)(31)(683)
Principal payments on term loan facility - Amended Credit Facility(2,050)(2,050)(441,150)(6,150)
Proceeds from revolving credit facility - Amended Credit Facility—38,33650,000 398,336 
Principal payments on revolving credit facility - Amended Credit Facility— (49,213)(50,000)(392,596)
Other financing activities(471)690 (4,022)(728)
Net cash used in financing activities(2,440)(24,340)(445,203)(1,821)
Effect of exchange rate changes on cash and cash equivalents(410)679 (1,815)174 
Increase (decrease) in cash and cash equivalents5,037 2,464 (33,523)(31,707)
Cash and cash equivalents at beginning of period143,71770,231182,277 104,402 
Cash and cash equivalents at end of period148,75472,695148,754 72,695 
Less: Cash and cash equivalents of discontinued operations at end of period—8,200— 8,200 
Cash and cash equivalents of continuing operations at end of period$148,754$64,495$148,754 $64,495 
Cash paid during the period for:
Interest$5,505$3,440$21,943 $20,176 
Income taxes3,886 5,283 16,637 13,005 


Table 5
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Reported Income to Adjusted Income
For the Three Months Ended September 30 (unaudited)
(Dollars in thousands, except per share amounts)Cost of salesSelling general and
administrative expenses		Restructuring and
impairment charges		Other expense, net
Income tax expense5
Net income attributable to
common shareholders		Diluted earnings per
share
2021
As reported$193,850 $54,520 $602 $2,777 $13,800 $11,197 $0.13 
Adjustments:
Restructuring— — (602)— — 602 0.01 
Acquisition related costs1
— (4,193)— — — 4,193 0.05 
Costs related to optimization projects3
(1,251)(1,261)— — — 2,512 0.03 
Costs related to divested businesses and assets— 1,768 — (224)— (1,544)(0.02)
Tax on adjustments— — — — (3,504)3,504 0.04 
Total adjustments6
(1,251)(3,686)(602)(224)(3,504)9,267 0.11 
As adjusted$192,599 $50,834 $— $2,553 $10,296 $20,464 $0.24 
       
2020
As reported$171,711 $47,820 $2,447 $5,305 $5,047 $9,107 $0.11 
Adjustments:
Restructuring— — (2,447)— — 2,447 0.03 
Acquisition related costs2
— (153)— — — 153 — 
Costs related to optimization projects4
(1,559)(1,783)— — — 3,342 0.04 
Costs related to divested businesses and assets— (763)— (200)— 963 0.01 
Other(453)— — (1,044)— 1,497 0.02 
Tax on adjustments— — — — 1,785 (1,785)(0.02)
Total adjustments6
(2,012)(2,699)(2,447)(1,244)1,785 6,617 0.08 
As adjusted$169,699 $45,121 $— $4,061 $6,832 $15,724 $0.19 
(1)The adjustments to “Selling general and administrative expenses” primarily include legal, professional and other expenses related to acquisition costs.
(2)The adjustments to “Selling general and administrative expenses” primarily include legal, professional and other expenses related to acquisition costs.
(3)Costs related to Optimization projects of $2.5 million include costs associated with our Americas manufacturing optimization initiative of $1.6 million, which is comprised of costs for process development and production testing, professional fees for legal and tax services, supplies and equipment commissioning, and utility setup and testing. The remaining $0.9 million of costs relate to global optimization projects and discrete projects at our previous acquisitions.
(4)Costs related to Optimization projects of $3.3 million include costs associated with our Americas manufacturing optimization initiative of $2.3 million, which is comprised of costs for process development and production testing, professional fees for legal and tax services, supplies and equipment commissioning, and utility setup and testing. The remaining $1.1 million of costs relate to global optimization projects and discrete projects at our previous acquisitions.
(5)Income tax expense reflects the reported expense, adjusted for adjustments being tax effected at the respective statutory rate where the item originated.
(6)Due to rounding, total earnings per share related to adjustments does not always add to the total adjusted earnings per share.
It should be noted that adjusted net 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. We believe by excluding these costs, our adjusted earnings per share better reflect our underlying business performance, as well as being considered in our internal evaluation of financial performance. These costs are ones that we have concluded are not normal, recurring cash operating expenses necessary to operate our business, and we believe it is useful to present this non-GAAP financial measure to provide investors greater comparability of our base business.


Table 6
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Reported Income to Adjusted Income
For the Nine Months Ended September 30 (unaudited)
(Dollars in thousands, except per share amounts)Cost of sales Selling general and
administrative expenses		 Restructuring and
impairment charges		 Other expense, net 
Income tax expense5
 Net income attributable to
common shareholders		 Diluted earnings per
share
2021
As reported$586,601 $167,384 $7,756 $20,566 $29,946 $46,363 $0.56 
Adjustments:
Restructuring— — (7,756)— — 7,756 0.09 
Acquisition related costs1
— (12,958)— (6,975)— 19,933 0.24 
Costs related to optimization projects3
(5,102)(4,398)— — — 9,500 0.11 
Costs related to divested businesses and assets— (2,047)— (86)— 2,133 0.03 
Tax on adjustments— — — — 4,796 (4,796)(0.06)
Total adjustments6
(5,102)(19,403)(7,756)(7,061)4,796 34,526 0.41 
As adjusted$581,499 $147,981 $— $13,505 $34,742 $80,889 $0.97 
       
2020
As reported$484,356 $154,407 $12,231 $14,113 $10,364 $22,707 $0.27 
Adjustments:
Restructuring— — (12,231)— — 12,231 0.15 
Acquisition related costs2
(9)(1,223)— — — 1,232 0.01 
Costs related to optimization projects4
(4,662)(7,228)— — — 11,890 0.14 
Costs related to divested businesses and assets— (4,006)— (307)— 4,313 0.05 
Other(453)— — (1,044)— 1,497 0.02 
Tax on adjustments— — — — 7,259 (7,259)(0.09)
Total adjustments6
(5,124)(12,457)(12,231)(1,351)7,259 23,904 0.29 
As adjusted$479,232 $141,950 $— $12,762 $17,623 $46,611 $0.56 
(1)The adjustments to “Selling general and administrative expenses” primarily include legal, professional and other expenses related to acquisition costs.
(2)The adjustments to “Selling general and administrative expenses” primarily include legal, professional and other expenses related to acquisition costs.
(3)Cost related to Optimization projects of $9.5 million includes costs associated with our Americas manufacturing optimization initiative of $5.6 million, which is comprised of costs for process development and production testing, professional fees for legal and tax services, supplies and equipment commissioning, and utility setup and testing. The remaining $3.9 million of costs relate to global optimization projects and discrete projects at our previous acquisitions.
(4)Cost related to Optimization projects of $11.9 million includes costs associated with our Americas manufacturing optimization initiative of $7.4 million, which is comprised of costs for process development and production testing, professional fees for legal and tax services, supplies and equipment commissioning, and utility setup and testing. The remaining $4.5 million of costs relate to global optimization projects and discrete projects at our previous acquisitions.
(5)Income tax expense reflects the reported expense, adjusted for adjustments being tax effected at the respective statutory rate where the item originated.
(6)Due to rounding, total earnings per share related to adjustments does not always add to the total adjusted earnings per share.
It should be noted that adjusted net 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. We believe by excluding these costs, our adjusted earnings per share better reflect our underlying business performance, as well as being considered in our internal evaluation of financial performance. These costs are ones that we have concluded are not normal, recurring cash operating expenses necessary to operate our business, and we believe it is useful to present this non-GAAP financial measure to provide investors greater comparability of our base business.


Table 7
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Adjusted Gross Profit
(Dollars in thousands)Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Functional Coatings$179,568 $154,218 $559,299 $441,325 
Color Solutions97,660 87,659 300,618 257,679 
Total net sales$277,228 $241,877 $859,917 $699,004 
Total net sales$277,228 $241,877 $859,917 $699,004 
Adjusted cost of sales1
192,599 169,699 581,499 479,232 
Adjusted gross profit$84,629 $72,178 $278,418 $219,772 
Adjusted gross profit percentage30.5 %29.8 %32.4 %31.4 %
(1)Refer to Table 5 for the reconciliation of adjusted cost of sales for the three months ended September 30, 2021 and 2020, respectively. Refer to Table 6 for the reconciliation of adjusted cost of sales for the nine months ended September 30, 2021 and 2020, respectively.
It should be noted that adjusted gross profit 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 this financial measure to the most comparable U.S. GAAP financial measure is presented. We believe this data provides investors with additional useful 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)
(Dollars in thousands)Three Months Ended
September 30,
2020
Adjusted 20201
20212021 vs Adjusted 2020
Segment net sales
Functional Coatings$154,218 $156,106 $179,568 $23,462 
Color Solutions87,659 88,497 97,660 9,163 
Total segment net sales$241,877 $244,603 $277,228 $32,625 
Segment adjusted gross profit
Functional Coatings$42,912 $43,034 $51,667 $8,633 
Color Solutions28,903 29,379 32,854 3,475 
Other costs of sales363 328 107 (221)
Total adjusted gross profit2
$72,178 $72,741 $84,628 $11,887 
Adjusted selling, general and administrative expenses
Strategic services$22,272 $22,455 $23,411 $956 
Functional services19,198 19,289 17,603 (1,686)
Incentive compensation2,042 2,046 8,401 6,355 
Stock-based compensation1,608 1,608 1,419 (189)
Total adjusted selling, general and administrative expenses3
$45,120 $45,398 $50,834 $5,436 
Adjusted operating profit$27,058 $27,343 $33,794 $26,707 
Adjusted operating profit as a % of net sales11.2 %11.2 %12.2 %
(1)Reflects the remeasurement of 2020 reported and adjusted local currency results using 2021 exchange rates, resulting in constant currency comparative figures to 2021 reported and adjusted results. See Table 5 for Non-GAAP adjustments applicable to the three month period.
(2)Refer to Table 7 for the reconciliation of adjusted gross profit for the three months ended September 30, 2021 and 2020, respectively.
(3)Refer to Table 5 for the reconciliation of adjusted SG&A expenses for the three months ended September 30, 2021 and 2020, respectively.
It should be noted that adjusted net sales, gross profit, SG&A expenses, and operating 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 are presented within this table, as well as Table 5 and Table 7. We believe this data provides investors with additional useful 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)
(Dollars in thousands)Nine Months Ended
September 30,
2020
Adjusted 20201
20212021 vs Adjusted 2020
Segment net sales
Functional Coatings$441,325 $455,101 $559,299 $104,198 
Color Solutions257,679 265,425 300,618 35,193 
Total segment net sales$699,004 $720,526 $859,917 $139,391 
Segment adjusted gross profit
Functional Coatings$129,902 $133,975 $175,923 $41,948 
Color Solutions89,698 92,765 103,785 11,020 
Other costs of sales170 165 (1,292)(1,457)
Total adjusted gross profit2
$219,770 $226,905 $278,416 $51,511 
Adjusted selling, general and administrative expenses
Strategic services$69,093 $71,524 $71,049 $(475)
Functional services60,179 61,700 58,404 (3,296)
Incentive compensation6,133 6,159 12,401 6,242 
Stock-based compensation6,550 6,550 6,134 (416)
Total adjusted selling, general and administrative expenses3
$141,955 $145,933 $147,988 $2,055 
Adjusted operating profit$77,815 $80,972 $130,428 $49,456 
Adjusted operating profit as a % of net sales11.1 %11.2 %15.2 %
(1)Reflects the remeasurement of 2020 reported and adjusted local currency results using 2021 exchange rates, resulting in constant currency comparative figures to 2021 reported and adjusted results. See Table 6 for Non-GAAP adjustments applicable to the nine month period.
(2)Refer to Table 7 for the reconciliation of adjusted gross profit for the nine months ended September 30, 2021 and 2020, respectively.
(3)Refer to Table 6 for the reconciliation of adjusted SG&A expenses for the nine months ended September 30, 2021 and 2020, respectively.
It should be noted that adjusted net sales, gross profit, SG&A expenses, and operating 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 are presented within this table, as well as Table 6 and Table 7. We believe this data provides investors with additional useful 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 Income Attributable to Ferro Corporation
Common Shareholders to Adjusted EBITDA (unaudited)
(Dollars in thousands)Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Net income attributable to Ferro Corporation common shareholders$11,197 $9,107 $46,363 $22,707 
Net income attributable to noncontrolling interests482 440 1,301 826 
Restructuring and impairment charges602 2,447 7,756 12,231 
Other (income) expense, net(2,659)538 687 (2,361)
Interest expense5,436 4,767 19,879 16,474 
Income tax expense13,800 5,047 29,946 10,364 
Depreciation and amortization10,759 10,870 31,697 33,519 
Less: interest amortization expense and other(499)(1,071)(1,601)(2,866)
Cost of sales adjustments1
1,251 2,012 5,102 5,124 
SG&A adjustments1
3,677 2,699 19,403 12,457 
Adjusted EBITDA$44,046 $36,856 $160,533 $108,475 
Net sales$277,228 $241,877 $859,917 $699,004 
Adjusted EBITDA as a % of net sales15.9 %15.2 %18.7 %15.5 %
(1)For details of Non-GAAP adjustments, refer to Table 5 and Table 6 for the reconciliation of adjusted cost of sales and adjusted SG&A for the three and nine months ended September 30, 2021 and 2020, 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 this financial measure to the most comparable U.S. GAAP financial measure is presented. We believe this data provides investors with additional useful 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
Change in Net Debt (unaudited)
(Dollars in thousands)Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Beginning of period
Gross debt$364,972 $835,486 $804,067 $811,450 
Cash143,717 62,031 174,077 96,202 
Debt, net of cash221,255 773,455 629,990 715,248 
Unamortized debt issuance costs1,372 4,314 3,719 3,885 
Debt, net of cash and unamortized debt issuance costs219,883 769,141 626,271 711,363 
End of period
Gross debt362,825 811,556 362,825 811,556 
Cash148,754 64,495 148,754 64,495 
Debt, net of cash214,071 747,061 214,071 747,061 
Unamortized debt issuance costs1,242 4,017 1,242 4,017 
Debt, net of cash and unamortized debt issuance costs212,829 743,044 212,829 743,044 
Unamortized debt issuance costs(130)(297)(2,477)132 
FX on cash(410)679 (1,815)174 
Period decrease (increase) in debt, net of cash, unamortized debt issuance costs and FX$7,594 $25,715 $417,734 $(31,987)
Period decrease (increase) in debt, net of cash and unamortized debt issuance costs$7,054 $26,097 $413,442 $(31,681)
It should be noted that the change in net debt 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 this financial measure to the most comparable U.S. GAAP financial measure is presented. We believe this data provides investors with additional useful information on the underlying operations and trends of the business and enables period-to-period comparability of financial performance.


Table 12
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Net Cash Used in Operating Activities (GAAP) to
Adjusted Free Cash Flow (Non-GAAP) (unaudited)
(Dollars in thousands)Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Cash flows from operating activities
Net income$10,857 $14,914 $135,148 $25,883 
Loss (gain) on sale of assets— (428)(98,746)78 
Depreciation and amortization10,281 9,799 30,098 30,653 
Interest amortization499 1,071 1,601 2,866 
Restructuring and impairment— 28 124 6,944 
Loss on extinguishment of debt— — 1,981 — 
Accounts receivable(26,495)(56,534)(122,547)(107,551)
Inventories(11,874)44,793 (21,057)10,022 
Accounts payable(6,921)(33,487)775 (78,576)
Other current assets and liabilities, net4,225 12,396 29,983 10,750 
Other adjustments, net889 5,528 (22,309)(7,550)
Net cash used in operating activities (GAAP)(18,539)(1,920)(64,949)(106,481)
Less: Capital Expenditures(5,110)(6,699)(25,684)(21,681)
Plus: Cash collected for AR securitization31,336 34,719 90,662 97,299 
Adjusted Free Cash Flow (Non-GAAP)$7,687 $26,100 $29 $(30,863)
Net Income Attributable to Ferro Corporation Common Shareholders$10,375 $14,474 $133,847 $25,057 
Adjusted Free Cash Flow Conversion of Net Income Attributable to Ferro Corporation Common Shareholders74.1 %180.3 %— %-123.2 %
It should be noted that Adjusted Free Cash Flow is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The 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 Free Cash Flow (Non-GAAP) is calculated as Cash Flow used in operating activities (GAAP), less capital expenditures and adding cash collected from the Accounts Receivable Securitization program. We believe this data provides investors with additional useful information on the underlying operations and trends of the business and enables period-to-period comparability of financial performance.