Platform Specialty Products Corporation (NYSE:PAH)
Platform reported continued earnings growth this quarter as the combination of organic revenue growth, lower interest expense and a strong tailwind from foreign exchange more than offset temporary margin pressures from input cost inflation. Platform’s organic revenue grew 5% as Performance Solutions grew 4%, and Ag Solutions grew 6%. The growth in the Performance Solutions segment continued to be driven by the positive results of the electronic materials business it acquired from Alent, and overall strength in its industrial business. The growth in Ag Solutions was driven by strength in the Latin and North American markets.
Despite positive organic sales growth, Platform’s organic EBITDA decreased 3% due to input cost inflation in Ag Solutions, which the company expects to mitigate through future price increases. Performance Solutions organic EBITDA grew 2% as positive revenue growth was somewhat offset by the increased proportion of sales from lower-margin products. Ag Solutions organic EBITDA declined 8% due to input cost inflation resulting from supply shortages of key active ingredients and a higher level of sales from lower-margin products. Platform’s overall EBITDA grew 7% due to a 10% tailwind from foreign exchange. EPS increased 30% due to lower interest expense from the company’s recent debt refinancing.
On Platform’s earnings call, management reiterated that it remains on track to separate its two businesses in the second half of this year, and stated that it is evaluating various execution alternatives for the separation in order to maximize shareholder value.
From Bill Ackman (Trades, Portfolio)'s first-quarter 2018 shareholder letter.
