HOUSTON, March 30, 2020 /PRNewswire/ -- Kraton Corporation (NYSE: KRA) ("Kraton" or the "Company"), a leading global sustainable producer of specialty polymers and high-value biobased products derived from pine wood pulping co-products today provided a status update related to the COVID-19 pandemic impact on the Company.
As a global company, Kraton continues to monitor the progression of the COVID-19 pandemic on a daily, if not hourly basis. The safety and well-being of our employees, stakeholders, and the communities in which we operate remain our primary concern. While our essential plant and laboratory personnel remain on-site, many of our employees around the world are working remotely. We are continuing to follow the orders and guidance of Federal, regional and local governmental agencies, as we maintain our own stringent protocols in an effort to mitigate the spread of the virus and protect the health of our employees, customers and suppliers as well as the communities in which we operate.
"To date, COVID-19 has had a limited impact on our business and results of operations. Our plants have continued to operate at normal capacities, and our supply chain remains intact, with adequate availability of key raw materials. Importantly, under the U.S. Department of Homeland Security guidance issued on March 19, as well as many related regional and local governmental orders, chemical manufacturing sites are considered essential critical infrastructure, and as such, are not currently subject to closure in the locations where we operate. While the European Union issues critical infrastructure orders on a country-by-country basis, thus far they have taken a similar approach to the U.S. Department of Homeland Securityguidance," said Kevin M. Fogarty, Kraton's Chief Executive Officer. "Although there has been some disruption in global logistics channels, we have not experienced significant delays in fulfillment of customer orders. While the future remains uncertain, we believe Kraton's geographic and end market diversification remains a strength, as we serve many customers, including those in medical, adhesive and food packaging industries, whose products remain vital in the current environment," added Fogarty.
The Company continues to strengthen its balance sheet, most recently through the March 6, 2020 sale of its Cariflex business for $530 million, and the subsequent reduction in amounts outstanding under its senior secured term loan facility.
"With the sale of our Cariflex business in early March, relative to year-end 2019 we expect to reduce our consolidated net debt by approximately $480 million by the end of the first quarter of 2020," said Atanas H. Atanasov, Kraton's Senior Vice President and Chief Financial Officer. "Further, at this time, Kraton has over $350 million of available liquidity, comprised of approximately $150 million of cash on hand, and an ample borrowing base under a $250 million largely undrawn ABL facility. While the ABL facility is available through its current maturity date in early 2021, we intend to renew and extend the facility before year-end 2020."
"From a broader long-term capital structure standpoint, we believe Kraton is well-positioned. With the exception of the currently largely undrawn ABL facility, we have no scheduled maturities until 2025. In the current environment, our focus will remain on cash generation, working capital and operational, efficiency and continued debt reduction. In addition, we are closely monitoring market conditions and will adapt our capital spending levels as we believe prudent," added Atanasov.
For the first quarter of 2020, the Company expects to report Adjusted EBITDA exceeding the current consensus estimate of approximately $46 million. The Company expects to release full results for the first quarter of 2020 after market close on April 29, 2020 and host a call to discuss first quarter 2020 results the morning of April 30, 2020.
Kraton Corporation (NYSE: KRA) is a leading global sustainable producer of specialty polymers and high-value biobased products derived from pine wood pulping co-products. Kraton's polymers are used in a wide range of applications, including adhesives, coatings, consumer and personal care products, sealants and lubricants, and medical, packaging, automotive, paving and roofing applications. As the largest global provider in the pine chemicals industry, the company's pine-based specialty products are sold into adhesives, roads and construction and tire markets, and it produces and sells a broad range of performance chemicals into markets that include fuel additives, oilfield chemicals, coatings, metalworking fluids and lubricants, inks, flavors and fragrances and mining. Kraton offers its products to a diverse customer base in numerous countries worldwide.
Kraton, and the Kraton logo and design, are all trademarks of Kraton Polymers LLC.
FORWARD LOOKING STATEMENTS
This press release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are often characterized by the use of words such as "believes," "estimates," "expects," "projects," "may," "intends," "plans" or "anticipates," or by discussions of strategy, plans or intentions. The statements in this press release that are not historical statements, including statements regarding the future outlook for our business and the markets and manner in which we operate; the impact of the COVID-19 pandemic on our operations and the effectiveness of our protective or other mitigation actions in response to such pandemic, the strength of our geographic and end market diversification, expectations for first quarter consolidated net debt reduction and Adjusted EBITDA results, and plans regarding the possible renewal and extension of our ABL facility are forward-looking statements. All forward-looking statements in this press release are made based on management's current expectations and estimates, which involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed in forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those expressed in forward-looking statements is contained in Kraton's most recently filed annual report on Form 10-K, quarterly reports on Form 10-Q and in other filings made by Kraton with the U.S. Securities and Exchange Commission, and include, but are not limited to, risks related to: Kraton's ability to repay or re-finance its indebtedness; Kraton's reliance on third parties for the provision of significant operating and other services; health epidemics or pandemics such as COVID-19 (including governmental and regulatory actions relating thereto); conditions in the global economy and capital markets; fluctuations in raw material costs; limitations in the availability of raw materials; competition in Kraton's end-use markets; and other factors of which we are currently unaware or deem immaterial. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements contained herein speak only as of the date of this press release, and we assume no obligation to publicly update or revise such forward-looking statements in light of new information or future events.
NON-GAAP FINANCIAL MEASURES
This press release contains information regarding adjusted EBITDA and consolidated net debt, which are non-GAAP financial measures made available as a supplement, and not an alternative, to the results provided in accordance with generally accepted accounting principles in the United States of America ("GAAP").
Adjusted EBITDA: For our consolidated results, Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation, and amortization, as adjusted for the impact of a number of items we do not consider indicative of our on-going performance, including the spread between FIFO and ECRC.
Consolidated Net Debt: We define consolidated net debt as total consolidated debt (including debt of KFPC) less consolidated cash and cash equivalents. Management uses consolidated net debt to determine our outstanding debt obligations that would not readily be satisfied by its cash and cash equivalents on hand. Management believes that using consolidated net debt is useful to investors in determining our leverage since we could choose to use cash and cash equivalents to retire debt.
We have not reconciled consolidated net debt guidance to debt due to high variability and difficulty in making accurate forecasts and projections that are impacted by future decisions and actions. The actual amount of such reconciling items will have a significant impact if they were included in our net debt. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.
FOR FURTHER INFORMATION
H. Gene Shiels
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SOURCE Kraton Corporation