Kraton Performance Polymers, Inc. announces financial results for the quarter ended June 30, 2014. Second quarter 2014 sales revenue was $323.8 million on sales volume of 78.4 kilotons, down $10.8 million compared to sales revenue of $334.5 million in the second quarter 2013 on sales volume of 77.5 kilotons.
Adjusted EBITDA at estimated current replacement cost (“ECRC”) (non-GAAP) was $38.6 million in the second quarter 2014, up $6.6 million compared to $32.0 million in the second quarter 2013. Gross profit per ton at ECRC (non-GAAP ) was $865 per ton in the second quarter 2014 compared to $802 per ton in the second quarter 2013.
Second quarter 2014 net income attributable to Kraton was $11.1 million, or $0.33 per diluted share, compared to net income of $3.8 million, or $0.12 per diluted share, in the second quarter 2013. Second quarter 2014 adjusted net income attributable to Kraton (non-GAAP) was $15.2 million, or $0.46 per diluted share, compared to adjusted net income of $5.0 million, or $0.15 per diluted share, in the second quarter 2013.
Net income attributable to Kraton and adjusted net income attributable to Kraton includes a positive spread between FIFO and ECRC of $4.3 million, or $0.13 per diluted share, in the second quarter 2014 and a negative spread of $2.5 million, or $0.08 per diluted share, in the second quarter 2013. “For the second quarter 2014, Kraton posted Adjusted EBITDA at ECRC of $38.6 million.
This represents a $6.6 million or 20.7% increase compared to second quarter 2013, a year-on-year increase in associated margin of over two hundred basis points, and the second highest Adjusted EBITDA at ECRC posting for a second quarter in the company’s history,” said Kevin M. Fogarty, Kraton’s President and Chief Executive Officer. “Sales volume in the second quarter 2014 was 78.4 kilotons, up 1.2% compared to the 77.5 kilotons reported in the second quarter of 2013, led by a 5.5% increase in the HSBC product family, and for the trailing twelve month period ended June 30, 2014, our Vitality Index was 15%.
Within our end-use markets, sales volume in Adhesives, Sealants and Coatings was up 5.9% compared to the second quarter 2013, our Cariflex end use remained on its long-term trend of volume growth, and our Paving and Roofing end use reflected modest sales volume growth globally in the quarter led by a significant increase in second quarter 2014 North American paving volumes.
These gains in sales volume momentum were partially offset by a 5.6% decline in our Advanced Materials end use, where increased HSBC sales volume in Asia was offset by lower USBC sales volume within the end use. With respect to HSBC-based solutions in personal care applications commented on in prior quarters, on a year-to-date basis the decline in HSBC sales volume has been approximately 2 kilotons, compared to the first half of 2013, but this has been offset by growth in other HSBC-based applications throughout the Kraton portfolio.
We believe the shift has largely occurred and therefore, we currently expect that sales volumes for personal care applications in the third and fourth quarters of 2014 will be in line with the second quarter.” said Fogarty. “During the second quarter, construction continued on our 30 kiloton HSBC expansion in Mailiao, which is being built by our joint venture with Formosa Petrochemical Corporation, and subsequent to quarter end we executed an agreement with a consortium of banks in Taiwan that will provide construction funding and working capital requirements for the joint venture.”