Polypore Reports Second Quarter 2010 Results

• Revenue grows to $150.1 million
   
• Adjusted EBITDA increases to $45.0 million
   
• Adjusted EPS increases to $0.33

CHARLOTTE, N.C., Aug. 4, 2010 (GLOBE NEWSWIRE) -- Polypore International, Inc. (NYSE:PPO) today reported its financial results for the second quarter ended July 3, 2010.

• Sales were $150.1 million, an increase of $31.9 million, or 27%, compared with the prior-year period. Excluding the effect of foreign currency translation, sales increased 29%.
• Adjusted Operating Income was $32.7 million compared with $23.0 million in the prior-year period. A table showing the reconciliation of Adjusted Operating Income to U.S. GAAP amounts is included in this release.
• Adjusted Net Income and Adjusted EPS were $15.2 million and $0.33 per diluted share, compared with $5.2 million and $0.12 per diluted share in the prior-year period. Net income was $15.9 million and $0.34 per diluted share. A table showing the reconciliation of Adjusted Net Income and Adjusted EPS to U.S. GAAP amounts is included in this release.

Robert B. Toth, President and Chief Executive Officer, said, "We're pleased with the ongoing robust growth during the quarter, and we're continuing to experience positive trends in all of our businesses. The demand drivers remain solid and the investments we have made and continue to make across our businesses—namely in Electric Drive Vehicles, healthcare and expansion in Asia—position us well for long term growth."

For the six months ended July 3, 2010:

• Sales were $295.5 million, up 30% from $227.1 million in the first six months of 2009.
• Adjusted Operating Income was $64.0 million compared with $42.0 million in the prior-year period.
• Adjusted Net Income was $29.3 million and $0.64 per diluted share, compared with $9.2 million and $0.21 per diluted share, in the prior-year period.

Adjusted EBITDA

Adjusted EBITDA was $45.0 million in the second quarter of 2010 compared with $35.9 million in the second quarter of 2009. Adjusted EBITDA for the twelve months ended July 3, 2010 was $173.9 million. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), as defined in Polypore's senior secured credit facility, is reconciled to net income as noted in the attached table. 

Energy Storage

In the quarter, sales for the Energy Storage segment were $107.5 million, an increase of $25.2 million, or 31%, compared with the prior-year period. Year-to-date segment sales were $208.9 million, an increase of $52.9 million, or 34%, compared with the prior-year period. There was no significant effect from foreign currency translation for the second quarter and year-to-date periods.

• Sales of lead-acid battery separators were $74.9 million, an increase of $13.3 million, or 22%, compared with the prior-year period, driven by economic improvement in the Americas and Europe as well as strong continued growth in Asia. Year-to-date sales were $145.9 million, an increase of $27.9 million, or 24%. Also in the quarter, the company reached an agreement to enter into a joint venture with a leading battery manufacturer and customer in China, Camel Group Co., Ltd. ("Camel"), to produce lead-acid battery separators primarily for Camel's use. This joint venture will be located on Camel's site in Xiangfan, China, utilizing redeployed production assets from the Company's former facility in Italy. This capacity is expected to come online by early 2012.
• Lithium battery separator sales were $32.6 million, an increase of $11.9 million, or 57%. The increase reflected economic improvement in consumer electronics, as well as continued application proliferation and new product launches, including emerging Electric Drive Vehicles ("EDVs"). Year-to-date sales were $63.0 million, an increase of $25.0 million, or 66%.
• Segment operating income was $21.2 million and 20% of sales compared with $13.5 million and 16% of sales for the prior-year period. Year-to-date segment operating income was $40.6 million and 19% of sales compared with $22.8 million and 15% of sales for the same period in the prior year. The operating income margin improvement was primarily related to higher volumes and production efficiencies, somewhat offset by initial costs from growth investments. A table showing the reconciliation of segment operating income to consolidated results is included in this release.

Separations Media 

In the quarter, sales for the Separations Media segment were $42.6 million, up $6.7 million, or 19%, compared with the prior-year period (up 25% excluding the effect of foreign currency translation). Year-to-date segment sales were $86.6 million, an increase of $15.5 million, or 22%, compared with the prior-year period (no significant effect from foreign currency translation).

• Second quarter sales of healthcare products were $25.5 million, an increase of $0.7 million, or 3%, due to solid demand in hemodialysis and blood oxygenation applications, somewhat offset by the effect of foreign currency translation. Year-to-date sales were $54.5 million, an increase of $4.7 million, or 9%.
• Second quarter sales of filtration and specialty products were $17.1 million, an increase of $6.0 million, or 54%, due to strong demand in all key application areas. Year-to-date sales were $32.1 million, an increase of $10.8 million, or 51%.
• Second quarter segment operating income was $12.0 million compared with $9.9 million in the prior year, or 28% of sales for both periods. Year-to-date segment operating income was $24.5 million compared with $19.9 million, or 28% of sales for both periods. A table showing the reconciliation of segment operating income to consolidated results is included in this release.

Outlook

Toth added: "We are pleased that the positive trends that began in the third quarter of last year continue in 2010. We remain encouraged by dynamics across our businesses, including robust growth of lead-acid battery separators in Asia, improvements in consumer electronics, sales into EDVs, continued application proliferation in filtration and emerging longer term opportunities in healthcare. Those dynamics affirm our confidence in the investments we're making to drive growth in 2011 and beyond."

Conference Call

Polypore International, Inc. will hold a conference call to discuss the Company's second quarter financial results and business outlook on Thursday, August 5, 2010 at 9:00 AM Eastern time. The number to call for this interactive teleconference is (719) 325-4771. Enter code 2799540. A replay of the conference call will be available through August 12, 2010, via telephone at (719) 457-0820. Enter code 2799540. The call will also be webcast live and archived for 30 days in the Investor Relations section of the Company's web site at http://investor.polypore.net/">http://investor.polypore.net/.

In addition, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission with Supplemental Financial Information that is located on the Company's web site.

The Polypore International, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3881

Non-GAAP Supplemental Information

Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS (earnings per share) are non-GAAP financial measures presented in this press release as supplemental disclosures to net income and reported results. Adjusted EBITDA is defined in Polypore's credit agreement and represents earnings before interest, taxes, depreciation and amortization and certain non-operating items, business restructuring costs and other non-cash or non-recurring charges. In addition, Adjusted EBITDA includes the pro forma impact of acquisitions as if the acquisitions occurred on the second day of the period presented. Polypore defines Adjusted Net Income as income from continuing operations excluding certain items. Polypore defines Adjusted EPS as Adjusted Net Income divided by the number of diluted shares of common stock outstanding. For more information regarding the computation of Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS, the reconciliation of Adjusted EBITDA to net income, Adjusted Net Income to income from continuing operations and Adjusted EPS to earnings per share, please see the attached financial tables.

Polypore presents these non-GAAP financial measures because it believes that they are useful indicators of its operating performance. Adjusted EBITDA is a measure used in our credit agreement to determine the availability of borrowings under our revolving credit facility. Polypore's management also uses Adjusted EBITDA to review and assess its operating performance in connection with employee incentive programs and the preparation of its annual budget and financial projections. Adjusted Operating Income, Adjusted Net Income and Adjusted EPS exclude amounts that we do not consider part of our ongoing operating results when assessing performance of the Company. We believe that our non-GAAP financial measures also facilitate the comparison of results for current periods and guidance for future periods with results for past periods.

Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS are not measurements of financial performance under GAAP and such financial measures should not be considered as an alternative to net income, operating income, cash flows from operating activities or other measures of performance determined in accordance with GAAP. In addition, Polypore's calculation of these non-GAAP financial measures may not be comparable to the calculation of similarly titled measures reported by other companies.

This release contains statements that are forward-looking in nature. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," and similar expressions are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. These factors include the following: the highly competitive nature of the markets in which we sell our products; the failure to continue to develop innovative products; the loss of our customers; the vertical integration by our customers of the production of our products into their own manufacturing process; increases in prices for raw materials or the loss of key supplier contracts; our substantial indebtedness; interest rate risk related to our variable rate indebtedness; our inability to generate cash; restrictions related to the senior secured credit facility; employee slowdowns, strikes or similar actions; product liability claims exposure; risks in connection with our operations outside the United States; the incurrence of substantial costs to comply with, or as a result of violations of, or liabilities under environmental laws; the failure to protect our intellectual property; the loss of senior management; the incurrence of additional debt, contingent liabilities and expenses in connection with future acquisitions; the failure to effectively integrate newly acquired operations; the adverse impact on our financial condition of restructuring activities; the absence of expected returns from the amount of intangible assets we have recorded; the adverse impact from legal proceedings on our financial condition; natural disasters, epidemics, terrorist acts and other events beyond our control; and economic uncertainty and the current crisis in global credit and financial markets. Additional information concerning these and other important factors can be found in Item 1A. "Risk Factors" of our most recent Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission. Such forward-looking statements speak only as of the date of this press release. Polypore expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Polypore's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.