Plastic compounds and resins supplier A. Schulman is lowering its full-year 2017 adjusted net income guidance range to $1.60 to $1.70 per diluted share and adjusted EBITDA to $200 to $204 million.
This revision is driven by margin compression in the Company's European business as well as weakened operating results from previous forecasts in certain other regions.
"While our volumes in Europe remain on track with our expectations, we are incurring significant margin pressure in the region due to the magnitude and timing of raw material cost increases," said Joseph M. Gingo, chairman, president and chief executive officer.
"This compression compounds the macroeconomic headwinds and previously disclosed operational challenges thus making our full-year guidance unattainable, despite the continued progress we are making in this reset year.
"We have taken further steps to recover the raw material costs more effectively, and I believe we will succeed, but the rate at which we can do so is dependent upon competitive pressures," said Gingo. "Typically, we experience a lag in our ability to recover raw material increases. Given this timing, our margin recovery should build momentum as we head into fiscal 2018."
In the Company's fiscal 2017 third quarter news release and earnings call, management reiterated the potential negative effects on its full-year financial performance from foreign currency translation and the continued complexity in the Evansville, Indiana consolidation.
The initial guidance provided by A. Schulman on October 26, 2016 of$2.08 to $2.18 per diluted share assumed a Euro rate of $1.13 and no major shifts in other major world currencies. The negative foreign currency effects on adjusted net income and adjusted EBITDA compared with the Company's guidance plan level are expected to be $0.12 per diluted share and $6 million, respectively, and are reflected in the revised guidance.