I'll be providing the shareholder letters written by Dan Leever for MacDermid from 1996 on. Platform Specialty Products' (NYSE:PAH) acquired MacDermid last year and all are interesting reads for people considering PAH. Other investors could find golden nuggets throughout the reports as well. (Excuse some of the formatting, I had to reformat transferring from SEC filings)
1996:Fiscal 1996 was the fifth consecutive year of record earnings per share for MacDermid. Sales increased to $235.9 million from $182.1 million in 1995, up 30%. Earnings increased to $13.2 million from $11.1 million in 1995, up 18%. Earnings per share increased to $4.51 from $3.55 in 1995, up 27%. We continue to benefit in per share terms from our repurchase in August of 1994 of 24% of our then outstanding shares. For the second year, we enjoyed growth across all product lines in all markets, both domestic and international. We continued to benefit from acquisitions, from our ongoing effort to improve our efficiency, and from the 1995 turnaround in a number of our European operations. In almost every country in which we operate, fiscal 1996 was an outstanding year. This is important since 47% of our sales are outside the United States.In the third quarter, we acquired the Electronics and Printing Division of Hercules Incorporated, a producer of photoresists used in forming patterns on printed circuits and photopolymers used in the manufacturing of advanced printing plates for commercial printing.This is an important acquisition. It brings a new technology in commercial printing with excellent growth potential and fills out our product offerings to the printed circuits market so that we now have unique total systems capabilities to offer our customers. The management is excellent, the integration has gone smoothly, and our competitive position has been significantly strengthened.Because of the strength of our cash flow and balance sheet, we were able to finance this $130 million acquisition with added debt and a callable, non-convertible preferred stock issue, both at attractive fixed rates. Our cash flow is at record levels. Our debt/capital ratio is 63%. Nevertheless, a dividend increase is not currently planned. Your Board of Directors believes shareholders are better served by utilizing excess cash flow to reduce debt and to fund internal growth and acquisitions.Our Acquisition Philosophy, simply stated, is to acquire businesses that will strengthen the competitive position of our core business in both technology and market share thus, most important, increasing the intrinsic value of your company on a per share basis.We place a high priority on R&D. It is not considered a discretionary expenditure. Our focus is not only on broadening and improving our current product line but on new products in new markets, all within our core competencies. In 1996, our R&D investment was $10 million compared with $9.6 million in 1995.Our Corporate Philosophy is on the inside cover of our annual report. Everyone at MacDermid is dedicated to conducting our business in accordance with that Philosophy.We begin fiscal 1997 a much bigger company than just a year ago with greater potential than at any time in our history. Nevertheless, our policies remain unchanged--improve our product and services so as to be the preferred supplier/partner with our customers, remove all excess costs, and grow as rapidly as prudently possible. Our awareness, that we work for our shareholders and that our stewardship will be measured by the long-term per share results, is heightened by the fact that, through personal holdings, our ESOP and other plans, we, your employees, own 34% of the outstanding shares. Our objective is to look back on our progress to date as but a beginning.All of our worldwide associates at MacDermid have worked hard and effectively to produce outstanding results in fiscal 1996. They deserve congratulations. We enthusiastically welcome our new associates from Hercules. We look forward to a long and productive relationship. Importantly, we thank our shareholders for their confidence.
Disclosure: I am long PAH.