To say that FY2018 was an interesting year would be an understatement. While the Company performed well, we did so in uncertain environments beset with geopolitical turbulence from the threat of growing trade restrictions and the uncertainties of tariffs and rising materials costs, among other unsettling events.
As a global provider of a broad range of products for applications that demand high reliability it was imperative that we remained focused on our goals and prepared to react to changes that were occurring in virtually every segment of the business.
I am pleased to report that our teams around the globe operated with steady hands and great flexibility. The need was for focus and agility to adapt to the changing needs of our customers. And everyone executed on that mission.
The Company reported revenue of $284.19 million for FY2018, an increase of $31.63 million, or 13%, compared to $252.56 million in FY2017. Net income of $43.14 million for FY2018 increased $1.13 million, or 3%, from $42.01 million in the prior year. Earnings per diluted share of $4.56 for FY2018 represented an increase of $0.12, or 3%, compared to $4.44 per diluted share in the prior year. Adjusted EBITDA for FY2018 increased $1.28 million, or 2%, to $75.25 million compared to $73.97 million in the prior year.
Consistent growth is the result of a long-time commitment to our core strategic drivers:
1. Inorganic growth through attractive acquisitions and integration.
2. Organic growth in select areas through market and product development.
3. Consolidation and rationalization where appropriate.
These strategies are sharply focused on building upon core businesses, and enhancing operational infrastructure and commonalities to gain competitive advantage.
In FY2017 and FY2018 Chase made two acquisitions that exemplify our goal of seeking only those companies that closely align with current businesses, where technologies and markets can be leveraged quickly.
The acquisition of Zappa Stewart in December 2017 is an excellent fit for us: Zappa Stewart product lines are highly complementary to our existing Industrial Materials segment and extended our reach into growing medical and consumer applications.
Zappa Stewart formulates superabsorbent materials for water and liquid management, remediation and protection. The company serves diverse markets including medical, environmental, infrastructure, wire and cable, energy and consumer products. With this acquisition, Chase added two manufacturing facilities in North Carolina enhancing our cross-functional operating model and synergy potential.
Zappa Stewart is already contributing to the top and bottom lines and is fully integrated into Chase's global ERP system.
Resin Designs, which was acquired in FY2017, is now fully integrated and creating new market opportunities for our Industrial Materials business segments, including HumiSeal. Resin Designs is a formulator of customized adhesive and sealant systems used in high-reliability electronic applications. Markets served include semiconductor packaging and devices, EMI shielding, enclosures, smart cards, and hybrid microelectronics assemblies.
The M&A environment remains competitive with elevated valuations in our target market. This creates a challenge for us in completing accretive acquisitions as we adhere to our disciplined approach.
We are pleased with growth from existing product lines and how acquisitions are giving the company further leverage into existing as well as new markets.
Organic growth in the Industrial Materials segment saw revenue increases over the prior year, beyond the additional revenue provided by the Zappa Stewart acquisition. With this however, there has been a negative impact on margins due to increasing raw materials costs from supply and demand imbalances and government trade policy changes.
With telecom infrastructure build and repair continuing nationwide, and North American and international automotive and appliance use of our products growing, these product lines are poised to continue their success. The 'Internet of Things' (IoT) is a key driver for this part of our business. IoT has a number of definitions but one may think of it as referring to interconnected electronic devices. It has been estimated that in 2017 there were 8.5 billion such devices and that by 2020 the number is forecast to grow to almost 31 billion devices.
Benefiting from these trends were pulling and detection tapes and electronic and industrial coatings product lines, which continued to outpace prior year sales results. Our cable materials product line rebounded in the second half of the fiscal year with strong results.
The Construction Materials segment continued the momentum gained in the second quarter to close out a strong year. Middle East sales of water and wastewater pipeline products and North American sales of our domestically produced oil and gas pipeline products grew over the prior year. Our bridge and highway product line achieved strong performance for a second consecutive year.
Over the past decade, consistent efforts have been made to maximize operational efficiencies to fully leverage resources. As Chase expands its global footprint this strategy is more and more critical to our success.
In FY2018 we experienced significant raw material cost increases. Where possible, we seek options that minimize the impact of these increases. Operationally, we also have the flexibility to shift production of certain product lines to locations less affected by rising costs.
In FY2018 we closed our Pawtucket, RI manufacturing plant. Operations transitioned to our Oxford, MA and Lenoir, NC locations. This ties to our strategic need to achieve structural cost reductions where required, given market dynamics. The Pawtucket, RI operation primarily served the wire and cable industry with specialty tapes. This industry has continued to experience customer consolidation, and our tactics match the needs dictated by the market.
In the 3rd quarter of FY2018 we sold our structural composites rod business, which continued our divestment of non-core businesses allowing us to focus on core activities centered on specialty chemical-based protective materials.
Investments in research and development continued to yield results with emerging products such as Trace-Safe - a water blocking tracer wire detection system used in underground pipelines.
As we grow and add new technologies through acquisitions and in-house development, R&D is a more vital function that will keep us positioned to take advantage of market opportunities.
In FY2019 we see little if any let up in the uncertainties that are present in global markets. This means continued margin pressures and the need to reduce costs without compromising momentum.
As a business Chase Corporation has long subscribed to an approach that embraces basic tenets:
We further believe that the Chase culture is our greatest resource. With close to 800 employees around the globe we value their contributions and we remain keenly focused on supporting each and every one. And with the support of you, our Shareholders, we are confident that our future will continue on a strong, successful path to creating long-term value.
Adam P. Chase
Chief Executive Officer
Peter R. Chase
Kenneth J. Feroldi
Treasurer & Chief Financial Officer
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