Albemarle Reports Third Quarter 2012 Results

                 Albemarle Reports Third Quarter 2012 Results

PR Newswire

BATON ROUGE, La., Oct. 17, 2012

BATON ROUGE, La., Oct. 17, 2012 /PRNewswire/ --

Third quarter 2012 highlights:

  o Quarterly earnings of $99.3 million, or $1.10 per share.
  o Net sales of $661 million and EBITDA margin of 25 percent for the quarter,
    before special items.
  o Polymer Solutions delivers 20% margins despite weak electronics and
    European construction markets.
  o Strong Refinery Catalysts volumes partially offset impact of lower metals
    surcharges.
  o Fine Chemistry net sales up 8 percent on strong custom services and
    performance chemicals growth.

                               Three Months Ended    Nine Months Ended
                               September 30,         September 30,
In thousands, except per share 2012       2011       2012         2011
amounts
Net sales                      $ 661,226  $ 722,977  $ 2,057,824  $ 2,161,615
Segment income                 $ 145,897  $ 186,411  $ 495,087    $ 538,191
Net income attributable to     $ 99,261   $ 116,098  $ 245,036    $ 336,837
Albemarle Corporation
Diluted earnings per share     $ 1.10     $ 1.28     $ 2.72       $ 3.66
Special items per share        $ —        $ —        $ 0.82       $ —
Diluted earnings per share     $ 1.10     $ 1.28     $ 3.54       $ 3.66
excluding special items

Albemarle Corporation (NYSE: ALB) reported third quarter 2012 earnings of
$99.3 million, or $1.10 per share, compared to third quarter 2011 earnings of
$116.1 million, or $1.28 per share.  Third quarter 2012 results include $4.1
million, or $0.05 per share, in after-tax charges ($6.5 million before tax)
related to a supplemental executive retirement plan (SERP) settlement, and
$4.5 million, or $0.05 per share, of net tax benefits related principally to
the release of various tax reserves.  The Company reported net sales of $661.2
million in the third quarter of 2012 compared to net sales of $723.0 million
in the third quarter of 2011, with approximately two-thirds of the change
attributable to lower metals surcharges in 2012 in the Catalysts business.

(Logo:  http://photos.prnewswire.com/prnh/20111129/MM14279LOGO )

Earnings for the nine months ended September 30, 2012 were $245.0 million, or
$2.72 per share, compared to $336.8 million, or $3.66 per share, for the same
period in 2011.  Excluding the third quarter 2012 special items noted above as
well as the second quarter 2012 after-tax special item of $73.6 million
related to our exit of the phosphorous flame retardants business, earnings for
the nine months ended September 30, 2012 were $318.3 million, or $3.54 per
share.  Net sales for the nine months ended September 30, 2012 were $2.1
billion compared to $2.2 billion for the same period in 2011. 

Commenting on results, Luke Kissam, CEO, stated "Given the challenging
economic environment, we are pleased with our results.  Polymer Solutions
faced severe deterioration in the electronics and European construction
markets, but its performance was further evidence of the improvements we have
made to this business since the 2008/2009 recession.  Refinery catalysts
volumes were strong in the quarter, but results were negatively impacted by
significant reductions in metals surcharges including rare earths.  Fine
Chemistry delivered 8% revenue growth due to a strong custom services pipeline
and late quarter surge in shipments of completion fluids.  While I expect
fourth quarter to be even more difficult than was the third, I remain
confident in our ability to grow our business in 2013."

Quarterly Segment Results

Catalysts generated net sales of $251.2 million in the third quarter of 2012,
a 16 percent decrease from net sales in the third quarter of 2011, due mainly
to unfavorable impacts from lower metals surcharges in refinery catalysts and
foreign currency, partially offset by higher FCC volumes.  Catalysts segment
income was $60.7 million in the third quarter of 2012, down 40 percent from
third quarter 2011 results of $101.9 million due primarily to unfavorable
impacts from metals cost volatility, fixed cost absorption and equity income
versus the third quarter of 2011, partially offset by favorable sales volumes
and lower spending. 

Facing weaker volumes in the electronics and European construction markets,
Polymer Solutions reported net sales of $217.0 million in the third quarter of
2012, an 11 percent decrease over net sales in the third quarter of 2011, due
mainly to unfavorable pricing and mix, foreign currency impacts and the
effects of our phosphorous flame retardants business exit in the second
quarter of 2012.  Segment income for Polymer Solutions was $43.6 million in
the third quarter of 2012, a 20 percent decline from $54.6 million in the
third quarter of 2011, due primarily to unfavorable pricing and mix, fixed
cost absorption and foreign currency impacts, offset by lower input costs,
lower charges attributable to the noncontrolling interest in our Jordanian
joint venture and favorable impacts from our exit of the Phosphorous business.

Fine Chemistry net sales in the third quarter of 2012 were $193.0 million, an
8 percent increase over net sales in the third quarter of 2011, due mainly to
favorable volumes in custom services and performance chemicals, partly offset
by unfavorable pricing and foreign currency impacts.  Segment income for Fine
Chemistry was $41.7 million for the third quarter of 2012, up 39 percent over
third quarter 2011 results of $30.0 million, due primarily to favorable volume
and input costs, partly offset by unfavorable pricing and foreign currency.

Corporate and Other

Corporate and other expense was $8.0 million for the third quarter of 2012. 
The decrease from the comparable period in 2011 was due primarily to lower
personnel-related costs associated with performance-based incentive
compensation levels and related adjustments. 

Interest and financing expenses were $7.9 million for the third quarter of
2012 compared to $9.7 million for the third quarter of 2011, with this
decrease due primarily to increases in interest capitalized on higher average
construction project balances outstanding and lower variable-rate borrowings
year-over-year.

Our third quarter 2012 effective income tax rate was 21.6 percent versus 25.1
percent in the third quarter of 2011.  Excluding special items (see notes to
the condensed consolidated financial information), our third quarter 2012
effective income tax rate was 25.9 percent.  Our effective tax rate continues
to be influenced by the level and geographic mix of income, and benefits from
a favorable mix of income in lower tax jurisdictions. 

Cash Flow

Our cash flow from operations was approximately $306 million for the nine
months ended September 30, 2012, and we had $402.6 million in cash and cash
equivalents at September 30, 2012.  During the nine months ended September 30,
2012, cash on hand and cash provided by operations funded capital expenditures
for plant, machinery and equipment of approximately $218.7 million (which
includes approximately $63.4 million in capital expenditures associated with
our Jordanian joint venture), long-term debt repayments of $49.2 million,
dividends to shareholders of $51.3 million and repurchases of $40.5 million of
our common stock.  

Outlook

We expect market and economic conditions to remain unstable for the
foreseeable future.  Polymer Solutions will likely face soft end market demand
and low factory operating rates at least through Chinese New Year.  While
volumes in Performance Chemicals should remain strong, a temporary lull in our
Custom Services business will negatively impact Fine Chemistry's fourth
quarter results before continued growth in 2013.  Our Catalysts business
should finish the year with strong volumes and profitability as it builds
toward a solid 2013.  While we expect to grow our profitability in all three
segments in 2013, if economic uncertainty continues, we are prepared to take
appropriate steps to ensure the Company's financial strength and future
growth.

Earnings Call

The Company's performance for the third quarter ended September 30, 2012 will
be discussed on a conference call at 9:00 AM Eastern Daylight time on October
18, 2012.  The call can be accessed by dialing 800-295-4740 (International
Dial In # 617-614-3925), and entering conference ID 12536010.  The Company's
earnings presentation and supporting material can be accessed through
Albemarle's website under Investors at www.albemarle.com.

About Albemarle

Albemarle Corporation, headquartered in Baton Rouge, Louisiana, is a leading
global developer, manufacturer and marketer of highly-engineered specialty
chemicals for consumer electronics, petroleum refining, utilities, packaging,
construction, automotive/transportation, pharmaceuticals, crop protection,
food-safety and custom chemistry services.  Albemarle is committed to global
sustainability and is advancing its eco-practices and solutions in its three
business segments, Polymer Solutions, Catalysts and Fine Chemistry, with
Corporate Responsibility Magazine naming Albemarle among its prestigious "100
Best Corporate Citizens" list for 2011.  Albemarle employs more than 4,000
people worldwide and serves customers in approximately 100 countries.
 Albemarle regularly posts information to www.albemarle.com, including
notification of events, news, financial performance, investor presentations
and webcasts, Regulation G reconciliations, SEC filings and other information
regarding the Company, its businesses and markets served. 

Forward-Looking Statements

Some of the information presented in this press release, including, without
limitation, statements with respect to product development, changes in
productivity, market trends, price and mix changes, expected growth, outlook
and all other information relating to matters that are not historical facts
may constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.  There can be no assurance that
actual results will not differ materially.  Factors that could cause actual
results to differ from expectations include, without limitation: changes in
economic and business conditions; changes in financial and operating
performance of our major customers and industries and markets served by us;
the timing of orders received from customers; the gain or loss of significant
customers; competition from other manufacturers; changes in the demand for our
products; limitations or prohibitions on the manufacture and sale of our
products; availability of raw materials; changes in the cost of raw materials
and energy and in our ability to pass through increases; acquisitions and
divestitures, and changes in performance of acquired companies; fluctuations
in foreign currencies; changes in laws and government regulation impacting our
operations or our products; the occurrence of claims or litigation; the
occurrence of natural disasters; the inability to maintain current levels of
product or premises liability insurance or the denial of such coverage;
political unrest, including terrorism or hostilities; political instability
affecting our manufacturing operations or joint ventures; changes in
accounting standards; the inability to achieve results from our global
manufacturing cost reduction initiatives as well as our ongoing continuous
improvement and rationalization programs; changes in the jurisdictional mix of
our earnings; changes in monetary policies or inflation or interest rates,
which may impact our ability to raise capital or increase our cost of funds,
the performance of our pension fund investments and our pension expense and
funding obligations; volatility and substantial uncertainties in the debt and
equity markets; technology or intellectual property infringement and other
risks; decisions we may make in the future; and the other factors detailed
from time to time in the reports we file with the SEC, including those
described under "Risk Factors" in our Annual Report on Form 10-K and our 2012
Quarterly Reports on Form 10-Q. 

 

Albemarle Corporation and Subsidiaries
Consolidated Statements of Income
(In Thousands Except Per Share Amounts) (Unaudited)
                                                    
                             Three Months Ended
                                                   Nine Months Ended
                             September 30,         September 30,
                             2012       2011       2012         2011
Net sales                    $ 661,226  $ 722,977  $ 2,057,824  $ 2,161,615
Cost of goods sold             446,469    464,965    1,352,495    1,418,638
Gross profit                   214,757    258,012    705,329      742,977
Selling, general and           59,982     77,169     215,298      233,115
administrative expenses (a)
Research and development       19,831     20,534     59,791       58,096
expenses
Restructuring and other        6,508      —          101,211      —
charges (b)
Operating profit               128,436    160,309    329,029      451,766
Interest and financing         (7,914)    (9,710)    (25,134)     (28,576)
expenses
Other income, net              2,370      956        1,564        534
Income before income taxes
and equity in net income of    122,892    151,555    305,459      423,724
unconsolidated investments
Income tax expense (c)         26,591     38,097     76,804       100,423
Income before equity in net
income of unconsolidated       96,301     113,458    228,655      323,301
investments
Equity in net income of
unconsolidated investments     7,935      9,500      29,233       37,118
(net of tax)
Net income                     104,236    122,958    257,888      360,419
Net income attributable to     (4,975)    (6,860)    (12,852)     (23,582)
noncontrolling interests
Net income attributable to   $ 99,261   $ 116,098  $ 245,036    $ 336,837
Albemarle Corporation
Basic earnings per share     $ 1.11     $ 1.29     $ 2.75       $ 3.70
Diluted earnings per share   $ 1.10     $ 1.28     $ 2.72       $ 3.66
Weighted-average common
shares outstanding – basic     89,327     89,935     89,246       91,094
Weighted-average common
shares outstanding – diluted   89,879     90,958     89,959       92,090
See accompanying notes to the condensed consolidated financial information.

 

 

Albemarle Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands) (Unaudited)
                                            September 30,      December 31,
                                            2012               2011
ASSETS
Cash and cash equivalents                   $   402,642        $  469,416
Other current assets                            984,210           886,204
Total current assets                            1,386,852         1,355,620
Property, plant and equipment                   2,830,268         2,619,428
Less accumulated depreciation
                                                1,577,129         1,489,948
   and amortization
Net property, plant and equipment               1,253,139         1,129,480
Other assets and intangibles                    722,664           718,724
Total assets                                $   3,362,655      $  3,203,824
LIABILITIES AND EQUITY
Current portion of long-term debt           $   12,572         $  14,416
Other current liabilities                       369,940           386,762
Total current liabilities                       382,512           401,178
Long-term debt                                  701,162           749,257
Other noncurrent liabilities                    278,430           296,659
Deferred income taxes                           99,268            77,903
Albemarle Corporation shareholders' equity      1,808,354         1,591,277
Noncontrolling interests                        92,929            87,550
Total liabilities & equity                  $   3,362,655      $  3,203,824
See accompanying notes to the condensed consolidated financial information.

 

 

Albemarle Corporation and Subsidiaries
Selected Consolidated Cash Flow Data
(In Thousands) (Unaudited)
                                                      Nine Months Ended
                                                      September 30,
                                                      2012         2011
Cash and cash equivalents at beginning of year        $ 469,416    $ 529,650
Cash and cash equivalents at end of period            $ 402,642    $ 481,258
Sources of cash and cash equivalents:
  Net income                                            257,888      360,419
  Proceeds from borrowings                              —            132,859
  Proceeds from exercise of stock options               19,977       1,103
Uses of cash and cash equivalents:
  Capital expenditures                                  (218,708)    (127,111)
  Repurchases of common stock                           (40,470)     (178,132)
  Repayments of long-term debt                          (49,243)     (105,076)
  Dividends paid to shareholders                        (51,287)     (43,098)
  Pension and postretirement contributions              (19,705)     (57,555)
  Investments in equity and other corporate             —            (10,868)
investments
  Long-term advances to joint venture                   (22,500)     —
Non-cash items:
  Depreciation and amortization                         74,428       71,926
  Restructuring and other charges (b)                   101,211      —
  Equity in net income of unconsolidated investments    (29,233)     (37,118)
See accompanying notes to the condensed consolidated financial information.

 

 

Albemarle Corporation and Subsidiaries
Consolidated Summary of Segment Results
(In Thousands) (Unaudited)
                           Three Months Ended      Nine Months Ended
                           September 30,           September 30,
                           2012        2011        2012         2011
Net sales:
Polymer Solutions          $ 216,992   $ 243,931   $ 692,139    $ 792,604
Catalysts                    251,201     299,531     773,867      827,339
Fine Chemistry               193,033     179,515     591,818      541,672
Total net sales            $ 661,226   $ 722,977   $ 2,057,824  $ 2,161,615
Segment operating profit:
Polymer Solutions          $ 42,964    $ 55,219    $ 157,487    $ 203,900
Catalysts                    53,937      93,682      185,656      209,251
Fine Chemistry               46,036      34,793      135,543      111,387
Total segment operating      142,937     183,694     478,686      524,538
profit
Equity in net income of
unconsolidated
investments:
Polymer Solutions            1,199       1,357       4,957        6,496
Catalysts                    6,736       8,170       24,276       30,796
Fine Chemistry               —           —           —            —
Corporate & other            —           (27)        —            (174)
Total equity in net income
of unconsolidated            7,935       9,500       29,233       37,118
investments
Net (income) loss
attributable to
noncontrolling interests:
Polymer Solutions            (602)       (2,021)     (1,255)      (9,200)
Catalysts                    —           —           —            —
Fine Chemistry               (4,373)     (4,789)     (11,577)     (14,439)
Corporate & other            —           (50)        (20)         57
Total net income
attributable to              (4,975)     (6,860)     (12,852)     (23,582)
noncontrolling interests
Segment income:
Polymer Solutions            43,561      54,555      161,189      201,196
Catalysts                    60,673      101,852     209,932      240,047
Fine Chemistry               41,663      30,004      123,966      96,948
Total segment income         145,897     186,411     495,087      538,191
Corporate & other            (7,993)     (23,462)    (48,466)     (72,889)
Restructuring and other      (6,508)     —           (101,211)    —
charges ^ (b)
Interest and financing       (7,914)     (9,710)     (25,134)     (28,576)
expenses
Other income, net            2,370       956         1,564        534
Income tax expense (c)       (26,591)    (38,097)    (76,804)     (100,423)
Net income attributable to $ 99,261    $ 116,098   $ 245,036    $ 336,837
Albemarle Corporation
See accompanying notes to the condensed consolidated financial information.

 

Notes to the Condensed Consolidated Financial Information
      The nine month period ended September 30, 2012 includes a gain of $8.1
      million ($5.1 million after tax, or $0.06 per share) resulting from
(a)   proceeds received in connection with the settlement of litigation (net
      of related legal fees).  The nine month period ended September 30, 2012
      also includes an $8 million charitable contribution ($5.1 million after
      tax, or $0.06 per share) to the Albemarle Foundation. 
      The three-month and nine-month periods ended September 30, 2012 include
      a settlement charge of $6.5 million ($4.1 million after income taxes, or
      $0.05 per share) associated with our SERP in connection with the
(b)   retirement of our former CEO and executive chairman.  The nine month
      period ended September 30, 2012 also includes charges amounting to $94.7
      million ($73.6 million after income taxes, or $0.82 per share) in
      connection with our exit of the phosphorous flame retardants business 
      The three-month and nine-month periods ended September 30, 2012 include
(c)   $4.5 million, or $0.05 per share, of net tax benefits related
      principally to the release of various tax reserves.

 

Additional Information

It should be noted that Net income attributable to Albemarle Corporation
("earnings"), earnings per share and effective income tax rates which exclude
special items, as well as presentations of segment operating profit, segment
income, EBITDA, EBITDA excluding special items, EBITDA margin and EBITDA
margin excluding special items are financial measures that are not required
by, or presented in accordance with, accounting principles generally accepted
in the United States, or GAAP.  These measures are presented here to provide
additional useful measurements to review our operations, provide transparency
to investors and enable period-to-period comparability of financial
performance.

A description of other non-GAAP financial measures that we use to evaluate our
operations and financial performance, and reconciliation of these non-GAAP
financial measures to the most directly comparable financial measures
calculated and reported in accordance with GAAP, can be found in the Investors
section of our website at www.albemarle.com, under "Non-GAAP Reconciliations"
under "Financials."  Also, see attached for a supplemental reconciliation of
our segment operating profit and segment income amounts to GAAP Operating
profit and GAAP Net income attributable to Albemarle Corporation,
respectively, as well as for a supplemental reconciliation of our GAAP Net
income attributable to Albemarle Corporation to EBITDA and EBITDA excluding
special items.

 

ALBEMARLE CORPORATION AND SUBSIDIARIES
Non-GAAP Reconciliation
(In Thousands)
(Unaudited)

Our segment information includes measures we refer to as "segment operating
profit," "segment income," "EBITDA" and "EBITDA excluding special items,"
which are financial measures that are not required by, or presented in
accordance with, GAAP.  The Company has reported segment operating profit,
segment income, EBITDA and EBITDA excluding special items because management
believes that these financial measures provide transparency to investors and
enable period-to-period comparability of financial performance.  Segment
operating profit, segment income, EBITDA and EBITDA excluding special items
should not be considered as alternatives to operating profit or net income
attributable to Albemarle Corporation, as determined in accordance with GAAP.

See below for a reconciliation of segment operating profit and segment income,
the non-GAAP financial measures, to Operating profit and Net income
attributable to Albemarle Corporation, respectively, the most directly
comparable financial measures calculated and reported in accordance with GAAP.

 

                   Three Months Ended            Nine Months Ended
                   September 30,                 September 30,
                   2012           2011           2012            2011
Total segment      $  142,937     $  183,694     $  478,686      $  524,538
operating profit
Corporate & other     (7,993)        (23,385)       (48,446)        (72,772)
*
Restructuring and     (6,508)        —              (101,211)       —
other charges
GAAP Operating     $  128,436     $  160,309     $  329,029      $  451,766
profit
Total segment      $  145,897     $  186,411     $  495,087      $  538,191
income
Corporate & other     (7,993)        (23,462)       (48,466)        (72,889)
Restructuring and     (6,508)        —              (101,211)       —
other charges
Interest and          (7,914)        (9,710)        (25,134)        (28,576)
financing expenses
Other income, net     2,370          956            1,564           534
Income tax expense    (26,591)       (38,097)       (76,804)        (100,423)
GAAP Net income
attributable to    $  99,261      $  116,098     $  245,036      $  336,837
Albemarle
Corporation
* Excludes corporate equity income and noncontrolling interest adjustments of
$(77) for the three-month period ended September 30, 2011, and $(20) and
$(117) for the nine-month periods ended September 30, 2012 and 2011,
respectively.

 

See below for a reconciliation of net income attributable to Albemarle
Corporation excluding special items, EBITDA and EBITDA excluding special
items, the non-GAAP financial measures, from net income attributable to
Albemarle Corporation, the most directly comparable financial measure
calculated and reported in accordance with GAAP.  EBITDA is defined as Net
income attributable to Albemarle Corporation before interest and financing
expenses, income taxes, depreciation and amortization.  EBITDA excluding
special items is defined as EBITDA before the special items as listed below.

 

                           Three Months Ended      Nine Months Ended
                           September 30,           September 30,
                           2012        2011        2012          2011
Net income attributable to $ 99,261    $ 116,098   $ 245,036     $ 336,837
Albemarle Corporation
Add:
Restructuring and other      4,114       —           77,704        —
charges, net of tax
Less:
Discrete net tax benefits    (4,490)     —           (4,490)       —
Net income attributable to
Albemarle Corporation      $ 98,885    $ 116,098   $ 318,250     $ 336,837
excluding special items
Net income attributable to $ 99,261    $ 116,098   $ 245,036     $ 336,837
Albemarle Corporation
Add:
Interest and financing       7,914       9,710       25,134        28,576
expenses
Income tax expense           26,591      38,097      76,804        100,423
Depreciation and             24,979      24,616      74,428        71,926
amortization
EBITDA                       158,745     188,521     421,402       537,762
Restructuring and other      6,508       —           101,211       —
charges
EBITDA excluding special   $ 165,253   $ 188,521   $ 522,613     $ 537,762
items
Net sales                  $ 661,226   $ 722,977   $ 2,057,824   $ 2,161,615
EBITDA Margin                24.0    %   26.1    %   20.5      %   24.9      %
EBITDA Margin excluding      25.0    %   26.1    %   25.4      %   24.9      %
special items

 

SOURCE Albemarle Corporation

Website: http://www.albemarle.com
Contact: Lorin Crenshaw, +1-225-388-7322