Albemarle reports second quarter 2013 results

                Albemarle reports second quarter 2013 results

PR Newswire

BATON ROUGE, La., July 17, 2013

BATON ROUGE, La., July 17, 2013 /PRNewswire/ --

Second quarter 2013 highlights:

  oEarnings of $81.8 million, or $0.97 per share, excluding non-operating
    items.
  oNet sales of $634 million and EBITDA margin, excluding non-operating
    items, of 22 percent.
  oAnnounced $450 million accelerated share repurchase program and
    repurchased approximately 6.8 million shares in second quarter.
  oAnnounced agreement to establish a Chinese joint venture to produce
    MARTINAL^® flame retardants.

                               Three Months Ended    Six Months Ended
                               June 30,              June 30,
In thousands, except per share 2013       2012       2013         2012
amounts
Net sales                      $ 634,197  $ 684,894  $ 1,275,822  $ 1,396,598
Segment income                 $ 129,031  $ 179,710  $ 262,656    $ 359,473
Net income attributable to     $ 82,739   $ 50,089   $ 166,726    $ 164,351
Albemarle Corporation
Diluted earnings per share     $ 0.98     $ 0.56     $ 1.92       $ 1.83
 Non-operating pension and     (0.01)     (0.09)     (0.03)       (0.11)
OPEB items^(a)
 Special items^(b)             —          0.82       —            0.82
Diluted earnings per share,
excluding special and
non-operating pension and     $ 0.97     $ 1.28     $ 1.89       $ 2.53
OPEB items^(e)
See accompanying notes and reconciliations to the condensed consolidated
financial information.

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Albemarle Corporation (NYSE: ALB) reported second quarter 2013 earnings of
$82.7 million, or $0.98 per share, compared to second quarter 2012 earnings of
$50.1 million, or $0.56 per share. Excluding special and non-operating
pension and OPEB items (see notes to the condensed consolidated financial
information), second quarter 2013 earnings were $81.8 million, or $0.97 per
share, compared to $115.3 million, or $1.28 per share, for the second quarter
of 2012. The Company reported net sales of $634.2 million in the second
quarter of 2013, down from net sales of $684.9 million in the second quarter
of 2012, driven by our exit from the phosphorus flame retardants business,
lower metals surcharges, unfavorable pricing in our bromine portfolio and
lower Fine Chemistry Services volumes, partly offset by favorable volumes in
our Refinery Catalysts and Brominated Flame Retardant businesses.

Earnings for the first half of 2013 were $166.7 million, or $1.92 per share,
compared to $164.4 million, or $1.83 per share, for the first half of 2012.
Excluding special and non-operating pension and OPEB items, earnings for the
first half of 2013 were $164.5 million, or $1.89 per share, compared to $227.8
million, or $2.53 per share, for the first half of 2012. Net sales for the
first half of 2013 were $1.28 billion, down from $1.40 billion for the first
half of 2012, driven by lower metals surcharges and pricing on certain
products.

"Our businesses delivered EBITDA margins of 22% in spite of facing lower
metals surcharges and an economic environment which saw continued sluggishness
across Europe, weak electronics and construction markets and a much weaker
China than most anticipated at the beginning of the year," stated Luke Kissam,
CEO. "We also successfully met several key milestones with regard to bringing
on our bromine and organometallics expansions, which will be essential drivers
of our long term growth."

Quarterly Segment Results

Catalysts generated net sales of $233.8 million in the second quarter of 2013,
a 2 percent increase from net sales in the second quarter of 2012, with
favorable volumes in Refinery Catalysts Solutions being largely offset by
lower metals surcharges and lower Performance Catalyst Solutions volumes.
Catalysts segment income was $51.0 million in the second quarter of 2013, down
25 percent from second quarter 2012 results of $68.2 million, due primarily to
lower metals surcharges and higher manufacturing costs.

Polymer Solutions reported net sales of $224.3 million in the second quarter
of 2013, a 9 percent decrease from net sales in the second quarter of 2012,
due to the year-over-year effects of our phosphorus flame retardants business
exit in the second quarter of 2012 and overall lower flame retardant pricing,
partly offset by favorable flame retardants volumes. Segment income for
Polymer Solutions was $43.7 million in the second quarter of 2013, a 34
percent decline from $65.7 million in the second quarter of 2012, driven by
unfavorable pricing, manufacturing costs and foreign currency impacts, partly
offset by favorable sales volumes and favorable impacts from our exit of the
phosphorus flame retardants business.

Fine Chemistry net sales in the second quarter of 2013 were $176.1 million, a
16 percent decrease from net sales in the second quarter of 2012, due mainly
to unfavorable sales volumes and pricing. Segment income for Fine Chemistry
was $34.4 million for the second quarter of 2013, down 25 percent from second
quarter 2012 results of $45.9 million, due to unfavorable pricing, lower
factory operating rates and timing of custom services projects.

Corporate and Other

Corporate and other expense was $15.5 million ($17.1 million excluding
non-operating pension and OPEB items) for the second quarter of 2013. The
$11.7 million increase from the comparable period in 2012 was due primarily to
an unfavorable variance in non-operating pension and OPEB items.

Interest and financing expenses were $7.6 million for the second quarter of
2013 compared to $8.5 million for the second quarter of 2012, with this
decrease due primarily to lower interest rates on variable-rate borrowings and
higher capitalized interest year-over-year.

Excluding special and non-operating pension and OPEB items, our effective
income tax rates were 20.6 percent and 26.4 percent for the second quarter of
2013 and 2012, respectively. 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 $179 million for the six
months ended June 30, 2013, and we had $315 million in cash and cash
equivalents at June 30, 2013. During the six months ended June 30, 2013,
proceeds from borrowings, cash on hand and cash provided by operations funded
capital expenditures for plant, machinery and equipment of approximately $103
million (which includes approximately $32 million in capital expenditures
associated with our Jordanian joint venture), dividends to shareholders of
$39.0 million and $582.3 millionfor repurchases of our common stock pursuant
to the terms of our share repurchase program and the accelerated share
repurchase program.

Earnings Call

The Company's performance for the second quarter ended June 30, 2013 will be
discussed on a conference call at 9:00 AM Eastern Daylight time on July 18,
2013. The call can be accessed by dialing 888-713-4211 (International Dial-In
# 617-213-4864), and entering conference ID 51619577. 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 2013. The Company 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 and the conference
call and discussions that follow, including, without limitation, statements
with respect to product development, changes in productivity, market trends,
price, volume and mix changes, expected growth and earnings, input costs,
surcharges, tax rates, stock repurchases, dividends, economic trends, 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 materially 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 such increases; acquisitions and
divestitures, and changes in performance of acquired companies; changes in our
markets in general; 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 affecting the global economy,
including adverse effects from 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 and changes in tax laws and rates; changes in monetary policies,
inflation or interest rates that may impact our ability to raise capital or
increase our cost of funds, impact the performance of our pension fund
investments and increase our pension expense and funding obligations;
volatility and substantial uncertainties in the debt and equity markets;
technology or intellectual property infringement, including cyber security
breaches, and other innovation 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 Quarterly Reports on Form 10-Q.



Albemarle Corporation and Subsidiaries
Consolidated Statements of Income
(In Thousands Except Per Share Amounts) (Unaudited)
                            Three Months Ended      Six Months Ended
                            June 30,                June 30,
                            2013        2012        2013          2012
Net sales                   $ 634,197   $ 684,894   $ 1,275,822   $ 1,396,598
Cost of goods sold            437,558     435,606     879,593       896,330
Gross profit                  196,639     249,288     396,229       500,268
Selling, general and          62,900      61,735      127,650       135,739
administrative expenses^(c)
Research and development      21,565      20,911      41,518        39,960
expenses
Restructuring and other       —           94,703      —             94,703
charges, net^(b)
Operating profit              112,174     71,939      227,061       229,866
Interest and financing        (7,608)     (8,486)     (12,839)      (17,220)
expenses
Other expenses, net           (1,697)     (688)       (5,906)       (806)
Income before income taxes
and equity in net
 income of unconsolidated   102,869     62,765      208,316       211,840
investments
Income tax expense            21,450      21,882      47,642        60,910
Income before equity in net
income of
 unconsolidated             81,419      40,883      160,674       150,930
investments
Equity in net income of
unconsolidated
 investments (net of tax)   9,709       12,712      19,970        21,298
Net income                    91,128      53,595      180,644       172,228
Net income attributable to    (8,389)     (3,506)     (13,918)      (7,877)
noncontrolling interests
Net income attributable to  $ 82,739    $ 50,089    $ 166,726     $ 164,351
Albemarle Corporation
Basic earnings per share    $ 0.98      $ 0.56      $ 1.93        $ 1.84
Diluted earnings per share  $ 0.98      $ 0.56      $ 1.92        $ 1.83
Weighted-average common
shares outstanding –
 basic                      84,028      89,414      86,374        89,206
Weighted-average common
shares outstanding –
 diluted                    84,489      90,051      86,862        89,999
See accompanying notes to the condensed consolidated financial information.



Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)
                                                June 30,       December 31,
                                                2013           2012
ASSETS
Cash and cash equivalents                       $  314,659     $  477,696
Other current assets                               967,219        929,617
Total current assets                               1,281,878      1,407,313
Property, plant and equipment                      2,895,949      2,818,604
Less accumulated depreciation and amortization     1,562,184      1,522,033
Net property, plant and equipment                  1,333,765      1,296,571
Other assets and intangibles                       720,306        733,407
Total assets                                    $  3,335,949   $  3,437,291
LIABILITIES AND EQUITY
Current portion of long-term debt               $  9,355       $  12,700
Other current liabilities                          366,228        372,309
Total current liabilities                          375,583        385,009
Long-term debt                                     1,067,852      686,588
Other noncurrent liabilities                       358,647        370,318
Deferred income taxes                              68,474         63,368
Albemarle Corporation shareholders' equity         1,352,994      1,833,598
Noncontrolling interests                           112,399        98,410
Total liabilities & equity                      $  3,335,949   $  3,437,291
See accompanying notes to the condensed consolidated financial information.



Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)
                                                     Six Months Ended
                                                     June 30,
                                                     2013         2012
Cash and cash equivalents at beginning of year       $ 477,696    $ 469,416
Cash and cash equivalents at end of period           $ 314,659    $ 461,751
Sources of cash and cash equivalents:
 Net income                                         $ 180,644    $ 172,228
 Proceeds from borrowings of long-term debt           117,000      2,978
 Proceeds from other borrowings, net                  266,248      7
 Proceeds from exercise of stock options              3,917        13,430
Uses of cash and cash equivalents:
 Capital expenditures                                 (103,168)    (126,623)
 Repurchases of common stock                          (582,298)    (13,695)
 Repayments of long-term debt                         (6,380)      (11,754)
 Dividends paid to shareholders                       (39,049)     (33,399)
 Pension and postretirement contributions             (4,246)      (4,612)
Non-cash and other items:
 Depreciation and amortization                        51,817       49,449
 Non-cash charges associated with restructuring and   —            70,587
other, net
 Pension and postretirement expense (benefit)         3,152        (10,203)
 Equity in net income of unconsolidated investments   (19,970)     (21,298)
See accompanying notes to the condensed consolidated financial information.



Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands) (Unaudited)
                          Three Months Ended        Six Months Ended
                          June 30,                  June 30,
                          2013         2012         2013          2012
Net sales:
Polymer Solutions         $ 224,316    $ 247,016    $ 439,090     $ 475,147
Catalysts                   233,818      229,144      469,391       522,666
Fine Chemistry              176,063      208,734      367,341       398,785
Total net sales           $ 634,197    $ 684,894    $ 1,275,822   $ 1,396,598
Segment operating profit:
Polymer Solutions         $ 43,821     $ 63,407     $ 87,491      $ 117,954
Catalysts                   43,613       57,370       92,658        134,011
Fine Chemistry              40,277       49,704       76,455        94,067
Total segment operating     127,711      170,481      256,604       346,032
profit
Equity in net income of
unconsolidated
investments:
Polymer Solutions           2,328        1,913        4,636         3,758
Catalysts                   7,381        10,799       15,334        17,540
Fine Chemistry              —            —            —             —
Corporate & other           —            —            —             —
Total equity in net
income of unconsolidated    9,709        12,712       19,970        21,298
investments
Net (income) loss
attributable to
noncontrolling interests:
Polymer Solutions           (2,494)      349          (3,202)       (653)
Catalysts                   —            —            —             —
Fine Chemistry              (5,895)      (3,832)      (10,716)      (7,204)
Corporate & other           —            (23)         —             (20)
Total net income
attributable to             (8,389)      (3,506)      (13,918)      (7,877)
noncontrolling interests
Segment income:
Polymer Solutions           43,655       65,669       88,925        121,059
Catalysts                   50,994       68,169       107,992       151,551
Fine Chemistry              34,382       45,872       65,739        86,863
Total segment income        129,031      179,710      262,656       359,473
Corporate & other^(a) (d)   (15,537)     (3,862)      (29,543)      (21,483)
Restructuring and other     —            (94,703)     —             (94,703)
charges, net^(b)
Interest and financing      (7,608)      (8,486)      (12,839)      (17,220)
expenses
Other expenses, net         (1,697)      (688)        (5,906)       (806)
Income tax expense          (21,450)     (21,882)     (47,642)      (60,910)
Net income attributable   $ 82,739     $ 50,089     $ 166,726     $ 164,351
to Albemarle Corporation


See accompanying notes to the condensed consolidated financial
information.

Notes to the Condensed Consolidated Financial Information

(a) Non-operating pension and OPEB items, consisting of mark-to-market (MTM)
actuarial gains/losses as well as interest costs and expected return on
assets, are included in Corporate & other as follows:

  oFor the three months ended June 30, 2013 and 2012, net benefits amounting
    to $1.5 million ($0.9 million after income taxes, or $0.01 per share) and
    $13.3 million ($8.4 million after income taxes, or $0.09 per share),
    respectively. There were no MTM actuarial gains/losses recorded during
    the three months ended June 30, 2013.
  oFor the six months ended June 30, 2013 and 2012, net benefits amounting to
    $3.6 million ($2.2 million after income taxes, or $0.03 per share) and
    $16.0 million ($10.1 million after income taxes, or $0.11 per share),
    respectively. There were no MTM actuarial gains/losses recorded during
    the six months ended June 30, 2013.

Although non-operating pension and OPEB items are included in our GAAP
operating profit, we believe that these components of pension cost are mainly
driven by market performance, and we manage these separately from the
operational performance of our businesses.

(b) The three and six month periods ended June 30, 2012 include net charges
amounting to $94.7 million ($73.6 million after income taxes, or $0.82 per
share) in connection with our exit of the phosphorus flame retardants
business.

(c) The six month period ended June 30, 2012 includes a gain of $8.1 million
($5.1 million after tax, or $0.06 per share) resulting from proceeds received
in connection with the settlement of litigation (net of related legal fees).
The six month period ended June 30, 2012 also includes an $8 million
charitable contribution ($5.1 million after tax, or $0.06 per share) to the
Albemarle Foundation.

(d) The three month and six month periods ended June 30, 2013 include costs
of $3.6 million which are the subject of a claim by the Company against a
freight services vendor for alleged fraud committed against several
companies.

(e) Totals may not add due to rounding.

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 and non-operating pension and OPEB items, as well as presentations of
segment operating profit, segment income, EBITDA, EBITDA excluding special and
non-operating pension and OPEB items, EBITDA margin and EBITDA margin
excluding special and non-operating pension and OPEB 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 Net income
attributable to Albemarle Corporation excluding special and non-operating
pension and OPEB items, EBITDA and EBITDA excluding special and non-operating
pension and OPEB items to Net income attributable to Albemarle Corporation.

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 and
non-operating pension and OPEB 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 and non-operating pension and OPEB 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 and non-operating
pension and OPEB 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            Six Months Ended
                    June 30,                      June 30,
                    2013           2012           2013           2012
Total segment       $  127,711     $  170,481     $  256,604     $  346,032
operating profit
Corporate & other *    (15,537)       (3,839)        (29,543)       (21,463)
Restructuring and      —              (94,703)       —              (94,703)
other charges, net
GAAP Operating      $  112,174     $  71,939      $  227,061     $  229,866
profit
Total segment       $  129,031     $  179,710     $  262,656     $  359,473
income
Corporate & other      (15,537)       (3,862)        (29,543)       (21,483)
Restructuring and      —              (94,703)       —              (94,703)
other charges, net
Interest and           (7,608)        (8,486)        (12,839)       (17,220)
financing expenses
Other expenses, net    (1,697)        (688)          (5,906)        (806)
Income tax expense     (21,450)       (21,882)       (47,642)       (60,910)
GAAP Net income
attributable to     $  82,739      $  50,089      $  166,726     $  164,351
Albemarle
Corporation


* Excludes corporate noncontrolling interest adjustments of $(23) and $(20)
for the three-month and six-month periods ended June 30, 2012, respectively.

See below for a reconciliation of Net income attributable to Albemarle
Corporation excluding special and non-operating pension and OPEB items, EBITDA
and EBITDA excluding special and non-operating pension and OPEB items, the
non-GAAP financial measures, to 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 and
non-operating pension and OPEB items is defined as EBITDA before the special
and non-operating pension and OPEB items as listed below.

                          Three Months Ended       Six Months Ended
                          June 30,                 June 30,
                          2013        2012         2013          2012
Net income attributable   $ 82,739    $ 50,089     $ 166,726     $ 164,351
to Albemarle Corporation
Add back:
Non-operating pension and   (947)       (8,424)      (2,244)       (10,127)
OPEB items (net of tax)
Special items (net of       —           73,590       —             73,590
tax)
Net income attributable
to Albemarle Corporation
excluding special
 and non-operating       $ 81,792    $ 115,255    $ 164,482     $ 227,814
pension and OPEB items
Net income attributable   $ 82,739    $ 50,089     $ 166,726     $ 164,351
to Albemarle Corporation
Add back:
Interest and financing      7,608       8,486        12,839        17,220
expenses
Income tax expense          21,450      21,882       47,642        60,910
Depreciation and            26,573      25,214       51,817        49,449
amortization
EBITDA                      138,370     105,671      279,024       291,930
Non-operating pension and   (1,515)     (13,329)     (3,584)       (16,023)
OPEB items
Special items               —           94,703       —             94,703
EBITDA excluding special
and non-operating pension
and
 OPEB items              $ 136,855   $ 187,045    $ 275,440     $ 370,610
Net sales                 $ 634,197   $ 684,894    $ 1,275,822   $ 1,396,598
EBITDA Margin               21.8    %   15.4     %   21.9      %   20.9      %
EBITDA Margin excluding
special and non-operating
pension and
 OPEB items                21.6    %   27.3     %   21.6      %   26.5      %

SOURCE Albemarle Corporation

Website: http://www.albemarle.com
Contact: Lorin Crenshaw 225.388.7322