Albemarle reports third quarter 2013 results

                 Albemarle reports third quarter 2013 results

PR Newswire

BATON ROUGE, La., Oct. 16, 2013

BATON ROUGE, La., Oct.16, 2013 /PRNewswire/ --

Third quarter 2013 highlights:

  oEarnings of $89.4 million, or $1.09 per share, excluding non-operating
    items.
  oNet sales of $648.6 million and EBITDA margin, excluding non-operating
    items, of 24 percent.
  oCash from operations in the quarter of $139 million, up 14% vs prior year.
  oAnnounced a reorganization to two business units effective January, 2014.



                                Three Months Ended    Nine Months Ended
                                September 30,         September 30,
In thousands, except per share  2013       2012       2013         2012
amounts
Net sales                       $ 648,638  $ 661,226  $ 1,924,460  $ 2,057,824
Segment income                  $ 136,456  $ 151,083  $ 399,112    $ 510,556
Net income attributable to      $ 90,512   $ 109,459  $ 257,238    $ 273,810
Albemarle Corporation
Diluted earnings per share      $ 1.11     $ 1.22     $ 3.02       $ 3.04
 Non-operating pension and   (0.01)     (0.02)     (0.04)       (0.13)
OPEB items^(a)
 Special items^(b) (c)       —          (0.05)     —            0.77
Diluted earnings per share,
excluding special and
non-operating pension and OPEB  $ 1.09     $ 1.15     $ 2.98       $ 3.68
items^(f)

See accompanying notes and reconciliations to the condensed consolidated
financial information.

Albemarle Corporation (NYSE: ALB) reported third quarter 2013 earnings of
$90.5 million, or $1.11 per share, compared to third quarter 2012 earnings of
$109.5 million, or $1.22 per share. Excluding special and non-operating
pension and OPEB items (see notes to the condensed consolidated financial
information), third quarter 2013 earnings were $89.4 million, or $1.09 per
share, compared to $103.1 million, or $1.15 per share, for the third quarter
of 2012. The Company reported net sales of $648.6 million in the third
quarter of 2013, down from net sales of $661.2 million in the third quarter of
2012, driven by our exitof the phosphorus flame retardants business, lower
metals pass through surcharges and unfavorable pricing in our bromine
portfolio, partly offset by favorable volumes in Polymer Solutions and Fine
Chemistry.

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

Earnings for the nine months ended September 30, 2013 were $257.2 million, or
$3.02 per share, compared to $273.8 million, or $3.04 per share, for the same
period in 2012. Excluding special and non-operating pension and OPEB items,
earnings for the nine months ended September 30, 2013 were $253.9 million, or
$2.98 per share, compared to $331.0 million, or $3.68 per share, for the same
period in 2012. Net sales for the nine months ended September 30, 2013 were
$1.9 billion, down from $2.1 billion for the same period in 2012, driven by
lower metals surcharges, our exitof the phosphorus flame retardants business,
and pricing on certain products, partly offset by higher sales volumes.

During the quarter, we announced a realignment of our global business units
(GBUs) to increase customer focus, improve efficiency, enhance innovation and
accelerate growth. Effective January 1, 2014, the Company's assets and
businesses will be aligned under two GBUs: Performance Chemicals, to include
Fire Safety Solutions, Specialty Chemicals and Fine Chemistry Services, and
Catalyst Solutions, to include Refinery Catalyst Solutions, Performance
Catalyst Solutions and Antioxidants.

"Third quarter results came in about as expected and earnings per share was up
13% sequentially, driven largely by improved performance in refinery catalysts
and custom services, lower corporate costs and continued strength in clear
brine fluid volumes," stated Luke Kissam, CEO. "We remain confident that our
strategy and the earnings and cash generation capabilities of our businesses
will continue to deliver exceptional shareholder value."

Quarterly Segment Results

Catalysts generated net sales of $226.0 million in the third quarter of 2013,
a 10 percent decrease from net sales in the third quarter of 2012, primarily
on unfavorable pricing in Refinery Catalysts Solutions on lower metals pass
through surcharges and unfavorable Performance Catalyst Solutions volumes and
pricing. Catalysts segment income was $57.5 million in the third quarter of
2013, down 7 percent from third quarter 2012 results of $61.8 million, due
primarily to higher manufacturing costs, lower pricing in Performance
Catalysts Solutions, and lower equity income from our unconsolidated joint
ventures, partly offset by higher Refinery Catalysts volumes and lower
variable input costs.

Polymer Solutions reported net sales of $224.3 million in the third quarter of
2013, a 3 percent increase from net sales in the third quarter of 2012, on
higher volumes across our portfolio, partly offset by unfavorable pricing
impacts, primarily in Flame Retardants. Segment income for Polymer Solutions
was $41.5 million in the third quarter of 2013, an 8 percent decline from
$45.3 million in the third quarter of 2012, driven by unfavorable pricing and
higher manufacturing costs, partly offset by favorable sales volumes.

Fine Chemistry net sales in the third quarter of 2013 were $198.3 million, a 3
percent increase from net sales in the third quarter of 2012, due mainly to
favorable sales volumes. Segment income for Fine Chemistry was $37.5 million
for the third quarter of 2013, down 15 percent from third quarter 2012 results
of $44.0 million, due primarily to unfavorable pricing and higher
manufacturing costs, partly offset by favorable volumes.

Corporate and Other

Corporate and other expense was $8.8 million ($10.6 million excluding
non-operating pension and OPEB items) for the third quarter of 2013. The $5.2
million increase from the comparable period in 2012 was due primarily to
higher pension and OPEB and other personnel costs, and higher fees for
services.

Interest and financing expenses were $9.5 million for the third quarter of
2013 compared to $7.9 million for the third quarter of 2012, due primarily to
decreases in interest capitalized on lower average construction work in
progress balances in the 2013 period.

Excluding special and non-operating pension and OPEB items, our effective
income tax rates were 22.6 percent and 26.4 percent for the third 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 $318 million for the nine
months ended September30, 2013, up 4 percent from 2012, and we had $401
million in cash and cash equivalents at September30, 2013. During the nine
months ended September30, 2013, proceeds from borrowings net of repayments,
cash on hand and cash provided by operations funded capital expenditures for
plant, machinery and equipment of approximately $135 million (which includes
approximately $35 million in capital expenditures associated with our
Jordanian joint venture), dividends to shareholders of $58.6 million,
dividends to noncontrolling interests of $10.0 million, pension and
postretirement contributions of $9.9 million and $582.3 million for
repurchases of our common stock pursuant to the terms of our share repurchase
program and our accelerated share repurchase program entered into in the
second quarter.

Earnings Call

The Company's performance for the third quarter ended September30, 2013 will
be discussed on a conference call at 9:00 AM Eastern Daylight time on
October17, 2013. The call can be accessed by dialing 888-679-8033
(International Dial-In # 617-213-4846), and entering conference ID 43417954.
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 approximately
4,200 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    Nine Months Ended
                                September 30,         September 30,
                                2013       2012       2013         2012
Net sales                       $ 648,638  $ 661,226  $ 1,924,460  $ 2,057,824
Cost of goods sold              436,989    443,476    1,316,582    1,339,806
Gross profit                    211,649    217,750    607,878      718,018
Selling, general and            62,543     53,404     190,193      189,143
administrative expenses^(d)
Research and development        19,441     19,831     60,959       59,791
expenses
Restructuring and other         —          —          —            94,703
charges, net^(b)
Operating profit                129,665    144,515    356,726      374,381
Interest and financing expenses (9,496)    (7,914)    (22,335)     (25,134)
Other (expenses) income, net    (389)      2,370      (6,295)      1,564
Income before income taxes and
equity in net
income of unconsolidated        119,780    138,971    328,096      350,811
investments
Income tax expense^(c)          27,274     32,472     74,916       93,382
Income before equity in net
income of
unconsolidated investments      92,506     106,499    253,180      257,429
Equity in net income of
unconsolidated
investments (net of tax)        5,338      7,935      25,308       29,233
Net income                      97,844     114,434    278,488      286,662
Net income attributable to      (7,332)    (4,975)    (21,250)     (12,852)
noncontrolling interests
Net income attributable to      $ 90,512   $ 109,459  $ 257,238    $ 273,810
Albemarle Corporation
Basic earnings per share        $ 1.11     $ 1.23     $ 3.04       $ 3.07
Diluted earnings per share      $ 1.11     $ 1.22     $ 3.02       $ 3.04
Weighted-average common shares
outstanding –
basic                           81,385     89,327     84,711       89,246
Weighted-average common shares
outstanding –
diluted                         81,852     89,879     85,192       89,959

See accompanying notes to the condensed consolidated financial information.



Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)
                                               September 30,  December 31,
                                               2013           2012
ASSETS
Cash and cash equivalents                      $  401,427     $  477,696
Other current assets                           993,279        929,617
Total current assets                           1,394,706      1,407,313
Property, plant and equipment                  2,934,613      2,818,604
Less accumulated depreciation and amortization 1,585,637      1,522,033
Net property, plant and equipment              1,348,976      1,296,571
Other assets and intangibles                   726,383        733,407
Total assets                                   $  3,470,065   $  3,437,291
LIABILITIES AND EQUITY
Current portion of long-term debt              $  19,602      $  12,700
Other current liabilities                      391,235        372,309
Total current liabilities                      410,837        385,009
Long-term debt                                 1,060,282      686,588
Other noncurrent liabilities                   353,029        370,318
Deferred income taxes                          68,768         63,368
Albemarle Corporation shareholders' equity     1,467,095      1,833,598
Noncontrolling interests                       110,054        98,410
Total liabilities and equity                   $  3,470,065   $  3,437,291

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,
                                                          2013       2012
Cash and cash equivalents at beginning of year            $ 477,696  $ 469,416
Cash and cash equivalents at end of period                $ 401,427  $ 402,642
Sources of cash and cash equivalents:
Net income                                                $ 278,488  $ 286,662
Proceeds from borrowings of long-term debt                117,000    —
Proceeds from other borrowings, net                       357,379    —
Proceeds from exercise of stock options                   4,510      19,977
Uses of cash and cash equivalents:
Capital expenditures                                      (135,028)  (218,708)
Repurchases of common stock                               (582,298)  (40,470)
Repayments of long-term debt                              (93,913)   (11,701)
Repayments of other borrowings, net                       —          (37,542)
Dividends paid to shareholders                            (58,574)   (51,287)
Dividends paid to noncontrolling interests                (10,014)   (7,628)
Pension and postretirement contributions                  (9,892)    (19,705)
Non-cash and other items:
Depreciation and amortization                             79,477     74,428
Non-cash charges associated with restructuring and other, —          70,587
net
Pension and postretirement expense (benefit)              4,730      (10,117)
Equity in net income of unconsolidated investments        (25,308)   (29,233)

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,
                                2013       2012       2013         2012
Net sales:
Polymer Solutions               $ 224,320  $ 216,992  $ 663,410    $ 692,139
Catalysts                       226,042    251,201    695,433      773,867
Fine Chemistry                  198,276    193,033    565,617      591,818
Total net sales                 $ 648,638  $ 661,226  $ 1,924,460  $ 2,057,824
Segment operating profit:
Polymer Solutions               $ 40,678   $ 44,694   $ 128,169    $ 162,648
Catalysts                       53,878     55,093     146,536      189,104
Fine Chemistry                  43,894     48,336     120,349      142,403
Total segment operating profit  138,450    148,123    395,054      494,155
Equity in net income of
unconsolidated investments:
Polymer Solutions               1,735      1,199      6,371        4,957
Catalysts                       3,603      6,736      18,937       24,276
Fine Chemistry                  —          —          —            —
Corporate & other               —          —          —            —
Total equity in net income of   5,338      7,935      25,308       29,233
unconsolidated investments
Net income attributable to
noncontrolling interests:
Polymer Solutions               (916)      (602)      (4,118)      (1,255)
Catalysts                       —          —          —            —
Fine Chemistry                  (6,416)    (4,373)    (17,132)     (11,577)
Corporate & other               —          —          —            (20)
Total net income attributable   (7,332)    (4,975)    (21,250)     (12,852)
to noncontrolling interests
Segment income:
Polymer Solutions               41,497     45,291     130,422      166,350
Catalysts                       57,481     61,829     165,473      213,380
Fine Chemistry                  37,478     43,963     103,217      130,826
Total segment income            136,456    151,083    399,112      510,556
Corporate & other^(a) (e)       (8,785)    (3,608)    (38,328)     (25,091)
Restructuring and other         —          —          —            (94,703)
charges, net^(b)
Interest and financing expenses (9,496)    (7,914)    (22,335)     (25,134)
Other (expenses) income, net    (389)      2,370      (6,295)      1,564
Income tax expense^(c)          (27,274)   (32,472)   (74,916)     (93,382)
Net income attributable to      $ 90,512   $ 109,459  $ 257,238    $ 273,810
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 September 30, 2013 and 2012, net benefits
    amounting to $1.8 million ($1.1 million after income taxes, or $0.01 per
    share) and $2.9 million ($1.8 million after income taxes, or $0.02 per
    share), respectively. There were no MTM actuarial gains/losses recorded
    during the three months ended September 30, 2013 and 2012.
  oFor the nine months ended September 30, 2013 and 2012, net benefits
    amounting to $5.4 million ($3.4 million after income taxes, or $0.04 per
    share) and $18.9 million ($12.0 million after income taxes, or $0.13 per
    share), respectively. There were no MTM actuarial gains/losses recorded
    during the nine months ended September 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 nine-month period ended September 30, 2012 includes 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 three and nine month periods ended September 30, 2012 included
discrete net tax benefit items of $4.5 million, or $0.05 per share, related
principally to the release of various tax reserves for uncertain domestic tax
positions due to the expiration of the domestic statute of limitations related
to the 2008 tax year.

(d) 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 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.

(e) The nine-month period ended September 30, 2013 includes 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.

(f) 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    Nine Months Ended
                                    September 30,         September 30,
                                    2013       2012       2013       2012
Total segment operating profit      $ 138,450  $ 148,123  $ 395,054  $ 494,155
Corporate & other *                 (8,785)    (3,608)    (38,328)   (25,071)
Restructuring and other charges,    —          —          —          (94,703)
net
GAAP Operating profit               $ 129,665  $ 144,515  $ 356,726  $ 374,381
Total segment income                $ 136,456  $ 151,083  $ 399,112  $ 510,556
Corporate & other                   (8,785)    (3,608)    (38,328)   (25,091)
Restructuring and other charges,    —          —          —          (94,703)
net
Interest and financing expenses     (9,496)    (7,914)    (22,335)   (25,134)
Other (expenses) income, net        (389)      2,370      (6,295)    1,564
Income tax expense                  (27,274)   (32,472)   (74,916)   (93,382)
GAAP Net income attributable to     $ 90,512   $ 109,459  $ 257,238  $ 273,810
Albemarle Corporation

* Excludes corporate noncontrolling interest adjustments of $(20) for the
nine-month period ended September 30, 2012.

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    Nine Months Ended
                                September 30,         September 30,
                                2013       2012       2013         2012
Net income attributable to      $ 90,512   $ 109,459  $ 257,238    $ 273,810
Albemarle Corporation
Add back:
 Non-operating pension and   (1,121)    (1,825)    (3,365)      (11,951)
OPEB items (net of tax)
 Special items (net of tax)  —          (4,490)    —            69,100
Net income attributable to
Albemarle Corporation excluding
special
 and non-operating pension and $ 89,391   $ 103,144  $ 253,873    $ 330,959
OPEB items
Net income attributable to      $ 90,512   $ 109,459  $ 257,238    $ 273,810
Albemarle Corporation
Add back:
 Interest and financing      9,496      7,914      22,335       25,134
expenses
 Income tax expense          27,274     32,472     74,916       93,382
 Depreciation and            27,660     24,979     79,477       74,428
amortization
EBITDA                          154,942    174,824    433,966      466,754
 Non-operating pension and   (1,791)    (2,887)    (5,375)      (18,910)
OPEB items
 Special items               —          —          —            94,703
EBITDA excluding special and
non-operating pension and
 OPEB items                    $ 153,151  $ 171,937  $ 428,591    $ 542,547
Net sales                       $ 648,638  $ 661,226  $ 1,924,460  $ 2,057,824
EBITDA Margin                   23.9%      26.4%      22.6%        22.7%
EBITDA Margin excluding special
and non-operating pension
 and OPEB items                23.6%      26.0%      22.3%        26.4%



SOURCE Albemarle Corporation

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