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Albemarle reports first quarter 2014 results

                 Albemarle reports first quarter 2014 results

PR Newswire

BATON ROUGE, La., April 16, 2014

BATON ROUGE, La., April16, 2014 /PRNewswire/ --

First quarter 2014 highlights:

  oEarnings of $76.7 million, or $0.96 per share, excluding special and
    non-operating items.
  oNet sales of $656.7 million and EBITDA margin, excluding special and
    non-operating items, of 21 percent.
  oCash flow from operations of $149 million, an increase of 51% from 1st
    quarter of 2013.
  oInitiated reduction of high cost aluminum alkyls supply capacity.
  oReached agreement to sell antioxidants and certain pharmaceuticals
    businesses.



Albemarle Corp. Logo



                                                        Three Months Ended
                                                        March 31,
In thousands, except per share amounts                  2014        2013
Net sales                                               $ 656,679   $ 641,625
Segment income                                          $ 128,418   $ 134,840
Net income attributable to Albemarle Corporation        $ 56,583    $ 83,987
Diluted earnings per share                              $ 0.71      $ 0.94
 Non-operating pension and OPEB items^(a)             0.11        (0.01)
 Special items^(b)                                    0.14        —
Diluted earnings per share, excluding special and
non-operating pension                                   $ 0.96      $ 0.93

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

Albemarle Corporation (NYSE: ALB) reported first quarter 2014 earnings of
$56.6 million, or $0.71 per share, compared to first quarter 2013 earnings of
$84.0 million, or $0.94 per share. Excluding special and non-operating
pension and OPEB items (see notes to the condensed consolidated financial
information), first quarter 2014 earnings were $76.7 million, or $0.96 per
share, compared to $82.7 million, or $0.93 per share, for the first quarter of
2013. The Company reported net sales of $656.7 million in the first quarter
of 2014, up from net sales of $641.6 million in the first quarter of 2013,
driven mainly by higher volumes in both operating segments partly offset by
lower pricing in Performance Chemicals.

As previously announced, effective January 1, 2014, the Company's assets and
businesses were aligned under two Global Business Units: Performance
Chemicals, including Fire Safety Solutions, Specialty Chemicals and Fine
Chemistry Services, and Catalyst Solutions, including Refinery Catalyst
Solutions, Performance Catalyst Solutions and Antioxidants.

On April 15, 2014, the Company signed a definitive agreement to sell its
antioxidant, ibuprofen and propofol businesses and assets to SI Group. Any
potential impairment charge related to this agreement that may be reported in
our Form 10-Q for the quarterly period ended March 31, 2014 is not reflected
in the financial results included herein as the outcome of such analysis is
pending completion.

"Despite the impact of inclement weather on our operations, first quarter
results were generally consistent with our expectations," stated Luke Kissam,
President and CEO. "Cash generation was higher than our expectations, driven
largely by improvements in working capital, pointing once again to the
strength of our business portfolio. During the quarter, we used this cash to
fund organic growth opportunities, repurchase approximately $50 million worth
of stock and increase our dividend for the 20th year in a row. We also
announced earlier today that we have entered into a contract with the SI Group
for the sale of our antioxidants, ibuprofen and propofol businesses, a
transaction that will, upon closing, increase our overall margin rates and
allow us to continue to focus more sharply on our core businesses."

Quarterly Segment Results

Performance Chemicals reported net sales of $360.5 million in the first
quarter of 2014, a decrease of less than 1 percent compared to net sales in
the first quarter of 2013, on unfavorable pricing impacts mainly in Fire
Safety Solutions, partly offset by higher volumes mainly in Specialty
Chemicals. Segment income for Performance Chemicals was $71.2 million in the
first quarter of 2014, an 11 percent decline from $79.7 million in the first
quarter of 2013, driven by unfavorable pricing due to market conditions,
unfavorable utilities pricing and higher manufacturing costs, partly offset by
favorable sales volumes due to market demand.

Catalyst Solutions generated net sales of $296.1 million in the first quarter
of 2014, a 6 percent increase from net sales in the first quarter of 2013,
primarily on favorable volumes and pricing in Refinery Catalysts Solutions,
partly offset by unfavorable Performance Catalyst Solutions pricing. Catalyst
Solutions segment income was $57.2 million in the first quarter of 2014, up 4
percent from first quarter 2013 results of $55.1 million, due primarily to
strong volumes and pricing in Refinery Catalyst Solutions partly offset by
higher manufacturing costs and commissions.

Corporate and Other

Corporate and other expense was $34.8 million ($20.7 million excluding
non-operating pension and OPEB items) for the first quarter of 2014. The
$19.5 million increase from the comparable period in 2013 was due primarily to
higher pension and OPEB costs and incentive compensation costs.

Interest and financing expenses were $8.8 million for the first quarter of
2014 compared to $5.2 million for the first quarter of 2013, due primarily to
decreases in interest capitalized on lower average construction work in
progress balances in the 2014 period.

Excluding special and non-operating pension and OPEB items, our effective
income tax rates were 23.7 percent and 24.6 percent for the first quarter of
2014 and 2013, 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.

During the first quarter of 2014 we initiated action to reduce high cost
supply capacity of certain aluminum alkyl products, primarily through the
termination of a third party manufacturing contract. Based on the contract
termination, we estimate costs of approximately $14.0 million for contract
termination and volume commitments. Additionally, we have recorded an
impairment charge of $3.0 million for certain capital project costs also
related to aluminum alkyls capacity which we do not expect to recover. After
income taxes, these charges were approximately $11.1 million, or $0.14 per
share.

Cash Flow

Our cash flow from operations was approximately $149 million for the three
months ended March 31, 2014, up 51 percent from the same period in 2013, and
we had $524 million in cash and cash equivalents at March31, 2014. During
the first quarter of 2014, cash on hand and cash provided by operations funded
capital expenditures for plant, machinery and equipment of approximately $24
million, dividends to shareholders of $19.6 million and $50.0 million for
repurchases of approximately 0.6 million shares of our common stock pursuant
to the terms of our accelerated share repurchase program entered into in the
first quarter.

Earnings Call

The Company's performance for the first quarter ended March31, 2014 will be
discussed on a conference call at 9:00 AM Eastern Daylight time on April17,
2014. The call can be accessed by dialing 888-713-4217 (International Dial-In
# 617-213-4869), and entering conference ID 79868036. 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. The Company is committed to global
sustainability and is advancing its eco-practices and solutions in its two
global business units: Performance Chemicals and Catalyst Solutions. Corporate
Responsibility Magazine selected Albemarle to its prestigious "100 Best
Corporate Citizens" list for 2010, 2011 and 2013. Albemarle employs
approximately 3,900 people 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 the markets we
serve.

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
                                                        March 31,
                                                        2014        2013
Net sales                                               $ 656,679   $ 641,625
Cost of goods sold^(a)                                  462,393     442,035
Gross profit                                            194,286     199,590
Selling, general and administrative expenses^(a)        79,310      64,750
Research and development expenses                       22,572      19,953
Restructuring and other charges, net^(b)                17,000      —
Operating profit                                        75,404      114,887
Interest and financing expenses                         (8,773)     (5,231)
Other income (expenses), net                            1,149       (4,209)
Income before income taxes and equity in net income of  67,780      105,447
unconsolidated investments
Income tax expense                                      12,446      26,192
Income before equity in net income of unconsolidated    55,334      79,255
investments
Equity in net income of unconsolidated investments (net 8,901       10,261
of tax)
Net income                                              64,235      89,516
Net income attributable to noncontrolling interests     (7,652)     (5,529)
Net income attributable to Albemarle Corporation        $ 56,583    $ 83,987
Basic earnings per share                                $ 0.71      $ 0.95
Diluted earnings per share                              $ 0.71      $ 0.94
Weighted-average common shares outstanding – basic      79,735      88,719
Weighted-average common shares outstanding – diluted    80,112      89,236
See accompanying notes to the condensed consolidated financial information.





Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)
                                                March 31,      December 31,
                                                2014           2013
ASSETS
Cash and cash equivalents                       $  524,043     $ 477,239
Other current assets                            953,359        1,005,676
Total current assets                            1,477,402      1,482,915
Property, plant and equipment                   2,975,692      2,972,084
Less accumulated depreciation and amortization  1,635,354      1,615,015
Net property, plant and equipment               1,340,338      1,357,069
Other assets and intangibles                    740,988        744,813
Total assets                                    $  3,558,728   $ 3,584,797
LIABILITIES AND EQUITY
Current portion of long-term debt               $  18,063      $ 24,554
Other current liabilities                       405,136        411,809
Total current liabilities                       423,199        436,363
Long-term debt                                  1,052,790      1,054,310
Other noncurrent liabilities                    227,535        222,160
Deferred income taxes                           127,603        129,188
Albemarle Corporation shareholders' equity      1,604,751      1,627,361
Noncontrolling interests                        122,850        115,415
Total liabilities and equity                    $  3,558,728   $ 3,584,797
See accompanying notes to the condensed consolidated financial information.





Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)
                                                    Three Months Ended
                                                    March 31,
                                                    2014         2013
Cash and cash equivalents at beginning of year      $  477,239   $ 477,696
Cash and cash equivalents at end of period          $  524,043   $ 434,904
Sources of cash and cash equivalents:
Net income                                          $  64,235    $ 89,516
Proceeds from exercise of stock options             1,255        1,720
Working capital changes                             39,826       —
Uses of cash and cash equivalents:
Working capital changes                             —            (12,641)
Capital expenditures                                (23,667)     (55,335)
Repurchases of common stock                         (50,000)     (60,798)
Repayments of long-term debt                        (101)        (3,604)
Repayments of other borrowings                      (8,434)      —
Dividends paid to shareholders                      (19,582)     (17,808)
Pension and postretirement contributions            (2,540)      (1,741)
Non-cash and other items:
Depreciation and amortization                       27,809       25,244
Write-offs associated with restructuring and other  3,000        —
Pension and postretirement expense                  16,669       1,582
Equity in net income of unconsolidated investments  (8,901)      (10,261)
See accompanying notes to the condensed consolidated financial information.





Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands) (Unaudited)
                                                        Three Months Ended
                                                        March 31,
                                                        2014        2013
Net sales:
Performance Chemicals                                   $ 360,543   $ 361,941
Catalyst Solutions                                      296,136     279,684
Total net sales                                         $ 656,679   $ 641,625
Segment operating profit:
Performance Chemicals                                   $ 75,923    $ 82,933
Catalyst Solutions                                      51,246      47,175
Total segment operating profit                          127,169     130,108
Equity in net income of unconsolidated investments:
Performance Chemicals                                   2,917       2,308
Catalyst Solutions                                      5,984       7,953
Total equity in net income of unconsolidated            8,901       10,261
investments
Net income attributable to noncontrolling interests:
Performance Chemicals                                   (7,652)     (5,529)
Total net income attributable to noncontrolling         (7,652)     (5,529)
interests
Segment income:
Performance Chemicals                                   71,188      79,712
Catalyst Solutions                                      57,230      55,128
Total segment income                                    128,418     134,840
Corporate & other^(a)                                   (34,765)    (15,221)
Restructuring and other charges, net^(b)                (17,000)    —
Interest and financing expenses                         (8,773)     (5,231)
Other income (expenses), net                            1,149       (4,209)
Income tax expense                                      (12,446)    (26,192)
Net income attributable to Albemarle Corporation        $ 56,583    $ 83,987
See accompanying notes to the condensed consolidated financial information.





Notes to the Condensed Consolidated Financial Information
    Non-operating pension and OPEB items, consisting of mark-to-market (MTM)
(a) actuarial gains/losses as well as interest cost and expected return on
    assets, are included in Corporate & other as follows:
      oFor the three months ended March31, 2014 and 2013, net charges
        (benefits) amounting to $14.1 million ($8.9 million after income
        taxes, or $0.11 per share) and $(2.1) million ($1.3 million after
        income taxes, or $0.01 per share), respectively. The MTM actuarial
        loss in 2014 was $15.4 million ($9.8 million after income taxes, or
        $0.12 per share) and resulted from a curtailment related to one of our
        U.S. defined benefit pension plans and our supplemental executive
        retirement plan which required a remeasurement of the related assets
        and obligations during the first quarter. The curtailment was in
        connection with our workforce reduction plan initiated in the fourth
        quarter of 2013. There were no MTM actuarial gains/losses recorded
        during the three months ended March 31, 2013.
    Although non-operating pension and OPEB items are included in cost of
    goods sold and selling, general and administrative expenses in accordance
    with GAAP, 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. Non-operating pension and OPEB
    items included in cost of goods sold and selling, general and
    administrative expenses are as follows (in millions):

                                                            Three Months Ended
                                                            March 31,
                                                            2014      2013
  Cost of goods sold:
  MTM actuarial loss                                        $  2.9    $ —
  Interest cost and expected return on assets,              (0.5)     (0.7)
  net
  Total                                                     $  2.4    $ (0.7)
  Selling, general and administrative expenses:
  MTM actuarial loss                                        $  12.5   $ —
  Interest cost and expected return on assets, net          (0.8)     (1.4)
  Total                                                     $  11.7   $ (1.4)

    The three month period ended March 31, 2014 includes net charges amounting
(b) to $17.0 million ($11.1 million after income taxes, or $0.14 per share) in
    connection with a reduction of aluminum alkyls high cost supply capacity.

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 Reconciliations

(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
                          March 31,
                          2014                          2013
Total segment operating   $      127,169                $     130,108
profit
Corporate & other         (34,765)                      (15,221)
Restructuring and other   (17,000)                      —
charges, net
GAAP Operating profit     $      75,404                 $     114,887
Total segment income      $      128,418                $     134,840
Corporate & other         (34,765)                      (15,221)
Restructuring and other   (17,000)                      —
charges, net
Interest and financing    (8,773)                       (5,231)
expenses
Other income (expenses),  1,149                         (4,209)
net
Income tax expense        (12,446)                      (26,192)
GAAP Net income
attributable to Albemarle $      56,583                 $     83,987
Corporation



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
                                                      March 31,
                                                      2014         2013
Net income attributable to Albemarle Corporation      $ 56,583     $ 83,987
Add back:
 Non-operating pension and OPEB items (net of tax)   8,944        (1,297)
 Special items (net of tax)                          11,145       —
Net income attributable to Albemarle Corporation
excluding special                                     $ 76,672     $ 82,690

 andnon-operating pension and OPEB items
Net income attributable to Albemarle Corporation      $ 56,583     $ 83,987
Add back:
 Interest and financing expenses                     8,773        5,231
 Income tax expense                                  12,446       26,192
 Depreciation and amortization                       27,809       25,244
EBITDA                                                105,611      140,654
 Non-operating pension and OPEB items                14,070       (2,069)
 Special items                                       17,000       —
EBITDA excluding special and non-operating
pensionand                                          $ 136,681    $ 138,585

 OPEB items
Net sales                                             $ 656,679    $ 641,625
EBITDA Margin                                         16.1      %  21.9      %
EBITDA Margin excluding special and non-operating
pension and                                           20.8      %  21.6      %

 OPEB items



Logo - http://photos.prnewswire.com/prnh/20111129/MM14279LOGO

SOURCE Albemarle Corporation

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