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Press release from PR Newswire

Albemarle Reports Fourth Quarter and Full Year 2010 Results

Monday, January 24, 2011

Albemarle Reports Fourth Quarter and Full Year 2010 Results16:05 EST Monday, January 24, 2011BATON ROUGE, La., Jan. 24, 2011 /PRNewswire/ -- Fourth quarter and full year highlights: Achieved quarterly earnings of $0.92 per share (second highest quarterly earnings in Albemarle?s history), up 35 percent over fourth quarter 2009 results. Net sales increased 8 percent from prior year?s quarter to $605 million, our best quarterly sales performance for the year.   Finished 2010 with record earnings performance of $3.56 per share before special items, 91% above 2009 earnings.Record quarterly segment income for Fine Chemistry and record annual segment income for Catalysts and Polymer Solutions. Achieved EBITDA of $140 million for the quarter, with record annual EBITDA of $545 million and annual EBITDA margin of 23 percent, in each case before special items. Cash and cash equivalents of $530 million at year end.(Logo:  http://photos.prnewswire.com/prnh/20050801/ALBEMARLELOGO )Fourth Quarter EndedYear EndedDecember 31,December 31,In thousands, except per share amounts2010200920102009Net Sales$604,975$558,228$2,362,764$2,005,394Operating Profit$111,386$63,437$414,848$186,280Net Income attributable to Albemarle Corporation$84,972$62,345$323,720$178,368Diluted earnings per share$0.92$0.68$3.51$1.94Special items per share$?$(0.08)$(0.05)$(0.17)Per share amount for one-time tax items$?$0.12$?$0.25Diluted earnings per share excluding special andone-time tax items$0.92$0.64$3.56$1.86Albemarle Corporation (NYSE: ALB) reported fourth quarter 2010 earnings of $85.0 million, or 92 cents per share, compared to fourth quarter 2009 earnings of $62.3 million, or 68 cents per share.  The Company reported net sales of $605.0 million in the fourth quarter 2010 compared to net sales of $558.2 million in the fourth quarter 2009. Earnings for the full year 2010 were $323.7 million, or $3.51 per share, compared to $178.4 million, or $1.94 per share, for 2009.  Excluding the $7.0 million ($4.6 million after tax, or 5 cents per share) charge for restructuring costs at our Bergheim, Germany site in the first quarter 2010, and the special and one-time tax items reported for 2009, earnings for 2010 were $328.3 million, or $3.56 per share, and earnings for 2009 were $171.4 million, or $1.86 per share.  Total net sales for 2010 were $2.36 billion compared to $2.01 billion for 2009.  ?Our results in the fourth quarter cap a year of tremendous progress for our Company, demonstrating the strength of our portfolio and our team?s ability to drive operational efficiencies,? said Mark C. Rohr, Chairman and CEO of Albemarle.  ?We ended 2010 with very solid results, achieving record annual earnings of $3.56 per share, all-time high EBITDA of $545 million and a solid balance sheet to support strategic growth opportunities.  As we begin the new year, our businesses are off to a strong start. We expect ongoing demand for our products, combined with the strength of our core technologies and key market insights to drive solid earnings growth in 2011.? Quarterly Segment ResultsPolymer Solutions delivered net sales in the fourth quarter 2010 of $220.0 million, an 8 percent increase over net sales in the fourth quarter 2009, due primarily to favorable price and mix, partly offset by lower volumes and unfavorable currency impacts.  Polymer Solutions segment income for the fourth quarter 2010 was $51.0 million, a 57 percent increase from $32.4 million in the fourth quarter 2009.  This increase was due primarily to favorable pricing and mix, partly offset by lower volumes.Catalysts generated net sales in the fourth quarter 2010 of $231.6 million, an 11 percent increase over net sales in the fourth quarter 2009, due primarily to higher volumes and favorable pricing, partly offset by unfavorable currency impacts.  Catalysts segment income for the fourth quarter 2010 was $58.5 million, a 40 percent increase from $41.8 million in the fourth quarter 2009.  This improvement was attributable primarily to higher volumes and favorable pricing, improved realization of metals costs in hydroprocessing catalysts and higher equity income from our Catalysts joint ventures.  Fine Chemistry net sales in the fourth quarter 2010 were $153.4 million, a five percent increase over net sales in the fourth quarter 2009, due primarily to favorable pricing, mix and sales volumes, partly offset by unfavorable currency impacts.  Fine Chemistry segment income for the fourth quarter 2010 was $26.3 million, up 39 percent compared to $19.0 million in the fourth quarter 2009.  This improvement in segment income was due primarily to favorable pricing and mix as well as favorable sales and production volumes, partly offset by higher variable input costs. Corporate and OtherCorporate and other expense for the fourth quarter and year ended December 31, 2010 was $20.8 million and $73.0 million, respectively.  The increase over the comparable periods in 2009 was due mainly to higher personnel-related costs.  In addition, the year ended December 31, 2009 included a favorable $7.8 million adjustment associated with the reversal of certain long-term employee benefit accruals. Cash FlowIn 2010, we incurred capital expenditures for plant, machinery and equipment of $75.5 million, dividends to shareholders of $49.6 million and $80.1 million in contributions to our U.S. defined benefit pension plans.  The Company repurchased approximately 400,356 shares of its common stock for an aggregate cost of $14.9 million during the year.  During December 2010, we sold $350 million aggregate principal amount of 4.50% senior unsecured notes due 2020.  The proceeds from this issuance have been used primarily to pay down outstanding borrowings under our revolving credit facility and to make voluntary pension contributions during December 2010 and January 2011.  Interest and financing expenses for the fourth quarter 2010 were $7.5 million versus fourth quarter 2009 expenses of $6.0 million due primarily to higher average interest rates on our outstanding borrowings during the 2010 period. At December 31, 2010, the Company had $529.7 million in cash and cash equivalents.  The Company has additional capacity to borrow in excess of $791 million under existing lines of credit with no significant debt maturities before 2013.  TaxesOur fourth quarter and full year 2010 effective income tax rates were 22.6 percent and 23.8 percent, respectively, before special items.  Excluding special and one-time tax items, our fourth quarter and full year 2009 effective income tax rates were 14.9 percent and 13.0 percent, respectively.  Our effective tax rate continues to be influenced by the level and geographic mix of income and has benefited from a favorable mix of income in lower tax jurisdictions.  OutlookContinued success with innovative product development, further improvements in productivity, positive market trends and implementation of announced price increases should provide the basis for both top and bottom-line growth in 2011. As we further leverage our core technologies and strategic partnerships around the world, we are positioning Albemarle for long-term growth. Earnings CallThe Company's performance for the fourth quarter and the year ended December 31, 2010 will be discussed on a conference call at 10:00 AM Eastern Standard time on January 25, 2011.  The call can be accessed by dialing 866-314-9013 (International Dial In # 617-213-8053), and entering conference ID 64836501.  The Company's earnings presentation and supporting material can be accessed through Albemarle's website under Investor Information at www.albemarle.com/Investor_information.About AlbemarleAlbemarle 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 three business segments, Polymer Solutions, Catalysts and Fine Chemistry. Corporate Responsibility Magazine selected Albemarle to its prestigious "100 Best Corporate Citizens" list for 2010.  Albemarle employs approximately 4,000 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 markets served.Forward-Looking StatementsSome of the information presented in this press release including, without limitation, statements with respect to product development, improvements in productivity, market trends, implementation of price increases, expected growth 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: deterioration in economic and business conditions; future financial and operating performance of our major customers and industries 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 our inability to pass through such increases; performance of acquired companies; changes in our markets in general; fluctuations in foreign currencies; changes in laws and increased government regulation of 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 unrest or 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 interest rates, to the extent such rates (1) affect our ability to raise capital or increase our cost of funds, (2) have an impact on the overall performance of our pension fund investments and (3) increase our pension expense and funding obligations; volatility and substantial uncertainties in the debt and equity markets; technology or intellectual property infringement and other risks; and the other factors detailed from time to time in the reports we file with the SEC. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found under "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the period ended December 31, 2009 and our 2010 Quarterly Reports on Form 10-Q and in our other public filings with the Securities and Exchange Commission.  Readers are urged to review and consider carefully the disclosures we make in our filings with the Securities and Exchange Commission.Albemarle Corporation and SubsidiariesConsolidated Statements of Income(In Thousands Except Per Share Amounts) (Unaudited)Fourth Quarter EndedYear EndedDecember 31,December 31,2010200920102009Net sales$604,975$558,228$2,362,764$2,005,394Cost of goods sold408,514408,7691,616,8421,521,532Gross profit196,461149,459745,922483,862Selling, general and administrative expenses70,40359,542265,722212,628Research and development expenses14,67214,83758,39460,918Restructuring and other charges (a)?11,6436,95811,643Port de Bouc charges (b)???12,393Operating profit111,38663,437414,848186,280Interest and financing expenses(7,474)(6,023)(25,533)(24,584)Other income (expense), net1,204(1,911)2,788(1,423)Income before income taxes and equity in net incomeof unconsolidated investments105,11655,503392,103160,273Income tax (expense) benefit (c)(23,802)5,353(92,719)7,028Income before equity in net income of unconsolidatedinvestments81,31460,856299,384167,301Equity in net income of unconsolidated investments (net of tax)8,0254,36037,97522,322Net income89,33965,216337,359189,623Net income attributable to noncontrolling interests(4,367)(2,871)(13,639)(11,255)Net income attributable to Albemarle Corporation$84,972$62,345$323,720$178,368Basic earnings per share$0.93$0.68$3.54$1.95Diluted earnings per share$0.92$0.68$3.51$1.94Weighted-average common shares outstanding ? Basic 91,56791,60591,39391,512Weighted-average common shares outstanding ? Diluted92,35092,31692,18492,046See accompanying notes to the condensed consolidated financial information.Albemarle Corporation and SubsidiariesCondensed Consolidated Balance Sheets(In Thousands) (Unaudited)December 31,December 31,20102009ASSETSCash and cash equivalents$529,650$308,791Other current assets 818,548723,296Total current assets1,348,1981,032,087Property, plant and equipment2,440,1782,406,129Less accumulated depreciation   and amortization1,433,8651,379,246Net property, plant and equipment1,006,3131,026,883Other assets and intangibles713,570712,587Total assets$3,068,081$2,771,557LIABILITIES AND EQUITYCurrent portion of long-term debt$8,983$36,310Other current liabilities355,194316,954Total current liabilities364,177353,264Long-term debt851,927776,403Other noncurrent liabilities266,661307,131Deferred income taxes109,57081,441Albemarle Corporation shareholders' equity1,416,0741,205,696Noncontrolling interests 59,67247,622Total liabilities & equity$3,068,081$2,771,557See accompanying notes to the condensed consolidated financial information.Albemarle Corporation and SubsidiariesSelected Consolidated Cash Flow Data(In Thousands) (Unaudited)Year EndedDecember 31,20102009Cash and cash equivalents at beginning of year$308,791$253,303Cash and cash equivalents at end of period$529,650$308,791Sources of cash and cash equivalents:  Net income 337,359189,623  Proceeds from issuance of senior notes346,853?  Proceeds from other borrowings125,79714,300  Proceeds from exercise of stock options7,1354,153Uses of cash and cash equivalents:  Capital expenditures(75,478)(100,786)  Purchases of common stock(14,945)(5,812)  Repayments of long-term debt(424,123)(134,332)  Dividends paid to shareholders(49,643)(44,432)  Dividends paid to noncontrolling interests?(11,709)  Contributions to defined benefit plans(80,107)(39,700)  Cash impact from deconsolidation of Stannica JV, net(12,649)?  Payments relating to Port de Bouc facility disposition(541)(16,440)  Payments relating to restructuring and other charges(3,568)(20,491)Non-cash items:  Depreciation and amortization95,578100,513  One-time net tax benefit, net of cash received?(22,743)  Restructuring and other charges (a)6,95811,643  Port de Bouc charges (b)?12,393  Equity in net income of unconsolidated investments(37,975)(22,322)See accompanying notes to the condensed consolidated financial information.Albemarle Corporation and Subsidiaries Consolidated Summary of Segment Results(In Thousands) (Unaudited)Fourth Quarter EndedYear EndedDecember 31,December 31,2010200920102009Net sales:Polymer Solutions$219,956$204,570$903,745$697,206Catalysts231,569207,962890,007808,063Fine Chemistry153,450145,696569,012500,125Total net sales$604,975$558,228$2,362,764$2,005,394Segment operating profit:Polymer Solutions$50,488$32,218$195,681$63,780Catalysts52,06939,377219,125129,691Fine Chemistry29,25420,06479,50552,589Subtotal$131,811$91,659$494,311$246,060Equity in net income of unconsolidated investments:Polymer Solutions$1,875$1,933$8,734$3,496Catalysts6,4752,45429,64818,934Fine Chemistry????Corporate & other(325)(27)(407)(108)Total equity in net income of unconsolidated investments$8,025$4,360$37,975$22,322Net income attributable to noncontrolling interests: Polymer Solutions$(1,405)$(1,741)$(6,154)$(5,886)Catalysts????Fine Chemistry(2,914)(1,069)(7,357)(5,471)Corporate & other(48)(61)(128)102Total net income attributable to noncontrolling interests$(4,367)$(2,871)$(13,639)$(11,255)Segment income:Polymer Solutions$50,958$32,410$198,261$61,390Catalysts58,54441,831248,773148,625Fine Chemistry26,34018,99572,14847,118Total segment income135,84293,236519,182257,133Corporate & other(20,798)(16,667)(73,040)(35,750)Restructuring and other charges (a)?(11,643)(6,958)(11,643)Port de Bouc charges (b)???(12,393)Interest and financing expenses(7,474)(6,023)(25,533)(24,584)Other income (expense), net 1,204(1,911)2,788(1,423)Income tax (expense) benefit (c)(23,802)5,353(92,719)7,028Net income attributable to Albemarle Corporation $84,972$62,345$323,720$178,368See accompanying notes to the condensed consolidated financial information.Notes to the Condensed Consolidated Financial Information(a) The year ended December 31, 2010 included charges amounting to $7.0 million ($4.6 million after income taxes, or 5 cents per share) that related principally to planned reductions in force at our Bergheim, Germany site.  Fourth quarter and year ended December 31, 2009 results included $11.6 million in pre-tax charges ($7.6 million after income taxes, or 8 cents per share) for restructuring and other costs, related principally to planned reductions in force and to the write-off of assets at our Arkansas facility.  (b) The year ended December 31, 2009 included charges amounting to $12.4 million ($8.2 million after income taxes, or 9 cents per share) that related to the costs of a final contract settlement arising from the 2008 disposition of our Port de Bouc, France facility. (c) The fourth quarter and year ended December 31, 2009 included $11.3 million (12 cents per share) in one-time tax benefits due mainly from the final settlement of the 2005-2007 tax audits with the U.S. Internal Revenue Service.  The year ended December 31, 2009 also included a $9.2 million (10 cents per share) one-time benefit due mainly to a tax issue settlement for the years 2005 through 2007 with the U.S. Internal Revenue Service and a non-recurring net benefit of $2.3 million (3 cents per share) resulting from adjustments related to prior periods.  Additionally, 2009 includes a $4.2 million benefit associated with the Port de Bouc charge described in footnote (b) above.Additional InformationIt should be noted that earnings or per share amounts excluding special and one-time tax items, EBITDA, EBITDA excluding special items, segment operating profit and segment income 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 Investor Information section of our website at http://www.albemarle.com/, under "Non-GAAP Reconciliations" under "Investor Relations."  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 SUBSIDIARIESNon-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.Fourth Quarter EndedYear EndedDecember 31,December 31,2010200920102009Total segment operating profit$131,811$91,659$494,311$246,060Corporate & other *(20,425)(16,579)(72,505)(35,744)Restructuring and other charges ?(11,643)(6,958)(11,643)Port de Bouc charges ???(12,393)GAAP Operating profit$111,386$63,437$414,848$186,280Total segment income$135,842$93,236$519,182$257,133Corporate & other(20,798)(16,667)(73,040)(35,750)Restructuring and other charges ?(11,643)(6,958)(11,643)Port de Bouc charges ???(12,393)Interest and financing expenses(7,474)(6,023)(25,533)(24,584)Other income (expense), net 1,204(1,911)2,788(1,423)Income tax (expense) benefit  (23,802)5,353(92,719)7,028GAAP Net income attributable to Albemarle Corporation $84,972$62,345$323,720$178,368* Includes corporate equity income and noncontrolling interest adjustments of $373 and $88 for the three-month periods ended December 31, 2010 and 2009, respectively, and $535 and $6 for the years ended December 31, 2010 and 2009, respectively. See below for a reconciliation of 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.  Fourth Quarter EndedYear EndedDecember 31,December 31,2010200920102009Net income attributable to Albemarle Corporation$84,972$62,345$323,720$178,368Add:Interest and financing expenses7,4746,02325,53324,584Income tax expense (benefit)23,802(5,353)92,719(7,028)Depreciation and amortization24,09225,97495,578100,513EBITDA140,34088,989537,550296,437Restructuring and other charges?11,6436,95811,643Port de Bouc charges???12,393EBITDA excluding special items$140,340$100,632$544,508$320,473Net Sales$604,975$558,228$2,362,764$2,005,394EBITDA Margin23.2%15.9%22.8%14.8%EBITDA Margin excluding special items23.2%18.0%23.0%16.0%SOURCE Albemarle CorporationFor further information: Sandra Rodriguez, +1-225-388-7654