Albemarle Q3 net income rises 24% year-over-year to US$116.1M as revenues increase 23.5% to nearly US$723M; catalysts posted record performance, fine chemistry business more than offset volume softness, CEO says

BATON ROUGE, Louisiana , October 25, 2011 (press release) – Third quarter 2011 highlights:

* Record quarterly earnings for the third consecutive quarter of $1.28 per share, up 25 percent over third quarter 2010 results.
* Net sales of $723 million for the quarter, up 24 percent from third quarter 2010.
* Record quarterly net sales and income for our Catalysts segment.
* EBITDA of $189 million and EBITDA margin of 26 percent for the quarter.

Albemarle Corporation (NYSE:ALB - News) reported third quarter 2011 earnings of $116.1 million, or $1.28 per share, compared to third quarter 2010 earnings of $93.7 million, or $1.02 per share. The Company reported net sales of $723.0 million in the third quarter of 2011 compared to net sales of $585.0 million in the third quarter of 2010.

Earnings for the nine months ended September 30, 2011 were $336.8 million, or $3.66 per share, compared to $238.7 million, or $2.59 per share, for the same period in 2010. Excluding the $7.0 million ($4.6 million after tax, or 5 cents per share) charge for restructuring costs in the first quarter of 2010, earnings for the nine months ended September 30, 2010 were $243.3 million, or $2.64 per share. Net sales for the nine months ended September 30, 2011 were $2.2 billion compared to $1.8 billion for the same period in 2010.

Commenting on results, Luke Kissam, President and CEO, stated, "We're pleased to announce record earnings for the third consecutive quarter. Catalysts' record performance and the continued strength of the Fine Chemistry business more than offset the expected volume softness seen in Polymer Solutions this quarter versus the first half of the year. These earnings are a testament to our competitive cost position, execution of our pricing strategies and the innovation of our people."

Quarterly Segment Results

Catalysts generated net sales of $299.5 million in the third quarter of 2011, a 39 percent increase over net sales in the third quarter of 2010, due mainly to favorable pricing and volume impacts as well as favorable impacts from foreign currency. Catalysts segment income was $101.9 million in the third quarter of 2011, up 48 percent over third quarter 2010 results of $68.9 million due primarily to the favorable pricing gains noted above, partly offset mainly by higher variable input costs versus the third quarter of 2010.

Polymer Solutions delivered net sales of $243.9 million in the third quarter of 2011, a five percent increase over net sales in the third quarter of 2010, due to favorable pricing and foreign currency impacts partially offset by lower volumes. Segment income for Polymer Solutions was $54.6 million in the third quarter of 2011, a seven percent decline from $58.5 million in the third quarter of 2010, due primarily to lower volumes and higher variable input costs, partly offset by favorable pricing.

Fine Chemistry net sales in the third quarter of 2011 were $179.5 million, a 30 percent increase over net sales in the third quarter of 2010, due mainly to favorable pricing and volume impacts. Segment income for Fine Chemistry was $30.0 million for the third quarter of 2011, over 80 percent higher than third quarter 2010 results of $16.5 million. This improvement in segment income was due primarily to the favorable pricing and volume performance noted above, partly offset by higher variable input costs and higher charges attributable to noncontrolling interests.

Corporate and Other

Corporate and other expense was $23.5 million for the third quarter of 2011. The increase over the comparable period in 2010 was due mainly to higher personnel-related costs.

Interest and financing expenses increased to $9.7 million for the third quarter of 2011 compared to $6.1 million for the third quarter of 2010, primarily due to higher average interest rates on outstanding borrowings during the 2011 period.

Our third quarter 2011 effective income tax rate was 25.1 percent versus 24.1 percent in the third quarter of 2010. The full year 2011 effective tax rate is expected to be 23.7 percent. Our effective tax rate continues to be influenced by the level and geographic mix of income and benefits from a favorable mix of income in lower tax jurisdictions.

Cash Flow

Our cash flow from operations was approximately $285 million for the nine months ended September 30, 2011, and we had $481.3 million in cash and cash equivalents at September 30, 2011. During the nine months ended September 30, 2011, cash on hand and cash provided by operations funded capital expenditures for plant, machinery and equipment of $127.1 million (versus $50.0 million in the same period of 2010) and dividends to shareholders of $43.1 million. During the third quarter of 2011, we repurchased 3.0 million shares of our common stock as authorized under the terms of our stock repurchase plan. Additionally, we made repayments of long-term debt of $105.1 million and pension and postretirement contributions of $57.6 million during the nine months ended September 30, 2011.

On September 22, 2011, we amended and restated our previous $675.0 million credit facility. Under the terms of the amended and restated five-year, revolving, unsecured credit facility, we have the ability to borrow $750.0 million, which may be increased by an additional $250.0 million. Borrowings under the new credit facility bear interest at the London Inter-Bank Offered Rate plus a spread, currently 0.975%, that varies with our debt rating. We had $120.0 million in outstanding borrowings on this facility at September 30, 2011.

Outlook

We are closely monitoring customer order patterns and other performance trends in our businesses and the markets which they serve in light of current uncertainties in the global economy. While we expect the typical slower year end order patterns in some of our businesses, we believe our businesses are fundamentally strong and still expect that our second half 2011 results will be similar to the first half of the year. We expect to end 2011 well positioned for another successful year in 2012.

Earnings Call

The Company's performance for the third quarter ended September 30, 2011 will be discussed on a conference call at 11:00 AM Eastern Daylight time on October 25, 2011. The call can be accessed by dialing 800-299-7928 (International Dial In # 617-614-3926), and entering conference ID 71549443. The Company's earnings presentation and supporting material can be accessed through Albemarle's website under Investors at www.albemarle.com.

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,

   
 

2011

   

2010

   

2011

   

2010

   

Net sales

$

722,977

   

$

585,036

   

$

2,161,615

   

$

1,757,789

   

Cost of goods sold

 

464,965

     

388,213

     

1,418,638

     

1,208,328

   

Gross profit

 

258,012

     

196,823

     

742,977

     

549,461

   

Selling, general and administrative expenses

 

77,169

     

61,924

     

233,115

     

195,319

   

Research and development expenses

 

20,534

     

14,336

     

58,096

     

43,722

   

Restructuring and other charges (a)

 

     

     

     

6,958

   

Operating profit

 

160,309

     

120,563

     

451,766

     

303,462

   

Interest and financing expenses

 

(9,710)

     

(6,139)

     

(28,576)

     

(18,059)

   

Other income, net

 

956

     

1,303

     

534

     

1,584

   

Income before income taxes and equity in net

                               

  income of unconsolidated investments

 

151,555

     

115,727

     

423,724

     

286,987

   

Income tax expense

 

38,097

     

27,886

     

100,423

     

68,917

   

Income before equity in net income of

                               

  unconsolidated investments

 

113,458

     

87,841

     

323,301

     

218,070

   

Equity in net income of unconsolidated

                               

  investments (net of tax)

 

9,500

     

9,179

     

37,118

     

29,950

   

Net income

 

122,958

     

97,020

     

360,419

     

248,020

   

Net income attributable to noncontrolling interests

 

(6,860)

     

(3,331)

     

(23,582)

     

(9,272)

   

Net income attributable to Albemarle Corporation

$

116,098

   

$

93,689

   

$

336,837

   

$

238,748

   
                                 

Basic earnings per share

$

1.29

   

$

1.03

   

$

3.70

   

$

2.61

   

Diluted earnings per share

$

1.28

   

$

1.02

   

$

3.66

   

$

2.59

   

Weighted-average common shares outstanding –

                               

  basic

 

89,935

     

91,312

     

91,094

     

91,335

   

Weighted-average common shares outstanding –

                               

  diluted

 

90,958

     

92,082

     

92,090

     

92,129

   
   

See accompanying notes to the condensed consolidated financial information.

 
                               

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 continuing to advance its eco-practices and solutions in its three business segments, Polymer Solutions, Catalysts and Fine Chemistry, with Corporate Responsibility Magazine naming Albemarle among its prestigious "100 Best Corporate Citizens" list for 2011. Albemarle employs 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.

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