Albemarle Reports Quarterly Earning Growth
April 27, 2010
Albemarle reported first quarter 2010 earnings of $63.3 million, or 69 cents per share, compared to $25.4 million, or 28 cents per share, for the first quarter 2009. First quarter 2010 results include a $7.0 million pre-tax charge ($4.6 million or 5 cents per share after tax) for restructuring costs related principally to planned reductions in force at our Bergheim, Germany site. Net sales in the first quarter of 2010 totaled $580.3 million compared to first quarter 2009 net sales of $486.6 million.
Commenting on results, Mark C. Rohr, Chairman and CEO, stated, "I am extremely pleased with our performance this quarter. We achieved strong operating results and significantly improved year over year performance across our segments including record profitability for the Corporation and in our Catalysts and Polymer Solutions businesses. We benefited from improving trends in the markets served by our businesses and continued our keen focus on cost control and cash generation. Our disciplined efforts toward cost control, working capital and operating efficiency have positioned us well to post record results in 2010."
Quarterly Segment Results
Polymer Solutions delivered net sales for the first quarter of 2010 of $216.7 million, a 76 percent increase versus the first quarter of 2009 due primarily to improved volumes in both our fire safety and stabilizers and curatives businesses. Polymer Solutions segment income for the first quarter of 2010 was a record $41.8 million as compared to the first quarter 2009 segment loss of $11.7 million. The significant improvement in segment income is due primarily to increased volume demand across the portfolio, particularly in brominated flame retardants, as well as higher production utilization rates.
Catalysts generated net sales for the first quarter of 2010 of $227.7 million, a decrease of 6 percent versus first quarter of 2009 due primarily to the impact of lower metals pricing, which we pass through, partly offset by favorable product pricing and mix. Catalysts segment income for the first quarter of 2010 was a record $55.1 million versus the first quarter of 2009 of $35.7 million. This 54 percent improvement was attributable primarily to improved realization of metals costs in refinery catalysts, favorable sales mix including profit contribution from our alternative fuels business and higher equity income.
Fine Chemicals net sales in the first quarter of 2010 were $136 million, a 13 percent increase versus the first quarter of 2009, due primarily to increased volumes in our performance chemicals business offset by lower volumes in fine chemistry services. Fine Chemicals segment income for the first quarter of 2010 was $11.8 million versus $8.7 million in first quarter 2009. Improved sales and production volumes drove a 35 percent increase in segment income from first quarter 2009.
Corporate and Other
Corporate and other charges were $16.7 million for first quarter 2010. These charges were up year over year due mainly to higher personnel related costs. First quarter 2009 included $7.8 million in favorable adjustments associated with the reversal of certain long-term employee benefit accruals.
In the first quarter of 2010, cash on hand funded capital expenditures for plant, machinery and equipment of $16.1 million and dividends to shareholders of $11.4 million. During the quarter, interest and financing expenses of $5.9 million were comparable to first quarter of 2009 expenses of $6.3 million. This slight decrease was due primarily to lower average debt balances year over year.
At March 31, 2010, the Company had approximately $267 million in cash and cash equivalents. In addition, the Company has additional capacity to borrow in excess of $460 million under our existing lines of credit and has no significant debt maturities before 2013. Focus on inventory levels resulted in lower balances at March 31, 2010 as compared to December 31, 2009 despite the increase in business activity.
Our reported first quarter 2010 effective income tax rate was 23.4 percent. Excluding the 2010 special item and $2.5 million in nonrecurring tax adjustments in 2009 relating to prior periods, the effective tax rate was 24.4 percent versus 14 percent for first quarter 2009. The increase is due mainly to level and mix of income in higher tax jurisdictions, principally significantly higher income in the U.S.
The volume improvement in most of our segments again this quarter is an encouraging sign that conditions in our key markets have improved. As a result of the initiatives we undertook in 2009, we are better positioned to capitalize on opportunities in these markets if demand remains strong. We will continue to monitor key economic indicators and do our best to manage potential headwinds such as increased raw material and energy costs. We remain optimistic that 2010 will result in outstanding full year performance.
Source: Albemarle Corp.
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