Press Releases
Contact:
Jodi Allen (Investor Relations)
(973) 357-3283
Cytec Announces
Fourth Quarter 2011 Results
As-Adjusted Fourth Quarter EPS of $0.86; Up 25% From Fourth
Quarter 2010
As-Adjusted Full Year EPS of $3.66, Up 22% From Full Year 2010
Retains Financial Advisor to Analyze Separation of Entire
Coating Resins Business
Woodland Park, New
Jersey, January 31, 2012 -- Cytec Industries Inc. (NYSE: CYT)
announced today net earnings for the fourth quarter 2011 of
$41.6 million or $0.88 per diluted share on net sales of $731
million. Included in the quarter are several special items that
total $1.3 million of net income after-tax or $0.02 per diluted
share and are outlined further in this release. Excluding these
special items, net earnings were $40.3 million or $0.86 per
diluted share.
Net earnings for the fourth quarter 2010 were $48.0 million or
$0.95 per diluted share on net sales of $700 million. Earnings
from continuing operations attributable to Cytec were $40.7
million or $0.81 per diluted share. Earnings from discontinued
operations were $7.3 million or $0.14 per diluted share.
Included in the quarter were several special items that totaled
$6.1 million of net income after-tax or $0.12 per diluted share.
Excluding the special items and earnings from discontinued
operations, net earnings from continuing operations attributable
to Cytec were $34.6 million or $0.69 per diluted share.
Shane Fleming, Chairman, President and Chief Executive Officer
commented, “We are pleased with our fourth quarter results. In
particular, the Engineered Materials and In Process Separation
segments delivered excellent volume growth driven by strong
demand for our advanced technologies. In addition, our
disciplined approach to pricing further improved profitability
in these growth platforms while partially mitigating the
softness in industrial market demand experienced by our Coating
Resins and Additive Technologies segments. Overall, we continue
to make good progress leveraging sales growth into stronger
earnings and cash flow for the company.”
Cytec In Process Separation sales increased by 10% to
$90 million; operating earnings increased to $20.4 million.
In Process Separation selling volumes were up by 3% versus the
fourth quarter 2010 driven by commercialization of our new
technologies across all of the product lines and solid
underlying demand in our key alumina and copper markets. Sales
were further supported by selling price increases of 7%.
Operating earnings of $20.4 million were higher versus operating
earnings of $13.3 million in the prior year quarter, mainly as a
result of higher selling volumes and prices. These positive
impacts were partially offset by higher raw material costs of
$1.2 million.
Cytec Engineered Materials sales increased by 16% to
$239 million; operating earnings increased to $41.6 million.
In Cytec Engineered Materials, selling volumes increased by 11%
compared to the prior year period, primarily due to higher build
rates in the large commercial transport sector, including supply
to new programs and ramp-ups to support build rate increases.
The Rotorcraft market was also higher, driven by higher build
rates in both the civil and military sectors. Selling prices
increased sales by 5%. This includes approximately $2.7 million
of price that consists mainly of retroactive price adjustments.
Operating earnings of $41.6 million were up versus $28.2 million
in the fourth quarter of 2010, mainly as a result of higher
selling volumes, increased production levels, and higher selling
prices. These benefits were partially offset by increased raw
material costs of $7.9 and higher manufacturing and operating
expenses as a result of the increased spending in growth
programs to meet the current and future demand levels.
Cytec Additive Technologies sales increased 1% to $65
million; operating earnings decreased to $7.1 million.
In Additive Technologies, selling volumes were down by
6% versus the fourth quarter 2010 due to soft demand in Europe
and Asia Pacific, reflecting a general slowdown in our
industrial markets as well as the expected short-term issue of
product availability in our polymer additives product line.
Selling prices increased sales by 7%.
Operating earnings of $7.1 million were down compared to $8.8
million in the fourth quarter of 2010 mainly as a result of
lower selling volumes and production levels. These unfavorable
impacts were partially offset by higher selling prices, which
more than covered the impact of higher raw material costs of
$1.9 million.
Cytec Coating Resins sales decreased 3% to $337 million;
operating earnings decreased to $0.1 million.
In Coating Resins, overall selling volumes decreased
11% versus the fourth quarter 2010 as we experienced weak market
demand across all of our product lines, particularly in Europe
and Asia Pacific, in addition to the volume decline associated
with normal seasonality in the fourth quarter as customers
manage inventories. We were able to sustain our good pricing
discipline in the quarter, with selling prices increasing sales
by 8%.
Operating earnings of $0.1 million were down versus $3.9 million
in the fourth quarter of 2010. Higher selling prices of $27.3
million more than offset higher raw material costs of $22.3
million. This net benefit was more than offset by the impact of
lower selling volumes.
Discontinued Operations
Net earnings for the fourth quarter of 2010 includes earnings
from discontinued operations, net of tax, of $7.3 million
associated with the former Building Block Chemicals Segment,
which was divested in the first quarter of 2011.
Special Items
In the fourth quarter of 2011 a number of special items were
recorded that resulted in net pre-tax benefit of $1.7 million
($1.3 million net benefit on an after-tax basis or $0.02 per
diluted share) as follows:
-
Included in
various manufacturing and operating expenses are pre-tax net
restructuring charges of $0.7 million ($0.4 million
after-tax or $0.01 per diluted share).
-
Included in
Manufacturing cost of sales and Other income/(expense) is a
net pre-tax benefit of $3.1 million ($2.1 million after-tax
or $0.04 per diluted share) mostly related to a favorable
adjustment to an environmental liability at one of our
European facilities reflecting an alternate remediation
approach.
-
Included in
Research and process development is pre-tax incremental
accelerated depreciation of $0.7 million ($0.4 million
after-tax or $0.01 per diluted share) related to the
sale-leaseback agreement of our research and development
facility in Stamford, Connecticut, which was signed in the
third quarter of 2011.
For comparative
purposes, in the fourth quarter of 2010 a number of special
items were recorded that resulted in net pre-tax charges of $5.8
million ($6.1 million net income on an after-tax basis or $0.12
per diluted share) as follows:
-
Included in
manufacturing and operating expenses are pre-tax net
restructuring charges of $1.1 million ($0.7 million
after-tax or $0.01 per diluted share).
-
Included in
Other Income/Expense is a pre-tax charge of $4.7 million
($2.9 million after-tax or $0.06 per diluted share) related
to an increase in environmental liabilities at two inactive
locations for a change in estimate for operating and
maintenance costs.
-
Included in
income tax expense is a benefit of $9.7 million or $0.19 per
diluted share related to the reversal of deferred tax
valuation allowances in two international entities.
Income Tax
Expense
Income tax expense related to continuing operations for
the fourth quarter of 2011 was $13.7 million, compared with a
tax benefit of $7.0 million in the fourth quarter of 2010. The
provision for the fourth quarter of 2011 includes a tax benefit
of $0.7 million primarily attributable to the re-measurement of
our deferred tax position related to changes in tax rates
enacted in the fourth quarter for several international
jurisdictions. Excluding the impact from the aforementioned
discrete tax benefit and the special items previously noted, the
overall underlying annual tax rate for 2011 was 30.5% which was
consistent with full year 2010.
Cash Flow
David Drillock, Vice President and Chief Financial
Officer commented, “Operating cash flows from continuing
operations were $131 million for the fourth quarter 2011. During
the quarter our average net working capital days were down to 66
compared to 71 days during the third quarter of 2011. Accounts
receivable days outstanding were down two to 49 days and
inventory days improved by six days to 68, all reflecting the
sustainability of our ongoing focus in working capital
management. Accounts payable days were down four to 51 days
primarily due to the lower production levels and raw material
purchases in the Coating Resins segment.”
“Capital spending for the quarter was $39 million with
approximately 35% of the spending attributable to Engineered
Materials, and 65% to Specialty Chemical segments. Capital
spending for the full year 2011 was $117 million and our
expectation for capital spending for the full year 2012 is to be
in a range of $200 million to $250 million with all of the
increase related to manufacturing capacity expansions in the
Engineered Materials and In Process Separation segments.”
During the quarter 1,450,000 shares of Cytec common stock were
purchased for $65 million. Year to date repurchases were
4,280,000 shares for $196 million. As of December 31, 2011,
approximately $198 million is available on the $200 million
authorization announced on December 8, 2011.
Coating Resins Update
The Company also announced that it has retained J.P.
Morgan to assist in an analysis of alternatives available to
Cytec to effect a separation of its entire Coating Resins
business. Cytec’s intention to review all options for the
Coatings Resins business was previously disclosed on the
Company’s third quarter 2011 earnings conference call. The
Company expects to complete its review and make a decision
regarding the separation of the Coating Resins business no later
than the second quarter of 2012.
Mr. Fleming commented, “Our first priority is to continue to
deliver quality products and services to our customers. We have
made great progress strengthening our product development
pipeline in our specialty resin product lines and will continue
to penetrate the market with our advanced technology solutions.
We are committed to maximizing the value of the Coating Resins
business. The decision to explore separation options for the
entire business is consistent with our strategy of focusing on
our remaining profitable and growing segments.”
2012 Outlook
Mr. Fleming continued, “Looking ahead, we see overall
growth in the global economy to be modest for 2012. Europe’s
sovereign debt issues continue to cloud the region and the rest
of the world. We are also faced with policy uncertainties and
slow growth within North America. We continue to expect
expansion in emerging market economies, albeit at a slower
pace.”
“We are committed to being as transparent as possible and will
be providing a detailed overview of our 2012 revenue and
operating earnings growth targets. However, in light of the
ongoing evaluation of separation alternatives for the Coating
Resins segment, we will not be providing full year EPS guidance
at this time.”
“At a high level, I expect 2012 to be another year of excellent
growth in our Engineered Materials and In Process Separation
segments, with continued improvement in our Additive
Technologies segment. We will continue to execute our strategy
and remain excited about the growth opportunities in these
segments.
“The In Process Separation segment continues to enjoy strong
demand in the base metal markets, and we have been successfully
commercializing our new technologies at both new and existing
customers. The outlook for our specialty phosphine products is
also encouraging as we continue to win new customers and
experience robust demand with these unique products. We expect
this positive trend to continue, and we remain focused on
introducing new technologies to solve complex challenges in the
industry. We continue to evaluate new opportunities in adjacent
markets and leverage our leadership position to expand existing
products into new geographies. These plans are expected to drive
revenue growth of approximately 10% in 2012; our goal is to
maintain similar operating margins in the segment as our record
2011 earnings.”
“In Engineered Materials, we are seeing continued momentum and
sustained growth in the global aerospace market as evidenced by
the backlog of large commercial aircraft orders. Production for
the new programs such as the Boeing 787 is ramping-up and we are
planning for steady demand from the business jets and rotorcraft
sector. Demand visibility remains good for this business and we
are forecasting revenue growth in 2012 of at least 10% above
full year 2011. We are also making good progress with our
pricing initiatives and this, together with volume growth and
leverage, is expected to lead to a 1 to 2% improvement in
operating margins versus full year 2011.”
“In Additive Technologies, we have nearly completed our planned
manufacturing expansions which will allow volume growth across
several product lines. We anticipate slow growth to start 2012,
particularly in Europe given the current macroeconomic
environment. However, overall global demand is expected to
remain strong for the year and we are excited about the growth
potential of our specialty products in this segment. We estimate
revenue growth in the range of 5 to 8% based on increased
selling volumes of higher value-added products. The expected
improvements in selling volumes and mix, coupled with higher
production levels, lead us to believe that we can slightly
expand operating margins in this segment.”
“For Corporate and Unallocated expenses, we are expecting
slightly higher expenses for 2012 as compared to 2011. This does
not include additional costs related to consultants and advisors
to assist us in evaluating our strategic options for the Coating
Resins segment, although we will report on these expenses
quarterly. Other Expense and Interest Expense, net, should be at
a similar level to 2011. The forecast for the underlying annual
tax rate for ongoing operations is expected to be in a range of
31% to 33%.”
Mr. Fleming concluded, “We closed the year with a strong
performance despite the challenging market environment. Our
continued improvements in 2011 are a result of our focused
strategy, execution, and the unwavering commitment of the people
of Cytec. Although uncertainties persist in the macro
environment, we look forward to a continuation of profitable
growth driven by expanded opportunities for our product and
applications technologies which will lead to improved returns
for our shareholders.”
Full Year Results
Net earnings for full year ended December 31, 2011 were $207.8
million or $4.24 per diluted share on sales of $3,073 million.
Earnings from continuing operations attributable to Cytec were
$165.3 million or $3.37 per diluted share. Earnings from
discontinued operations were $42.5 million or $0.87 per diluted
share including gain on sale of discontinued operations, net of
tax, of $34.6 million or $0.71 per diluted share.
For the full year ended December 31, 2011, a number of special
items (all from continuing operations) were recorded that
resulted in a net pre-tax charge of $20.2 million ($13.9 million
net charge on an after-tax basis or $0.29 per diluted share) as
follows:
-
Included in
manufacturing and operating expenses are pre-tax net
restructuring charges of $21.5 million ($14.9 million
after-tax or $0.30 per diluted share) primarily related to
Coating Resins.
-
Included in
Gain on sale of assets is a pre-tax gain of $3.3 million
($2.1 million after-tax or $0.04 per diluted share) related
to a sale of land at our manufacturing site in Colombia
which was shutdown in the second half of 2009.
-
Included in
Research and process development is pre-tax incremental
accelerated depreciation of $0.7 million ($0.4 million
after-tax or $0.01 per diluted share) related to the
sale-leaseback agreement of our research and development
facility in Stamford, Connecticut, which was transacted in
the third quarter of 2011.
-
Included in
Manufacturing cost of sales and Other income/(expense) is a
net pre-tax charge of $1.3 million ($0.7 million after-tax
or $0.01 per diluted share) related to a favorable
adjustment to the environmental liability at one of our
European facilities reflecting an alternate remediation
approach, which was more than offset by unfavorable
adjustments in environmental liabilities at several other
sites for changes in estimates for operating and maintenance
costs.
Excluding these
items and earnings from discontinued operations, net earnings
from continuing operations attributable to Cytec were $179.2
million or $3.66 per diluted share for full year ended December
31, 2011.
Net earnings for the full year ended December 31, 2010 were
$172.3 million or $3.46 per diluted share on sales of $2,748
million. Earnings from continuing operations attributable to
Cytec were $142.0 million or $2.85 per diluted share.
For full year ended December 31, 2010, a number of special items
(all from continuing operations) were recorded that resulted in
a net pre-tax charge of $13.4 million ($7.1 million net charge
on an after-tax basis or $0.14 per diluted share) as follows:
-
Pre-tax net
restructuring charges of $8.8 million ($5.6 million
after-tax or $0.11 per diluted share).
-
A charge of
$8.3 million or $0.16 per diluted share related to the
impact of Health Care Legislation on tax expense.
-
A pre-tax
charge of $4.7 million ($2.9 million after-tax or $0.06 per
diluted share) related to an increase in environmental
liabilities at two inactive locations for a change in
estimate for operating and maintenance costs.
-
A benefit of
$9.7 million or $0.19 per diluted share related to the
reversal of deferred tax valuation allowances in two
international entities.
Excluding these
items and earnings from discontinued operations, net earnings
from continuing operations attributable to Cytec were $149.1
million or $2.99 per diluted share for full year ended December
31, 2010.
Investor Conference Call to be Held on February 1, 2012
at 11:00am ET
Cytec will host their fourth quarter earnings release conference
call on February 1, 2012 at 11:00am ET. The conference call will
also be simultaneously webcast for all investors from Cytec’s
website. Select the Investor Relations page to access the live
webcast.
Use of Non-GAAP Measures
Management believes that net earnings excluding special items
and diluted earnings per share excluding special items, which
are non-GAAP measurements, are meaningful to investors because
they provide a view of the Company with respect to ongoing
operating results. Special items represent significant charges
or credits that are important to an understanding of the
Company’s overall operating results in the period presented.
Such non-GAAP measurements are not recognized in accordance with
generally accepted accounting principles (GAAP) and should not
be viewed as an alternative to GAAP measures of performance. A
reconciliation of GAAP to non-GAAP measurements can be found at
the end of this release.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions
contained herein, statements contained in this release may
constitute “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. Achieving
the results described in these statements involves a number of
risks, uncertainties and other factors that could cause actual
results to differ materially, as discussed in Cytec’s filings
with the Securities and Exchange Commission.
Corporate Profile
Cytec’s vision is to deliver specialty chemical and
material technologies beyond our customers’ imagination. Our
focus on innovation, advanced technology and application
expertise enables us to develop, manufacture and sell products
that change the way our customers do business. These pioneering
products perform specific and important functions for our
customers, enabling them to offer innovative solutions to the
industries that they serve. Our products serve a diverse range
of end markets including aerospace composites, structural
adhesives, automotive and industrial coatings, electronics,
inks, mining and plastics.
Click here
for financial tables
Back to All Press Releases
|
