Press Releases
Contact:
Jodi Allen (Investor Relations)
(973) 357-3283
Cytec
Announces First Quarter 2012 Results
As-Adjusted First Quarter EPS of $1.28; Up 64% From First
Quarter 2011
Increases Guidance for 2012 excluding the impact from potential
acquisition
Woodland Park, New
Jersey, April 19, 2012 -- Cytec Industries Inc. (NYSE: CYT)
announced today net earnings for the first quarter 2012 of $53.1
million or $1.14 per diluted share on net sales of $783.3
million. Included in the quarter are several special items that
total $6.7 million of net expense after-tax or $0.14 per diluted
share and are outlined further in this release. Excluding these
special items, net earnings attributable to Cytec were $59.8
million or $1.28 per diluted share.
Earnings from continuing operations for the first quarter 2011
were $39.6 million or $0.79 per diluted share. Earnings from
discontinued operations were $43.6 million or $0.87 per diluted
share including the gain on the sale of Building Block Chemicals
of $36.8 million after-tax or $0.73 per diluted share. Included
in the 2011 quarter were several special items from continuing
operations that total $0.5 million of net credit after-tax or
$0.01 per diluted share. Excluding the special items, earnings
from continuing operations were $39.1 million or $0.78 per
diluted share.
Shane Fleming, Chairman, President and Chief Executive Officer
commented, “I am extremely pleased with our strong start to
2012. Engineered Materials delivered excellent results due to
strong volume growth across each of our aerospace end markets,
higher selling prices, and higher operating rates which
translated into increased operating margins. The In Process
Separation segment also performed well driven by higher selling
prices and strong demand for our specialty mining and phosphine
products. Coating Resins also performed better than expected
versus the prior year period, which is mostly attributable to
higher selling prices that mitigated the impact of lower selling
volumes. Overall, our two growth segments contributed
significantly to the improved results as we enjoy strong demand
in our markets and continue to execute our growth strategy.”
Cytec Engineered Materials sales increased 17% to $219
million; operating earnings increased to $45 million.
In Engineered Materials, selling volumes increased by
14% compared to the prior year period, due to higher build rates
in the large commercial transport sector and business and
regional jet sectors, including supply to new programs and
ramp-ups to support build rate increases. Selling volumes for
the military and civil rotorcraft markets were also higher,
driven by higher build rates compared to prior year period.
Higher selling prices increased sales by 3%.
Operating earnings of $45.0 million were up versus $25.1 million
in the first quarter of 2011, mainly as a result of higher
selling volumes, increased production levels, and selling price
increases. These benefits were partially offset by higher
manufacturing and operating expenses as a result of the
increased spending to meet the higher demand and to support
growth programs.
Cytec In Process Separation sales increased 17% to $92
million; operating earnings increased to $22.9 million.
In Process Separation selling volumes were up by 8%
versus the first quarter 2011 driven by strong demand for our
mining chemicals across most regions, particularly in Eastern
Europe and Africa as we continue to expand our presence in these
high growth regions. The sales increase was further supported by
selling price increases of 9%.
Operating earnings of $22.9 million were higher versus operating
earnings of $16.4 million in the prior year quarter, mainly as a
result of higher selling volumes and prices. These positive
impacts were partially offset by higher manufacturing cost of
sales and operating expenses of $5.1 million as we invest in
growth opportunities in developing markets.
Cytec Additive Technologies sales decreased 4% to $68
million; operating earnings decreased to $6 million.
In Additive Technologies, selling volumes were down by
8% versus the first quarter of 2011 due to soft demand in most
regions, most notably in Europe, reflecting a general slowdown
of the economic activity within the region. Higher selling
prices increased sales by 5% and the impact of exchange rates
decreased sales by 1%.
Operating earnings of $6.4 million were down compared to $8.4
million in the first quarter of 2011 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.
Cytec Coating Resins sales decreased 6% to $405 million;
operating earnings increased to $29 million.
In Coating Resins, overall selling volumes decreased 9%
versus the first quarter of 2011 as we experienced weaker demand
across most of our product lines, particularly in Europe and
Asia Pacific as customers continued to manage inventories.
Unfavorable impacts of lower volumes were partially offset by
higher selling prices of 5% and the impact of exchange rates
decreased sales by 2%.
Operating earnings of $28.8 million were up versus $20.0 million
in the first quarter of 2011 mainly due to higher selling prices
of $19.7 million and benefits from our restructuring initiatives
implemented in 2011 which more than offset the unfavorable
impacts of lower volumes and higher raw material costs.
Discontinued Operations
Net earnings for the first quarter of 2011 includes
earnings from discontinued operations, net of tax, of $43.6
million which includes a gain from the sale of the former
Building Block Chemicals Segment of $36.8, net of tax, which was
divested in the first quarter of 2011.
Special Items
In the first quarter of 2012 a number of special items
were recorded (all in Corporate and Unallocated) that resulted
in net pre-tax charges of $10.2 million ($6.7 million net charge
on an after-tax basis or $0.14 per diluted share) as follows:
-
Included in
various manufacturing and operating expenses are pre-tax net
restructuring charges of $3.3 million ($2.4 million
after-tax or $0.05 per diluted share).
-
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.
-
Included mainly
in Administrative and general is a net pre-tax charge of
$6.2 million ($3.9 million after-tax or $0.08 per diluted
share) related to our exploration of the separation of the
Coating Resins business.
In the first
quarter of 2011 a number of special items (all from continuing
operations and in Corporate and Unallocated) were recorded that
resulted in net pre-tax credit of $0.8 million ($0.5 million net
benefit on an after-tax basis or $0.01 per diluted share).
Income Tax Expense
Income tax expense for the first quarter of 2012 was $25.7
million, compared with $15.0 million in the first quarter of
2011. Included in 2011’s income tax provision is a benefit of
$2.3 million related to changes in the deferred tax positions of
certain international subsidiaries due to tax legislation which
reduced tax rates in those jurisdictions. Excluding this impact
and the impact from the special items previously noted, the
overall underlying annual tax rate for the first quarter of 2012
was 32.5% versus the underlying annual tax rate in the first
quarter of 2011 of 31.25%. The 2012 increase in the underlying
annual rate was primarily attributable to the expiration of
certain US tax laws such as the Research and Development credit.
Cash Flow
David Drillock, Vice President and Chief Financial Officer
commented, “Cash flows provided by operating activities were
$32.3 million for the first quarter 2012. During the quarter our
average net working capital days stayed flat at 66 compared to
the fourth quarter of 2011. Average accounts receivable days
outstanding also stayed flat at 49 days and average inventory
days increased by five to 73 days mostly as a result of the
higher demand within our growth platforms. Average accounts
payable days were up five to 56 days, again related to the
aforementioned higher demand.”
“Capital spending for the quarter was $24 million with over 50%
of the spending attributable to our growth platforms. Our
expectation for capital spending for the full year 2012 is
approximately $200 million with all of the increase from prior
year related to manufacturing capacity expansions in the
Engineered Materials and In Process Separation segments.”
Coating Resins Update
In January 2012, the Company announced that it has retained J.P.
Morgan to assist in an analysis of alternatives available to
Cytec to effect a potential separation of its entire Coating
Resins business. The Company is making good progress on its
evaluation of strategic options, and is on schedule to announce
a decision regarding the separation of the Coating Resins
business during the second quarter of 2012 with an anticipated
completion by year end.
2012 Outlook
Mr. Fleming continued, “We entered the year on a solid
footing and we remain focused on executing our strategic
imperatives to deliver growth and create value for our customers
and our shareholders. Our guidance for 2012 full year adjusted
diluted earnings per share is a range of $4.35 to $4.65 on sales
of $3.19 to $3.27 billion. This compares to sales of $3.07
billion and adjusted diluted earnings per share of $3.66 in
2011. We announced our plan to acquire Umeco Plc on April 12th.
Our expected earnings accretion from this acquisition of $0.20
per diluted share, assuming a July closing, is not included in
our full year guidance.”
Cytec’s sales and operating earnings guidance by segment follows
and as a reminder, the Company implemented organizational
changes during the first quarter of 2012 (announced in a
separate release dated today, April 19th, 2012) and the guidance
is reflective of its new segment reporting structure.
Mr. Fleming added, “In Engineered Materials, demand visibility
for this business remains good and our outlook for the global
aerospace market remains very positive. For 2012, our estimate
is for a 12% to 17% increase in revenues driven by higher build
rates in the large commercial programs and steady demand growth
in the business jet and rotorcraft sectors along with our
pricing initiatives. Sales are projected to be in a range of
$880 to $920 million versus sales of $789 million in 2011 and
operating earnings are projected to be in a range of $170
million to $180 million, up from the 2011 operating earnings of
$125 million.”
“For the In Process Separation segment, the level of customer
interest in our specialty technologies remains strong and is
driving higher volumes. With our recent purchase in India, we
are well on track to expand our existing products into new
geographies. Expectations are for full year sales to be in a
range of $375 million to $385 million compared to sales of $340
million in 2011 and for full year operating earnings to be in a
range of $78 million to $83 million, up from the 2011 operating
earnings of $70 million.
“In Additive Technologies, we anticipated a slower start this
year, particularly in Europe given the weak macroeconomic
environment. However, we still expect to see a healthy demand
for the year as we continue to drive regional expansion and new
market penetration for growth. In addition, we now have the
added capacity to meet the increased demand for our specialty
products in this segment. Taking this into account, sales are
projected to be in a range of $290 million to $300 million
compared to sales of $287 million in 2011 and for full year
operating earnings to be in a range of $40 million to $45
million, up from the 2011 operating earnings of $39.4 million.”
“For Coating Resins, customers remain cautious as they manage
inventory through uncertainties. Although we continue to expect
to offset increasing raw material costs with higher pricing, the
marketplace remains competitive, and coupled with weak
underlying fundamentals in Europe, we are expecting overall
selling volumes to be flat to down this year. One exception is
the global automotive market which continues to be strong and we
will continue to target this market where there is a positive
secular trend towards our environmentally friendly technologies.
We also expect to see the benefits of improved mix of products
from the product rationalization initiatives from 2011. Taking
all the above into account, sales are projected to be in a range
of $1,640 million to $1,660 million compared to sales of $1,657
million in 2011 and full year operating earnings are expected to
be in a range of $70 million to $75 million, in line with the
2011 operating earnings of $69 million.”
The guidance for Corporate and Unallocated expenses is
approximately $18 to $20 million for the year, Other Expense is
forecasted to be approximately $2 million, and interest expense,
net is expected to be between $36 and $38 million. The forecast
for the underlying annual tax rate is expected to be in a range
of 31.5% to 33.5%.”
Mr. Fleming concluded, “We have started the year with good
momentum, and we are well positioned to deliver strong growth in
2012. We continue to create value for our customers with our
unique technology offerings as we invest in our Engineered
Materials and In Process Separation growth platforms. Cytec is
poised to deliver another year of double-digit earnings growth
while strengthening our portfolio to provide sustained future
growth.”
Investor Conference Call to be Held on April 20, 2012 at
11:00am ET
Cytec will host their first quarter earnings release
conference call on April 20, 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
|
