Press Releases
Contact:
Jodi Allen (Investor Relations)
(973) 357-3283
Cytec Announces Third Quarter
2009 Results Increases Full Year EPS Outlook
Woodland Park, New Jersey, October 15, 2009 – Cytec Industries
Inc. (NYSE:CYT) announced today net earnings for the third
quarter 2009 of $12.5 million or $0.26 per diluted share on net
sales of $740 million. Included in the quarter are several
special items that total $15.1 million of net expense after-tax
or $0.31 per diluted share and are outlined further in this
release. Excluding these special items, net earnings were $27.6
million or $0.57 per diluted share.
Net earnings for
the third quarter of 2008 were $46.3 million or $0.96 per
diluted share on net sales of $963.0 million. Included in the
2008 quarter were several special items that totaled $4.9
million of net expense after-tax or $0.10 per diluted share.
Excluding these special items, net earnings were $51.2 million
or $1.06 per diluted share.
Shane Fleming,
Chairman, President and Chief Executive Officer commented, “We
are pleased with the positive results of the third quarter. Our
cost reduction efforts are benefiting us particularly in the
Coating Resins segment, where we have seen a significant
improvement in earnings from the first half of this year.
Coating Resins had sequential improvement in sales from the
second to the third quarter 2009 and this modest improvement in
selling volumes, lower raw material costs, plus our cost
reduction initiatives led to the improved earnings. We believe
the selling volume improvement signals customer restocking
activity across the specialty chemicals segments. In Engineered
Materials, the reduction in sales for the quarter was attributed
to the continued destocking by parts manufacturers within the
commercial transport market while the build rates in the
business and regional jet markets were well below the prior year
period. In response to this, we took additional restructuring
actions in this segment during the quarter. Finally, we again
had excellent cash flow from operations in large part due to the
success of our company-wide emphasis on reducing working
capital.”
Cytec Coating Resins sales decreased 23% to $336 million;
Operating Earnings decreased to $18.5 million.
In Coating Resins, overall selling volumes were down by 16%
versus the third quarter 2008, with lower demand in industrial
markets versus the prior year period. However, volumes improved
12% versus the second quarter 2009, reflecting partial recovery
as a result of customer restocking. Selling prices versus third
quarter 2008 decreased by 5% in response to competitive
pressures and lower raw material costs, while the effect of
exchange rates decreased sales by 2%.
Operating earnings of $18.5 million were down
versus earnings of $22.7 million in the third quarter 2008
principally due to the weaker selling volumes across each
product line in the segment and reduced production rates. This
was partially offset by lower raw material costs and the
benefits from the cost improvement initiatives.
Cytec Additive Technologies sales
decreased 20% to $65 million; Operating Earnings decreased to
$3.1 million.
In Additive Technologies, overall selling volumes were down 18%
versus the third quarter 2008, primarily due to the exit of
several commodity products and partially due to the economic
slowdown. Selling prices decreased by 1% and the impact of
exchange rates decreased sales by 1%.
Operating earnings of $3.1 million were down
versus $6.1 million of earnings in the third quarter 2008 mainly
as a result of the lower selling volumes and production rates.
Cytec In Process Separation sales
decreased 14% to $71 million; Operating Earnings decreased to
$12.5 million.
In Process Separation selling volumes decreased by 12% versus
the third quarter 2008, primarily a result of lower demand in
mining product lines versus the prior period. However, selling
volumes increased 16% when compared to second quarter 2009 due
to demand improvement as destocking activity slowed throughout
the segment. Selling prices versus third quarter 2008 decreased
by 1% and the impact of exchange rates decreased sales by 1%.
Operating earnings of $12.5 were down compared
to $19.0 million in the prior year quarter, primarily due to
lower selling volumes and reduced production rates.
Cytec
Engineered Materials sales decreased by 24% to $169 million;
Operating Earnings decreased to $18.3 million.
In Engineered Materials, selling volumes decreased by 24% versus
the third quarter 2008, driven by build rate reductions in
business and regional jets, inventory destocking by parts
manufacturers within the commercial transport sector, and sales
volume reductions in the high performance automotive market.
Selling prices increased by 1% and exchange rates reduced sales
by 1%.
Operating earnings
of $18.3 million were down versus earnings of $40.6 million in
the third quarter 2008, principally as a result of lower selling
volumes and reduced production rates.
Cytec
Building Block Chemicals sales decreased by 29% to $99 million;
Operating Earnings increased to $4.8 million.
In Building Block Chemicals, selling volumes increased 22%
versus the third quarter 2008, which is primarily related to the
improved demand for acrylonitrile into the acrylic fibers
market. Selling prices decreased by 51% given the significantly
lower cost of propylene and ammonia versus the third quarter of
2008.
Operating earnings
were $4.8 compared to an operating loss of $1.3 million in the
third quarter 2008. This is partially related to the increased
selling volumes but also related to the prior year’s negative
impact of the hurricane Gustav which led to additional costs in
the third quarter 2008.
Special
Items
In the third quarter of 2009 a number of special items were
recorded that resulted in a net pre-tax charge of $21.7 million
($15.1 million after-tax or $0.31 per diluted share) as follows:
-
Included
primarily in manufacturing cost of sales and operating
expenses is a pre-tax charge of $22.0 million ($15.3 million
after-tax or $0.32 per diluted share) associated with
various restructuring initiatives across Specialty
Chemicals, Engineered Materials, and Corporate operations.
-
Included in
other income is a net pre-tax loss of $8.6 million ($5.5
million after-tax or $0.11 per diluted share) associated
with the premium paid on the debt tender completed in July
2009.
-
Included in
other income is a pre-tax non-cash gain of $8.9 million
($5.7 million after-tax or $0.12 per diluted share) due to
completion of a sale of land in 2009 for which the purchase
price had been prepaid in 2004.
Income Tax
Expense
The tax provision for the third quarter of 2009 was $7.6
million, compared with a tax provision of $23.1 million in the
third quarter of 2008. Excluding the impact from the special
items previously noted, the overall underlying annual effective
tax rate for the third quarter of 2009 is 34%. The increase over
the prior year’s underlying rate of 31.7% is primarily due to a
greater percent of earnings in higher tax jurisdictions and
limitations on certain favorable U.S. tax benefits.
Cash Flow
David Drillock, Vice President and Chief Financial Officer
commented, “Cash flow from operations was $165 million for the
third quarter 2009 reflecting the excellent progress of our
working capital initiative. Trade accounts receivable increased
by $3 million and days outstanding were flat versus the end of
the second quarter. Inventory decreased by $44 million and days
on hand was reduced by 4 versus the second quarter as a result
of our focused efforts to reduce inventory levels. Accounts
payable also showed an increase of $39 million in the quarter
with our days payable outstanding increasing by 6 days. Capital
spending for the quarter was $43 million, with approximately 60%
related to Engineered Materials projects. The majority of the
spending in Engineered Materials is related to payments for
equipment for the previously delayed carbon fiber plant in South
Carolina and completion of the composites manufacturing plant in
China.”
Mr. Drillock continued, “Early in the quarter we completed an
offering of $250 million principal amount of 8.95% senior
unsecured Notes due 2017. We used those proceeds to purchase
$235 million principal amount of our 5.5% Notes maturing October
2010 and $15 million principal amount of our 4.6% Notes maturing
July 2013, which significantly improved our debt maturity
profile. We further reduced our debt by $43 million due to our
excellent cash flows in the third quarter 2009, which brings our
year to date debt reduction to $153 million.”
2009 Outlook
Mr. Fleming commented, “Our results this past quarter
demonstrate the excellent progress we have made with our
restructuring efforts and our working capital initiative. In
addition, the sales growth versus the second quarter shows
evidence of restocking activity across the Specialty Chemicals
markets. These are positive events, but we remain cautious about
the remainder of the year if restocking is not replaced by
growth in underlying demand. After taking all this into account,
we are increasing our guidance for full year adjusted diluted
earnings per share to $0.80 to $1.00 per diluted share from our
prior guidance of $0.60 to $0.90 per diluted share.”
Coating Resins has seen demand
improvement and is beginning to realize the cost saving benefits
of the restructuring activities. However, the expectations in
the fourth quarter include normal seasonal demand fluctuations
as year end approaches. Taking the improvements and the
seasonality into consideration, the estimate for full year
operating loss is in a range of $10 to $15 million for this
segment, down from the prior operating loss range of $32 to $40
million.
Additives Technologies has begun
to see restocking by customers and also anticipates some
seasonality in the fourth quarter. The estimate is for full year
operating earnings to be in a range of $8 to $10 million for
this segment, slightly changed from the prior earnings range of
$8 to $12 million.
Demand has also improved in the
In Process Separation segment related to both mining and
phosphine chemicals product lines, as their new technologies
continue to penetrate the copper and alumina markets. Due to
timing issues for certain shipments close to year end, it is
possible some deliveries may move into the first quarter of
2010. As a result, the estimate for full year operating earnings
for this segment is to be in a range of $30 to $35 million, down
from the prior range of $32 to $40 million.
In Engineered Materials,
destocking actions are expected to continue across the
commercial transport sector, and the business foresees continued
weak demand in the business/regional jet and high performance
industrial markets. As a result, the estimate for full year
operating earnings is to be in a range of $85 to $90 million,
down from our prior range of $100 to $105 million.
Building Block Chemicals has seen
demand improve for acrylonitrile, but melamine remains
challenged by weak demand in the building and construction
market. The business expects a softer fourth quarter, and now
estimate full year operating earnings to be approximately $12
million, up from the prior estimate of $5 million.
The updated guidance for
Corporate and Unallocated is an expense of approximately $25
million for the year, and interest expense, net, is expected to
be between $28 and $29 million. The forecast for the underlying
annual tax rate for ongoing operations is expected to be
approximately 34%.
In closing, Mr. Fleming
commented, “I am extremely pleased with the successful execution
of our restructuring and working capital initiatives. The work
we have completed to date is already delivering significant cost
savings and cash flow benefits while positioning Cytec to better
leverage future demand growth into stronger earnings and cash
flow generation. We remain focused on our growth strategy of
delivering high-performance technologies that create value for
our customers; we have therefore kept intact our investment in
the research and technology activities and plant capacity to
support our growth platforms throughout our restructuring. I am
confident in our ability to continue to execute our plans which
will deliver increasing shareholder value.”
Nine Month Results
Net loss for nine months ended September 30, 2009 was $12.4
million or $0.26 per diluted share on sales of $2,038 million.
Included in the results for the nine months were (a) pre-tax net
restructuring charges of $59.5 million ($40.4 million after-tax
or $0.85 per diluted share), (b) net pre-tax charges of $1.4
million for the exit of the polyurethanes product line ($1.9
million after-tax or $0.04 per diluted share), (c) a net pre-tax
loss of $8.6 million ($5.5 million after-tax or $0.11 per
diluted share) associated with the premium for the debt tender,
and (d) a pre-tax non-cash gain of $8.9 million ($5.7 million
after-tax or $0.12 per diluted share) as a result of a land
sale. Excluding these items, net earnings were $29.7 million or
$0.62 per diluted share.
Net earnings for the nine months ended September 30, 2008 were
$152.0 million or $3.12 per diluted share on sales of $2,942
million. Included in the results for the nine months were (a)
net pre-tax restructuring charges of $10.8 million ($7.6 million
after-tax or $0.16 per diluted share), (b) a pre-tax charge of
$4.2 million ($2.7 million after-tax or $0.06 per diluted share)
for accelerated depreciation of our Pampa site. Excluding these
items, net earnings were $162.3 million or $3.33 per diluted
share.
Investor Conference Call to be Held on October 16, 2009
at 11:00am ET
Cytec will host their third quarter earnings release conference
call on October 16, 2009 at 11:00am ET. The conference call will
also be simultaneously webcast for all investors from Cytec’s
website www.cytec.com. 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 Industries Inc. is a global specialty chemicals and
materials company focused on developing, manufacturing and
selling value-added products. Our products serve a diverse range
of end markets including aerospace, adhesives, automotive and
industrial coatings, chemical intermediates, inks, mining and
plastics. We use our technology and application development
expertise to create chemical and material solutions that are
formulated to perform specific and important functions in the
finished products of our customers.
(Click
Here For Financial Tables)
Back to All Press Releases
|
