ALBEMARLE CORPORATION 
BATON ROUGE, La., Jan. 22, 2013 /PRNewswire/ --
Fourth quarter 2012 highlights:
-- Quarterly earnings of $105.2 million excluding special items, or $1.17
per share.
-- Net sales of $688 million and EBITDA margin of 23 percent for the
quarter, excluding special items.
-- Full year earnings of $436.2 million excluding special items, or $4.85
per share.
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
In thousands, except per share amounts 2012 2011 2012 2011
--------------------------------------
Net sales $687,596 $707,390 $2,745,420 $2,869,005
Segment income $150,600 $165,473 $661,156 $712,033
Net income attributable to Albemarle Corporation $37,726 $45,548 $311,536 $392,114
Diluted earnings per share $0.42 $0.51 $3.47 $4.28
Special items per share
Non-operating pension and OPEB adjustments (a) 0.60 0.63 0.46 0.59
Restructuring and other special items, net (b) 0.15 -- 0.92 --
Diluted earnings per share excluding special items (d) $1.17 $1.13 $4.85 $4.88
===== ===== ===== =====
See accompanying notes and reconciliations to the condensed consolidated financial information.
Albemarle Corporation (NYSE: ALB) reported fourth quarter 2012 earnings of $37.7 million, or $0.42 per share, compared to fourth quarter 2011 earnings of $45.5 million, or $0.51 per share. Excluding special items, fourth quarter 2012 earnings were $105.2 million, or $1.17 per share, compared to $101.9 million, or $1.13 per share, for 2011. The Company reported net sales of $687.6 million in the fourth quarter of 2012 compared to net sales of $707.4 million in the fourth quarter of 2011 with lower metals surcharges in the Catalysts segment more than offsetting total company volume growth.
(Logo: http://photos.prnewswire.com/prnh/20111129/MM14279LOGO )
Earnings for the full year 2012 were $311.5 million, or $3.47 per share, compared to $392.1 million, or $4.28 per share, for 2011. Excluding special items, earnings for 2012 were $436.2 million, or $4.85 per share, compared to $446.3 million, or $4.88 per share, for 2011. Net sales for 2012 were $2.7 billion compared to $2.9 billion for 2011 with the majority of the reduction caused by lower metals surcharges in the Catalysts segment.
As previously announced, in the fourth quarter of 2012 the Company adopted mark-to-market (MTM) accounting relating to its global pension and other postretirement benefit (OPEB) plans. All historical consolidated financial information presented herein has been retrospectively adjusted to reflect this change in accounting method. The MTM actuarial loss for 2012, recorded in Corporate and other expense, amounted to $75.8 million ($48.3 million after income taxes, or $0.54 per share) reflecting a lower assumed discount rate partially offset by 2012 pension asset performance.
Commenting on results, Luke Kissam, CEO, stated, "2012 was a difficult year from a macroeconomic standpoint, but we are pleased with the earnings power that we demonstrated in the face of a weak global economy, the negative impact of raw material pricing related to certain metals and lower demand than originally anticipated in many of the markets served by our products, resulting in lower operating rates at many of our production units. At the same time, we were able to exit the phosphorus business, freeze our pension obligations and further strengthen our balance sheet while also investing sufficient capital to permit future growth across our business portfolio."
Quarterly Segment Results
Catalysts generated net sales of $294.1 million in the fourth quarter of 2012, a 2 percent increase over net sales in the fourth quarter of 2011, due mainly to favorable impacts from higher hydroprocessing and performance catalyst volumes, partially offset by lower metals surcharges in refinery catalysts and foreign currency. Catalysts segment income was $78.8 million in the fourth quarter of 2012, down 6 percent from fourth quarter 2011 results of $84.2 million due primarily to unfavorable impacts from metals cost volatility versus the fourth quarter of 2011, partially offset by favorable sales volumes and higher equity income.
Polymer Solutions reported net sales of $200.1 million in the fourth quarter of 2012, a 4 percent decrease over net sales in the fourth quarter of 2011, due to the year-over-year effects of our phosphorus flame retardants business exit in the second quarter of 2012. Higher sales volumes in our core products were offset by unfavorable pricing, mix and foreign currency impacts. Segment income for Polymer Solutions was $36.3 million in the fourth quarter of 2012, a 3 percent decline from $37.5 million in the fourth quarter of 2011, driven by unfavorable pricing, higher variable input costs including fixed cost absorption and unfavorable foreign currency impacts, partly offset by favorable sales volumes and favorable impacts from our exit of the phosphorus flame retardants business.
Fine Chemistry net sales in the fourth quarter of 2012 were $193.4 million, a 7 percent decrease versus net sales in the fourth quarter of 2011, due mainly to unfavorable pricing, lower volumes (mainly due to the timing of custom services contracts) and unfavorable foreign currency impacts. Segment income for Fine Chemistry was $35.5 million for the fourth quarter of 2012, down 19 percent from fourth quarter 2011 results of $43.8 million, due to unfavorable pricing, higher variable input costs including fixed cost absorption and impacts from higher income attributable to noncontrolling interests, partly offset by favorable sales mix.
Corporate and Other
Corporate and other expense was $98.7 million for the fourth quarter of 2012. The decrease from the comparable period in 2011 was due primarily to lower personnel-related costs associated with performance-based incentive compensation levels and lower costs from non-operating pension and OPEB items which included a fourth quarter MTM actuarial loss of $86.0 million in 2012 and $92.3 million in 2011.
Interest and financing expenses were $7.7 million for the fourth quarter of 2012 compared to $9.0 million for the fourth quarter of 2011, with this decrease due primarily to increases in interest capitalized on higher average construction project balances outstanding and lower variable-rate borrowings year-over-year.
Our fourth quarter and full year 2012 effective income tax rates were (45.6) percent and 22.0 percent, respectively. The fourth quarter rate was impacted primarily by the MTM actuarial loss. Excluding special items (see notes to the condensed consolidated financial information), our fourth quarter and full year 2012 effective income tax rates were 18.3 percent and 24.5 percent, respectively. 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 $489 million for the full year 2012, and we had $478 million in cash and cash equivalents at December 31, 2012. During 2012, cash on hand and cash provided by operations funded capital expenditures for plant, machinery and equipment of approximately $281 million (which includes approximately $78.0 million in capital expenditures associated with our Jordanian joint venture), long-term debt repayments of $63.8 million, dividends to shareholders of $69.1 million, repurchases of $63.6 million of our common stock, advances to joint ventures of $25.0 million and pension and OPEB contributions of $21.6 million.
Earnings Call
The Company's performance for the fourth quarter and the year ended December 31, 2012 will be discussed on a conference call at 9:00 AM Eastern Standard time on January 23, 2013. The call can be accessed by dialing 800-638-4930 (International Dial In # 617-614-3944), and entering conference ID 29909204. The Company's earnings presentation and supporting material can be accessed through Albemarle's website under Investors at www.albemarle.com.
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 advancing its eco-practices and solutions in its three business segments, Polymer Solutions, Catalysts and Fine Chemistry, and employs more than 4,000 people worldwide 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.
Forward-Looking Statements
Some of the information presented in this press release and the conference call and discussions that follow, including, without limitation, statements with respect to product development, changes in productivity, market trends, price, volume and mix changes, expected growth and earnings, input costs, surcharges, tax rates, stock repurchases, dividends, economic trends, outlook and all other information relating to matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ from expectations include, without limitation: changes in economic and business conditions; changes in financial and operating performance of our major customers and industries and markets served by us; the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in the demand for our products; limitations or prohibitions on the manufacture and sale of our products; availability of raw materials; changes in the cost of raw materials and energy and in our ability to pass through increases; acquisitions and divestitures, and changes in performance of acquired companies; fluctuations in foreign currencies; changes in laws and government regulation impacting our operations or our products; the occurrence of claims or litigation; the occurrence of natural disasters; the inability to maintain current levels of product or premises liability insurance or the denial of such coverage; political unrest, including terrorism or hostilities; political instability affecting our manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs; changes in the jurisdictional mix of our earnings; changes in monetary policies or inflation or interest rates, which may impact our ability to raise capital or increase our cost of funds, the performance of our pension fund investments and our pension expense and funding obligations; volatility and substantial uncertainties in the debt and equity markets; technology or intellectual property infringement and other innovation risks; decisions we may make in the future; and the other factors detailed from time to time in the reports we file with the SEC, including those described under "Risk Factors" in our Annual Report on Form 10-K and our 2012 Quarterly Reports on Form 10-Q.
Albemarle Corporation and Subsidiaries
Consolidated Statements of Income
(In Thousands Except Per Share Amounts) (Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Net sales $687,596 $707,390 $2,745,420 $2,869,005
Cost of goods sold 495,619 500,580 1,835,425 1,914,058
------- ------- --------- ---------
Gross profit 191,977 206,810 909,995 954,947
Selling, general and administrative expenses (c) 124,084 137,026 313,227 360,070
Research and development expenses 19,128 18,987 78,919 77,083
Restructuring and other charges, net (b) 16,982 -- 111,685 --
------ --- ------- ---
Operating profit 31,783 50,797 406,164 517,794
Interest and financing expenses (7,666) (8,998) (32,800) (37,574)
Other (expenses) income, net (335) (177) 1,229 357
---- ---- ----- ---
Income before income taxes and equity in net
income of unconsolidated investments 23,782 41,622 374,593 480,577
Income tax (benefit) expense (b) (10,849) (1,791) 82,533 104,134
------- ------ ------ -------
Income before equity in net income of
unconsolidated investments 34,631 43,413 292,060 376,443
Equity in net income of unconsolidated
investments (net of tax) 8,834 6,636 38,067 43,754
----- ----- ------ ------
Net income 43,465 50,049 330,127 420,197
Net income attributable to noncontrolling interests (5,739) (4,501) (18,591) (28,083)
------ ------ ------- -------
Net income attributable to Albemarle Corporation $37,726 $45,548 $311,536 $392,114
======= ======= ======== ========
Basic earnings per share $0.42 $0.51 $3.49 $4.33
Diluted earnings per share $0.42 $0.51 $3.47 $4.28
Weighted-average common shares outstanding -
basic 89,018 88,805 89,189 90,522
Weighted-average common shares outstanding -
diluted 89,660 89,819 89,884 91,522
See accompanying notes to the condensed consolidated financial information.
Albemarle Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands) (Unaudited)
December 31, December 31,
2012 2011
---- ----
ASSETS
Cash and
cash
equivalents $477,696 $469,416
Other current
assets 929,617 886,204
------- -------
Total current
assets 1,407,313 1,355,620
--------- ---------
Property, plant
and equipment 2,867,083 2,619,428
Less accumulated
depreciation 1,570,512 1,489,948
and amortization
Net property,
plant and
equipment 1,296,571 1,129,480
Other assets and
intangibles 733,407 718,724
------- -------
Total
assets $3,437,291 $3,203,824
========== ==========
LIABILITIES AND
EQUITY
Current
portion
of long-
term
debt $12,700 $14,416
Other current
liabilities 372,309 386,762
------- -------
Total current
liabilities 385,009 401,178
------- -------
Long-term debt 686,588 749,257
Other noncurrent
liabilities 370,318 296,659
Deferred income
taxes 63,368 77,903
Albemarle
Corporation
shareholders'
equity 1,833,598 1,591,277
Noncontrolling
interests 98,410 87,550
------ ------
Total
liabilities
& equity $3,437,291 $3,203,824
========== ==========
See accompanying notes to the condensed consolidated financial information.
Albemarle Corporation and Subsidiaries
Selected Consolidated Cash Flow Data
(In Thousands) (Unaudited)
Year Ended
December 31,
------------
2012 2011
Cash and
cash
equivalents
at
beginning
of year $469,416 529,650
$
Cash and
cash
equivalents
at end
of year $477,696 $469,416
Sources of cash and
cash equivalents:
Net
income $330,127 $420,197
Proceeds from
borrowings -- 9,415
Proceeds from
exercise of stock
options 21,148 2,230
Uses of cash and
cash equivalents:
Capital
expenditures (280,873) (190,574)
Repurchases of
common stock (63,575) (178,132)
Repayments of long-
term debt (63,811) (109,591)
Dividends paid to
shareholders (69,113) (57,759)
Pension and
postretirement
contributions (21,610) (59,773)
Investments in
equity and other
corporate
investments -- (10,868)
Long-term advances
to joint ventures (24,959) --
Non-cash and other
items:
Depreciation and
amortization 99,020 96,753
Restructuring and
other charges (b) 111,685 --
Pension and
postretirement
expense 77,442 97,207
Equity in net
income of
unconsolidated
investments (38,067) (43,754)
See accompanying notes to the condensed consolidated financial information.
Albemarle Corporation and Subsidiaries
Consolidated Summary of Segment Results
(In Thousands) (Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Net sales:
Polymer Solutions $200,093 $209,318 $892,232 $1,001,922
Catalysts 294,081 289,524 1,067,948 1,116,863
Fine Chemistry 193,422 208,548 785,240 750,220
Total net sales $687,596 $707,390 $2,745,420 $2,869,005
======== ======== ========== ==========
Segment operating profit:
Polymer Solutions $35,778 $36,860 $198,426 $243,396
Catalysts 71,440 78,750 260,544 290,065
Fine Chemistry 40,287 47,670 182,690 162,726
Total segment operating profit 147,505 163,280 641,660 696,187
------- ------- ------- -------
Equity in net income of unconsolidated investments:
Polymer Solutions 1,459 1,200 6,416 7,696
Catalysts 7,375 5,463 31,651 36,259
Fine Chemistry -- -- -- --
Corporate & other -- (27) -- (201)
Total equity in net income of unconsolidated investments 8,834 6,636 38,067 43,754
----- ----- ------ ------
Net (income) loss attributable to noncontrolling interests:
Polymer Solutions (966) (603) (2,221) (9,803)
Catalysts -- -- -- --
Fine Chemistry (4,773) (3,867) (16,350) (18,306)
Corporate & other -- (31) (20) 26
Total net income attributable to noncontrolling interests (5,739 (4,501) (18,591) (28,083)
------ ------ ------- -------
Segment income:
Polymer Solutions 36,271 37,457 202,621 241,289
Catalysts 78,815 84,213 292,195 326,324
Fine Chemistry 35,514 43,803 166,340 144,420
------ ------ ------- -------
Total segment income 150,600 165,473 661,156 712,033
Corporate & other (a) (98,740) (112,541) (123,831) (178,568)
Restructuring and other charges, net(b) (16,982) -- (111,685) --
Interest and financing expenses (7,666) (8,998) (32,800) (37,574)
Other (expenses) income, net (335) (177) 1,229 357
Income tax benefit (expense) (b) 10,849 1,791 (82,533) (104,134)
Net income attributable to Albemarle Corporation $37,726 $45,548 $311,536 $392,114
======= ======= ======== ========
See accompanying notes to the condensed consolidated financial information.
Notes to the Condensed Consolidated Financial Information
(a) Non-operating pension and OPEB items, consisting of MTM actuarial gains/losses as well as interest costs and expected return on assets, are included in Corporate & other as follows:
-- For the three months ended December 31, 2012 and 2011, net charges
amounting to $84.2 million ($53.6 million after income taxes, or $0.60
per share) and $89.1 million ($56.3 million after income taxes, or $0.63
per share), respectively. The MTM actuarial loss was $86.0 million
($54.8 million after income taxes, or $0.61 per share) and $92.3 million
($58.4 million after income taxes, or $0.65 per share) for the three
months ended December 31, 2012 and 2011, respectively.
-- For the years ended December 31, 2012 and 2011, net charges amounting to
$65.3 million ($41.7 million after income taxes, or $0.46 per share) and
$85.8 million ($54.2 million after income taxes, or $0.59 per share),
respectively. The MTM actuarial loss was $75.8 million ($48.3 million
after income taxes, or $0.54 per share) and $98.6 million ($62.3 million
after income taxes, or $0.68 per share) for the years ended December 31,
2012 and 2011, respectively.
(b) Restructuring and other special items consisted of the following:
Three months ended December 31, 2012 --
-- A one-time employer contribution to the Company's defined contribution
plan of $10.1 million ($6.4 million after income taxes, or $0.07 per
share) and a net curtailment gain of $4.5 million ($2.9 million after
income taxes, or $0.03 per share), both in connection with various
amendments to certain of our U.S. pension and defined contribution
plans.
-- Net charges of $11.4 million ($6.8 million after income taxes, or $0.08
per share) in connection with various restructuring-related activities
across the Company including certain planned reductions in force,
changes in product sourcing and other items.
-- Discrete net tax expense items of $3.5 million, or $0.03 per share,
relating to tax planning and other tax matters.
Year ended December 31, 2012 --
-- A one-time employer contribution to the Company's defined contribution
plan of $10.1 million ($6.4 million after income taxes, or $0.07 per
share) and a net curtailment gain of $4.5 million ($2.9 million after
income taxes, or $0.03 per share), both in connection with various
amendments to certain of our U.S. pension and defined contribution
plans.
-- Net charges amounting to $100.8 million ($76.1 million after income
taxes, or $0.85 per share) in connection with our exit of the phosphorus
flame retardants business, and other charges amounting to $5.3 million
($4.3 million after income taxes, or $0.04 per share) relating to
changes in product sourcing and other items.
-- Discrete net tax benefit items of $1.0 million, or $0.01 per share,
related principally to tax planning and the release of various tax
reserves.
(c) The year ended December 31, 2012 includes a gain of $8.1 million ($5.1 million after tax, or $0.06 per share) resulting from proceeds received in connection with the settlement of litigation (net of related legal fees). The year ended December 31, 2012 also includes an $8 million charitable contribution ($5.1 million after tax, or $0.06 per share) to the Albemarle Foundation.
(d) Totals may not add due to rounding.
Additional Information
It should be noted that Net income attributable to Albemarle Corporation ("earnings"), earnings per share and effective income tax rates which exclude special items, as well as presentations of segment operating profit, segment income, EBITDA, EBITDA excluding special items, EBITDA margin and EBITDA margin excluding special items are financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. These measures are presented here to provide additional useful measurements to review our operations, provide transparency to investors and enable period-to-period comparability of financial performance.
A description of other non-GAAP financial measures that we use to evaluate our operations and financial performance, and reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, can be found in the Investors section of our website at www.albemarle.com, under "Non-GAAP Reconciliations" under "Financials." Also, see attached for a supplemental reconciliation of our segment operating profit and segment income amounts to GAAP Operating profit and GAAP Net income attributable to Albemarle Corporation, respectively, as well as for a supplemental reconciliation of our GAAP Net income attributable to Albemarle Corporation to EBITDA and EBITDA excluding special items.
ALBEMARLE CORPORATION AND SUBSIDIARIES
Non-GAAP Reconciliation
(In Thousands)
(Unaudited)
Our segment information includes measures we refer to as "segment operating profit," "segment income," "EBITDA" and "EBITDA excluding special items," which are financial measures that are not required by, or presented in accordance with, GAAP. The Company has reported segment operating profit, segment income, EBITDA and EBITDA excluding special items because management believes that these financial measures provide transparency to investors and enable period-to-period comparability of financial performance. Segment operating profit, segment income, EBITDA and EBITDA excluding special items should not be considered as alternatives to operating profit or net income attributable to Albemarle Corporation, as determined in accordance with GAAP.
See below for a reconciliation of segment operating profit and segment income, the non-GAAP financial measures, to Operating profit and Net income attributable to Albemarle Corporation, respectively, the most directly comparable financial measures calculated and reported in accordance with GAAP.
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Total segment operating profit $147,505 $163,280 $641,660 $696,187
Corporate & other * (98,740) (112,483) (123,811) (178,393)
Restructuring and other charges, net (16,982) -- (111,685) --
------- ---
GAAP Operating profit $31,783 $50,797 $406,164 $517,794
======= ======= ======== ========
Total segment income $150,600 $165,473 $661,156 $712,033
Corporate & other (98,740) (112,541) (123,831) (178,568)
Restructuring and other charges, net (16,982) -- (111,685) --
Interest and financing expenses (7,666) (8,998) (32,800) (37,574)
Other (expenses) income, net (335) (177) 1,229 357
Income tax benefit (expense) 10,849 1,791 (82,533) (104,134)
------ ----- ------- --------
GAAP Net income attributable to Albemarle Corporation $37,726 $45,548 $311,536 $392,114
======= ======= ======== ========
* Excludes corporate equity income and noncontrolling interest adjustments of $(58) for the three-month period ended December 31, 2011, and $(20) and $(175) for the years ended December 31, 2012 and 2011, respectively.
See below for a reconciliation of net income attributable to Albemarle Corporation excluding special items, EBITDA and EBITDA excluding special items, the non-GAAP financial measures, to net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with GAAP. EBITDA is defined as Net income attributable to Albemarle Corporation before interest and financing expenses, income taxes, depreciation and amortization. EBITDA excluding special items is defined as EBITDA before the special items as listed below.
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Net income attributable to Albemarle Corporation $37,726 $45,548 $311,536 $392,114
======= ======= ======== ========
Add back:
Non-operating pension and OPEB adjustments (net of tax) 53,649 56,331 41,729 54,231
Restructuring and other charges, net (net of tax) 10,333 -- 83,923 --
Discrete tax items, net 3,504 -- (986) --
----- --- ---- ---
Net income attributable to Albemarle Corporation excluding
special items $105,212 $101,879 $436,202 $446,345
======== ======== ======== ========
Net income attributable to Albemarle Corporation $37,726 $45,548 $311,536 $392,114
======= ======= ======== ========
Add back:
Interest and financing expenses 7,666 8,998 32,800 37,574
Income tax (benefit) expense (10,849) (1,791) 82,533 104,134
Depreciation and amortization 24,592 24,827 99,020 96,753
------ ------ ------ ------
EBITDA 59,135 77,582 525,889 630,575
Non-operating pension and OPEB adjustments 84,220 89,083 65,316 85,765
Restructuring and other charges, net 16,982 -- 111,685 --
EBITDA excluding special items $160,337 $166,665 $702,890 $716,340
======== ======== ======== ========
Net sales $687,596 $707,390 $2,745,420 $2,869,005
======== ======== ========== ==========
EBITDA Margin 8.6% 11.0% 19.2% 22.0%
=== ==== ==== ====
EBITDA Margin excluding special items 23.3% 23.6% 25.6% 25.0%
==== ==== ==== ====
SOURCE Albemarle Corporation
