Cytec Announces Fourth Quarter 2011 Results
(Thomson Reuters ONE) -
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.
Contact:
Jodi Allen (Investor Relations)
(973) 357-3283
Q4 2011 Financial Tables:
http://hugin.info/146098/R/1581590/494029.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Cytec Industries Inc via Thomson Reuters ONE
[HUG#1581590]
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Datum: 31.01.2012 - 22:06 Uhr
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