Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )
 November 4, 2015 - 5:39 PM EST
Print Email Article Font Down Font Up
Albemarle reports third quarter 2015 results

BATON ROUGE, La., Nov. 4, 2015 /PRNewswire/ --

Third quarter 2015 highlights:

  • Adjusted earnings of $0.90 per share.
  • Three core business units grew adjusted EBITDA by 8% versus prior year, and achieved adjusted EBITDA margins of 31%, excluding unfavorable currency exchange impacts.
  • Actions to date will result in approximately $60 million in 2015 acquisition synergies, exceeding previous expectations.
  • Full year EPS guidance at $3.65 to $3.80; within prior guidance range.
  • In October, refinanced $1.25 billion of 4.625% senior notes assumed from Rockwood at lower rate.
Albemarle Corp. Logo.

 


Three Months Ended


Nine Months Ended


September 30,


September 30,

In thousands, except per share amounts

2015


2014


2015


2014

Net sales

$

905,093



$

642,418



$

2,720,982



$

1,846,982


Adjusted EBITDA

$

234,996



$

144,604



$

730,705



$

425,322


Net income from continuing operations

$

70,872



$

88,019



$

177,387



$

243,427


Net income attributable to Albemarle Corporation

$

65,392



$

72,794



$

160,654



$

151,824


Diluted earnings per share

$

0.58



$

0.93



$

1.44



$

1.91


   Non-operating pension and OPEB items(a)



0.01



(0.03)



0.11


   Special items(b)

0.32



0.12



1.49



0.32


   Discontinued operations(c)



0.08





0.87


Adjusted diluted earnings per share(d)

$

0.90



$

1.14



$

2.91



$

3.21



See accompanying notes (a) through (d) to the condensed consolidated financial information and non-GAAP reconciliations.

 

Albemarle Corporation (NYSE: ALB) reported third quarter 2015 earnings of $65.4 million, or $0.58 per diluted share, compared to third quarter 2014 earnings of $72.8 million, or $0.93 per diluted share. Third quarter 2015 adjusted earnings were $100.9 million, or $0.90 per diluted share, compared to $89.5 million, or $1.14 per diluted share, for the third quarter of 2014 (see notes to the condensed consolidated financial information). The Company reported net sales of $905.1 million in the third quarter of 2015, up from net sales of $642.4 million in the third quarter of 2014, driven primarily by the acquisition of Rockwood Holdings, Inc. ("Rockwood"), which closed January 12, 2015, partly offset by the impact of lower sales volumes and unfavorable currency exchange impacts.

Earnings for the nine months ended September 30, 2015 were $160.7 million, or $1.44 per diluted share, compared to $151.8 million, or $1.91 per diluted share, for the same period in 2014. Adjusted earnings for the nine months ended September 30, 2015 (including $52.4 million in non-cash currency exchange transaction gains from the first quarter) were $323.2 million, or $2.91 per diluted share, compared to $254.7 million, or $3.21 per diluted share, for 2014. Net sales for the nine months ended September 30, 2015 were $2.72 billion, up from net sales of $1.85 billion, driven primarily by the acquisition of Rockwood, partly offset by the impact of lower sales volumes and unfavorable currency exchange impacts.

"Albemarle's core businesses continued to perform well in the third quarter. Through the first nine months of 2015, these businesses delivered 8% adjusted EBITDA growth and 30% margin rates on a constant currency basis," said Albemarle's President and CEO, Luke Kissam. "Our integration synergies have exceeded expectations to date, and our free cash flow remains in-line with prior guidance."

The acquisition of Rockwood was completed on January 12, 2015 for a purchase price of approximately $5.7 billion. The cash consideration was funded with proceeds from senior notes the Company issued in 2014 and borrowings under the Company's term loan credit agreement, cash bridge facility and revolving credit agreement. The results of Rockwood from January 1, 2015 to January 12, 2015 ("stub period") are excluded from the year-to-date financial results presented herein. Excluded net sales and adjusted EBITDA for the stub period were $33.2 million and $3.4 million, respectively.

Quarterly Segment Results

In order to provide a meaningful comparison of the results of operations, where applicable, segment results for the third quarter and nine months ended September 30, 2015 are compared to pro forma segment results for the comparative periods of 2014. The 2014 pro forma segment results are based on the historical combined consolidated financial statements of Albemarle and Rockwood and were prepared to illustrate the effects of the integration of the Rockwood business, as well as the first quarter 2015 change in reporting structure. This supplemental pro forma financial information is also located on the Company's website and in Albemarle's Current Report on Form 8-K which was filed on April 13, 2015.

Performance Chemicals reported net sales of $399.5 million in the third quarter of 2015, a decrease of 4.2% from third quarter 2014 pro forma net sales of $417.1 million. Net sales were impacted by $16.6 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $1.0 million decrease in net sales was predominantly due to lower sales volumes for Bromine almost fully offset by higher Lithium and Performance Catalyst Solutions ("PCS") sales volumes and favorable pricing in Bromine, Lithium and PCS. Adjusted EBITDA for Performance Chemicals was $136.2 million, an increase of 6.2% from third quarter 2014 pro forma results of $128.2 million. Adjusted EBITDA was impacted by $5.9 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $13.9 million increase in adjusted EBITDA was primarily driven by favorable Bromine, Lithium and PCS pricing as well as earnings from our Talison joint venture, offset slightly by lower overall sales volumes.

Refining Solutions generated net sales of $185.1 million in the third quarter of 2015, a decrease of 15.5% from net sales of $219.0 million in the third quarter of 2014. Net sales were impacted by $9.1 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $24.8 million decrease in net sales was primarily driven by unfavorable Clean Fuels Technology volumes and price partly offset by favorable Heavy Oil Upgrading volumes. Adjusted EBITDA for Refining Solutions was $54.5 million in the third quarter of 2015, a decrease of 11.6% from third quarter 2014 results of $61.7 million. Adjusted EBITDA was impacted by $3.3 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $3.9 million decrease in adjusted EBITDA was primarily due to lower Clean Fuels Technology sales volumes and price partly offset by favorable Heavy Oil Upgrading volumes.

Chemetall® Surface Treatment reported net sales of $211.9 million in the third quarter of 2015, an increase of 1.5% from third quarter 2014 pro forma net sales of $208.8 million. Net sales were impacted by $26.3 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $29.4 million increase in net sales was primarily due to increased sales volumes related to the acquisition of the remaining shares of the Chemetall Shanghai joint venture in February of this year and favorable pricing. Adjusted EBITDA for Chemetall Surface Treatment was $53.9 million in the third quarter of 2015, an increase of 4.7% from third quarter 2014 pro forma results of $51.5 million. Adjusted EBITDA was impacted by $5.5 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $7.9 million increase in adjusted EBITDA was primarily due to higher overall sales volumes and favorable pricing offset slightly by increased selling, general, and administrative expenses primarily associated with the Chemetall Shanghai joint venture acquisition.

All Other net sales were $102.2 million in the third quarter of 2015, a decrease of 32.3% from pro forma net sales of $151.1 million in the third quarter of 2014. Net sales were impacted by $12.9 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $36.0 million decrease in net sales was primarily due to unfavorable Fine Chemistry Services volumes. All Other adjusted EBITDA was $6.3 million in the third quarter of 2015, a decrease of 77.2% from third quarter 2014 pro forma results of $27.4 million. Adjusted EBITDA was impacted by $1.4 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $19.7 million decrease in adjusted EBITDA was primarily due to lower Fine Chemistry Services sales volumes offset slightly by lower selling, general and administrative expenses.

In summary, total net sales of $905.1 million, a decrease of $93.6 million or 9.4% from third quarter 2014 pro forma net sales of $998.7 million, was unfavorably impacted by currency exchange of $64.9 million. Excluding currency exchange impacts, net sales for the period would have been down 2.9% as compared to the prior year. Total adjusted EBITDA of $235.0 million, a decrease of $1.2 million or 0.1% from third quarter 2014 pro forma adjusted EBITDA of $236.2 million, was unfavorably impacted by currency exchange of $16.5 million (including $0.4 million of unfavorable foreign currency exchange impacts on Corporate results). Excluding currency exchange impacts, adjusted EBITDA for the period would have been up 6.5% as compared to the prior year.

Corporate Results

Corporate adjusted EBITDA was $(15.9) million in the third quarter of 2015 compared to $(32.6) million pro forma adjusted EBITDA in the third quarter of 2014. The $16.7 million improvement is primarily related to achieved synergies.

Income Taxes

Our adjusted effective income tax rates, which exclude discontinued operations, special and non-operating pension and OPEB items, were 26.6% and 18.9% for the third quarter of 2015 and 2014, 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. The effective tax rate increase compared to the prior year is primarily driven by the Rockwood acquisition, which caused a reduction in various benefits in our effective tax rate.

Cash Flow

Our cash flow from operations was approximately $316.9 million for the nine months ended September 30, 2015, down 26% versus the same period in 2014 primarily due to significant cash expenses in the current period related to the Rockwood acquisition, including acquisition fees, costs to deliver synergy projects, and tax payments to repatriate cash from overseas. We had $234.5 million in cash and cash equivalents at September 30, 2015 as compared to $2.5 billion at December 31, 2014. Cash on hand, cash provided by operations, a return of capital from an unconsolidated investment and proceeds from borrowings funded $2.1 billion for acquisitions, $164.6 million of capital expenditures for plant, machinery and equipment and dividends to shareholders of $86.8 million during the nine months ended September 30, 2015.

Outlook

The outlook for the full year results reflects continued strength in Lithium and Performance Catalyst Solutions, and on track results in Refining Solutions and Chemetall Surface Treatment. However, the outlook is impacted by a lower forecast for Fine Chemistry Services. Full year adjusted EBITDA is now expected to range from $940 million to $960 million; adjusted EPS is expected to be $3.65 to $3.80; adjusted free cash flow is expected to range from $475 million to $525 million.

Earnings Call

The Company's performance for the third quarter ended September 30, 2015 will be discussed on a conference call at 9:00 AM Eastern time on November 5, 2015. The call can be accessed by dialing 888-713-4214 (International Dial-In # 617-213-4866), and entering conference ID 93072672. 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 premier specialty chemicals company with leading positions in attractive end markets around the world. With a broad customer reach and diverse end markets, Albemarle develops, manufactures and markets technologically advanced and high value added products, including lithium and lithium compounds, bromine and bromine derivatives, catalysts and surface treatment chemistries used in a wide range of applications including consumer electronics, flame retardants, metal processing, plastics, contemporary and alternative transportation vehicles, refining, pharmaceuticals, agriculture, construction and custom chemistry services. Albemarle is focused on delivering differentiated, performance-based technologies that deliver innovative and sustainable solutions to its customers. The Company employs approximately 6,900 people 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 the markets it serves.

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 the transaction with Rockwood and the anticipated consequences and benefits of the transaction, product development, changes in productivity, market trends, price, expected growth and earnings, input costs, surcharges, tax rates, stock repurchases, dividends, cash flow generation, costs and cost synergies, portfolio diversification, 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 materially 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; changes in our markets in general; 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 affecting the global economy; 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 and changes in tax laws and rates; changes in monetary policies, inflation or interest rates; volatility and substantial uncertainties in the debt and equity markets; technology or intellectual property infringement; decisions we may make in the future; the ability to successfully operate and integrate Rockwood's operations and realize estimated synergies; and the other factors detailed from time to time in the reports we file with the SEC, including those described under "Risk Factors" in the joint proxy statement / prospectus we filed in connection with the transaction with Rockwood, and in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date of this press release. We assume no obligation to provide any revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.

 

Albemarle Corporation and Subsidiaries

Consolidated Statements of Income

(In Thousands Except Per Share Amounts) (Unaudited)



Three Months Ended


Nine Months Ended


September 30,


September 30,


2015


2014


2015


2014

Net sales

$

905,093



$

642,418



$

2,720,982



$

1,846,982


Cost of goods sold(a)(b)

592,883



436,972



1,849,740



1,238,574


Gross profit

312,210



205,446



871,242



608,408


Selling, general and administrative expenses(a)

137,615



66,012



421,092



211,127


Research and development expenses

25,295



22,407



77,123



66,916


Restructuring and other, net(b)

(6,804)



293



(6,804)



20,625


Acquisition and integration related costs(b)

42,798



10,261



126,487



15,104


Operating profit

113,306



106,473



253,344



294,636


Interest and financing expenses(b)

(32,058)



(8,749)



(100,986)



(26,255)


Other income (expenses), net(b)

466



(6,618)



50,964



(6,454)


Income from continuing operations before income taxes and equity in net income of unconsolidated investments

81,714



91,106



203,322



261,927


Income tax expense(b)

16,892



11,737



48,171



46,700


Income from continuing operations before equity in net income of unconsolidated investments

64,822



79,369



155,151



215,227


Equity in net income of unconsolidated investments (net of tax)(b)

6,050



8,650



22,236



28,200


Net income from continuing operations

70,872



88,019



177,387



243,427


Loss from discontinued operations (net of tax)(c)



(6,679)





(68,473)


Net income

70,872



81,340



177,387



174,954


Net income attributable to noncontrolling interests

(5,480)



(8,546)



(16,733)



(23,130)


Net income attributable to Albemarle Corporation

$

65,392



$

72,794



$

160,654



$

151,824


Basic earnings (loss) per share








     Continuing operations

$

0.58



$

1.02



$

1.45



$

2.79


     Discontinued operations



(0.09)





(0.87)



$

0.58



$

0.93



$

1.45



$

1.92


Diluted earnings (loss) per share








     Continuing operations

$

0.58



$

1.01



$

1.44



$

2.78


     Discontinued operations



(0.08)





(0.87)



$

0.58



$

0.93



$

1.44



$

1.91


Weighted-average common shares outstanding – basic

112,202



78,244



110,840



78,880


Weighted-average common shares outstanding – diluted

112,544



78,659



111,205



79,287




See accompanying notes to the condensed consolidated financial information.


 

 

Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)



September 30,


December 31,


2015


2014

ASSETS




Cash and cash equivalents

$

234,490



$

2,489,768


Other current assets

1,486,425



859,082


Total current assets

1,720,915



3,348,850


Property, plant and equipment

4,096,921



2,620,670


Less accumulated depreciation and amortization

1,496,069



1,388,802


Net property, plant and equipment

2,600,852



1,231,868


Other assets and intangibles

5,353,297



642,385


Total assets

$

9,675,064



$

5,223,103


LIABILITIES AND EQUITY




Current portion of long-term debt

$

284,368



$

711,096


Other current liabilities

1,038,180



428,790


Total current liabilities

1,322,548



1,139,886


Long-term debt

3,558,964



2,223,035


Other noncurrent liabilities

757,194



314,663


Deferred income taxes

761,844



56,884


Albemarle Corporation shareholders' equity

3,144,489



1,359,465


Noncontrolling interests

130,025



129,170


Total liabilities and equity

$

9,675,064



$

5,223,103



See accompanying notes to the condensed consolidated financial information.

 

 

Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)



Nine Months Ended


September 30,


2015


2014

Cash and cash equivalents at beginning of year

$

2,489,768



$

477,239


Cash and cash equivalents at end of period

$

234,490



$

653,120


Sources of cash and cash equivalents:




Net income

$

177,387



$

174,954


Cash proceeds from divestitures, net

6,133



104,718


Proceeds from borrowings of long-term debt

1,000,000




Dividends received from unconsolidated investments and nonmarketable securities

57,149



37,854


Return of capital from unconsolidated investment

98,000




Decrease in restricted cash

57,550




Working capital changes

14,823



89,020


Uses of cash and cash equivalents:




Capital expenditures

(164,568)



(76,682)


Acquisition of Rockwood, net of cash acquired

(2,051,645)




Other acquisitions, net of cash acquired

(48,845)




Repurchases of common stock



(150,000)


Repayments of long-term debt

(1,332,293)



(3,023)


Repayments of other borrowings, net

(16,854)



(23,554)


Pension and postretirement contributions

(16,673)



(10,718)


Dividends paid to shareholders

(86,770)



(62,827)


Dividends paid to noncontrolling interests

(23,195)



(7,612)


Non-cash and other items:




Depreciation and amortization

200,372



78,344


(Gain) loss associated with restructuring and other

(6,804)



6,333


Loss on disposal of businesses



85,515


Pension and postretirement (benefit) expense

(232)



21,946


Deferred income taxes

(53,593)



(24,412)


Equity in net income of unconsolidated investments (net of tax)

(22,236)



(28,200)




See accompanying notes to the condensed consolidated financial information.


 

 

Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands) (Unaudited)



Three Months Ended


Nine Months Ended


September 30,


September 30,


Actual


Actual


Pro forma


Actual


Actual


Pro forma


2015


2014


2014


2015


2014


2014

Net sales:












Performance Chemicals

$

399,536



$

299,947



$

417,112



$

1,224,864



$

856,221



$

1,205,930


Refining Solutions

185,102



218,950



218,950



528,841



618,635



618,635


Chemetall Surface Treatment

211,877





208,765



617,163





624,877


All Other

102,224



123,521



151,077



337,997



372,126



461,465


Corporate

6,354





2,814



12,117





9,175


Total net sales

$

905,093



$

642,418



$

998,718



$

2,720,982



$

1,846,982



$

2,920,082














Adjusted EBITDA:












Performance Chemicals

$

136,209



$

82,329



$

128,231



$

415,419



$

232,668



$

362,870


Refining Solutions

54,517



61,674



61,674



144,910



189,259



189,259


Chemetall Surface Treatment

53,898





51,454



148,344





146,970


All Other

6,262



20,971



27,421



29,540



63,482



83,659


Corporate(a)

(15,890)



(20,370)



(32,577)



(7,508)



(60,087)



(99,853)


Total adjusted EBITDA

$

234,996



$

144,604



$

236,203



$

730,705



$

425,322



$

682,905


 

 

Performance Chemicals - details by product category:







Three Months Ended


Nine Months Ended


September 30,


September 30,


Actual


Actual


Pro forma


Actual


Actual


Pro forma


2015


2014


2014


2015


2014


2014

Net sales:












Bromine

$

190,716



$

222,189



$

222,189



$

604,267



$

620,586



$

620,586


Lithium

128,404





117,165



369,811





349,709


PCS

80,416



77,758



77,758



250,786



235,635



235,635


Total Performance Chemicals

$

399,536



$

299,947



$

417,112



$

1,224,864



$

856,221



$

1,205,930














Adjusted EBITDA:












Bromine

$

58,801



$

62,266



$

62,266



$

180,431



$

171,513



$

171,513


Lithium

52,110





45,902



156,333





130,202


PCS

25,298



20,063



20,063



78,655



61,155



61,155


Total Performance Chemicals

$

136,209



$

82,329



$

128,231



$

415,419



$

232,668



$

362,870



See accompanying notes to the condensed consolidated financial information and non-GAAP reconciliations below.

 

 

Notes to the Condensed Consolidated Financial Information

(a)   Non-operating pension and OPEB items, consisting of mark-to-market ("MTM") actuarial gains/losses, settlements/curtailments, interest cost and expected return on assets, are not allocated to our reportable segments and are included in the Corporate category. Although non-operating pension and OPEB items are included in Cost of goods sold and Selling, general and administrative expenses in accordance with GAAP, we believe that these components of pension cost are mainly driven by market performance, and we manage these separately from the operational performance of our businesses. Non-operating pension and OPEB items included in Cost of goods sold and Selling, general and administrative expenses were as follows (in millions):


Three Months Ended


Nine Months Ended


September 30,


September 30,


2015


2014


2015


2014

Cost of goods sold:








MTM actuarial loss (gain)

$



$

2.8



$

(0.1)



$

5.7


Interest cost and expected return on assets, net

(0.4)



(0.5)



(1.1)



(1.5)


Total

$

(0.4)



$

2.3



$

(1.2)



$

4.2










Selling, general and administrative expenses:








MTM actuarial loss

$



$



$



$

12.5


Settlements/curtailments





(2.6)




Interest cost and expected return on assets, net

(0.7)



(0.9)



(2.1)



(2.6)


Total

$

(0.7)



$

(0.9)



$

(4.7)



$

9.9


 

Settlements/curtailments for the nine months ended September 30, 2015 resulted from the termination of a domestic OPEB plan during the first quarter of 2015. The three and nine-month periods ended September 30, 2014 include a MTM actuarial loss of $2.8 million which resulted from the remeasurement of the assets and obligations of one of our U.S. defined benefit plans in connection with the September 1, 2014 sale of our antioxidant, ibuprofen and propofol businesses and assets to SI Group, Inc. The nine-month period ended September 30, 2014 also includes a MTM actuarial loss of $15.4 million which resulted from the remeasurement of the assets and obligations of one of our U.S. defined benefit pension plans and our supplemental executive retirement plan during the first quarter of 2014 in connection with a workforce reduction plan initiated in the fourth quarter of 2013.

(b)   In addition to the non-operating pension and OPEB items disclosed above, we have identified certain other items and excluded them from our adjusted earnings calculation for the periods presented. A listing of these items, as well as a detailed description of each follows below (per diluted share):


Three Months Ended


Nine Months Ended


September 30,


September 30,


2015


2014


2015


2014

Utilization of inventory markup(1)

$

0.12



$



$

0.70



$


Restructuring and other, net(2)

(0.04)





(0.04)



0.17


Acquisition and integration related costs(3)

0.24



0.09



0.77



0.12


Interest and financing expenses related to Rockwood acquisition(4)





0.01




Financing fees related to Rockwood acquisition(5)



0.06



0.03



0.06


Discrete tax items(6)



(0.03)



0.02



(0.03)


Total special items

$

0.32



$

0.12



$

1.49



$

0.32


 

(1)   In connection with the acquisition of Rockwood, the Company valued Rockwood's existing inventory at fair value as of the acquisition date, which resulted in a markup of the underlying net book value of the inventory. The inventory markup is being expensed over the estimated remaining selling period. For the three months ended September 30, 2015, $7.7 million ($4.5 million after income taxes, or $0.04 per share) was included in Cost of goods sold, and Equity in net income of unconsolidated investments was reduced by $9.1 million ($0.08 per share), related to the utilization of the inventory markup. For the nine months ended September 30, 2015, $75.4 million ($51.7 million after income taxes, or $0.46 per share) was included in Cost of goods sold, and Equity in net income of unconsolidated investments was reduced by $26.9 million ($0.24 per share), related to the utilization of the inventory markup.

(2)   Restructuring and other, net, consisted of the following:

Three and nine months ended September 30, 2015 -

  • A gain of $6.8 million ($4.7 million after income taxes, or $0.04 per share) recognized upon the sale of land in Avonmouth, UK, which was utilized by the phosphorus flame retardants business we exited in 2012.

Three months ended September 30, 2014 -

  • Other charges of $0.3 million ($0.2 million after income taxes).

Nine months ended September 30, 2014 -

  • Net charges amounting to $17.0 million ($11.1 million after income taxes, or $0.14 per share) in connection with a reduction of aluminum alkyls high cost supply capacity.
  • A write-off of $3.3 million ($2.1 million after income taxes, or $0.03 per share) for certain multi-product facility project costs that we do not expect to recover in future periods.
  • Other charges of $0.3 million ($0.2 million after income taxes).

(3)   Acquisition and integration related costs consisted of the following:

Three months ended September 30, 2015 -

  • $41.8 million directly related to the acquisition of Rockwood and $1.0 million in connection with other significant projects. After income taxes, these charges totaled $27.4 million, or $0.24 per share.

Three months ended September 30, 2014 -

  • $9.3 million directly related to the acquisition of Rockwood and $1.0 million in connection with other significant projects. After income taxes, these charges totaled $6.5 million, or $0.09 per share.

Nine months ended September 30, 2015 -

  • $120.5 million directly related to the acquisition of Rockwood and $6.0 million in connection with other significant projects. After income taxes, these charges totaled $86.1 million, or $0.77 per share.

Nine months ended September 30, 2014 -

  • $9.3 million directly related to the acquisition of Rockwood and $5.8 million in connection with other significant projects. After income taxes, these charges totaled $9.6 million, or $0.12 per share.

(4)   Included in Interest and financing expenses for the nine months ended September 30, 2015 is $1.6 million ($1.1 million after income taxes, or $0.01 per share) of interest and financing expenses associated with senior notes we issued in the fourth quarter 2014 in connection with the acquisition of Rockwood, which did not close until January 12, 2015.

(5)   Included in Other income (expenses), net, for the nine months ended September 30, 2015 is $4.4 million ($3.2 million after income taxes, or $0.03 per share) for amortization of bridge facility fees and other financing fees related to the acquisition of Rockwood. Included in Other income (expenses), net, for the three and nine months ended September 30, 2014 is $7.0 million ($4.5 million after income taxes, or $0.06 per share) for amortization of bridge facility fees and other financing fees related to the acquisition of Rockwood.

(6)   Included in Income tax expense for the nine months ended September 30, 2015 is an expense of $2.0 million, or $0.02 per share, related mainly to prior year uncertain tax position adjustments associated with lapses in statutes of limitations and items associated with U.S. provision to return adjustments. Included in Income tax expense for the three and nine months ended September 30, 2014 were discrete net tax benefit items of $2.1 million, or $0.03 per share, related principally to the expiration of the U.S. federal statute of limitations.

(c)   On September 1, 2014, the Company closed the sale of its antioxidant, ibuprofen and propofol businesses and assets to SI Group, Inc. and received net proceeds of $104.7 million and a post-closing working capital settlement of $7.6 million which was received in the first quarter of 2015. Financial results of the disposed group have been presented as discontinued operations in the consolidated statements of income for the 2014 periods. Included in Loss from discontinued operations are pre-tax charges of $4.8 million ($3.6 million after income taxes, or $0.05 per share) recorded in the third quarter of 2014 and $85.5 million ($64.6 million after income taxes, or $0.82 per share) recorded in the nine months ended September 30, 2014 related to the loss on the sale of the disposed group, representing the difference between the carrying value of the related assets and their fair value as determined by the sales price less estimated costs to sell. The loss is primarily attributable to the write-off of goodwill, intangibles and long-lived assets, net of cumulative foreign currency translation gains of $17.8 million.

(d)   Totals may not add due to rounding.

Additional Information

It should be noted that adjusted net income attributable to Albemarle Corporation ("adjusted earnings"), adjusted diluted earnings per share, adjusted effective income tax rates, EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin are financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. These non-GAAP measures should not be considered as alternatives to net income attributable to Albemarle Corporation ("earnings"). 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 below for supplemental reconciliations of the non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP.

ALBEMARLE CORPORATION AND SUBSIDIARIES

Non-GAAP Reconciliations

(In Thousands)

(Unaudited)

See below for a reconciliation of adjusted net income attributable to Albemarle Corporation ("adjusted earnings"), EBITDA and adjusted EBITDA, the non-GAAP financial measures, to Net income attributable to Albemarle Corporation ("earnings"), the most directly comparable financial measure calculated and reported in accordance with GAAP. Adjusted earnings is defined as earnings before discontinued operations and the special and non-operating pension and OPEB items as listed below. EBITDA is defined as earnings before interest and financing expenses, income taxes, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA before discontinued operations and the special and non-operating pension and OPEB items as listed below.


Three Months Ended


Nine Months Ended


September 30,


September 30,


2015


2014


2015


2014

Net income attributable to Albemarle Corporation

$

65,392



$

72,794



$

160,654



$

151,824


Add back:








Non-operating pension and OPEB items (net of tax)

(524)



927



(3,613)



9,016


Special items (net of tax)

36,064



9,066



166,187



25,401


Loss from discontinued operations (net of tax)



6,679





68,473


Adjusted net income attributable to Albemarle Corporation

$

100,932



$

89,466



$

323,228



$

254,714










Net income attributable to Albemarle Corporation

$

65,392



$

72,794



$

160,654



$

151,824


Add back:








Interest and financing expenses

32,058



8,749



100,986



26,255


Income tax expense (from continuing and discontinued operations)

16,892



10,664



48,171



24,734


Depreciation and amortization

68,903



25,630



200,372



78,344


EBITDA

183,245



117,837



510,183



281,157


Non-operating pension and OPEB items

(1,077)



1,440



(5,900)



14,141


Special items (excluding special items associated with interest expense)

52,828



17,575



226,422



42,750


Loss from discontinued operations



7,752





90,439


Less depreciation and amortization from discontinued operations







(3,165)


Adjusted EBITDA

$

234,996



$

144,604



$

730,705



$

425,322










Net sales

$

905,093



$

642,418



$

2,720,982



$

1,846,982


EBITDA margin

20.2

%


18.3

%


18.7

%


15.2

%

Adjusted EBITDA margin

26.0

%


22.5

%


26.9

%


23.0

%

 

See below for a reconciliation of adjusted EBITDA on a segment basis, the non-GAAP financial measure, to Net income (loss) attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reporting in accordance with GAAP.


Performance Chemicals


Refining Solutions


Chemetall Surface Treatment


Reportable Segments Total


All Other


Corporate


Consolidated Total

Three months ended September 30, 2015 (Actual):













Net income (loss) attributable to Albemarle Corporation

$

87,893



$

45,713



$

33,638



$

167,244



$

617



$

(102,469)



$

65,392


Depreciation and amortization

31,482



8,804



20,260



60,546



5,645



2,712



68,903


Special items

16,834







16,834





35,994



52,828


Interest and financing expenses











32,058



32,058


Income tax expense











16,892



16,892


Non-operating pension and OPEB items











(1,077)



(1,077)


Adjusted EBITDA

$

136,209



$

54,517



$

53,898



$

244,624



$

6,262



$

(15,890)



$

234,996
















Three months ended September 30, 2014 (Actual):













Net income (loss) attributable to Albemarle Corporation

$

69,736



$

52,851



$



$

122,587



$

17,479



$

(67,272)



$

72,794


Depreciation and amortization

12,593



8,823





21,416



3,492



722



25,630


Special items











17,575



17,575


Interest and financing expenses











8,749



8,749


Income tax expense











11,737



11,737


Loss from discontinued operations (net of tax)











6,679



6,679


Non-operating pension and OPEB items











1,440



1,440


Adjusted EBITDA

$

82,329



$

61,674



$



$

144,003



$

20,971



$

(20,370)



$

144,604
















Three months ended September 30, 2014 (Pro forma):











Net income (loss) attributable to Albemarle Corporation

$

104,553



$

52,851



$

43,557



$

200,961



$

23,107



$

(65,466)



$

158,602


Depreciation and amortization

23,678



8,823



7,897



40,398



4,314



5,579



50,291


Special items











(22,750)



(22,750)


Interest and financing expenses











22,249



22,249


Income tax expense











51,137



51,137


Loss from discontinued operations (net of tax)











(24,821)



(24,821)


Non-operating pension and OPEB items











1,495



1,495


Adjusted EBITDA

$

128,231



$

61,674



$

51,454



$

241,359



$

27,421



$

(32,577)



$

236,203


 

 


Performance Chemicals


Refining Solutions


Chemetall Surface Treatment


Reportable Segments Total


All Other


Corporate


Consolidated Total

Nine months ended September 30, 2015 (Actual):













Net income (loss) attributable to Albemarle Corporation

$

242,572



$

119,513



$

70,747



$

432,832



$

9,644



$

(281,822)



$

160,654


Depreciation and amortization

93,608



25,397



57,567



176,572



16,867



6,933



200,372


Special items (excluding special items associated with interest expense)

79,239





20,030



99,269



3,029



124,124



226,422


Interest and financing expenses











100,986



100,986


Income tax expense











48,171



48,171


Non-operating pension and OPEB items











(5,900)



(5,900)


Adjusted EBITDA

$

415,419



$

144,910



$

148,344



$

708,673



$

29,540



$

(7,508)



$

730,705
















Nine months ended September 30, 2014 (Actual):













Net income (loss) attributable to Albemarle Corporation

$

194,926



$

163,908



$



$

358,834



$

53,203



$

(260,213)



$

151,824


Depreciation and amortization

37,742



25,351





63,093



10,279



1,807



75,179


Special items











42,750



42,750


Interest and financing expenses











26,255



26,255


Income tax expense











46,700



46,700


Loss from discontinued operations (net of tax)











68,473



68,473


Non-operating pension and OPEB items











14,141



14,141


Adjusted EBITDA

$

232,668



$

189,259



$



$

421,927



$

63,482



$

(60,087)



$

425,322
















Nine months ended September 30, 2014 (Pro forma):











Net income (loss) attributable to Albemarle Corporation

$

290,460



$

163,908



$

123,474



$

577,842



$

70,664



$

(384,983)



$

263,523


Depreciation and amortization

72,410



25,351



23,496



121,257



12,995



16,647



150,899


Special items











8,627



8,627


Interest and financing expenses











67,555



67,555


Income tax expense











111,200



111,200


Loss from discontinued operations (net of tax)











66,873



66,873


Non-operating pension and OPEB items











14,228



14,228


Adjusted EBITDA

$

362,870



$

189,259



$

146,970



$

699,099



$

83,659



$

(99,853)



$

682,905


 


Bromine


Lithium


PCS


Total
Performance
Chemicals

Three months ended September 30, 2015 (Actual):








Net income attributable to Albemarle Corporation

$

49,395



$

16,507



$

21,991



$

87,893


Depreciation and amortization

9,406



18,769



3,307



31,482


Special items



16,834





16,834


Adjusted EBITDA

$

58,801



$

52,110



$

25,298



$

136,209










Three months ended September 30, 2014 (Actual):








Net income attributable to Albemarle Corporation

$

53,044



$



$

16,692



$

69,736


Depreciation and amortization

9,222





3,371



12,593


Adjusted EBITDA

$

62,266



$



$

20,063



$

82,329










Three months ended September 30, 2014 (Pro Forma):








Net income attributable to Albemarle Corporation

$

53,044



$

34,817



$

16,692



$

104,553


Depreciation and amortization

9,222



11,085



3,371



23,678


Adjusted EBITDA

$

62,266



$

45,902



$

20,063



$

128,231










Nine months ended September 30, 2015 (Actual):








Net income attributable to Albemarle Corporation

$

154,353



$

20,222



$

67,997



$

242,572


Depreciation and amortization

26,078



56,872



10,658



93,608


Special items



79,239





79,239


Adjusted EBITDA

$

180,431



$

156,333



$

78,655



$

415,419










Nine months ended September 30, 2014 (Actual):








Net income attributable to Albemarle Corporation

$

144,701



$



$

50,225



$

194,926


Depreciation and amortization

26,812





10,930



37,742


Adjusted EBITDA

$

171,513



$



$

61,155



$

232,668










Nine months ended September 30, 2014 (Pro Forma):








Net income attributable to Albemarle Corporation

$

144,701



$

95,534



$

50,225



$

290,460


Depreciation and amortization

26,812



34,668



10,930



72,410


Adjusted EBITDA

$

171,513



$

130,202



$

61,155



$

362,870


 

 

Logo - http://photos.prnewswire.com/prnh/20111129/MM14279LOGO

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/albemarle-reports-third-quarter-2015-results-300172799.html

SOURCE Albemarle Corporation


Source: PR Newswire (November 4, 2015 - 5:39 PM EST)

News by QuoteMedia
www.quotemedia.com