News
Albemarle reports first quarter 2016 results and increases annual guidance
May 10, 2016
First quarter 2016 highlights:
- First quarter earnings of
$2.02 per diluted share ($0.40 in prior year); adjusted diluted earnings of$1.12 per share, an increase of 44% over the prior year, excluding the impact of currency and divestitures - First quarter adjusted EBITDA of
$245 million , an increase of 16% over the prior year, excluding the impact of currency and divestitures - First quarter cash from operations of
$173 million , an increase of$127 million over the prior year and on track with expectations - Completed the sales of the metal sulfides and minerals-based flame retardants and specialty chemicals businesses and used the proceeds to reduce debt
Three Months Ended |
|||||||
March 31, |
|||||||
In thousands, except per share amounts |
2016 |
2015 |
|||||
Net sales |
$ |
865,398 |
$ |
884,404 |
|||
Adjusted EBITDA |
$ |
244,976 |
$ |
265,628 |
|||
Net income attributable to Albemarle Corporation |
$ |
228,186 |
$ |
43,115 |
|||
Diluted earnings per share |
$ |
2.02 |
$ |
0.40 |
|||
Non-operating pension and OPEB items(a) |
— |
(0.02) |
|||||
Special items(b) |
(0.90) |
0.80 |
|||||
Adjusted diluted earnings per share(c) |
$ |
1.12 |
$ |
1.17 |
|||
See accompanying notes (a) through (c) to the condensed consolidated financial information and non-GAAP reconciliations. |
"I am very pleased with our start to 2016," said
The results of Rockwood from
Quarterly Segment Results
Effective
Lithium and Advanced Materials reported net sales of
Bromine Specialties reported net sales of
Refining Solutions reported net sales of
Chemetall Surface Treatment reported net sales of
On
All Other net sales were
In summary, total net sales of
Corporate Results
Corporate adjusted EBITDA was a loss of
Income Taxes
Our adjusted effective income tax rates, which exclude special and non-operating pension and OPEB items, were 22.2% and 26.3% for the first quarter of 2016 and 2015, 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
Outlook
Given our strong first quarter performance, expectations for continued growth in most of our businesses and the April decision to keep our fine chemistry services business, we are raising our annual guidance and we now expect full year 2016 net sales between
Earnings Call
The Company's performance for the first quarter ended March 31, 2016 will be discussed on a conference call at
About Albemarle
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 regulatory proceedings, claims or litigation; the occurrence of cybersecurity breaches, terrorist attacks, industrial accidents, natural disasters or climate change; 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 execute, operate and integrate acquisitions and divestitures, including the integration of Rockwood's operations, and realize estimated synergies; and the other factors detailed from time to time in the reports we file with the
Albemarle Corporation and Subsidiaries Consolidated Statements of Income (In Thousands Except Per Share Amounts) (Unaudited) |
|||||
Three Months Ended |
|||||
March 31, |
|||||
2016 |
2015 |
||||
Net sales |
$ |
865,398 |
$ |
884,404 |
|
Cost of goods sold(a)(b) |
528,000 |
625,938 |
|||
Gross profit |
337,398 |
258,466 |
|||
Selling, general and administrative expenses(a) |
139,157 |
135,765 |
|||
Research and development expenses |
23,401 |
26,492 |
|||
Gain on sales of businesses, net(b) |
(121,324) |
— |
|||
Acquisition and integration related costs(b) |
21,356 |
59,523 |
|||
Operating profit |
274,808 |
36,686 |
|||
Interest and financing expenses(b) |
(25,251) |
(35,746) |
|||
Other income, net(b) |
410 |
49,957 |
|||
Income before income taxes and equity in net income of unconsolidated investments |
249,967 |
50,897 |
|||
Income tax expense(b) |
30,985 |
14,140 |
|||
Income before equity in net income of unconsolidated investments |
218,982 |
36,757 |
|||
Equity in net income of unconsolidated investments (net of tax)(b) |
16,566 |
10,392 |
|||
Net income |
235,548 |
47,149 |
|||
Net income attributable to noncontrolling interests |
(7,362) |
(4,034) |
|||
Net income attributable to Albemarle Corporation |
$ |
228,186 |
$ |
43,115 |
|
Basic earnings per share |
$ |
2.03 |
$ |
0.40 |
|
Diluted earnings per share |
$ |
2.02 |
$ |
0.40 |
|
Weighted-average common shares outstanding – basic |
112,260 |
108,130 |
|||
Weighted-average common shares outstanding – diluted |
112,770 |
108,464 |
|||
See accompanying notes to the condensed consolidated financial information. |
Albemarle Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In Thousands) (Unaudited) |
|||||||
March 31, |
December 31, |
||||||
2016 |
2015 |
||||||
ASSETS |
|||||||
Cash and cash equivalents |
$ |
252,382 |
$ |
213,734 |
|||
Other current assets |
1,252,712 |
1,212,784 |
|||||
Assets held for sale |
110,297 |
404,485 |
|||||
Total current assets |
1,615,391 |
1,831,003 |
|||||
Property, plant and equipment |
3,929,319 |
3,881,162 |
|||||
Less accumulated depreciation and amortization |
1,439,779 |
1,396,424 |
|||||
Net property, plant and equipment |
2,489,540 |
2,484,738 |
|||||
Other assets and intangibles |
5,334,037 |
5,282,213 |
|||||
Total assets |
$ |
9,438,968 |
$ |
9,597,954 |
|||
LIABILITIES AND EQUITY |
|||||||
Current portion of long-term debt |
$ |
484,754 |
$ |
677,345 |
|||
Other current liabilities |
711,726 |
810,634 |
|||||
Liabilities held for sale |
28,618 |
128,706 |
|||||
Total current liabilities |
1,225,098 |
1,616,685 |
|||||
Long-term debt |
3,105,351 |
3,157,614 |
|||||
Other noncurrent liabilities |
678,537 |
686,025 |
|||||
Deferred income taxes |
735,111 |
736,317 |
|||||
Albemarle Corporation shareholders' equity |
3,540,305 |
3,254,392 |
|||||
Noncontrolling interests |
154,566 |
146,921 |
|||||
Total liabilities and equity |
$ |
9,438,968 |
$ |
9,597,954 |
|||
See accompanying notes to the condensed consolidated financial information. |
Albemarle Corporation and Subsidiaries Selected Consolidated Cash Flow Data (In Thousands) (Unaudited) |
||||||
Three Months Ended |
||||||
March 31, |
||||||
2016 |
2015 |
|||||
Cash and cash equivalents at beginning of year |
$ |
213,734 |
$ |
2,489,768 |
||
Cash and cash equivalents at end of period |
$ |
252,382 |
$ |
261,421 |
||
Sources of cash and cash equivalents: |
||||||
Net income |
$ |
235,548 |
$ |
47,149 |
||
Cash proceeds from divestitures, net |
307,165 |
— |
||||
Proceeds from borrowings of long-term debt |
— |
1,000,000 |
||||
Other borrowings, net |
68,829 |
167,571 |
||||
Dividends received from unconsolidated investments and |
200 |
3,048 |
||||
Decrease in restricted cash |
— |
57,550 |
||||
Working capital changes |
10,467 |
28,881 |
||||
Uses of cash and cash equivalents: |
||||||
Capital expenditures |
(58,120) |
(56,741) |
||||
Acquisition of Rockwood, net of cash acquired |
— |
(2,051,645) |
||||
Other acquisitions, net of cash acquired |
— |
(45,550) |
||||
Cash payments related to acquisitions and other |
(81,988) |
— |
||||
Repayments of long-term debt |
(331,595) |
(1,326,263) |
||||
Pension and postretirement contributions |
(4,224) |
(5,986) |
||||
Dividends paid to shareholders |
(32,541) |
(21,730) |
||||
Non-cash and other items: |
||||||
Depreciation and amortization |
60,552 |
63,986 |
||||
Gain on sales of businesses, net |
(121,324) |
— |
||||
Pension and postretirement expense (benefit) |
1,389 |
(1,458) |
||||
Deferred income taxes |
816 |
(32,845) |
||||
Equity in net income of unconsolidated investments (net of tax) |
(16,566) |
(10,392) |
||||
See accompanying notes to the condensed consolidated financial information. |
Albemarle Corporation and Subsidiaries Consolidated Summary of Segment Results (In Thousands) (Unaudited) |
|||||||
Three Months Ended |
|||||||
March 31, |
|||||||
2016 |
2015 |
||||||
Net sales: |
|||||||
Lithium and Advanced Materials |
$ |
216,173 |
$ |
198,774 |
|||
Bromine Specialties |
196,553 |
189,592 |
|||||
Refining Solutions |
170,579 |
179,166 |
|||||
Chemetall Surface Treatment |
208,187 |
192,091 |
|||||
All Other |
72,089 |
122,369 |
|||||
Corporate |
1,817 |
2,412 |
|||||
Total net sales |
$ |
865,398 |
$ |
884,404 |
|||
Adjusted EBITDA: |
|||||||
Lithium and Advanced Materials |
$ |
86,474 |
$ |
77,595 |
|||
Bromine Specialties |
61,608 |
52,933 |
|||||
Refining Solutions |
55,074 |
42,193 |
|||||
Chemetall Surface Treatment |
52,522 |
46,004 |
|||||
All Other |
8,464 |
13,564 |
|||||
Corporate(a) |
(19,166) |
33,339 |
|||||
Total adjusted EBITDA |
$ |
244,976 |
$ |
265,628 |
|||
Lithium and Advanced Materials - details by product category: |
|||||||
Three Months Ended |
|||||||
March 31, |
|||||||
2016 |
2015 |
||||||
Net sales: |
|||||||
Lithium |
$ |
136,560 |
$ |
114,386 |
|||
PCS |
79,613 |
84,388 |
|||||
Total Lithium and Advanced Materials |
$ |
216,173 |
$ |
198,774 |
|||
Adjusted EBITDA: |
|||||||
Lithium |
$ |
63,834 |
$ |
50,578 |
|||
PCS |
22,640 |
27,017 |
|||||
Total Lithium and Advanced Materials |
$ |
86,474 |
$ |
77,595 |
|||
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 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 |
|||||||
March 31, |
|||||||
2016 |
2015 |
||||||
Cost of goods sold: |
|||||||
Interest cost and expected return on assets, net |
$ |
(0.1) |
$ |
(0.2) |
|||
Total |
$ |
(0.1) |
$ |
(0.2) |
|||
Selling, general and administrative expenses: |
|||||||
MTM actuarial gain |
$ |
(0.1) |
$ |
— |
|||
Settlements/curtailments |
— |
(2.6) |
|||||
Interest cost and expected return on assets, net |
— |
(0.7) |
|||||
Total |
$ |
(0.1) |
$ |
(3.3) |
Settlements/curtailments for the three months ended
(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 |
|||||||
March 31, |
|||||||
2016 |
2015 |
||||||
Utilization of inventory markup(1) |
$ |
— |
$ |
0.34 |
|||
Gain on sales of businesses, net(2) |
(1.02) |
— |
|||||
Acquisition and integration related costs(3) |
0.14 |
0.39 |
|||||
Interest and financing expenses related to Rockwood acquisition(4) |
— |
0.01 |
|||||
Financing fees related to Rockwood acquisition(5) |
— |
0.03 |
|||||
Discrete tax items(6) |
(0.02) |
0.03 |
|||||
Total special items |
$ |
(0.90) |
$ |
0.80 |
(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 was expensed over the estimated remaining selling period. For the three-month period ended March 31, 2016,
(2) Included in Gain on sales of businesses, net, for the three months ended
(3) Acquisition and integration related costs consisted of the following:
Three months ended
$19.7 million of integration costs resulting from the acquisition of Rockwood and$1.7 million in connection with other significant projects. After income taxes, these charges totaled$15.0 million , or$0.14 per share.
Three months ended
$57.4 million directly related to the acquisition of Rockwood and$2.1 million in connection with other significant projects. After income taxes, these charges totaled$42.3 million , or$0.39 per share.
(4) Included in Interest and financing expenses for the year ended March 31, 2015 is
(5) Included in Other income, net, for the year ended March 31, 2015 are expenses of
(6) Included in Income tax expense for the three months ended
(c) Totals may not add due to rounding.
Additional Information
It should be noted that adjusted net income attributable to
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
Three Months Ended |
|||||||
March 31, |
|||||||
2016 |
2015 |
||||||
Net income attributable to Albemarle Corporation |
$ |
228,186 |
$ |
43,115 |
|||
Add back: |
|||||||
Non-operating pension and OPEB items (net of tax) |
77 |
(2,227) |
|||||
Special items (net of tax) |
(102,450) |
86,316 |
|||||
Adjusted net income attributable to Albemarle Corporation |
$ |
125,813 |
$ |
127,204 |
|||
Net income attributable to Albemarle Corporation |
$ |
228,186 |
$ |
43,115 |
|||
Add back: |
|||||||
Interest and financing expenses |
25,251 |
35,746 |
|||||
Income tax expense |
30,985 |
14,140 |
|||||
Depreciation and amortization |
60,552 |
63,986 |
|||||
EBITDA |
344,974 |
156,987 |
|||||
Non-operating pension and OPEB items |
(184) |
(3,509) |
|||||
Special items (excluding special items associated with interest expense) |
(99,814) |
112,150 |
|||||
Adjusted EBITDA |
$ |
244,976 |
$ |
265,628 |
|||
Net sales |
$ |
865,398 |
$ |
884,404 |
|||
EBITDA margin |
39.9 |
% |
17.8 |
% |
|||
Adjusted EBITDA margin |
28.3 |
% |
30.0 |
% |
See below for a reconciliation of adjusted EBITDA on a segment basis, the non-GAAP financial measure, to Net income (loss) attributable to
Lithium |
Bromine |
Refining |
Chemetall |
Reportable |
All Other |
Corporate |
Consolidated |
||||||||||||||||
Three months ended March 31, 2016: |
|||||||||||||||||||||||
Net income (loss) attributable to Albemarle Corporation |
$ |
63,327 |
$ |
51,853 |
$ |
46,314 |
$ |
35,426 |
$ |
196,920 |
$ |
130,709 |
$ |
(99,443) |
$ |
228,186 |
|||||||
Depreciation and amortization |
23,147 |
9,755 |
8,760 |
16,942 |
58,604 |
612 |
1,336 |
60,552 |
|||||||||||||||
Special items |
— |
— |
— |
154 |
154 |
(122,857) |
22,889 |
(99,814) |
|||||||||||||||
Interest and financing expenses |
— |
— |
— |
— |
— |
— |
25,251 |
25,251 |
|||||||||||||||
Income tax expense |
— |
— |
— |
— |
— |
— |
30,985 |
30,985 |
|||||||||||||||
Non-operating pension and OPEB items |
— |
— |
— |
— |
— |
— |
(184) |
(184) |
|||||||||||||||
Adjusted EBITDA |
$ |
86,474 |
$ |
61,608 |
$ |
55,074 |
$ |
52,522 |
$ |
255,678 |
$ |
8,464 |
$ |
(19,166) |
$ |
244,976 |
|||||||
Three months ended March 31, 2015: |
|||||||||||||||||||||||
Net income (loss) attributable to Albemarle Corporation |
$ |
27,191 |
$ |
44,472 |
$ |
34,083 |
$ |
10,855 |
$ |
116,601 |
$ |
5,415 |
$ |
(78,901) |
$ |
43,115 |
|||||||
Depreciation and amortization |
21,822 |
8,461 |
8,110 |
18,196 |
56,589 |
5,498 |
1,899 |
63,986 |
|||||||||||||||
Special items (excluding special items associated with interest expense) |
28,582 |
— |
— |
16,953 |
45,535 |
2,651 |
63,964 |
112,150 |
|||||||||||||||
Interest and financing expenses |
— |
— |
— |
— |
— |
— |
35,746 |
35,746 |
|||||||||||||||
Income tax expense |
— |
— |
— |
— |
— |
— |
14,140 |
14,140 |
|||||||||||||||
Non-operating pension and OPEB items |
— |
— |
— |
— |
— |
— |
(3,509) |
(3,509) |
|||||||||||||||
Adjusted EBITDA |
$ |
77,595 |
$ |
52,933 |
$ |
42,193 |
$ |
46,004 |
$ |
218,725 |
$ |
13,564 |
$ |
33,339 |
$ |
265,628 |
|||||||
Lithium |
PCS |
Total |
|||||||||||||||||||||
Three months ended March 31, 2016: |
|||||||||||||||||||||||
Net income attributable to Albemarle Corporation |
$ |
44,346 |
$ |
18,981 |
$ |
63,327 |
|||||||||||||||||
Depreciation and amortization |
19,488 |
3,659 |
23,147 |
||||||||||||||||||||
Adjusted EBITDA |
$ |
63,834 |
$ |
22,640 |
$ |
86,474 |
|||||||||||||||||
Three months ended March 31, 2015: |
|||||||||||||||||||||||
Net income attributable to Albemarle Corporation |
$ |
3,928 |
$ |
23,263 |
$ |
27,191 |
|||||||||||||||||
Depreciation and amortization |
18,068 |
3,754 |
21,822 |
||||||||||||||||||||
Special items |
28,582 |
— |
28,582 |
||||||||||||||||||||
Adjusted EBITDA |
$ |
50,578 |
$ |
27,017 |
$ |
77,595 |
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SOURCE
Matt Juneau, 225.388.7940
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