Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) July 21, 2011

 

 

ALBEMARLE CORPORATION

(Exact name of Registrant as specified in charter)

 

 

 

Virginia   001-12658   54-1692118

(State or other jurisdiction

of incorporation)

 

(Commission

file number)

 

(IRS employer

identification no.)

451 Florida Street, Baton Rouge, Louisiana   70801
(Address of principal executive offices)   (Zip code)

Registrant’s telephone number, including area code (225) 388-8011

Not applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a- 12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 


Section 2 — Financial Information

 

Item 2.02. Results of Operations and Financial Condition.

On July 21, 2011, Albemarle Corporation (the “Company”) issued a press release regarding its earnings for the second quarter ended June 30, 2011. A copy of this release is being furnished as Exhibit 99.1 hereto and incorporated herein by reference. In addition, on July 22, 2011, the Company will hold a teleconference for analysts and media to discuss results for the second quarter ended June 30, 2011. The teleconference is webcast on the Company’s website at www.albemarle.com.

The press release attached as Exhibit 99.1 includes presentations of 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. These are financial measures that are not required by, nor presented in accordance with, accounting principles generally accepted in the United States (“GAAP”), but are included to provide additional useful measurements to review our operations, provide transparency to investors and enable period-to-period comparability of financial performance.

Our presentations of earnings, earnings per share, segment operating profit and effective income tax rates which exclude special items should not be considered as alternatives to earnings, earnings per share, operating profit and effective income tax rates, respectively, as determined in accordance with GAAP. Also, segment income, EBITDA and EBITDA excluding special items should not be considered as alternatives to net income attributable to Albemarle Corporation as determined in accordance with GAAP. Further, EBITDA margin and EBITDA margin excluding special items should not be considered as alternatives to net income attributable to Albemarle Corporation as a percentage of our consolidated net sales as would be determined in accordance with GAAP. The Company has included in the press release certain reconciliation information for these measures to their most directly comparable financial measures calculated and reported in accordance with GAAP.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Section 9 — Financial Statements and Exhibits

 

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits.

 

99.1    Press release, dated July 21, 2011, issued by the Company.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 21, 2011

 

ALBEMARLE CORPORATION
By:  

/s/ Karen G. Narwold

  Karen G. Narwold
  Senior Vice President, General Counsel and Corporate Secretary


EXHIBIT INDEX

 

Exhibit
Number

  

Exhibit

99.1    Press release, dated July 21, 2011, issued by the Company.
Press Release

Exhibit 99.1

 

LOGO

   Contact:   
   Lorin Crenshaw    225.388.7322
     

Albemarle Reports Second Consecutive Record Quarter

 

 

BATON ROUGE, LA - July 21, 2011 –

Second quarter 2011 highlights:

 

 

Record quarterly earnings for the second consecutive quarter of $1.23 per share, up 38 percent over second quarter 2010 results.

 

 

Record quarterly net sales of $742 million, up 25 percent from prior year second quarter net sales of $592 million.

 

 

Record quarterly net sales and income for our Polymer Solutions and Fine Chemistry segments.

 

 

EBITDA of $178 million and EBITDA margin of 24 percent for the quarter.

 

     Three Months Ended      Six Months Ended  
     June 30,      June 30,  

In thousands, except per share amounts

   2011      2010      2011      2010  

Net sales

   $ 742,108       $ 592,483       $ 1,438,638       $ 1,172,753   

Segment income

   $ 180,180       $ 130,800       $ 351,780       $ 239,441   

Net income attributable to Albemarle Corporation

   $ 114,159       $ 81,751       $ 220,739       $ 145,059   

Diluted earnings per share

   $ 1.23       $ 0.89       $ 2.38       $ 1.57   

Special item per share

   $ —         $ —         $ —         $ 0.05   
                                   

Diluted earnings per share excluding special item

   $ 1.23       $ 0.89       $ 2.38       $ 1.62   
                                   

Albemarle Corporation (NYSE: ALB) reported second quarter 2011 earnings of $114.2 million, or $1.23 per share, compared to second quarter 2010 earnings of $81.8 million, or 89 cents per share. The Company reported net sales of $742.1 million in the second quarter of 2011 compared to net sales of $592.5 million in the second quarter of 2010.

Earnings for the first half of 2011 were $220.7 million, or $2.38 per share, compared to $145.1 million, or $1.57 per share, for the first half of 2010. Excluding the $7.0 million ($4.6 million after tax, or 5 cents per share) charge for restructuring costs in the first quarter of 2010, earnings for the first half of 2010 were $149.7 million, or $1.62 per share. Net sales for the first half of 2011 were $1.44 billion compared to $1.17 billion for the first half of 2010.

Commenting on results, Mark C. Rohr, Chairman and CEO, stated, “We are pleased to report record sales and earnings for the second consecutive quarter driven by stronger volume and pricing trends. Robust business demand helped establish new earnings records for Fine Chemistry and Polymer Solutions. Catalysts volumes are

 

1


showing signs of continued strengthening as we enter the second half of 2011. Overall, while we will remain alert to any indications of slower global growth going forward, we are optimistic about our prospects for the second half of the year.”

Quarterly Segment Results

Polymer Solutions delivered net sales of $290.5 million in the second quarter of 2011, a 23 percent increase over net sales in the second quarter of 2010, due mainly to favorable pricing. Segment income for Polymer Solutions was $77.2 million in the second quarter of 2011, a 64 percent increase from $47.0 million in the second quarter of 2010. This increase was due primarily to favorable pricing, partly offset by higher variable input costs and higher charges attributable to noncontrolling interests.

Catalysts generated net sales of $266.9 million in the second quarter of 2011, a 24 percent increase over net sales in the second quarter of 2010, due mainly to favorable pricing and higher volumes. Catalysts segment income was $65.6 million in the second quarter of 2011, roughly flat with second quarter of 2010 results of $66.2 million. Catalysts segment income for the second quarter of 2011 was favorably impacted primarily by higher pricing and higher equity income while offset mainly by higher variable input costs versus the second quarter of 2010.

Fine Chemistry net sales in the second quarter of 2011 were $184.8 million, a 31 percent increase over net sales in the second quarter of 2010, due mainly to favorable pricing and higher volumes. Segment income for Fine Chemistry was $37.4 million for the second quarter of 2011, more than double second quarter 2010 results of $17.5 million. This improvement in segment income was due primarily to the favorable sales gains noted above, partly offset by higher variable input costs and higher charges attributable to noncontrolling interests.

Corporate and Other

Corporate and other expense was $25.8 million for the second quarter of 2011. The increase over the comparable period in 2010 was due mainly to higher personnel-related costs.

Interest and financing expenses increased to $9.3 million for the second quarter of 2011 compared to $6.0 million for the second quarter of 2010, primarily due to higher average interest rates on outstanding borrowings during the 2011 period.

Our second quarter 2011 effective income tax rate was 21.7 percent versus 24.4 percent in the second quarter of 2010. The full year 2011 effective tax rate is expected to be 22.9 percent. 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.

 

2


Cash Flow

Our cash flow from operations was approximately $146 million for the six months ended June 30, 2011, and we had $490.7 million in cash and cash equivalents at June 30, 2011. In the first half of 2011, cash on hand and cash provided by operations funded capital expenditures for plant, machinery and equipment of $67.6 million (versus $33.9 million in the first half of 2010) and dividends to shareholders of $28.0 million. Additionally, we made repayments of long-term debt of $105.2 million and pension and postretirement contributions of $55.8 million during the first half of 2011.

Outlook

Our outlook for the second half of 2011 remains positive while we continue to monitor global economic developments for any signs of slower growth. We expect some typical seasonal contraction and potential volume softness in the fourth quarter; however, we believe our continued focus on innovative product development, operational excellence and cost control programs positions us well to deliver solid financial performance for the remainder of the year.

Earnings Call

The Company’s performance for the second quarter ended June 30, 2011 will be discussed on a conference call at 10:00 AM Eastern Daylight time on July 22, 2011. The call can be accessed by dialing 800-706-7749 (International Dial In # 617-614-3474), and entering conference ID 88315326. 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 continuing to advance its eco-practices and solutions in its three business segments, Polymer Solutions, Catalysts and Fine Chemistry, with Corporate Responsibility Magazine naming Albemarle among its prestigious “100 Best Corporate Citizens” list for 2011. Albemarle employs approximately 4,000 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 markets served.

 

3


Forward-Looking Statements

Some of the information presented in this press release, including, without limitation, statements with respect to product development, improvements in productivity, market trends, price and mix changes, expected growth, 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 of 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 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 2011 Quarterly Reports on Form 10-Q.

 

4


Albemarle Corporation and Subsidiaries

Consolidated Statements of Income

(In Thousands Except Per Share Amounts) (Unaudited)

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2011     2010     2011     2010  

Net sales

   $ 742,108      $ 592,483      $ 1,438,638      $ 1,172,753   

Cost of goods sold

     490,159        404,316        953,673        820,115   
                                

Gross profit

     251,949        188,167        484,965        352,638   

Selling, general and administrative expenses

     82,907        66,865        155,946        133,395   

Research and development expenses

     19,947        14,667        37,562        29,386   

Restructuring and other charges (a)

     —          —          —          6,958   
                                

Operating profit

     149,095        106,635        291,457        182,899   

Interest and financing expenses

     (9,274     (5,984     (18,866     (11,920

Other (expenses) income, net

     (760     (729     (422     281   
                                

Income before income taxes and equity in net income of unconsolidated investments

     139,061        99,922        272,169        171,260   

Income tax expense

     30,154        24,331        62,326        41,031   
                                

Income before equity in net income of unconsolidated investments

     108,907        75,591        209,843        130,229   

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

     14,787        10,495        27,618        20,771   
                                

Net income

     123,694        86,086        237,461        151,000   

Net income attributable to noncontrolling interests

     (9,535     (4,335     (16,722     (5,941
                                

Net income attributable to Albemarle Corporation

   $ 114,159      $ 81,751      $ 220,739      $ 145,059   
                                

Basic earnings per share

   $ 1.24      $ 0.90      $ 2.41      $ 1.59   

Diluted earnings per share

   $ 1.23      $ 0.89      $ 2.38      $ 1.57   

Weighted-average common shares outstanding – basic

     91,713        91,308        91,673        91,347   

Weighted-average common shares outstanding – diluted

     92,795        92,111        92,656        92,152   

See accompanying notes to the condensed consolidated financial information.

 

5


Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)

 

     June 30,      December 31,  
     2011      2010  

ASSETS

     

Cash and cash equivalents

   $ 490,715       $ 529,650   

Other current assets

     964,981         818,548   
                 

Total current assets

     1,455,696         1,348,198   
                 

Property, plant and equipment

     2,540,701         2,440,178   

Less accumulated depreciation and amortization

     1,477,261         1,433,865   
                 

Net property, plant and equipment

     1,063,440         1,006,313   

Other assets and intangibles

     773,211         713,570   
                 

Total assets

   $ 3,292,347       $ 3,068,081   
                 

LIABILITIES AND EQUITY

     

Current portion of long-term debt

   $ 12,885       $ 8,983   

Other current liabilities

     381,528         355,194   
                 

Total current liabilities

     394,413         364,177   
                 

Long-term debt

     758,867         851,927   

Other noncurrent liabilities

     216,106         266,661   

Deferred income taxes

     120,842         109,570   

Albemarle Corporation shareholders’ equity

     1,726,028         1,416,074   

Noncontrolling interests

     76,091         59,672   
                 

Total liabilities & equity

   $ 3,292,347       $ 3,068,081   
                 

See accompanying notes to the condensed consolidated financial information.

 

6


Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)

 

     Six Months Ended  
     June 30,  
     2011     2010  

Cash and cash equivalents at beginning of year

   $ 529,650      $ 308,791   

Cash and cash equivalents at end of period

   $ 490,715      $ 324,123   

Sources of cash and cash equivalents:

    

Net income

     237,461        151,000   

Proceeds from borrowings

     14,558        8,310   

Proceeds from exercise of stock options

     1,082        1,771   

Uses of cash and cash equivalents:

    

Capital expenditures

     (67,627     (33,930

Repurchases of common stock

     —          (14,945

Repayments of long-term debt

     (105,206     (28,524

Dividends paid to shareholders

     (27,960     (24,129

Pension and postretirement contributions

     (55,751     (23,528

Cash impact from deconsolidation of Stannica JV, net

     —          (13,074

Investments in equity and other corporate investments

     (10,868     (5

Non-cash items:

    

Depreciation and amortization

     47,310        48,411   

Restructuring and other charges (a)

     —          6,958   

Equity in net income of unconsolidated investments

     (27,618     (20,771

See accompanying notes to the condensed consolidated financial information.

 

7


Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands) (Unaudited)

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2011     2010     2011     2010  

Net sales:

        

Polymer Solutions

   $ 290,450      $ 235,289      $ 548,673      $ 451,942   

Catalysts

     266,851        216,000        527,808        443,653   

Fine Chemistry

     184,807        141,194        362,157        277,158   
                                

Total net sales

   $ 742,108      $ 592,483      $ 1,438,638      $ 1,172,753   
                                

Segment operating profit:

        

Polymer Solutions

   $ 78,850      $ 46,131      $ 148,681      $ 86,494   

Catalysts

     53,438        58,340        115,569        105,335   

Fine Chemistry

     42,635        19,884        76,594        32,452   
                                

Total segment operating profit

     174,923        124,355        340,844        224,281   
                                

Equity in net income of unconsolidated investments:

        

Polymer Solutions

     2,650        2,625        5,139        4,819   

Catalysts

     12,165        7,898        22,626        16,007   

Fine Chemistry

     —          —          —          —     

Corporate & other

     (28     (28     (147     (55
                                

Total equity in net income of unconsolidated investments

     14,787        10,495        27,618        20,771   
                                

Net income attributable to noncontrolling interests:

        

Polymer Solutions

     (4,333     (1,724     (7,179     (2,514

Catalysts

     —          —          —          —     

Fine Chemistry

     (5,225     (2,354     (9,650     (3,152

Corporate & other

     23        (257     107        (275
                                

Total net income attributable to noncontrolling interests

     (9,535     (4,335     (16,722     (5,941
                                

Segment income:

        

Polymer Solutions

     77,167        47,032        146,641        88,799   

Catalysts

     65,603        66,238        138,195        121,342   

Fine Chemistry

     37,410        17,530        66,944        29,300   
                                

Total segment income

     180,180        130,800        351,780        239,441   

Corporate & other

     (25,833     (18,005     (49,427     (34,754

Restructuring and other charges (a)

     —          —          —          (6,958

Interest and financing expenses

     (9,274     (5,984     (18,866     (11,920

Other (expenses) income, net

     (760     (729     (422     281   

Income tax expense

     (30,154     (24,331     (62,326     (41,031
                                

Net income attributable to Albemarle Corporation

   $ 114,159      $ 81,751      $ 220,739      $ 145,059   
                                

See accompanying notes to the condensed consolidated financial information.

 

8


Notes to the Condensed Consolidated Financial Information

 

(a) The six months ended June 30, 2010 included charges amounting to $7.0 million ($4.6 million after income taxes, or 5 cents per share) that related principally to planned reductions in force at our Bergheim, Germany site.

Additional Information

It should be noted that 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.

 

9


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     Six Months Ended  
     June 30,     June 30,  
     2011     2010     2011     2010  

Total segment operating profit

   $ 174,923      $ 124,355      $ 340,844      $ 224,281   

Corporate & other *

     (25,828     (17,720     (49,387     (34,424

Restructuring and other charges

     —          —          —          (6,958
                                

GAAP Operating profit

   $ 149,095      $ 106,635      $ 291,457      $ 182,899   
                                

Total segment income

   $ 180,180      $ 130,800      $ 351,780      $ 239,441   

Corporate & other

     (25,833     (18,005     (49,427     (34,754

Restructuring and other charges

     —          —          —          (6,958

Interest and financing expenses

     (9,274     (5,984     (18,866     (11,920

Other (expenses) income, net

     (760     (729     (422     281   

Income tax expense

     (30,154     (24,331     (62,326     (41,031
                                

GAAP Net income attributable to Albemarle Corporation

   $ 114,159      $ 81,751      $ 220,739      $ 145,059   
                                

 

* Excludes corporate equity income and noncontrolling interest adjustments of $(5) and $(285) for the three-month periods ended June 30, 2011 and 2010, respectively, and $(40) and $(330) for the six-month periods ended June 30, 2011 and 2010, respectively.

 

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See below for a reconciliation of EBITDA and EBITDA excluding special items, the non-GAAP financial measures, from 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 item as listed below.

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2011     2010     2011     2010  

Net income attributable to Albemarle Corporation

   $ 114,159      $ 81,751      $ 220,739      $ 145,059   
                                

Add:

        

Interest and financing expenses

     9,274        5,984        18,866        11,920   

Income tax expense

     30,154        24,331        62,326        41,031   

Depreciation and amortization

     24,306        23,710        47,310        48,411   
                                

EBITDA

     177,893        135,776        349,241        246,421   

Restructuring and other charges

     —          —          —          6,958   
                                

EBITDA excluding special item

   $ 177,893      $ 135,776      $ 349,241      $ 253,379   
                                

Net sales

   $ 742,108      $ 592,483      $ 1,438,638      $ 1,172,753   
                                

EBITDA Margin

     24.0     22.9     24.3     21.0
                                

EBITDA Margin excluding special item

     24.0     22.9     24.3     21.6
                                

 

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