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) April 17, 2013

 

 

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 April 17, 2013, Albemarle Corporation (the “Company”) issued a press release regarding its earnings for the first quarter ended March 31, 2013. A copy of this release is being furnished as Exhibit 99.1 hereto and incorporated herein by reference. In addition, on April 18, 2013, the Company will hold a teleconference for analysts and media to discuss results for the first quarter ended March 31, 2013. The teleconference is webcast on the Company’s website at www.albemarle.com.

The press release attached as Exhibit 99.1 includes presentations of net income attributable to Albemarle Corporation (“earnings”), earnings per share and effective income tax rates which exclude non-operating items, as well as presentations of segment operating profit, segment income, EBITDA, EBITDA excluding non-operating items, EBITDA margin and EBITDA margin excluding non-operating 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 non-operating 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, earnings excluding non-operating items, EBITDA and EBITDA excluding non-operating 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 non-operating 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 April 17, 2013, 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: April 17, 2013

 

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 April 17, 2013, issued by the Company.
EX-99.1

Exhibit 99.1

 

   Contact:   
LOGO    Lorin Crenshaw        225.388.7322
     

Albemarle reports first quarter 2013 results

 

 

BATON ROUGE, LA – April 17, 2013 –

First quarter 2013 highlights:

 

 

Earnings of $82.7 million, or $0.93 per share, excluding non-operating items.

 

 

Net sales of $642 million and EBITDA margin, excluding non-operating items, of 22 percent.

 

 

Increased dividend by 20% and announced intention to repurchase 10% of outstanding shares by end of year.

 

 

Repurchased approximately 1 million shares in first quarter.

 

     Three Months Ended  
     March 31,  

In thousands, except per share amounts

   2013     2012  

Net sales

   $ 641,625      $ 711,704   

Segment income

   $ 133,625      $ 179,763   

Net income attributable to Albemarle Corporation

   $ 83,987      $ 114,262   

Diluted earnings per share

   $ 0.94      $ 1.27   

Non-operating pension and OPEB adjustments(a)

     (0.01     (0.02
  

 

 

   

 

 

 

Diluted earnings per share, excluding non-operating items

   $ 0.93      $ 1.25   
  

 

 

   

 

 

 

 

See accompanying notes and reconciliations to the condensed consolidated financial information.

Albemarle Corporation (NYSE: ALB) reported first quarter 2013 earnings of $84.0 million, or $0.94 per share, compared to first quarter 2012 earnings of $114.3 million, or $1.27 per share. Excluding non-operating items, first quarter 2013 earnings were $82.7 million, or $0.93 per share, compared to $112.6 million, or $1.25 per share, for 2012. The Company reported net sales of $641.6 million in the first quarter of 2013 compared to net sales of $711.7 million in the first quarter of 2012, driven by our exit from the phosphorus flame retardants business, lower metals surcharges and pricing on certain products.

“First quarter results matched our expectation that 2013 would begin the year slowly,” stated Luke Kissam, CEO. “Catalysts was impacted by start-up costs from our two greenfield polyolefin catalysts expansions and an unfavorable mix in Refinery Catalysts. In Fine Chemistry, we saw robust demand for drilling fluids and an expected slow quarter in custom manufacturing. Polymer Solutions showed modest improvement from fourth quarter, but our current order book patterns suggest that demand for our portfolio of products in consumer electronics, construction and European auto markets will remain sluggish.”

 

1


Quarterly Segment Results

Catalysts generated net sales of $235.5 million in the first quarter of 2013, a 20 percent decrease from net sales in the first quarter of 2012, due mainly to lower metals surcharges, unfavorable mix and lower overall volumes. Catalysts segment income was $57.0 million in the first quarter of 2013, down 32 percent from first quarter 2012 results of $83.4 million, due primarily to lower metals surcharges and volumes and unfavorable mix.

Polymer Solutions reported net sales of $214.8 million in the first quarter of 2013, a 6 percent decrease from net sales in the first quarter of 2012, due to the year-over-year effects of our phosphorus flame retardants business exit in the second quarter of 2012. Higher sales volumes in our core products were offset by lower pricing and unfavorable mix. Segment income for Polymer Solutions was $45.3 million in the first quarter of 2013, an 18 percent decline from $55.4 million in the first quarter of 2012, driven by lower pricing, higher variable input costs and unfavorable foreign currency impacts, partly offset by favorable sales volumes and favorable impacts from our exit of the phosphorus flame retardants business.

Fine Chemistry net sales in the first quarter of 2013 were $191.3 million, a 1 percent increase over net sales in the first quarter of 2012, due mainly to favorable sales volume partly offset by unfavorable pricing impacts. Segment income for Fine Chemistry was $31.4 million for the first quarter of 2013, down 24 percent from first quarter 2012 results of $41.0 million, due to unfavorable pricing, lower factory operating rates and timing of custom services projects.

 

2


Corporate and Other

Corporate and other expense was $14.0 million ($16.1 million excluding non-operating items) for the first quarter of 2013. The $3.6 million decrease from the comparable period in 2012 was due primarily to lower personnel-related costs and other spending.

Interest and financing expenses were $5.2 million for the first quarter of 2013 compared to $8.7 million for the first quarter of 2012, with this decrease due primarily to increases in interest capitalized on higher average construction project balances outstanding and lower variable-rate borrowings year-over-year.

Excluding non-operating items (see notes to the condensed consolidated financial information), our effective income tax rates were 24.6 percent and 26.0 percent for the first quarter of 2013 and 2012, 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 $99 million for the three months ended March 31, 2013, and we had $435 million in cash and cash equivalents at March 31, 2013. During the three months ended March 31, 2013, cash on hand and cash provided by operations funded capital expenditures for plant, machinery and equipment of approximately $55 million (which includes approximately $19 million in capital expenditures associated with our Jordanian joint venture), dividends to shareholders of $17.8 million and repurchases of $60.8 million, or approximately 1.0 million shares, of our common stock.

Earnings Call

The Company’s performance for the first quarter ended March 31, 2013 will be discussed on a conference call at 9:00 AM Eastern Daylight time on April 18, 2013. The call can be accessed by dialing 888-680-0879 (International Dial-In # 617-213-4856), and entering conference ID 46604711. The Company’s earnings presentation and supporting material can be accessed through Albemarle’s website under Investors at www.albemarle.com.

 

3


About Albemarle

Albemarle Corporation, headquartered in Baton Rouge, Louisiana, is a leading global developer, manufacturer and marketer of highly-engineered specialty chemicals for consumer electronics, petroleum refining, utilities, packaging, construction, automotive/transportation, pharmaceuticals, crop protection, food-safety and custom chemistry services. Albemarle is committed to global sustainability and is advancing its eco-practices and solutions in its three business segments, Polymer Solutions, Catalysts and Fine Chemistry. The Company employs more than 4,000 people worldwide and serves customers in approximately 100 countries. Albemarle regularly posts information to www.albemarle.com, including notification of events, news, financial performance, investor presentations and webcasts, Regulation G reconciliations, SEC filings and other information regarding the Company, its businesses and markets served.

Forward-Looking Statements

Some of the information presented in this press release and the conference call and discussions that follow, including, without limitation, statements with respect to product development, changes in productivity, market trends, price, volume and mix changes, expected growth and earnings, input costs, surcharges, tax rates, stock repurchases, dividends, economic trends, outlook and all other information relating to matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ from expectations include, without limitation: changes in economic and business conditions; changes in financial and operating performance of our major customers and industries and markets served by us; the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in the demand for our products; limitations or prohibitions on the manufacture and sale of our products; availability of raw materials; changes in the cost of raw materials and energy and in our ability to pass through increases; acquisitions and divestitures, and changes in performance of acquired companies; fluctuations in foreign currencies; changes in laws and government regulation impacting our operations or our products; the occurrence of claims or litigation; the occurrence of natural disasters; the inability to maintain current levels of product or premises liability insurance or the denial of such coverage; political unrest, including terrorism or hostilities; political instability affecting our manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs; changes in the jurisdictional mix of our earnings; changes in monetary policies or inflation or interest rates, which may impact our ability to raise capital or increase our cost of funds, the performance of our pension fund investments and our pension expense and funding obligations; volatility and substantial uncertainties in the debt and equity markets; technology or intellectual property infringement and other innovation risks; decisions we may make in the future; and the other factors detailed from time to time in the reports we file with the SEC, including those described under “Risk Factors” in our Annual Report on Form 10-K and our 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  
     March 31,  
     2013     2012  

Net sales

   $ 641,625      $ 711,704   

Cost of goods sold

     442,035        460,724   
  

 

 

   

 

 

 

Gross profit

     199,590        250,980   

Selling, general and administrative expenses(b)

     64,750        74,004   

Research and development expenses

     19,953        19,049   
  

 

 

   

 

 

 

Operating profit

     114,887        157,927   

Interest and financing expenses

     (5,231     (8,734

Other expenses, net

     (4,209     (118
  

 

 

   

 

 

 

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

     105,447        149,075   

Income tax expense

     26,192        39,028   
  

 

 

   

 

 

 

Income before equity in net income of unconsolidated investments

     79,255        110,047   

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

     10,261        8,586   
  

 

 

   

 

 

 

Net income

     89,516        118,633   

Net income attributable to noncontrolling interests

     (5,529     (4,371
  

 

 

   

 

 

 

Net income attributable to Albemarle Corporation

   $ 83,987      $ 114,262   
  

 

 

   

 

 

 

Basic earnings per share

   $ 0.95      $ 1.28   

Diluted earnings per share

   $ 0.94      $ 1.27   

Weighted-average common shares outstanding – basic

     88,719        88,997   

Weighted-average common shares outstanding – diluted

     89,236        89,947   

See accompanying notes to the condensed consolidated financial information.

 

5


Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)

 

     March 31,      December 31,  
     2013      2012  

ASSETS

     

Cash and cash equivalents

   $ 434,904       $ 477,696   

Other current assets

     968,596         929,617   
  

 

 

    

 

 

 

Total current assets

     1,403,500         1,407,313   
  

 

 

    

 

 

 

Property, plant and equipment

     2,850,731         2,818,604   

Less accumulated depreciation and amortization

     1,532,972         1,522,033   
  

 

 

    

 

 

 

Net property, plant and equipment

     1,317,759         1,296,571   

Other assets and intangibles

     729,186         733,407   
  

 

 

    

 

 

 

Total assets

   $ 3,450,445       $ 3,437,291   
  

 

 

    

 

 

 

LIABILITIES AND EQUITY

     

Current portion of long-term debt

   $ 9,228       $ 12,700   

Other current liabilities

     425,023         372,309   
  

 

 

    

 

 

 

Total current liabilities

     434,251         385,009   
  

 

 

    

 

 

 

Long-term debt

     686,592         686,588   

Other noncurrent liabilities

     361,102         370,318   

Deferred income taxes

     66,260         63,368   

Albemarle Corporation shareholders’ equity

     1,797,997         1,833,598   

Noncontrolling interests

     104,243         98,410   
  

 

 

    

 

 

 

Total liabilities & equity

   $ 3,450,445       $ 3,437,291   
  

 

 

    

 

 

 

See accompanying notes to the condensed consolidated financial information.

 

6


Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)

 

     Three Months Ended  
     March 31,  
     2013     2012  

Cash and cash equivalents at beginning of year

   $ 477,696      $ 469,416   

Cash and cash equivalents at end of period

   $ 434,904      $ 519,359   

Sources of cash and cash equivalents:

    

Net income

   $ 89,516      $ 118,633   

Proceeds from exercise of stock options

     1,720        2,569   

Uses of cash and cash equivalents:

    

Capital expenditures

     (55,335     (54,784

Repurchases of common stock

     (60,798     —     

Repayments of long-term debt

     (3,604     (7,149

Dividends paid to shareholders

     (17,808     (15,578

Pension and postretirement contributions

     (1,741     (2,527

Non-cash and other items:

    

Depreciation and amortization

     25,244        24,235   

Pension and postretirement expense

     1,582        243   

Equity in net income of unconsolidated investments

     (10,261     (8,586

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  
     March 31,  
     2013     2012  

Net sales:

    

Polymer Solutions

   $ 214,774      $ 228,131   

Catalysts

     235,573        293,522   

Fine Chemistry

     191,278        190,051   
  

 

 

   

 

 

 

Total net sales

   $ 641,625      $ 711,704   
  

 

 

   

 

 

 

Segment operating profit:

    

Polymer Solutions

   $ 43,670      $ 54,547   

Catalysts

     49,045        76,641   

Fine Chemistry

     36,178        44,363   
  

 

 

   

 

 

 

Total segment operating profit

     128,893        175,551   
  

 

 

   

 

 

 

Equity in net income of unconsolidated investments:

    

Polymer Solutions

     2,308        1,845   

Catalysts

     7,953        6,741   

Fine Chemistry

     —          —     

Corporate & other

     —          —     
  

 

 

   

 

 

 

Total equity in net income of unconsolidated investments

     10,261        8,586   
  

 

 

   

 

 

 

Net (income) loss attributable to noncontrolling interests:

    

Polymer Solutions

     (708     (1,002

Catalysts

     —          —     

Fine Chemistry

     (4,821     (3,372

Corporate & other

     —          3   
  

 

 

   

 

 

 

Total net income attributable to noncontrolling interests

     (5,529     (4,371
  

 

 

   

 

 

 

Segment income:

    

Polymer Solutions

     45,270        55,390   

Catalysts

     56,998        83,382   

Fine Chemistry

     31,357        40,991   
  

 

 

   

 

 

 

Total segment income

     133,625        179,763   

Corporate & other(a)

     (14,006     (17,621

Interest and financing expenses

     (5,231     (8,734

Other expenses, net

     (4,209     (118

Income tax expense

     (26,192     (39,028
  

 

 

   

 

 

 

Net income attributable to Albemarle Corporation

   $ 83,987      $ 114,262   
  

 

 

   

 

 

 

See accompanying notes to the condensed consolidated financial information.

 

8


Notes to the Condensed Consolidated Financial Information

 

(a) Non-operating pension and OPEB items, consisting of mark-to-market (MTM) actuarial gains/losses as well as interest costs and expected return on assets, are included in Corporate & other as follows:

 

   

For the three months ended March 31, 2013 and 2012, net benefits amounting to $2.1 million ($1.3 million after income taxes, or $0.01 per share) and $2.7 million ($1.7 million after income taxes, or $0.02 per share), respectively. There were no MTM actuarial gains/losses recorded during the three months ended March 31, 2013 and 2012.

Although non-operating pension and OPEB items are included in our GAAP operating profit, 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.

 

(b) The quarter ended March 31, 2012 includes a gain of $8.1 million ($5.1 million after tax, or $0.06 per share) resulting from proceeds received in connection with the settlement of litigation (net of related legal fees). The quarter ended March 31, 2012 also includes an $8 million charitable contribution ($5.1 million after tax, or $0.06 per share) to the Albemarle Foundation.

 

9


Additional Information

It should be noted that Net income attributable to Albemarle Corporation (“earnings”), earnings per share and effective income tax rates which exclude non-operating items, as well as presentations of segment operating profit, segment income, EBITDA, EBITDA excluding non-operating items, EBITDA margin and EBITDA margin excluding non-operating 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 Net income attributable to Albemarle Corporation excluding non-operating items, EBITDA and EBITDA excluding non-operating items to Net income attributable to Albemarle Corporation.

 

10


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 non-operating 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 non-operating 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 non-operating 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  
     March 31,  
     2013     2012  

Total segment operating profit

   $ 128,893      $ 175,551   

Corporate & other*

     (14,006     (17,624
  

 

 

   

 

 

 

GAAP Operating profit

   $ 114,887      $ 157,927   
  

 

 

   

 

 

 

Total segment income

   $ 133,625      $ 179,763   

Corporate & other

     (14,006     (17,621

Interest and financing expenses

     (5,231     (8,734

Other expenses, net

     (4,209     (118

Income tax expense

     (26,192     (39,028
  

 

 

   

 

 

 

GAAP Net income attributable to Albemarle Corporation

   $ 83,987      $ 114,262   
  

 

 

   

 

 

 

 

* Excludes corporate equity income and noncontrolling interest adjustments of $3 for the three-month period ended March 31, 2012.

 

11


See below for a reconciliation of Net income attributable to Albemarle Corporation excluding non-operating items, EBITDA and EBITDA excluding non-operating items, the non-GAAP financial measures, to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with GAAP. EBITDA is defined as Net income attributable to Albemarle Corporation before interest and financing expenses, income taxes, depreciation and amortization. EBITDA excluding non-operating items is defined as EBITDA before the non-operating items as listed below.

 

     Three Months Ended  
     March 31,  
     2013     2012  

Net income attributable to Albemarle Corporation

   $ 83,987      $ 114,262   
  

 

 

   

 

 

 

Add back:

    

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

     (1,297     (1,703
  

 

 

   

 

 

 

Net income attributable to Albemarle Corporation excluding non-operating items

   $ 82,690      $ 112,559   
  

 

 

   

 

 

 

Net income attributable to Albemarle Corporation

   $ 83,987      $ 114,262   
  

 

 

   

 

 

 

Add back:

    

Interest and financing expenses

     5,231        8,734   

Income tax expense

     26,192        39,028   

Depreciation and amortization

     25,244        24,235   
  

 

 

   

 

 

 

EBITDA

     140,654        186,259   

Non-operating pension and OPEB adjustments

     (2,069     (2,694
  

 

 

   

 

 

 

EBITDA excluding non-operating items

   $ 138,585      $ 183,565   
  

 

 

   

 

 

 

Net sales

   $ 641,625      $ 711,704   
  

 

 

   

 

 

 

EBITDA Margin

     21.9     26.2
  

 

 

   

 

 

 

EBITDA Margin excluding non-operating items

     21.6     25.8
  

 

 

   

 

 

 

 

12