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 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 July 17, 2013, Albemarle Corporation (the “Company”) issued a press release regarding its earnings for the second quarter ended June 30, 2013. A copy of this release is being furnished as Exhibit 99.1 hereto and incorporated herein by reference. In addition, on July 18, 2013, the Company will hold a teleconference for analysts and media to discuss results for the second quarter ended June 30, 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 special and non-operating pension and OPEB items, as well as presentations of segment operating profit, segment income, EBITDA, EBITDA excluding special and non-operating pension and OPEB items, EBITDA margin and EBITDA margin excluding special and non-operating pension and OPEB 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 and non-operating pension and OPEB 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 special and non-operating pension and OPEB items, EBITDA and EBITDA excluding special and non-operating pension and OPEB 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 and non-operating pension and OPEB 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 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: July 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 July 17, 2013, issued by the Company.
EX-99.1

Exhibit 99.1

 

 

 

 

LOGO

   Contact:                                   
   Lorin Crenshaw 225.388.7322
  

Albemarle reports second quarter 2013 results

 

 

BATON ROUGE, LA - July 17, 2013 –

Second quarter 2013 highlights:

 

 

Earnings of $81.8 million, or $0.97 per share, excluding non-operating items.

 

 

Net sales of $634 million and EBITDA margin, excluding non-operating items, of 22 percent.

 

 

Announced $450 million accelerated share repurchase program and repurchased approximately 6.8 million shares in second quarter.

 

 

Announced agreement to establish a Chinese joint venture to produce MARTINAL® flame retardants.

 

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

In thousands, except per share amounts

   2013     2012     2013     2012  

Net sales

   $ 634,197      $ 684,894      $ 1,275,822      $ 1,396,598   

Segment income

   $ 129,031      $ 179,710      $ 262,656      $ 359,473   

Net income attributable to Albemarle Corporation

   $ 82,739      $ 50,089      $ 166,726      $ 164,351   

Diluted earnings per share

   $ 0.98      $ 0.56      $ 1.92      $ 1.83   

Non-operating pension and OPEB items(a)

     (0.01     (0.09     (0.03     (0.11

Special items(b)

     —          0.82        —          0.82   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share, excluding special and non-operating pension and OPEB items(e)

   $ 0.97      $ 1.28      $ 1.89      $ 2.53   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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

Albemarle Corporation (NYSE: ALB) reported second quarter 2013 earnings of $82.7 million, or $0.98 per share, compared to second quarter 2012 earnings of $50.1 million, or $0.56 per share. Excluding special and non-operating pension and OPEB items (see notes to the condensed consolidated financial information), second quarter 2013 earnings were $81.8 million, or $0.97 per share, compared to $115.3 million, or $1.28 per share, for the second quarter of 2012. The Company reported net sales of $634.2 million in the second quarter of 2013, down from net sales of $684.9 million in the second quarter of 2012, driven by our exit from the phosphorus flame retardants business, lower metals surcharges, unfavorable pricing in our bromine portfolio and lower Fine Chemistry Services volumes, partly offset by favorable volumes in our Refinery Catalysts and Brominated Flame Retardant businesses.

Earnings for the first half of 2013 were $166.7 million, or $1.92 per share, compared to $164.4 million, or $1.83 per share, for the first half of 2012. Excluding special and non-operating pension and OPEB items, earnings for the first half of 2013 were $164.5 million, or $1.89 per share, compared to $227.8 million, or $2.53 per share, for the first half of 2012. Net sales for the first half of 2013 were $1.28 billion, down from $1.40 billion for the first half of 2012, driven by lower metals surcharges and pricing on certain products.

 

1


“Our businesses delivered EBITDA margins of 22% in spite of facing lower metals surcharges and an economic environment which saw continued sluggishness across Europe, weak electronics and construction markets and a much weaker China than most anticipated at the beginning of the year,” stated Luke Kissam, CEO. “We also successfully met several key milestones with regard to bringing on our bromine and organometallics expansions, which will be essential drivers of our long term growth.”

Quarterly Segment Results

Catalysts generated net sales of $233.8 million in the second quarter of 2013, a 2 percent increase from net sales in the second quarter of 2012, with favorable volumes in Refinery Catalysts Solutions being largely offset by lower metals surcharges and lower Performance Catalyst Solutions volumes. Catalysts segment income was $51.0 million in the second quarter of 2013, down 25 percent from second quarter 2012 results of $68.2 million, due primarily to lower metals surcharges and higher manufacturing costs.

Polymer Solutions reported net sales of $224.3 million in the second quarter of 2013, a 9 percent decrease from net sales in the second quarter of 2012, due to the year-over-year effects of our phosphorus flame retardants business exit in the second quarter of 2012 and overall lower flame retardant pricing, partly offset by favorable flame retardants volumes. Segment income for Polymer Solutions was $43.7 million in the second quarter of 2013, a 34 percent decline from $65.7 million in the second quarter of 2012, driven by unfavorable pricing, manufacturing costs and 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 second quarter of 2013 were $176.1 million, a 16 percent decrease from net sales in the second quarter of 2012, due mainly to unfavorable sales volumes and pricing. Segment income for Fine Chemistry was $34.4 million for the second quarter of 2013, down 25 percent from second quarter 2012 results of $45.9 million, due to unfavorable pricing, lower factory operating rates and timing of custom services projects.

 

2


Corporate and Other

Corporate and other expense was $15.5 million ($17.1 million excluding non-operating pension and OPEB items) for the second quarter of 2013. The $11.7 million increase from the comparable period in 2012 was due primarily to an unfavorable variance in non-operating pension and OPEB items.

Interest and financing expenses were $7.6 million for the second quarter of 2013 compared to $8.5 million for the second quarter of 2012, with this decrease due primarily to lower interest rates on variable-rate borrowings and higher capitalized interest year-over-year.

Excluding special and non-operating pension and OPEB items, our effective income tax rates were 20.6 percent and 26.4 percent for the second 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 $179 million for the six months ended June 30, 2013, and we had $315 million in cash and cash equivalents at June 30, 2013. During the six months ended June 30, 2013, proceeds from borrowings, cash on hand and cash provided by operations funded capital expenditures for plant, machinery and equipment of approximately $103 million (which includes approximately $32 million in capital expenditures associated with our Jordanian joint venture), dividends to shareholders of $39.0 million and $582.3 million for repurchases of our common stock pursuant to the terms of our share repurchase program and the accelerated share repurchase program.

Earnings Call

The Company’s performance for the second quarter ended June 30, 2013 will be discussed on a conference call at 9:00 AM Eastern Daylight time on July 18, 2013. The call can be accessed by dialing 888-713-4211 (International Dial-In # 617-213-4864), and entering conference ID 51619577. 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, with Corporate Responsibility Magazine naming Albemarle among its prestigious “100 Best Corporate Citizens” list for 2013. 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 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 and in our ability to pass through such increases; acquisitions and divestitures, and changes in performance of acquired companies; 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, including adverse effects from 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 and changes in tax laws and rates; changes in monetary policies, inflation or interest rates that may impact our ability to raise capital or increase our cost of funds, impact the performance of our pension fund investments and increase our pension expense and funding obligations; volatility and substantial uncertainties in the debt and equity markets; technology or intellectual property infringement, including cyber security breaches, 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
June 30,
    Six Months Ended
June 30,
 
      
     2013     2012     2013     2012  

Net sales

   $ 634,197      $ 684,894      $ 1,275,822      $ 1,396,598   

Cost of goods sold

     437,558        435,606        879,593        896,330   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     196,639        249,288        396,229        500,268   

Selling, general and administrative expenses(c)

     62,900        61,735        127,650        135,739   

Research and development expenses

     21,565        20,911        41,518        39,960   

Restructuring and other charges, net(b)

     —          94,703        —          94,703   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

     112,174        71,939        227,061        229,866   

Interest and financing expenses

     (7,608     (8,486     (12,839     (17,220

Other expenses, net

     (1,697     (688     (5,906     (806
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     102,869        62,765        208,316        211,840   

Income tax expense

     21,450        21,882        47,642        60,910   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before equity in net income of unconsolidated investments

     81,419        40,883        160,674        150,930   

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

     9,709        12,712        19,970        21,298   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     91,128        53,595        180,644        172,228   

Net income attributable to noncontrolling interests

     (8,389     (3,506     (13,918     (7,877
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Albemarle Corporation

   $ 82,739      $ 50,089      $ 166,726      $ 164,351   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share

   $ 0.98      $ 0.56      $ 1.93      $ 1.84   

Diluted earnings per share

   $ 0.98      $ 0.56      $ 1.92      $ 1.83   

Weighted-average common shares outstanding – basic

     84,028        89,414        86,374        89,206   

Weighted-average common shares outstanding – diluted

     84,489        90,051        86,862        89,999   

See accompanying notes to the condensed consolidated financial information.

 

5


Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)

 

     June 30,
2013
     December 31,
2012
 

ASSETS

     

Cash and cash equivalents

   $ 314,659       $ 477,696   

Other current assets

     967,219         929,617   
  

 

 

    

 

 

 

Total current assets

     1,281,878         1,407,313   
  

 

 

    

 

 

 

Property, plant and equipment

     2,895,949         2,818,604   

Less accumulated depreciation and amortization

     1,562,184         1,522,033   
  

 

 

    

 

 

 

Net property, plant and equipment

     1,333,765         1,296,571   

Other assets and intangibles

     720,306         733,407   
  

 

 

    

 

 

 

Total assets

   $ 3,335,949       $ 3,437,291   
  

 

 

    

 

 

 

LIABILITIES AND EQUITY

     

Current portion of long-term debt

   $ 9,355       $ 12,700   

Other current liabilities

     366,228         372,309   
  

 

 

    

 

 

 

Total current liabilities

     375,583         385,009   
  

 

 

    

 

 

 

Long-term debt

     1,067,852         686,588   

Other noncurrent liabilities

     358,647         370,318   

Deferred income taxes

     68,474         63,368   

Albemarle Corporation shareholders’ equity

     1,352,994         1,833,598   

Noncontrolling interests

     112,399         98,410   
  

 

 

    

 

 

 

Total liabilities & equity

   $ 3,335,949       $ 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)

 

     Six Months Ended
June 30,
 
     2013     2012  

Cash and cash equivalents at beginning of year

   $ 477,696      $ 469,416   

Cash and cash equivalents at end of period

   $ 314,659      $ 461,751   

Sources of cash and cash equivalents:

    

Net income

   $ 180,644      $ 172,228   

Proceeds from borrowings of long-term debt

     117,000        2,978   

Proceeds from other borrowings, net

     266,248        7   

Proceeds from exercise of stock options

     3,917        13,430   

Uses of cash and cash equivalents:

    

Capital expenditures

     (103,168     (126,623

Repurchases of common stock

     (582,298     (13,695

Repayments of long-term debt

     (6,380     (11,754

Dividends paid to shareholders

     (39,049     (33,399

Pension and postretirement contributions

     (4,246     (4,612

Non-cash and other items:

    

Depreciation and amortization

     51,817        49,449   

Non-cash charges associated with restructuring and other, net

     —          70,587   

Pension and postretirement expense (benefit)

     3,152        (10,203

Equity in net income of unconsolidated investments

     (19,970     (21,298

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
June 30,
    Six Months Ended
June 30,
 
      2013     2012     2013     2012  

Net sales:

        

Polymer Solutions

   $ 224,316      $ 247,016      $ 439,090      $ 475,147   

Catalysts

     233,818        229,144        469,391        522,666   

Fine Chemistry

     176,063        208,734        367,341        398,785   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

   $ 634,197      $ 684,894      $ 1,275,822      $ 1,396,598   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating profit:

        

Polymer Solutions

   $ 43,821      $ 63,407      $ 87,491      $ 117,954   

Catalysts

     43,613        57,370        92,658        134,011   

Fine Chemistry

     40,277        49,704        76,455        94,067   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment operating profit

     127,711        170,481        256,604        346,032   
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in net income of unconsolidated investments:

        

Polymer Solutions

     2,328        1,913        4,636        3,758   

Catalysts

     7,381        10,799        15,334        17,540   

Fine Chemistry

     —          —          —          —     

Corporate & other

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total equity in net income of unconsolidated investments

     9,709        12,712        19,970        21,298   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (income) loss attributable to noncontrolling interests:

        

Polymer Solutions

     (2,494     349        (3,202     (653

Catalysts

     —          —          —          —     

Fine Chemistry

     (5,895     (3,832     (10,716     (7,204

Corporate & other

     —          (23     —          (20
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net income attributable to noncontrolling interests

     (8,389     (3,506     (13,918     (7,877
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment income:

        

Polymer Solutions

     43,655        65,669        88,925        121,059   

Catalysts

     50,994        68,169        107,992        151,551   

Fine Chemistry

     34,382        45,872        65,739        86,863   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment income

     129,031        179,710        262,656        359,473   

Corporate & other(a)(d)

     (15,537     (3,862     (29,543     (21,483

Restructuring and other charges, net(b)

     —          (94,703     —          (94,703

Interest and financing expenses

     (7,608     (8,486     (12,839     (17,220

Other expenses, net

     (1,697     (688     (5,906     (806

Income tax expense

     (21,450     (21,882     (47,642     (60,910
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Albemarle Corporation

   $ 82,739      $ 50,089      $ 166,726      $ 164,351   
  

 

 

   

 

 

   

 

 

   

 

 

 

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 June 30, 2013 and 2012, net benefits amounting to $1.5 million ($0.9 million after income taxes, or $0.01 per share) and $13.3 million ($8.4 million after income taxes, or $0.09 per share), respectively. There were no MTM actuarial gains/losses recorded during the three months ended June 30, 2013.

 

   

For the six months ended June 30, 2013 and 2012, net benefits amounting to $3.6 million ($2.2 million after income taxes, or $0.03 per share) and $16.0 million ($10.1 million after income taxes, or $0.11 per share), respectively. There were no MTM actuarial gains/losses recorded during the six months ended June 30, 2013.

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 three and six month periods ended June 30, 2012 include net charges amounting to $94.7 million ($73.6 million after income taxes, or $0.82 per share) in connection with our exit of the phosphorus flame retardants business.

 

(c) The six month period ended June 30, 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 six month period ended June 30, 2012 also includes an $8 million charitable contribution ($5.1 million after tax, or $0.06 per share) to the Albemarle Foundation.

 

(d) The three month and six month periods ended June 30, 2013 include costs of $3.6 million which are the subject of a claim by the Company against a freight services vendor for alleged fraud committed against several companies.

 

(e) Totals may not add due to rounding.

 

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 special and non-operating pension and OPEB items, as well as presentations of segment operating profit, segment income, EBITDA, EBITDA excluding special and non-operating pension and OPEB items, EBITDA margin and EBITDA margin excluding special and non-operating pension and OPEB 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 special and non-operating pension and OPEB items, EBITDA and EBITDA excluding special and non-operating pension and OPEB items to Net income attributable to Albemarle Corporation.

 

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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 and non-operating pension and OPEB 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 and non-operating pension and OPEB 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 and non-operating pension and OPEB 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
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013     2012  

Total segment operating profit

   $ 127,711      $ 170,481      $ 256,604      $ 346,032   

Corporate & other *

     (15,537     (3,839     (29,543     (21,463

Restructuring and other charges, net

     —          (94,703     —          (94,703
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Operating profit

   $ 112,174      $ 71,939      $ 227,061      $ 229,866   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment income

   $ 129,031      $ 179,710      $ 262,656      $ 359,473   

Corporate & other

     (15,537     (3,862     (29,543     (21,483

Restructuring and other charges, net

     —          (94,703     —          (94,703

Interest and financing expenses

     (7,608     (8,486     (12,839     (17,220

Other expenses, net

     (1,697     (688     (5,906     (806

Income tax expense

     (21,450     (21,882     (47,642     (60,910
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net income attributable to Albemarle Corporation

   $ 82,739      $ 50,089      $ 166,726      $ 164,351   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* Excludes corporate noncontrolling interest adjustments of $(23) and $(20) for the three-month and six-month periods ended June 30, 2012, respectively.

 

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See below for a reconciliation of Net income attributable to Albemarle Corporation excluding special and non-operating pension and OPEB items, EBITDA and EBITDA excluding special and non-operating pension and OPEB 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 special and non-operating pension and OPEB items is defined as EBITDA before the special and non-operating pension and OPEB items as listed below.

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013     2012  

Net income attributable to Albemarle Corporation

   $ 82,739      $ 50,089      $ 166,726      $ 164,351   
  

 

 

   

 

 

   

 

 

   

 

 

 

Add back:

        

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

     (947     (8,424     (2,244     (10,127

Special items (net of tax)

     —          73,590        —          73,590   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Albemarle Corporation excluding special and non-operating pension and OPEB items

   $ 81,792      $ 115,255      $ 164,482      $ 227,814   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Albemarle Corporation

   $ 82,739      $ 50,089      $ 166,726      $ 164,351   
  

 

 

   

 

 

   

 

 

   

 

 

 

Add back:

        

Interest and financing expenses

     7,608        8,486        12,839        17,220   

Income tax expense

     21,450        21,882        47,642        60,910   

Depreciation and amortization

     26,573        25,214        51,817        49,449   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     138,370        105,671        279,024        291,930   

Non-operating pension and OPEB items

     (1,515     (13,329     (3,584     (16,023

Special items

     —          94,703        —          94,703   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA excluding special and non-operating pension and OPEB items

   $ 136,855      $ 187,045      $ 275,440      $ 370,610   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net sales

   $ 634,197      $ 684,894      $ 1,275,822      $ 1,396,598   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Margin

     21.8     15.4     21.9     20.9
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Margin excluding special and non-operating pension and OPEB items

     21.6     27.3     21.6     26.5
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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