Albemarle reports second quarter 2015 results

Aug 05, 2015, 17:16 ET from Albemarle Corporation

BATON ROUGE, La., Aug. 5, 2015 /PRNewswire/ -- Second quarter 2015 highlights:

  • Adjusted earnings of $0.84 per share.
  • Three core business units grew constant currency revenue by 7% and adjusted EBITDA by 10% from prior year, and achieved adjusted EBITDA margins of 30%.
  • Actions taken to date will result in $50 million in acquisition synergies, in line with expectations.
  • Full year EPS guidance reaffirmed at $3.65 to $4.05.

 


Three Months Ended


Six Months Ended


June 30,


June 30,

In thousands, except per share amounts

2015


2014


2015


2014

Net sales

$

931,485



$

604,721



$

1,815,889



$

1,204,564


Adjusted EBITDA

$

230,081



$

144,688



$

495,709



$

280,718


Net income from continuing operations

$

59,366



$

89,404



$

106,515



$

155,408


Net income attributable to Albemarle Corporation

$

52,147



$

22,447



$

95,262



$

79,030


Diluted earnings per share

$

0.46



$

0.28



$

0.86



$

0.99


   Non-operating pension and OPEB items(a)

(0.01)



(0.01)



(0.03)



0.10


   Special items(b)

0.39



0.07



1.18



0.21


   Discontinued operations(c)



0.76





0.78


Adjusted diluted earnings per share

$

0.84



$

1.10



$

2.01



$

2.08



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

 

Albemarle Corporation (NYSE: ALB) reported second quarter 2015 earnings of $52.1 million, or $0.46 per share, compared to second quarter 2014 earnings of $22.4 million, or $0.28 per share. Second quarter 2015 adjusted earnings were $95.1 million, or $0.84 per share, compared to $86.8 million, or $1.10 per share, for the second quarter of 2014 (see notes to the condensed consolidated financial information). The Company reported net sales of $931.5 million in the second quarter of 2015, up from net sales of $604.7 million in the second quarter of 2014, driven primarily by the acquisition of Rockwood Holdings, Inc. ("Rockwood"), which closed January 12, 2015.

Earnings for the six months ended June 30, 2015 were $95.3 million, or $0.86 per share, compared to $79.0 million, or $0.99 per share, for the same period in 2014. Adjusted earnings for the six months ended June 30, 2015 (including $52.4 million in non-cash currency transaction gains from the first quarter) were $222.3 million, or $2.01 per share, compared to $165.2 million, or $2.08 per share, for 2014. Net sales for the six months ended June 30, 2015 were $1.82 billion, up from net sales of $1.20 billion, driven primarily by the acquisition of Rockwood.

"All of Albemarle's core businesses, with the exception of Clean Fuels Technologies, delivered outstanding results in the second quarter. EBITDA margins in our core businesses were 30% for the quarter and 29% for the first half of the year," said Albemarle President and CEO, Luke Kissam. "Our integration team has initiated actions which will result in our achieving at least $50 million in cost savings in 2015. Finally, we demonstrated the superior cash generating power of our businesses, with first half free cash flow on track with our expectations. Based on our performance year to date, we are reaffirming our full year EPS guidance of $3.65 - $4.05."

As previously announced, as a result of the completion of the acquisition of Rockwood, the Company has realigned its global business units. The new structure aligns the Company's strategic assets and businesses to be market-focused and allows it to more effectively leverage its combined resources on innovation and growth. The new reporting structure consists of three reportable operating segments, or global business units ("GBUs"): Performance Chemicals, Refining Solutions and Chemetall Surface Treatment. Three businesses that the Company previously announced it intends to sell will be reported together in the "All Other" category.

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

Quarterly Segment Results

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

Performance Chemicals reported net sales of $437.0 million in the second quarter of 2015, an increase of 10.0% from second quarter 2014 pro forma net sales of $397.1 million. Excluding $21.8 million of unfavorable currency exchange impacts, net sales increased by 15.5% from the second quarter of 2014 primarily due to higher sales volumes for Bromine, Lithium and PCS as well as favorable price impacts. Adjusted EBITDA for Performance Chemicals was $148.7 million, an increase of 24.5% from second quarter 2014 pro forma results of $119.5 million. Excluding $6.5 million of unfavorable currency exchange impacts, adjusted EBITDA increased by 29.9%. The increase was primarily driven by higher overall sales volumes, favorable Bromine and Lithium pricing, and the addition of our Talison joint venture on May 28th, 2014. Net sales and adjusted EBITDA for the second quarter were both favorably impacted by the delivery of a large Bromine related order that was previously expected to be delivered in the third quarter.

Refining Solutions generated net sales of $164.6 million in the second quarter of 2015, a decrease of 19.7% from net sales of $205.0 million in the second quarter of 2014. Excluding $7.2 million of unfavorable currency exchange impacts, net sales decreased by 16.2% primarily driven by unfavorable Clean Fuels Technology volumes partly offset by favorable Heavy Oil Upgrading volumes. Adjusted EBITDA for Refining Solutions was $48.2 million in the second quarter of 2015, a decrease of 27.6% from second quarter 2014 results of $66.6 million. Excluding $1.0 million of unfavorable currency exchange impacts, Adjusted EBITDA decreased by 26.1% due primarily to lower Clean Fuels Technology sales volumes partly offset by favorable Heavy Oil Upgrading volumes.

Chemetall Surface Treatment reported net sales of $213.2 million in the second quarter of 2015, an increase of 0.4% from second quarter 2014 pro forma net sales of $212.4 million. Excluding $29.2 million of unfavorable currency exchange impacts, net sales increased by 14.1% primarily due to increased sales volumes related to the acquisition of the remaining shares of the Chemetall Shanghai joint venture in February of this year and favorable pricing. Adjusted EBITDA for Chemetall Surface Treatment was $48.4 million in the second quarter of 2015, a decrease of 1.3% from second quarter 2014 pro forma results of $49.1 million. Excluding $4.9 million of unfavorable currency exchange impacts, adjusted EBITDA increased by 8.6% due primarily to higher overall sales volumes and favorable pricing offset slightly by increased selling, general, and administrative expenses primarily associated with the Chemetall Shanghai joint venture acquisition.

All Other net sales were $113.4 million in the second quarter of 2015, a decrease of 24.0% from pro forma net sales of $149.2 million in the second quarter of 2014. Excluding $10.3 million of unfavorable currency exchange impacts, net sales decreased by 17.1% primarily due to unfavorable Fine Chemistry Services volumes and pricing.  All Other adjusted EBITDA was $9.7 million in the second quarter of 2015, a decrease of 66.1% from second quarter 2014 pro forma results of $28.6 million. Excluding $2.2 million of unfavorable currency exchange impacts, adjusted EBITDA decreased by 58.3% due primarily to lower overall sales volumes and unfavorable Fine Chemistry Services pricing.

In total, the unfavorable currency exchange impact was $68.5 million in net sales and $12.7 million in adjusted EBITDA (including $1.9 million of favorable currency exchange impacts on Corporate results).

Corporate Results

Corporate adjusted EBITDA was $(25.0) million in the second quarter of 2015 compared to $(33.4) million pro forma adjusted EBITDA in the second quarter of 2014. The $8.4 million improvement is primarily related to achieved synergies and $1.9 million of favorable impacts from currency exchange.

Income Taxes

Our adjusted effective income tax rates, which exclude discontinued operations, special and non-operating pension and OPEB items, were 28.4% and 22.6% for the second quarter of 2015 and 2014, respectively. Our effective tax rate continues to be influenced by the level and geographic mix of income, and benefits from a favorable mix of income in lower tax jurisdictions. The effective tax rate increase compared to the prior year is primarily driven by the Rockwood acquisition, which caused a reduction in various benefits in our effective tax rate.

Cash Flow

Our cash flow from operations was approximately $133.2 million for the six months ended June 30, 2015, down 55% versus the same period in 2014 primarily due to significant cash expenses in the current period related to the Rockwood acquisition, including acquisition fees, costs to deliver synergy projects, and tax payments to repatriate cash from overseas. We had $207.2 million in cash and cash equivalents at June 30, 2015 as compared to $2.5 billion at December 31, 2014. Cash on hand, cash provided by operations and proceeds from borrowings funded $2.1 billion for acquisitions, $111.7 million of capital expenditures for plant, machinery and equipment and dividends to shareholders of $54.2 million during the six months ended June 30, 2015.

Earnings Call

The Company's performance for the second quarter ended June 30, 2015 will be discussed on a conference call at 9:00 AM Eastern time on August 6, 2015. The call can be accessed by dialing 888-680-0869 (International Dial-In # 617-213-4854), and entering conference ID 45458728. The Company's earnings presentation and supporting material can be accessed through Albemarle's website under Investors at www.albemarle.com.

About Albemarle

Albemarle Corporation, headquartered in Baton Rouge, Louisiana, is a premier specialty chemicals company with leading positions in attractive end markets around the world. With a broad customer reach and diverse end markets, Albemarle develops, manufactures and markets technologically advanced and high value added products, including lithium and lithium compounds, bromine and bromine derivatives, catalysts and surface treatment chemistries used in a wide range of applications including consumer electronics, flame retardants, metal processing, plastics, contemporary and alternative transportation vehicles, refining, pharmaceuticals, agriculture, construction and custom chemistry services. Albemarle is focused on delivering differentiated, performance-based technologies that deliver innovative and sustainable solutions to its customers. The Company employs approximately 6,900 people and serves customers in approximately 100 countries. Albemarle regularly posts information to www.albemarle.com, including notification of events, news, financial performance, investor presentations and webcasts, Regulation G reconciliations, SEC filings and other information regarding the Company, its businesses and the markets it serves.

Forward-Looking Statements

Some of the information presented in this press release and the conference call and discussions that follow, including, without limitation, statements with respect to the transaction with Rockwood and the anticipated consequences and benefits of the transaction, product development, changes in productivity, market trends, price, expected growth and earnings, input costs, surcharges, tax rates, stock repurchases, dividends, cash flow generation, costs and cost synergies, portfolio diversification, economic trends, outlook and all other information relating to matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ materially include, without limitation: changes in economic and business conditions; changes in financial and operating performance of our major customers and industries and markets served by us; the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in the demand for our products; limitations or prohibitions on the manufacture and sale of our products; availability of raw materials; changes in the cost of raw materials and energy; changes in our markets in general; fluctuations in foreign currencies; changes in laws and government regulation impacting our operations or our products; the occurrence of claims or litigation; the occurrence of natural disasters; the inability to maintain current levels of product or premises liability insurance or the denial of such coverage; political unrest affecting the global economy; political instability affecting our manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement  and rationalization programs; changes in the jurisdictional mix of our earnings and changes in tax laws and rates; changes in monetary policies, inflation or interest rates; volatility and substantial uncertainties in the debt and equity markets; technology or intellectual property infringement; decisions we may make in the future; the ability to successfully operate and integrate Rockwood's operations and realize estimated synergies; and the other factors detailed from time to time in the reports we file with the SEC, including those described under "Risk Factors" in the joint proxy statement / prospectus we filed in connection with the transaction with Rockwood, and in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date of this press release. We assume no obligation to provide any revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.

 

 

Albemarle Corporation and Subsidiaries

Consolidated Statements of Income

(In Thousands Except Per Share Amounts) (Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Net sales

$

931,485

$

604,721

$

1,815,889

$

1,204,564

Cost of goods sold(a)(b)

630,919

397,358

1,256,857

801,602

Gross profit

300,566

207,363

559,032

402,962

Selling, general and administrative expenses(a)

147,712

67,011

283,477

145,115

Research and development expenses

25,336

21,937

51,828

44,509

Restructuring and other charges, net(b)

3,332

20,332

Acquisition and integration related costs(b)

24,166

4,843

83,689

4,843

Operating profit

103,352

110,240

140,038

188,163

Interest and financing expenses(b)

(33,182)

(8,733)

(68,928)

(17,506)

Other income (expenses), net(b)

541

(979)

50,498

164

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

70,711

100,528

121,608

170,821

Income tax expense(b)

17,139

21,773

31,279

34,963

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

53,572

78,755

90,329

135,858

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

5,794

10,649

16,186

19,550

Net income from continuing operations

59,366

89,404

106,515

155,408

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

(60,025)

(61,794)

Net income

59,366

29,379

106,515

93,614

Net income attributable to noncontrolling interests

(7,219)

(6,932)

(11,253)

(14,584)

Net income attributable to Albemarle Corporation

$

52,147

$

22,447

$

95,262

$

79,030

Basic earnings (loss) per share

     Continuing operations

$

0.46

$

1.05

$

0.86

$

1.78

     Discontinued operations

(0.76)

(0.78)

$

0.46

$

0.29

$

0.86

$

1.00

Diluted earnings (loss) per share

     Continuing operations

$

0.46

$

1.04

$

0.86

$

1.77

     Discontinued operations

(0.76)

(0.78)

$

0.46

$

0.28

$

0.86

$

0.99

Weighted-average common shares outstanding – basic

112,189

78,662

110,160

79,199

Weighted-average common shares outstanding – diluted

112,607

79,091

110,536

79,602

See accompanying notes to the condensed consolidated financial information.

 

 

 

Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)

June 30,

December 31,

2015

2014

ASSETS

Cash and cash equivalents

$

207,238

$

2,489,768

Other current assets

1,446,843

859,082

Total current assets

1,654,081

3,348,850

Property, plant and equipment

4,073,722

2,620,670

Less accumulated depreciation and amortization

1,455,185

1,388,802

Net property, plant and equipment

2,618,537

1,231,868

Other assets and intangibles

5,498,191

642,385

Total assets

$

9,770,809

$

5,223,103

LIABILITIES AND EQUITY

Current portion of long-term debt

$

428,000

$

711,096

Other current liabilities

940,078

428,790

Total current liabilities

1,368,078

1,139,886

Long-term debt

3,562,308

2,223,035

Other noncurrent liabilities

757,800

314,663

Deferred income taxes

766,713

56,884

Albemarle Corporation shareholders' equity

3,179,077

1,359,465

Noncontrolling interests

136,833

129,170

Total liabilities and equity

$

9,770,809

$

5,223,103

See accompanying notes to the condensed consolidated financial information.

 

 

 

Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)

Six Months Ended

June 30,

2015

2014

Cash and cash equivalents at beginning of year

$

2,489,768

$

477,239

Cash and cash equivalents at end of period

$

207,238

$

515,119

Sources of cash and cash equivalents:

Net income

$

106,515

$

93,614

Proceeds from borrowings of long-term debt

1,000,000

Proceeds from other borrowings, net

133,699

Dividends received from unconsolidated investments and nonmarketable securities

45,526

11,944

Decrease in restricted cash

57,550

Working capital changes

63,235

Uses of cash and cash equivalents:

Working capital changes

(44,932)

Capital expenditures

(111,723)

(46,670)

Acquisition of Rockwood, net of cash acquired

(2,051,645)

Other acquisitions, net of cash acquired

(48,845)

Repurchases of common stock

(150,000)

Repayments of long-term debt

(1,331,648)

(3,016)

Repayments of other borrowings, net

(13,083)

Pension and postretirement contributions

(10,973)

(4,717)

Dividends paid to shareholders

(54,238)

(41,316)

Non-cash and other items:

Depreciation and amortization

131,469

52,714

Write-offs associated with restructuring and other

6,333

Impairment of assets of discontinued operations

80,711

Pension and postretirement (benefit) expense

(1,071)

17,917

Deferred income taxes

(41,207)

(16,114)

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

(16,186)

(19,550)

See accompanying notes to the condensed consolidated financial information.

 

 

 

Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands) (Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

Actual

Actual

Pro forma

Actual

Actual

Pro forma

2015

2014

2014

2015

2014

2014

Net sales:

Performance Chemicals

$

436,962

$

280,377

$

397,146

$

825,328

$

556,274

$

788,818

Refining Solutions

164,573

205,024

205,024

343,739

399,685

399,685

Chemetall Surface Treatment

213,195

212,371

405,286

416,112

All Other

113,404

119,320

149,229

235,773

248,605

310,388

Corporate

3,351

3,256

5,763

6,363

Total net sales

$

931,485

$

604,721

$

967,026

$

1,815,889

$

1,204,564

$

1,921,366

Adjusted EBITDA:

Performance Chemicals

$

148,682

$

76,954

$

119,453

$

279,210

$

150,339

$

234,639

Refining Solutions

48,200

66,551

66,551

90,393

127,585

127,585

Chemetall Surface Treatment

48,442

49,072

94,446

95,516

All Other

9,714

21,816

28,626

23,278

42,511

56,238

Corporate(a)

(24,957)

(20,633)

(33,350)

8,382

(39,717)

(67,276)

Total adjusted EBITDA

$

230,081

$

144,688

$

230,352

$

495,709

$

280,718

$

446,702

 

 

Performance Chemicals - details by product category:

Three Months Ended

Six Months Ended

June 30,

June 30,

Actual

Actual

Pro forma

Actual

Actual

Pro forma

2015

2014

2014

2015

2014

2014

Net sales:

Bromine

$

223,959

$

195,601

$

195,601

$

413,551

$

398,397

$

398,397

Lithium

127,021

116,769

241,407

232,544

PCS

85,982

84,776

84,776

170,370

157,877

157,877

Total Performance Chemicals

$

436,962

$

280,377

$

397,146

$

825,328

$

556,274

$

788,818

Adjusted EBITDA:

Bromine

$

68,697

$

52,530

$

52,530

$

121,630

$

109,247

$

109,247

Lithium

53,645

42,499

104,223

84,300

PCS

26,340

24,424

24,424

53,357

41,092

41,092

Total Performance Chemicals

$

148,682

$

76,954

$

119,453

$

279,210

$

150,339

$

234,639

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

 

Notes to the Condensed Consolidated Financial Information

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

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Cost of goods sold:

MTM actuarial (gain) loss

$

(0.1)

$

$

(0.1)

$

2.9

Interest cost and expected return on assets, net

(0.5)

(0.5)

(0.7)

(1.0)

Total

$

(0.6)

$

(0.5)

$

(0.8)

$

1.9

Selling, general and administrative expenses:

MTM actuarial loss

$

$

$

$

12.5

Settlements/curtailments

(2.6)

Interest cost and expected return on assets, net

(0.7)

(0.9)

(1.4)

(1.7)

Total

$

(0.7)

$

(0.9)

$

(4.0)

$

10.8

 

Settlements/curtailments for the six months ended June 30, 2015 resulted from the termination of a domestic OPEB plan during the first quarter of 2015. The MTM actuarial loss for the six months ended June 30, 2014 resulted from a remeasurement of the assets and obligations of one of our U.S. defined benefit pension plans and our supplemental executive retirement plan during the first quarter of 2014 in connection with a workforce reduction plan initiated in the fourth quarter of 2013.

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

 

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Utilization of inventory markup(1)

$

0.25

$

$

0.59

$

Restructuring and other charges, net(2)

0.03

0.17

Acquisition and integration related costs(3)

0.15

0.04

0.53

0.04

Interest and financing expenses related to Rockwood acquisition(4)

0.01

Financing fees related to Rockwood acquisition(5)

0.03

Discrete tax items(6)

(0.01)

0.02

Total special items

$

0.39

$

0.07

$

1.18

$

0.21

 

(1)   In connection with the acquisition of Rockwood, the Company valued Rockwood's existing inventory at fair value as of the acquisition date, which resulted in a markup of the underlying net book value of the inventory. The inventory markup is being expensed over the estimated remaining selling period. For the three months ended June 30, 2015, $27.3 million ($18.5 million after income taxes, or $0.16 per share) was included in Cost of goods sold, and Equity in net income of unconsolidated investments was reduced by $10.0 million ($0.09 per share), related to the utilization of the inventory markup. For the six months ended June 30, 2015, $67.6 million ($47.1 million after income taxes, or $0.43 per share) was included in Cost of goods sold, and Equity in net income of unconsolidated investments was reduced by $17.9 million ($0.16 per share), related to the utilization of the inventory markup.

(2)   Restructuring and other charges consisted of the following:

Three months ended June 30, 2014 -

  • A write-off of $3.3 million ($2.1 million after income taxes, or $0.03 per share) for certain multi-product facility project costs that we do not expect to recover in future periods.

Six months ended June 30, 2014 -

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

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

Three months ended June 30, 2015 -

  • $21.3 million directly related to the acquisition of Rockwood and $2.9 million in connection with other significant projects. After income taxes, these charges totaled $16.4 million, or $0.15 per share.

Six months ended June 30, 2015 -

  • $78.7 million directly related to the acquisition of Rockwood and $5.0 million in connection with other significant projects. After income taxes, these charges totaled $58.6 million, or $0.53 per share.

Three and six months ended June 30, 2014 -

  • $4.8 million ($3.1 million after income taxes, or $0.04 per share) in connection with other significant projects.

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

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

(6)   Included in Income tax expense for the three and six months ended June 30, 2015 is a benefit of $1.0 million, or $0.01 per share, related mainly to prior year uncertain tax position adjustments associated with lapses in statutes of limitations. Also included in Income tax expense for the six months ended June 30, 2015 are expenses of $3.2 million, or $0.03 per share, associated with U.S. provision to return adjustments, the release of uncertain tax positions associated with a lapse in the statute of limitations, and the inclusion of liabilities for non-indefinitely invested earnings on the announcement that the Company intends to sell its Minerals operating segment, which includes entities in Germany.

(c)   On April 15, 2014, the Company signed a definitive agreement to sell its antioxidant, ibuprofen and propofol businesses and assets to SI Group, Inc. Included in the transaction were Albemarle's manufacturing sites in Orangeburg, South Carolina and Jinshan, China, along with Albemarle's antioxidant product lines manufactured in Ningbo, China. In the second quarter of 2014, the Company began accounting for these assets as held for sale and recorded a pre-tax charge of $80.7 million ($60.3 million after income taxes, or $0.76 per share) related to the expected loss on the anticipated sale of the assets. The expected loss represented the difference between the carrying value of the related assets and their estimated fair value, based on the estimated sales price as outlined in the agreement less estimated costs to sell. The expected loss and estimated costs to sell, net of related taxes, are included in Loss from discontinued operations (net of tax) in our consolidated statements of income for the three-month and six-month periods ended June 30, 2014.

Additional Information

It should be noted that adjusted net income attributable to Albemarle Corporation ("adjusted earnings"), adjusted diluted earnings per share, adjusted effective income tax rates, EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin are financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. These measures are presented here to provide additional useful measurements to review our operations, provide transparency to investors and enable period-to-period comparability of financial performance.

A description of other non-GAAP financial measures that we use to evaluate our operations and financial performance, and reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, can be found in the Investors section of our website at www.albemarle.com, under "Non-GAAP Reconciliations" under "Financials." Also, see below for supplemental reconciliations of the non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP.

ALBEMARLE CORPORATION AND SUBSIDIARIES

Non-GAAP Reconciliations

(In Thousands)

(Unaudited)

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

 

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Net income attributable to Albemarle Corporation

$

52,147

$

22,447

$

95,262

$

79,030

Add back:

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

(862)

(855)

(3,089)

8,089

Special items (net of tax)

43,807

5,189

130,123

16,334

Loss from discontinued operations (net of tax)

60,025

61,794

Adjusted net income attributable to Albemarle Corporation

$

95,092

$

86,806

$

222,296

$

165,247

Net income attributable to Albemarle Corporation

$

52,147

$

22,447

$

95,262

$

79,030

Add back:

Interest and financing expenses

33,182

8,733

68,928

17,506

Income tax expense (from continuing and discontinued operations)

17,139

1,624

31,279

14,070

Depreciation and amortization

67,483

24,905

131,469

52,714

EBITDA

169,951

57,709

326,938

163,320

Non-operating pension and OPEB items

(1,314)

(1,370)

(4,823)

12,701

Special items (excluding special items associated with interest expense)

61,444

8,175

173,594

25,175

Loss from discontinued operations

80,174

82,687

Less depreciation and amortization from discontinued operations

(3,165)

Adjusted EBITDA

$

230,081

$

144,688

$

495,709

$

280,718

Net sales

$

931,485

$

604,721

$

1,815,889

$

1,204,564

EBITDA margin

18.2

%

9.5

%

18.0

%

13.6

%

Adjusted EBITDA margin

24.7

%

23.9

%

27.3

%

23.3

%

 

 

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

Performance Chemicals

Refining Solutions

Chemetall Surface Treatment

Reportable Segments Total

All Other

Corporate

Consolidated Total

Three months ended June 30, 2015 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

83,016

$

39,717

$

26,254

$

148,987

$

3,612

$

(100,452)

$

52,147

Depreciation and amortization

31,843

8,483

19,111

59,437

5,724

2,322

67,483

Special items (excluding special items associated with interest expense)

33,823

3,077

36,900

378

24,166

61,444

Interest and financing expenses

33,182

33,182

Income tax expense

17,139

17,139

Non-operating pension and OPEB items

(1,314)

(1,314)

Adjusted EBITDA

$

148,682

$

48,200

$

48,442

$

245,324

$

9,714

$

(24,957)

$

230,081

Three months ended June 30, 2014 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

63,861

$

58,703

$

$

122,564

$

18,393

$

(118,510)

$

22,447

Depreciation and amortization

13,093

7,848

20,941

3,423

541

24,905

Special items

8,175

8,175

Interest and financing expenses

8,733

8,733

Income tax expense

21,773

21,773

Loss from discontinued operations (net of tax)

60,025

60,025

Non-operating pension and OPEB items

(1,370)

(1,370)

Adjusted EBITDA

$

76,954

$

66,551

$

$

143,505

$

21,816

$

(20,633)

$

144,688

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

Net income (loss) attributable to Albemarle Corporation

$

94,304

$

58,703

$

41,193

$

194,200

$

24,253

$

(149,269)

$

69,184

Depreciation and amortization

25,149

7,848

7,879

40,876

4,373

5,513

50,762

Special items

7,907

7,907

Interest and financing expenses

22,333

22,333

Income tax expense

34,073

34,073

Loss from discontinued operations (net of tax)

47,425

47,425

Non-operating pension and OPEB items

(1,332)

(1,332)

Adjusted EBITDA

$

119,453

$

66,551

$

49,072

$

235,076

$

28,626

$

(33,350)

$

230,352

 

 

Performance Chemicals

Refining Solutions

Chemetall Surface Treatment

Reportable Segments Total

All Other

Corporate

Consolidated Total

Six months ended June 30, 2015 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

154,679

$

73,800

$

37,109

$

265,588

$

9,027

$

(179,353)

$

95,262

Depreciation and amortization

62,126

16,593

37,307

116,026

11,222

4,221

131,469

Special items (excluding special items associated with interest expense)

62,405

20,030

82,435

3,029

88,130

173,594

Interest and financing expenses

68,928

68,928

Income tax expense

31,279

31,279

Non-operating pension and OPEB items

(4,823)

(4,823)

Adjusted EBITDA

$

279,210

$

90,393

$

94,446

$

464,049

$

23,278

$

8,382

$

495,709

Six months ended June 30, 2014 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

125,190

$

111,057

$

$

236,247

$

35,724

$

(192,941)

$

79,030

Depreciation and amortization

25,149

16,528

41,677

6,787

1,085

49,549

Special items

25,175

25,175

Interest and financing expenses

17,506

17,506

Income tax expense

34,963

34,963

Loss from discontinued operations (net of tax)

61,794

61,794

Non-operating pension and OPEB items

12,701

12,701

Adjusted EBITDA

$

150,339

$

127,585

$

$

277,924

$

42,511

$

(39,717)

$

280,718

Six months ended June 30, 2014 (Pro forma):

Net income (loss) attributable to Albemarle Corporation

$

185,907

$

111,057

$

79,917

$

376,881

$

47,557

$

(319,517)

$

104,921

Depreciation and amortization

48,732

16,528

15,599

80,859

8,681

11,068

100,608

Special items

31,377

31,377

Interest and financing expenses

45,306

45,306

Income tax expense

60,063

60,063

Loss from discontinued operations (net of tax)

91,694

91,694

Non-operating pension and OPEB items

12,733

12,733

Adjusted EBITDA

$

234,639

$

127,585

$

95,516

$

457,740

$

56,238

$

(67,276)

$

446,702

 

Bromine

Lithium

PCS

Total Performance Chemicals

Three months ended June 30, 2015 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

60,486

$

(213)

$

22,743

$

83,016

Depreciation and amortization

8,211

20,035

3,597

31,843

Special items

33,823

33,823

Adjusted EBITDA

$

68,697

$

53,645

$

26,340

$

148,682

Three months ended June 30, 2014 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

43,623

$

$

20,238

$

63,861

Depreciation and amortization

8,907

4,186

13,093

Adjusted EBITDA

$

52,530

$

$

24,424

$

76,954

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

Net income (loss) attributable to Albemarle Corporation

$

43,623

$

30,443

$

20,238

$

94,304

Depreciation and amortization

8,907

12,056

4,186

25,149

Adjusted EBITDA

$

52,530

$

42,499

$

24,424

$

119,453

Six months ended June 30, 2015 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

104,958

$

3,715

$

46,006

$

154,679

Depreciation and amortization

16,672

38,103

7,351

62,126

Special items

62,405

62,405

Adjusted EBITDA

$

121,630

$

104,223

$

53,357

$

279,210

Six months ended June 30, 2014 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

91,657

$

$

33,533

$

125,190

Depreciation and amortization

17,590

7,559

25,149

Adjusted EBITDA

$

109,247

$

$

41,092

$

150,339

Six months ended June 30, 2014 (Pro Forma):

Net income (loss) attributable to Albemarle Corporation

$

91,657

$

60,717

$

33,533

$

185,907

Depreciation and amortization

17,590

23,583

7,559

48,732

Adjusted EBITDA

$

109,247

$

84,300

$

41,092

$

234,639

 

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SOURCE Albemarle Corporation



RELATED LINKS

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