Albemarle reports third quarter 2015 results

04 Nov, 2015, 17:39 ET from Albemarle Corporation

BATON ROUGE, La., Nov. 4, 2015 /PRNewswire/ --

Third quarter 2015 highlights:

  • Adjusted earnings of $0.90 per share.
  • Three core business units grew adjusted EBITDA by 8% versus prior year, and achieved adjusted EBITDA margins of 31%, excluding unfavorable currency exchange impacts.
  • Actions to date will result in approximately $60 million in 2015 acquisition synergies, exceeding previous expectations.
  • Full year EPS guidance at $3.65 to $3.80; within prior guidance range.
  • In October, refinanced $1.25 billion of 4.625% senior notes assumed from Rockwood at lower rate.

 


Three Months Ended


Nine Months Ended


September 30,


September 30,

In thousands, except per share amounts

2015


2014


2015


2014

Net sales

$

905,093



$

642,418



$

2,720,982



$

1,846,982


Adjusted EBITDA

$

234,996



$

144,604



$

730,705



$

425,322


Net income from continuing operations

$

70,872



$

88,019



$

177,387



$

243,427


Net income attributable to Albemarle Corporation

$

65,392



$

72,794



$

160,654



$

151,824


Diluted earnings per share

$

0.58



$

0.93



$

1.44



$

1.91


   Non-operating pension and OPEB items(a)



0.01



(0.03)



0.11


   Special items(b)

0.32



0.12



1.49



0.32


   Discontinued operations(c)



0.08





0.87


Adjusted diluted earnings per share(d)

$

0.90



$

1.14



$

2.91



$

3.21



See accompanying notes (a) through (d) to the condensed consolidated financial information and non-GAAP reconciliations.

 

Albemarle Corporation (NYSE: ALB) reported third quarter 2015 earnings of $65.4 million, or $0.58 per diluted share, compared to third quarter 2014 earnings of $72.8 million, or $0.93 per diluted share. Third quarter 2015 adjusted earnings were $100.9 million, or $0.90 per diluted share, compared to $89.5 million, or $1.14 per diluted share, for the third quarter of 2014 (see notes to the condensed consolidated financial information). The Company reported net sales of $905.1 million in the third quarter of 2015, up from net sales of $642.4 million in the third quarter of 2014, driven primarily by the acquisition of Rockwood Holdings, Inc. ("Rockwood"), which closed January 12, 2015, partly offset by the impact of lower sales volumes and unfavorable currency exchange impacts.

Earnings for the nine months ended September 30, 2015 were $160.7 million, or $1.44 per diluted share, compared to $151.8 million, or $1.91 per diluted share, for the same period in 2014. Adjusted earnings for the nine months ended September 30, 2015 (including $52.4 million in non-cash currency exchange transaction gains from the first quarter) were $323.2 million, or $2.91 per diluted share, compared to $254.7 million, or $3.21 per diluted share, for 2014. Net sales for the nine months ended September 30, 2015 were $2.72 billion, up from net sales of $1.85 billion, driven primarily by the acquisition of Rockwood, partly offset by the impact of lower sales volumes and unfavorable currency exchange impacts.

"Albemarle's core businesses continued to perform well in the third quarter. Through the first nine months of 2015, these businesses delivered 8% adjusted EBITDA growth and 30% margin rates on a constant currency basis," said Albemarle's President and CEO, Luke Kissam. "Our integration synergies have exceeded expectations to date, and our free cash flow remains in-line with prior guidance."

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 the Company issued in 2014 and borrowings under the Company's 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 third quarter and nine months ended September 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 first quarter 2015 change in reporting structure. This supplemental pro forma financial information is also located on the Company's website and in Albemarle's Current Report on Form 8-K which was filed on April 13, 2015.

Performance Chemicals reported net sales of $399.5 million in the third quarter of 2015, a decrease of 4.2% from third quarter 2014 pro forma net sales of $417.1 million. Net sales were impacted by $16.6 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $1.0 million decrease in net sales was predominantly due to lower sales volumes for Bromine almost fully offset by higher Lithium and Performance Catalyst Solutions ("PCS") sales volumes and favorable pricing in Bromine, Lithium and PCS. Adjusted EBITDA for Performance Chemicals was $136.2 million, an increase of 6.2% from third quarter 2014 pro forma results of $128.2 million. Adjusted EBITDA was impacted by $5.9 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $13.9 million increase in adjusted EBITDA was primarily driven by favorable Bromine, Lithium and PCS pricing as well as earnings from our Talison joint venture, offset slightly by lower overall sales volumes.

Refining Solutions generated net sales of $185.1 million in the third quarter of 2015, a decrease of 15.5% from net sales of $219.0 million in the third quarter of 2014. Net sales were impacted by $9.1 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $24.8 million decrease in net sales was primarily driven by unfavorable Clean Fuels Technology volumes and price partly offset by favorable Heavy Oil Upgrading volumes. Adjusted EBITDA for Refining Solutions was $54.5 million in the third quarter of 2015, a decrease of 11.6% from third quarter 2014 results of $61.7 million. Adjusted EBITDA was impacted by $3.3 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $3.9 million decrease in adjusted EBITDA was primarily due to lower Clean Fuels Technology sales volumes and price partly offset by favorable Heavy Oil Upgrading volumes.

Chemetall® Surface Treatment reported net sales of $211.9 million in the third quarter of 2015, an increase of 1.5% from third quarter 2014 pro forma net sales of $208.8 million. Net sales were impacted by $26.3 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $29.4 million increase in net sales was 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 $53.9 million in the third quarter of 2015, an increase of 4.7% from third quarter 2014 pro forma results of $51.5 million. Adjusted EBITDA was impacted by $5.5 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $7.9 million increase in adjusted EBITDA was primarily due 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 $102.2 million in the third quarter of 2015, a decrease of 32.3% from pro forma net sales of $151.1 million in the third quarter of 2014. Net sales were impacted by $12.9 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $36.0 million decrease in net sales was primarily due to unfavorable Fine Chemistry Services volumes. All Other adjusted EBITDA was $6.3 million in the third quarter of 2015, a decrease of 77.2% from third quarter 2014 pro forma results of $27.4 million. Adjusted EBITDA was impacted by $1.4 million of unfavorable currency exchange impacts as compared to the prior year. The remaining $19.7 million decrease in adjusted EBITDA was primarily due to lower Fine Chemistry Services sales volumes offset slightly by lower selling, general and administrative expenses.

In summary, total net sales of $905.1 million, a decrease of $93.6 million or 9.4% from third quarter 2014 pro forma net sales of $998.7 million, was unfavorably impacted by currency exchange of $64.9 million. Excluding currency exchange impacts, net sales for the period would have been down 2.9% as compared to the prior year. Total adjusted EBITDA of $235.0 million, a decrease of $1.2 million or 0.1% from third quarter 2014 pro forma adjusted EBITDA of $236.2 million, was unfavorably impacted by currency exchange of $16.5 million (including $0.4 million of unfavorable foreign currency exchange impacts on Corporate results). Excluding currency exchange impacts, adjusted EBITDA for the period would have been up 6.5% as compared to the prior year.

Corporate Results

Corporate adjusted EBITDA was $(15.9) million in the third quarter of 2015 compared to $(32.6) million pro forma adjusted EBITDA in the third quarter of 2014. The $16.7 million improvement is primarily related to achieved synergies.

Income Taxes

Our adjusted effective income tax rates, which exclude discontinued operations, special and non-operating pension and OPEB items, were 26.6% and 18.9% for the third 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 $316.9 million for the nine months ended September 30, 2015, down 26% 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 $234.5 million in cash and cash equivalents at September 30, 2015 as compared to $2.5 billion at December 31, 2014. Cash on hand, cash provided by operations, a return of capital from an unconsolidated investment and proceeds from borrowings funded $2.1 billion for acquisitions, $164.6 million of capital expenditures for plant, machinery and equipment and dividends to shareholders of $86.8 million during the nine months ended September 30, 2015.

Outlook

The outlook for the full year results reflects continued strength in Lithium and Performance Catalyst Solutions, and on track results in Refining Solutions and Chemetall Surface Treatment. However, the outlook is impacted by a lower forecast for Fine Chemistry Services. Full year adjusted EBITDA is now expected to range from $940 million to $960 million; adjusted EPS is expected to be $3.65 to $3.80; adjusted free cash flow is expected to range from $475 million to $525 million.

Earnings Call

The Company's performance for the third quarter ended September 30, 2015 will be discussed on a conference call at 9:00 AM Eastern time on November 5, 2015. The call can be accessed by dialing 888-713-4214 (International Dial-In # 617-213-4866), and entering conference ID 93072672. 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

Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

Net sales

$

905,093

$

642,418

$

2,720,982

$

1,846,982

Cost of goods sold(a)(b)

592,883

436,972

1,849,740

1,238,574

Gross profit

312,210

205,446

871,242

608,408

Selling, general and administrative expenses(a)

137,615

66,012

421,092

211,127

Research and development expenses

25,295

22,407

77,123

66,916

Restructuring and other, net(b)

(6,804)

293

(6,804)

20,625

Acquisition and integration related costs(b)

42,798

10,261

126,487

15,104

Operating profit

113,306

106,473

253,344

294,636

Interest and financing expenses(b)

(32,058)

(8,749)

(100,986)

(26,255)

Other income (expenses), net(b)

466

(6,618)

50,964

(6,454)

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

81,714

91,106

203,322

261,927

Income tax expense(b)

16,892

11,737

48,171

46,700

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

64,822

79,369

155,151

215,227

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

6,050

8,650

22,236

28,200

Net income from continuing operations

70,872

88,019

177,387

243,427

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

(6,679)

(68,473)

Net income

70,872

81,340

177,387

174,954

Net income attributable to noncontrolling interests

(5,480)

(8,546)

(16,733)

(23,130)

Net income attributable to Albemarle Corporation

$

65,392

$

72,794

$

160,654

$

151,824

Basic earnings (loss) per share

     Continuing operations

$

0.58

$

1.02

$

1.45

$

2.79

     Discontinued operations

(0.09)

(0.87)

$

0.58

$

0.93

$

1.45

$

1.92

Diluted earnings (loss) per share

     Continuing operations

$

0.58

$

1.01

$

1.44

$

2.78

     Discontinued operations

(0.08)

(0.87)

$

0.58

$

0.93

$

1.44

$

1.91

Weighted-average common shares outstanding – basic

112,202

78,244

110,840

78,880

Weighted-average common shares outstanding – diluted

112,544

78,659

111,205

79,287

See accompanying notes to the condensed consolidated financial information.

 

 

Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)

September 30,

December 31,

2015

2014

ASSETS

Cash and cash equivalents

$

234,490

$

2,489,768

Other current assets

1,486,425

859,082

Total current assets

1,720,915

3,348,850

Property, plant and equipment

4,096,921

2,620,670

Less accumulated depreciation and amortization

1,496,069

1,388,802

Net property, plant and equipment

2,600,852

1,231,868

Other assets and intangibles

5,353,297

642,385

Total assets

$

9,675,064

$

5,223,103

LIABILITIES AND EQUITY

Current portion of long-term debt

$

284,368

$

711,096

Other current liabilities

1,038,180

428,790

Total current liabilities

1,322,548

1,139,886

Long-term debt

3,558,964

2,223,035

Other noncurrent liabilities

757,194

314,663

Deferred income taxes

761,844

56,884

Albemarle Corporation shareholders' equity

3,144,489

1,359,465

Noncontrolling interests

130,025

129,170

Total liabilities and equity

$

9,675,064

$

5,223,103

See accompanying notes to the condensed consolidated financial information.

 

 

Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)

Nine Months Ended

September 30,

2015

2014

Cash and cash equivalents at beginning of year

$

2,489,768

$

477,239

Cash and cash equivalents at end of period

$

234,490

$

653,120

Sources of cash and cash equivalents:

Net income

$

177,387

$

174,954

Cash proceeds from divestitures, net

6,133

104,718

Proceeds from borrowings of long-term debt

1,000,000

Dividends received from unconsolidated investments and nonmarketable securities

57,149

37,854

Return of capital from unconsolidated investment

98,000

Decrease in restricted cash

57,550

Working capital changes

14,823

89,020

Uses of cash and cash equivalents:

Capital expenditures

(164,568)

(76,682)

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

(1,332,293)

(3,023)

Repayments of other borrowings, net

(16,854)

(23,554)

Pension and postretirement contributions

(16,673)

(10,718)

Dividends paid to shareholders

(86,770)

(62,827)

Dividends paid to noncontrolling interests

(23,195)

(7,612)

Non-cash and other items:

Depreciation and amortization

200,372

78,344

(Gain) loss associated with restructuring and other

(6,804)

6,333

Loss on disposal of businesses

85,515

Pension and postretirement (benefit) expense

(232)

21,946

Deferred income taxes

(53,593)

(24,412)

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

(22,236)

(28,200)

See accompanying notes to the condensed consolidated financial information.

 

 

Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands) (Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

Actual

Actual

Pro forma

Actual

Actual

Pro forma

2015

2014

2014

2015

2014

2014

Net sales:

Performance Chemicals

$

399,536

$

299,947

$

417,112

$

1,224,864

$

856,221

$

1,205,930

Refining Solutions

185,102

218,950

218,950

528,841

618,635

618,635

Chemetall Surface Treatment

211,877

208,765

617,163

624,877

All Other

102,224

123,521

151,077

337,997

372,126

461,465

Corporate

6,354

2,814

12,117

9,175

Total net sales

$

905,093

$

642,418

$

998,718

$

2,720,982

$

1,846,982

$

2,920,082

Adjusted EBITDA:

Performance Chemicals

$

136,209

$

82,329

$

128,231

$

415,419

$

232,668

$

362,870

Refining Solutions

54,517

61,674

61,674

144,910

189,259

189,259

Chemetall Surface Treatment

53,898

51,454

148,344

146,970

All Other

6,262

20,971

27,421

29,540

63,482

83,659

Corporate(a)

(15,890)

(20,370)

(32,577)

(7,508)

(60,087)

(99,853)

Total adjusted EBITDA

$

234,996

$

144,604

$

236,203

$

730,705

$

425,322

$

682,905

 

 

Performance Chemicals - details by product category:

Three Months Ended

Nine Months Ended

September 30,

September 30,

Actual

Actual

Pro forma

Actual

Actual

Pro forma

2015

2014

2014

2015

2014

2014

Net sales:

Bromine

$

190,716

$

222,189

$

222,189

$

604,267

$

620,586

$

620,586

Lithium

128,404

117,165

369,811

349,709

PCS

80,416

77,758

77,758

250,786

235,635

235,635

Total Performance Chemicals

$

399,536

$

299,947

$

417,112

$

1,224,864

$

856,221

$

1,205,930

Adjusted EBITDA:

Bromine

$

58,801

$

62,266

$

62,266

$

180,431

$

171,513

$

171,513

Lithium

52,110

45,902

156,333

130,202

PCS

25,298

20,063

20,063

78,655

61,155

61,155

Total Performance Chemicals

$

136,209

$

82,329

$

128,231

$

415,419

$

232,668

$

362,870

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

Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

Cost of goods sold:

MTM actuarial loss (gain)

$

$

2.8

$

(0.1)

$

5.7

Interest cost and expected return on assets, net

(0.4)

(0.5)

(1.1)

(1.5)

Total

$

(0.4)

$

2.3

$

(1.2)

$

4.2

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)

(2.1)

(2.6)

Total

$

(0.7)

$

(0.9)

$

(4.7)

$

9.9

 

Settlements/curtailments for the nine months ended September 30, 2015 resulted from the termination of a domestic OPEB plan during the first quarter of 2015. The three and nine-month periods ended September 30, 2014 include a MTM actuarial loss of $2.8 million which resulted from the remeasurement of the assets and obligations of one of our U.S. defined benefit plans in connection with the September 1, 2014 sale of our antioxidant, ibuprofen and propofol businesses and assets to SI Group, Inc. The nine-month period ended September 30, 2014 also includes a MTM actuarial loss of $15.4 million which resulted from the 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 and excluded them from our adjusted earnings calculation for the periods presented. A listing of these items, as well as a detailed description of each follows below (per diluted share):

Three Months Ended

Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

Utilization of inventory markup(1)

$

0.12

$

$

0.70

$

Restructuring and other, net(2)

(0.04)

(0.04)

0.17

Acquisition and integration related costs(3)

0.24

0.09

0.77

0.12

Interest and financing expenses related to Rockwood acquisition(4)

0.01

Financing fees related to Rockwood acquisition(5)

0.06

0.03

0.06

Discrete tax items(6)

(0.03)

0.02

(0.03)

Total special items

$

0.32

$

0.12

$

1.49

$

0.32

 

(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 September 30, 2015, $7.7 million ($4.5 million after income taxes, or $0.04 per share) was included in Cost of goods sold, and Equity in net income of unconsolidated investments was reduced by $9.1 million ($0.08 per share), related to the utilization of the inventory markup. For the nine months ended September 30, 2015, $75.4 million ($51.7 million after income taxes, or $0.46 per share) was included in Cost of goods sold, and Equity in net income of unconsolidated investments was reduced by $26.9 million ($0.24 per share), related to the utilization of the inventory markup.

(2)   Restructuring and other, net, consisted of the following:

Three and nine months ended September 30, 2015 -

  • A gain of $6.8 million ($4.7 million after income taxes, or $0.04 per share) recognized upon the sale of land in Avonmouth, UK, which was utilized by the phosphorus flame retardants business we exited in 2012.

Three months ended September 30, 2014 -

  • Other charges of $0.3 million ($0.2 million after income taxes).

Nine months ended September 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.
  • Other charges of $0.3 million ($0.2 million after income taxes).

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

Three months ended September 30, 2015 -

  • $41.8 million directly related to the acquisition of Rockwood and $1.0 million in connection with other significant projects. After income taxes, these charges totaled $27.4 million, or $0.24 per share.

Three months ended September 30, 2014 -

  • $9.3 million directly related to the acquisition of Rockwood and $1.0 million in connection with other significant projects. After income taxes, these charges totaled $6.5 million, or $0.09 per share.

Nine months ended September 30, 2015 -

  • $120.5 million directly related to the acquisition of Rockwood and $6.0 million in connection with other significant projects. After income taxes, these charges totaled $86.1 million, or $0.77 per share.

Nine months ended September 30, 2014 -

  • $9.3 million directly related to the acquisition of Rockwood and $5.8 million in connection with other significant projects. After income taxes, these charges totaled $9.6 million, or $0.12 per share.

(4)   Included in Interest and financing expenses for the nine months ended September 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 nine months ended September 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. Included in Other income (expenses), net, for the three and nine months ended September 30, 2014 is $7.0 million ($4.5 million after income taxes, or $0.06 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 nine months ended September 30, 2015 is an expense of $2.0 million, or $0.02 per share, related mainly to prior year uncertain tax position adjustments associated with lapses in statutes of limitations and items associated with U.S. provision to return adjustments. Included in Income tax expense for the three and nine months ended September 30, 2014 were discrete net tax benefit items of $2.1 million, or $0.03 per share, related principally to the expiration of the U.S. federal statute of limitations.

(c)   On September 1, 2014, the Company closed the sale of its antioxidant, ibuprofen and propofol businesses and assets to SI Group, Inc. and received net proceeds of $104.7 million and a post-closing working capital settlement of $7.6 million which was received in the first quarter of 2015. Financial results of the disposed group have been presented as discontinued operations in the consolidated statements of income for the 2014 periods. Included in Loss from discontinued operations are pre-tax charges of $4.8 million ($3.6 million after income taxes, or $0.05 per share) recorded in the third quarter of 2014 and $85.5 million ($64.6 million after income taxes, or $0.82 per share) recorded in the nine months ended September 30, 2014 related to the loss on the sale of the disposed group, representing the difference between the carrying value of the related assets and their fair value as determined by the sales price less estimated costs to sell. The loss is primarily attributable to the write-off of goodwill, intangibles and long-lived assets, net of cumulative foreign currency translation gains of $17.8 million.

(d)   Totals may not add due to rounding.

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 non-GAAP measures should not be considered as alternatives to net income attributable to Albemarle Corporation ("earnings"). 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

Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

Net income attributable to Albemarle Corporation

$

65,392

$

72,794

$

160,654

$

151,824

Add back:

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

(524)

927

(3,613)

9,016

Special items (net of tax)

36,064

9,066

166,187

25,401

Loss from discontinued operations (net of tax)

6,679

68,473

Adjusted net income attributable to Albemarle Corporation

$

100,932

$

89,466

$

323,228

$

254,714

Net income attributable to Albemarle Corporation

$

65,392

$

72,794

$

160,654

$

151,824

Add back:

Interest and financing expenses

32,058

8,749

100,986

26,255

Income tax expense (from continuing and discontinued operations)

16,892

10,664

48,171

24,734

Depreciation and amortization

68,903

25,630

200,372

78,344

EBITDA

183,245

117,837

510,183

281,157

Non-operating pension and OPEB items

(1,077)

1,440

(5,900)

14,141

Special items (excluding special items associated with interest expense)

52,828

17,575

226,422

42,750

Loss from discontinued operations

7,752

90,439

Less depreciation and amortization from discontinued operations

(3,165)

Adjusted EBITDA

$

234,996

$

144,604

$

730,705

$

425,322

Net sales

$

905,093

$

642,418

$

2,720,982

$

1,846,982

EBITDA margin

20.2

%

18.3

%

18.7

%

15.2

%

Adjusted EBITDA margin

26.0

%

22.5

%

26.9

%

23.0

%

 

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 September 30, 2015 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

87,893

$

45,713

$

33,638

$

167,244

$

617

$

(102,469)

$

65,392

Depreciation and amortization

31,482

8,804

20,260

60,546

5,645

2,712

68,903

Special items

16,834

16,834

35,994

52,828

Interest and financing expenses

32,058

32,058

Income tax expense

16,892

16,892

Non-operating pension and OPEB items

(1,077)

(1,077)

Adjusted EBITDA

$

136,209

$

54,517

$

53,898

$

244,624

$

6,262

$

(15,890)

$

234,996

Three months ended September 30, 2014 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

69,736

$

52,851

$

$

122,587

$

17,479

$

(67,272)

$

72,794

Depreciation and amortization

12,593

8,823

21,416

3,492

722

25,630

Special items

17,575

17,575

Interest and financing expenses

8,749

8,749

Income tax expense

11,737

11,737

Loss from discontinued operations (net of tax)

6,679

6,679

Non-operating pension and OPEB items

1,440

1,440

Adjusted EBITDA

$

82,329

$

61,674

$

$

144,003

$

20,971

$

(20,370)

$

144,604

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

Net income (loss) attributable to Albemarle Corporation

$

104,553

$

52,851

$

43,557

$

200,961

$

23,107

$

(65,466)

$

158,602

Depreciation and amortization

23,678

8,823

7,897

40,398

4,314

5,579

50,291

Special items

(22,750)

(22,750)

Interest and financing expenses

22,249

22,249

Income tax expense

51,137

51,137

Loss from discontinued operations (net of tax)

(24,821)

(24,821)

Non-operating pension and OPEB items

1,495

1,495

Adjusted EBITDA

$

128,231

$

61,674

$

51,454

$

241,359

$

27,421

$

(32,577)

$

236,203

 

 

Performance Chemicals

Refining Solutions

Chemetall Surface Treatment

Reportable Segments Total

All Other

Corporate

Consolidated Total

Nine months ended September 30, 2015 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

242,572

$

119,513

$

70,747

$

432,832

$

9,644

$

(281,822)

$

160,654

Depreciation and amortization

93,608

25,397

57,567

176,572

16,867

6,933

200,372

Special items (excluding special items associated with interest expense)

79,239

20,030

99,269

3,029

124,124

226,422

Interest and financing expenses

100,986

100,986

Income tax expense

48,171

48,171

Non-operating pension and OPEB items

(5,900)

(5,900)

Adjusted EBITDA

$

415,419

$

144,910

$

148,344

$

708,673

$

29,540

$

(7,508)

$

730,705

Nine months ended September 30, 2014 (Actual):

Net income (loss) attributable to Albemarle Corporation

$

194,926

$

163,908

$

$

358,834

$

53,203

$

(260,213)

$

151,824

Depreciation and amortization

37,742

25,351

63,093

10,279

1,807

75,179

Special items

42,750

42,750

Interest and financing expenses

26,255

26,255

Income tax expense

46,700

46,700

Loss from discontinued operations (net of tax)

68,473

68,473

Non-operating pension and OPEB items

14,141

14,141

Adjusted EBITDA

$

232,668

$

189,259

$

$

421,927

$

63,482

$

(60,087)

$

425,322

Nine months ended September 30, 2014 (Pro forma):

Net income (loss) attributable to Albemarle Corporation

$

290,460

$

163,908

$

123,474

$

577,842

$

70,664

$

(384,983)

$

263,523

Depreciation and amortization

72,410

25,351

23,496

121,257

12,995

16,647

150,899

Special items

8,627

8,627

Interest and financing expenses

67,555

67,555

Income tax expense

111,200

111,200

Loss from discontinued operations (net of tax)

66,873

66,873

Non-operating pension and OPEB items

14,228

14,228

Adjusted EBITDA

$

362,870

$

189,259

$

146,970

$

699,099

$

83,659

$

(99,853)

$

682,905

 

Bromine

Lithium

PCS

Total Performance Chemicals

Three months ended September 30, 2015 (Actual):

Net income attributable to Albemarle Corporation

$

49,395

$

16,507

$

21,991

$

87,893

Depreciation and amortization

9,406

18,769

3,307

31,482

Special items

16,834

16,834

Adjusted EBITDA

$

58,801

$

52,110

$

25,298

$

136,209

Three months ended September 30, 2014 (Actual):

Net income attributable to Albemarle Corporation

$

53,044

$

$

16,692

$

69,736

Depreciation and amortization

9,222

3,371

12,593

Adjusted EBITDA

$

62,266

$

$

20,063

$

82,329

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

Net income attributable to Albemarle Corporation

$

53,044

$

34,817

$

16,692

$

104,553

Depreciation and amortization

9,222

11,085

3,371

23,678

Adjusted EBITDA

$

62,266

$

45,902

$

20,063

$

128,231

Nine months ended September 30, 2015 (Actual):

Net income attributable to Albemarle Corporation

$

154,353

$

20,222

$

67,997

$

242,572

Depreciation and amortization

26,078

56,872

10,658

93,608

Special items

79,239

79,239

Adjusted EBITDA

$

180,431

$

156,333

$

78,655

$

415,419

Nine months ended September 30, 2014 (Actual):

Net income attributable to Albemarle Corporation

$

144,701

$

$

50,225

$

194,926

Depreciation and amortization

26,812

10,930

37,742

Adjusted EBITDA

$

171,513

$

$

61,155

$

232,668

Nine months ended September 30, 2014 (Pro Forma):

Net income attributable to Albemarle Corporation

$

144,701

$

95,534

$

50,225

$

290,460

Depreciation and amortization

26,812

34,668

10,930

72,410

Adjusted EBITDA

$

171,513

$

130,202

$

61,155

$

362,870

 

 

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SOURCE Albemarle Corporation



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