Cytec Announces Second Quarter Results
July 16, 2015 – Woodland Park, NJ - Cytec Industries Inc. (NYSE: CYT) announced today net earnings for the second quarter of 2015 of $54.7 million or $0.75 per diluted share on net sales from continuing operations of $508 million. Earnings from continuing operations were $56.2 million or $0.77 per diluted share. Loss from discontinued operations was $1.5 million or $0.02 per diluted share. Included in continuing operations in the quarter are a few special items that total $3.4 million of net expense after-tax, or $0.04 per diluted share, and are outlined further in this release. Excluding these special items, net earnings from continuing operations were $59.6 million or $0.81 per diluted share.Net earnings for the second quarter of 2014 were $73.6 million or $1.00 per diluted share on net sales of $527 million. Earnings from continuing operations were $62.5 million or $0.85 per diluted share. Earnings from discontinued operations were $11.1 million or $0.15 per diluted share. Included in continuing operations in the quarter are special items of $0.2 million after-tax which did not impact earnings per diluted share. Excluding the special items, net earnings from continuing operations were $62.7 million or $0.85 per diluted share. Shane Fleming, Chairman, President and Chief Executive Officer commented, “Our second quarter results were in line with our expectations as we continue to execute our long-term plan. I am very pleased with the performance of our largest segments, Aerospace Materials and In Process Separation, both of which supported the solid earnings performance in the quarter against tough comparable quarters. Industrial Materials is experiencing weaker market conditions versus the prior year period, but we remain excited about the longer-term growth opportunities in the segment. Our solid performance through the first six months of the year gives me confidence in delivering our full year targets for the company.”Second Quarter ResultsCytec Aerospace Materials sales increased 1% to $265 million; Operating Earnings decreased to $49.1 million.In Aerospace Materials, sales were up 1% versus a strong prior year period due mainly to selling price increases of 1%. Volumes were flat versus the prior year quarter, with increases in sales from the Joint Strike Fighter program offsetting lower demand from the civilian rotorcraft market. Operating earnings of $49.1 million were down versus $52.7 million in the prior year period, due primarily to higher manufacturing costs, including planned project spending as we work to qualify our new carbon fiber line, and planned reductions in our finished goods inventory. The higher costs were partially offset by favorable exchange and increased selling prices.Cytec Industrial Materials sales were down 26% to $64 million; Operating Earnings decreased to $3.5 million.Industrial Materials sales in the quarter were down by 26% versus a tough comparable quarter. Selling volume was down 20% primarily as a result of lower demand from the aerospace tooling, high performance automotive and wind energy markets versus the prior year period, compounded by a soft European market which impacted the overall business, and by internal supply challenges as some sales will slip from the second to third quarter as we implemented the first phase of our new enterprise-wide operating model. Foreign exchange also impacted sales unfavorably by 6%. Operating earnings of $3.5 million were down from the prior year quarter of $9.6 million mainly as a result of the lower selling volumes. Cytec In Process Separation sales were up 6% to $110 million; Operating Earnings increased to $32.5 million.In Process Separation selling volumes increased by 7% versus the second quarter 2014 primarily due to higher sales of mining products related to copper and other base metals. Exchange rates were unfavorable by 1% in the quarter and selling prices were essentially flat.All-time record operating earnings of $32.5 million were up 14% versus the prior year period driven primarily by the higher selling volumes, favorable product mix, and some benefits from foreign exchange. Cytec Additive Technologies sales decreased 6% to $70 million; Operating Earnings decreasedto $9.6 million.In Additive Technologies, the sales decline was mostly related to foreign exchange, down 4% versus the prior year period. Selling volumes were essentially flat in the quarter, as increased sales from the polymer additives product line were offset by sales declines from the specialty additives products. Selling price impacted the quarter unfavorably by 2%. Operating earnings of $9.6 million were slightly down versus $10.4 million in the prior year period due mainly to the price impact and some unfavorable product mix in specialty additives. Special ItemsIn the second quarter of 2015 a few special items were recorded in continuing operations that resulted in a net pre-tax charge of $5.4 million ($3.4 million after-tax or $0.04 per diluted share) mainly attributable to the following:
- A net pre-tax charge of $3.8 million ($2.4 million after-tax or $0.03 per diluted share) related to the final costs from the lockout of employees represented by Teamsters Local Union 745 at our Greenville, TX Aerospace manufacturing site. The agreement was ratified in the first quarter of 2015.
- A net pre-tax charge of $1.5 million ($0.9 million after-tax or $0.01 per diluted share) related to an increase in environmental liabilities at inactive sites.
- A net pre-tax charge of $15.8 million ($9.9 million after-tax or $0.14 per diluted share) attributable to mark to market adjustments for pension and other postemployment benefits which was deferred from 2014.
- A net pre-tax charge of $11.3 million ($7.2 million after-tax or $0.10 per diluted share) related to the final costs from the lockout of employees represented by Teamsters Local Union 745 at our Greenville, TX Aerospace manufacturing site. The agreement was ratified in the first quarter of 2015.
- A net pre-tax charge of $3.7 million ($2.5 million after-tax or $0.03 per diluted share) related to restructuring activities.
- A net pre-tax charge $1.5 million ($0.9 million after-tax or $0.01 per diluted share) related to an increase in environmental liabilities at inactive sites.