Woodland Park, New Jersey, October 17, 2013 -- Cytec Industries Inc. (NYSE: CYT) announced today net earnings attributable to Cytec for the third quarter of 2013 of $43.8 million or $1.19 per diluted share. Net sales from continuing operations were $464 million. Earnings from continuing operations were $44.4 million or $1.20 per diluted share. Loss from discontinued operations was $0.6 million or $0.01 per diluted share. Included in the quarter for continuing operations are several special items that total $5.0 million of net charges after-tax, or $0.14 per diluted share, which are outlined further in this release. Excluding these special items, earnings from continuing operations were $49.4 million or $1.34 per diluted share. Net earnings attributable to Cytec for the third quarter of 2012 were $58.4 million or $1.24 per diluted share. Net sales from continuing operations were $455 million. Earnings from continuing operations were $34.7 million or $0.74 per diluted share. Earnings from discontinued operations were $23.7 million or $0.50 per diluted share, net of non-controlling interest. Included in the quarter for continuing operations were several special items that totaled $11.8 million of net charges after-tax or $0.25 per diluted share. Excluding the special items, earnings from continuing operations were $46.5 million or $0.99 per diluted share. Shane Fleming, Chairman, President and Chief Executive Officer commented, "On an as-adjusted basis we delivered a 35% EPS improvement over the prior year quarter driven by higher earnings combined with our lower share count. Our third quarter results reflect more modest top line growth compared to the third quarter of last year as legacy large commercial aircraft build rates have plateaued. We believe that Aerospace Materials sales are also being impacted by continued destocking by several tier one suppliers reducing sales for the quarter. We are encouraged by the improved results within the Industrial Materials segment, where we have begun to see some pickup in demand in the high performance auto market. The In Process Separation segment had reduced sales coming from lower demand for phosphine gases in the electronics market and returned product related to a temporary quality issue. While the alumina markets remain weak, sales to our other metals markets remain on track. "Cytec Aerospace Materials sales increased 7% to $236 million; Operating Earnings up slightly to $40.7 million.In Aerospace Materials, total selling volumes increased by 4% versus the third quarter 2012 with approximately half due to the acquisition of Umeco and the remainder mostly driven by higher large commercial transport build rates. Growth in commercial transport was partially offset by lower sales to the rotorcraft sector. Selling prices increased by 3% versus the prior year period.Operating earnings of $40.7 million were slightly up versus earnings of $40.4 million in the prior year quarter. Higher selling prices and volumes were offset by higher expenses of approximately $1.5 million related to the planned carbon fiber maintenance turn-around and expense work related to our ongoing capital projects. In addition, operating expenses are higher due to costs of $0.8 related to the acquired Umeco business and the impact of stranded costs of approximately $2.7 million associated with the sale of the coating resins business earlier this year. Cytec Industrial Materials sales increased 1% to $71 million; Operating Earnings were $5.1 million.Sales in the quarter include approximately $15.5 million of higher sales related to timing of the acquired Umeco business which closed on July 21, 2012. Included in the third quarter 2012 results is $9.0 million of sales related to the distribution product line which was divested on July 15, 2013. Excluding these two items sales were down approximately $6 million. The decrease in sales is due to lower demand in the high performance automotive and tooling sectors and also in reduced sales of our process materials to the wind energy market. Operating earnings were $5.1 million for the quarter versus $1.6 million in the prior year quarter. Included in the $1.6 million is a $4.6 million charge related to amortization of purchase accounting step-up in inventories which was treated as a special item. The lower earnings in the quarter are due to the lower sales versus prior year period and $0.9 million of stranded cost increases related to the coating resins sale.Cytec In Process Separation sales were down 7% to $91 million; Operating Earnings decreased to $20.4 million.In Process Separation selling volumes decreased by 5% versus the third quarter of 2012 primarily due to lower sales of phosphine products as a result of a product quality issue that reduced sales by approximately $3 million in the quarter, on top of weak end markets, particularly electronics. Sales to the alumina market were down but more than offset by sales to our other mining markets. Selling prices decreased sales 2% and the overall impact of exchange rates was flat versus the prior year quarter.Operating earnings were $20.4 million versus $25.4 million in the prior year quarter due to the decrease in selling volumes and prices, an unfavorable product mix from the lower phosphine sales, and the impact of stranded costs of approximately $1.9 million associated with the sale of the coating resins business earlier this year. Cytec Additive Technologies sales decreased 1% to $66 million; Operating Earnings decreased to $9.0 million.In Additive Technologies, overall selling volumes were flat versus the third quarter 2012 primarily due to the planned rationalization of a low margin product within the specialty additives product line which more than offset sales growth of polymer additive products related to demand improvement in the Latin America and Asia Pacific markets. Selling prices were down by 1% and the overall impact of changes in exchange rates was flat versus the prior year quarter.Operating earnings of $9.0 million were down versus $10.3 million in the third quarter of 2012 as a favorable product mix was more than offset by lower selling prices and the impact of stranded costs of approximately $1.5 million associated with the sale of the coating resins business earlier this year.Special ItemsIn the third quarter of 2013 a number of special items were recorded in continuing operations that resulted in net pre-tax charges of $5.3 million ($5.0 million expense after-tax or $0.14 per diluted share) as follows:
- Included in Corporate and Unallocated, mostly in Asset impairment charge and Administrative and general, are net pre-tax charges of $4.5 million ($3.9 million after-tax or $0.11 per diluted share), almost all related to the July 2013 announcement of restructuring initiatives within Industrial Materials to reduce costs associated with the acquired Umeco business.
- Included in Corporate and Unallocated, in Administrative and General, is a pre-tax charge of $0.7 million ($0.7 million after-tax or $0.02 per diluted share) for advisory fees related to the Umeco distribution sale.
- Included in Corporate and Unallocated, principally in Asset Impairment Charge and Administrative and general, are net pre-tax charges of $5.1 million ($4.4 million after-tax or $0.11 per diluted share) primarily related to the 2013 announcements of restructuring initiatives within Aerospace and Industrial Materials to reduce costs associated with the acquired Umeco business.
- Included in Corporate and Unallocated, in Asset Impairment Charge, is a pre-tax charge of $3.0 million ($2.0 million after-tax or $0.05 per diluted share) related to an asset write-off at our manufacturing facility in Nagpur, India.
- Included in Corporate and Unallocated, in Other expense, is a pre-tax charge of $3.2 million ($3.2 million after-tax or $0.08 per diluted share) related to the shutdown of our Process Materials Joint Venture in China.
- Included in Corporate and Unallocated, in Other expense, are pre-tax net charges of $2.2 million ($1.7 million after-tax or $0.04 per diluted share) primarily related to an increase in environmental liability at an inactive site for a change in estimate.
- Included in Corporate and Unallocated, principally in Manufacturing cost of sales, is a net pre-tax benefit of $1.9 million ($1.2 million after-tax or $0.03 per diluted share) related to pension and other postemployment benefit mark-to-market adjustments.
- Included in Corporate and Unallocated, in Loss on early extinguishment of debt, is a pre-tax charge of $39.4 million ($24.7 million after-tax or $0.59 per diluted share) related to premiums associated with the repurchase of $328 million of our outstanding public debt.
- Included in Corporate and Unallocated, in Administrative and General, is a pre-tax charge of $1.2 million ($1.1 million after tax or $0.03 per diluted share),mainly for advisory fees related to the Umeco distribution sale.
- Included in Income tax provision is $0.7 million of net income tax benefit ($0.02 per diluted share) related to a revision of our previously accrued estimated income tax liability on the unrepatriated earnings of certain foreign subsidiaries as a result of the sale of our Coating Resins business. The revision is primarily due to changes in the tax attributes of certain foreign subsidiaries.
Jodi Allen
Investor Relations
Tel: 1.973.357.3283
jodi.allen@cytec.com
Tara Tepp
In Process Separation Marketing Communications
Tel: 1.973.357.3347
tara.tepp@cytec.com
Katherine Vaiente
Global Marketing Communications Manager
Tel: 1.480.730.2310
Katherine.Vaiente@cytec.com
Claire Michel
Industrial Materials Marketing Communications
Tel: 44.1773.766200
claire.michel@cytec.com
Katherine Vaiente
Global Marketing Communications Manager
Tel: 1.480.730.2310
Katherine.Vaiente@cytec.com