(Source: Business Wire)
Rockwood Holdings, Inc. (NYSE: ROC), a global producer of specialty chemicals and advanced materials, today announced results for the second quarter of 2009, as compared to the same period last year.
Commenting on the second quarter results, Seifi Ghasemi, Chairman and Chief Executive Officer, said, "During the second quarter of 2009, we were successful in achieving several key objectives. First, our intense focus on controlling and cutting our costs which was started a year and a half ago enabled us to achieve an Adjusted EBITDA margin of 17.2 percent, despite a 20.9 percent drop in net sales versus the second quarter of 2008. It is particularly noteworthy that the Adjusted EBITDA margin in Advanced Ceramics was restored to 26.9 percent and Specialty Chemicals maintained its Adjusted EBITDA margin of 24.3 percent despite a significant drop in net sales. Protecting our margins has always been a key priority for Rockwood, and it is encouraging to see that our organization and people have the strength, commitment and flexibility to deliver this level of profitability during the current global downturn.
"Second, one of the key strengths of Rockwood's portfolio is its ability to deliver significant free cash flow from operations. During the second quarter, we generated $66.4 million of free cash.
"Finally, we recently completed several financing actions in support of our long-term strategy. This included the repurchase at a discount of approximately $138 million in aggregate principal amount of Euro-denominated bonds and the completion of a major amendment to our senior secured credit facility which redefined the leverage ratio for covenant calculations. We also extended the maturity of $1.2 billion of our senior secured debt from 2012 to 2014 and $130 million of availability under our revolving credit facility from 2010 to 2012, and expect to extend an additional $50 million of availability under our revolving credit facility.
"With the above accomplishments in place, we have a solid foundation to move forward and implement our long-term strategy."
The highlights for the second quarter are as follows: Net sales were $730.4 million for the second quarter of 2009, down 20.9% compared to $923.2 million for the same period in the prior year.Net sales were $1,390.4 million for the six months ended June 30, 2009, down 21.3% compared to $1,767.0 million for the same period in the prior year. Adjusted EBITDA from continuing operations was $125.3 million for the second quarter of 2009, down 28.4% compared to $175.1 million for the same periodin the prior year. Adjusted EBITDA from continuing operations was $234.5 million for the six months ended June 30, 2009, down 31.9% compared to $344.3 millionfor the same period in the prior year. On a constant-currency basis, net sales and Adjusted EBITDA from continuing operations were down 13.1% and 21.9%, respectively, for the second quarter of 2009,and were down 13.2% and 25.4%, respectively, for the six months ended June 30, 2009. Net income from continuing operations attributable to Rockwood Holdings, Inc. for the second quarter of 2009 was $0.6 million, including after-taxnet non-recurring and other special charges of $8.8 million. Net income from continuing operations attributable to Rockwood Holdings, Inc. for thesecond quarter of 2008 was $75.6 million, including income of $25.7 million related to after-tax net non-recurring and other special items primarilyrelated to mark-to-market valuation gains on interest rate hedging instruments. Net loss from continuing operations attributable to Rockwood Holdings, Inc. for the six months ended June 30, 2009 was $3.2 million, including after-taxnet non-recurring and other special charges of $10.8 million. Net income from continuing operations attributable to Rockwood Holdings, Inc. for the six monthsended June 30, 2008 was $104.3 million, including income of $9.0 million related to after-tax net non-recurring and other special items. Diluted earnings per share from continuing operations for the second quarter of 2009 were $0.01, including after-tax net non-recurring and other special chargesof $0.12. Excluding net non-recurring and other special charges, diluted earnings per share were $0.13 in the second quarter of 2009. Diluted earnings per sharefrom continuing operations for the second quarter of 2008 were $0.98, including income of $0.33 related to after-tax net non-recurring and other special items.Excluding net non-recurring and other special items, diluted earnings per share from continuing operations were $0.65 in the second quarter of 2008. Diluted loss per share from continuing operations for the six months ended June 30, 2009 was $0.04, including after-tax net non-recurring and other special charges of $0.14.Excluding net non-recurring and other special charges, diluted earnings per share from continuing operations were $0.10 for the six months ended June 30, 2009.Diluted earnings per share from continuing operations for the six months ended June 30, 2008 were $1.36, including income of $0.12 related to after-tax net non-recurring andother special items. Excluding net non-recurring and other special items, diluted earnings per share from continuing operations were $1.24 in the six months ended June 30, 2008. -------------------------------------------------------------------------------
Commenting on the outlook, Mr. Ghasemi said "Although it is very difficult to predict the course of the global economy, we believe, based on what we have seen recently, that demand for our products has stabilized at current levels. We do not, however, see any clear signs of significant improvement. Therefore, as we move forward, we will continue to focus on items we can control, such as reducing costs at all levels, improving productivity and conserving cash by controlling working capital and capital expenditures. We should continue to benefit from these actions in the months ahead."
Second quarter results, as compared with the same period a year ago, are summarized below:
Specialty Chemicals: Net sales and Adjusted EBITDA decreased 29.6% and 30.0%, respectively.
-- In our Fine Chemicals business, lower volumes were partially offset by higher selling prices. -- In our Surface Treatment business, lower volumes, particularly in general industrial and automotive applications, were partially offset by higher selling prices, cost control measures and the impact of a bolt-on acquisition. -------------------------------------------------------------------------------
Performance Additives: Net sales and Adjusted EBITDA decreased 25.7% and 40.1%, respectively.
-- Results were negatively impacted primarily by lower volumes of construction-related products in our Color Pigments and Services and Timber Treatment Chemicals businesses and lower volumes in our Clay-based Additives business. -- Higher selling prices, cost control measures and the impact of a bolt-on acquisition had a favorable impact on results. -------------------------------------------------------------------------------
Titanium Dioxide Pigments: Net sales and Adjusted EBITDA increased 32.2% and 38.3%, respectively. However, net sales and Adjusted EBITDA declined significantly excluding the impact of the venture that was completed in September 2008.
-- Lower volumes for titanium dioxide and functional additives had a negative effect on results. -- Adjusted EBITDA was positively impacted by cost control measures, as well as lower raw material and energy costs. -------------------------------------------------------------------------------
Advanced Ceramics: Net sales and Adjusted EBITDA decreased 33.2% and 41.9%, respectively.
-- Lower volumes in all applications, except medical, were partially offset by the impact of a bolt-on acquisition and cost control measures. -------------------------------------------------------------------------------
Specialty Compounds: Net sales and Adjusted EBITDA decreased 29.5% and 11.9%, respectively.
-- Results were down primarily from lower volumes in most applications, particularly in wire and cable. -- Lower raw material costs had a favorable impact on Adjusted EBITDA. -------------------------------------------------------------------------------
Corporate and other: Corporate costs were down due to lower compensation-related costs and lower professional fees, as well as other cost control measures. Also, corporate costs were favorably impacted by the reversal of certain long-term incentive compensation accruals related to performance targets that are no longer expected to be achieved.
Other Items:
-- Restructuring and other severance costs of $4.0 million were recorded in the second quarter of 2009 primarily related to headcount reductions throughout the Company. -- Interest expense increased $19.2 million in the second quarter of 2009 compared to the same period in the prior year. The second quarter of 2009 and 2008 included non-cash gains of $12.2 million and $34.0 million, respectively, representing the movement in the mark-to-market valuation of our interest rate hedges. Excluding the impact of these gains, interest expense decreased $2.6 million primarily due to lower interest rates and debt repayments, partially offset by debt incurred during 2008 related to the Titanium Dioxide Pigments venture with Kemira. -- Loss on early extinguishment of debt, net. In the second quarter of 2009, we recorded a loss on early extinguishment of debt, net of $27.9 million related to the following: -- As previously discussed, we amended our senior secured credit facility on June 15, 2009. As a result, we wrote off $17.7 million of deferred financing costs and expensed $11.1 million of lender fees incurred in connection with this amendment. -- We repurchased $137.7 million in principal of our Euro-denominated senior subordinated notes due in 2014, for which we recorded a net gain of $0.9 million.
