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Detrex Corporation Reports Profit for the Third Quarter of 2012

Friday, November 9, 2012 10:30 AM


Detrex Corporation (Pink Sheets: DTRX), announced today 2012 third quarter net income from continuing operations of $448,426, or $0.26 per fully diluted share, compared to net income from continuing operations of $828,349, or $0.49 per fully diluted share, in the third quarter of 2011. The Company also announced that it will pay a $0.25 quarterly dividend on December 12, 2012 to shareholders of record as of November 27, 2012.

Third quarter net sales were $10.1 million compared to the record $14.1 million generated in the comparable period last year. The change in sales is largely the result of the absence of 2011 tolling revenues that did not repeat this year combined with lower sales to a large customer. In addition, general market activity in industrial lubricants has been sluggish since the middle of the second quarter 2012. Year-to-date sales through September 2012 were $33.5 million which is below the $38.3 million in the comparable period of 2011. Most of this decrease is attributable to the year over year decline in the third quarter as discussed above.

President and CEO, Tom Mark said “We have seen lower sales in the third quarter compared to last year as the slow-down that began in the second quarter continued. As expected, we also experienced reduced sales to a major customer and had lower tolling revenues. In spite of this, we continued to invest in future growth initiatives. The core business remains strong and we are optimistic about long term prospects as we are generating opportunities for new and existing products with our global customer base. Our financial condition is solid and we are continuing to investigate strategic opportunities to enhance shareholder value.”

Net income including discontinued operations in the third quarter of 2012 was $363,235, or $0.21 per fully diluted share, compared to $1,405,172, or $0.83 per fully diluted share in the third quarter of 2011. The year-to-date net income including the gain on the sale of its subsidiary Harvel Plastics, Inc., reported in discontinued operations, was $18,218,730, or $10.58 per fully diluted share, compared to $3,941,666, or $2.33 per fully diluted share in 2011 which includes net income from Harvel in discontinued operations.

Earnings declined in the third quarter of 2012 compared to the prior year due to the margin impact of lower sales. While the volume decline had a significant impact on gross margin, this was partially offset by improved pricing and mix. The Company’s third quarter 2012 provision for environmental expense of $600,000 ($1.8 million year-to-date) compared to the third quarter 2011 provision of $500,000 ($1.5 million year-to-date) reflect the Company’s practice of replenishing the environmental reserve by an amount at least equal to expected spending. Other income of $192,572 was recorded in the third quarter 2012 for recovery of past legal expenses.

About Detrex Corporation

Founded in 1925, Detrex Corporation through its subsidiary The Elco Corporation is a leading manufacturer of high performance specialty chemicals including additives for industrial petroleum products and high purity hydrochloric acid.

Forward Looking Statements

Statements included in this press release that are not historical in nature are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Act”). The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target” and similar expressions identify forward-looking statements. The Company cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. Certain risks and uncertainties are identified from time to time in the Company’s reports. Some factors that could cause results to differ materially from those projected in the forward-looking statements include: market conditions, environmental remediation costs, pension expense and funding requirements, liquidation value of assets, and marketability of real estate and the market value and future liquidity of Detrex stock. The Company claims the protection of the safe harbor for forward-looking statements contained in the 1995 Act.

 
Detrex Corporation and Subsidiaries
Condensed Consolidated Statement of Income
(unaudited, in thousands)
     
Three Months Ended Year to date
September 30 September 30
2012 2011 2012 2011
 
Net sales $ 10,102 $ 14,117 $ 33,502 $ 38,312
 
Cost of sales 6,633 9,632 21,984 25,854
Selling, general and administrative expense 2,095 2,122 6,301 5,993
Provision for depreciation and amortization 289 289 861 867
Provision for corporate environmental reserves 600 500 1,800 1,500
Interest (Income) Expense (192 ) (6 ) (188 ) (2 )
Other (Income) Expense, net   (40 )   123     (54 )   383  
Income from continuing operations
before income taxes 717 1,457 2,798 3,717
 
Provision for income taxes   269     629     1,039     1,601  
Net Income from continuing operations 448 828 1,759 2,116
 
Discontinued operations:
Gain (loss) on sale of Subsidiary, net of tax (85 ) 16,459
Income from the operation of Subsidiary, net of income tax 577 1,826
       
Net income $ 363   $ 1,405   $ 18,218   $ 3,942  
 
Basic earnings per common share attributable to Detrex shareholders:
From continuing operations $ 0.27 $ 0.49 $ 1.05 $ 1.26
From discontinued operations   (0.05 )   0.34     9.82     1.09  
Net earnings per share $ 0.22   $ 0.84   $ 10.87   $ 2.35  
 
Fully diluted earnings per common share attributable to Detrex shareholders:
From continuing operations $ 0.26 $ 0.49 $ 1.02 $ 1.25
From discontinued operations   (0.05 )   0.34     9.56     1.08  
Net earnings per share $ 0.21   $ 0.83   $ 10.58   $ 2.33  
 
Shares outstanding,basic 1,676 1,676 1,676 1,676
Shares outstanding,fully diluted 1,721 1,689 1,721 1,689
 
     
Condensed Consolidated Balance Sheet
 
Unaudited Audited
Sept 30 Dec 31
2012 2011
Assets
Current Assets:
Continuing operations $ 23,817 $ 13,063
Assets held for sale - 16,039
Property and equipment, net 10,296 9,773
Other assets:
Continuing operations 3,528 6,706
Assets held for sale   -   8,549
Total assets $ 37,641 $ 54,130
 
Liabilities and stockholders' equity
Current liabilities:
Continuing operations $ 9,321 $ 12,248
Against assets held for sale - 4,797
Non-current liabilities:
Continuing operations 5,056 21,336
Against assets held for sale - 3,825
 
Detrex Corporation shareholders' equity 23,264 9,303
Noncontrolling interest   -   2,621
Total equity   23,264   11,924
Total liabilities and stockholders' equity $ 37,641 $ 54,130
 

(Source: Business Wire )
(Source: Quotemedia)

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