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W.R. Grace (GRA) Slips To 4Q Loss On Asbestos-Related Liability

 February 06, 2013 07:22 AM

(By Balaseshan) W.R. Grace & Co. (NYSE: GRA), which produces specialty chemicals and specialty materials, slipped to a quarterly loss due to non-cash charge adjusted to asbestos-related liability and lower sales from Catalysts Technologies. However, results exceeded Street's expectations.

Loss for the fourth quarter was $111.6 million or $1.48 per share, compared to a profit of $58.1 million or $0.77 per share in the same period last year.

The loss was due to a $365.0 million non-cash charge recorded in the quarter to adjust the company's asbestos-related liability. Adjusted earnings per share (EPS) rose to $1.11 from $0.89.

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Net sales decreased 3.4% to $797.8 million, as higher sales volumes and improved base pricing were offset by lower rare earth surcharges and unfavorable currency translation.

Analysts, on average, polled by Thomson Reuters had expected a profit of $1.06 per share on revenue of $790.13 million for the fourth quarter.

Sales in emerging regions represented 39.1% of sales and grew 16.1% compared with the prior-year quarter. Acquisitions, net of divestitures, contributed $3.0 million (up 0.4%) to sales in the quarter.

Sales from Catalysts Technologies decreased 10.7%, due to lower rare earth surcharges and unfavorable currency translation, which more than offset increased sales volumes and improved base pricing.

Sales from Materials Technologies rose 2.7%, due to higher sales volumes and improved pricing, which more than offset unfavorable currency translation. Construction Products sales increased 2.3% on higher sales volumes and improved pricing as well as the acquisition of Rheoset Industria.

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Gross margin increased 270 basis points to 37.6%, exceeding the top-end of the company's target range of 35% to 37%.

Looking ahead into the fiscal 2013, the company expects sales of $3.2 billion to $3.3 billion with organic growth of 6% to 8%, while Street predicts revenue of $3.30 billion. GRA projects gross margin in the range of 36% to 38% and capital expenditures of $180 million to $200 million.

GRA closed Tuesday's regular session at $72.63. The stock has been trading between $47.40 and $74.00 for the past 52 weeks.

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