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Cytec Industries' CEO Discusses Q2 2011 Results - Earnings Call Transcript

Now let me turn over the call to Shane.

Shane Fleming

Thanks, Jodi. Good morning, everyone. I appreciate you taking the time to join our earnings call. Let me begin on Slide 3. Overall sales in the quarter for continuing operations were $798 million, a 14% increase over the prior quarter. The year-on-year sales growth was driven by 10% selling price increases across our all of our business segments with additional support from foreign exchange. Volumes versus the prior year quarter were down by 1%. And if you recall, Cytec had very strong earnings performance in the second quarter 2010, particularly in Coating Resins and Engineered Materials.

Net earnings from continuing operations in the second quarter this year were $45.9 million or $0.92 per diluted share, excluding the special items that Dave will explain shortly. Although this is a decrease versus the prior year quarter record earnings performance, it does reflect an 18% increase versus $39 million earned in the first quarter of this year.

Beginning on Slide 4, Coating Resins delivered sales of $421 million, a 14% increase versus second quarter of 2010. The increase was driven by 15% higher selling prices and favorable exchange impact of 8%. This was partially offset by volume being down 9% due to weaker demand, particularly, later in the quarter as customers reduced inventory levels, anticipating lower raw material costs in the third quarter. Volume in the quarter was also negatively impacted by the shutdown of our San Fernando, Spain, Radcure monomers plant in March next of this year and bottom slicing actions we have taken with certain solvent-borne commodity products as we move to improve mix and reduce manufacturing cost in this segment.

From a global perspective, volume was down in all regions of the world with the largest decline in Asia Pacific, where the most opportunistic buying practices typically take place. I'm pleased to point out that we were able to grow volume in our waterborne product line despite the softening demand environment.

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