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American Pacific Corporation's CEO Discusses F3Q 2011 Results - Earnings Call Transcript

In addition, we will be referring to both GAAP and non-GAAP financial measures. Our recently published earnings release contains definitions of these non-GAAP measures and a reconciliation of these non-GAAP measures to the most comparable GAAP measures.

Our earnings release can be found in the news release section of our website at apfc.com. I will now turn the call over to Joe.

Joe Carleone

Thank you Amanda and good afternoon ladies and gentlemen and thank you for joining our conference call. Consistent with our expectations, we have shown strong sales for our third quarter. We are also reaffirming guidance for sales and EBITDA of at least $195 million and $29 million respectively.

We are however, somewhat disappointed that profits in our Fine Chemicals segment are lagging behind our expectations. This reaffirmation of guidance clearly implies that Q4 will be a major quarter for impact.

Fourth quarter sales are expected to be at least $65 million. Profits will be more concentrated in Q4 because of the product mix. Of course, as with any plan that is so concentrated at the end of the fiscal year, a small timing change could move some sales between fiscal 2011 and 2012 in either direction.

In addition, we were required to take a substantial environmental charge this quarter. As you may recall, we have been designing an improvement and expansion of our remediation facility in Henderson, Nevada. Prior to this quarter, our existing reserves were based on conceptual models and estimates developed during the pre-engineering phase of the project.

During Q3, detailed designs, using updated data, were finalized to a point where hard bids could be obtained. We have received the firm quotes for the new equipment, pipeline, construction and installation costs.

These quotes, together with updated operating cost estimates came in $6 million higher than our forecast developed approximately two years ago. On the plus side, the expanded capacity of the project could reduce the overall life of the project by four years.

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