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Cytec Industries' CEO Discusses Q3 2011 Results - Earnings Call Transcript

Beginning in Slide 4. Coating Resins delivered sales of $387 million, a 6% increase versus the third quarter of 2010. The increase was driven by 10% higher selling prices and favorable currency exchange impact of 6%. We continue to maintain good pricing discipline and have achieved $39 million of selling price increases in the quarter, more than covering the raw material cost escalation. This was partially offset by the 10% volume decline due to weaker demand across a number of global industrial markets, with the greatest drops seen in Europe.

The slowdown has impacted all of the Coating Resins product lines, with the waterborne products down the least at 1% versus the prior quarter. We are also seeing very tight inventory control measures being implemented broadly by our customers. Visibility is becoming more limited and we are now operating at more of a made-to-order basis as a result of short lead times and altered buying patterns.

The chart on Slide 5 displays monthly sales revenue for the business. Although revenue dollars are relatively flat for each months of the quarter, volumes in September were 13% below September last year, most of which was offset by price.

Coating Resins operating earnings of $18 million for the quarter were down about 8% versus earnings of $19.5 million in the third quarter of 2010.

Moving to Additives Technology. Slide 6 shows sales in the segment of $71 million, an increase of 7% versus the third quarter 2010. Once again, increased selling price was the primary driver of growth, achieving 10% versus the prior-year period with an additional 4% benefit from exchange rates.

Selling volumes were down by 7% due primarily to the softening demand environment that has impacted many of our global markets. Order visibility in this segment, however, remains good and we are still getting healthy forecast from customers for our specialty product lines, which remain in tight supply as we are nearing the completion of our expansion work.

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