Third quarter results, as compared with the same period a year ago, are summarized below:
- Lithium: Net sales and Adjusted EBITDA increased 1.5% and 6.3%, respectively.
- Net sales increased from higher selling prices, but were negatively impacted by lower volumes of lithium carbonate (technical grade) and the impact of currency changes.
- Adjusted EBITDA increased from higher net sales, partially offset by the negative impact of currency changes, higher research and development costs and higher raw material costs.
- Surface Treatment: Net sales decreased 5.7%, while Adjusted EBITDA was flat.
- Net sales decreased primarily due to the negative impact of currency changes. Higher selling prices in certain markets and higher volumes in the U.S. and Asia were partially offset by lower volumes in Europe.
- Adjusted EBITDA was positively impacted from increased selling prices, offset by the negative impact of currency changes.
- Performance Additives: Net sales and Adjusted EBITDA decreased 11.3% and 18.1%, respectively.
- Net sales decreased primarily due to lower volumes in Color Pigments and Services and Clay-based Additives resulting from difficult economic conditions in Europe and a slowdown in North American oilfield drilling. In addition, net sales were negatively impacted by currency changes, partially offset by increased selling prices.
- Adjusted EBITDA decreased from lower volumes.
- Titanium Dioxide Pigments: Net sales and Adjusted EBITDA decreased 9.1% and 63.2%, respectively.
- Net sales decreased from the negative impact of currency changes and lower volumes, partially offset by higher selling prices.
- Adjusted EBITDA decreased from lower volumes, significantly higher raw material costs, primarily slag and ilmenite, and the negative impact of currency changes.
- Advanced Ceramics: Net sales and Adjusted EBITDA decreased 10.9% and 11.4%, respectively.
- Net sales and Adjusted EBITDA decreased primarily from the negative impact of currency changes and lower volumes in electronic and cutting tool applications, partially offset by higher volumes of medical ceramics.
- Corporate and other: Net sales decreased 18.9% and Adjusted loss before interest, taxes, depreciation and amortization decreased 92.1%.
- Net sales decreased primarily from the negative impact of currency changes and lower volumes and selling prices primarily in our metal sulfides business.
- Adjusted loss before interest, taxes, depreciation and amortization decreased primarily from lower variable compensation costs.
Other Financial Items:
- Interest expense, net decreased $5.2 million in the third quarter of 2012 compared to the same period in the prior year, primarily due to debt repayments.
- Income taxes. The effective income tax rate for the third quarter of 2012 was 27.6% and was favorably impacted by a beneficial earnings mix and certain domestic income that was not tax effected.
- Free cash flow was an inflow of $81.2 million for the third quarter of 2012, and primarily consisted of net cash provided by operating activities of continuing operations, partially offset by capital expenditures of $71.3 million.
- Net debt, which is total debt less cash and cash equivalents, was $1,510.9 million as of September 30, 2012 compared to $1,366.2 million as of December 31, 2011. The increase in net debt was primarily due to cash outflows for working capital, capital expenditures and a dividend payment to the noncontrolling partner in our titanium dioxide pigments venture.
Conference Call and Webcast
We will host a conference call and webcast to discuss the results of operations for the third quarter ended September 30, 2012 on Thursday, October 25, 2012 at 11:00 am Eastern Time. The dial-in number to access the conference call in the U.S. is (888) 423-3280 and the international dial-in number is (612) 332-0725. No access code is needed for either call. A replay of the conference call will be available through November 8, 2012 at (800) 475-6701 in the U.S., access code: 266579, and internationally at (320) 365-3844, access code: 266579.