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TheStreet Open House

Rockwood Reports Third Quarter Results

Stocks in this article: ROC

A listen only, live webcast of the conference call will be available at www.rocksp.com. Materials for the call, including a PowerPoint file detailing the results, will be available for download on this site on the morning of the call. The webcast and PowerPoint file will be archived on Rockwood’s website.

Non-GAAP Financial Measures

This press release includes “non-GAAP financial measures,” such as, a discussion of Adjusted EBITDA, free cash flow and net income/diluted earnings per share from continuing operations attributable to Rockwood Holdings, Inc. shareholders excluding certain items. Adjusted EBITDA is not intended to be an alternative to net income attributable to Rockwood Holdings, Inc. shareholders as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. All presentations of consolidated Adjusted EBITDA are calculated using the definition set forth in the Company’s senior secured credit agreement as a basis and reflects management’s interpretations thereof. Adjusted EBITDA, which is referred to under the senior secured credit agreement as “Consolidated EBITDA,” is defined in the senior secured credit agreement as consolidated earnings (which, as defined in the senior secured credit agreement, equals income (loss) before the deduction of income taxes of Rockwood Specialties Group, Inc. and the Restricted Subsidiaries (as such term is defined in the senior secured credit agreement), excluding extraordinary items) plus certain items including interest expense, depreciation expense, amortization expense, extraordinary losses and non-recurring charges, losses on asset sales, less certain items including extraordinary gains and non-recurring gains, non-cash gains and gains on asset sales. We use Adjusted EBITDA on a consolidated basis to assess our operating performance, to calculate performance-based cash bonuses and determine whether certain performance-based options and restricted stock units vest (as such bonuses, options and restricted stock units are tied to Adjusted EBITDA), and as a liquidity measure. In addition, we use Adjusted EBITDA to determine compliance with our debt covenants. We also use Adjusted EBITDA on a segment basis as the primary measure used by our chief operating decision maker to evaluate the ongoing performance of our business segments and reporting units. A reconciliation of net income attributable to Rockwood Holdings, Inc. shareholders to Adjusted EBITDA is contained in this press release. We strongly urge you to review the reconciliation. In addition, we discuss sales growth in terms of nominal (actual) and net change (nominal less constant currency impacts).

Free cash flow is not intended to be an alternative to cash flows from operating activities as a measure of liquidity. Our presentation of free cash flow is defined as net cash from operating activities of continuing operations, less capital expenditures, net of proceeds from government grants received, and other items (including, among others, the cash impact of adjustments made to Adjusted EBITDA under our senior secured credit agreement). Management believes that free cash flow is meaningful to investors because it provides an additional measure of liquidity. However, a limitation of free cash flow is that it does not represent the total increase or decrease in cash during the period. An additional limitation associated with the use of this measure is that the term “free cash flow” does not have a standardized meaning. Therefore, other companies may use the same or a similarly named measure but exclude different items or use different computations, which may provide investors a comparable view of our performance in relation to other companies. Management compensates for this limitation by presenting the most comparable GAAP measure, net cash provided by operating activities of continuing operations, with free cash flow within its earnings release and by providing a reconciliation that shows and describes the adjustments made. A reconciliation of net cash provided by operating activities of continuing operations to free cash flow is provided in the accompanying tables.

Neither net income from continuing operations attributable to Rockwood Holdings, Inc. shareholders excluding certain items nor diluted earnings per share from continuing operations attributable to Rockwood Holdings, Inc. shareholders excluding certain items is intended to be an alternative for net income or diluted earnings per share. Management believes that net income and diluted earnings per share from continuing operations attributable to Rockwood Holdings, Inc. shareholders excluding certain items is meaningful to investors because it provides a view of the Company with respect to ongoing operating results. Reconciliations of these non-GAAP financial measures are included herein. These non-GAAP measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies.

Rockwood Holdings, Inc. is a leading global specialty chemicals and advanced materials company. Rockwood has a worldwide employee base of approximately 10,300 people and annual net sales of approximately $3.7 billion. Rockwood focuses on global niche segments of the specialty chemicals, pigments and additives and advanced materials markets. For more information on Rockwood, please visit www.rocksp.com .

The information set forth in this press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the business, operations and financial condition of Rockwood Holdings, Inc. and its subsidiaries and affiliates ("Rockwood"). Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "predicts" and variations of such words or expressions are intended to identify forward-looking statements. Although Rockwood believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that its expectations will be realized. "Forward-looking statements" consist of all non-historical information, including any statements referring to the prospects and future performance of Rockwood. Actual results could differ materially from those projected in Rockwood's forward-looking statements due to numerous known and unknown risks and uncertainties, including, among other things, the "Risk Factors" described in Rockwood's periodic reports on file with the Securities and Exchange Commission. Rockwood does not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

           
Rockwood Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share amounts; shares in thousands)
(Unaudited)
 
Three months ended Nine months ended
September 30, September 30,
2012 2011 2012 2011
Net sales $ 862.8 $ 940.9 $ 2,677.9 $ 2,854.9
Cost of products sold   595.2     609.4     1,747.2     1,856.7  
Gross profit 267.6 331.5 930.7 998.2
 
Selling, general and administrative expenses 156.3 176.0 500.9 538.1
Restructuring and other severance costs   6.0     4.5     23.9     9.5  
Operating income   105.3     151.0     405.9     450.6  
 
Other expenses, net:
Interest expense, net (a) (21.1 ) (26.3 ) (56.5 ) (74.0 )
Loss on early extinguishment/modification of debt (0.1 ) (0.1 ) (12.5 ) (16.6 )
Foreign exchange gain (loss) on financing activities, net 0.4 (2.4 ) (7.3 ) 1.8
Other, net   (0.2 )   -     (0.1 )   (0.1 )
Other expenses, net   (21.0 )   (28.8 )   (76.4 )   (88.9 )
 
Income from continuing operations before taxes 84.3 122.2 329.5 361.7
Income tax provision (benefit)   23.3     34.4     (54.9 )   101.0  
Income from continuing operations 61.0 87.8 384.4 260.7
Income from discontinued operations, net of tax (b)   -     -     -     120.3  
Net income 61.0 87.8 384.4 381.0
Net loss (income) attributable to noncontrolling interest   0.6     (11.9 )   (22.1 )   (32.6 )
Net income attributable to Rockwood Holdings, Inc. shareholders $ 61.6   $ 75.9   $ 362.3   $ 348.4  
 
Amounts attributable to Rockwood Holdings, Inc. shareholders:
Income from continuing operations $ 61.6 $ 75.9 $ 362.3 $ 228.1
Income from discontinued operations   -     -     -     120.3  
Net income $ 61.6   $ 75.9   $ 362.3   $ 348.4  
 
Basic earnings per share attributable to Rockwood Holdings, Inc. shareholders:
Earnings from continuing operations $ 0.79 $ 0.99 $ 4.67 $ 2.98
Earnings from discontinued operations (b)   -    

-

    -     1.58  
Basic earnings per share $ 0.79   $ 0.99   $ 4.67   $ 4.56  
 
Diluted earnings per share attributable to Rockwood Holdings, Inc. shareholders:
Earnings from continuing operations $ 0.77 $ 0.95 $ 4.53 $ 2.85
Earnings from discontinued operations (b)   -     -     -     1.51  

Diluted earnings per share

$

0.77

  $ 0.95   $ 4.53   $ 4.36  
 

Dividends declared per share of common stock

$

0.35

 

$

-

 

$

0.70

 

$

-

 
 
Weighted average number of basic shares outstanding   77,639     76,703     77,542     76,430  
Weighted average number of diluted shares outstanding   79,963     80,030     79,914     79,907  
 
(a) Interest expense, net includes:
Interest expense on debt, net $ (16.5 ) $ (21.2 ) $ (48.8 ) $ (71.3 )
Mark-to-market (losses) gains on interest rate swaps (2.3 ) (3.9 ) (2.5 ) 1.0
Deferred financing costs   (2.3 )   (1.2 )   (5.2 )   (3.7 )
Total $ (21.1 ) $ (26.3 ) $ (56.5 ) $ (74.0 )
 

(b) Primarily relates to the gain on sale of the AlphaGary plastic compounding business.

 
 
Rockwood Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in millions, except per share amounts; shares in thousands)
(Unaudited)
       
 
September 30, December 31,
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 1,489.9 $ 321.5
Accounts receivable, net 521.2 454.1
Inventories 854.2 674.3
Deferred income taxes 13.7 10.2
Prepaid expenses and other current assets   67.2     75.1  
Total current assets 2,946.2 1,535.2
Property, plant and equipment, net 1,674.3 1,618.5
Goodwill 843.2 849.6
Other intangible assets, net 452.7 509.7
Deferred financing costs, net 55.1 14.3
Deferred income taxes 153.2 19.3
Other assets   55.0     41.0  
Total assets $ 6,179.7   $ 4,587.6  
LIABILITIES
Current liabilities:
Accounts payable $ 205.3 $ 249.1
Income taxes payable 65.2 45.8
Accrued compensation 114.8 161.4
Accrued expenses and other current liabilities 145.7 129.6
Deferred income taxes 4.7 3.8
Long-term debt, current portion   327.7     250.5  
Total current liabilities 863.4 840.2
Long-term debt 2,673.1 1,437.2
Pension and related liabilities

460.7

450.7
Deferred income taxes

96.8

86.5
Other liabilities  

116.4

    100.6  
Total liabilities

4,210.4

2,915.2
Restricted stock units 22.7 14.0
EQUITY
Rockwood Holdings, Inc. stockholders' equity:
Common stock ($0.01 par value, 400,000 shares authorized, 77,742
shares issued and 77,648 shares outstanding at September 30, 2012;
400,000 shares authorized, 77,030 shares issued and 76,936
shares outstanding at December 31, 2011) 0.8 0.8
Paid-in capital 1,231.2 1,222.2
Accumulated other comprehensive income

8.2

10.1
Retained earnings 435.0 128.5
Treasury stock, at cost   (1.4 )   (1.4 )
Total Rockwood Holdings, Inc. stockholders' equity

1,673.8

1,360.2
Noncontrolling interest   272.8     298.2  
Total equity  

1,946.6

    1,658.4  
Total liabilities and equity $ 6,179.7   $ 4,587.6  
 
       
Rockwood Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in millions)
(Unaudited)
 
Nine months ended
September 30,
2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 384.4 $ 381.0
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations, net of tax (a) - (120.3 )
Depreciation and amortization 196.4 200.2
Deferred financing costs amortization 5.2 3.7
Loss on early extinguishment/modification of debt 12.5 16.6
Foreign exchange loss (gain) on financing activities, net 7.3 (1.8 )
Fair value adjustment of derivatives 2.5 (1.0 )
Bad debt provision 0.2 -
Stock-based compensation 8.7 9.8
Deferred income taxes (125.0 ) 21.3
Restructuring and other 11.9 0.3
Excess tax benefits from stock-based payment arrangements (1.4 ) -
Changes in assets and liabilities, net of the effect of foreign currency translation and acquisitions:
Accounts receivable (69.3 ) (79.6 )
Inventories (112.5 ) (71.4 )
Prepaid expenses and other assets (6.2 ) 3.5
Accounts payable (19.8 ) (18.8 )
Income taxes payable 20.6 34.6
Accrued expenses and other liabilities   (23.9 )   (11.4 )
Net cash provided by operating activities of continuing operations 291.6 366.7
Net cash used in operating activities of discontinued operations   (2.7 )   (1.8 )
Net cash provided by operating activities   288.9     364.9  
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (b) (215.3 ) (181.6 )
Acquisitions (69.2 ) (0.8 )
Proceeds on sale of assets   1.7     0.7  
Net cash used in investing activities of continuing operations (282.8 ) (181.7 )
Net cash provided by investing activities of discontinued operations, representing net
sale proceeds in 2011   -     300.7  
Net cash (used in) provided by investing activities   (282.8 )   119.0  
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net of fees 6.0 14.2
Excess tax benefits from stock-based payment arrangements 1.4 -
Payments of long-term debt (689.4 ) (437.5 )
Proceeds from long-term debt 1,987.4 -
Loan repayments to noncontrolling shareholders - (5.0 )
Deferred financing costs (47.5 ) (5.3 )
Fees related to early extinguishment/modification of debt (9.2 ) (13.4 )
Dividend distributions to shareholders (54.3 ) -
Dividend distributions to noncontrolling shareholder   (45.3 )   (9.8 )
Net cash provided by (used in) financing activities   1,149.1     (456.8 )
Effect of exchange rate changes on cash and cash equivalents   13.2     (9.9 )
Net increase in cash and cash equivalents 1,168.4 17.2
Less net decrease in cash and cash equivalents from discontinued operations   -     (16.6 )
Increase in cash and cash equivalents from continuing operations 1,168.4 33.8
Cash and cash equivalents of continuing operations, beginning of period   321.5     324.1  
Cash and cash equivalents of continuing operations, end of period $ 1,489.9   $ 357.9  
 
Supplemental disclosures of cash flow information:
Interest paid $ 54.7 $ 73.1
Income taxes paid, net of refunds 49.5 45.1
Non-cash investing activities:
Acquisition of capital equipment 13.2 21.9
 
(a) Primarily relates to the gain on sale of the plastic compounding business in January 2011.
(b) Net of government grants of $8.9 million and $9.8 million for the nine months ended September 30, 2012 and 2011, respectively.
       
Rockwood Holdings, Inc. and Subsidiaries
Net Sales and Adjusted EBITDA
       
Net Sales
 
Three Months Ended
September 30,

($ in millions)

  2012     2011   % Change  
Lithium $ 116.0 $ 114.3 1.5 %
Surface Treatment 175.3 185.8 (5.7 )
Performance Additives 178.1 200.7 (11.3 )
Titanium Dioxide Pigments 229.6 252.6 (9.1 )
Advanced Ceramics 130.3 146.2 (10.9 )
Corporate and other   33.5     41.3   (18.9 )
Total $ 862.8   $ 940.9   (8.3 ) %
       
Adjusted EBITDA
 
Three Months Ended
September 30,

($ in millions)

  2012     2011   % Change  
Lithium $ 45.4 $ 42.7 6.3 %
Surface Treatment 37.9 37.9 -
Performance Additives 29.9 36.5 (18.1 )
Titanium Dioxide Pigments 27.6 74.9 (63.2 )
Advanced Ceramics 42.1 47.5 (11.4 )
Corporate and other   (1.0 )   (12.6 ) 92.1
Total Adjusted EBITDA $ 181.9   $ 226.9   (19.8 ) %
 
         
Rockwood Holdings, Inc. and Subsidiaries
Net Sales and Adjusted EBITDA
 
Net Sales
 
Nine Months Ended
September 30,

($ in millions)

  2012       2011   % Change  
Lithium $ 355.3 $ 351.9 1.0 %
Surface Treatment 547.7 562.5 (2.6 )
Performance Additives 580.1 614.7 (5.6 )
Titanium Dioxide Pigments 666.4 735.4 (9.4 )
Advanced Ceramics 417.7 455.3 (8.3 )
Corporate and other   110.7       135.1   (18.1 )
Total $ 2,677.9     $ 2,854.9   (6.2 ) %
 
Adjusted EBITDA
 
Nine Months Ended
September 30,

($ in millions)

  2012       2011   % Change  
Lithium $ 137.9 $ 129.9 6.2 %
Surface Treatment 116.6 115.0 1.4
Performance Additives 107.0 117.4 (8.9 )
Titanium Dioxide Pigments 158.0 193.1 (18.2 )
Advanced Ceramics 136.1 146.4 (7.0 )
Corporate and other   (17.7 )     (34.7 ) 49.0
Adjusted EBITDA from continuing operations 637.9 667.1 (4.4 )
Discontinued operations - Plastic Compounding   -       0.2   (100.0 )
Total Adjusted EBITDA $ 637.9     $ 667.3   (4.4 ) %
 
         
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Segment Net Sales and Adjusted EBITDA
 
Three Months Ended
September 30, Total Total

($ in millions)

2012 2011 Change in $ Change in %
Net Sales:
Lithium $ 116.0 $ 114.3 $ 1.7 1.5 %
Surface Treatment 175.3 185.8 (10.5 ) (5.7 )
Performance Additives 178.1 200.7 (22.6 ) (11.3 )
Titanium Dioxide Pigments 229.6 252.6 (23.0 ) (9.1 )
Advanced Ceramics 130.3 146.2 (15.9 ) (10.9 )
Corporate and other   33.5     41.3     (7.8 ) (18.9 )
Total $ 862.8   $ 940.9   $ (78.1 ) (8.3 ) %
 
Constant Constant Currency Basis
Currency Net Net

($ in millions)

Effect in $ (a) Change in $ Change in %
Net Sales:
Lithium $ (5.8 ) $ 7.5 6.6 %
Surface Treatment (13.7 ) 3.2 1.7
Performance Additives (5.8 ) (16.8 ) (8.4 )
Titanium Dioxide Pigments (29.0 ) 6.0 2.4
Advanced Ceramics (14.8 ) (1.1 ) (0.8 )
Corporate and other   (4.3 )   (3.5 ) (8.5 )
Total $ (73.4 ) $ (4.7 ) (0.5 ) %
 
Three Months Ended
September 30, Total Total

($ in millions)

2012 2011 Change in $ Change in %
Adjusted EBITDA:
Lithium $ 45.4 $ 42.7 $ 2.7 6.3 %
Surface Treatment 37.9 37.9 - -
Performance Additives 29.9 36.5 (6.6 ) (18.1 )
Titanium Dioxide Pigments 27.6 74.9 (47.3 ) (63.2 )
Advanced Ceramics 42.1 47.5 (5.4 ) (11.4 )
Corporate and other   (1.0 )   (12.6 )   11.6   92.1
Total Adjusted EBITDA $ 181.9   $ 226.9   $ (45.0 ) (19.8 ) %
 
Constant Constant Currency Basis
Currency Net Net

($ in millions)

Effect in $ (a) Change in $ Change in %
Adjusted EBITDA:
Lithium $ (1.9 ) $ 4.6 10.8 %
Surface Treatment (2.6 ) 2.6 6.9
Performance Additives (1.2 ) (5.4 ) (14.8 )
Titanium Dioxide Pigments (3.6 ) (43.7 ) (58.3 )
Advanced Ceramics (5.1 ) (0.3 ) (0.6 )
Corporate and other   (0.4 )   12.0   95.2
Total Adjusted EBITDA $ (14.8 ) $ (30.2 ) (13.3 ) %
 

(a) The constant currency effect is the translation impact of the change in the average rate of exchange of another currency to the U.S. dollar for the applicable period as compared to the preceding period. The impact primarily relates to the conversion of the Euro to the U.S. dollar.

         
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Segment Net Sales and Adjusted EBITDA
 
Nine Months Ended
September 30, Total Total

($ in millions)

2012 2011 Change in $ Change in %
Net Sales:
Lithium $ 355.3 $ 351.9 $ 3.4 1.0 %
Surface Treatment 547.7 562.5 (14.8 ) (2.6 )
Performance Additives 580.1 614.7 (34.6 ) (5.6 )
Titanium Dioxide Pigments 666.4 735.4 (69.0 ) (9.4 )
Advanced Ceramics 417.7 455.3 (37.6 ) (8.3 )
Corporate and other   110.7     135.1     (24.4 ) (18.1 )
Total $ 2,677.9   $ 2,854.9   $ (177.0 ) (6.2 ) %
 
Constant Constant Currency Basis
Currency Net Net

($ in millions)

Effect in $ (a) Change in $ Change in %
Net Sales:
Lithium $ (14.3 ) $ 17.7 5.0 %
Surface Treatment (36.6 ) 21.8 3.9
Performance Additives (14.9 ) (19.7 ) (3.2 )
Titanium Dioxide Pigments (64.4 ) (4.6 ) (0.6 )
Advanced Ceramics (35.8 ) (1.8 ) (0.4 )
Corporate and other   (10.5 )   (13.9 ) (10.3 )
Total $ (176.5 ) $ (0.5 ) (0.0 ) %
 
Nine Months Ended
September 30, Total Total

($ in millions)

2012 2011 Change in $ Change in %
Adjusted EBITDA:
Lithium $ 137.9 $ 129.9 $ 8.0 6.2 %
Surface Treatment 116.6 115.0 1.6 1.4
Performance Additives 107.0 117.4 (10.4 ) (8.9 )
Titanium Dioxide Pigments 158.0 193.1 (35.1 ) (18.2 )
Advanced Ceramics 136.1 146.4 (10.3 ) (7.0 )
Corporate and other   (17.7 )   (34.7 )   17.0   49.0
Adjusted EBITDA from continuing operations 637.9 667.1 (29.2 ) (4.4 )
Discontinued operations - Plastic Compounding   -     0.2     (0.2 ) (100.0 )
Total Adjusted EBITDA $ 637.9   $ 667.3   $ (29.4 ) (4.4 ) %
 
Constant Constant Currency Basis
Currency Net Net

($ in millions)

Effect in $ (a) Change in $ Change in %
Adjusted EBITDA:
Lithium $ (4.9 ) $ 12.9 9.9 %
Surface Treatment (6.8 ) 8.4 7.3
Performance Additives (3.1 ) (7.3 ) (6.2 )
Titanium Dioxide Pigments (13.4 ) (21.7 ) (11.2 )
Advanced Ceramics (12.7 ) 2.4 1.6
Corporate and other   (1.3 )   18.3   52.7
Adjusted EBITDA from continuing operations (42.2 ) 13.0 1.9
Discontinued operations - Plastic Compounding   -     (0.2 ) (100.0 )
Total Adjusted EBITDA $ (42.2 ) $ 12.8   1.9 %
 

(a) The constant currency effect is the translation impact of the change in the average rate of exchange of another currency to the U.S. dollar for the applicable period as compared to the preceding period. The impact primarily relates to the conversion of the Euro to the U.S. dollar.

           
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Income (Loss) from Continuing Operations before Taxes
to Adjusted EBITDA by Segment
 
Titanium
Surface Performance Dioxide

($ in millions)

Lithium Treatment Additives Pigments
Three months ended September 30, 2012
 
Income (loss) from continuing operations before taxes $ 32.2 $ 23.1 $ 12.3 $ (0.8 )
Interest expense, net 0.7 3.0 1.2 9.9
Depreciation and amortization 11.1 7.8 14.9 17.1
Restructuring and other severance costs 1.3 2.4 1.3 -
Systems/organization establishment expenses 0.1 0.6 - 0.4
Acquisition and disposal costs - - - 0.4
Loss on early extinguishment/modification of debt - - - 0.1
Foreign exchange loss (gain) on financing activities, net - 1.0 - -
Other   -     -     0.2     0.5  
Total Adjusted EBITDA $ 45.4   $ 37.9   $ 29.9   $ 27.6  
 
Advanced Corporate and

($ in millions)

Ceramics other Consolidated
Three months ended September 30, 2012
 
Income (loss) from continuing operations before taxes $ 26.0 $ (8.5 ) $ 84.3
Interest expense, net 2.8 3.5 21.1
Depreciation and amortization 12.4 2.2 65.5
Restructuring and other severance costs 0.9 0.1 6.0
Systems/organization establishment expenses - - 1.1
Acquisition and disposal costs - 1.6 2.0
Loss on early extinguishment/modification of debt - - 0.1
Foreign exchange loss (gain) on financing activities, net (0.2 ) (1.2 ) (0.4 )
Other   0.2     1.3     2.2  
Total Adjusted EBITDA $ 42.1   $ (1.0 ) $ 181.9  
 
Titanium
Surface Performance Dioxide

($ in millions)

Lithium Treatment Additives Pigments
Three months ended September 30, 2011
 
Income (loss) from continuing operations before taxes $ 33.3 $ 17.8 $ 18.3 $ 47.2
Interest expense, net 1.9 5.2 2.2 6.1
Depreciation and amortization 10.6 8.1 14.6 18.2
Restructuring and other severance costs 0.5 2.4 1.1 -
Systems/organization establishment expenses - 0.1 0.2 -
Acquisition and disposal costs - - - -
Loss on early extinguishment/modification of debt 0.1 - - -
Foreign exchange (gain) loss on financing activities, net (3.7 ) 4.2 0.2 -
Other   -     0.1     (0.1 )   3.4  
Total Adjusted EBITDA $ 42.7   $ 37.9   $ 36.5   $ 74.9  
 
Advanced Corporate and

($ in millions)

Ceramics other Consolidated
Three months ended September 30, 2011
 
Income (loss) from continuing operations before taxes $ 27.4 $ (21.8 ) $ 122.2
Interest expense, net 5.2 5.7 26.3
Depreciation and amortization 13.3 2.2 67.0
Restructuring and other severance costs 0.4 0.1 4.5
Systems/organization establishment expenses - - 0.3
Acquisition and disposal costs 0.1 0.1 0.2
Loss on early extinguishment/modification of debt - - 0.1
Foreign exchange (gain) loss on financing activities, net 1.0 0.7 2.4
Other   0.1     0.4     3.9  
Total Adjusted EBITDA $ 47.5   $ (12.6 ) $ 226.9  
           
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Income (Loss) from Continuing Operations before Taxes
to Adjusted EBITDA by Segment
 
Titanium
Surface Performance Dioxide
($ in millions) Lithium Treatment Additives Pigments
Nine months ended September 30, 2012
 
Income (loss) from continuing operations before taxes $ 84.6 $ 69.5 $ 50.8 $ 82.4
Interest expense, net 2.6 11.8 5.2 15.4
Depreciation and amortization 32.6 23.6 44.7 51.4
Restructuring and other severance costs 13.4 4.4 4.9 -
Systems/organization establishment expenses 0.4 0.6 0.2 1.9
Acquisition and disposal costs - 0.1 - 2.1
Loss on early extinguishment/modification of debt 2.2 3.0 0.9 2.8
Foreign exchange loss (gain) on financing activities, net 2.0 3.1 (0.1 ) -
Other   0.1     0.5     0.4     2.0  
Total Adjusted EBITDA $ 137.9   $ 116.6   $ 107.0   $ 158.0  
 
Advanced Corporate and
($ in millions) Ceramics other Consolidated
Nine months ended September 30, 2012
 
Income (loss) from continuing operations before taxes $ 85.9 $ (43.7 ) $ 329.5
Interest expense, net 11.0 10.5 56.5
Depreciation and amortization 37.8 6.3 196.4
Restructuring and other severance costs 1.0 0.2 23.9
Systems/organization establishment expenses - - 3.1
Acquisition and disposal costs - 1.8 4.0
Loss on early extinguishment/modification of debt 0.7 2.9 12.5
Foreign exchange loss (gain) on financing activities, net (0.5 ) 2.8 7.3
Other   0.2     1.5     4.7  
Total Adjusted EBITDA $ 136.1   $ (17.7 ) $ 637.9  
 
Titanium
Surface Performance Dioxide
($ in millions) Lithium Treatment Additives Pigments
Nine months ended September 30, 2011
 
Income (loss) from continuing operations before taxes $ 90.9 $ 60.2 $ 61.8 $ 126.6
Interest expense, net 6.1 16.0 6.9 9.2
Depreciation and amortization 30.7 25.6 43.3 53.6
Restructuring and other severance costs 2.4 4.6 1.9 -
Systems/organization establishment expenses - 0.4 0.6 0.3
Acquisition and disposal costs - 0.1 - -
Loss on early extinguishment/modification of debt 3.0 4.7 1.7 -
Foreign exchange (gain) loss on financing activities, net (3.3 ) 2.8 1.2 -
Other   0.1     0.6     -     3.4  
Adjusted EBITDA from continuing operations 129.9 115.0 117.4 193.1
Discontinued operations - Plastic Compounding   -     -     -     -  
Total Adjusted EBITDA $ 129.9   $ 115.0   $ 117.4   $ 193.1  
 
Discontinued
Operations -
Advanced Plastic Corporate and
($ in millions) Ceramics Compounding other Consolidated
Nine months ended September 30, 2011
 
Income (loss) from continuing operations before taxes $ 83.6 $ - $ (61.4 ) $ 361.7
Interest expense, net 16.8 - 19.0 74.0
Depreciation and amortization 40.4 - 6.6 200.2
Restructuring and other severance costs 0.5 - 0.1 9.5
Systems/organization establishment expenses - - - 1.3
Acquisition and disposal costs 0.1 - 0.2 0.4
Loss on early extinguishment/modification of debt 4.0 - 3.2 16.6
Foreign exchange (gain) loss on financing activities, net 0.8 - (3.3 ) (1.8 )
Other   0.2     -     0.9     5.2  
Adjusted EBITDA from continuing operations 146.4 - (34.7 ) 667.1
Discontinued operations - Plastic Compounding   -     0.2     -     0.2  
Total Adjusted EBITDA $ 146.4   $ 0.2   $ (34.7 ) $ 667.3  
 
           
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Reconciliation of Net Income Attributable to
Rockwood Holdings, Inc. Shareholders to Adjusted EBITDA
($ in millions)
 
Three Months Ended Nine Months Ended
September 30, September 30,
  2012     2011   2012     2011  
Net income attributable to Rockwood Holdings, Inc. shareholders $ 61.6 $ 75.9 $ 362.3 $ 348.4
Net (loss) income attributable to noncontrolling interest   (0.6 )   11.9   22.1     32.6  
Net income 61.0 87.8 384.4 381.0
Income tax provision (benefit) 23.3 34.4 (54.9 ) 101.0
Income from discontinued operations, net of tax (a)   -     -   -     (120.3 )
Income from continuing operations before taxes 84.3 122.2 329.5 361.7
Interest expense, net 21.1 26.3 56.5 74.0
Depreciation and amortization 65.5 67.0 196.4 200.2
Restructuring and other severance costs 6.0 4.5 23.9 9.5
Systems/organization establishment expenses 1.1 0.3 3.1 1.3
Acquisition and disposal costs 2.0 0.2 4.0 0.4
Loss on early extinguishment/modification of debt 0.1 0.1 12.5 16.6
Foreign exchange (gain) loss on financing activities, net (0.4 ) 2.4 7.3 (1.8 )
Other   2.2     3.9   4.7     5.2  
Adjusted EBITDA from continuing operations 181.9 226.9 637.9 667.1
Discontinued operations - Plastic Compounding   -     -   -     0.2  
Total Adjusted EBITDA $ 181.9   $ 226.9 $ 637.9   $ 667.3  
 
(a) Primarily relates to the gain on sale of the AlphaGary plastic compounding business.
       
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Net Cash Provided By Operating Activities From
Continuing Operations to Adjusted EBITDA
 
Nine months ended
September 30,

($ in millions)

  2012     2011
Net cash provided by operating activities from continuing
operations $ 291.6 $ 366.7
Changes in assets and liabilities, net of the effect of
foreign currency translation and acquisitions 191.9 133.3
Current portion of income tax provision 70.1 79.7
Interest expense, net, excluding amortization of deferred
financing costs and unrealized losses/gains on derivatives 48.8 71.3
Restructuring and other severance costs 23.9 9.5
Systems/organization establishment expenses 3.1 1.3
Acquisition and disposal costs 4.0 0.4
Bad debt provision (0.2 ) -
Other   4.7     4.9
Adjusted EBITDA from continuing operations 637.9 667.1
Discontinued operations - Plastic Compounding   -     0.2
Total Adjusted EBITDA $ 637.9   $ 667.3
 
     
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Net Cash Provided by Operating Activities From
Continuing Operations to Free Cash Flow
 
 
Three months ended

($ in millions)

September 30, 2012
Net cash provided by operating activities of continuing operations $ 143.1
Capital expenditures, net of government grants received (71.3 )
Restructuring charges 4.8
Other (a)   4.6  
Free Cash Flow $ 81.2  
 

(a) Represents the cash impact of adjustments made to EBITDA under our senior secured credit agreement, which include fees incurred in connection with the acquisition of certain business assets, particularly crenox GmbH and Talison.

           
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Reconciliation of Net Income/Diluted Earnings Per Share from
Continuing Operations Attributable to Rockwood Holdings, Inc. Shareholders
as Reported to Net Income/Diluted Earnings Per Share from Continuing
Operations Attributable to Rockwood Holdings, Inc. Shareholders as Adjusted
(Dollars in millions, except per share amounts; shares in thousands)
 
Three Months Ended Three Months Ended
September 30, 2012 September 30, 2011
Net Income

 

Net Income

 

from Continuing from Continuing
Operations

 

Operations

 

Attributable

Diluted EPS

Attributable

Diluted EPS

to Rockwood

from

to Rockwood

from

Holdings, Inc.

Continuing

Holdings, Inc.

Continuing

Shareholders Operations Shareholders Operations
As reported $ 61.6 $ 0.77 $ 75.9 $ 0.95
 
 
Adjustments to expenses from continuing operations:
Restructuring and other severance costs 6.3 0.08 3.8 0.05
Impact of tax related items 2.9 0.04 - -
Acquisition and disposal costs 1.6 0.02 - -
Mark-to-market swap loss 1.0 0.01 1.6 0.02
Systems/organization establishment expenses 0.7 0.01 0.3 0.01
Foreign exchange loss on financing activities, net - - 1.2 0.01
Loss on early extinguishment/modification of debt - - 0.1 -
Other   1.5     0.02     1.8   0.02
Subtotal 14.0 0.18 8.8 0.11
 
Adjustments to income from continuing operations:
Foreign exchange gain on financing activities, net   (0.3 )   (0.01 )   -   -
Subtotal   (0.3 )   (0.01 )   -   -
 
Total adjustments (a) 13.7 0.17 8.8 0.11
       
As adjusted $ 75.3   $ 0.94   $ 84.7 $ 1.06
 
Weighted average number of diluted shares outstanding   79,963     80,030
 
(a) The tax effects of the adjustments are benefits of $0.7 million and $3.6 million for the three months ended September 30, 2012 and 2011, respectively, based on the statutory tax rate in the various tax jurisdictions in which the adjustments occurred, adjusted for the impact of certain valuation allowances.
           
Rockwood Holdings, Inc. and Subsidiaries

Consolidated Reconciliation of Net Income/Diluted Earnings Per Share from Continuing

Operations Attributable to Rockwood Holdings, Inc. Shareholders

as Reported to Net Income/Diluted Earnings Per Share from Continuing Operations

Attributable to Rockwood Holdings, Inc. Shareholders as Adjusted

(Dollars in millions, except per share amounts; shares in thousands)
 
Nine Months Ended Nine Months Ended
September 30, 2012 September 30, 2011
Net Income

 

Net Income

 

from Continuing from Continuing
Operations

 

Operations

 

Attributable

Diluted EPS

Attributable

Diluted EPS

to Rockwood

from

to Rockwood

from

Holdings, Inc.

Continuing

Holdings, Inc.

Continuing

Shareholders Operations Shareholders Operations
As reported $ 362.3 $ 4.53 $ 228.1 $ 2.85
 
 
Adjustments to expenses from continuing operations:
Restructuring and other severance costs 22.9 0.29 7.5 0.09
Loss on early extinguishment/modification of debt 9.0 0.11 13.5 0.17
Foreign exchange loss on financing activities, net 6.4 0.08 - -
Impact of tax related items 2.9 0.04
Acquisition and disposal costs 2.8 0.03 - -
Systems/organization establishment expenses 1.5 0.02 0.9 0.01
Mark-to-market swap loss 1.1 0.02
Other   3.1     0.04     3.1     0.05  
Subtotal 49.7 0.63 25.0 0.32
 
Adjustments to income from continuing operations:
Valuation allowance reversal (139.0 ) (1.74 ) - -
Mark-to-market swap gain - - (1.6 ) (0.02 )
Foreign exchange gain on financing activities, net   -     -     (3.0 )   (0.04 )
Subtotal   (139.0 )   (1.74 )   (4.6 )   (0.06 )
 
Total adjustments (a) (89.3 ) (1.11 ) 20.4 0.26
       
As adjusted $ 273.0   $ 3.42   $ 248.5   $ 3.11  
 
Weighted average number of diluted shares outstanding   79,914     79,907  
 
(a) The tax effects of the adjustments are benefits of $146.7 million and $7.9 million for the nine months ended September 30, 2012 and 2011, respectively, based on the statutory tax rate in the various tax jurisdictions in which the adjustments occurred, adjusted for the impact of certain valuation allowances.




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