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Rockwood Reports Second Quarter 2013 Results

Stocks in this article: ROC

Rockwood Holdings, Inc. (NYSE: ROC) today reported net income of $32.3 million, or $0.41 per share for the second quarter of 2013, which included other net charges of $25.5 million, primarily related to the non-core business sales process, particularly Advanced Ceramics and Clay-based Additives, as compared to $224.9 million, or $2.81 per share for the same period in the prior year, which included other net benefits of $125.8 million, primarily related to the reversal of a majority of our federal tax valuation allowance.

Excluding these other net charges and benefits, adjusted net income was $57.8 million, or $0.73 per share, in the second quarter of 2013 compared to $99.1 million, or $1.24 per share, for the same period in the prior year. Quarter on quarter performance was down primarily due to Titanium Dioxide Pigments, which more than offset improved results from Surface Treatment, the Advanced Ceramics medical business and Lithium.

For the six months ended June 30, 2013, net income was $51.2 million, or $0.64 per share, which included other net charges of $61.0 million, as compared to $300.7 million, or $3.76 per share for the prior year, which included other net benefits of $103.0 million.

Excluding these other net charges and benefits, adjusted net income was $112.2 million, or $1.41 per share, in the six months ended June 30, 2013, versus $197.7 million, or $2.47 per share for the same period in the prior year. Year on year performance was lower from weak results from Titanium Dioxide Pigments, partially offset by improved results from Surface Treatment, Lithium and the Advanced Ceramics medical business.

Free cash flow for the second quarter 2013 was $19.8 million compared to $39.0 million in same period in the prior year. The second quarter benefited from significant improvement in working capital offset by lower earnings, higher cash taxes, cash interest and capital expenditures. Capital expenditures were higher largely due to the expansion of our lithium carbonate facility in Chile.


Table 1: Second Quarter and YTD Financial Highlights

% Change % Change
  Constant   Constant

($ in millions; except per share amounts)

Q2 2013   Q2 2012   Total   Currency   YTD 2013   YTD 2012   Total   Currency
Net sales $ 822.3 $ 762.8 7.8% 7.2% $ 1,614.0 $ 1,527.7 5.6% 5.4%
Net sales (including discontinued operations) 972.3 905.6 7.4% 6.6% 1,906.9 1,815.1 5.1% 4.7%
Adjusted EBITDA from continuing operations 116.1 173.4 (33.0%) (33.5%) 237.8 362.0 (34.3%) (34.5%)
Total Adjusted EBITDA 165.7 221.1 (25.1%) (25.8%) 333.9 456.0 (26.8%) (27.2%)
Net income 32.3 224.9 (85.6%) 51.2 300.7 (83.0%)
Diluted EPS 0.41 2.81 (85.4%) 0.64 3.76 (82.9%)
Net income - as adjusted 57.8 99.1 (41.7%) 112.2 197.7 (43.2%)
Diluted EPS - as adjusted 0.73 1.24 (41.1%) 1.41 2.47 (42.7%)
Cash flow provided by operating activities 85.4 100.9 (15.4%) 134.2 146.6 (8.5%)
Capital expenditures, net (64.7) (61.4) 5.4% (123.5) (126.2) (2.1%)
Free cash flow 19.8 39.0 (49.2%) 14.3 18.4 (22.3%)

Seifi Ghasemi, Chairman and Chief Executive Officer, commented, “Our core Lithium and Surface Treatment business segments performed well within expectations, delivering improved quarter on quarter Adjusted EBITDA performance and strong margins of 39% and 23%, respectively. These results however, were overshadowed, as we had indicated on our April 30 first quarter earnings call, by continued weak performance from the Titanium Dioxide Pigments business. Our Performance Additives segment did not perform to our expectations due to a slow recovery in consumer discretionary spending for remodeling activities and weaker starts of new homes impacted by both economic and adverse weather conditions in the US.

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