Solutia Inc. ( SOA)

Q4 2010 Earnings Call

January 27, 2010 10:00 am ET


Susannah Livingston - VP, IR and Communications

Jeff Quinn - Chairman, President and CEO

Jim Sullivan - EVP and CFO


Laurence Alexander - Jefferies & Co.

David Begleiter - Deutsche Bank Securities

Frank Mitsch - BB&T Capital Markets

Doug Chudy - Keybanc Capital Markets

Edlain Rodriguez - Gleacher & Company



Good day, ladies and gentlemen, and welcome to the quarter four Solutia Inc earnings conference call. My name Laura and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question and answer session toward the end of today’s conference. (Operator Instructions)

I would now like to turn the conference over to your host for today, Ms. Susannah Livingston, Vice President, Investor Relations and Communications. Please proceed.

Susannah Livingston

Thank you, Laura, and good morning. We are pleased that you have taken the time to join Solutia's fourth quarter conference call. Jeff Quinn, Solutia's Chairman, President, and Chief Executive Officer; and Jim Sullivan, Executive Vice President and Chief Financial Officer are with me this morning.

First, I'd like to remind you that we are webcasting this call, which you can access through our website Also, we will be using presentation material that are posted on the website, along with the earnings release announcing fourth quarter results and a video highlighting our 2010 performance. Finally, Solutia's Form 10-K will be filed near the end of February.

If you would please turn to slide two. During this call, management may make certain forward-looking statements. These statements are based on management's current expectations and are subject to change. Our actual results may differ materially. Please read our commentary on forward-looking statements at the end of our press release or statements in our quarterly and annual SEC filings.

Our prepared remarks today include references to non-GAAP financials in our discussions of earnings. For reconciliation of our non-GAAP measure to GAAP figures, please see the schedules in our earnings release and contained in the slides today.

Now let me turn the call over to Jeff.

Jeff Quinn

Thank, Susannah and thanks to all of you for joining us this morning for our fourth quarter call. I especially appreciate those of you in New York braving the weather to take the call. Luckily we don’t have that kind of 20 inch snow here in St. Louis.

I want to begin this morning by discussing some of the highlights from the year and the quarter and then discuss our end markets, our working capital initiatives, make a few comments about raw materials.

Then Jim Sullivan, our Chief Financial Officer will provide a more detailed review of the numbers for the quarter and share some of our expectations for the 2011. After that I will provide some closing comments, and then we will open it up to take your questions.

Turning to slide four, by any measure 2010 was an extraordinary year for our company. First of all and most importantly, we had another very good year in the area of environmental health and safety performance. Without that strong performance not much anything else matters. Again, we are very please by our continuing trend of excellence in this area, but of course we are always striving to do better. That is really important and is a fundamental core belief of our organization.

We also delivered strong financial results for the year highlighted by a strong top line growth at 21% with the Asia-Pacific region growing at 33%. We delivered recorded adjusted EBIDTA of $504 million, 26% increase from 2009. We had strong industry leading EBIDTA margins of 26%, strong cash flow generation with free cash flow for the year at $213 million and the year end global liquidity of $466 million and a very compelling total return for shareholders of about 89%.

I am very pleased that we are able to deliver these results whilst at the same time enhancing our strategic positioning by continue to work to enhance our portfolio of market leading businesses through the two highly synergistic acquisitions that we did during the year, the commencement of high return internal growth projects in Asia and the shutdown of unprofitable other rubber chemical businesses and also at the same time improving our capital structure through the refinancing activities which putting in place the new cash flow revolver and the new term loan and extending our debt maturities.

In 2004, when I had the privilege of becoming CEO of Solutia I had a vision for what Solutia could be at some point. Four years of bankruptcy reorganization later a global economic meltdown under our belt and a lot of hard work by the men and women of Solutia 2010 was in some ways the year that that vision became a reality and I think I can say without hesitation now that Solutia has become a premier world leading specialty chemical and performance materials company. We have built a unique culture founded on our high performance cultural guidelines. We have constructed one of the best portfolios of market leading businesses in the sector. We have attracted and groomed an exceptional management team.

We have created a sustainable low cost operating structure that is at a level that even we previously thought was unattainable and have created a capable structure that will allow us to explore internal and external growth opportunities around the globe in high growth markets. We know that all we really have created up to this point however, is the possibility of future success. We must deliver that success and we know what lies ahead; more hard work. We are grounded and focused, we believe in this company and the fact that the best indeed does lie ahead, but you know what happened in 2010 was not bad either.

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