Rockwood Reports Third Quarter Results

Rockwood Holdings, Inc. (NYSE: ROC), a global producer of specialty chemicals and advanced materials, today reported earnings per share from continuing operations of $0.77 for the third quarter of 2012 as compared to $0.95 for the same period in the prior year. Rockwood’s as adjusted earnings per share from continuing operations were $0.94 in the third quarter of 2012 compared to $1.06 for the same period in the prior year.

Commenting on the third quarter, Seifi Ghasemi, Chairman and Chief Executive Officer, said, “As compared to the third quarter of 2011, our results were negatively impacted by foreign currency translation, which reduced net sales by $73 million and Adjusted EBITDA by $15 million. As compared to the third quarter of 2011, our TiO2 business experienced a sharp fall-off in demand which reduced our Adjusted EBITDA by a further $44 million. On the positive side, we continued to see improving net sales for our lithium and surface treatment products as a result of higher selling prices, and our medical ceramics business continued its growth. In addition, we continued to focus on controlling costs, which contributed to an Adjusted EBITDA margin of 21% and helped generate $81 million of free cash.

“During the quarter, Rockwood entered into a definitive agreement to acquire Talison Lithium Limited (Talison). This accretive acquisition is expected to close in December of 2012. In addition, we issued $1.25 billion in unsecured senior notes at an attractive interest rate of 4.625%. We used $250 million of these funds to repay a portion of our existing term debt in October, and expect to use the remainder to finance the Talison acquisition and other corporate activities.”

The highlights from continuing operations for the third quarter and nine months ended September 30, 2012 are as follows:
  • Net sales were $862.8 million for the third quarter of 2012, down 8.3% compared to $940.9 million for the same period in the prior year. Net sales were $2,677.9 million for the nine months ended September 30, 2012, down 6.2% compared to $2,854.9 million for the same period in the prior year.
  • Adjusted EBITDA was $181.9 million for the third quarter of 2012, down 19.8% compared to $226.9 million for the same period in the prior year. Adjusted EBITDA was $637.9 million for the nine months ended September 30, 2012, down 4.4% compared to $667.1 million for the same period in the prior year.
  • On a constant-currency basis, net sales and Adjusted EBITDA decreased 0.5% and 13.3% for the third quarter of 2012 compared to the same period in the prior year and for the nine months ended September 30, 2012, net sales were flat and Adjusted EBITDA increased 1.9% compared to the same period in the prior year.
  • Net income attributable to Rockwood for the third quarter of 2012 was $61.6 million, including other charges of $13.7 million. Net income attributable to Rockwood for the third quarter of 2011 was $75.9 million, including other charges of $8.8 million.Net income attributable to Rockwood for the nine months ended September 30, 2012 was $362.3 million, including income of $89.3 million primarily related to the reversal of $139.0 million of our valuation allowance on net federal deferred tax assets. Net income attributable to Rockwood for the nine months ended September 30, 2011 was $228.1 million, including other charges of $20.4 million.
  • Diluted earnings per share for the third quarter of 2012 were $0.77, including other charges of $0.17. Excluding other charges, diluted earnings per share were $0.94 in the third quarter of 2012. Diluted earnings per share for the third quarter of 2011 were $0.95, including other charges of $0.11. Excluding other charges, diluted earnings per share were $1.06 in the third quarter of 2011.Diluted earnings per share for the nine months ended September 30, 2012 were $4.53, including income of $1.11 related to other items. Excluding other items, diluted earnings per share were $3.42 for the nine months ended September 30, 2012. Diluted earnings per share for the nine months ended September 30, 2011 were $2.85, including other charges of $0.26. Excluding other charges, diluted earnings per share were $3.11 for the nine months ended September 30, 2011.

Looking ahead, Mr. Ghasemi concluded, “Since the outlook for the global economy is not clear, we will continue to focus on controlling our costs to maintain our profit margins and generate free cash. We expect demand for TiO2 products to remain weak in the fourth quarter, and as a result, will operate our TiO2 facilities at 65% of capacity or less. We expect demand for our lithium products and medical ceramics to continue to be strong.”

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