Specialty chemicals and advanced materials company
Rockwood Holdings, Inc.
) second-quarter 2013 adjusted earnings (excluding other net
charges and gains) of 73 cents per share were down roughly 41%
from $1.24 per share earned a year ago, missing the Zacks
Consensus Estimate by 3 cents.
Profit, as reported, tumbled 86% year over year to $32.3 million
or 41 cents per share in the quarter from $224.9 million or $2.81
per share a year ago. The bottom line was hit by charges
associated with sale of non-core assets, especially advanced
ceramics and clay-based additives, and lower earnings from the
Titanium Dioxide (TiO2) Pigments division.
Net sales rose 7.8% year over year to $822.3 million in the
reported quarter. Consolidated sales (including discontinued
operations) rose 7.4% to $972.3 million. By that measure, it beat
the Zacks Consensus Estimate of $948 million.
Net sales from Rockwood Holdings' Lithium unit crept up 0.9% year
over year to $125.7 million as higher volumes of lithium
carbonate, lithium hydroxide and specialty salts offset a decline
in selling prices and volumes for potash and battery products.
Net sales from the Surface Treatment segment rose 4% year over
year to $191.2 million, helped by higher selling prices and
increased volumes of automotive OEM and general industrial
Revenues from the Performance Additives division clipped 6.1% to
$192.9 million as higher volumes from North American oil and
natural gas drilling and improved construction volumes in the
U.S. was more than offset by lower volumes from timber treatment
chemicals, coatings applications and construction in Europe in
Color Pigments and Services.
Net sales from the Titanium Dioxide Pigments unit surged 30.3% to
$275.8 million, boosted by the acquisition of certain crenox GmbH
assets last year and higher demand in most applications, partly
ebbed by lower selling prices. However, the segment witnessed a
roughly 117% plunge in adjusted earnings before interest, taxes,
depreciation, and amortization (EBITDA) on weak pricing.
Net sales from the Corporate and other segment fell 1.3% to $36.7
Revenues from the Advanced Ceramics segment, which has been
classified as discontinued operation, went up 5% to $150 million
on higher volumes of medical ceramics.
Rockwood Holdings exited the quarter with cash and cash
equivalents of $321.7 million, down 6% year over year. Long-term
debt increased 25% year over year to $2.2 billion. Free cash flow
for the quarter declined 49% year over year to $19.8 million.
Rockwood Holdings expects continued growth and strong margins in
its lithium and surface treatment businesses in the second half.
It also sees its TiO2 pigments business to achieve a turnaround
in the second half and deliver adjusted EBITDA margins of more
Rockwood Holdings remains focused on optimizing free cash flows
and implementing appropriate capital allocation strategies
through dividends and share repurchases and reinvestment in key
businesses in 2013.
Rockwood Holdings has entered into definitive agreements to sale
its non-core businesses. The company, in June, agreed to divest
its advanced ceramics business CeramTec to private equity firm
Cinven for €1.49 billion (roughly $2 billion). Moreover, it
recently landed a pact with Germany-based ALTANA Group to sell
its clay-based additives business for $635 million.
The move is in line with Rockwood Holdings' goal to become a more
focused specialty chemical company. The company plans to use the
net proceeds from asset sales to cut debt, return capital to
shareholders and re-invest in core businesses.
Rockwood Holdings currently holds a Zacks Rank #4 (Sell).
Other companies in the specialty chemical space with favorabe
Zacks Rank are
KMG Chemicals Inc.
Sensient Technologies Corporation
). While Ferro retains a Zacks Rank #1 (Strong Buy), KMG
Chemicals and Sensient Technologies retain a Zacks Rank #2
FERRO CORP (FOE): Free Stock Analysis Report
KMG CHEMICALS (KMG): Free Stock Analysis
ROCKWOOD HLDGS (ROC): Free Stock Analysis
SENSIENT TECH (SXT): Free Stock Analysis
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