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Start Time: 10:00
End Time: 10:57
Albemarle Corporation (ALB)
Q3 2008 Earnings Call
October 28, 2008 10:00 am
Sandra Rodriguez - Director of IR
Mark Rohr - President and CEO
John Steitz - EVP and COO
Richard Diemer - Sr. VP and CFO
Steve Sherman - Lafayette Research
Jeff Zekauskas - JP Morgan
Bob Koort - Goldman Sachs
David Begleiter - Deutsche Bank
Kevin McCarthy - Banc of America Securities
Chris Shaw - UBS
Mike Sison - KeyBanc
Laurence Alexander - Jefferies
Previous Statements by ALB
» Albemarle Corp. Q3 2009 Earnings Call Transcript
» Albemarle Corporation Q4 2008 Earnings Call Transcript
» Albemarle Corp. Q2 2008 Earnings Call Transcript
Thanks, Amity. Good morning everyone and thank you for joining us today for a review of Albemarle’s third quarter results, which was released after the market closed yesterday. A press release contains preliminary results for the quarter and this information is subject to further review by the company and our auditors as part of our quarter-end review process.
Please note that we have posted supplemental sales information, as well as reconciliations for net debt and EBITDA on our website under the investor information section at www.albemarle.com.
I’d like to also caution that the remarks today contain forward-looking statements. Factors that could cause results to differ from expectations are listed in our annual report on form 10K.
Participating on the call with me this morning are Mark Rohr, Chairman and CEO; John Steitz, Executive Vice President and Chief Operating Officer; and Rich Diemer, Senior Vice President and Chief Financial Officer.
Now I’d like to turn the call over to Mark.
Thanks Sandra and good morning everyone. It’s a pleasure to be with you this morning and have the opportunity to share our third quarter results. I’ll give you the details in just a moment, but before I do, I’d like to make a few comments about the business impact of the September hurricanes and then update you on some of the strategic initiatives recently reported.
Most of you are aware that we have manufacturing research and administrative sites in Louisiana and Texas. Like most companies in the region, Albemarle was materially impacted by Hurricanes Gustov and Ike.
Our facility suffered little fiscal damage and, thanks to our employees, we were ready to restart after a few days. However, others we depend upon were not so fortunate. A number of customers went down and many declared forced mature (ph) as outages lingered. Of particular note, there were 17 refineries down at one time and their return to full capacity has been impacted by storm damage, as well as low demand in some fuel markets.
Issues resulting from the storm spanned our supply chain from lack of raw material availability to customers’ inability to receive orders. While most have recovered after a few weeks, distribution challenges, especially rail care availability became the prevalent issue in the region as we closed September.
We estimate the negative impact to our third quarter results from the two hurricanes to be approximately $11 million before taxes, or $0.07 to $0.08 per share with a majority of the impact hitting the catalyst and Fine Chemical segments. We also expect approximately $2 million of the impact in the fourth quarter as raw material delays are still causing shutdowns in a few areas.
Despite these natural disasters, our performance was solid with a year-over-year and sequential top line growth.
Moving on, I’d like to update you on some of the strategic initiatives under way. Earlier in the year we talked about possible asset optimization steps. As part of this process, we recently announced the initiation of the consultation process with the works council at our Port-de-Bouc facility in France, for the purpose of the potential sale of this facility to International Chemical and Investor’s Group, ICIG. This proposed divestment would improve biochemical segment performance next year and polymer additives business segment performance in 2010.
We would expect to incur a pre-tax charge in a range of $25 million to $30 million at closing, which could occur before year-end. I will provide more information on this potential sale when available.
You also heard us talk about the great opportunities we developed through our alliance with UOP. Another example of the success of this alliance is a recently signed technology agreement between Albemarle, UOP, and Petrobras to accelerate the commercialization of UOP’s catalytic crude upgrading technology. Under the agreement, UOP will provide the process technology and Albemarle and Petrobras will provide an improved FCC catalyst solution to be used in this process.
We are very pleased to have a role in the commercialization of CCU technology and believe it provides an outstanding opportunity for our FCC business.
At the end of July, we closed on the Sorbent Technologies acquisition at a cash price of $22 million. This acquisition has more than met our expectations to-date, contributing $2.6 million in revenues in the third quarter and adding to our profitability.
Bromine-based mercury removal technology fit seamlessly within our franchise and complements our focus on products that help provide clean energy solution.
Sorbent’s integration is going well and the business is positioned to grow materially in 2009 and 2010. In support of our commitment to a sustainable business model, we are pleased to have appointed Dave Cleary as our Chief Sustainable Officer.