Albemarle Corporation (ALB)

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Albermarle Corporation (ALB)

Q4 2012 Earnings Call

January 23, 2013 09:00 AM ET


Lorin Crenshaw - Director, IR

Luke Kissam - CEO

Scott Tozier - SVP, CRO and CFO


PJ Juvekar - Citigroup

Robert Koort - Goldman Sachs

Vincent Andrews - Morgan Stanley

Mike Ritzenthaler ā€“ Piper Jaffray

Robert Walker ā€“ Florence

Mike Sison - Keybanc Capital

David Begleiter - Deutsche Bank

Steven Schwartz - First Analysis



Good day ladies and gentlemen, and welcome to the fourth quarter 2012 Albermarle Corporation Earnings Conference Call. My name is Carissa and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instruction). As a reminder this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host, Mr. Lorin Crenshaw, Director of Investor Relations and Communication. Please proceed.

Lorin Crenshaw

Thank you, Carissa, and welcome everyone to Albemarle's fourth quarter 2012 earnings conference call. Our earnings were released after the close of the market yesterday and you'll find our press release, earnings presentation and non-GAAP reconciliations posted on our website under the Investors section, at Joining me on the call today are Luke Kissam, Chief Executive Officer; and Scott Tozier, Chief Financial Officer.

As a reminder, some of the statements made during this conference call about the future performance of the company may constitute forward-looking statements within the meaning of Federal Securities Laws. Please note the cautionary language about our forward-looking statements contained in our Press Release. That same language applies to this call. Finally, reconciliations related to any non-GAAP financial measures discussed on this call may be found in our press release or earnings presentation, which are posted on our website.

With that, I'll turn the call over to Luke.

Luke Kissam

Thanks Lorin and good morning everyone. We appreciate the opportunity to share our fourth quarter and full year results with you today. I'll begin by commenting on the Company's results and accomplishments for the quarter in the full year. Scott will review select highlights related to business segment performance and financial results and I will end by providing prospective on our outlook for the future. As usual, at the end of our prepared remarks, we'll open it up for your questions.

In 2012, we continue to deliver strong returns for our shareholders and build an even stronger foundation for sustainable long-term growth. And we did so in a manner aligned with our core values of safe operations and sustainability. We invested our cash wisely in capital expansions to advance our competitive position and retain our marker leadership in critical existing and emerging markets, while we enjoy advantages of low cost and close proximity to and intimacy with our customers.

During 2012, our business demonstrated strong earnings power in the face of a weak global economy, negative impact on our catalyst results due to raw material pricing related to certain metals and lower demand than originally anticipated in some of the markets served by our products, resulting in lower operating rates at some of our production units.

We closed out 2012 by delivering fourth quarter net income excluding special items of $105 million, or $1.17 per share, versus $1.13 per share in the fourth quarter of 2011. That resulted in full year earnings of $436 million or $4.85 per share, excluding special items, versus $4.88 per share in 2011.

Net sales for the quarter totaled $688 million and were $2.7 billion for the full year, while EBITDA excluding special item was $160 million and $703 million for the quarter and year respectively. Profitability as measured by EBITDA margin, excluding special items was 23% for the fourth quarter and 26% for the full year. So in a year, in which we saw global economic slowdown, in which our revenue in profit were negatively impacted year-over-year by metals pricing; our business was essentially flat from the earnings perspective and we actually improved our EBITDA margins.

Scott will discuss our financial results in detail in a moment, but from a 20, 000 foot view, strength in fine chemistry and specific cause initiatives undertaken during 2012 overcame weakness in polymer solutions caused by global macroeconomic trends and catalyst volume growth partially offset the impact of lower metals pricing.

In addition we generated $0.5 billion in cash for the second straight year. That allowed us to fund a higher than average level of capital expenditures in support of several strategic expansions, that position as well for future growth.

We also repurchased over 1.1 million shares of stock and increased dividends to shareholders for the 18th straight year. Even with those increased cash expenditures, we ended the year with the strongest balance sheet in our history and the financial flexibility to continue to fund growth opportunities and return cash to shareholders.

Overall the results we delivered, despite numerous challenges based in 2012 are a reflection on the dedication to operating excellence that exist among our 4000 plus Albemarle employees around the world. These people are committed to our strategy and the execution thereof, regardless of the circumstances and are committed to delivering these results in a responsible, safe and sustainable manner.

From a safety standpoint, Iā€™m extremely proud of the efforts that our employees made to make 2012 the safest year in the history of Albemarle, with injury rates at our sites at an all-time low and likely near to the top quartile of the global specialty chemical industry. We were honored in 2012 to be one of three companies recognized by the American Chemistry Council as a responsible care company of the year, a great recognition for the way our employees go about performing their jobs each and every day.

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