Albemarle Corporation (ALB)

ALB 
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Albemarle Corp. (ALB)

Q3 2009 Earnings Call

October 27, 2009 11:00 AM ET

Executives

Sandra Rodriguez - Director - Investor Relations

Mark C. Rohr - Chairman, President and Chief Executive Officer

Luther C. Kissam, IV - Executive Vice President

John M. Steitz - Executive Vice President and Chief Operating Officer

Richard J. Diemer, Jr. - Senior Vice President and Chief Financial Officer

Analysts

Kevin McCarthy - Banc of America/Merrill Lynch

P.J. Juvekar - Citigroup

David Begleiter - Deutsche Bank North America

Steve Sherman - Lafayette Research

Michael J. Sison - KeyBanc Capital Markets

Robert Koort - Goldman Sachs & Co.

Lucy Watson - Jefferies and Co.

Dimitry Silversteyn – Longbow Research

Edward Yang - Oppenheimer

Steven Schwartz - First Analysis Securities Corp.

Presentation

Operator

Good day ladies and gentlemen, welcome to the third quarter 2009 Albemarle Corporation Earnings Conference Call. My name is Leticia, I will be your operator for today's call. At this time, all participants are in a listen-only mode.

We will conduct a question and answer session towards the end of this conference. (Operator Instructions). As a reminder this conference is being recorded for replay purposes. I would now like to turn the call over to Ms. Sandra Rodriguez Director of Investor Relations, please proceed ma'am.

Sandra Rodriguez

Thanks Leticia. Good morning everyone and thank you for joining us today for a review of Albemarle's third quarter results, which were released after the market closed yesterday. Our press release contains preliminary results for the quarter which are, as you know, 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 reconciliation for net debt and EBITDA on our website under the Investor Information section at albemarle.com. I would also like to caution that remarks today containing forward-looking statements, factors that could cause results to differ from expectations are listed in our annual report on Form 10-K.

Participating with me on the call this morning are Mark Rohr, Chairman and Chief Executive Officer; Luth Kissam, Executive Vice President; John Steitz, Chief Operating Officer and Rich Diemer, Chief Financial Officer. At this, time I'll turn the call over to Mark.

Mark C. Rohr

Thanks Sandra. Good morning everyone and thank you for joining our third quarter conference call. I will begin today with a few opening remarks on the company's quarterly results and our current view of how improving market trends impacted our business in the third quarter, and how these trends continue show signs of further improvement.

Luth will follow with a brief update on the Company's productivity and cost reduction efforts. John will cover the segment performance sharing his insight on each business and Rich will wrap up with the financial highlights. As you're seeing from many reports, the case is being built that the U.S. economy bottomed in the second quarter and that we're experiencing early stages of recovery.

We've certainly seen this in our markets. Activity in all sectors has stabilized. The sense of pre-fall we've been living with has diminished and volume improvements in virtually every sector are underway. Perhaps most noticeable, the year-end warning signals from some Asian customers we spoke about on the last call have yet to materialize which bodes well for Albemarle to wrap up this year.

Before moving onto quarterly results, let me take a few minutes to highlight some of the strategic initiatives underway. First I'm pleased to announce Barry Perry would join our Board effective January 1.

Barry served as Chairman, Chief Executive Officer of Englehard from 2001 to 2006 which is now part of BASF, and prior to that, he had a distinguished career with General Electric and Rhone-Poulenc. He brings a wealth of experience in polymer science and global leadership that will be a strong addition to our Board. We look forward to Barry's contributions and welcome him to the Albemarle team.

I hope you had a chance to see our press release this morning where we announced the formation of a joint venture between Albemarle and Saudi Basic Industries Corporation. Due to this venture, the two parties will build a World-Scale Organometallics production facility in Al-Jabal, Saudi Arabia. Our Polyolefins Catalysts business has grown nicely over the past two years and has become a strategic component of the company.

The Polyolefins market has substantial needs for Catalysts. They can help customers' differentiate their product lines. Albemarle, the leading provider of advanced technical solutions for this market, with this joint venture will become the first manufacturer of these components in the Middle East. We're obviously very excited about this joint venture and expect it to be the foundation for the opportunities in the region.

Early this month the American Chemical Society jointly recognized Albemarle and it's consortium partners, Lummus Technology and Neste Oil with a award for our Affordable Green Chemistry 2010 award for Affordable Green Chemistry for AlkyClean Technology. This is another great example of our commitment to sustainable value added solutions.

AlkyClean solid acid alkylation process significantly improves the safety of the refinery processes. Besides this environmental advantage, the technology also improves operational economics, while this business is generating very modest earnings at this time and has good potential as a green solution for the refinery industry.

With that, let me now address the company results. On an extremely challenging first-half of 2009, I am very pleased with the advances we have made in number of our businesses this quarter. The positive momentum regained across the portfolio drove earnings of $0.57 per share for the third quarter. Sales revenue was 515 million versus 660 million at same quarter of 2008. But compared to 445 million last quarter, our sales increased 16%, driven by sequential volume improvement of nearly 22%.

Net income for the quarter was 52.1 million, down 7% from the third quarter 2008, up 35% from last quarter. Segment margins increased 90 basis points year-over-year and 140 basis points sequentially to 14.3%. This level of profitability highlights the progress we've made by lowering our breakeven point.

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