Albemarle Corporation (ALB)

ALB 
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Albemarle Corporation (ALB)

Q2 2011 Earnings Call

July 22, 2011; 10:00 am ET

Executives

Mark Rohr - Chairman & Chief Executive Officer

Luke Kissam - President

John Steitz - Chief Operating Officer

Scott Tozier - Chief Financial Officer.

Lorin Crenshaw - Direct of Investor Relations and Communications

Analysts

David Begleiter - Deutsche Bank

P J Juvekar - Citi

Kevin McCarthy - Banc of America

Laurence Alexander - Jefferies & Co.

Michael Sison - Keybanc Capital Markets

Robert Koort - Goldman Sachs

Steve Schwartz - First Analysis

Dmitry Silversteyn - Longbow Research

Presentation

Operator

Good day ladies and gentlemen and welcome to the second quarter 2011 Albemarle earnings conference call. My name is Derrick and will be your operator today.

At this time all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the conference. (Operator Instructions)

I would now link to turn the conference over to Mr. Lorin Crenshaw, Direct of Investor Relations and Communications. You may proceed.

Lorin Crenshaw

Thanks Derrick and welcome everyone to Albemarle’s second quarter 2011 earnings conference call. Our earnings were released after the close of the market yesterday and you will find our press release, earnings presentation and non-GAAP reconciliations posted on our website under the investor section at albemarle.com.

Joining me on the call today are Mark Rohr, Chairman and Chief Executive Officer; Luke Kissam, President; John Steitz, Chief Operating Officer and Scott Tozier, Chief Financial Officer.

As a reminder some of the maters discussed during the call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Please note the cautionary language about our forward-looking statements contained in our Press Release; that same language applies to this call. Also to the extent that we discuss any non-GAAP financial measures you will find reconciliations in our press release, which is posed on our website at Albemarle.com.

With that I’ll turn the call over to Mark.

Mark Rohr

Well thank you Lorin and good morning everyone. We appreciate you joining us today as we report second quarter 2011 earnings. I’ll kick off today’s call by sharing highlights of our financial results and the underlying drivers of business performance, before providing some context on the announced succession process and roles that Luke and I will assume in September.

Then Luke will discuss the trends droving our quarterly results and provide an update on several of the companies strategic efforts. John will follow with specifics about performance drives within each business segment and Scott will cover the financial highlights. As always at the end of our prepared remarks we will open it up for Q&A.

With that, I’m delighted to report that Albemarle performance reflects all-time record results in revenue, segment income and EPS for the second straight quarter. Solid volumes across most end-markets and good project contraction across our bromine and catalyst franchises drove net sale of $742 million up 25% year-over-year and 7% sequentially.

These factors combined with strong operational performance, high utilization rates and effective management of raw materials drove a 40% increase in segment income to $180 million, compared to $131 million for the prior period and operating margin expansion at 220 basis points from last year to approximately 24%.

Earnings for the period were an all time record, $114 million or $1.23 per share, up 38% versus second quarter 2010 EPS of $0.89. We are very pleased with this performance and our business performance during the quarter when we faced a variety of challenges, most predominantly the continued escalation of input costs and the pressures on production and businesses to fulfill exceptional customer demand across our key franchises.

These financial results are a testament to our employees’ ability to execute and the demand for our innovative technologies we bring to the market that delivers genuine and often unique value to our customers. Looking forward we expect the second half of this year to be similar to the first half, with the third quarter stronger than the fourth.

At this time I would like to switch gears to our leadership change we announced on July 18 and effective September 1, Luke fills in the role of Chief Executive Officer and I will continue my role as Executive Chairman of the Board. Luke and I have worked together since 2003. As the company begins the implementation of our Vision 2015, the Board and I thought it appropriate to take this next step and succession plan that we have been working on for the last few years.

As I said a couple of times recently, this is the time were going to be pressing the opportunity for Albemarle. I have the utmost confidence in the leadership team that we have in place and the commitment and capability of our 4,000 employees around the globe. Albemarle is well positioned to capitalize on these opportunities and we continue to generate strong shareholder returns, consistent with our Vision 2015 objectives.

With that I’ll turn it over to Luke.

Luke Kissam

Thanks Mark and good morning everyone. I am honored to have been named CEO of Albemarle and to have the privilege of leading what I believe to be the best in this innovative workforce and especially chemical space. I look forward to continuing to work with Mark, the Board and the rest of our leadership team as we implement Vision 2015.

Turing to our financial results; we are pleased with the performance of our businesses this quarter. Fine Chemistry and Polymer Solutions reported record sales in segment income, while Catalyst reported it’s second highest sales ever, an excellent quarter overall. Fine Chemistry’s net sale of $185 million were up 31% year-over-year and segment income of $37 million was more than double levels of a year ago.

Read the rest of this transcript for free on seekingalpha.com