EXHIBIT (99.1)
News | Contact Ted Lowen (Media) 732-205-6360 Gavin A. Bell (Investor Relations) 732-205-6313 Ref. #C1444 Engelhard Corporation 101 Wood Avenue P.O. Box 770 Iselin, NJ 08830-0770 |
For immediate release
ENGELHARD EARNINGS EXCEED PREANNOUNCED PROJECTIONS AS ALL SEGMENTS POST DOUBLE-DIGIT EARNINGS, REVENUE GROWTH
ISELIN, NJ, April 26, 2006 - Engelhard Corporation (NYSE: EC) today reported net earnings for the first quarter ended March 31 of $69 million, or 55 cents per share, which includes approximately three cents of expenses and two cents of share dilution due to the impact of an unsolicited BASF tender offer. The Company reported net earnings of $58 million, or 47 cents per share, for the same period in 2005.
First-quarter revenues were $1.5 billion, an increase of 43% versus the prior-year period.
“Our strong first-quarter performance demonstrates that the significant investments we made in recent years in both organic growth initiatives and strategic acquisitions are indeed paying off,” said Barry W. Perry, chairman and chief executive officer. “Our results from the current and last quarters reflect that our past actions have positioned Engelhard to generate strong earnings growth over the next several years.”
First-Quarter Operating Results
Operating earnings from Environmental Technologies were $42 million, an increase of 12% versus the prior year. Revenues, which include the pass-through of substrate costs, rose 35% to $320 million. Operating margins remained strong excluding the pass-through of substrate costs. The increase in earnings resulted from growth in emission-control technologies for certain mobile-source markets and improved productivity.
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Operating earnings from Process Technologies rose 38% to $26 million, driven primarily by continued demand for technologies for petroleum refining and growth in most chemical catalyst markets. Revenues increased 16% to $171 million in the first quarter.
Operating earnings from Appearance and Performance Technologies increased 19% to $22 million resulting from the positive impact of recent acquisitions in cosmetics and personal care and higher pricing to offset the impact of higher natural gas prices. Revenues grew 19% to $206 million.
Operating earnings from technology segments in total rose 21% to $89 million, reflecting strong underlying fundamentals across the businesses. Revenues grew 25% to $698 million.
Operating earnings from Materials Services were $17 million, an increase of $12 million versus a year ago. Revenues were $728 million, compared with $446 million in last year’s first quarter.
Ventures generated strong performance in the quarter as a result of continued investment to drive growth opportunities. Revenues increased to $30 million versus $13 million in last year’s first quarter. Operating earnings were $2 million compared to less than $1 million in the prior year period.
Earnings from equity investments were $8 million in the first quarter as the company’s Asian joint ventures continued to deliver solid performance.
Engelhard Corporation is a surface and materials science company that develops technologies to improve customers’ products and processes. A Fortune 500 company, Engelhard is a world-leading provider of technologies for environmental, process, appearance and performance applications. For more information, visit Engelhard on the Internet at www.engelhard.com.
Forward-Looking Statements. This announcement contains forward-looking statements. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to future prospects, developments and business strategies. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar
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terms and phrases, including references to assumptions. These forward-looking statements involve risks and uncertainties, internal and external, that may cause Engelhard’s actual future activities and results of operations to be materially different from those suggested or described in this announcement. For a more thorough discussion of these factors, please refer to “Forward-Looking Statements” (excluding the first sentence thereof), “Risk Factors” and “Key Assumptions” on pages 34, 35 and 38, respectively, of Engelhard’s 2005 Annual Report on Form 10-K, dated March 3, 2006. Please also refer to “Forward-Looking Statements” and “Key Assumptions” contained in the investor presentation captioned “Recapitalization Plan” filed as an exhibit on Form 8-K, dated April 26, 2006, and “Forward-Looking Statements” in the Offer to Purchase to be filed by Engelhard in connection with its proposed self-tender offer for additional information regarding such risks, uncertainties and contingencies.
Investors are cautioned not to place undue reliance on any forward-looking statement, which speaks only as of the date made, and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the risks and uncertainties described above, as well as others that Engelhard may consider immaterial or do not anticipate at this time. The foregoing risks and uncertainties are not exclusive and further information concerning Engelhard and its businesses, including factors that potentially could materially affect its financial results or condition, may emerge from time to time. Investors are advised to consult any further disclosures Engelhard makes on related subjects in Engelhard’s future periodic and current reports and other documents that Engelhard files with or furnishes to the Securities and Exchange Commission (“SEC”).
No Offer or Solicitation. This announcement does not constitute an offer or invitation to purchase nor a solicitation of an offer to sell any securities of Engelhard. The proposed self-tender offer by Engelhard described in this announcement has not commenced. Any offers to purchase or solicitation of offers to sell will be made only pursuant to a tender offer statement (including an offer to purchase, a letter of transmittal and other offer documents) filed by Engelhard (“Engelhard’s Tender Offer Statement”) with the SEC. Engelhard’s shareholders are advised to read Engelhard’s tender offer statement and any other documents relating to the tender offer that are filed with the SEC carefully and in their entirety when they become available because they will contain important information.
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Additional Information and Where to Find It. Engelhard also plans to file with the SEC and mail to its shareholders a definitive Proxy Statement on Form 14A relating to the 2006 annual meeting of shareholders and the election of directors (the “2006 Proxy Statement”) and other important information. Engelhard and its directors and certain of its officers may be deemed, under SEC rules, to be participants in soliciting proxies from Engelhard’s shareholders. Information regarding the names of Engelhard’s directors and executive officers and their respective interests in Engelhard by security holdings or otherwise is set forth in Engelhard’s Proxy Statement relating to the 2005 annual meeting of shareholders (the “2005 Proxy Statement”). Additional information regarding the interests of such and other potential participants will be included in the 2006 Proxy Statement and other relevant documents to be filed with the SEC in connection with Engelhard’s 2006 annual meeting of shareholders that will be filed with the SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE 2006 PROXY STATEMENT AND OTHER MATERIALS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. On January 9, 2006, BASF filed a Tender Offer Statement on Schedule TO, which has been amended (the “BASF Tender Offer Statement”). In response to the BASF Tender Offer Statement, Engelhard has filed certain materials with the SEC, including the Schedule 14D-9 filed on February 2, 2006, and which has been amended, (the “Schedule 14D-9”).
Investors and security holders may obtain a free copy of Engelhard’s Tender Offer Statement (when it is filed and becomes available), Schedule 14D-9, 2005 Proxy Statement, 2006 Proxy Statement (when it is filed and becomes available), BASF’s Tender Offer Statement and other documents filed by Engelhard or BASF with the SEC at the SEC's website at http://www.sec.gov. In addition, investors and security holders may obtain a free copy of each of the Schedule 14D-9, 2005 Proxy Statement, 2006 Proxy Statement (when it is filed and becomes available), Engelhard’s Tender Offer Statement (when it is filed and becomes available), as well as Engelhard’s related filings with the SEC, from Engelhard by directing a request to Engelhard Corporation, 101 Wood Avenue, Iselin, New Jersey 08830, Attention: Investor Relations or at 732-205-5000, or from MacKenzie Partners, Inc. by calling 1-800-322-2885 toll free or at 1-212-929-5500 collect or by e-mail at Engelhard@mackenziepartners.com.
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| ENGELHARD CORPORATION | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | |||||||
| (Thousands, except per share data) | |||||||
| (Unaudited) | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2006 | 2005 | ||||||
| Net sales | $ | 1,455,327 | $ | 1,018,711 | |||
| Cost of sales | 1,244,551 | 849,990 | |||||
| Gross profit | 210,776 | 168,721 | |||||
| Selling, administrative and other expenses | 117,159 | 98,482 | |||||
| Expenses related to BASF tender offer | 6,875 | - | |||||
| Operating earnings | 86,742 | 70,239 | |||||
| Equity in earnings of affiliates | 7,656 | 8,109 | |||||
| (Loss) gain on investment | (32 | ) | 119 | ||||
| Interest expense, net | (6,415 | ) | (4,780 | ) | |||
| Earnings before income taxes | 87,951 | 73,687 | |||||
| Income tax expense | 18,823 | 15,231 | |||||
| Net earnings from continuing operations | 69,128 | 58,456 | |||||
| Loss from discontinued operations, net of tax | (135 | ) | (504 | ) | |||
| Net Earnings | $ | 68,993 | $ | 57,952 | |||
| Earnings per share from continuing operations: | |||||||
| Basic | $ | 0.56 | $ | 0.48 | |||
| Diluted | $ | 0.55 | $ | 0.47 | |||
| Earnings per share from discontinued operations: | |||||||
| Basic | $ | (0.00 | ) | $ | (0.00 | ) | |
| Diluted | $ | (0.00 | ) | $ | (0.00 | ) | |
| Earnings per share: | |||||||
| Basic | $ | 0.56 | $ | 0.48 | |||
| Diluted | $ | 0.55 | $ | 0.47 | |||
| Cash dividends paid per share | $ | 0.12 | $ | 0.12 | |||
| Average number of shares outstanding - basic | 122,582 | 121,702 | |||||
| Average number of shares outstanding - diluted | 125,712 | 123,905 | |||||
| Actual number of shares outstanding at end of period | 123,963 | 121,161 | |||||
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| ENGELHARD CORPORATION | ||||||||||
| BUSINESS SEGMENT INFORMATION | ||||||||||
| (Thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2006 | 2005 | Change | ||||||||
| Net Sales | ||||||||||
| Environmental Technologies | $ | 320,222 | $ | 237,458 | 35 | % | ||||
| Process Technologies | 171,048 | 147,981 | 16 | % | ||||||
| Appearance and Performance Technologies | 206,332 | 173,875 | 19 | % | ||||||
| Technology segments | 697,602 | 559,314 | 25 | % | ||||||
| Materials Services | 727,788 | 446,424 | 63 | % | ||||||
| All Other | 29,937 | 12,973 | 131 | % | ||||||
| Total net sales | $ | 1,455,327 | $ | 1,018,711 | 43 | % | ||||
| Operating Earnings | ||||||||||
| Environmental Technologies | $ | 41,530 | $ | 36,981 | 12 | % | ||||
| Process Technologies | 26,263 | 19,057 | 38 | % | ||||||
| Appearance and Performance Technologies | 21,512 | 18,063 | 19 | % | ||||||
| Technology segments | 89,305 | 74,101 | 21 | % | ||||||
| Materials Services | 17,205 | 4,725 | 264 | % | ||||||
| All Other | (19,768) | * | (8,587 | ) | 130 | % | ||||
| Total operating earnings | 86,742 | 70,239 | 23 | % | ||||||
| Equity in earnings of affiliates | 7,656 | 8,109 | -6 | % | ||||||
| (Loss) gain on investment | (32 | ) | 119 | -127 | % | |||||
| Interest expense, net | (6,415 | ) | (4,780 | ) | 34 | % | ||||
| Earnings before income taxes | 87,951 | 73,687 | 19 | % | ||||||
| Income tax expense | 18,823 | 15,231 | 24 | % | ||||||
| Net earnings from continuing operations | 69,128 | 58,456 | 18 | % | ||||||
| Loss from discontinued operations, net of tax | (135 | ) | (504 | ) | -73 | % | ||||
| Net Earnings | $ | 68,993 | $ | 57,952 | 19 | % | ||||
*Includes $6,875,000 of expenses related to BASF tender offer.
*
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| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (Thousands) | |||||||
| (Unaudited) | |||||||
| March 31, | December 31, | ||||||
| 2006 | 2005 | ||||||
| Cash and cash equivalents | $ | 64,573 | $ | 41,619 | |||
| Cash in trust | 112,377 | - | |||||
| Receivables, net | 631,791 | 526,962 | |||||
| Committed metal positions | 1,004,646 | 904,953 | |||||
| Inventories | 561,658 | 532,638 | |||||
| Other current assets | 137,941 | 145,392 | |||||
| Total current assets | 2,512,986 | 2,151,564 | |||||
| Investments | 203,369 | 204,495 | |||||
| Property, plant and equipment, net | 909,612 | 936,193 | |||||
| Goodwill | 406,252 | 400,719 | |||||
| Other intangible and noncurrent assets | 184,309 | 186,007 | |||||
| Total assets | $ | 4,216,528 | $ | 3,878,978 | |||
| Short-term borrowings | $ | 167,876 | $ | 48,784 | |||
| Current maturities of long-term debt | 106,737 | 120,852 | |||||
| Accounts payable | 799,773 | 561,955 | |||||
| Hedged metal obligations | 533,477 | 640,812 | |||||
| Other current liabilities | 246,928 | 265,359 | |||||
| Total current liabilities | 1,854,791 | 1,637,762 | |||||
| Long-term debt | 432,247 | 430,500 | |||||
| Other noncurrent liabilities | 321,545 | 321,554 | |||||
| Shareholders' equity | 1,607,945 | 1,489,162 | |||||
| Total liabilities and shareholders' equity | $ | 4,216,528 | $ | 3,878,978 | |||
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| ENGELHARD CORPORATION | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (Thousands) | |||||||
| (Unaudited) | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2006 | 2005 | ||||||
| Cash flows from operating activities | |||||||
| Net earnings | $ | 68,993 | $ | 57,952 | |||
| Adjustments to reconcile net earnings to net | |||||||
| cash provided by operating activities: | |||||||
| Depreciation and depletion | 33,154 | 31,368 | |||||
| Amortization of intangible assets | 1,594 | 1,117 | |||||
| Loss (gain) on investment | 32 | (119 | ) | ||||
| Equity results, net of dividends | (5,855 | ) | (5,050 | ) | |||
| Net change in assets and liabilities: | |||||||
| Materials Services related | (23,899 | ) | (14,662 | ) | |||
| Funding of retirement trust | (112,377 | ) | - | ||||
| Excess tax benefits from share-based arrangements | (15,527 | ) | - | ||||
| All other | (65,948 | ) | (28,982 | ) | |||
| Net cash (used in) provided by operating activities | (119,833 | ) | 41,624 | ||||
| Cash flows from investing activities | |||||||
| Capital expenditures | (32,918 | ) | (24,967 | ) | |||
| Acquisitions and other investments | - | (55,084 | ) | ||||
| Net cash used in investing activities | (32,918 | ) | (80,051 | ) | |||
| Cash flows from financing activities | |||||||
| Increase in short-term borrowings | 118,805 | 20,532 | |||||
| (Decrease) increase in long-term debt | (8,993 | ) | 69 | ||||
| Purchase of treasury stock | - | (46,016 | ) | ||||
| Cash from exercise of stock options | 66,732 | 2,709 | |||||
| Excess tax benefits from share-based arrangements | 15,527 | - | |||||
| Dividends paid | (14,859 | ) | (14,636 | ) | |||
| Net cash provided by (used in) financing activities | 177,212 | (37,342 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (1,507 | ) | 2,202 | ||||
| Net increase (decrease) in cash and cash equivalents | 22,954 | (73,567 | ) | ||||
| Cash and cash equivalents at beginning of year | 41,619 | 126,229 | |||||
| Cash and cash equivalents at end of period | $ | 64,573 | $ | 52,662 | |||
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