EXHIBIT (99.1)
News | Contact Ted Lowen (Media) 732-205-6360 |
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| | Gavin Bell (Investor Relations) 732-205-6313 Ref. # |
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| | Engelhard Corporation 101 Wood Avenue P.O. Box 770 Iselin, NJ 08830-0770 |
For immediate release
ENGELHARD REPORTS THIRD-QUARTER RESULTS
ISELIN, NJ, October 24, 2005 - Engelhard Corporation (NYSE: EC) today reported net earnings from continuing operations for the third quarter ended September 30 of $59 million, or 48 cents per share. The Company reported earnings from continuing operations of 48 cents per share for the same period in 2004.
Third-quarter revenues were $1.2 billion versus $1.0 billion the prior-year period.
“The company’s earnings results were in line with expectations in the quarter,” said Barry W. Perry, chairman and chief executive officer. “A balanced performance across our enterprise delivered strong revenue growth, enabling us to overcome weakness in certain served markets and the overall impact of a severe hurricane season. For the full year, we expect to deliver solid top-line growth and higher earnings per share versus the prior year.”
Third-Quarter Operating Results
Revenues from Environmental Technologies rose 19% to $255 million. Operating earnings of $33 million were down 2% versus the prior year. Third-quarter earnings performance resulted from growth in emission-control technologies for certain mobile-source markets and improved productivity, offset by unfavorable volume and mix in light-duty vehicles.
Revenues from Process Technologies increased 13% to $167 million. Operating earnings grew 12% to $23 million, driven primarily by strong demand for technologies for petroleum refining and improved results from chemical-process markets.
Revenues from Appearance and Performance Technologies increased 9% to $188 million. Operating earnings of $17 million were down 12% versus the prior year as the positive impact of recent acquisitions in cosmetics and personal care was offset by the continuing negative impact of higher natural gas prices.
Revenues from Materials Services were $578 million, compared with $447 million in last year’s third quarter. Operating earnings of $6 million were down $1 million versus a year ago.
Earnings from equity investments were $9 million in the third 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 document contains forward-looking statements in management’s comments. There are a number of factors that could cause Engelhard’s actual results to vary materially from those projected in the forward-looking statements. For a more thorough discussion of these factors, please refer to page 30 of Engelhard’s 2004 Form 10-K, dated March 11, 2005.
ENGELHARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands, except per-share data)
(Unaudited)
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| Net sales | | $ | 1,208,258 | | $ | 995,451 | | $ | 3,325,181 | | $ | 3,125,849 | |
| Cost of sales | | | 1,033,676 | | | 825,800 | | | 2,796,445 | | | 2,627,067 | |
| Gross profit | | | 174,582 | | | 169,651 | | | 528,736 | | | 498,782 | |
| Selling, administrative and other expenses | | | 103,865 | | | 94,846 | | | 307,737 | | | 285,204 | |
| Operating earnings | | | 70,717 | | | 74,805 | | | 220,999 | | | 213,578 | |
| Equity in earnings of affiliates | | | 8,695 | | | 6,087 | | | 24,237 | | | 19,390 | |
| Gain/(loss) on investments | | | (12 | ) | | - | | | 168 | | | - | |
| Interest expense, net | | | (7,419 | ) | | (3,953 | ) | | (18,746 | ) | | (13,421 | ) |
| Earnings before income taxes | | | 71,981 | | | 76,939 | | | 226,658 | | | 219,547 | |
| Income tax expense | | | 13,430 | | | 17,123 | | | 45,394 | | | 40,700 | |
| Income from continuing operations | | | 58,551 | | | 59,816 | | | 181,264 | | | 178,847 | |
| Loss from discontinued operations, net of taxes | | | (42 | ) | | (761 | ) | | (6,905 | ) | | (1,455 | ) |
Net earnings | | $ | 58,509 | | $ | 59,055 | | $ | 174,359 | | $ | 177,392 | |
| | | | | | | | | | | | | | |
| Earnings per share from continuing operations: | | | | | | | | | | | | | |
| Basic | | $ | 0.49 | | $ | 0.49 | | $ | 1.50 | | $ | 1.45 | |
| Diluted | | $ | 0.48 | | $ | 0.48 | | $ | 1.48 | | $ | 1.42 | |
| | | | | | | | | | | | | | |
| Earnings per share from discontinued operations: | | | | | | | | | | | | | |
| Basic | | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.06 | ) | $ | (0.01 | ) |
| Diluted | | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.06 | ) | $ | (0.01 | ) |
| | | | | | | | | | | | | | |
| Earnings per share: | | | | | | | | | | | | | |
| Basic | | $ | 0.49 | | $ | 0.48 | | $ | 1.45 | | $ | 1.44 | |
| Diluted | | $ | 0.48 | | $ | 0.47 | | $ | 1.42 | | $ | 1.41 | |
| | | | | | | | | | | | | | |
| Cash dividends paid per share | | $ | 0.12 | | $ | 0.11 | | $ | 0.36 | | $ | 0.33 | |
| Average number of shares outstanding - basic | | | 119,608 | | | 122,951 | | | 120,493 | | | 123,584 | |
| Average number of shares outstanding - diluted | | | 121,554 | | | 125,150 | | | 122,547 | | | 125,829 | |
| Actual number of shares outstanding at end of period | | | 119,884 | | | 122,470 | | | 119,884 | | | 122,470 | |
Had compensation cost for Engelhard’s stock option plans been determined based on the fair value at grant date consistent with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” (assuming SFAS No. 123 was adopted on its effective date of October 1995), Engelhard would have reported net earnings and diluted earnings per share as follows:
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | |
Pro forma information (in thousands, except per-share data) | | 2005 | | 2004 | | 2005 | | 2004 | |
| Net earnings - as reported | | $ | 58,509 | | $ | 59,055 | | $ | 174,359 | | $ | 177,392 | |
| Net earnings - pro forma | | | 57,696 | | | 58,244 | | | 170,473 | | | 172,959 | |
| Diluted earnings per share - as reported | | | 0.48 | | | 0.47 | | | 1.42 | | | 1.41 | |
| Diluted earnings per share - pro forma | | | 0.47 | | | 0.47 | | | 1.39 | | | 1.37 | |
ENGELHARD CORPORATION
BUSINESS SEGMENT INFORMATION
(Thousands)
(Unaudited)
| | | Three Months Ended September 30, | | | | Nine Months Ended September 30, | | | |
| | | 2005 | | 2004 | | Change | | 2005 | | 2004 | | Change | |
| Net Sales | | | | | | | | | | | | | |
| Environmental Technologies | | $ | 254,701 | | $ | 213,432 | | | 19 | % | $ | 738,416 | | $ | 667,901 | | | 11 | % |
| Process Technologies | | | 167,012 | | | 147,776 | | | 13 | % | | 487,554 | | | 439,209 | | | 11 | % |
Appearance and Performance Technologies | | | 188,223 | | | 172,187 | | | 9 | % | | 548,692 | | | 523,719 | | | 5 | % |
| Technology segments | | | 609,936 | | | 533,395 | | | 14 | % | | 1,774,662 | | | 1,630,829 | | | 9 | % |
| Materials Services | | | 578,436 | | | 446,606 | | | 30 | % | | 1,501,528 | | | 1,453,627 | | | 3 | % |
| All Other | | | 19,886 | | | 15,450 | | | 29 | % | | 48,991 | | | 41,393 | | | 18 | % |
| Total net sales | | $ | 1,208,258 | | $ | 995,451 | | | 21 | % | $ | 3,325,181 | | $ | 3,125,849 | | | 6 | % |
| | | | | | | | | | | | | | | | | | | | |
| Operating Earnings | | | | | | | | | | | | | | | | | | | |
| Environmental Technologies | | $ | 33,345 | | $ | 33,976 | | | -2 | % | $ | 108,327 | | $ | 104,256 | | | 4 | % |
| Process Technologies | | | 23,270 | | | 20,723 | | | 12 | % | | 65,633 | | | 60,085 | | | 9 | % |
Appearance and Performance Technologies | | | 16,952 | | | 19,264 | | | -12 | % | | 55,499 | | | 58,121 | | | -5 | % |
| Technology segments | | | 73,567 | | | 73,963 | | | -1 | % | | 229,459 | | | 222,462 | | | 3 | % |
| Materials Services | | | 5,800 | | | 6,657 | | | -13 | % | | 16,706 | | | 13,361 | | | 25 | % |
| All Other | | | (8,650 | ) | | (5,815 | ) | | 49 | % | | (25,166 | ) | | (22,245 | ) | | 13 | % |
| Total operating earnings | | | 70,717 | | | 74,805 | | | -5 | % | | 220,999 | | | 213,578 | | | 3 | % |
| Equity in earnings of affiliates | | | 8,695 | | | 6,087 | | | 43 | % | | 24,237 | | | 19,390 | | | 25 | % |
| Gain/(loss) on investments | | | (12 | ) | | - | | | 0 | % | | 168 | | | - | | | 0 | % |
| Interest expense, net | | | (7,419 | ) | | (3,953 | ) | | 88 | % | | (18,746 | ) | | (13,421 | ) | | 40 | % |
| Earnings before income taxes | | | 71,981 | | | 76,939 | | | -6 | % | | 226,658 | | | 219,547 | | | 3 | % |
| Income tax expense | | | 13,430 | | | 17,123 | | | -22 | % | | 45,394 | | | 40,700 | | | 12 | % |
| Income from continuing operations | | | 58,551 | | | 59,816 | | | -2 | % | | 181,264 | | | 178,847 | | | 1 | % |
| Loss from discontinued operations, net of taxes | | | (42 | ) | | (761 | ) | | -94 | % | | (6,905 | ) | | (1,455 | ) | | 375 | % |
| Net earnings | | $ | 58,509 | | $ | 59,055 | | | -1 | % | $ | 174,359 | | $ | 177,392 | | | -2 | % |
ENGELHARD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
| | | September 30, 2005 | | December 31, 2004 | |
| Cash | | $ | 29,538 | | $ | 126,229 | |
| Receivables, net | | | 500,218 | | | 406,962 | |
| Committed metal positions | | | 687,037 | | | 457,498 | |
| Inventories | | | 530,437 | | | 458,020 | |
| Other current assets | | | 134,342 | | | 135,468 | |
| Total current assets | | | 1,881,572 | | | 1,584,177 | |
| Investments | | | 197,862 | | | 179,160 | |
| Property, plant and equipment, net | | | 913,018 | | | 902,751 | |
| Goodwill | | | 418,596 | | | 330,798 | |
| Other intangible and noncurrent assets | | | 212,845 | | | 181,706 | |
| Total assets | | $ | 3,623,893 | | $ | 3,178,592 | |
| Short-term borrowings | | $ | 207,588 | | $ | 12,025 | |
| Accounts payable | | | 398,156 | | | 375,343 | |
| Hedged metal obligations | | | 543,101 | | | 292,880 | |
| Other current liabilities | | | 285,010 | | | 248,411 | |
| Total current liabilities | | | 1,433,855 | | | 928,659 | |
| Long-term debt | | | 437,596 | | | 513,680 | |
| Other noncurrent liabilities | | | 306,503 | | | 321,940 | |
| Shareholders’ equity | | | 1,445,939 | | | 1,414,313 | |
| Total liabilities and shareholders’ equity | | $ | 3,623,893 | | $ | 3,178,592 | |
ENGELHARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(Unaudited)
| | | Nine Months Ended Septemer 30, | |
| | | 2005 | | 2004 | |
| Cash flows from operating activities | | | | | |
| Net earnings from continuing activities | | $ | 181,264 | | $ | 178,847 | |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | | | |
| Depreciation and depletion | | | 93,538 | | | 92,785 | |
| Amortization of intangible assets | | | 3,440 | | | 2,767 | |
| Equity results, net of dividends | | | (13,369 | ) | | (4,608 | ) |
| Net change in assets and liabilities: | | | | | | | |
| Materials Services related | | | (29,938 | ) | | (47,961 | ) |
| All other | | | (98,058 | ) | | (51,948 | ) |
| Net cash provided by operating activities | | | 136,877 | | | 169,882 | |
| | | | | | | | |
| Cash flows from investing activities | | | | | | | |
| Capital expenditures | | | (85,334 | ) | | (76,335 | ) |
| Proceeds from investments | | | - | | | 1,988 | |
| Acquisitions and other investments | | | (159,303 | ) | | (66,240 | ) |
| Net cash used in investing activities | | | (244,637 | ) | | (140,587 | ) |
| | | | | | | | |
| Cash flows from financing activities | | | | | | | |
| Increase (decrease) in short-term borrowings | | | 74,732 | | | (54,326 | ) |
| Proceeds from long-term debt | | | 49,469 | | | 108,972 | |
| Purchase of treasury stock | | | (91,366 | ) | | (107,586 | ) |
| Cash from exercise of stock options | | | 7,009 | | | 22,433 | |
| Dividends paid | | | (43,444 | ) | | (40,819 | ) |
| Net cash used in financing activities | | | (3,600 | ) | | (71,326 | ) |
| | | | | | | | |
| Effect of exchange rate changes on cash | | | 14,669 | | | (2,498 | ) |
| Net decrease in cash | | | (96,691 | ) | | (44,529 | ) |
| Cash at beginning of year | | | 126,229 | | | 87,889 | |
| Cash at end of period | | $ | 29,538 | | $ | 43,360 | |
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