EXHIBIT 99.1
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Contact:
Octel Corp. Investor Relations Citigate Financial Intelligence
Heather Ashworth Shoshana Dubey / Patrick Kilhaney
+44-161-498-8889 +1-212-840-0008
Octel Corp. Reports 1st Quarter 2003 Results
NEWARK, DELAWARE, April 28, 2003 - Octel Corp. (NYSE: OTL) today announced
financial results for the first quarter ended March 31, 2003.
- Highlights -
. Net income of $0.88 per share for the quarter
. Specialty Chemicals sales up 8% over last year
. Restructuring activities in line with plan
Net income for the first quarter of 2003 was $10.9 million or $0.88 per share
compared with a profit of $18.4 million or $1.47 per share in the comparable
period last year.
TEL (tetraethyl lead) sales were $47.8 million, 26% below the same period last
year on volumes 32% down. The political situation in Venezuela that was
highlighted last quarter impacted the first quarter's results with no shipments
to that region. Deliveries have since resumed in April 2003. Selling prices
overall were well managed and reduced the impact of the global market volume
decline. Price increases and continued strong cost control at our UK plant
resulted in gross profit for the first quarter of $24.0 million or 50.2% of
sales.
Sales in Specialty Chemicals were $49.9 million, an 8% increase over the first
quarter of 2002. Gross profit for the quarter of $16.0 million was marginally
down on last year by $0.7 million or 4.2% due to the reduced profitability of
our detergent business.
As planned, overall operating expenses of $18.4 million were $1.1 million higher
than last year reflecting our continued investment in infrastructure to support
the growing Specialty Chemicals segment.
Cash flow from operating activities was $5.5 million for the first quarter of
2003. As was discussed last quarter, this was impacted by the political
situation in Venezuela and the consequent loss of fourth quarter 2002 and first
quarter 2003 shipments. As a result, the bank debt repayments scheduled for the
early part of 2003 have been rescheduled to later this year and next.
In 2002 we made provisions for restructuring costs of $19.5 million, the
majority of which related to the Specialty Chemicals business. There were no
additions to the provision in the first quarter of 2003 although it is still
expected that aggregate further charges of $20 million will be incurred during
the remainder of 2003 and 2004.
These additional charges will reflect our stated objectives of being proactive
in managing the continuing decline in demand for TEL and the rationalization of
sites and assets to capture synergies in Specialty Chemicals.
Commenting on the results, Dennis Kerrison, President and Chief Executive
Officer, said, "TEL had a good quarter considering the absence of deliveries to
Venezuela. It is encouraging to report that the position in the country has now
improved and deliveries have resumed this month. Our plans to further reduce
capacity at Ellesmere Port in line with future demand have now been finalized
and will be completed by early 2004. This continues our stated intent to manage
the capacity required to support the continuing decline in TEL demand."
"Specialty Chemicals results were a little better than expected and are starting
to reflect the results of management actions taken late last year and early
2003. The benefits of strengthening the management team and a more focused
approach to the market place are starting to come through but will be seen more
fully later in the year and 2004 as has been previously stated. The
restructuring steps announced in the second half of last year have been
implemented with further actions to be taken during the remainder of this year."
"The first quarter results were only marginally below expectations despite the
shortfall from Venezuela. With our customer in that country now back on stream
and improving results from the Specialty Chemicals operations, we are looking
forward to a successful 2003."
Octel Corp., a Delaware corporation, is a global chemical company specializing
in high performance fuel additives and special and effect chemicals. The
company's strategy is to manage profitably and responsibly the decline in world
demand for its major product - tetraethyl lead (TEL) in gasoline - through
competitive differentiation and stringent product stewardship, to expand its
Petroleum Specialties and Performance Chemicals businesses organically through
product innovation and focus on customer needs, and to seek synergistic growth
opportunities through joint venture, alliances, collaborative arrangements and
acquisitions.
Certain of the statements made herein constitute forward looking statements that
involve risks and uncertainties, including the risks associated with business
plans, the effects of changing economic and competitive conditions and
government regulations. Additional information may be obtained by reviewing the
Company's reports filed from time to time with the SEC.
Schedule 1
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31
---------------------------
2003 2002
---- ----
(millions of dollars except
per share data)
Net sales $ 97.7 $ 114.5
Cost of goods sold (57.7) (65.2)
------------ ------------
Gross profit 40.0 49.3
Operating expenses
Selling, general and admin. (17.2) (15.9)
Research and development (1.2) (1.4)
Amortization of intangible assets (2.6) (2.1)
------------ ------------
(21.0) (19.4)
------------ ------------
Operating income 19.0 29.9
Interest expense (net) (2.4) (3.8)
Other income/(expenses) 0.3 (0.7)
------------ ------------
Income before income taxes and minority interest 16.9 25.4
Minority interest (0.9) (0.8)
------------ ------------
Income before income taxes 16.0 24.6
Income taxes (4.6) (6.2)
Cumulative effect of change in accounting principle (0.5) -
------------ ------------
Net income $ 10.9 $ 18.4
============ ============
Earnings per share Basic $ 0.92 $ 1.59
Diluted $ 0.88 $ 1.47
Weighted average shares outstanding (in thousands) Basic 11,825 11,566
Diluted 12,351 12,454
ANALYSIS OF BUSINESS UNIT RESULTS
2003 2002
---- ----
(millions of dollars)
Net sales
TEL - Ongoing $ 47.8 $ 64.7
TEL - Chlorine - 3.6
------------ ------------
47.8 68.3
Specialty Chemicals 49.9 46.2
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Total 97.7 114.5
------------ ------------
------------ ------------
Gross profit
TEL - Ongoing 24.0 32.6
TEL - Chlorine - -
------------ ------------
24.0 32.6
Specialty Chemicals 16.0 16.7
------------ ------------
Total 40.0 49.3
------------ ------------
------------ ------------
Operating income
TEL - Ongoing 18.3 28.0
TEL - Chlorine - -
------------ ------------
18.3 28.0
Specialty Chemicals 3.1 4.5
Corporate (2.4) (2.6)
------------ ------------
Total $ 19.0 $ 29.9
------------ ------------
The TEL Chlorine operation closed at the end of 2002.
Schedule 2
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31 December 31
2003 2002
-------------------------------------
Assets (millions of dollars)
Current assets
Cash and cash equivalents $ 31.3 $ 26.7
Accounts receivable, less allowance 72.3 80.7
of $2.6 (2002 - $3.1)
Other receivable - Veritel 3.2 3.2
Inventories
Finished products 35.3 25.3
Raw materials and work in progress 21.0 30.4
------------ -----------
Total inventories 56.3 55.7
Prepaid expenses 2.1 5.5
------------ -----------
Total current assets 165.2 171.8
Property, plant and equipment 94.0 88.9
Less accumulated depreciation (38.7) (32.1)
------------ -----------
Net property, plant and equipment 55.3 56.8
Goodwill 350.6 352.8
Intangible asset 49.6 50.9
Prepaid pension cost 105.5 105.2
Deferred financing costs 3.9 4.4
Other assets 6.0 5.9
------------ -----------
$ 736.1 $ 747.8
============ ===========
Liabilities and Stockholders' Equity
Current liabilities
Bank overdraft $ 1.7 $ 4.0
Accounts payable 42.0 55.2
Other payable - Veritel 10.0 10.0
Accrued liabilities 47.1 45.9
Accrued income taxes 11.8 13.7
Current portion of plant closure provisions 6.0 -
Current portion of deferred income 2.0 2.0
Current portion of long-term debt 38.6 56.8
------------ -----------
Total current liabilities 159.2 187.6
Plant closure provisions 26.0 36.4
Deferred income taxes 41.5 41.7
Deferred income 7.9 8.4
Long-term debt 120.1 102.4
Other liabilities 2.8 4.2
Minority interest 5.5 4.6
Stockholders' equity
Common stock, $0.01 par value 0.1 0.1
Additional paid-in capital 276.7 276.7
Treasury stock (34.1) (34.5)
Retained earnings 168.8 157.9
Accumulated other comprehensive income (38.4) (37.7)
------------ -----------
Total stockholders' equity 373.1 362.5
------------ -----------
$ 736.1 $ 747.8
============ ===========
Schedule 3
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31
2003 2002
---- ----
(millions of dollars)
Cash Flows from Operating Activities
Net income $ 10.9 $ 18.4
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 5.8 5.4
Deferred income taxes (0.2) 1.7
Other (0.9) -
Profit on disposal of equipment (0.5) -
Changes in operating assets and liabilities:
Accounts receivable and prepaid expenses 12.5 15.0
Inventories (0.1) 3.2
Accounts payable and accrued liabilities (13.4) 1.4
Income taxes and other current liabilities (2.0) 0.2
Other non-current assets and liabilities (6.6) (1.3)
------------- -------------
Net cash provided by operating activities 5.5 44.0
Cash Flows from Investing Activities
Capital expenditures (1.2) (1.6)
Veritel - (11.8)
Other (0.3) (0.5)
------------- -------------
Net cash used in investing activities (1.5) (13.9)
Cash Flows from Financing Activities
Short-term borrowings - 20.0
Long-term borrowings (0.4) (62.9)
Repurchase of common stock (0.2) -
Minority interest 0.9 0.7
------------- -------------
Net cash used in financing activities 0.3 (42.2)
Effect of exchange rate changes on cash 2.6 (5.5)
------------- -------------
Net change in cash and cash equivalents 6.9 (17.6)
Cash and cash equivalents at beginning of period 22.7 43.0
------------- -------------
Cash and cash equivalents at end of period $ 29.6 $ 25.4
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Cash at bank 31.3 31.7
Bank overdraft (1.7) (6.3)
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$ 29.6 $ 25.4
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