Exhibit 99.1
ETHYL CORPORATION REPORTS SECOND QUARTER AND SIX MONTHS 2003 RESULTS
o Net income of $5.7 million or $.34 per share for second quarter
o Petroleum additives profits improve for second quarter and first half
o TEL earnings improve for second quarter
o Debt reduced $34.3 million in first half of year
Richmond, VA, August 5, 2003 -Ethyl Corporation (NYSE:EY) -President and Chief
Executive Officer, Thomas E. (Teddy) Gottwald released the following earnings
report for the second quarter and first half of 2003 and update on the company's
operations.
Net income for second quarter 2003 improved to $5.7 million or $.34 per share.
On a comparable basis, (excluding nonrecurring items and discontinued
operations), results for the second quarter last year were income of $0.8
million or $.05 per share. For the first half of this year, earnings from
continuing operations excluding nonrecurring items improved to income of $5.6
million or $.33 per share compared to earnings on the same basis for the first
half of last year of $0.8 million or $.05 per share.
Net income for the second quarter this year did not include significant
nonrecurring items. However, several nonrecurring items were included in net
income for the second quarter and first half of last year as well as the first
half of this year. If these items are included, net income of $5.7 million or
$.34 per share for this year's second quarter compares to a net loss of $2.5
million or $.14 per share for second quarter last year. For the first half of
this year, net income is $22.0 million or $1.32 per share compared to a net loss
of $4.1 million or $.24 per share for the first half of 2002. The discontinued
operations and nonrecurring items are reflected separately for clarification in
the summary of earnings chart at the end of this press release.
Petroleum additives segment operating profit improved significantly over results
for the second quarter and first half of last year. Continuing operating profits
excluding nonrecurring items were up 34 percent for the quarter and 31 percent
for the first-half year compared to the same periods last year. These results
represent the best first-half petroleum additives results since 1999. Profit
improved in all of our major petroleum additive product lines compared to the
first half of last year. These improved results reflect the efforts of the
entire Ethyl team focusing on helping our customers grow their business and
control their costs while at the same time driving Ethyl's development
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activities toward meeting the future demands of our market. Pricing improved
somewhat in an effort to recover increasing cost of raw materials. Research,
development and testing costs were also higher as we continue to support growth
ambitions, meet customer demands and the requirements of new product
specifications. The results also reflect favorable production costs including an
increase in certain inventory levels, as well as a favorable foreign exchange
impact.
Operating profit in our tetraethyl lead (TEL) segment also improved in the
second quarter compared to the same period last year. For the first half of this
year, operating profit matched the first half of last year even as volume
continued its predicted decline. This segment is characterized by significant
quarterly swings in earnings results. While the product's use continues to be
phased out around the world, TEL provides strong cash flow.
Our earnings also benefited from lower interest expense as we continue to make
excellent progress on debt reduction. During the first half of this year, we
reduced debt by $34.3 million. This included the utilization of $27 million from
the sale of our phenolic antioxidant business in January of this year.
The continuing improvement in the profitability of our petroleum additives
segment is due to the dedication, hard work, and professionalism of Ethyl's
employees worldwide. While this market is highly competitive and certain aspects
of the world economy are a concern, our petroleum additives business is well
positioned for the future.
Sincerely,
Teddy Gottwald
6
Earnings for the second quarter 2002 and six months for both 2003 and 2002
include significant nonrecurring items. The following summary of earnings
totaling net income under generally accepted accounting principles is included
below as part of the earnings release.
Summary of Earnings for the Second Quarter and Six Months:
- ----------------------------------------------------------
Second Quarter Ended Six Months Ended
June 30 June 30
--------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------- ------------ ------------
Net income (loss):
Earnings excluding discontinued operations and
nonrecurring items $ 5.7 $ 0.8 $ 5.6 $ 0.8
Discontinued operations including 2003 gain on sale of
phenolic antioxidant business (1) - 0.6 14.8 1.5
Nonrecurring items (1) - (3.9) 1.6 (6.4)
------------ ------------- ------------ ------------
Net income (loss) $ 5.7 $ (2.5) $ 22.0 $ (4.1)
============ ============= ============ ============
Basic earnings (loss) per share (2):
Earnings excluding discontinued operations and
nonrecurring items $ 0.34 $ 0.05 $ 0.33 $ 0.05
Discontinued operations including 2003 gain on sale of
phenolic antioxidant business (1) - 0.04 0.89 0.09
Nonrecurring items (1) - (0.23) 0.10 (0.38)
------------ ------------- ------------ ------------
Net income (loss) $ 0.34 $ (0.14) $ 1.32 $ (0.24)
============ ============= ============ ============
(1) Details included in notes to accompanying financial statements.
(2) Information on diluted earnings (loss) per share is included in the
accompanying Segment Results and Other Financial Information Statement.
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As a reminder, a conference call and Internet webcast is scheduled for 2:00 p.m.
EDT on August 7, 2003 to review second quarter 2003 financial results. You can
access the conference call live by dialing 800-404-1354 (domestic) or
706-643-0825 (international) and requesting the Ethyl conference call. To avoid
delays, callers should dial in five minutes early. The call will also be
broadcast via the Internet and can be accessed through the Company's website at
www.Ethyl.com or www.vcall.com. A teleconference replay of the call will be
available until August 11, 2003 at 11:55 a.m. by dialing 800-642-1687 (domestic)
and 706-645-9291 (international). The replay passcode is 1815458. A webcast
replay will be available for 30 days.
Some of the information contained in this press release constitutes
forward-looking comments within the meaning of the Private Securities Litigation
Reform Act of 1995. Although Ethyl's management believes its expectations are
based on reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results will not
differ materially from expectations. Factors that could cause actual results to
differ from expectations are included in Ethyl's latest annual report to
shareholders, which is available upon request.
To the extent that this press release contains non-GAAP financial measures, it
also presents both the most directly comparable financial measures calculated
and presented in accordance with GAAP and a quantitative reconciliation of the
difference between any such non-GAAP measures and such comparable GAAP financial
measures. For management's statement concerning the reasons why management
believes that presentation of non-GAAP measures provides useful information to
investors concerning Ethyl's financial condition and results of operations, see
the Form 8-K furnished to the Securities and Exchange Commission on August 5,
2003.
FOR INVESTOR INFORMATION CONTACT:
David A. Fiorenza
Investor Relations
Phone: 804.788.5555
Fax: 804.788.5688
Email: investorrelations@ethyl.com
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SEGMENT RESULTS AND OTHER FINANCIAL INFORMATION
ETHYL CORPORATION AND SUBSIDIARIES
(In millions except per share amounts, unaudited)
Second Quarter Six Months
------------------------------------- -------------------------------------
2003 2002 2003 2002
----------------- ----------------- ----------------- ------------------
Net sales:
Petroleum additives $ 178.8 $ 167.9 $ 350.6 $ 312.4
Tetraethyl lead 1.8 3.0 3.4 4.7
----------------- ----------------- ----------------- ------------------
Total $ 180.6 $ 170.9 $ 354.0 $ 317.1
================= ================= ================= ==================
Segment operating profit:
Petroleum additives before nonrecurring items $ 16.6 $ 12.3 $ 28.3 $ 21.6
Nonrecurring items (a) - 0.3 0.1 (1.2)
----------------- ----------------- ----------------- ------------------
Total petroleum additives 16.6 12.6 28.4 20.4
Tetraethyl lead 6.3 3.4 7.8 7.8
Nonrecurring items (a) - - 2.4 (1.6)
----------------- ----------------- ----------------- ------------------
Total tetraethyl lead 6.3 3.4 10.2 6.2
Segment operating profit 22.9 16.0 38.6 26.6
(Deduct) add back nonrecurring items to reconcile
Segment Reporting to Consolidated
Statements of Income (b) - - (2.5) 3.1
Corporate unallocated expense (4.4) (4.0) (9.0) (6.3)
Interest expense (6.4) (6.6) (11.2) (13.6)
Writedown investments and property (a) - (4.1) - (4.1)
Pension expense (1.4) (1.5) (2.8) (3.0)
Other expense, net (2.0) (2.5) (4.7) (5.5)
----------------- ----------------- ----------------- ------------------
Income (loss) from continuing operations
before income taxes $ 8.7 $ (2.7) $ 8.4 $ (2.8)
================= ================= ================= ==================
Net income (loss):
Earnings excluding discontinued operations and
nonrecurring items $ 5.7 $ 0.8 $ 5.6 $ 0.8
Discontinued operations (c) - 0.6 14.8 1.5
Nonrecurring items (a) - (3.9) 1.6 (6.4)
----------------- ----------------- ----------------- ------------------
Net income (loss): $ 5.7 $ (2.5) $ 22.0 ($4.1)
================= ================= ================= ==================
Basic earnings (loss) per share:
Earnings excluding discontinued operations and
nonrecurring items $ 0.34 $ 0.05 $ 0.33 $ 0.05
Discontinued operations (c) - 0.04 0.89 0.09
Nonrecurring items (a) - (0.23) 0.10 (0.38)
----------------- ----------------- ----------------- ------------------
Net income (loss) $ 0.34 $ (0.14) $ 1.32 $ (0.24)
================= ================= ================= ==================
Diluted earnings (loss) per share:
Earnings excluding discontinued operations and
nonrecurring items $ 0.34 $ 0.05 $ 0.33 $ 0.05
Discontinued operations (c) - 0.04 0.88 0.09
Nonrecurring items (a) - (0.23) 0.10 (0.38)
----------------- ----------------- ----------------- ------------------
Net income (loss) $ 0.34 $ (0.14) $ 1.31 $ (0.24)
================= ================= ================= ==================
Notes to Segment Results and Other Financial Information
Prior periods have been reclassified to conform to the current presentation.
(a) Nonrecurring items after income taxes are shown below. The gain on the
implementation of Statement of Financial Accounting Standards (SFAS) No.
143, as well as the impairment of goodwill and engine oil additives
rationalization, are included in segment operating profit.
Gain on implementation of SFAS No. 143 $ - $ - $ 1.6 $ -
Impairment of goodwill - - - (2.5)
Loss on impairments of nonoperating assets - (4.1) - (4.1)
Engine oil additives rationalization - 0.2 - 0.2
----------------- ----------------- ----------------- ------------------
$ - $ (3.9) $ 1.6 $ (6.4)
================= ================= ================= ==================
(b) For segment reporting, the 2003 gain on the implementation of SFAS No. 143,
as well as the 2002 impairment of goodwill, is shown in operating profit as
nonrecurring items. In the Consolidated Statements of Income, these items
are shown as cumulative effect of accounting changes in both years.
(c) Discontinued operations reflect the phenolic antioxidant business, which
was sold in January 2003. The six months 2003 amount is the gain on the
disposal of the business ($23.2 million before tax). The second quarter and
six months 2002 amount represents the earnings of the business.
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CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts, unaudited)
ETHYL CORPORATION AND SUBSIDIARIES
Three Months Ended Six Months Ended
June 30 June 30
2003 2002 2003 2002
--------------- -------------- --------------- --------------
Net sales $ 180,574 $ 170,943 $ 354,040 $ 317,119
Cost of goods sold 136,576 135,665 273,982 251,783
-------------- -------------- --------------- --------------
Gross profit 43,998 35,278 80,058 65,336
TEL marketing agreements services 7,931 4,446 10,932 10,162
Selling, general, and administrative expenses 21,904 18,978 42,492 35,108
Research, development, and testing expenses 15,021 13,160 28,703 25,166
-------------- -------------- --------------- --------------
Operating profit 15,004 7,586 19,795 15,224
Interest and financing expenses 6,402 6,562 11,204 13,600
Other income (expense), net (a) 56 (3,734) (142) (4,420)
-------------- -------------- --------------- --------------
Income (loss) from continuing operations
before income taxes 8,658 (2,710) 8,449 (2,796)
Income tax expense 2,913 374 2,841 278
-------------- -------------- --------------- --------------
Income (loss) from continuing operations 5,745 (3,084) 5,608 (3,074)
Discontinued operations (b)
Gain on disposal of business (net of tax) - - 14,805 -
Income from operations of discontinued
business (net of tax) - 622 - 1,495
-------------- -------------- --------------- --------------
Income (loss) before cumulative effect of
accounting changes 5,745 (2,462) 20,413 (1,579)
Cumulative effect of accounting changes (net of tax) (c) - - 1,624 (2,505)
-------------- -------------- --------------- --------------
Net income (loss) $ 5,745 $(2,462) $ 22,037 $ (4,084)
============== ============== =============== ==============
Basic earnings (loss) per share:
Earnings (loss) from continuing operations $ 0.34 $ (0.18) $ 0.33 $ (0.18)
Discontinued operations (net of tax) (b) - 0.04 0.89 0.09
Cumulative effect of accounting changes (net of tax) (c) - - 0.10 (0.15)
-------------- -------------- --------------- --------------
$ 0.34 $ (0.14) $ 1.32 $ (0.24)
============== ============== =============== ==============
Diluted earnings (loss) per share:
Earnings (loss) from continuing operations $ 0.34 $ (0.18) $ 0.33 $ (0.18)
Discontinued operations (net of tax) (b) - 0.04 0.88 0.09
Cumulative effect of accounting changes (net of tax) (c) - - 0.10 (0.15)
-------------- -------------- --------------- --------------
$ 0.34 $ (0.14) $ 1.31 $ (0.24)
============== ============== =============== ==============
Shares used to compute basic
earnings (loss) per share 16,724 16,691 16,706 16,691
============== ============== =============== ==============
Shares used to compute diluted
earnings (loss) per share 16,969 16,691 16,829 16,691
============== ============== =============== ==============
Notes to Consolidated Statements of Income
Prior periods have been reclassified to conform to the current presentation.
(a) Other income (expense), net includes a loss on the impairment of
nonoperating assets for second quarter 2002 and six months 2002 of $4.1
million ($4.1 million after tax or $.24 per share), as well as expenses
related to debt refinancing activities of $300 thousand for six months 2003
and $1.0 million for six months 2002.
(b) Discontinued operations reflect the phenolic antioxidant business, which
was sold in January 2003. The gain on the disposal of this business was
$23.2 million ($14.8 million after tax or $.89 per share).
(c) The cumulative effect of accounting change for six months 2003 reflects the
gain of $2.5 million ($1.6 million after tax or $.10 per share) recognized
upon the adoption of Statement of Financial Accounting Standard (SFAS) No.
143 on January 1, 2003. The six months 2002 amount reflects the impairment
of goodwill of $3.1 million ($2.5 million after tax or $.15 per share)
resulting from the January 1, 2002 adoption of SFAS No. 142.
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CONSOLIDATED BALANCE SHEETS
(In thousands)
ETHYL CORPORATION AND SUBSIDIARIES
June 30
2003 December 31
(unaudited) 2002
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 26,856 $ 15,478
Restricted cash 408 683
Trade and other accounts receivable, less
allowance for doubtful accounts ($2,058 - 2003;
$911 - 2002) 126,170 124,430
Receivable - TEL marketing agreements services 7,591 7,418
Inventories 123,180 104,046
Prepaid expenses 7,551 2,232
Deferred income taxes 12,044 14,339
Assets of discontinued operations (a) - 4,323
--------- ---------
Total current assets 303,800 272,949
--------- ---------
Property, plant and equipment, at cost 744,685 746,237
Less accumulated depreciation and amortization 564,939 547,518
--------- ---------
Net property, plant and equipment 179,746 198,719
--------- ---------
Prepaid pension cost 24,755 24,995
Deferred income taxes 9,541 9,494
Other assets and deferred charges 82,708 80,756
Intangibles, net of amortization 66,777 69,338
--------- ---------
Total assets $ 667,327 $ 656,251
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 53,429 $ 44,130
Accrued expenses 39,739 38,778
Long-term debt, current portion 9,517 40,537
Income taxes payable 13,147 6,288
--------- ---------
Total current liabilities 115,832 129,733
--------- ---------
Long-term debt 246,276 249,530
Other noncurrent liabilities 125,107 123,910
Shareholders' equity
Common stock ($1 par value)
Issued - 16,734,009 in 2003 and
16,689,009 in 2002 16,734 16,689
Additional paid in capital 66,916 66,766
Accumulated other comprehensive loss (24,492) (29,294)
Retained earnings 120,954 98,917
--------- ---------
180,112 153,078
--------- ---------
Total liabilities and shareholders' equity $ 667,327 $ 656,251
========= =========
Notes to the Consolidated Balance Sheets
(a) Assets of discontinued operations reflect the accounts of the phenolic
antioxidant business sold in January 2003.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
ETHYL CORPORATION AND SUBSIDIARIES
Six Months Ended
June 30
------------------------------------
2003 2002
----------------- ----------------
Cash and cash equivalents at beginning of year $ 15,478 $12,382
----------------- ----------------
Cash flows from operating activities:
Net income (loss) 22,037 (4,084)
Adjustments to reconcile net income (loss) to cash flows
from operating activities:
Depreciation and amortization 23,285 24,227
Amortization of deferred financing costs 3,228 2,914
Cumulative effect of accounting changes (2,549) 3,120
Gain on sale of phenolic antioxidant business (23,196) -
Prepaid pension cost 2,780 2,957
Net loss on impairments - 4,033
TEL working capital advance 1,300 479
Deferred income tax expense (benefit) 118 (4,361)
Working capital changes (7,877) 3,753
Legal settlement 4,825 -
Contract settlement - 2,700
Other, net 1,519 2,596
----------------- ----------------
Cash provided from operating activities 25,470 38,334
----------------- ----------------
Cash flows from investing activities:
Capital expenditures (4,104) (7,248)
Proceeds from sale of phenolic antioxidant business 27,770 -
Proceeds from sale of certain assets 12,576 -
Prepayment for TEL marketing agreements services (3,200) (12,800)
Other, net 13 7
----------------- ----------------
Cash provided from (used in) investing activities 33,055 (20,041)
----------------- ----------------
Cash flows from financing activities:
Repayment of debt - old agreements (284,519) (43,640)
Net borrowings-old agreements - 30,340
Issuance of senior notes and term loan 265,000 -
Repayments on term loan (14,490) -
Debt issuance costs (13,094) (1,982)
Other, net (44) (248)
----------------- ----------------
Cash used in financing activities (47,147) (15,530)
----------------- ----------------
----------------- ----------------
Increase in cash and cash equivalents 11,378 2,763
----------------- ----------------
Cash and cash equivalents at end of period $ 26,856 $15,145
================= ================
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