First Quarter 2002 Reports 
5/2/2002 
 

Ethyl Corporation Reports First Quarter 2002 Results

  • Petroleum additives results improve over first quarter last year
  • New credit agreement in place
  • Board approves and recommends a one-for-five reverse stock split

Richmond, VA, May 2, 2002 - Ethyl Corporation (NYSE: EY) - Ethyl Corporation President and Chief Executive Officer, Thomas E. (Teddy) Gottwald today released the following earnings report for the first quarter 2002 and update on the company's operations.

To Our Shareholders:
Earnings excluding nonrecurring items for first quarter 2002 were income of $1 million or 1 cent per share compared to earnings on the same basis for the first quarter of last year of $4 million income or 4 cents per share. Earnings for both first quarter this year and last year were affected by significant nonrecurring items including the write-off of goodwill this year. These nonrecurring items are included in the summary of earnings chart at the end of this earnings release.

These results included improved earnings in our petroleum additives segment as well as lower corporate and interest cost due to our cost reduction and debt reduction initiatives. These improvements to earnings were more than offset by lower TEL earnings as well as significantly lower non-cash pension income and a negative impact related to foreign currency, relative to the strong US dollar.

The petroleum additives segment posted an improved operating profit in the first quarter of 2002 as compared to the same period last year. While sales revenue and volume were lower than anticipated, we experienced favorable costs, which are the combined impact of lower manufacturing costs and lower raw materials. However, crude oil prices have risen substantially from the low levels of the first quarter, and we are beginning to experience the effect in the second quarter. It is difficult to anticipate at this time the full impact these increases will have on our raw material cost and on the world economy.

First quarter 2002 operating profit was lower in our TEL segment than the same period last year. This business is characterized by quarterly swings and we expect TEL to be on plan by year end. TEL marketing agreement shipments were somewhat higher in first quarter 2002 compared to first quarter 2001; however, TEL earnings in first quarter 2001 included the benefit of the sale of substantially all our remaining inventory to Octel that they were required to purchase under our TEL agreement with them. TEL earnings for the year are expected to be lower than last year as this product continues to be phased out around the world.

We recently reached agreement with our lenders to extend our loan facility to March 31, 2003. This facility can be further extended to March 31, 2004 provided certain conditions are met. Debt reduction continues to be a top priority. Debt was reduced $1 million in the first quarter of this year. This quarter included the costs associated with our loan extension and the beginning of the required funding associated with the amendment of our TEL marketing alliance. This funding requirement is expected to be substantially completed in the second quarter and will result in a net increase in debt during the first half of the year. We expect to be able to make significant debt reductions in the second half.

The Board of Directors has unanimously approved and recommended to shareholders a one-for-five reverse stock split of Ethyl's common stock. The proposed reverse stock split will be presented to shareholders for approval at Ethyl's annual meeting on June 4, 2002. The Board of Directors believes this action will serve to encourage greater interest in our stock by the investment community.

We continue to make progress on our goal of profitable growth in petroleum additives. Our improved first quarter petroleum additives profits include steady progress in specialty lubricant additives. Our cost structure in petroleum additives is now positioned to allow us to compete effectively for the long run, and we entered 2002 better positioned for profitable growth. Our actions and strategies position us well in this highly competitive business. Our TEL earnings are on target as our marketing agreements maximize earnings and cash flows.

Sincerely,
Teddy Gottwald

Earnings for the second quarter and six months include significant nonrecurring items. A 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 first quarter 2002 and 2001:

   

First Quarter

   

2002

 

2001

Net income (loss):
Earnings excluding nonrecurring items

$

0.9

$

3.5

Nonrecurring items (1)

 

-

 

(14.8)

Cumulative effect of accounting change for goodwill write-off

 

(2.5)

 

-

Net (loss):
 

$
 

(1.6)
=====

$
 

(11.3)
=====

         

Basic and diluted (loss) earnings per share:
Earnings excluding nonrecurring items

$

0.01

$

0.04

Nonrecurring items (1)

 

-

 

(0.18)

Cumulative effect of accounting change for goodwill write-off

 

(0.03)

 

-

Net (loss):
 

$
 

(0.02)
=====

$
 

(0.14)
=====

(1) Details included in notes to accompanying financial statements.

For Investor Information, Contact:

David A. Fiorenza
Investor Relations
Phone: 804.788.5055
Fax: 804.788.5688

E-mail: InvestorRelations@Ethyl.com

Additional Financial Information (PDF)