Fourth Quarter 2002 Results 
2/7/2003 
 

Ethyl Corporation Announces Improved Year 2002 Results

  • Petroleum additives earnings for the year improve significantly
  • Debt reduced $45.9 million in 2002 to $290 MM
  • Record year in safety performance

Richmond, VA, February 7, 2003 - Ethyl Corporation (NYSE: EY) - Ethyl Corporation President and Chief Executive Officer, Thomas E. (Teddy) Gottwald today released the following earnings report for the year and fourth quarter 2002 and an update of the company's operations.

To Our Shareholders:
We are pleased to report to you that in 2002 we met our goals of improving our profits and reducing our debt. We are very proud that in addition to meeting these financial targets, we reached our safety goal of being in the top 10% of all chemical companies in safety performance.

Earnings from continuing operations excluding nonrecurring items for the year 2002 were $12 million, or 72 cents per share, a significant improvement over earnings on the same basis for last year of $7.5 million or 45 cents per share. This improvement in earnings is even more noteworthy considering it includes the impact of pension expense included in the current year's results while 2001 results included the benefit of pension income. This change in pension earnings reduced income 33 cents per share for the year compared with 2001. On the same basis, earnings for the fourth quarter 2002 were $1.0 million or 6 cents per share compared with earnings of $2.9 million or 17 cents per share for last year's fourth quarter.

Net income for the year and fourth quarter for 2002 and 2001 include significant nonrecurring items not included above. These nonrecurring items are included in the summary of earnings chart at the end of this press release.

During the year 2002 we continued our focus on improving profits, reducing debt and managing cost while providing our customers with top quality products.

We are pleased with the continuing improvement in our petroleum additives operating profits. For the year, we stabilized our business base in the important engine oil additives area and grew sales 12 percent in the other petroleum additives businesses compared to last year. Operating profit for continuing operations of the petroleum additives segment excluding nonrecurring items increased 60 percent over last year and represents this segment's best earnings results for a year since 1999. Petroleum additives profits for the year improved in all of our major product lines compared with last year.

The improved petroleum additives profits reflect the benefits of improved asset utilization, more efficient research and development spending and other cost controls. As expected, continuing petroleum additives profits for the fourth quarter were lower than fourth quarter 2001 and lower than our very strong performance in the third quarter 2002. Our fourth quarter 2002 numbers reflect the impact of scheduled plant maintenance, planned reductions in inventory, increasing raw material costs, and our normal pattern of lower sales in the latter part of the year.

TEL earnings for the year 2002, as well as the fourth quarter, were lower, as expected, compared to the same periods last year. This reduction in earnings compared with last year reflects both the continuing decline in the market for this product as well as certain costs incurred in the current year, while 2001 included the benefit of certain sales to Octel. This product continues to supply the Company with strong cash flows.

Earnings have also benefited from lower interest expense as we continued to make excellent progress on debt reduction. During the year 2002, we reduced debt $45.9 million and ended the year with $290MM in debt. In addition to paying down debt, we also made payments totaling $19.2 million related to the required funding associated with the amendment of our TEL marketing agreements.

On January 21, 2003, we completed the sale of our phenolic antioxidant business to Albemarle Corporation (NYSE: ALB). Following an extensive assessment, we concluded this business was not part of our future core business or growth goals. This is another strategic step in fulfilling our goals of reducing debt, strengthening our balance sheet and allowing us to focus more closely on our core businesses. The earnings results of the phenolic antioxidant business is, therefore, being reported as discontinued operations.

Our improved performance has allowed us to meet all of the debt exposure reduction requirements necessary to extend our current loan facility to March 31, 2004. By the terms of the agreement the extension will not be granted until March 1, 2003. Consequently, most of the bank debt shown as "current" in this release, will be reclassified to "long term" when we file our 10-K in March following the granting of the extension.

We expect to see significant quarterly variations in our 2003 earnings. It is the nature of our businesses. While we remain concerned about certain aspects of the global economy, for the full year 2003, our current view is that we expect earnings, excluding nonrecurring items and discontinued operations, to be above our 2002 results.

The company, through its dedicated employees, continues to provide our customers with the best products and service in the industry while improving profits, managing cost and achieving excellent progress in reducing debt. Our safety record is a tribute to that dedication. In 2002, our recordable injury rate - a common measure of safety performance - was 0.76, our lowest (best) ever. This compares to a chemical industry average of approximately 4.0 and a general industry average of around 5. Our employees have made a personal commitment to working safely. While we're proud of what this means for our employees and their families, we submit to you that the same commitment to excellence and attention to detail is being applied to all that we do - from quality improvement and customer service to product development.

I thank all our employees for their performance and dedication. I thank our customers for their confidence in us by allowing us the opportunity to provide the goods and services integral to their businesses. And I also express my appreciation to our shareholders for your continued support.

Sincerely,
Teddy Gottwald

Earnings for the fourth quarter and year for both 2002 and 2001 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 Second Quarter and Six Months:

   

Second Quarter Ended
June 30

 

Six Months Ended
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.

# # #

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.

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)