First Quarter 2003 Results 
5/6/2003 
 

Ethyl Corporation Announces First Quarter 2003 Results

  • Petroleum additives profits improve significantly
  • Debt reduced $42 million
  • Refinancing completed in April
  • Phenolic Antioxidant business sale completed
  • TEL profits decline

Richmond, VA, May 6, 2003 - Ethyl Corporation (NYSE:EY) - President and Chief Executive Officer, Thomas E. (Teddy) Gottwald today released the following earnings report for the first quarter 2003 and an update on the company's operations.

Earnings from continuing operations excluding nonrecurring items for first quarter 2003 were slightly lower than first quarter last year on this same basis. Results on this basis for first quarter 2003 were a loss of $100 thousand or about $.01 per share while results for the first quarter last year were break even. Net income for this year and last year's first quarter include significant nonrecurring items. Including these items, net income for the first quarter 2003 amounted to $16.3 million or $.98 per share while first quarter last year was a net loss of $1.6 million or $.10 per share. The nonrecurring items are included in the summary of earnings chart at the end of this press release.

Petroleum additives segment operating profit improved significantly. Results from continuing operations, excluding nonrecurring items grew 29 percent over first quarter last year. Net sales were up 19 percent, with each major region showing improvement. The continuing improvement in petroleum additive earnings and sales reflects the continued success of the close partnership of our customers and our technical, marketing, sales and product supply personnel. We continue to focus our efforts to help our customers grow their business and reduce their operating costs through solutions provided by our products and services.

As expected Tetraethyl lead (TEL) earnings were lower in first quarter 2003 reflecting the timing of shipments and the continuing decline of this market. The TEL segment has historically been characterized by large swings in quarterly profitability, as is the case this quarter. TEL continues to provide strong cash flows to our company.

Our earnings also benefited from lower interest expense as we made excellent progress on debt reduction. During the first quarter of this year we reduced debt $42 million. This significant reduction in debt included $27 million from the sale of our phenolic antioxidant business in January 2003.

On April 30th, 2003, we entered into a new long-term financing structure. The new structure includes $150 million in senior notes due 2010, $115 million in a bank term loan facility due 2009, and a $50 million revolving credit facility due 2008. The proceeds were used to repay previously existing loan agreements that were due in March 2004 as well as other company debt. This structure will provide us with the financial base and flexibility we need to grow our business and increase shareholder value. A summary of the new financing structure is attached to this release.

We are extremely pleased with the continuing improvement in the profitability of our petroleum additives segment as well as our progress on debt reduction. Due primarily to fluctuations in the TEL business, we expect to continue to see significant quarterly variations in our company-wide 2003 results. We remain concerned about certain aspects of the global economy and expect to see the negative impact of raw material increases in the second and third quarter of this year. There will be several one-time expenses flowing through our second quarter income and cash flow statements that are associated with establishing the new loan and paying off the old loans. While we continue to expect that the increase in profits in our Petroleum Additives segment will offset the declines in TEL for the year 2003, we plan to discontinue comments on specific earnings projections after this earnings release.

Sincerely,
Teddy Gottwald

Summary of Earnings for the Second Quarter and Six Months:

   

First Quarter
March 31

   

2003

 

2002

Net income (loss):
Earnings excluding discontinued operations and nonrecurring items

$

(0.1)

$

-

Discontinued operations including 2003 gain on sale of phenolic antioxidant business (1)

 

14.8

 

. 9

Nonrecurring items (1)

 

1.6

 

(2.5)

Net income (loss):
 

$
 

16.3
=====

$
 

(1.6)
=====

         

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

$

(0.01)

$

-

Discontinued operations including 2003 gain on sale of phenolic antioxidant business (1)

 

0.89

 

0.05

Nonrecurring items (1)

 

0.10

 

(0.15)

Net income (loss):
 

$
 

0.98
=====

$
 

(0.10)
=====

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

Summary of New Finance Structure

The senior notes for $150 million bear interest at a fixed rate of 8.875% and are due in 2010.

The bank term loan is for $115 million and has a variable interest rate of LIBOR plus 450 basis points. The term loan matures in April 2009 and has scheduled quarterly payments beginning in June 2003.

The revolver is a $50 million facility for working capital and letter of credit issuance purposes. It bears interest at LIBOR plus 400 basis points.

The credit facilities contain covenants, representations, and events of default typical of a credit agreement of this nature. The financial covenants include:

  • A minimum net worth;
  • A maximum debt to earnings before interest, taxes, depreciation and amortization (EBITDA);
  • A maximum senior debt to EBITDA;
  • Limitations on capital expenditures;
  • An interest coverage ratio; and
  • Restrictions on payments of dividends and stock repurchases.

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 May 6, 2003.

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)