Ethyl Corporation Announces Continued Earnings Improvement 
2/2/2004 
  • Petroleum additives and TEL earnings improve for the year and quarter
  • Petroleum additives sales increase for the year
  • Debt reduced $81 million in 2003

Richmond, VA, February 2, 2004–Ethyl Corporation (NYSE: EY) –President and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report for the fourth quarter and year 2003 and update on the company's operations.

We are pleased to report to you that 2003 was a year of continuing accomplishments. We met our goals of improving earnings, continuing to reduce debt and establishing a long-term capital structure. Earnings improved in both our Petroleum Additives and TEL segments. Our debt reduction was significant and exceeded our target. The long-term borrowing structure entered into in April of 2003 provides us with our desired platform to enable us to continue to build for the future.

Our results reflect these accomplishments. For the year 2003, earnings excluding discontinued operations and certain nonrecurring items were $20.7 million, or $1.23 per share, a significant improvement over earnings on the same basis last year of $12.0 million or 72 cents per share. On this same basis, earnings for the fourth quarter 2003 also showed improvement with income of $4.7 million, or 28 cents per share, compared to earnings of $1.0 million or 6 cents per share for fourth quarter 2002. For clarification, the nonrecurring items and discontinued operations are disclosed individually in the summary of earnings chart at the end of this press release which total to net income under generally accepted accounting principles.

Earnings for this year’s fourth quarter did not include any discontinued operations or significant nonrecurring items; however, fourth quarter last year, as well as the total year earnings for 2003 and 2002, included such items. On this basis, net income for 2003 amounted to $37.1 million, or $2.21 per share, compared to net income for 2002 of $9.9 million or 59 cents per share. Net income for last year’s fourth quarter was $3.1 million, or 18 cents per share.

Petroleum additives segment operating profit before nonrecurring items improved 13 percent over last year. This represents the best earnings results from this segment since 1999. Net sales were also up 15 percent reflecting higher sales in all of our major petroleum additives product lines. Margins continued to be adversely affected by rising raw material costs as only a small portion was recovered through increased pricing. Earnings also benefited from a favorable foreign exchange impact as the dollar continued to weaken against the Euro and Yen. Our commitment to supplying our customers with top quality products is reflected in our increased research, development and testing costs which are part of our ongoing effort to improve our products and services to meet our customers’ needs.

Operating profit in our TEL segment also improved for this year and fourth quarter compared to last year’s periods. While volumes shipped declined as we expected, the improved earnings reflect the benefit of improved pricing and the absence in 2003 of certain cost incurred in the 2002 periods.

We continue to make excellent progress on our debt reduction program. For the year 2003, we reduced debt $81 million. The net proceeds from the sale of our phenolic antioxidant business contributed $19 million to the debt reduction. Lower interest expense also benefited our earnings.

We are extremely pleased with the continuing improvement in earnings as well as our progress on debt reduction. Our debt is now at a point where it will not be a significant focus in our future communications with the investing public. As we look toward 2004, we continue to face a difficult external environment. This environment is characterized by the factors we have discussed throughout 2003; namely, margin compression as raw material prices increase, continuing demand for new high performance products, and a highly competitive marketplace. Despite these challenges, Ethyl dedicated employees around the world continue to find ways to bring increased value to our customers and shareholders. We salute their continuing commitment and the progress they have achieved.

Sincerely,
Thomas E. Gottwald

This press release contains a brief summary of the fourth quarter and year results. Please see our Annual Report on Form 10-K filing for a more complete discussion of our business results.

Fourth quarter 2002 and earnings for both years 2003 and 2002 include significant nonrecurring items and discontinued operations as noted in the table below. 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 Fourth Quarter and Year:              
     

Fourth Quarter Ended
December 31

 

Year Ended
December 31

       
                   
      2003   2002   2003   2002
Net income:                
  Earnings excluding discontinued operations                
     and nonrecurring items $ 4.7 $ 1 $ 20.7 $ 12.0
  Discontinued operations including 2003 gain on                
     sale of phenolic antioxidant business (1)   -       0.7   14.8   2.9
  Nonrecurring items (1)   -       1.4    1.6   (5.0)
                   
   Net income $ 4.7 $ 3.1 $ 37.1 $ 9.9
                   
Basic earnings per share (2):                
  Earnings excluding discontinued operations                
     and nonrecurring items $ 0.28 $ 0.06 $ 1.23 $ 0.72
  Discontinued operations including 2003 gain on                
     sale of phenolic antioxidant business (1)   -       0.04   0.88   0.17
  Nonrecurring items (1)   -       0.08   0.10   (0.30)
                   
   Net income $ 0.28 $ 0.18 $ 2.21 $ 0.59
                   
(1) Details included in notes to accompanying financial statements.  
                   
(2) Information on diluted earnings per share is included in the accompanying Segment Results and Other Financial Information Statement.  
                   
 

As a reminder, a conference call and Internet web cast is scheduled for 2:00 p.m. EST on February 5, 2004 to review 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 February 8, 2004 at 11:55 p.m. EST by dialing 800-642-1687 (domestic) and 706-645-9291 (international). The replay pass code is 5110759. A web cast replay will be available for 30 days.

Some of the information contained in this press release constitutes forward-looking statements 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 materially from expectations include, but are not limited to: timing of sales orders; gain or loss of significant customers; competition from other manufacturers; a significant rise in interest rates; resolution of environmental liabilities; changes in the demand for Ethyl’s products; significant changes in new product introduction; increases in product cost; the impact of fluctuations in foreign exchange rates on reported results of operations; changes in various markets; geopolitical risks in certain of the countries in which Ethyl conducts business; the impact of consolidation of the petroleum additives industry; and other factors detailed from time to time in the reports that Ethyl files with the Securities and Exchange Commission, including the risk factors in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of Ethyl’s 2002 Annual Report on Form 10-K, which is available to shareholders upon request.

You should keep in mind that any forward-looking statement made by Ethyl in the foregoing discussion speaks only as of the date on which such forward-looking statement is made. New risks and uncertainties come up from time to time, and it is impossible for Ethyl to predict these events or how they may affect the company. Ethyl has no duty to, and does not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that the events described in any forward-looking statement made in this discussion, or elsewhere, might not occur.

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 February 2, 2004.
 

For Investor Information, Contact:

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