Ethyl Corporation Reports Improved First Quarter 2004 Results 
4/29/2004 
  • Petroleum additives and TEL earnings improve
  • Petroleum additives sales increase 25 percent
  • Debt reduced $14.7 million

Ethyl Corporation (NYSE: EY) -President and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report for the first quarter 2004 and an update of the company's operations.

The earnings results for first quarter 2004 include improvement in both our petroleum additives and tetraethyl lead (TEL) profits compared with first quarter last year. Income from continuing operations for the first quarter of 2004 was $5.8 million or $.35 per share. This was a significant improvement over results on the same basis for first quarter 2003 which were a loss of $100 thousand or $.01 per share. First quarter net income in 2003, including the $14.8 million gain on the sale of our phenolic antioxidant business and a $1.6 million benefit of another nonrecurring item, amounted to $16.3 million or $.98 per share. The year 2003 nonrecurring items are included in the summary of earnings chart at the end of this earnings release.

Petroleum additives segment operating profit for the first quarter 2004 improved 33 percent over first quarter last year. Net sales increased 25 percent over the same period last year reflecting improved sales in each of our major product groups. Our position in the petroleum additives market continues to show the benefits of our strong, diverse product portfolio and our increased spending on research development and testing. These earnings improvements were accomplished in spite of the adverse impact of rising raw material costs which continue to adversely affect our margin. Only a small portion of these costs were recovered through increased pricing. The continuing improvement in our petroleum additives earnings reflects the benefits of our continued focus on helping our customers grow their business while managing cost through solutions provided by our products and services.

Our TEL earnings were significantly higher in the first quarter of this year compared to the same period last year. The improvement reflects higher pricing and shipments this quarter compared to first quarter 2003. This segment's results will continue to be characterized by significant swings in shipping volumes from quarter to quarter.

We also continue to make significant progress on debt reduction as we reduced debt $14.7 million during the first quarter this year.

We are extremely pleased with the growth in our petroleum additives segment, as well as our progress in debt reduction. Our improved earnings reflect the success of our ongoing focus to increase profitability of our product lines; however this is being made more difficult due to increasing raw material cost. Our debt reduction program continues to strengthen our financial position and enables us to review new business growth opportunities. We believe the holding company structure recommended by the board of directors to the shareholders of Ethyl will facilitate an even more focused management of our petroleum additives and our TEL businesses, as well as provide a more flexible structure for future business growth.

Sincerely,

Thomas E. Gottwald

Earnings for the first quarter 2003 included 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:
-------------------------------------------
                                               First Quarter Ended
                                                    March 31
                                            -------------------------

                                                   2004         2003
                                            ------------  -----------
Net income:
 Income (loss) from continuing operations  $        5.8  $      (0.1)
 Discontinued operations (2003 gain on
  sale of phenolic antioxidant
  business) (1)                                       -         14.8
 Nonrecurring item (1)                                -          1.6
                                            ------------  -----------
    Net income                             $        5.8  $      16.3
                                            ============  ===========

Basic earnings per share: (2)
 Income (loss) from continuing operations  $       0.35  $     (0.01)
 Discontinued operations (2003 gain on
  sale of phenolic antioxidant
  business) (1)                                       -         0.89
 Nonrecurring item (1)                                -         0.10
                                            ------------  -----------

    Net income                             $       0.35  $      0.98
                                            ============  ===========

(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. EDT on April 30, 2004 to review first quarter 2004 financial results. You can access the conference call live by dialing 800-657-1269 (domestic) or 973-409-9259 (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 May 3, 2004 EDT by dialing 877-519-4471 (domestic) and 973-341-3080 (international). The replay pass code is 4709306. 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; 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 2003 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 April 30, 2004.

ETHYL CORPORATION AND SUBSIDIARIES
SEGMENT RESULTS AND OTHER FINANCIAL INFORMATION
(In millions except per share amounts, unaudited)


                                                  Three Months Ended
                                                        March 31
                                                   -----------------
                                                     2004      2003
                                                   -------   -------
Net sales:
  Petroleum additives                             $  214.6  $  171.8
  Tetraethyl lead                                      2.2       1.7
                                                    -------   -------
    Total                                         $  216.8  $  173.5
                                                    =======   =======

Segment operating profit:
  Petroleum additives before nonrecurring item    $   14.9  $   11.2
  Nonrecurring item (a)                                  -       0.1
                                                    -------   -------
    Total petroleum additives                         14.9      11.3

  Tetraethyl lead before nonrecurring item             7.3       1.4
  Nonrecurring item (a)                                  -       2.4
                                                    -------   -------
    Total tetraethyl lead                              7.3       3.8

    Segment operating profit                          22.2      15.1
  Deduct current year nonrecurring item to reconcile
   Segment Reporting to Consolidated
   Statements of Income (b)                              -      (2.5)
  Corporate unallocated expense                       (5.2)     (4.7)
  Interest expense                                    (5.2)     (4.8)
  Other expense, net                                  (2.9)     (3.3)
                                                    -------   -------
    Income (loss) from continuing operations
     before income taxes                          $    8.9  $   (0.2)
                                                    =======   =======

Net income:
  Earnings excluding discontinued operations and
   nonrecurring item                              $    5.8  $   (0.1)
  Discontinued operations (c)                            -      14.8
  Nonrecurring item (a)                                  -       1.6
                                                    -------   -------
    Net income:                                   $    5.8  $   16.3
                                                    =======   =======

Basic earnings per share:
  Earnings excluding discontinued operations and
   nonrecurring item                              $   0.35  $  (0.01)
  Discontinued operations (c)                            -      0.89
  Nonrecurring item (a)                                  -      0.10
                                                    -------   -------
    Net income                                    $   0.35  $   0.98
                                                    =======   =======

Diluted earnings per share:
  Earnings excluding discontinued operations and
   nonrecurring item                              $   0.34  $  (0.01)
  Discontinued operations (c)                            -      0.89
  Nonrecurring item (a)                                  -      0.10
                                                    -------   -------
    Net income                                    $   0.34  $   0.98
                                                    =======   =======


Notes to Segment Results and Other Financial Information

Prior periods have been reclassified to conform to the current
 presentation.

(a) The nonrecurring item after income taxes amounts to
    $1.6 million and results from 2003 gain on the
    implementation of Statement of Financial Accounting
    Standards (SFAS) No. 143.  This nonrecurring item is
    included in segment operating profit.

(b) For segment reporting, the 2003 gain on the
    implementation of SFAS No. 143 is shown in operating
    profit as a nonrecurring item.  In the Consolidated
    Statements of Income, this item is shown as a
    cumulative effect of accounting change.

(c) Discontinued operations reflect the gain ($23.2
    million before tax) on the disposal of the phenolic
    antioxidant business, which was sold in January 2003.



ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts, unaudited)



                                                    Three Months Ended
                                                         March 31
                                                     2004       2003
                                                   --------- ---------

Net sales                                         $ 216,770 $ 173,466
Cost of goods sold                                  170,909   137,406
                                                   --------- ---------

   Gross profit                                      45,861    36,060

TEL marketing agreements services                     7,312     3,001

Selling, general, and administrative expenses        23,518    20,588
Research, development, and testing expenses          15,749    13,682
                                                   --------- ---------

   Operating profit                                  13,906     4,791

Interest and financing expenses                       5,156     4,802
Other income (expense), net                             166      (198)
                                                   --------- ---------
Income (loss) from continuing operations
   before income taxes                                8,916      (209)
Income tax expense (benefit)                          3,098       (72)
                                                   --------- ---------

Income (loss) from continuing operations              5,818      (137)

Discontinued operations (a)
   Gain on disposal of business (net of tax)              -    14,805
                                                   --------- ---------
Income before cumulative effect of
   accounting change                                  5,818    14,668

Cumulative effect of accounting change (net of tax)
 (b)                                                      -     1,624
                                                   --------- ---------

Net income                                        $   5,818 $  16,292
                                                   ========= =========

Basic earnings per share:
   Earnings (loss) from continuing operations     $    0.35 $   (0.01)
   Discontinued operations (net of tax) (a)               -      0.89
   Cumulative effect of accounting change (net of
    tax) (b)                                              -      0.10
                                                   --------- ---------

   Net income                                     $    0.35 $    0.98
                                                   ========= =========
Diluted earnings per share:
   Earnings (loss) from continuing operations     $    0.34 $   (0.01)
   Discontinued operations (net of tax) (a)               -      0.89
   Cumulative effect of accounting change (net of
    tax) (b)                                              -      0.10
                                                   --------- ---------

   Net income                                     $    0.34 $    0.98
                                                   ========= =========

Shares used to compute basic earnings per share      16,813    16,689
                                                   ========= =========

Shares used to compute diluted earnings per share    17,121    16,689
                                                   ========= =========

Notes to Consolidated Statements of Income

(a) 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.)

(b) The cumulative effect of accounting change in the first quarter
    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.



ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)



                                                  March 31
                                                   2004       Dec. 31
                                                (unaudited)    2003
                                                ----------  ----------
ASSETS

Current assets:
   Cash and cash equivalents                      $  22,290 $  29,052
   Restricted cash                                    1,805     1,903
   Trade and other accounts
    receivable, less allowance
    for doubtful accounts
     ($2,691 - 2004; $2,382 - 2003)                 135,948   132,542
   Receivable - TEL marketing
    agreements services                               2,228     2,456
   Inventories                                      122,304   124,428
   Prepaid expenses                                   9,061     3,810
   Deferred income taxes                             11,001    11,296
                                                 ---------- ----------
      Total current assets                          304,637   305,487
                                                 ---------- ----------

Property, plant and equipment, at cost              753,420   751,919
   Less accumulated depreciation and
    amortization                                    583,481   577,686
                                                 ---------- ----------
      Net property, plant and
       equipment                                    169,939   174,233
                                                 ---------- ----------
Prepaid pension cost                                 22,754    21,829
Deferred income taxes                                 8,527     5,471
Other assets and deferred charges                    67,069    75,564
Intangibles, net of amortization                     61,272    62,849
                                                 ---------- ----------
Total assets                                      $ 634,198 $ 645,433
                                                 ========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                              $  59,300 $  53,589
    Accrued expenses                                 42,345    50,691
    Long-term debt, current
     portion                                          5,871     6,978
    Income taxes payable                             15,657    10,055
                                                 ---------- ----------
        Total current liabilities                   123,173   121,313
                                                 ---------- ----------

Long-term debt                                      188,205   201,839
Other noncurrent liabilities                        117,607   122,598

Shareholders' equity
      Common stock ($1 par value)
       Issued - 16,831,509 in 2004
        and 16,786,009 in 2003                       16,832    16,786
      Additional paid in capital                     67,242    67,091
      Accumulated other
       comprehensive loss                           (20,649   (20,164)
      Retained earnings                             141,788   135,970
                                                 ---------- ----------
                                                    205,213   199,683
                                                 ---------- ----------
Total liabilities and shareholders'
 equity                                           $ 634,198 $ 645,433
                                                 ========== ==========


ETHYL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)



                                                 Three Months Ended
                                                      March 31
                                             -------------------------
                                                    2004       2003
                                                ----------  ----------

Cash and cash equivalents at beginning of
 year                                             $ 29,052  $ 15,478
                                                ----------  ----------
Cash flows from operating activities:
   Net income                                        5,818    16,292
   Adjustments to reconcile net income to
    cash flows from operating activities:
     Depreciation and amortization                  10,874    11,271
     Amortization of deferred financing costs        1,086     1,318
     Noncash pension expense                         2,583     2,316
     Cumulative effect of accounting changes             -    (2,549)
     Gain on sale of phenolic antioxidant
      business                                           -   (23,196)
     Deferred income tax (benefit) expense          (2,356)    2,029
   Working capital changes                           2,789     3,366
   Cash pension contributions                       (5,940)     (687)
   TEL working capital advance                         113       779
   Proceeds from legal settlement                        -     4,825
   Other, net                                       (3,901)    2,933
                                                ----------  ----------
      Cash provided from operating activities       11,066    18,697
                                                ----------  ----------
Cash flows from investing activities:
   Capital expenditures                             (3,295)   (1,818)
   Proceeds from sale of phenolic antioxidant
    business                                             -    27,020
   Other,net                                            11         3
                                                ----------  ----------
      Cash (used in) provided from investing
       activities                                   (3,284)   25,205
                                                ----------  ----------
Cash flows from financing activities:
   Repayment of term loan                          (14,602)        -
   Repayment of debt - previous agreements               -   (41,890)
   Debt issuance costs                                   -    (1,756)
   Other, net                                           58      (131)
                                                ----------  ----------
      Cash used in financing activities            (14,544)  (43,777)
                                                ----------  ----------

(Decrease) increase in cash and cash
 equivalents                                        (6,762)      125
                                                ----------  ----------

Cash and cash equivalents at end of period        $ 22,290  $ 15,603
                                                ==========  ==========


 

Contact:

     Ethyl Corporation
     David A. Fiorenza, 804-788-5555
     Fax: 804-788-5688
     investorrelations@ethyl.com

Additional Financial Information (PDF)