Rockwood Reports Fourth Quarter and Full Year Results
PRINCETON, N.J., Feb 18, 2009 (BUSINESS WIRE) -- Rockwood Holdings, Inc. (NYSE: ROC), a global producer of specialty chemicals and advanced materials, today announced results for the fourth quarter and full year 2008.
The highlights from continuing operations for the fourth quarter and year ended December 31, 2008 are as follows:
-- Net sales were $732.3 million for the fourth quarter of 2008, down 6.6% compared to $784.1 million for the same period in the prior year. Net sales were $3,380.1 million for the year ended December 31, 2008, up 10.3% compared to $3,065.2 million for the same period in the prior year.
-- Adjusted EBITDA from continuing operations was $131.4 million for the fourth quarter of 2008, down 14.2% compared to $153.1 million for the same period in the prior year. Adjusted EBITDA from continuing operations was $638.9 million for the year ended December 31, 2008, up 6.1% compared to $602.4 million last year.
-- On a constant-currency basis, net sales were up 0.6% and Adjusted EBITDA from continuing operations was down 8.0% for the fourth quarter of 2008, and were up 6.3% and 1.1%, respectively, for the year ended December 31, 2008.
-- Net loss from continuing operations for the fourth quarter of 2008 was $(734.1) million, including after-tax net non-recurring and other special charges of $748.4 primarily related to goodwill impairment charges recorded within several businesses. Net income from continuing operations for the fourth quarter of 2007 was $14.7 million, including after-tax net non-recurring and other special charges of $15.5 million.
-- Net loss from continuing operations for the year ended December 31, 2008 was $(634.6) million, including after-tax net non-recurring and other special charges of $778.5 million primarily related to the goodwill impairment charges recorded in the fourth quarter of 2008. Net income from continuing operations for the year ended December 31, 2007 was $81.5 million, including after-tax net non-recurring and other special charges of $36.1 million.
-- Diluted loss per share from continuing operations for the fourth quarter of 2008 was $(9.91), including after-tax net non-recurring and other special charges of $10.10. Excluding net non-recurring and other special charges, diluted earnings per share from continuing operations were $0.19 in the fourth quarter of 2008. Diluted earnings per share from continuing operations for the fourth quarter of 2007 were $0.19, including after-tax net non-recurring and other special charges of $0.20. Excluding net non-recurring and other special charges, diluted earnings per share from continuing operations were $0.39 in the fourth quarter of 2007.
-- Diluted loss per share from continuing operations for the full year 2008 was $(8.58), including after-tax net non-recurring and other special charges of $10.47. Excluding net non-recurring and other special charges, diluted earnings per share from continuing operations were $1.89 for the full year 2008. Diluted earnings per share from continuing operations for the full year 2007 were $1.07, including after-tax net non-recurring and other special charges of $0.47. Excluding net non-recurring and other special charges, diluted earnings per share from continuing operations were $1.54 in the full year 2007.
-- As previously announced, we completed the sale of our Pool and Spa Chemicals business in October 2008 and recorded a gain on sale, net of taxes of $40.5 million. The results of this business have been accounted for as a discontinued operation in the consolidated financial statements for all periods presented.
Commenting on Rockwood's performance, Seifi Ghasemi, Chairman and Chief Executive Officer, said, "The significant slowdown in global business activity affected our revenues but our proactive cost control measures enabled us to achieve Adjusted EBITDA margins at the 18% level during the fourth quarter despite the poor economic climate. We have been focused on consolidating facilities, reducing work hours and headcount, controlling discretionary expenses, and maintaining our pricing. Recognizing that we are in a global recession, we will remain intensely focused on the items we can control. With cash and cash equivalents at year end of approximately $469 million, we will also continue to focus on maintaining our strong liquidity position. We are confident that this proactive stance, combined with the strength of our portfolio, our major market positions and the diversity of our customer base, will enable us to perform up to our high expectations."
Fourth quarter results, as compared with the same period a year ago, are summarized below:
-- Specialty Chemicals: Net sales decreased 5.9% in part due to the impact of currency changes, while Adjusted EBITDA was up 3.2% primarily from higher selling prices, partially offset by lower volumes and higher raw material costs. -- In our Fine Chemicals business, higher selling prices of lithium products were partially offset by lower volumes of lithium products and metal sulfide applications.
-- In our Surface Treatment business, lower volumes, particularly in automotive applications, were partially offset by increased selling prices, the impact from bolt-on acquisitions and cost control measures.
-- In both businesses, higher raw material costs and the impact of currency changes had a negative impact on results.
-- Performance Additives: Net sales and Adjusted EBITDA decreased 23.5% and 75.6%, respectively. -- Results were negatively impacted by lower volumes of construction-related products.
-- Higher raw material costs, primarily in our Color Pigments and Services business, also had a negative impact on Adjusted EBITDA, partially offset by increased selling prices and the impact of a bolt-on acquisition.
-- Titanium Dioxide Pigments: Net sales and Adjusted EBITDA increased 42.3% and 5.0%, respectively. However, net sales and Adjusted EBITDA declined significantly excluding the impact of the venture with Kemira that was completed in September 2008. -- Market conditions, including current industry overcapacity particularly serving the construction industry, have continued to negatively impact this segment.
-- Lower volumes for functional additives and titanium dioxide products, primarily commodity grade, as well as higher energy and raw material costs, had a negative effect on results.
-- Advanced Ceramics: Net sales and Adjusted EBITDA decreased 13.5% and 20.1%, respectively. -- Lower volumes in most applications were partially offset by increased volumes of medical products.
-- Higher raw material and energy costs also had a negative impact on Adjusted EBITDA.
-- Specialty Compounds: Net sales and Adjusted EBITDA decreased 23.6% and 18.0%, respectively. -- Results were down primarily from lower volumes in wire and cable applications, partially offset by increased selling prices.
-- Higher raw material costs also had a negative impact on Adjusted EBITDA.
-- Corporate and other: Corporate costs were down due to lower compensation-related costs and lower professional fees recorded in the fourth quarter of 2008, as well as other cost control measures.
-- Other Items: -- Impairment charges. As a result of the significant drop in global stock valuations, the substantial reduction in the market valuation of Rockwood and comparable companies, and the continuing negative global economic and market outlook, we recorded a non-cash charge of $809.5 million in the fourth quarter of 2008 to write-down the carrying value of goodwill within several businesses. The write-down had no impact on the Company's debt, Adjusted EBITDA or calculation of lender covenants.
-- Restructuring and other severance costs of $29.6 million were recorded in the fourth quarter of 2008 primarily related to miscellaneous headcount reductions throughout the Company.
-- Interest expense increased $30.7 million in the fourth quarter of 2008 compared to the same period in the prior year. The fourth quarter of 2008 and 2007 included non-cash losses of $44.7 million and $16.8 million, respectively, representing the movement in the mark-to-market valuation of our interest rate hedges. Excluding the impact of these losses, interest expense increased $2.8 million primarily due to debt incurred related to the Titanium Dioxide Pigments venture with Kemira.
-- Gain on early extinguishment of debt. In the fourth quarter of 2008, we redeemed 11.0 million Euros of our senior subordinated notes due in 2014 and recorded a gain of $4.0 million.
-- Foreign exchange loss of $20.1 million for the fourth quarter of 2008 was primarily due to the impact of the weaker pound sterling as of December 31, 2008 versus September 30, 2008, in connection with non-operating euro-denominated transactions.
-- Income taxes. The effective tax rate for the fourth quarter of 2008 of 8.4% was primarily impacted by the impairment losses on non-deductible goodwill. The effective tax rate for the full year 2008, after excluding non-recurring items, was approximately 31%.
-- Minority interest in continuing operations, net of tax in the fourth quarter of 2008 primarily relates to the goodwill impairment charge recorded in the Titanium Dioxide Pigments venture.
-- Free cash flow was an inflow of $89.9 million for the year ended December 31, 2008. This amount consists of net cash provided by operating activities from continuing operations of $290.8 million plus non-recurring items and other, net of $17.9 million and proceeds on the sale of property, plant and equipment of $5.2 million, less capital expenditures of $224.0 million.
-- Net debt, which is total debt less cash and cash equivalents, was $2,342.5 million as of December 31, 2008 compared to $2,231.3 million as of December 31, 2007. The increase in net debt was primarily due to increased debt levels related to the Titanium Dioxide Pigments venture with Kemira, partially offset by the impact of currency changes.
Conference Call and Webcast
We will host a conference call and webcast to discuss the results of operations for the fourth quarter and full year ended December 31, 2008, on Wednesday, February 18, 2009 at 11:00 am Eastern Standard Time. The dial-in number to access the conference call in the U.S. is (800) 230-1059 and the international dial-in number is (612) 332-0637. No access code is needed for either call. A replay of the conference call will be available through March 4, 2009 at (800) 475-6701 in the U.S., access code: 980859, and internationally at (320) 365-3844, access code: 980859.
A listen only, live webcast of the conference call will be available at www.rocksp.com. Materials for the call, including a PowerPoint file detailing the results, will be available for download on the site on the morning of the call. The webcast and PowerPoint file will be archived on Rockwood's website.
Non-GAAP Financial Measures
This press release includes "non-GAAP financial measures," such as, a discussion of Adjusted EBITDA, free cash flow, net income (loss)/diluted earnings (loss) per share from continuing operations excluding certain items. Adjusted EBITDA is not intended to be an alternative to net income (loss) as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. All presentations of consolidated Adjusted EBITDA are calculated using the definition set forth in the senior secured credit agreement as a basis and reflects management's interpretations thereof. Adjusted EBITDA, which is referred to under the senior secured credit agreement as "Consolidated EBITDA," is defined in the senior secured credit agreement as consolidated earnings (which, as defined in the senior secured credit agreement, equals income (loss) before the deduction of income taxes of Rockwood Specialties Group, Inc. and the Restricted Subsidiaries (as such term is defined in the senior secured credit agreement), excluding extraordinary items) plus certain items including interest expense, depreciation expense, amortization expense, extraordinary losses and non-recurring charges, losses on asset sales, less certain items including extraordinary gains and non-recurring gains, non-cash gains and gains on asset sales. We use Adjusted EBITDA on a consolidated basis to assess our operating performance, to calculate performance-based cash bonuses and determine whether certain performance-based options vest (as both such bonuses and options are tied to Adjusted EBITDA), and as a liquidity measure. In addition, we use Adjusted EBITDA to determine compliance with our debt covenants. We also use Adjusted EBITDA on a segment basis as the primary measure used by our chief operating decision maker to evaluate the ongoing performance of our business segments and reporting units. A reconciliation of Adjusted EBITDA to net income (loss) is contained in the press release. We strongly urge you to review the reconciliation. In addition, we discuss sales growth in terms of nominal (actual) and net change (nominal less constant currency impacts). Free cash flow is not intended to be an alternative to cash flows from operating activities as a measure of liquidity. Our presentation of free cash flow is defined as net cash from operating activities from continuing operations, plus non-recurring items and other, net and proceeds on the sale of property, plant and equipment (excludes sales of property, plant and equipment related to sales of businesses) less capital expenditures. Management believes that free cash flow is meaningful to investors because it provides an additional measure of liquidity. Neither net income (loss) from continuing operations excluding certain items nor diluted earnings per share from continuing operations excluding certain items is intended to be an alternative for net income (loss) or diluted earnings (loss) per share. Management believes that net income (loss) and diluted earnings (loss) per share from continuing operations excluding certain items is meaningful to investors because it provides a view of the Company with respect to ongoing operating results. Reconciliations of these non-GAAP financial measures are included herein. These non-GAAP measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies.
Rockwood Holdings, Inc. is a leading global specialty chemicals and advanced materials company. Rockwood has a worldwide employee base of approximately 10,000 people and annual net sales of approximately $3.4 billion. Rockwood focuses on global niche segments of the specialty chemicals, pigments and additives and advanced materials markets. For more information on Rockwood, please visit www.rocksp.com.
The information set forth in this press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the business, operations and financial condition of Rockwood Holdings, Inc. and its subsidiaries and affiliates ("Rockwood"). Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "predicts" and variations of such words or expressions are intended to identify forward-looking statements. Although Rockwood believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that its expectations will be realized. "Forward-looking statements" consist of all non-historical information, including any statements referring to the prospects and future performance of Rockwood. Actual results could differ materially from those projected in Rockwood's forward-looking statements due to numerous known and unknown risks and uncertainties, including, among other things, the "Risk Factors" described in Rockwood's filings with the Securities and Exchange Commission. Rockwood does not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in millions, except per share amounts; shares in
thousands)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Net sales $ 732.3 $ 784.1 $ 3,380.1 $ 3,065.2
Cost of products sold 531.3 539.9 2,365.8 2,089.1
Gross profit 201.0 244.2 1,014.3 976.1
Selling, general and administrative expenses 148.6 155.9 661.3 597.6
Goodwill impairment charges 809.5 - 809.5 -
Restructuring and other severance costs 29.6 3.1 35.3 12.0
(Gain) loss on sale of assets and other (0.6 ) 0.6 (2.4 ) (4.7 )
Operating (loss) income (786.1 ) 84.6 (489.4 ) 371.2
Other income (expenses):
Interest expense (91.4 ) (60.7 ) (231.1 ) (219.3 )
Interest income 1.8 1.4 6.0 11.5
Gain (loss) on early extinguishment of debt 4.0 - 4.0 (18.6 )
Refinancing expenses - - - (0.9 )
Foreign exchange (loss) gain, net (20.1 ) (3.5 ) (32.3 ) 7.8
Other, net - 0.1 0.7 -
Other expenses, net (105.7 ) (62.7 ) (252.7 ) (219.5 )
(Loss) income from continuing operations before taxes and
minority interest (891.8 ) 21.9 (742.1 ) 151.7
Income tax (benefit) provision (74.5 ) 5.5 (23.9 ) 62.3
(Loss) income from continuing operations before minority interest (817.3 ) 16.4 (718.2 ) 89.4
Minority interest in continuing operations, net of tax 83.2 (1.7 ) 83.6 (7.9 )
Net (loss) income from continuing operations (734.1 ) 14.7 (634.6 ) 81.5
Income from discontinued operations, net of tax 0.4 9.7 3.3 25.3
Gain on sale of discontinued operations, net of tax 42.9 94.7 42.9 210.4
Minority interest in discontinued operations, net of tax - - - (0.1 )
Net (loss) income $ (690.8 ) $ 119.1 $ (588.4 ) $ 317.1
Basic (loss) earnings per share:
(Loss) earnings from continuing operations $ (9.91 ) $ 0.20 $ (8.58 ) $ 1.10
Earnings from discontinued operations, net of tax 0.58 1.41 0.63 3.20
Basic (loss) earnings per share $ (9.33 ) $ 1.61 $ (7.95 ) $ 4.30
Diluted (loss) earnings per share:
(Loss) earnings from continuing operations $ (9.91 ) $ 0.19 $ (8.58 ) $ 1.07
Earnings from discontinued operations, net of tax 0.58 1.37 0.63 3.09
Diluted (loss) earnings per share $ (9.33 ) $ 1.56 $ (7.95 ) $ 4.16
Weighted average number of basic shares outstanding 74,059 73,865 73,983 73,817
Weighted average number of diluted shares outstanding 74,059 76,523 73,983 76,279
(a) Interest expense includes:
Interest expense on debt $ (44.2 ) $ (41.6 ) $ (170.0 ) $ (177.9 )
Mark-to-market losses on interest rate swaps (44.7 ) (16.8 ) (51.5 ) (32.2 )
Deferred financing costs (2.5 ) (2.3 ) (9.6 ) (9.2 )
Total $ (91.4 ) $ (60.7 ) $ (231.1 ) $ (219.3 )
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in millions, except per share amounts; shares in
thousands)
December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $ 468.7 $ 350.1
Accounts receivable, net 464.6 460.3
Inventories 641.0 526.9
Deferred income taxes 20.3 22.6
Prepaid expenses and other current assets 65.9 69.7
Assets of discontinued operations - 75.1
Total current assets 1,660.5 1,504.7
Property, plant and equipment, net 1,752.2 1,508.5
Goodwill 917.8 1,730.0
Other intangible assets, net 754.8 675.9
Deferred debt issuance costs, net of accumulated amortization
of $39.2 and $31.2, respectively 39.1 41.1
Deferred income taxes 11.3 15.5
Other assets 39.5 39.2
Total assets $ 5,175.2 $ 5,514.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 260.8 $ 285.5
Income taxes payable 4.1 9.5
Accrued compensation 92.6 81.5
Restructuring liability 18.9 14.0
Accrued expenses and other current liabilities 198.4 164.3
Deferred income taxes 9.8 7.2
Long-term debt, current portion 90.9 107.4
Liabilities of discontinued operations - 17.0
Total current liabilities 675.5 686.4
Long-term debt 2,720.3 2,474.0
Pension and related liabilities 352.0 327.5
Deferred income taxes 94.7 112.6
Other liabilities 191.7 165.7
Total liabilities 4,034.2 3,766.2
Minority interest 315.4 175.3
Restricted stock units 2.1 1.8
Stockholders' equity:
Common stock ($0.01 par value, 400,000 shares authorized, 74,155
shares issued and 74,061 shares outstanding at December 31, 2008;
400,000 shares authorized, 73,989 shares issued and 73,895
shares outstanding at December 31, 2007) 0.7 0.7
Paid-in capital 1,163.5 1,156.2
Accumulated other comprehensive income 204.0 371.0
Retained (deficit) earnings (543.3 ) 45.1
Treasury stock, at cost (1.4 ) (1.4 )
Total stockholders' equity 823.5 1,571.6
Total liabilities and stockholders' equity $ 5,175.2 $ 5,514.9
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in millions)
Year ended
December 31,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (588.4 ) $ 317.1
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Income from discontinued operations, net of tax (3.3 ) (25.3 )
Gain on sale of discontinued operations, net of tax (42.9 ) (210.4 )
Minority interest in discontinued operations, net of tax - 0.1
Depreciation and amortization 258.9 211.7
Deferred financing costs amortization 9.6 9.2
(Gain) loss on early extinguishment of debt (including $4.1 of
noncash write-offs on deferred
financing costs for the year ended December 31, 2007) (4.0 ) 18.6
Foreign exchange loss (gain) 32.3 (7.8 )
Fair value adjustment of derivatives 51.5 32.2
Bad debt provision 3.4 (1.3 )
Acquired in-process research and development 2.9 -
Stock-based compensation 4.1 3.9
Deferred income taxes (64.5 ) 28.4
Goodwill impairment charges 809.5 -
Loss (gain) on sale of assets and other 0.7 (4.7 )
Minority interest in continuing operations (83.6 ) 7.9
Changes in assets and liabilities, net of the effect of foreign
currency translation and acquisitions:
Accounts receivable 36.8 7.1
Inventories, including inventory write-up charges (66.8 ) (34.5 )
Prepaid expenses and other assets 12.6 (18.5 )
Accounts payable (52.1 ) 1.6
Income taxes payable (1.4 ) (5.8 )
Accrued expenses and other liabilities (24.5 ) 0.7
Net cash provided by operating activities of continuing operations 290.8 330.2
Net cash provided by operating activities of discontinued operations 12.0 38.3
Net cash provided by operating activities 302.8 368.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, including transaction fees paid, net of cash acquired (232.7 ) (240.1 )
Post closing purchase price consideration 29.8 -
Capital expenditures, excluding capital leases (224.0 ) (193.2 )
Proceeds from formation of Viance joint venture, net - 73.0
Proceeds on sale of assets 7.0 14.2
Net cash used in investing activities of continuing operations (419.9 ) (346.1 )
Net cash provided by investing activities of discontinued
operations, including net sale proceeds
of $122.0 and $731.7 in 2008 and 2007, respectively 116.3 723.7
Net cash (used in) provided by investing activities (303.6 ) 377.6
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net of fees 2.3 1.5
Titanium Dioxide Pigments venture financing 362.5 -
Payment of assumed debt to Titanium Dioxide Pigments venture (141.4 ) -
minority shareholder
Repayment of 2011 Notes - (273.4 )
Repayment of 2014 Notes (10.2 ) -
Repayment of senior secured credit facilities (68.7 ) (57.1 )
Repayment of senior secured credit facilities revolver - (37.0 )
Payments on other long-term debt (30.9 ) (24.1 )
Deferred financing costs (5.0 ) -
Payments related to early extinguishment of debt - (14.5 )
Distribution to minority shareholder (3.9 ) (7.2 )
Net cash provided by (used in) financing activities of continuing 104.7 (411.8 )
operations
Net cash used in financing activities of discontinued operations - -
Net cash provided by (used in) financing activities 104.7 (411.8 )
Effect of exchange rate changes on cash and cash equivalents 14.7 (10.3 )
Net increase in cash and cash equivalents 118.6 324.0
Less increase in cash and cash equivalents from discontinued - (1.6 )
operations, net (a)
Increase in cash and cash equivalents from continuing operations 118.6 322.4
Cash and cash equivalents of continuing operations, beginning of 350.1 27.7
period
Cash and cash equivalents of continuing operations, end of period $ 468.7 $ 350.1
(a) Excludes net sale proceeds of $122.0 and intercompany
transfers of $6.3 for the year ended December 31, 2008.
Excludes
net sale proceeds of $731.7 and intercompany transfers of $28.7 in
2007.
Supplemental disclosures of cash flow information:
Interest paid $ 167.3 $ 174.4
Income taxes paid, net of refunds $ 41.9 $ 39.8
Non-cash investing activities:
Titanium Dioxide Pigments venture formation, net $ 246.0 $ -
Acquisition of capital equipment $ 22.7 $ 24.7
Rockwood Holdings, Inc. and Subsidiaries
Net Sales and Adjusted EBITDA
Net Sales
Three Months Ended
December 31,
($ in millions) 2008 2007 % Change
Specialty Chemicals $ 265.9 $ 282.7 (5.9 ) %
Performance Additives 158.8 207.7 (23.5 )
Titanium Dioxide Pigments 154.0 108.2 42.3
Advanced Ceramics 101.0 116.7 (13.5 )
Specialty Compounds 50.7 66.4 (23.6 )
Corporate and other 1.9 2.4 (20.8 )
Total (a) $ 732.3 $ 784.1 (6.6 ) %
Adjusted EBITDA
Three Months Ended
December 31,
($ in millions) 2008 2007 % Change
Specialty Chemicals $ 71.6 $ 69.4 3.2 %
Performance Additives 7.6 31.2 (75.6 )
Titanium Dioxide Pigments 22.9 21.8 5.0
Advanced Ceramics 28.7 35.9 (20.1 )
Specialty Compounds 7.3 8.9 (18.0 )
Corporate and other (6.7 ) (14.1 ) 52.5
Adjusted EBITDA from continuing operations 131.4 153.1 (14.2 )
Discontinued operations - Pool and Spa Chemicals 0.3 6.1 (95.1 )
Total Adjusted EBITDA $ 131.7 $ 159.2 (17.3 ) %
(a) - Excludes net sales of $2.9 million and $23.1 million for the
three months ended December 31, 2008 and 2007, respectively, from
the Pool and Spa Chemicals business that was sold in October 2008.
The results of this business have been accounted for as a
discontinued operation in the consolidated financial statements for
all periods presented.
Rockwood Holdings, Inc. and Subsidiaries
Net Sales and Adjusted EBITDA
Net Sales
Year Ended
December 31,
($ in millions) 2008 2007 % Change
Specialty Chemicals $ 1,232.6 $ 1,082.9 13.8 %
Performance Additives 835.6 798.5 4.6
Titanium Dioxide Pigments 534.8 442.9 20.7
Advanced Ceramics 505.9 452.5 11.8
Specialty Compounds 261.5 276.6 (5.5 )
Corporate and other 9.7 11.8 (17.8 )
Total (a) $ 3,380.1 $ 3,065.2 10.3 %
Adjusted EBITDA
Year Ended
December 31,
($ in millions) 2008 2007 % Change
Specialty Chemicals $ 313.0 $ 262.2 19.4 %
Performance Additives 107.1 150.7 (28.9 )
Titanium Dioxide Pigments 83.1 82.7 0.5
Advanced Ceramics 150.2 128.1 17.3
Specialty Compounds 34.0 34.3 (0.9 )
Corporate and other (48.5 ) (55.6 ) 12.8
Adjusted EBITDA from continuing operations 638.9 602.4 6.1
Discontinued operations - Pool and Spa Chemicals 5.4 12.0 (55.0 )
Total Adjusted EBITDA $ 644.3 $ 614.4 4.9 %
(a) - Excludes net sales of $54.9 million and $71.2 million for
the year ended December 31, 2008 and 2007, respectively, from the
Pool and Spa Chemicals business that was sold in October 2008. The
results of this business have been accounted for as a discontinued
operation in the consolidated financial statements for all periods
presented.
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Segment Net Sales and Adjusted EBITDA
Three Months Ended
December 31, Total Total
($ in millions) 2008 2007 Change in $ Change in %
Net Sales:
Specialty Chemicals $ 265.9 $ 282.7 $ (16.8 ) (5.9 ) %
Performance Additives 158.8 207.7 (48.9 ) (23.5 )
Titanium Dioxide Pigments 154.0 108.2 45.8 42.3
Advanced Ceramics 101.0 116.7 (15.7 ) (13.5 )
Specialty Compounds 50.7 66.4 (15.7 ) (23.6 )
Corporate and other 1.9 2.4 (0.5 ) (20.8 )
Total $ 732.3 $ 784.1 $ (51.8 ) (6.6 ) %
Constant Constant Currency Basis
Currency Net Net
($ in millions) Effect in $ Change in $ Change in %
Net Sales:
Specialty Chemicals $ (23.1 ) $ 6.3 2.2 %
Performance Additives (11.0 ) (37.9 ) (18.2 )
Titanium Dioxide Pigments (8.5 ) 54.3 50.2
Advanced Ceramics (8.7 ) (7.0 ) (6.0 )
Specialty Compounds (4.7 ) (11.0 ) (16.6 )
Corporate and other (0.2 ) (0.3 ) (12.5 )
Total $ (56.2 ) $ 4.4 0.6 %
Three Months Ended
December 31, Total Total
($ in millions) 2008 2007 Change in $ Change in %
Adjusted EBITDA:
Specialty Chemicals $ 71.6 $ 69.4 $ 2.2 3.2 %
Performance Additives 7.6 31.2 (23.6 ) (75.6 )
Titanium Dioxide Pigments 22.9 21.8 1.1 5.0
Advanced Ceramics 28.7 35.9 (7.2 ) (20.1 )
Specialty Compounds 7.3 8.9 (1.6 ) (18.0 )
Corporate and other (6.7 ) (14.1 ) 7.4 52.5
Adjusted EBITDA from continuing operations 131.4 153.1 (21.7 ) (14.2 )
Discontinued operations - Pool and Spa Chemicals 0.3 6.1 (5.8 ) (95.1 )
Total Adjusted EBITDA $ 131.7 $ 159.2 $ (27.5 ) (17.3 ) %
Constant Constant Currency Basis
Currency Net Net
($ in millions) Effect in $ Change in $ Change in %
Adjusted EBITDA:
Specialty Chemicals $ (4.2 ) $ 6.4 9.2 %
Performance Additives (1.0 ) (22.6 ) (72.4 )
Titanium Dioxide Pigments (1.2 ) 2.3 10.6
Advanced Ceramics (2.7 ) (4.5 ) (12.5 )
Specialty Compounds (0.5 ) (1.1 ) (12.4 )
Corporate and other 0.1 7.3 51.8
Adjusted EBITDA from continuing operations (9.5 ) (12.2 ) (8.0 )
Discontinued operations - Pool and Spa Chemicals - (5.8 ) (95.1 )
Total Adjusted EBITDA $ (9.5 ) $ (18.0 ) (11.3 ) %
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Segment Net Sales and Adjusted EBITDA
Year Ended
December 31, Total Total
($ in millions) 2008 2007 Change in $ Change in %
Net Sales:
Specialty Chemicals $ 1,232.6 $ 1,082.9 $ 149.7 13.8 %
Performance Additives 835.6 798.5 37.1 4.6
Titanium Dioxide Pigments 534.8 442.9 91.9 20.7
Advanced Ceramics 505.9 452.5 53.4 11.8
Specialty Compounds 261.5 276.6 (15.1 ) (5.5 )
Corporate and other 9.7 11.8 (2.1 ) (17.8 )
Total $ 3,380.1 $ 3,065.2 $ 314.9 10.3 %
Constant Constant Currency Basis
Currency Net Net
($ in millions) Effect in $ Change in $ Change in %
Net Sales:
Specialty Chemicals $ 53.0 $ 96.7 8.9 %
Performance Additives 3.8 33.3 4.2
Titanium Dioxide Pigments 32.9 59.0 13.3
Advanced Ceramics 35.7 17.7 3.9
Specialty Compounds (3.1 ) (12.0 ) (4.3 )
Corporate and other 0.7 (2.8 ) (23.7 )
Total $ 123.0 $ 191.9 6.3 %
Year Ended
December 31, Total Total
($ in millions) 2008 2007 Change in $ Change in %
Adjusted EBITDA:
Specialty Chemicals $ 313.0 $ 262.2 $ 50.8 19.4 %
Performance Additives 107.1 150.7 (43.6 ) (28.9 )
Titanium Dioxide Pigments 83.1 82.7 0.4 0.5
Advanced Ceramics 150.2 128.1 22.1 17.3
Specialty Compounds 34.0 34.3 (0.3 ) (0.9 )
Corporate and other (48.5 ) (55.6 ) 7.1 12.8
Adjusted EBITDA from continuing operations 638.9 602.4 36.5 6.1
Discontinued operations - Pool and Spa Chemicals 5.4 12.0 (6.6 ) (55.0 )
Total Adjusted EBITDA $ 644.3 $ 614.4 $ 29.9 4.9 %
Constant Constant Currency Basis
Currency Net Net
($ in millions) Effect in $ Change in $ Change in %
Adjusted EBITDA:
Specialty Chemicals $ 11.7 $ 39.1 14.9 %
Performance Additives 2.0 (45.6 ) (30.3 )
Titanium Dioxide Pigments 5.2 (4.8 ) (5.8 )
Advanced Ceramics 12.0 10.1 7.9
Specialty Compounds - (0.3 ) (0.9 )
Corporate and other (0.8 ) 7.9 14.2
Adjusted EBITDA from continuing operations 30.1 6.4 1.1
Discontinued operations - Pool and Spa Chemicals - (6.6 ) (55.0 )
Total Adjusted EBITDA $ 30.1 $ (0.2 ) - %
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Income (loss) from Continuing Operations
before Taxes and
Minority Interest to Adjusted EBITDA by Segment
Titanium
Specialty Performance Dioxide Advanced
($ in millions) Chemicals Additives Pigments Ceramics
Three months ended December 31, 2008
Income (loss) from continuing operations
before taxes and minority interest $ 17.8 $ (483.7 ) $ (257.3 ) $ 2.1
Interest expense 15.2 7.8 11.3 7.8
Interest income (0.3 ) 0.2 (0.1 ) (0.1 )
Depreciation and amortization 18.7 16.3 17.0 11.4
Goodwill impairment charges - 456.6 247.7 -
Acquisition related expenses 2.2 6.2 3.9 1.6
Restructuring and other severance costs 15.7 3.0 0.2 3.6
Gain on early extinguishment of debt - - - -
(Gain) loss on sale of assets and other (0.8 ) - 0.3 (0.1 )
Foreign exchange loss (gain), net 2.9 0.2 (0.2 ) 2.3
Other 0.2 1.0 0.1 0.1
Adjusted EBITDA from continuing operations 71.6 7.6 22.9 28.7
Discontinued operations - Pool and Spa Chemicals - 0.3 - -
Total Adjusted EBITDA $ 71.6 $ 7.9 $ 22.9 $ 28.7
Specialty Corporate and
($ in millions) Compounds other Consolidated
Three months ended December 31, 2008
Income (loss) from continuing operations
before taxes and minority interest $ (103.6 ) $ (67.1 ) $ (891.8 )
Interest expense 2.4 46.9 91.4
Interest income (0.1 ) (1.4 ) (1.8 )
Depreciation and amortization 3.0 1.9 68.3
Goodwill impairment charges 105.2 - 809.5
Acquisition related expenses 0.4 0.2 14.5
Restructuring and other severance costs - 2.0 24.5
Gain on early extinguishment of debt - (4.0 ) (4.0 )
(Gain) loss on sale of assets and other - - (0.6 )
Foreign exchange loss (gain), net - 14.9 20.1
Other - (0.1 ) 1.3
Adjusted EBITDA from continuing operations 7.3 (6.7 ) 131.4
Discontinued operations - Pool and Spa Chemicals - - 0.3
Total Adjusted EBITDA $ 7.3 $ (6.7 ) $ 131.7
Titanium
Specialty Performance Dioxide Advanced
($ in millions) Chemicals Additives Pigments Ceramics
Three months ended December 31, 2007
Income (loss) from continuing operations
before taxes and minority interest $ 39.8 $ 1.0 $ (0.3 ) $ 15.6
Interest expense 11.5 7.8 8.5 8.6
Interest income 2.9 (1.0 ) (0.2 ) 0.4
Depreciation and amortization 14.5 17.2 12.5 10.7
Acquisition related expenses 0.1 5.6 0.5 1.0
Restructuring and other severance costs 0.7 0.5 - 0.3
(Gain) loss on sale of assets and other 0.2 (0.1 ) 0.4 -
Foreign exchange gain, net (0.3 ) - 0.4 (0.8 )
Other - 0.2 - 0.1
Adjusted EBITDA from continuing operations 69.4 31.2 21.8 35.9
Discontinued operations - Pool and Spa Chemicals - 6.1 - -
Total Adjusted EBITDA $ 69.4 $ 37.3 $ 21.8 $ 35.9
Specialty Corporate and
($ in millions) Compounds other Consolidated
Three months ended December 31, 2007
Income (loss) from continuing operations
before taxes and minority interest $ 2.8 $ (37.0 ) $ 21.9
Interest expense 2.4 21.9 60.7
Interest income 0.2 (3.7 ) (1.4 )
Depreciation and amortization 2.8 1.4 59.1
Acquisition related expenses 0.7 (1.6 ) 6.3
Restructuring and other severance costs - 0.1 1.6
(Gain) loss on sale of assets and other - 0.1 0.6
Foreign exchange gain, net - 4.2 3.5
Other - 0.5 0.8
Adjusted EBITDA from continuing operations 8.9 (14.1 ) 153.1
Discontinued operations - Pool and Spa Chemicals - - 6.1
Total Adjusted EBITDA $ 8.9 $ (14.1 ) $ 159.2
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Income (loss) from Continuing Operations
before Taxes and
Minority Interest to Adjusted EBITDA by Segment
Titanium
Specialty Performance Dioxide Advanced
($ in millions) Chemicals Additives Pigments Ceramics
Year ended December 31, 2008
Income (loss) from continuing operations
before taxes and minority interest $ 166.5 $ (470.6 ) $ (266.3 ) $ 61.3
Interest expense 56.2 30.4 37.9 34.2
Interest income (1.2 ) 1.3 (0.2 ) (0.2 )
Depreciation and amortization 69.7 67.2 56.3 47.0
Goodwill impairment charges - 456.6 247.7 -
Acquisition related expenses 4.6 17.0 6.7 2.4
Restructuring and other severance costs 16.1 3.4 0.2 4.0
Gain on early extinguishment of debt - - - -
(Gain) loss on sale of assets and other (1.3 ) - 1.1 0.1
Foreign exchange loss (gain), net 2.9 0.3 (0.3 ) 1.4
Other (0.5 ) 1.5 - -
Adjusted EBITDA from continuing operations 313.0 107.1 83.1 150.2
Discontinued operations - Pool and Spa Chemicals - 5.4 - -
Total Adjusted EBITDA $ 313.0 $ 112.5 $ 83.1 $ 150.2
Specialty Corporate and
($ in millions) Compounds other Consolidated
Year ended December 31, 2008
Income (loss) from continuing operations
before taxes and minority interest $ (92.8 ) $ (140.2 ) $ (742.1 )
Interest expense 9.3 63.1 231.1
Interest income (0.5 ) (5.2 ) (6.0 )
Depreciation and amortization 11.3 7.4 258.9
Goodwill impairment charges 105.2 - 809.5
Acquisition related expenses 1.5 1.4 33.6
Restructuring and other severance costs - 2.4 26.1
Gain on early extinguishment of debt - (4.0 ) (4.0 )
(Gain) loss on sale of assets and other - (2.3 ) (2.4 )
Foreign exchange loss (gain), net - 28.0 32.3
Other - 0.9 1.9
Adjusted EBITDA from continuing operations 34.0 (48.5 ) 638.9
Discontinued operations - Pool and Spa Chemicals - - 5.4
Total Adjusted EBITDA $ 34.0 $ (48.5 ) $ 644.3
Titanium
Specialty Performance Dioxide Advanced
($ in millions) Chemicals Additives Pigments Ceramics
Year ended December 31, 2007
Income (loss) from continuing operations
before taxes and minority interest $ 165.4 $ 62.5 $ 6.0 $ 50.9
Interest expense 42.0 19.5 32.4 33.8
Interest income - (1.6 ) (0.2 ) 0.3
Depreciation and amortization 54.4 57.6 42.4 40.5
Acquisition related expenses (0.2 ) 9.1 1.6 2.5
Restructuring and other severance costs 2.6 1.5 - 1.2
Loss on early extinguishment of debt - 1.4 - -
Refinancing expenses - - - -
(Gain) loss on sale of assets and other (0.2 ) 0.2 0.5 -
Foreign exchange gain, net (0.6 ) (0.2 ) - (1.2 )
Other (1.2 ) 0.7 - 0.1
Adjusted EBITDA from continuing operations 262.2 150.7 82.7 128.1
Discontinued operations - Pool and Spa Chemicals - 12.0 - -
Total Adjusted EBITDA $ 262.2 $ 162.7 $ 82.7 $ 128.1
Specialty Corporate and
($ in millions) Compounds other Consolidated
Year ended December 31, 2007
Income (loss) from continuing operations
before taxes and minority interest $ 11.8 $ (144.9 ) $ 151.7
Interest expense 9.4 82.2 219.3
Interest income (0.3 ) (9.7 ) (11.5 )
Depreciation and amortization 11.2 5.6 211.7
Acquisition related expenses 1.1 0.6 14.7
Restructuring and other severance costs - 4.2 9.5
Loss on early extinguishment of debt 1.1 16.1 18.6
Refinancing expenses - 0.9 0.9
(Gain) loss on sale of assets and other - (5.2 ) (4.7 )
Foreign exchange gain, net - (5.8 ) (7.8 )
Other - 0.4 -
Adjusted EBITDA from continuing operations 34.3 (55.6 ) 602.4
Discontinued operations - Pool and Spa Chemicals - - 12.0
Total Adjusted EBITDA $ 34.3 $ (55.6 ) $ 614.4
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Reconciliation of Net Income (Loss) to Adjusted
EBITDA
($ in millions)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Net (loss) income $ (690.8 ) $ 119.1 $ (588.4 ) $ 317.1
Income from discontinued operations, net of tax (0.4 ) (9.7 ) (3.3 ) (25.3 )
Gain on sale of discontinued operations, net of tax (42.9 ) (94.7 ) (42.9 ) (210.4 )
Minority interest in discontinued operations, net of tax - - - 0.1
Net (loss) income from continuing operations (734.1 ) 14.7 (634.6 ) 81.5
Income tax (benefit) provision (74.5 ) 5.5 (23.9 ) 62.3
Minority interest in continuing operations, net of tax (83.2 ) 1.7 (83.6 ) 7.9
(Loss) income from continuing operations before taxes and minority (891.8 ) 21.9 (742.1 ) 151.7
interest
Interest expense 91.4 60.7 231.1 219.3
Interest income (1.8 ) (1.4 ) (6.0 ) (11.5 )
Depreciation and amortization 68.3 59.1 258.9 211.7
Goodwill impairment charges 809.5 - 809.5 -
Acquisition-related expenses (a) 14.5 6.3 33.6 14.7
Restructuring and other severance costs 24.5 1.6 26.1 9.5
(Gain) loss on early extinguishment of debt (4.0 ) - (4.0 ) 18.6
Refinancing expenses - - - 0.9
(Gain) loss on sale of assets and other (0.6 ) 0.6 (2.4 ) (4.7 )
Foreign exchange loss (gain), net 20.1 3.5 32.3 (7.8 )
Other 1.3 0.8 1.9 -
Adjusted EBITDA from continuing operations 131.4 153.1 638.9 602.4
Discontinued operations - Pool and Spa Chemicals 0.3 6.1 5.4 12.0
Total Adjusted EBITDA $ 131.7 $ 159.2 $ 644.3 $ 614.4
(a) - Primarily related to integration and restructuring costs,
inventory write-up charges and acquired in-process research and
development costs related to the Kemira venture formation, the
Holliday Pigments and Elementis acquisitions in the Performance
Additives segment and other acquisitions.
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Reconciliation of Net Income (Loss)/Diluted Earnings
(Loss) Per Share from Continuing Operations as Reported to Net
Income/Diluted Earnings Per Share from Continuing Operations as
Adjusted
(Dollars in millions, except per share amounts; shares in
thousands)
Three Months Ended Three Months Ended
December 31, 2008 December 31, 2007
Net Income Diluted EPS Net Income Diluted EPS
from from from from
Continuing Continuing Continuing Continuing
Operations Operations Operations Operations
As reported $ (734.1 ) $ (9.91 ) $ 14.7 $ 0.19
Anti-dilution adjustment - 0.02 (a) - -
Adjustments to expenses from continuing operations:
Goodwill impairment charges 675.7 9.11 - -
Mark-to-market swap loss 42.9 0.58 16.8 0.22
Foreign exchange losses on financing activities 35.6 0.48 8.1 0.11
Restructuring and other severance costs 18.3 0.24 1.2 0.02
Acquisition-related expenses 10.4 0.14 5.1 0.07
Other 0.8 0.01 1.2 0.01
Subtotal 783.7 10.56 32.4 0.43
Adjustments to income from continuing operations:
Tax allocation from discontinued operations/other comprehensive (27.3 ) (0.37 ) (7.1 ) (0.10 )
income
Gain on early extinguishment of debt (4.0 ) (0.05 ) - -
Impact of tax rate changes (3.6 ) (0.05 ) (9.7 ) (0.13 )
Gain on asset sales and other (0.4 ) (0.01 ) (0.1 ) -
Subtotal (35.3 ) (0.48 ) (16.9 ) (0.23 )
Total adjustments 748.4 10.10 (b) 15.5 0.20
As adjusted $ 14.3 $ 0.19 $ 30.2 $ 0.39
Weighted average number of normalized diluted shares outstanding 74,209 76,523
(a) The effect of stock-based awards is excluded from as reported
diluted EPS as it is anti-dilutive. However, on an as adjusted
basis, these awards are dilutive; normalized diluted shares
outstanding were 74,209 compared to as reported diluted shares
outstanding of 74,059.
(b) Includes anti-dilution adjustment. See (a).
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Reconciliation of Net Income (loss)/Diluted
Earnings (loss) Per Share from Continuing Operations as Reported
to Net Income/Diluted Earnings Per Share from Continuing
Operations as Adjusted
(Dollars in millions, except per share amounts; shares in
thousands)
Year Ended Year Ended
December 31, 2008 December 31, 2007
Net Income Diluted EPS Net Income Diluted EPS
from from from from
Continuing Continuing Continuing Continuing
Operations Operations Operations Operations
As reported $ (634.6 ) $ (8.58 ) $ 81.5 $ 1.07
Anti-dilution adjustment - 0.24 (a) - -
Adjustments to expenses from continuing operations:
Goodwill impairment charges 675.7 8.88 - -
Foreign exchange losses on financing activities 53.1 0.70 1.7 0.02
Mark-to-market swap loss 49.4 0.65 26.2 0.34
Restructuring and other severance costs 19.4 0.25 6.5 0.09
Acquisition-related expenses 24.6 0.32 10.4 0.14
Loss on early extinguishment of debt - - 11.9 0.16
Other 1.4 0.02 0.8 -
Subtotal 823.6 10.82 57.5 0.75
Adjustments to income from continuing operations:
Tax allocation from discontinued operations/other comprehensive (35.2 ) (0.46 ) (7.1 ) (0.09 )
income
Gains on asset sales and other (2.3 ) (0.03 ) (3.1 ) (0.04 )
Gain on early extinguishment of debt (4.0 ) (0.05 ) - -
Impact of tax rate changes (3.6 ) (0.05 ) (11.2 ) (0.15 )
Subtotal (45.1 ) (0.59 ) (21.4 ) (0.28 )
Total adjustments 778.5 10.47 (b) 36.1 0.47
As adjusted $ 143.9 $ 1.89 $ 117.6 $ 1.54
Weighted average number of diluted shares outstanding 76,092 76,279
(a) The effect of stock-based awards is excluded from as reported
diluted EPS as it is anti-dilutive. However, on an as adjusted
basis, these awards are dilutive; normalized diluted shares
outstanding were 76,092 compared to as reported diluted shares
outstanding of 73,983.
(b) Includes anti-dilution adjustment. See (a).
SOURCE: Rockwood Holdings, Inc.
CONTACT:
Rockwood Holdings, Inc. Timothy McKenna, 609-734-6430 tmckenna@rocksp.com
Copyright Business Wire 2009
PRINCETON, N.J., Feb 18, 2009 (BUSINESS WIRE) -- Rockwood Holdings, Inc. (NYSE: ROC), a global producer of specialty chemicals and advanced materials, today announced results for the fourth quarter and full year 2008.
The highlights from continuing operations for the fourth quarter and year ended December 31, 2008 are as follows:
-- Net sales were $732.3 million for the fourth quarter of 2008, down 6.6% compared to $784.1 million for the same period in the prior year. Net sales were $3,380.1 million for the year ended December 31, 2008, up 10.3% compared to $3,065.2 million for the same period in the prior year.
-- Adjusted EBITDA from continuing operations was $131.4 million for the fourth quarter of 2008, down 14.2% compared to $153.1 million for the same period in the prior year. Adjusted EBITDA from continuing operations was $638.9 million for the year ended December 31, 2008, up 6.1% compared to $602.4 million last year.
-- On a constant-currency basis, net sales were up 0.6% and Adjusted EBITDA from continuing operations was down 8.0% for the fourth quarter of 2008, and were up 6.3% and 1.1%, respectively, for the year ended December 31, 2008.
-- Net loss from continuing operations for the fourth quarter of 2008 was $(734.1) million, including after-tax net non-recurring and other special charges of $748.4 primarily related to goodwill impairment charges recorded within several businesses. Net income from continuing operations for the fourth quarter of 2007 was $14.7 million, including after-tax net non-recurring and other special charges of $15.5 million.
-- Net loss from continuing operations for the year ended December 31, 2008 was $(634.6) million, including after-tax net non-recurring and other special charges of $778.5 million primarily related to the goodwill impairment charges recorded in the fourth quarter of 2008. Net income from continuing operations for the year ended December 31, 2007 was $81.5 million, including after-tax net non-recurring and other special charges of $36.1 million.
-- Diluted loss per share from continuing operations for the fourth quarter of 2008 was $(9.91), including after-tax net non-recurring and other special charges of $10.10. Excluding net non-recurring and other special charges, diluted earnings per share from continuing operations were $0.19 in the fourth quarter of 2008. Diluted earnings per share from continuing operations for the fourth quarter of 2007 were $0.19, including after-tax net non-recurring and other special charges of $0.20. Excluding net non-recurring and other special charges, diluted earnings per share from continuing operations were $0.39 in the fourth quarter of 2007.
-- Diluted loss per share from continuing operations for the full year 2008 was $(8.58), including after-tax net non-recurring and other special charges of $10.47. Excluding net non-recurring and other special charges, diluted earnings per share from continuing operations were $1.89 for the full year 2008. Diluted earnings per share from continuing operations for the full year 2007 were $1.07, including after-tax net non-recurring and other special charges of $0.47. Excluding net non-recurring and other special charges, diluted earnings per share from continuing operations were $1.54 in the full year 2007.
-- As previously announced, we completed the sale of our Pool and Spa Chemicals business in October 2008 and recorded a gain on sale, net of taxes of $40.5 million. The results of this business have been accounted for as a discontinued operation in the consolidated financial statements for all periods presented.
Commenting on Rockwood's performance, Seifi Ghasemi, Chairman and Chief Executive Officer, said, "The significant slowdown in global business activity affected our revenues but our proactive cost control measures enabled us to achieve Adjusted EBITDA margins at the 18% level during the fourth quarter despite the poor economic climate. We have been focused on consolidating facilities, reducing work hours and headcount, controlling discretionary expenses, and maintaining our pricing. Recognizing that we are in a global recession, we will remain intensely focused on the items we can control. With cash and cash equivalents at year end of approximately $469 million, we will also continue to focus on maintaining our strong liquidity position. We are confident that this proactive stance, combined with the strength of our portfolio, our major market positions and the diversity of our customer base, will enable us to perform up to our high expectations."
Fourth quarter results, as compared with the same period a year ago, are summarized below:
-- Specialty Chemicals: Net sales decreased 5.9% in part due to the impact of currency changes, while Adjusted EBITDA was up 3.2% primarily from higher selling prices, partially offset by lower volumes and higher raw material costs. -- In our Fine Chemicals business, higher selling prices of lithium products were partially offset by lower volumes of lithium products and metal sulfide applications.
-- In our Surface Treatment business, lower volumes, particularly in automotive applications, were partially offset by increased selling prices, the impact from bolt-on acquisitions and cost control measures.
-- In both businesses, higher raw material costs and the impact of currency changes had a negative impact on results.
-- Performance Additives: Net sales and Adjusted EBITDA decreased 23.5% and 75.6%, respectively. -- Results were negatively impacted by lower volumes of construction-related products.
-- Higher raw material costs, primarily in our Color Pigments and Services business, also had a negative impact on Adjusted EBITDA, partially offset by increased selling prices and the impact of a bolt-on acquisition.
-- Titanium Dioxide Pigments: Net sales and Adjusted EBITDA increased 42.3% and 5.0%, respectively. However, net sales and Adjusted EBITDA declined significantly excluding the impact of the venture with Kemira that was completed in September 2008. -- Market conditions, including current industry overcapacity particularly serving the construction industry, have continued to negatively impact this segment.
-- Lower volumes for functional additives and titanium dioxide products, primarily commodity grade, as well as higher energy and raw material costs, had a negative effect on results.
-- Advanced Ceramics: Net sales and Adjusted EBITDA decreased 13.5% and 20.1%, respectively. -- Lower volumes in most applications were partially offset by increased volumes of medical products.
-- Higher raw material and energy costs also had a negative impact on Adjusted EBITDA.
-- Specialty Compounds: Net sales and Adjusted EBITDA decreased 23.6% and 18.0%, respectively. -- Results were down primarily from lower volumes in wire and cable applications, partially offset by increased selling prices.
-- Higher raw material costs also had a negative impact on Adjusted EBITDA.
-- Corporate and other: Corporate costs were down due to lower compensation-related costs and lower professional fees recorded in the fourth quarter of 2008, as well as other cost control measures.
-- Other Items: -- Impairment charges. As a result of the significant drop in global stock valuations, the substantial reduction in the market valuation of Rockwood and comparable companies, and the continuing negative global economic and market outlook, we recorded a non-cash charge of $809.5 million in the fourth quarter of 2008 to write-down the carrying value of goodwill within several businesses. The write-down had no impact on the Company's debt, Adjusted EBITDA or calculation of lender covenants.
-- Restructuring and other severance costs of $29.6 million were recorded in the fourth quarter of 2008 primarily related to miscellaneous headcount reductions throughout the Company.
-- Interest expense increased $30.7 million in the fourth quarter of 2008 compared to the same period in the prior year. The fourth quarter of 2008 and 2007 included non-cash losses of $44.7 million and $16.8 million, respectively, representing the movement in the mark-to-market valuation of our interest rate hedges. Excluding the impact of these losses, interest expense increased $2.8 million primarily due to debt incurred related to the Titanium Dioxide Pigments venture with Kemira.
-- Gain on early extinguishment of debt. In the fourth quarter of 2008, we redeemed 11.0 million Euros of our senior subordinated notes due in 2014 and recorded a gain of $4.0 million.
-- Foreign exchange loss of $20.1 million for the fourth quarter of 2008 was primarily due to the impact of the weaker pound sterling as of December 31, 2008 versus September 30, 2008, in connection with non-operating euro-denominated transactions.
-- Income taxes. The effective tax rate for the fourth quarter of 2008 of 8.4% was primarily impacted by the impairment losses on non-deductible goodwill. The effective tax rate for the full year 2008, after excluding non-recurring items, was approximately 31%.
-- Minority interest in continuing operations, net of tax in the fourth quarter of 2008 primarily relates to the goodwill impairment charge recorded in the Titanium Dioxide Pigments venture.
-- Free cash flow was an inflow of $89.9 million for the year ended December 31, 2008. This amount consists of net cash provided by operating activities from continuing operations of $290.8 million plus non-recurring items and other, net of $17.9 million and proceeds on the sale of property, plant and equipment of $5.2 million, less capital expenditures of $224.0 million.
-- Net debt, which is total debt less cash and cash equivalents, was $2,342.5 million as of December 31, 2008 compared to $2,231.3 million as of December 31, 2007. The increase in net debt was primarily due to increased debt levels related to the Titanium Dioxide Pigments venture with Kemira, partially offset by the impact of currency changes.
Conference Call and Webcast
We will host a conference call and webcast to discuss the results of operations for the fourth quarter and full year ended December 31, 2008, on Wednesday, February 18, 2009 at 11:00 am Eastern Standard Time. The dial-in number to access the conference call in the U.S. is (800) 230-1059 and the international dial-in number is (612) 332-0637. No access code is needed for either call. A replay of the conference call will be available through March 4, 2009 at (800) 475-6701 in the U.S., access code: 980859, and internationally at (320) 365-3844, access code: 980859.
A listen only, live webcast of the conference call will be available at www.rocksp.com. Materials for the call, including a PowerPoint file detailing the results, will be available for download on the site on the morning of the call. The webcast and PowerPoint file will be archived on Rockwood's website.
Non-GAAP Financial Measures
This press release includes "non-GAAP financial measures," such as, a discussion of Adjusted EBITDA, free cash flow, net income (loss)/diluted earnings (loss) per share from continuing operations excluding certain items. Adjusted EBITDA is not intended to be an alternative to net income (loss) as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. All presentations of consolidated Adjusted EBITDA are calculated using the definition set forth in the senior secured credit agreement as a basis and reflects management's interpretations thereof. Adjusted EBITDA, which is referred to under the senior secured credit agreement as "Consolidated EBITDA," is defined in the senior secured credit agreement as consolidated earnings (which, as defined in the senior secured credit agreement, equals income (loss) before the deduction of income taxes of Rockwood Specialties Group, Inc. and the Restricted Subsidiaries (as such term is defined in the senior secured credit agreement), excluding extraordinary items) plus certain items including interest expense, depreciation expense, amortization expense, extraordinary losses and non-recurring charges, losses on asset sales, less certain items including extraordinary gains and non-recurring gains, non-cash gains and gains on asset sales. We use Adjusted EBITDA on a consolidated basis to assess our operating performance, to calculate performance-based cash bonuses and determine whether certain performance-based options vest (as both such bonuses and options are tied to Adjusted EBITDA), and as a liquidity measure. In addition, we use Adjusted EBITDA to determine compliance with our debt covenants. We also use Adjusted EBITDA on a segment basis as the primary measure used by our chief operating decision maker to evaluate the ongoing performance of our business segments and reporting units. A reconciliation of Adjusted EBITDA to net income (loss) is contained in the press release. We strongly urge you to review the reconciliation. In addition, we discuss sales growth in terms of nominal (actual) and net change (nominal less constant currency impacts). Free cash flow is not intended to be an alternative to cash flows from operating activities as a measure of liquidity. Our presentation of free cash flow is defined as net cash from operating activities from continuing operations, plus non-recurring items and other, net and proceeds on the sale of property, plant and equipment (excludes sales of property, plant and equipment related to sales of businesses) less capital expenditures. Management believes that free cash flow is meaningful to investors because it provides an additional measure of liquidity. Neither net income (loss) from continuing operations excluding certain items nor diluted earnings per share from continuing operations excluding certain items is intended to be an alternative for net income (loss) or diluted earnings (loss) per share. Management believes that net income (loss) and diluted earnings (loss) per share from continuing operations excluding certain items is meaningful to investors because it provides a view of the Company with respect to ongoing operating results. Reconciliations of these non-GAAP financial measures are included herein. These non-GAAP measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies.
Rockwood Holdings, Inc. is a leading global specialty chemicals and advanced materials company. Rockwood has a worldwide employee base of approximately 10,000 people and annual net sales of approximately $3.4 billion. Rockwood focuses on global niche segments of the specialty chemicals, pigments and additives and advanced materials markets. For more information on Rockwood, please visit www.rocksp.com.
The information set forth in this press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the business, operations and financial condition of Rockwood Holdings, Inc. and its subsidiaries and affiliates ("Rockwood"). Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "predicts" and variations of such words or expressions are intended to identify forward-looking statements. Although Rockwood believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that its expectations will be realized. "Forward-looking statements" consist of all non-historical information, including any statements referring to the prospects and future performance of Rockwood. Actual results could differ materially from those projected in Rockwood's forward-looking statements due to numerous known and unknown risks and uncertainties, including, among other things, the "Risk Factors" described in Rockwood's filings with the Securities and Exchange Commission. Rockwood does not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in millions, except per share amounts; shares in
thousands)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Net sales $ 732.3 $ 784.1 $ 3,380.1 $ 3,065.2
Cost of products sold 531.3 539.9 2,365.8 2,089.1
Gross profit 201.0 244.2 1,014.3 976.1
Selling, general and administrative expenses 148.6 155.9 661.3 597.6
Goodwill impairment charges 809.5 - 809.5 -
Restructuring and other severance costs 29.6 3.1 35.3 12.0
(Gain) loss on sale of assets and other (0.6 ) 0.6 (2.4 ) (4.7 )
Operating (loss) income (786.1 ) 84.6 (489.4 ) 371.2
Other income (expenses):
Interest expense (91.4 ) (60.7 ) (231.1 ) (219.3 )
Interest income 1.8 1.4 6.0 11.5
Gain (loss) on early extinguishment of debt 4.0 - 4.0 (18.6 )
Refinancing expenses - - - (0.9 )
Foreign exchange (loss) gain, net (20.1 ) (3.5 ) (32.3 ) 7.8
Other, net - 0.1 0.7 -
Other expenses, net (105.7 ) (62.7 ) (252.7 ) (219.5 )
(Loss) income from continuing operations before taxes and
minority interest (891.8 ) 21.9 (742.1 ) 151.7
Income tax (benefit) provision (74.5 ) 5.5 (23.9 ) 62.3
(Loss) income from continuing operations before minority interest (817.3 ) 16.4 (718.2 ) 89.4
Minority interest in continuing operations, net of tax 83.2 (1.7 ) 83.6 (7.9 )
Net (loss) income from continuing operations (734.1 ) 14.7 (634.6 ) 81.5
Income from discontinued operations, net of tax 0.4 9.7 3.3 25.3
Gain on sale of discontinued operations, net of tax 42.9 94.7 42.9 210.4
Minority interest in discontinued operations, net of tax - - - (0.1 )
Net (loss) income $ (690.8 ) $ 119.1 $ (588.4 ) $ 317.1
Basic (loss) earnings per share:
(Loss) earnings from continuing operations $ (9.91 ) $ 0.20 $ (8.58 ) $ 1.10
Earnings from discontinued operations, net of tax 0.58 1.41 0.63 3.20
Basic (loss) earnings per share $ (9.33 ) $ 1.61 $ (7.95 ) $ 4.30
Diluted (loss) earnings per share:
(Loss) earnings from continuing operations $ (9.91 ) $ 0.19 $ (8.58 ) $ 1.07
Earnings from discontinued operations, net of tax 0.58 1.37 0.63 3.09
Diluted (loss) earnings per share $ (9.33 ) $ 1.56 $ (7.95 ) $ 4.16
Weighted average number of basic shares outstanding 74,059 73,865 73,983 73,817
Weighted average number of diluted shares outstanding 74,059 76,523 73,983 76,279
(a) Interest expense includes:
Interest expense on debt $ (44.2 ) $ (41.6 ) $ (170.0 ) $ (177.9 )
Mark-to-market losses on interest rate swaps (44.7 ) (16.8 ) (51.5 ) (32.2 )
Deferred financing costs (2.5 ) (2.3 ) (9.6 ) (9.2 )
Total $ (91.4 ) $ (60.7 ) $ (231.1 ) $ (219.3 )
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in millions, except per share amounts; shares in
thousands)
December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $ 468.7 $ 350.1
Accounts receivable, net 464.6 460.3
Inventories 641.0 526.9
Deferred income taxes 20.3 22.6
Prepaid expenses and other current assets 65.9 69.7
Assets of discontinued operations - 75.1
Total current assets 1,660.5 1,504.7
Property, plant and equipment, net 1,752.2 1,508.5
Goodwill 917.8 1,730.0
Other intangible assets, net 754.8 675.9
Deferred debt issuance costs, net of accumulated amortization
of $39.2 and $31.2, respectively 39.1 41.1
Deferred income taxes 11.3 15.5
Other assets 39.5 39.2
Total assets $ 5,175.2 $ 5,514.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 260.8 $ 285.5
Income taxes payable 4.1 9.5
Accrued compensation 92.6 81.5
Restructuring liability 18.9 14.0
Accrued expenses and other current liabilities 198.4 164.3
Deferred income taxes 9.8 7.2
Long-term debt, current portion 90.9 107.4
Liabilities of discontinued operations - 17.0
Total current liabilities 675.5 686.4
Long-term debt 2,720.3 2,474.0
Pension and related liabilities 352.0 327.5
Deferred income taxes 94.7 112.6
Other liabilities 191.7 165.7
Total liabilities 4,034.2 3,766.2
Minority interest 315.4 175.3
Restricted stock units 2.1 1.8
Stockholders' equity:
Common stock ($0.01 par value, 400,000 shares authorized, 74,155
shares issued and 74,061 shares outstanding at December 31, 2008;
400,000 shares authorized, 73,989 shares issued and 73,895
shares outstanding at December 31, 2007) 0.7 0.7
Paid-in capital 1,163.5 1,156.2
Accumulated other comprehensive income 204.0 371.0
Retained (deficit) earnings (543.3 ) 45.1
Treasury stock, at cost (1.4 ) (1.4 )
Total stockholders' equity 823.5 1,571.6
Total liabilities and stockholders' equity $ 5,175.2 $ 5,514.9
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in millions)
Year ended
December 31,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (588.4 ) $ 317.1
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Income from discontinued operations, net of tax (3.3 ) (25.3 )
Gain on sale of discontinued operations, net of tax (42.9 ) (210.4 )
Minority interest in discontinued operations, net of tax - 0.1
Depreciation and amortization 258.9 211.7
Deferred financing costs amortization 9.6 9.2
(Gain) loss on early extinguishment of debt (including $4.1 of
noncash write-offs on deferred
financing costs for the year ended December 31, 2007) (4.0 ) 18.6
Foreign exchange loss (gain) 32.3 (7.8 )
Fair value adjustment of derivatives 51.5 32.2
Bad debt provision 3.4 (1.3 )
Acquired in-process research and development 2.9 -
Stock-based compensation 4.1 3.9
Deferred income taxes (64.5 ) 28.4
Goodwill impairment charges 809.5 -
Loss (gain) on sale of assets and other 0.7 (4.7 )
Minority interest in continuing operations (83.6 ) 7.9
Changes in assets and liabilities, net of the effect of foreign
currency translation and acquisitions:
Accounts receivable 36.8 7.1
Inventories, including inventory write-up charges (66.8 ) (34.5 )
Prepaid expenses and other assets 12.6 (18.5 )
Accounts payable (52.1 ) 1.6
Income taxes payable (1.4 ) (5.8 )
Accrued expenses and other liabilities (24.5 ) 0.7
Net cash provided by operating activities of continuing operations 290.8 330.2
Net cash provided by operating activities of discontinued operations 12.0 38.3
Net cash provided by operating activities 302.8 368.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, including transaction fees paid, net of cash acquired (232.7 ) (240.1 )
Post closing purchase price consideration 29.8 -
Capital expenditures, excluding capital leases (224.0 ) (193.2 )
Proceeds from formation of Viance joint venture, net - 73.0
Proceeds on sale of assets 7.0 14.2
Net cash used in investing activities of continuing operations (419.9 ) (346.1 )
Net cash provided by investing activities of discontinued
operations, including net sale proceeds
of $122.0 and $731.7 in 2008 and 2007, respectively 116.3 723.7
Net cash (used in) provided by investing activities (303.6 ) 377.6
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net of fees 2.3 1.5
Titanium Dioxide Pigments venture financing 362.5 -
Payment of assumed debt to Titanium Dioxide Pigments venture (141.4 ) -
minority shareholder
Repayment of 2011 Notes - (273.4 )
Repayment of 2014 Notes (10.2 ) -
Repayment of senior secured credit facilities (68.7 ) (57.1 )
Repayment of senior secured credit facilities revolver - (37.0 )
Payments on other long-term debt (30.9 ) (24.1 )
Deferred financing costs (5.0 ) -
Payments related to early extinguishment of debt - (14.5 )
Distribution to minority shareholder (3.9 ) (7.2 )
Net cash provided by (used in) financing activities of continuing 104.7 (411.8 )
operations
Net cash used in financing activities of discontinued operations - -
Net cash provided by (used in) financing activities 104.7 (411.8 )
Effect of exchange rate changes on cash and cash equivalents 14.7 (10.3 )
Net increase in cash and cash equivalents 118.6 324.0
Less increase in cash and cash equivalents from discontinued - (1.6 )
operations, net (a)
Increase in cash and cash equivalents from continuing operations 118.6 322.4
Cash and cash equivalents of continuing operations, beginning of 350.1 27.7
period
Cash and cash equivalents of continuing operations, end of period $ 468.7 $ 350.1
(a) Excludes net sale proceeds of $122.0 and intercompany
transfers of $6.3 for the year ended December 31, 2008.
Excludes
net sale proceeds of $731.7 and intercompany transfers of $28.7 in
2007.
Supplemental disclosures of cash flow information:
Interest paid $ 167.3 $ 174.4
Income taxes paid, net of refunds $ 41.9 $ 39.8
Non-cash investing activities:
Titanium Dioxide Pigments venture formation, net $ 246.0 $ -
Acquisition of capital equipment $ 22.7 $ 24.7
Rockwood Holdings, Inc. and Subsidiaries
Net Sales and Adjusted EBITDA
Net Sales
Three Months Ended
December 31,
($ in millions) 2008 2007 % Change
Specialty Chemicals $ 265.9 $ 282.7 (5.9 ) %
Performance Additives 158.8 207.7 (23.5 )
Titanium Dioxide Pigments 154.0 108.2 42.3
Advanced Ceramics 101.0 116.7 (13.5 )
Specialty Compounds 50.7 66.4 (23.6 )
Corporate and other 1.9 2.4 (20.8 )
Total (a) $ 732.3 $ 784.1 (6.6 ) %
Adjusted EBITDA
Three Months Ended
December 31,
($ in millions) 2008 2007 % Change
Specialty Chemicals $ 71.6 $ 69.4 3.2 %
Performance Additives 7.6 31.2 (75.6 )
Titanium Dioxide Pigments 22.9 21.8 5.0
Advanced Ceramics 28.7 35.9 (20.1 )
Specialty Compounds 7.3 8.9 (18.0 )
Corporate and other (6.7 ) (14.1 ) 52.5
Adjusted EBITDA from continuing operations 131.4 153.1 (14.2 )
Discontinued operations - Pool and Spa Chemicals 0.3 6.1 (95.1 )
Total Adjusted EBITDA $ 131.7 $ 159.2 (17.3 ) %
(a) - Excludes net sales of $2.9 million and $23.1 million for the
three months ended December 31, 2008 and 2007, respectively, from
the Pool and Spa Chemicals business that was sold in October 2008.
The results of this business have been accounted for as a
discontinued operation in the consolidated financial statements for
all periods presented.
Rockwood Holdings, Inc. and Subsidiaries
Net Sales and Adjusted EBITDA
Net Sales
Year Ended
December 31,
($ in millions) 2008 2007 % Change
Specialty Chemicals $ 1,232.6 $ 1,082.9 13.8 %
Performance Additives 835.6 798.5 4.6
Titanium Dioxide Pigments 534.8 442.9 20.7
Advanced Ceramics 505.9 452.5 11.8
Specialty Compounds 261.5 276.6 (5.5 )
Corporate and other 9.7 11.8 (17.8 )
Total (a) $ 3,380.1 $ 3,065.2 10.3 %
Adjusted EBITDA
Year Ended
December 31,
($ in millions) 2008 2007 % Change
Specialty Chemicals $ 313.0 $ 262.2 19.4 %
Performance Additives 107.1 150.7 (28.9 )
Titanium Dioxide Pigments 83.1 82.7 0.5
Advanced Ceramics 150.2 128.1 17.3
Specialty Compounds 34.0 34.3 (0.9 )
Corporate and other (48.5 ) (55.6 ) 12.8
Adjusted EBITDA from continuing operations 638.9 602.4 6.1
Discontinued operations - Pool and Spa Chemicals 5.4 12.0 (55.0 )
Total Adjusted EBITDA $ 644.3 $ 614.4 4.9 %
(a) - Excludes net sales of $54.9 million and $71.2 million for
the year ended December 31, 2008 and 2007, respectively, from the
Pool and Spa Chemicals business that was sold in October 2008. The
results of this business have been accounted for as a discontinued
operation in the consolidated financial statements for all periods
presented.
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Segment Net Sales and Adjusted EBITDA
Three Months Ended
December 31, Total Total
($ in millions) 2008 2007 Change in $ Change in %
Net Sales:
Specialty Chemicals $ 265.9 $ 282.7 $ (16.8 ) (5.9 ) %
Performance Additives 158.8 207.7 (48.9 ) (23.5 )
Titanium Dioxide Pigments 154.0 108.2 45.8 42.3
Advanced Ceramics 101.0 116.7 (15.7 ) (13.5 )
Specialty Compounds 50.7 66.4 (15.7 ) (23.6 )
Corporate and other 1.9 2.4 (0.5 ) (20.8 )
Total $ 732.3 $ 784.1 $ (51.8 ) (6.6 ) %
Constant Constant Currency Basis
Currency Net Net
($ in millions) Effect in $ Change in $ Change in %
Net Sales:
Specialty Chemicals $ (23.1 ) $ 6.3 2.2 %
Performance Additives (11.0 ) (37.9 ) (18.2 )
Titanium Dioxide Pigments (8.5 ) 54.3 50.2
Advanced Ceramics (8.7 ) (7.0 ) (6.0 )
Specialty Compounds (4.7 ) (11.0 ) (16.6 )
Corporate and other (0.2 ) (0.3 ) (12.5 )
Total $ (56.2 ) $ 4.4 0.6 %
Three Months Ended
December 31, Total Total
($ in millions) 2008 2007 Change in $ Change in %
Adjusted EBITDA:
Specialty Chemicals $ 71.6 $ 69.4 $ 2.2 3.2 %
Performance Additives 7.6 31.2 (23.6 ) (75.6 )
Titanium Dioxide Pigments 22.9 21.8 1.1 5.0
Advanced Ceramics 28.7 35.9 (7.2 ) (20.1 )
Specialty Compounds 7.3 8.9 (1.6 ) (18.0 )
Corporate and other (6.7 ) (14.1 ) 7.4 52.5
Adjusted EBITDA from continuing operations 131.4 153.1 (21.7 ) (14.2 )
Discontinued operations - Pool and Spa Chemicals 0.3 6.1 (5.8 ) (95.1 )
Total Adjusted EBITDA $ 131.7 $ 159.2 $ (27.5 ) (17.3 ) %
Constant Constant Currency Basis
Currency Net Net
($ in millions) Effect in $ Change in $ Change in %
Adjusted EBITDA:
Specialty Chemicals $ (4.2 ) $ 6.4 9.2 %
Performance Additives (1.0 ) (22.6 ) (72.4 )
Titanium Dioxide Pigments (1.2 ) 2.3 10.6
Advanced Ceramics (2.7 ) (4.5 ) (12.5 )
Specialty Compounds (0.5 ) (1.1 ) (12.4 )
Corporate and other 0.1 7.3 51.8
Adjusted EBITDA from continuing operations (9.5 ) (12.2 ) (8.0 )
Discontinued operations - Pool and Spa Chemicals - (5.8 ) (95.1 )
Total Adjusted EBITDA $ (9.5 ) $ (18.0 ) (11.3 ) %
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Segment Net Sales and Adjusted EBITDA
Year Ended
December 31, Total Total
($ in millions) 2008 2007 Change in $ Change in %
Net Sales:
Specialty Chemicals $ 1,232.6 $ 1,082.9 $ 149.7 13.8 %
Performance Additives 835.6 798.5 37.1 4.6
Titanium Dioxide Pigments 534.8 442.9 91.9 20.7
Advanced Ceramics 505.9 452.5 53.4 11.8
Specialty Compounds 261.5 276.6 (15.1 ) (5.5 )
Corporate and other 9.7 11.8 (2.1 ) (17.8 )
Total $ 3,380.1 $ 3,065.2 $ 314.9 10.3 %
Constant Constant Currency Basis
Currency Net Net
($ in millions) Effect in $ Change in $ Change in %
Net Sales:
Specialty Chemicals $ 53.0 $ 96.7 8.9 %
Performance Additives 3.8 33.3 4.2
Titanium Dioxide Pigments 32.9 59.0 13.3
Advanced Ceramics 35.7 17.7 3.9
Specialty Compounds (3.1 ) (12.0 ) (4.3 )
Corporate and other 0.7 (2.8 ) (23.7 )
Total $ 123.0 $ 191.9 6.3 %
Year Ended
December 31, Total Total
($ in millions) 2008 2007 Change in $ Change in %
Adjusted EBITDA:
Specialty Chemicals $ 313.0 $ 262.2 $ 50.8 19.4 %
Performance Additives 107.1 150.7 (43.6 ) (28.9 )
Titanium Dioxide Pigments 83.1 82.7 0.4 0.5
Advanced Ceramics 150.2 128.1 22.1 17.3
Specialty Compounds 34.0 34.3 (0.3 ) (0.9 )
Corporate and other (48.5 ) (55.6 ) 7.1 12.8
Adjusted EBITDA from continuing operations 638.9 602.4 36.5 6.1
Discontinued operations - Pool and Spa Chemicals 5.4 12.0 (6.6 ) (55.0 )
Total Adjusted EBITDA $ 644.3 $ 614.4 $ 29.9 4.9 %
Constant Constant Currency Basis
Currency Net Net
($ in millions) Effect in $ Change in $ Change in %
Adjusted EBITDA:
Specialty Chemicals $ 11.7 $ 39.1 14.9 %
Performance Additives 2.0 (45.6 ) (30.3 )
Titanium Dioxide Pigments 5.2 (4.8 ) (5.8 )
Advanced Ceramics 12.0 10.1 7.9
Specialty Compounds - (0.3 ) (0.9 )
Corporate and other (0.8 ) 7.9 14.2
Adjusted EBITDA from continuing operations 30.1 6.4 1.1
Discontinued operations - Pool and Spa Chemicals - (6.6 ) (55.0 )
Total Adjusted EBITDA $ 30.1 $ (0.2 ) - %
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Income (loss) from Continuing Operations
before Taxes and
Minority Interest to Adjusted EBITDA by Segment
Titanium
Specialty Performance Dioxide Advanced
($ in millions) Chemicals Additives Pigments Ceramics
Three months ended December 31, 2008
Income (loss) from continuing operations
before taxes and minority interest $ 17.8 $ (483.7 ) $ (257.3 ) $ 2.1
Interest expense 15.2 7.8 11.3 7.8
Interest income (0.3 ) 0.2 (0.1 ) (0.1 )
Depreciation and amortization 18.7 16.3 17.0 11.4
Goodwill impairment charges - 456.6 247.7 -
Acquisition related expenses 2.2 6.2 3.9 1.6
Restructuring and other severance costs 15.7 3.0 0.2 3.6
Gain on early extinguishment of debt - - - -
(Gain) loss on sale of assets and other (0.8 ) - 0.3 (0.1 )
Foreign exchange loss (gain), net 2.9 0.2 (0.2 ) 2.3
Other 0.2 1.0 0.1 0.1
Adjusted EBITDA from continuing operations 71.6 7.6 22.9 28.7
Discontinued operations - Pool and Spa Chemicals - 0.3 - -
Total Adjusted EBITDA $ 71.6 $ 7.9 $ 22.9 $ 28.7
Specialty Corporate and
($ in millions) Compounds other Consolidated
Three months ended December 31, 2008
Income (loss) from continuing operations
before taxes and minority interest $ (103.6 ) $ (67.1 ) $ (891.8 )
Interest expense 2.4 46.9 91.4
Interest income (0.1 ) (1.4 ) (1.8 )
Depreciation and amortization 3.0 1.9 68.3
Goodwill impairment charges 105.2 - 809.5
Acquisition related expenses 0.4 0.2 14.5
Restructuring and other severance costs - 2.0 24.5
Gain on early extinguishment of debt - (4.0 ) (4.0 )
(Gain) loss on sale of assets and other - - (0.6 )
Foreign exchange loss (gain), net - 14.9 20.1
Other - (0.1 ) 1.3
Adjusted EBITDA from continuing operations 7.3 (6.7 ) 131.4
Discontinued operations - Pool and Spa Chemicals - - 0.3
Total Adjusted EBITDA $ 7.3 $ (6.7 ) $ 131.7
Titanium
Specialty Performance Dioxide Advanced
($ in millions) Chemicals Additives Pigments Ceramics
Three months ended December 31, 2007
Income (loss) from continuing operations
before taxes and minority interest $ 39.8 $ 1.0 $ (0.3 ) $ 15.6
Interest expense 11.5 7.8 8.5 8.6
Interest income 2.9 (1.0 ) (0.2 ) 0.4
Depreciation and amortization 14.5 17.2 12.5 10.7
Acquisition related expenses 0.1 5.6 0.5 1.0
Restructuring and other severance costs 0.7 0.5 - 0.3
(Gain) loss on sale of assets and other 0.2 (0.1 ) 0.4 -
Foreign exchange gain, net (0.3 ) - 0.4 (0.8 )
Other - 0.2 - 0.1
Adjusted EBITDA from continuing operations 69.4 31.2 21.8 35.9
Discontinued operations - Pool and Spa Chemicals - 6.1 - -
Total Adjusted EBITDA $ 69.4 $ 37.3 $ 21.8 $ 35.9
Specialty Corporate and
($ in millions) Compounds other Consolidated
Three months ended December 31, 2007
Income (loss) from continuing operations
before taxes and minority interest $ 2.8 $ (37.0 ) $ 21.9
Interest expense 2.4 21.9 60.7
Interest income 0.2 (3.7 ) (1.4 )
Depreciation and amortization 2.8 1.4 59.1
Acquisition related expenses 0.7 (1.6 ) 6.3
Restructuring and other severance costs - 0.1 1.6
(Gain) loss on sale of assets and other - 0.1 0.6
Foreign exchange gain, net - 4.2 3.5
Other - 0.5 0.8
Adjusted EBITDA from continuing operations 8.9 (14.1 ) 153.1
Discontinued operations - Pool and Spa Chemicals - - 6.1
Total Adjusted EBITDA $ 8.9 $ (14.1 ) $ 159.2
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Income (loss) from Continuing Operations
before Taxes and
Minority Interest to Adjusted EBITDA by Segment
Titanium
Specialty Performance Dioxide Advanced
($ in millions) Chemicals Additives Pigments Ceramics
Year ended December 31, 2008
Income (loss) from continuing operations
before taxes and minority interest $ 166.5 $ (470.6 ) $ (266.3 ) $ 61.3
Interest expense 56.2 30.4 37.9 34.2
Interest income (1.2 ) 1.3 (0.2 ) (0.2 )
Depreciation and amortization 69.7 67.2 56.3 47.0
Goodwill impairment charges - 456.6 247.7 -
Acquisition related expenses 4.6 17.0 6.7 2.4
Restructuring and other severance costs 16.1 3.4 0.2 4.0
Gain on early extinguishment of debt - - - -
(Gain) loss on sale of assets and other (1.3 ) - 1.1 0.1
Foreign exchange loss (gain), net 2.9 0.3 (0.3 ) 1.4
Other (0.5 ) 1.5 - -
Adjusted EBITDA from continuing operations 313.0 107.1 83.1 150.2
Discontinued operations - Pool and Spa Chemicals - 5.4 - -
Total Adjusted EBITDA $ 313.0 $ 112.5 $ 83.1 $ 150.2
Specialty Corporate and
($ in millions) Compounds other Consolidated
Year ended December 31, 2008
Income (loss) from continuing operations
before taxes and minority interest $ (92.8 ) $ (140.2 ) $ (742.1 )
Interest expense 9.3 63.1 231.1
Interest income (0.5 ) (5.2 ) (6.0 )
Depreciation and amortization 11.3 7.4 258.9
Goodwill impairment charges 105.2 - 809.5
Acquisition related expenses 1.5 1.4 33.6
Restructuring and other severance costs - 2.4 26.1
Gain on early extinguishment of debt - (4.0 ) (4.0 )
(Gain) loss on sale of assets and other - (2.3 ) (2.4 )
Foreign exchange loss (gain), net - 28.0 32.3
Other - 0.9 1.9
Adjusted EBITDA from continuing operations 34.0 (48.5 ) 638.9
Discontinued operations - Pool and Spa Chemicals - - 5.4
Total Adjusted EBITDA $ 34.0 $ (48.5 ) $ 644.3
Titanium
Specialty Performance Dioxide Advanced
($ in millions) Chemicals Additives Pigments Ceramics
Year ended December 31, 2007
Income (loss) from continuing operations
before taxes and minority interest $ 165.4 $ 62.5 $ 6.0 $ 50.9
Interest expense 42.0 19.5 32.4 33.8
Interest income - (1.6 ) (0.2 ) 0.3
Depreciation and amortization 54.4 57.6 42.4 40.5
Acquisition related expenses (0.2 ) 9.1 1.6 2.5
Restructuring and other severance costs 2.6 1.5 - 1.2
Loss on early extinguishment of debt - 1.4 - -
Refinancing expenses - - - -
(Gain) loss on sale of assets and other (0.2 ) 0.2 0.5 -
Foreign exchange gain, net (0.6 ) (0.2 ) - (1.2 )
Other (1.2 ) 0.7 - 0.1
Adjusted EBITDA from continuing operations 262.2 150.7 82.7 128.1
Discontinued operations - Pool and Spa Chemicals - 12.0 - -
Total Adjusted EBITDA $ 262.2 $ 162.7 $ 82.7 $ 128.1
Specialty Corporate and
($ in millions) Compounds other Consolidated
Year ended December 31, 2007
Income (loss) from continuing operations
before taxes and minority interest $ 11.8 $ (144.9 ) $ 151.7
Interest expense 9.4 82.2 219.3
Interest income (0.3 ) (9.7 ) (11.5 )
Depreciation and amortization 11.2 5.6 211.7
Acquisition related expenses 1.1 0.6 14.7
Restructuring and other severance costs - 4.2 9.5
Loss on early extinguishment of debt 1.1 16.1 18.6
Refinancing expenses - 0.9 0.9
(Gain) loss on sale of assets and other - (5.2 ) (4.7 )
Foreign exchange gain, net - (5.8 ) (7.8 )
Other - 0.4 -
Adjusted EBITDA from continuing operations 34.3 (55.6 ) 602.4
Discontinued operations - Pool and Spa Chemicals - - 12.0
Total Adjusted EBITDA $ 34.3 $ (55.6 ) $ 614.4
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Reconciliation of Net Income (Loss) to Adjusted
EBITDA
($ in millions)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Net (loss) income $ (690.8 ) $ 119.1 $ (588.4 ) $ 317.1
Income from discontinued operations, net of tax (0.4 ) (9.7 ) (3.3 ) (25.3 )
Gain on sale of discontinued operations, net of tax (42.9 ) (94.7 ) (42.9 ) (210.4 )
Minority interest in discontinued operations, net of tax - - - 0.1
Net (loss) income from continuing operations (734.1 ) 14.7 (634.6 ) 81.5
Income tax (benefit) provision (74.5 ) 5.5 (23.9 ) 62.3
Minority interest in continuing operations, net of tax (83.2 ) 1.7 (83.6 ) 7.9
(Loss) income from continuing operations before taxes and minority (891.8 ) 21.9 (742.1 ) 151.7
interest
Interest expense 91.4 60.7 231.1 219.3
Interest income (1.8 ) (1.4 ) (6.0 ) (11.5 )
Depreciation and amortization 68.3 59.1 258.9 211.7
Goodwill impairment charges 809.5 - 809.5 -
Acquisition-related expenses (a) 14.5 6.3 33.6 14.7
Restructuring and other severance costs 24.5 1.6 26.1 9.5
(Gain) loss on early extinguishment of debt (4.0 ) - (4.0 ) 18.6
Refinancing expenses - - - 0.9
(Gain) loss on sale of assets and other (0.6 ) 0.6 (2.4 ) (4.7 )
Foreign exchange loss (gain), net 20.1 3.5 32.3 (7.8 )
Other 1.3 0.8 1.9 -
Adjusted EBITDA from continuing operations 131.4 153.1 638.9 602.4
Discontinued operations - Pool and Spa Chemicals 0.3 6.1 5.4 12.0
Total Adjusted EBITDA $ 131.7 $ 159.2 $ 644.3 $ 614.4
(a) - Primarily related to integration and restructuring costs,
inventory write-up charges and acquired in-process research and
development costs related to the Kemira venture formation, the
Holliday Pigments and Elementis acquisitions in the Performance
Additives segment and other acquisitions.
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Reconciliation of Net Income (Loss)/Diluted Earnings
(Loss) Per Share from Continuing Operations as Reported to Net
Income/Diluted Earnings Per Share from Continuing Operations as
Adjusted
(Dollars in millions, except per share amounts; shares in
thousands)
Three Months Ended Three Months Ended
December 31, 2008 December 31, 2007
Net Income Diluted EPS Net Income Diluted EPS
from from from from
Continuing Continuing Continuing Continuing
Operations Operations Operations Operations
As reported $ (734.1 ) $ (9.91 ) $ 14.7 $ 0.19
Anti-dilution adjustment - 0.02 (a) - -
Adjustments to expenses from continuing operations:
Goodwill impairment charges 675.7 9.11 - -
Mark-to-market swap loss 42.9 0.58 16.8 0.22
Foreign exchange losses on financing activities 35.6 0.48 8.1 0.11
Restructuring and other severance costs 18.3 0.24 1.2 0.02
Acquisition-related expenses 10.4 0.14 5.1 0.07
Other 0.8 0.01 1.2 0.01
Subtotal 783.7 10.56 32.4 0.43
Adjustments to income from continuing operations:
Tax allocation from discontinued operations/other comprehensive (27.3 ) (0.37 ) (7.1 ) (0.10 )
income
Gain on early extinguishment of debt (4.0 ) (0.05 ) - -
Impact of tax rate changes (3.6 ) (0.05 ) (9.7 ) (0.13 )
Gain on asset sales and other (0.4 ) (0.01 ) (0.1 ) -
Subtotal (35.3 ) (0.48 ) (16.9 ) (0.23 )
Total adjustments 748.4 10.10 (b) 15.5 0.20
As adjusted $ 14.3 $ 0.19 $ 30.2 $ 0.39
Weighted average number of normalized diluted shares outstanding 74,209 76,523
(a) The effect of stock-based awards is excluded from as reported
diluted EPS as it is anti-dilutive. However, on an as adjusted
basis, these awards are dilutive; normalized diluted shares
outstanding were 74,209 compared to as reported diluted shares
outstanding of 74,059.
(b) Includes anti-dilution adjustment. See (a).
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Reconciliation of Net Income (loss)/Diluted
Earnings (loss) Per Share from Continuing Operations as Reported
to Net Income/Diluted Earnings Per Share from Continuing
Operations as Adjusted
(Dollars in millions, except per share amounts; shares in
thousands)
Year Ended Year Ended
December 31, 2008 December 31, 2007
Net Income Diluted EPS Net Income Diluted EPS
from from from from
Continuing Continuing Continuing Continuing
Operations Operations Operations Operations
As reported $ (634.6 ) $ (8.58 ) $ 81.5 $ 1.07
Anti-dilution adjustment - 0.24 (a) - -
Adjustments to expenses from continuing operations:
Goodwill impairment charges 675.7 8.88 - -
Foreign exchange losses on financing activities 53.1 0.70 1.7 0.02
Mark-to-market swap loss 49.4 0.65 26.2 0.34
Restructuring and other severance costs 19.4 0.25 6.5 0.09
Acquisition-related expenses 24.6 0.32 10.4 0.14
Loss on early extinguishment of debt - - 11.9 0.16
Other 1.4 0.02 0.8 -
Subtotal 823.6 10.82 57.5 0.75
Adjustments to income from continuing operations:
Tax allocation from discontinued operations/other comprehensive (35.2 ) (0.46 ) (7.1 ) (0.09 )
income
Gains on asset sales and other (2.3 ) (0.03 ) (3.1 ) (0.04 )
Gain on early extinguishment of debt (4.0 ) (0.05 ) - -
Impact of tax rate changes (3.6 ) (0.05 ) (11.2 ) (0.15 )
Subtotal (45.1 ) (0.59 ) (21.4 ) (0.28 )
Total adjustments 778.5 10.47 (b) 36.1 0.47
As adjusted $ 143.9 $ 1.89 $ 117.6 $ 1.54
Weighted average number of diluted shares outstanding 76,092 76,279
(a) The effect of stock-based awards is excluded from as reported
diluted EPS as it is anti-dilutive. However, on an as adjusted
basis, these awards are dilutive; normalized diluted shares
outstanding were 76,092 compared to as reported diluted shares
outstanding of 73,983.
(b) Includes anti-dilution adjustment. See (a).
SOURCE: Rockwood Holdings, Inc.
CONTACT:
Rockwood Holdings, Inc. Timothy McKenna, 609-734-6430 tmckenna@rocksp.com
Copyright Business Wire 2009
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