Detrex Corporation Reports Profit for 2010
SOUTHFIELD, Mich., Mar 11, 2011 (BUSINESS WIRE) -- Detrex Corporation (Pink Sheets: DTRX), a diversified manufacturer of PVC and CPVC pipe, duct and shapes and specialty chemicals including additives for industrial petroleum products and high purity hydrochloric acid, today announced 2010 full year net income of $2,088,320, or $1.31 per fully diluted share, compared to a net loss of $2,963,752, or $1.85 per fully diluted share, in 2009.
The combined sales of the company's two business units -- The Elco Corporation and Harvel Plastics, Inc. - grew to $93.7 million in 2010 which represents a 25.7% increase over the 2009 level of $74.5 million. Double digit growth rates for both companies contributed to this achievement. Elco sales increased to $35.3 million in 2010 from $24.2 million in 2009. This 46% growth was due to generally improved market conditions, geographic expansion, market share gains and a temporary tolling arrangement. Elco expects strong financial performance to continue in 2011. Harvel sales were $58.4 million in 2010 which represents 16% growth over the 2009 level of $50.4 million. This growth was achieved in spite of a weak North American pipe market and resulted from strong relationships with key customers, as well as demand for the specialty products that Harvel produces. Both companies generated improved year-over-year profitability due to the volume increases combined with certain costs and expenses that grew at a slower rate than the increase in sales.
The improvement in net income to $2,088,320 from a loss in 2009 was the result of higher earnings from the operating units and lower charges for legacy items. In 2009, the legacy items included a $3,900,000 environmental charge and a charge of $1,618,818 to write down the value of a property held for sale. Those charges were partially offset by a gain of $1,760,351 recognized due to a postretirement benefit plan termination. In 2010 the main legacy item was an environmental charge of $755,000. The net income in 2010 reflects federal income tax expense of $1,329,000 that the company is not required to pay due to utilization of significant tax loss carryforwards.
In 2010 the company spent $2.1 million on environmental matters, compared to the $4.1 million spent in 2009. A major landfill capping project was completed during the year and progress was made at a number of sites. The uncertainties inherent in environmental matters challenged the company again in 2010 as new developments and changed conditions resulted in a $755,000 charge to increase the reserve amounts for several projects. At year end, the reserve was $3,616,000 and 2011 spending is anticipated to be $1.8 million. While the company believes that the recorded reserves are appropriate based on currently available information, the estimates may be subject to change as discoveries at various sites are made during the investigation and/or implementation of the remediation strategies for the projects.
The underfunded status of the company's pension plans went from $10.6 million to $8.7 million at the end of the year due to gains in the investment portfolio and company contributions to the plans which were partially offset by benefit payments and a reduction in the discount rate used for calculating the liability. All pension plans have been frozen and annual funding was $1.6 million in 2010 and is expected to approximate $1.7 million in 2011.
The company utilized internally generated funds and increased net bank borrowings of $0.6 million to finance operations, pension funding of $1.6 million, environmental expenditures of $2.1 million and capital expenditures of approximately $2.9 million. In December 2010 the company negotiated an amendment to its loan agreement with JP Morgan Chase Bank, N.A. The amended agreement has a term that expires in June 2012 and provides a facility that is adequate for the company's current requirements.
