Solutia Inc. reported net sales for the first quarter 2011 of USD 509 million, an increase of USD 61 million or 14% compared to the same period in 2010. Reported income from continuing operations attr…
Solutia Inc. reported net sales for the first quarter 2011 of USD 509 million, an increase of USD 61 million or 14% compared to the same period in 2010. Reported income from continuing operations attributable to Solutia was USD 65 million for the first quarter 2011, USD 121 million more than the same period in 2010. Both periods were impacted by certain events affecting comparability, resulting in net after-tax gains of USD 5 million in 2011 and charges of USD 98 million in 2010. Excluding these items, Adjusted Earnings increased USD 18 million. Adjusted EBITDA totalled USD 135 million, up USD 11 million from the same period in 2010. Adjusted EPS totalled 50 cents, up 15 cents from the same period in 2010. Adjusted EPS increased primarily due to higher sales volumes, increased selling prices and lower interest and income tax expenses, partially offset by higher raw material costs. Advanced Interlayers“ first quarter 2011 net sales totalled USD 213 million, an increase of USD 27 million or 15% from the same period in 2010. Adjusted EBITDA increased USD 1 million to USD 49 million for the first quarter of 2011 compared to the prior year period. This earnings increase was mainly due to higher sales volumes, supplemented by the Vistasolar business, improved product mix and lower annual incentive compensation programme expenses, which more than offset the impact of higher raw material costs. “Advanced Interlayers continues to experience growing demand in the global automotive market and increased momentum among our premium products, such as acoustic interlayers,” said James R. Voss, executive vice president and chief operating officer. “This demand for premium products underscores the significance of investments made in our acoustic capabilities, most recently at our Gent, Belgium facility, to provide for our growing global customer base.” Performance Films“ first quarter 2011 net sales were USD 76 million, up USD 24 million or 46% from the same period in 2010. Adjusted EBITDA increased USD 9 million to USD 19 million for the first quarter of 2011 compared to the prior year period. This increase was due to higher sales volumes across all product lines, particularly V-Kool and FlexvueTM films, which more than offset increased selling costs. “Performance Films“ automotive window films experienced strong growth during the first quarter, particularly in Asia, which is a direct reflection of Solutia“s solid market position with the addition of V-Kool premium films,” said Voss. “The recently announced acquisition of additional conductive film manufacturing assets located in Asia increases our ability to meet growing demand for our Flexvue products in the fast-growing mobile electronic technology and energy markets.” Technical Specialties“ first quarter 2011 net sales were USD 220 million, an increase of USD 14 million or 7% compared to the same period in 2010. Adjusted EBITDA decreased USD 2 million to USD 81 million for the first quarter of 2011 compared to the prior year period, with the modest reduction in Adjusted EBITDA caused by the divestiture of other rubber chemicals businesses since the first quarter of 2010. Increased raw material costs were offset by higher sales volumes, increased selling prices and improved manufacturing costs. “Technical Specialties continues to build upon its 45-year history of supplying the energy solutions industry and was recently awarded a contract to supply Therminol heat transfer fluid for the world“s largest solar generation facility,” added Voss. “In addition, we continue to experience increased demand for Crystex insoluble sulphur from the rubber and tire industry, particularly in Asia, as this emerging market increases its production and use of radial tires.” Unallocated and other expenses reduced Adjusted EBITDA by USD 14 million, which was a USD 3 million more than the first quarter of 2010, mainly due to reduced expenses related to the annual incentive compensation programme. The company ended the first quarter with net debt of USD 1,214 million and liquidity of USD 452 million. Cash from continuing operations less capital expenditures for the quarter totalled USD 32 million compared to a use of USD 1 million for the same period in 2010. The USD 33 million year-over-year increase in cash flow was mainly due to higher Adjusted EBITDA and lower pension contributions, partially offset by increased growth capital expenditures and payments regarding the annual incentive compensation programme. The company paid down USD 77 million in debt and completed a refinancing of its existing senior secured term loan, which lowered interest costs and improved strategic and financial flexibility. “These activities evidence our commitment to deleveraging the Company and maintaining a strong balance sheet,” said James M. Sullivan, executive vice president and chief financial officer. The company continues to expect the automotive, energy solutions and electronics markets to grow globally in 2011 at higher than GDP rates, with the most significant growth in China and other emerging markets. In response to rising raw material costs, the company has implemented price increases on certain products for the remainder of the year. Finally, the company acknowledged that the previously announced sales of certain other rubber chemical businesses in the first quarter will reduce full-year net sales, Adjusted EBITDA and Adjusted EPS by approximately USD 40 million, USD 7 million, and USD 0.05 respectively, as compared to 2010. Notwithstanding the impact of these divestitures, the Company increased guidance for 2011 and is now expecting to generate Adjusted EPS in the range of USD 2.10 to USD 2.25, up from the previous guidance range of USD 1.95 to USD 2.20 per share. “Solutia delivered another quarter of strong earnings despite an escalation in raw material costs, reflective of solid demand growth across all reporting segments and excellent operational performance,” said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia Inc. “The strategic improvements we have made to our portfolio and capital structure will allow for continued top- and bottom-line growth for the remainder of 2011.”