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International Speciality Holdings Announces Record First Quarter 2005 Sales and operating Income

Published on 2005-05-09. Author : SpecialChem

Wayne, NJ -- International Specialty Holdings Inc. (the "Company"), a wholly-owned subsidiary of International Specialty Products Inc. ("ISP"), reported today first quarter 2005 net income of $24.1 million, after a non-cash, pre-tax charge of $10.5 million (see below), compared with net income of $29.9 million in the first quarter of 2004.

Results for the first quarter of 2005 set Company records for quarterly net sales and operating income. Record net sales for the first quarter of 2005 were $338.8 million compared with $300.4 million in the same period last year. The 13% increase in sales resulted primarily from higher unit volumes and favorable pricing in the Synthetic Elastomers and Mineral Products segments, as well as favorable pricing in Industrial Chemicals. The favorable impact of the weaker U.S. dollar, primarily in Europe, also benefited sales.

Operating income for the first quarter of 2005 was $53.3 million, after a non-cash charge of $10.5 million, compared with $50.4 million in the first quarter of 2004. The non-cash charge was for the impairment of assets at one of the Company's domestic manufacturing facilities related to a program for the restructuring and consolidation of production capacity in the Specialty Chemicals segment. Excluding such charge, operating income increased by 27% to $63.8 million from $50.4 million in the first quarter of 2004 (see attached reconciliation of non-GAAP financial measures).

The Specialty Chemicals segment recorded operating income of $45.4 million, excluding the aforementioned impairment charge in this year's first quarter, compared with last year's record first quarter of $46.2 million. Favorable performance in the personal care product line was offset by lower results in the performance chemicals and fine chemicals product lines.

The Industrial Chemicals segment recorded operating income of $7.8 million in the first quarter of 2005 compared with operating income of $0.3 million in last year's first quarter. The improved results were attributable to favorable pricing, partially offset by higher material costs.

The Synthetic Elastomers segment recorded operating income of $5.9 million in the first quarter of 2005 compared with operating income of $1.4 million in the first quarter of 2004. The improved results were attributable to favorable pricing and the impact of higher unit volumes, partially offset by higher material and manufacturing costs.

Operating income for the Mineral Products business segment was $4.6 million in the first quarter of 2005 compared with $2.4 million in last year's first quarter. The higher operating income was attributable to favorable pricing and to the favorable impact of higher unit volumes, partially offset by increased material and manufacturing costs.

Interest expense for the first quarter of 2005 was $19.5 million compared with $21.5 million in the first quarter of 2004. Investment and interest income in the first quarter of 2005 was $7.9 million compared with $18.3 million in the same period last year. Other expense, net, for the quarter was $5.1 million compared with $1.9 million in the first quarter of 2004, with the higher expense due primarily to unfavorable foreign exchange.

In March 2005, ISP Chemco Inc. acquired a 1,4 butanediol (BDO) production facility, and related working capital, located in Lima, Ohio. BDO is a key building block for many of the core Specialty Chemicals products that the Company markets for pharmaceutical, personal care, food, beverage, coatings, oil field and other market applications. This acquisition will play a pivotal role in ensuring the Company a high quality domestic supply of a key raw material used in the production of Specialty Chemicals products, as well as expand sales of BDO in global merchant markets. International Specialty Holdings Inc. is a leading multinational manufacturer of specialty chemicals, industrial chemicals, synthetic elastomers and mineral products.

This press release contains "forward looking statements" within the meaning of the federal securities laws with respect to the Company's financial results and future operations and, as such, concerns matters that are not historical facts. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in such statements. Important factors that could cause such differences are discussed in the Company's filings with the U.S. Securities and Exchange Commission and are incorporated herein by reference.

Source: International Specialty Holdings Inc.


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