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Solutia expects strong Q3 from continuing operations
21
Oct '08
Solutia Inc announced that for its continuing operations - including Saflex, Technical Specialties, and CPFilms - the company expects to report third quarter net sales of $587 million, a 29% increase over the prior year period and adjusted EBITDA is anticipated to be $111 million, a 46% increase over the prior year period. These strong results were driven by a combination of volume, price and manufacturing improvements.

"We believe our three specialties businesses, which comprise the going-forward Solutia portfolio, represent some of the most valuable franchises in the specialty chemicals sector," said Jeffry N. Quinn, chairman, president, and CEO of Solutia Inc.

"Third quarter results for these businesses were exceptional. Although we are mindful of slowing global economic conditions, we anticipate these businesses will meet previously announced earnings guidance for the year." Solutia's full-year 2008 adjusted EBITDA guidance for continuing operations is $385 million to $395 million, with the mid-point of the range on par with the guidance provided during the Company's second quarter earnings call.

"During the third quarter, Solutia reduced its net debt by $390 million, to $1,366 million," said James M. Sullivan, senior vice president and chief financial officer. "Our capital structure is well positioned with credit facilities committed through 2013."

Of the company's $1,191 million term loan debt, $900 million is protected by a LIBOR cap of 425 basis points until April 2010. At the end of the third quarter, Solutia had liquidity of $227 million. The company anticipates strong cash generation in the fourth quarter that will further increase liquidity and reduce net debt to approximately $1.3 billion by year-end.

Effective with the third quarter, Solutia will report results from its three specialties segments as continuing operations and report results from its Nylon segment as discontinued operations. As previously announced, Solutia is exploring strategic alternatives for its Nylon business, and a disposition of these assets is currently anticipated by the end of the first quarter 2009.

The discontinued Nylon segment expects to report third quarter net sales of $506 million and an adjusted EBITDA loss of ($5) million. These results were negatively impacted by Hurricane Ike as well as deteriorating markets in nylon intermediates and nylon carpet fibers. The Nylon chemical plant in Alvin, Texas, which had been shut down in advance of Hurricane Ike, resumed normal operations in early October.

The estimated cost of property damage incurred at the site is approximately $10 million, which is being excluded from the Company's adjusted EBITDA. Lost profits and other business interruption cost impacts of $8 million from the hurricane are included in adjusted EBITDA.

Solutia Inc

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