Sale of nylon biz marks historical development, Solutia
Solutia Inc announces the second quarter 2009 results.
2009 Second Quarter Highlights
• Transformational sale of nylon business completed
• Net sales of $410 million, a sequential improvement over first quarter 2009 of 21 percent
• Basic and diluted earnings per share from continuing operations of $0.25; Adjusted earnings per share of $0.33
• Adjusted EBITDA of $96 million, a sequential improvement over first quarter 2009 of 71 percent
• Adjusted EBITDA margins improved to 23 percent
• Net debt reduced in the quarter by $206 million
• Affirming Adjusted EBITDA guidance of $325 to $350 million and cash guidance from continuing operations less capital
expenditures to high end of range at $100 million, up from previously stated target of $50 to $100 million
"The sale of the nylon business this quarter marked a historical development, as it completed Solutia's transformation into a pure-play performance material and specialty chemicals company," said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia Inc. "This latest move completes a key component of our restructuring strategy which began during our reorganization and positions the Company on a solid foundation with a portfolio of high-margin businesses, valued products and world-leading market positions.
Improved sequential performance in all business segments in comparison to first quarter 2009, was enabled by our aggressive response to the global recession and helped us achieve a record adjusted EBITDA margin during the quarter and affirms our confidence that we will achieve our adjusted EBITDA guidance for the full year. We are positioned to continue to deliver strong financial performance despite the challenging macroeconomic environment and to benefit as conditions improve in the end-markets we serve."
Consolidated Results from Continuing Operations
Solutia Inc reported consolidated income from continuing operations of $24 million for the second quarter of 2009, compared to a loss of $6 million for the same period in 2008. These results were impacted by certain events affecting comparability (detailed below) totaling a net loss of $8 million in 2009 and a net loss of $28 million in 2008.
After adjusting for these items in both periods, consolidated net income from continuing operations of $32 million in the second quarter of 2009 increased from income of $22 million in the second quarter of last year. This was primarily due to implementation of cost reductions, lower raw material and energy costs, improved interest expense, partially offset by weakened demand and higher stock compensation expense.
For the quarter, Solutia posted basic and diluted earnings per share from continuing operations attributable to Solutia of $0.25 and as adjusted, earnings per share of $0.33.
Consolidated EBITDA from continuing operations for the second quarter increased to $90 million from $69 million in the second quarter of 2008 on net sales of $410 million and $577 million, respectively. After taking into consideration adjustments (as detailed below in the consolidated and segment sales, EBITDA and Adjusted EBITDA table), Adjusted EBITDA decreased to $96 million from $114 million.
In order to aid understanding of Solutia's business performance, the results of its business segments are presented on an adjusted basis and reconciled to the comparable GAAP measures in the below tables.
Saflex's second quarter 2009 net sales were $160 million, down $60 million or 27 percent from the same period in 2008. Adjusted EBITDA decreased to $39 million for the second quarter of 2009 compared to $41 million in the prior year period primarily due to automotive sales volume declines, partially offset by lower raw material and SG&A costs.