FINANCIALS: Record results for some, depressed earnings for others
Quarterly earnings roundup includes Nalco, Insituform, SJW Corp., CalWater, Praxair, National WaterWorks, Pentair, Ashland, ITT, IDEX, Calgon Carbon, Crane and Cytec...
Nalco quarterly revenue up 8.8%, organic sales grow 4.9%
NAPERVILLE, IL, Oct. 29, 2004 (BUSINESS WIRE) -- Nalco Holding Co., parent of Nalco Co., continues to deliver sales growth, with 2004 third quarter revenues up 8.8% compared to the third quarter in 2003. Sales grew 4.9% organically - excluding currency translations, acquisition and divestiture impacts - even as cool summer weather and hurricane shutdowns modestly affected sales. The pace of organic sales growth compared to the same quarter in 2003 accelerated, from 3.1% in the first quarter of 2004 to 4.3% in the second quarter of 2004 to 4.9% in the third quarter of 2004.
Debt reduction also accelerated during the third quarter of 2004, as Nalco paid down $90 million of term loan debt, bringing year-to-date term loan and revolver repayments to $210 million excluding the term loan repayments financed by a trade receivables facility. The $90 million payments resulted in a decrease of net debt, defined as debt less cash and cash equivalents, of $81 million. Net income was $2.0 million in the third quarter of 2004 vs. $33.7 million in the third quarter of 2003 when net interest expense was $53 million lower.
Nalco is now reporting results at the Nalco Holding Company level. Nalco Holding Company is the parent of Nalco Company, Nalco Holdings LLC, Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. Nalco Company is the entity level at which our term loans, senior notes and senior subordinated notes are held. Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. are the entities at which the senior discount notes issued in January 2004 are held.
Adjusted EBITDA, a non-GAAP measure, was $157.2 million, up 3.9% from third quarter 2003 Adjusted EBITDA (excluding pro forma cost savings). Year-to-date Adjusted EBITDA is $438.0 million, up 9.7% from 2003 Adjusted EBITDA (excluding pro forma cost savings). Please see Attachment 5 for a reconciliation of Adjusted EBITDA to Net Income.
The Energy Services Division posted significant organic growth in sales over the same period last year. The Industrial and Institutional Services Division reported broad-based growth across most markets and geographies, led by Global Mining Services. Nalco also reported solid gains in its water treatment business in the Middle East, Latin American and Pacific regions.
"The ability of Nalco to deliver solid results despite unusually cool summer weather, hurricane-based plant shutdowns and faster-than-expected raw material and freight cost increases is a testament to the strength of the Nalco business model," stated Dr. William H. Joyce, Chairman and Chief Executive Officer. "Because of these issues, we did not fully benefit at the earnings level from our cost reduction and growth initiatives. Nonetheless, through the third quarter, we remain on track with our previously announced performance commitments."
Mix issues, raw material costs and freight costs again contributed to lower gross margins from 2003 comparable-quarter levels. Among mix issues, lower gross margin mining and oil and gas exploration services particularly grew significantly faster than our other divisions, while above-average gross margin cooling water sales grew more slowly as a result of cooler than normal July and August weather in North America.
Nalco announced additional price increases in September designed to take effect during the fourth quarter. These price increases are expected to help offset higher raw material and freight costs. A few significant raw material vendors have allocated supplies to Nalco and other consumers of these materials. In some cases these vendors have raised prices faster than expected, particularly for acrylic acid, cationic monomer and silicone. Nalco has quickly moved to moderate the effects of supply constriction on materials with alternate products that maintain or improve customer performance.
Certain of Nalco's new product programs also reduce the dependence on selected raw materials. Nalco's 3D TRASAR® stress management system for cooling water improves customer performance while reducing demand for acrylic acid based products. Sales of this multi-patented innovation continue to run ahead of plan.
Year-to-date sales are up 7.9% and net income for the first nine months shows a loss of $122.3 million. Without the impact of this non-cash purchase accounting-related expense in the same amount for in-process research and development, Nalco would have break-even net income.
In mid-October, Nalco successfully completed conversion of its North America business to a new SAP platform. European operations are expected to convert to the platform at the beginning of January 2005. "The capital demands on our business remain low," noted Dr. Joyce. "We expect capital costs for information technology to decline with the completion of the SAP project." Total capital spend level, however, should remain about $100 million in 2005 as we expand capacity in a few selected areas to meet volume requirements.
Nalco's September 2004 year-to-date tax expenses are running at a higher rate than the base rate of 35% largely due to the one-time impact of non-deductible in-process R&D on pretax earnings, the tax costs related to the repatriation of cash from profitable offshore subsidiaries and the currently non-deductible interest expense on the Senior
Nalco is a provider of integrated water treatment and process improvement services, chemicals and equipment programs for industrial and institutional applications. The company currently serves more than 60,000 customer locations representing a broad range of end markets. It has established a global presence with over 10,000 employees operating in 130 countries, supported by a comprehensive network of manufacturing facilities, sales offices and research centers. In 2003, Nalco achieved sales of $2.8 billion.
Insituform reports quarterly revenues up 23%
CHESTERFIELD, MO, Oct. 28, 2004 (BUSINESS WIRE) -- Insituform Technologies Inc. reported third quarter 2004 earnings of $3.5 million, or $0.13 per diluted share, compared to $3.3 million, or $0.12 per diluted share, for the same period last year. Revenues increased 23.4% to $144.8 million for the third quarter of 2004 from $117.4 million in the same period last year. This reflects growth in tunneling and several regional rehabilitation business units along with the impact of 2003 acquisitions.
Year-to-date revenues increased 13.6% to $415.2 million from $365.5 million in the same period last year. As with third quarter revenues, this was principally due to the effect of acquisitions and growth in certain North American CIPP regions, as well as in Europe, Tite Liner® and tunneling. Year-to-date earnings were $7.2 million, or $0.27 per diluted share, in 2004 compared to $14.5 million, or $0.55 per diluted share, in the first nine months of 2003.
Gross profit increased 10.4% to $30.3 million in the third quarter of 2004 from $27.4 million in year ago period. Gross profit margin for the quarter for the company's rehabilitation and Tite Liner segments increased from 24.5% to 25.2% and from 30.7% to 35.1%, respectively. Gross profit margin for the tunneling segment declined from 16.8% to 6.3% in the third quarter compared with the same period in 2003, primarily as a result of project performance issues described below. Gross profit margin for the Company as a whole declined from 23.4% to 20.9% due to the tunneling segment's performance. For the first nine months of 2004, gross profit increased 1.5% to $86.2 million from $85.0 million for the same period a year ago.
Insituform Technologies, Inc. is a leading worldwide provider of proprietary technologies and services for rehabilitating sewer, water and other underground piping systems without digging and disruption.
SJW Corp. shows 6% rise in quarterly operating revenue
SAN JOSE, CA, Oct. 28, 2004 (BUSINESS WIRE) -- SJW Corp. basic earnings per common share for the quarter ended Sept. 30 were $0.61, compared to $0.66 for the same quarter in 2003.
Operating revenue for the third quarter was $52,297,000 vs. $49,514,000 for the same period in 2003, representing an increase of $2,783,000 or 6%. About $3,050,000 of the total revenue increase was attributable to cumulative customer rate increases. Additionally, customer growth contributed $176,000 to increased revenue and other revenues increased by $163,000. The revenue increases were offset by a $606,000 decrease due to lower usage.
Water production costs for the third quarter of 2004 consisting of purchased water, power and pump taxes, increased $1,754,000, or 4% from the third quarter of 2003. The increase were due to the higher combined cost of purchased water and pump taxes of $1,620,000 and reduced surface water availability of $731,000, offset by a decrease in customer demand of $525,000 and lower non-contract water and power costs of $72,000.
Quarterly operating expenses for the third quarter of 2004, excluding water production costs and income taxes, increased $1,291,000 or 3% from 2003. The increases consisted principally of $309,000 in labor and labor related expenses, $858,000 in depreciation expense on added utility plant and other nonutility properties, and $124,000 in other costs. Income tax expense for the third quarter of 2004 was lower than the same period in 2003 due to decreased earnings.
The year-to-date revenue increase of $13,335,000 was attributable to higher water usage of $4,739,000, customer growth of $337,000, rate increases of $7,318,000 and other revenue increase of $941,000. The revenue increase was offset by increases in production and operating expenses of $12,748,000, consisting principally of $8,062,000 in water production costs, $1,063,000 in wages, salaries and stock compensation, $1,230,000 in administrative and general expenses and $2,393,000 in depreciation expense. Year-to-date basic earnings per common share were $1.33 compared to $1.72 for the same period in 2003. The decrease in year-to-date earnings was mainly due to the sale of a SJW Land Company property in the first quarter of 2003, which resulted in an after-tax gain of $3,030,000, or $0.33 per share.
SJW Corp. is a publicly traded holding company headquartered in San Jose, California. SJW Corp., through its subsidiary San Jose Water Company, provides water service to a population of about one million people in the City of San Jose and nearby communities.
Cal Water net income up 26%, avoids loss of Selma system
SAN JOSE, CA, Oct. 27, 2004 (BUSINESS WIRE) -- California Water Service Group announced net income of $10.8 million and earnings of $0.59 per share for the third quarter of 2004, compared to net income of $8.6 million and earnings of $0.53 per share in the third quarter of 2003.
Revenue for the third quarter increased $8.9 million, or 10%, to $97.1 million. Rate increases added $9.9 million to revenue, while sales to new customers added $1.3 million. Partially offsetting these higher revenues was a 3%, or $2.3 million, decrease in sales to existing customers compared to the same period last year.
Total operating expenses for the third quarter increased 9%, or $6.9 million. Water production costs increased 3% due to rate increases by wholesale water suppliers. Other operations expenses increased 14%. For the quarter, the company experienced unexpected cost increases from higher claims for health benefits and workers' compensation. Both of these programs are basically self insured with stop loss insurance coverage for extraordinary claims. In addition, cost increases were incurred to comply with the Sarbanes Oxley (SOX) requirements on internal controls. SOX costs have increased more than originally estimated. Areas of cost increases that were in line with internal expectations were depreciation and property taxes due to capital investments, and higher income taxes driven by the higher taxable income.
"Our third quarter results were good. Although we had some unexpected cost increases for health benefits and workers' compensation claims, net income increased 26% over last year," said president and CEO Peter C. Nelson. "Also, we are very pleased to announce that we have prevailed in our efforts to stop the City of Selma from taking over our Selma water system."
At a public hearing on Oct. 18, the Selma City Council voted unanimously to abandon efforts to acquire Cal Water's Selma system. Hundreds of customers made calls, signed petitions, wrote letters, and attended the public hearing to speak on the company's behalf.
California Water Service Group is the parent company of California Water Service Company, Washington Water Service Company, New Mexico Water Service Company, Hawaii Water Service Company, Inc., and CWS Utility Services. Together these companies provide regulated and non-regulated water service to more than 2 million people in 100 California, Washington, New Mexico, and Hawaii communities.
Praxair reports 3Q EPS of 53 cents
DANBURY, CT, Oct. 27, 2004 (BUSINESS WIRE) -- Praxair Inc. reported record net income of $177 million and diluted earnings per share of 53 cents for the third quarter of 2004, an increase of 18% compared to $150 million and 45 cents, respectively, in 2003. Growth in net income was due to higher sales and higher operating profit, partially offset by a higher effective tax rate compared to the year-ago quarter.
Sales for the quarter were $1,674 million, 18% above $1,414 million in 2003. Operating profit of $280 million grew 17% from $240 million in 2003, and reflected an operating margin of 16.7%. Sales and operating profit were higher in every geographic region. The strongest sales growth came from energy, healthcare, electronics, metals and manufacturing markets.
In North America, sales of $1,085 million rose 18%, from $918 million in the year-ago quarter. Growth came from higher sales of on-site, merchant and packaged gases, and from higher healthcare sales due in part to a North American home healthcare acquisition. Operating profit of $157 million grew 11%, principally due to strong volumes and ongoing productivity initiatives.
In Europe, sales grew 18% to $198 million. Excluding the effect of a stronger euro and the consolidation of a joint venture, sales grew 7% from higher pricing and higher volumes, particularly to metals and healthcare markets. Operating profit grew 23% to $54 million from $44 million in the year-ago period.
In South America, sales of $219 million grew 17%, and 18% excluding currency effects. Sales increased from higher pricing and higher volumes, benefiting from a strengthening economic environment. Operating profit rose to $40 million from $29 million in 2003, and reflected a strong operating margin of 18.3%.
Sales in Asia grew 19% to $123 million, from higher sales in China, India and Korea to electronics and metals markets. Operating profit of $20 million grew 18% from $17 million in the prior period.
Praxair Surface Technologies' sales for the quarter were $109 million, 10% above the prior year due to improved business conditions in industrial and aviation coatings markets and a stronger Euro. Operating profit was $9 million, comparable to the prior-year period.
Cash flow from operations for the quarter was $382 million. Capital expenditures were $161 million, and debt reduction was $147 million. The company's debt-to-capital ratio decreased to 44.7%. After-tax return on capital was 13.2%.
Full-year capital expenditures are expected to be in the area of $675 million. This guidance excludes any impact from the announced acquisition of industrial gas business in Germany, which is expected to close later this year.
Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 2003 sales of $5.6 billion. The company produces, sells and distributes atmospheric and process gases, and high-performance surface coatings. Praxair products, services and technologies bring productivity and environmental benefits to a wide variety of industries, including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, metals and others.
National Waterworks rolls up record quarterly results
WACO, TX, Oct. 26, 2004 (BUSINESS WIRE) -- National Waterworks Inc., a distributor of water and wastewater transmission products in the United States, reported net sales for the three months ended Sept. 24 had increased $67.4 million, or 18.8%, to $425.9 million from $358.5 million for the prior year period.
The increase reflects the pass-through of price increases in principally all major product lines, combined with continued strong demand.
Net income for the quarter was $16.6 million compared to $12.5 million year ago period. The increase is primarily a result of the increase in net sales discussed above and the related $11.8 million increase in gross profit.
Net sales for the nine-month period increased $163.9 million, or 17.1%, to $1,123.1 million from $959.2 million for the same timeframe a year earlier. Net income for the period was $38.5 million compared to $25.5 million a year earlier.
"While our business in the Southeast, and particularly in Florida, was off significantly due to multiple hurricanes, we at National Waterworks were fortunate to incur no personal injury and only minor physical damage," said president and CEO Harry K. Hornish Jr., stated, "The third quarter is historically our strongest quarter, so we are extremely pleased to be reporting new record results for quarterly sales and profits."
National Waterworks Inc. distributes a full line of products including pipe, fittings, valves, meters, service and repair products, fire hydrants and other components that are used to transport clean water and wastewater between reservoirs and treatment plants and residential and commercial locations. Its products are integral to building, repairing and maintaining water and wastewater (sewer) systems and serve as part of the basic municipal infrastructure. Through a network of 134 branches in 36 states, it sells directly to municipalities and to contractors who serve municipalities and also perform residential, commercial and industrial waterworks projects.
Pentair shows quarterly EPS gain of 19%
GOLDEN VALLEY, MN, Oct. 26, 2004 (PRNewswire-FirstCall) -- Pentair announced that its third quarter 2004 earnings per share (EPS) from continuing operations of $0.32 increased 19% over third quarter 2003 EPS from continuing operations of $0.27. Pentair's third quarter 2004 net sales totaled $607.8 million, up 46% from $417.0 million in the same period a year ago. Removing the effects of acquisitions, sales were up 11% over the third quarter 2003.
"We completed the strategic repositioning of Pentair, exchanging earnings of our Tools business, and the dynamics of the tools market, for the earnings of WICOR, and brighter prospects of our water business, for a net cash outlay of about $100 million," said Randall J. Hogan, Pentair chairman and CEO.
In the Water Group, third quarter 2004 sales of $426.7 million were 58% higher than the $270.9 million recorded in the same period last year, reflecting the impact of the WICOR acquisition effective as of July 31. Organic sales increased in the upper single digits reflecting continued double-digit growth in our pump markets.
Third quarter 2004 operating income of $47.4 million in the Water Group reflected a 31% gain over the same period last year. As expected, operating income margins were 11.1% including lower initial margins of the former WICOR businesses. Excluding the WICOR and Everpure businesses and about $1.0 million of post-acquisition integration expenses, operating margins were about 13.6%, comparable to the 13.4% in the same period in 2003.
Integration of the former WICOR businesses proceeded as expected during the quarter. The consolidations of three manufacturing facilities and six distribution or warehousing locations in the U.S. and Europe have been announced, with some already completed. Costs associated with the integration efforts, which are expected to total about $5 million in the fourth quarter of 2004, will continue to offset the benefits for the remainder of this year.
All Enclosures Group businesses had significantly higher sales in key sectors, resulting in organic sales growth of 24% for the quarter. Additional wins in high growth markets, continued market share gains, and new customers in European markets helped to boost third quarter 2004 sales to $181.1 million compared to a year-earlier total of $146.2 million.
Third quarter operating income in the Enclosures Group increased 71% from the same period last year, totaling $23.2 million in 2004 vs. $13.6 million in 2003. Margins reached 12.8%, expanding by 350 basis points over the third quarter 2003 and by 70 basis points over the second quarter 2004, delivering the Enclosures Group's 11th consecutive quarter of sequential margin improvement.
Pentair noted that the proceeds from the early fourth quarter sale of its Tools Group to Black & Decker yielded a total of $796 million. With the closing of the sale, Pentair immediately paid down the $850 bridge loan associated with its acquisition of WICOR. Today, Pentair's debt-to-total- capital ratio is less than 37%, equal to what it was in late 2003.
Ashland reports record quarterly earnings
COVINGTON, KY, Oct. 25, 2004 (PRNewswire-FirstCall) -- Ashland Inc. reported record net income of $200 million, or $2.76 a share, for the quarter ended Sept. 30, the fourth quarter of the company's 2004 fiscal year. Net income for the same 2003 quarter was $137 million, or $1.99 a share. Income from continuing operations for the 2004 quarter amounted to $203 million, or $2.81 a share, compared to $61 million, or 89 cents a share, for the quarter a year ago. The difference between net income and income from continuing operations relates principally to a gain on the sale of the Electronic Chemicals business in the 2003 September quarter and quarterly charges of nearly $5 million for asbestos liabilities.
For the year, Ashland reported net income of $378 million, or $5.31 a share, compared to net income of $75 million, or $1.10 a share a year ago. Ashland's income from continuing operations for 2004 totaled $398 million, or $5.59 a share, compared to $94 million, or $1.37 a share, for 2003.
Operating income from Ashland Specialty Chemical was $24 million for the September quarter. This division has improved consistently despite the impact of rapidly increasing raw material costs. Sales revenues for the quarter were $369 million, a 19-percent increase compared to the 2003 quarter.
Revenues from the Thermoset Resins businesses were up 29% compared to the 2003 period, reflecting a 15-percent increase in volumes.
Revenues from the Water Technologies businesses were up eight% compared to the 2003 quarter. During the quarter, the division sold a parcel of land and fixed assets in Plaquemine, La. for $9 million, realizing a pre-tax gain of $6 million.
Ashland Specialty Chemical's operating income for the 2004 fiscal year was $87 million.
ITT 3Q EPS of $1.16 reflects 12% jump in organic revenue growth
WHITE PLAINS, NY, Oct. 21, 2004 (PRNewswire-FirstCall) -- ITT Industries Inc. reported third quarter 2004 net income of $109.8 million, even with the period last year, and up 21% when excluding the net benefit of special items recorded in the third quarter 2003. Diluted earnings per share (EPS) for the quarter was $1.16. Third quarter revenue was $1.67 billion, up 21% due to increased sales in all business units, the completion of recent acquisitions and the positive impact of foreign currency translation. Segment operating income rose 23% to $188 million on higher volume and improved efficiencies in all segments.
In its Fluid Technology segment, ITT reported:
-- Third quarter 2004 revenues were $619.2 million, up $55.1 million or 10% from the third quarter 2003, driven by higher sales in the Water Technology and Fluid Handling units, recent acquisitions and the positive impact of foreign currency translation.
Segment operating income was $77 million, and margins declined 80 basis points, with operational improvements more than offset by the impact of foreign exchange transactions, acquisitions and restructuring expenses.
-- Order activity strengthened within the water and wastewater businesses of Fluid Technology, with orders in the Advanced Water Treatment group up more than 200%. The group has seen success from its market expansion strategy with a significant contract to design, supply and build an industry-leading energy efficient reverse osmosis desalination plant in the Middle East, providing 30 million gallons of drinking water per day. The plant is due to begin operations by early 2006.
-- The Industrial Products group saw a significant increase in orders for replacement parts. The group is also benefiting from an increase in mining activity. The company was awarded a $3 million mining order for high alloy vertical turbines in South America.
IDEXX Labs' net income jumps 23%
WESTBROOK, ME, Oct. 22, 2004 (PRNewswire) -- IDEXX Laboratories Inc. reported net income increased 23% to $19.7 million for the quarter ended Sept. 30 from $16.0 million for the same period in the prior year.
Earnings per diluted share for the quarter were $0.56, a 27% increase over earnings per diluted share of $0.44 for the quarter ended September 30, 2003. For the quarter ended September 30, 2004, the revision of a contingent liability estimate resulting from settlement of a third party claim contributed an after tax benefit of $0.02 to the Company's earnings per diluted share. Excluding this item, adjusted fully diluted earnings per share were $0.54, an increase of 23% from the quarter ended September 30, 2003.
Revenue for the third quarter of 2004 increased 12% to $134.1 million from $120.1 million for the third quarter of 2003. The favorable impact of currency contributed 3% to revenue growth.
Calgon Carbon quarterly sales up nearly 25%
PITTSBURGH, Oct. 21, 2004 (PRNewswire-FirstCall) -- Calgon Carbon Corp. announced sales for the third quarter ended Sept. 30 of $83.0 million vs. third quarter 2003 sales of $66.6 million, an increase of 24.7%. The company's net income was $1.3 million, as compared to $1.2 million for the third quarter of 2003, a 3.8% increase.
Earnings per share on a diluted basis for the third quarter of 2004 were $0.03, the same as for the comparable period in 2003. Sales of the former Specialty Products Division of Waterlink Inc., which Calgon Carbon acquired in February 2004, were $14.0 million for the third quarter of 2004. Foreign currency translation had a $2.7 million positive effect on sales for the quarter due to the stronger Euro.
For the third quarter of 2004, sales from the Activated Carbon and Service segment increased 15.5% vs. the comparable period in 2003. Excluding the contribution from Waterlink, sales in this segment declined 5.5%. In 2003, the company provided activated carbon for a new drinking water treatment facility in Asia and services to a single large customer for perchlorate removal from drinking water. There were no replacements for these sales in the third quarter of 2004.
Equipment sales increased 110.0% in the third quarter of 2004 as compared to the third quarter of 2003. Excluding Waterlink sales, this segment was up 67.1% due to higher sales of solvent recovery and ion exchange systems.
A 5.3% increase in Consumer sales for the third quarter of 2004 was attributable to higher charcoal sales. However, most of the increase was due to the impact of foreign exchange.
Crane Co. reports 3Q results, agreement to resolve asbestos claims
STAMFORD, CT, Oct. 21, 2004 -- Crane Co., a diversified manufacturer of engineered products, reports third quarter 2004 net income, before a non-cash charge, was $33.2 million, or $0.56 per share, compared with net income of $28.1 million, or $0.47 per share, reported in the third quarter 2003. The third quarter 2004 results including the non-cash, after-tax charge of $238 million, or $4.04 per share, was a net loss of $205 million, or loss of $3.48 per share.
Crane Co. also announced it has reached an agreement in principle with attorneys representing a majority of current claimants and an independent representative of future claimants to resolve all current and future asbestos claims against the company. It recorded the non-cash charge during the third quarter for the comprehensive settlement of its asbestos liability. The non-cash, after-tax charge also includes $26 million for environmental cleanup costs which are based on an agreement with the U.S. Environmental Protection Agency on the scope of work for further investigation and remediation for the company's Goodyear, Ariz., Superfund site. The total charge of $238 million is net of taxes and estimated insurance recoveries.
Financial Details of Charge for Asbestos Settlement and Environmental Costs: The aggregate charge in the third quarter 2004 is based on a gross settlement cost of $510 million, partly offset by anticipated insurance recoveries of $153 million (using a 30% recovery assumption) and existing reserves of $103 million. The inclusion of additional costs of $68 million, for asbestos-related settlement and defense costs and professional fees and expenses, resulted in a total pre-tax, non-cash asbestos charge in the third quarter 2004 of $322 million. After including the pre-tax charge of $40 million for environmental costs and anticipated tax benefits of $124 million, the total after-tax charge was $238 million, or $4.04 per share.
Crane received a commitment from JPMorgan to underwrite and arrange $450 million in new credit facilities that will fund the settlement and provide ongoing liquidity. The Company has also obtained a waiver from its existing credit facility syndicate that provides interim liquidity until such time as the new credit facilities are expected to be in place. The company expects that loans under these facilities will be used to fund the $280 million Settlement Trust for current asbestos claims and that such borrowings will be paid off in about two years through a combination of cash flow generated from operations and reduced taxes resulting from the non-cash charge.
Crane emphasized that there will be no layoffs or changes in management as a result of implementing the settlement, and wages, salaries, benefits and pension plans will not be adversely affected. The company expects that business with its customers, distributors, joint venture partners, suppliers and other third parties will be conducted consistent with current practices. In addition, management is working with the rating agencies and is committed to the company remaining investment grade. It does not expect to change its dividend policy.
Details of financial results: In it's Fluid Handling Segment, total third quarter sales increase of $23.6 million to $217.7 million includes $8.9 million, or 4%, from favorable foreign currency translation, $5.6 million, or 3%, of incremental sales from the Hattersley brand acquired in January 2004, and core business sales increased $9.1 million, or 5%. This segment experienced a 39% operating profit improvement to $15.8 million based on higher volumes from strengthening market demand in the chemical processing industry ("CPI") and the benefit of prior year facility consolidations which were partially offset by material cost increases.
Valve Group sales of $110.6 million increased $7.1 million, or 7%, from $103.5 million in the prior year, including $4.1 million, or 4%, from favorable foreign currency translation and the remaining $3 million, or 3%, reflecting increased shipments to the industrial chemical process markets. Economic recovery continued with signs of strengthening from the core CPI market. Valve Group operating profit declined 12% during the third quarter as a result of supply chain disruptions, poor performance in its marine valve business and large material cost increases.
Crane Ltd. sales of $32.9 million increased $7.7 million, or 31%, from $25.2 million in the prior year. Sales increased $5.6 million from the Hattersley valve brand, acquired in January 2004. Demand continued to be weak within the core commodity valve product lines in the domestic U.K. market. Margins remained depressed, impacted by product availability issues and higher material costs although they were helped by reduced benefit costs.
Crane Pumps & Systems sales of $25.5 million increased from $24.7 million in the prior year and operating profit margins were about 11% in the third quarter 2004.
Crane Supply sales of $36.0 million increased $7.0 million, or 24%, from $29.0 million in the prior year driven by significant growth in core product sales of pipe, valve and fittings. Industrial maintenance, repair and overhaul ("MRO"), commercial construction, petrochemical and mining industry demand across Canada remained strong. Operating profit margin increased strongly to over 10% from 8.4%.
The Fluid Handling Segment backlog was $176.7 million at September 30, 2004, a $4.6 million, or 3%, improvement compared with $172.1 million at June 30, 2004.
Cytec earnings slip due to commodities costs, litigation
WEST PATERSON, NJ, Oct. 21, 2004 (BUSINESS WIRE) -- Cytec Industries Inc. announced that net earnings available to common stockholders for the third quarter of 2004 were $9.4 million or $0.23 per diluted share on net sales of $434 million. Net earnings available to common stockholders for the comparable period of 2003 were $22.1 million or $0.55 per diluted share, on net sales of $368 million.
There were several special item charges, however, as follows: a pretax charge of $8.0 million ($6.2 million after tax or $0.15 per diluted share) primarily relating to settlement of a carbon fiber litigation matter for alleged price fixing, a pretax charge of $2.0 million ($1.6 million after tax or $0.04 per diluted share) relating to the settlement of disputed matters with the holder of the company's Series C Cumulative Preferred Stock and a charge to net earnings available to common stockholders of $9.9 million ($0.24 per diluted share) as a result of the redemption of the company's Series C notes. Excluding the special items, net earnings available to common stockholders for the third quarter of 2004 were $27.1 million or $0.66 per diluted share.
David Lilley, Chairman, President and Chief Executive Officer said, "Overall, sales for the third quarter were up 18%. Our base sales volumes were up a strong 10%, acquisitions added 3%, selling prices were up 3% and exchange rate changes added 2%. Our manufacturing plants continue to run well to meet the higher demand levels, although our two plants in Alabama and Louisiana were impacted by Hurricane Ivan. Both plants suffered minimal damage and are up and running. Our plant personnel did an excellent job in securing and re-starting the plants. As a result, our losses attributed to the hurricane in the quarter were limited to about $1 million. During the quarter, raw material and energy costs continued an upward trend and were well above the prior year quarter."
Water and Industrial Process Chemicals Sales increased 18%; Operating Earnings increase to $6 million: Base sales volumes increased 13%, acquisitions added 3%, exchange rate changes benefited sales by 3% while selling prices were down slightly. Base sales volumes were up in all product lines. Major contributors to our sales growth were sales of Water Treatment chemicals in Europe and Mining Chemicals in Latin America where high production rates continue at the major copper producers. The increase in operating earnings was the result of higher demand levels partially offset by significantly higher raw material and energy costs.