Solutia Reports Third Quarter 2009 Results

Date: 28 October 2009
Source: Solutia
2009 Third Quarter Highlights    -- Net sales of $448 million, a sequential improvement over second quarter 2009 of 9 percent    -- Basic and diluted earnings per share from continuing operations of $0.24; Adjusted earnings per share of $0.37    -- Adjusted EBITDA of $119 million, a sequential improvement over second quarter 2009 of 24 percent and a year-over-year improvement of 7 percent; Adjusted EBITDA margins of 27 percent compared to 19 percent in the year ago period    -- Increased Adjusted EBITDA guidance to a range of $350 million to $365 million, up from previously stated target of $340 million to $360 million "Solutia's record quarterly earnings and margins in the third quarter were attributable to an underlying improvement in sales volumes and aggressive cost reduction actions taken early in the global recession," said Jeffry N.

Quinn, chairman, president and chief executive officer of Solutia Inc. "We have now raised the full-year range of Adjusted EBITDA outlook to $350 million to $365 million. The high level of commitment of our organization to continue to meet the needs of our customers while aligning our cost structure to current market conditions has yielded strong results. With industry-leading businesses, Solutia is well positioned for profitable growth as global markets continue to recover."
 
Consolidated Results from Continuing Operations
 
Solutia Inc. (NYSE: SOA) today reported income from continuing operations attributable to Solutia of $29 million for the third quarter of 2009, compared to $21 million for the same period in 2008. These results were impacted by certain events affecting comparability (detailed below) totaling a net loss of $15 million in 2009. After adjusting for these items, income from continuing operations attributable to Solutia of $44 million in the third quarter of 2009 increased $23 million versus the third quarter of 2008. This improvement was primarily due to cost reductions, lower raw material and energy costs, and lower interest expense, partially offset by weakened demand and lower selling prices. For the quarter, Solutia posted basic and diluted earnings per share from continuing operations attributable to Solutia of $0.24, and, as adjusted, earnings per share of $0.37.
 
Consolidated EBITDA from continuing operations for the third quarter decreased to $99 million on net sales of $448 million from $108 million in the third quarter of 2008 on net sales of $587 million. After taking into consideration adjustments (as detailed below in the consolidated and segment EBITDA and Adjusted EBITDA table), Adjusted EBITDA increased to $119 million from $111 million.
 
Segment Data
 
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® Segment
 
Saflex's third quarter 2009 net sales were $182 million, down $39 million or 18 percent from the same period in 2008. Adjusted EBITDA increased to $47 million for the third quarter of 2009 compared to $36 million in the prior year period primarily due to lower raw material and SG&A costs, and improved manufacturing performance, partially offset by volume declines and lower selling prices. Adjusted EBITDA margins expanded to 26 percent in the third quarter of 2009 in comparison to 16 percent in the same period in 2008. Sales increased $22 million or 14 percent and Adjusted EBITDA increased $8 million or 20 percent compared to the second quarter in 2009. This was primarily due to improved volumes, lower raw material and manufacturing costs and improved manufacturing utilization rates.
 
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