- Buyer's Guide
The Lubrizol Corporation on February 4 announced consolidated earnings for the fourth quarter ended December 31, 2009, of $134 million, or $1.92 per diluted share, including after-tax restructuring and impairment charges of $2 million, or $.03 per diluted share. In the fourth quarter of 2008, the company reported a consolidated loss of $281 million, or $4.16 per diluted share, including after-tax restructuring and impairment charges of $330 million, or $4.86 per diluted share, and an after-tax write-off of acquired in-process research and development of $1 million, or $.01 per diluted share. The fourth quarter 2008 restructuring and impairment charges consisted primarily of a non-cash goodwill impairment charge related to the company's Performance Coatings and Engineered Polymers product lines.
Fourth-Quarter Consolidated Results
Consolidated revenues for the fourth quarter of 2009 increased 9 percent to $1.19 billion compared with $1.09 billion in the fourth quarter of 2008. The year-over-year increase in revenues was attributable to higher volume and favorable currency that more than offset a decline in the combination of price and product mix. Included in these factors was the incremental impact from acquisitions completed at the end of 2008, which contributed 2 percent to consolidated revenues in the fourth quarter of 2009.
Excluding the special charges in both periods, adjusted earnings were $136 million, or $1.95 per diluted share, for the fourth quarter of 2009 compared with $50 million, or $.74 per diluted share, for the fourth quarter of 2008. Adjusted earnings per share for the fourth quarter of 2009 increased compared with the prior-year fourth quarter largely due to effective margin management, increased volume, a lower effective tax rate, cost savings initiatives that lowered selling, technical, administrative and research (STAR) expenses and contributions from the 2008 acquisitions. These positive factors impacting earnings more than offset higher performance-based compensation expense, manufacturing costs and net interest expense.
CEO James Hambrick commented, "I am very pleased with our results this quarter. The strong performance of both operating segments enabled us to post the third best quarterly results in our history. Additives continued to sustain the strong performance they established earlier in the year. Advanced Materials benefited from strong volume increases and success in delivering valuable technology to our customers while continuing to control costs and spending. And with their strong finish to the year, both segments delivered record operating income in 2009."
Consolidated 2009 Results
For the full year of 2009, consolidated revenues decreased 9 percent to $4.59 billion compared with $5.03 billion for the full year of 2008. Earnings for the full year of 2009 were $501 million, or $7.26 per diluted share, including after-tax restructuring and impairment charges of $19.8 million, or $.29 per diluted share. For the full year of 2008, the company reported a loss of $66 million, or $.97 per diluted share, including after-tax restructuring and impairment charges of $346 million, or $5.04 per diluted share, and a $1.0 million, or $.01 per diluted share, after-tax write-off for in-process research and development. Excluding the special charges in both periods, earnings of $7.55 per diluted share for 2009 compared with $4.09 per diluted share for 2008.
Cash flow from operations for the year ended 2009 was $951 million compared with $223 million for the year ended 2008. The increase in cash flow from operations primarily was attributable to higher net income and a significant reduction in inventory. Capital expenditures for 2009 were $140 million, down from $203 million in the prior year, as the company carefully managed spending in 2009's uncertain economic environment. The company's cash balance at December 31, 2009, was $991 million compared with a cash balance of $186 million at December 31, 2008. The higher cash balance largely was due to the company's strong operating cash flow for the year.
Continued Hambrick, "2009 was an excellent year for our company. Our success was a direct result of our employees' commitment and dedication, diligent control of operating expenses and a continued emphasis on delivering high-value products, all built on the foundation of many years of planning and solid execution. The Lubrizol organization responded extraordinarily well to the challenges we faced this past year, especially during the first six months."
About The Lubrizol Corporation
The Lubrizol Corporation is an innovative specialty chemical company that produces and supplies technologies that improve the quality and performance of our customers' products in the global transportation, industrial and consumer markets. These technologies include lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, as well as fuel additives for gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for personal care products and pharmaceuticals; specialty materials, including plastics technology and performance coatings in the form of specialty resins and additives. Lubrizol's industry-leading technologies in additives, ingredients and compounds enhance the quality, performance and value of customers' products, while reducing their environmental impact.