Arch Chemicals Inc. (ARJ) filed Quarterly Report for the period ended 2009-09-30.
Arch Chemicals Inc. is a chemicals manufacturer which supplies value added products and services to several industries on a worldwide basis. The principal businesses in which the company competes are microelectronic chemicals water chemicals and performance chemicals. The company's ability and willingness to provide superior levels of technical customer support the manufacturing flexibility of many of its facilities and the cultivation of close customer relationships are the common skills on which the company relies in servicing its global markets and customers. Arch Chemicals Inc. has a market cap of $681.2 million; its shares were traded at around $27.2 with a P/E ratio of 12.1 and P/S ratio of 0.5. The dividend yield of Arch Chemicals Inc. stocks is 3%. Arch Chemicals Inc. had an annual average earning growth of 37.7% over the past 5 years.
Highlight of Business Operations:
The Company has narrowed the range of its earnings forecast for the full-year 2009 from continuing operations and before estimated executive severance to be in the $1.65 to $1.80 per share range compared to the Company’s previous guidance of $1.60 to $1.80. Full-year sales are expected to be approximately six to seven percent lower than 2008, as the contribution from the acquisition of Advantis and higher pricing should be more than offset by lower volumes and unfavorable foreign exchange. The Company now expects depreciation and amortization to be in the $45 to $50 million range. Capital spending continues to be in the $30 to $35 million range and the effective tax rate remains in the 34 to 35 percent range.
The Company anticipates results from continuing operations to be in the range of breakeven to a loss of $(0.15) per share for the fourth quarter of 2009. Fourth quarter 2008 loss from continuing operations was $(0.75) per share, which included a net charge of $0.97 per share primarily for a goodwill impairment charge. Excluding the net charge, earnings per share from continuing operations for the fourth quarter of 2008 were $0.22. The expected decrease in the fourth quarter results is principally due to lower results for the industrial biocides and performance urethanes businesses. The decrease for industrial biocides is principally the result of higher plant costs related to the Company’s new manufacturing facilities in China and unfavorable foreign exchange. The Company expects lower demand and higher raw material costs will negatively impact the performance urethanes business.
Sales decreased $1.2 million. Excluding the impact of the acquisition of Advantis ($17.0 million or six percent), sales decreased $18.2 million, or six percent, as lower volumes (eight percent) and unfavorable foreign exchange (three percent) were partially offset by improved pricing (five percent).
Operating income decreased $6.0 million as 2008 included an $11.5 million benefit in HTH water products related to the final determination from the DOC which reduced the antidumping duty rate from the Company’s supplier of isos from 76% to less than 1% for purchases made by the Company from June 1, 2006 through May 31, 2007. Excluding the impact of the ruling, operating income increased $5.5 million.
Operating income decreased $8.3 million as 2008 included the benefit related to the favorable antidumping duty ruling for the June 1, 2006 to May 31, 2007 review period of $11.5 million. Excluding the impact of the ruling, operating income improved $3.2 million as higher pricing and the positive contribution of the acquisition of Advantis more than offset lower volumes and higher product costs.
Operating income decreased $2.1 million as 2008 included the benefit related to the favorable antidumping duty ruling for the June 1, 2006 to May 31, 2007 review period of $11.5 million. Excluding the impact of the ruling, operating income increased $9.4 million as improved pricing and the positive contribution from the acquisition of Advantis more than offset lower volumes, higher product costs and unfavorable foreign exchange.
ARJ is in the portfolios of John Keeley of Keeley Fund Management.
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