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Cytec Industries Inc. Reports Operating Results (10-Q)

October 28, 2010 | About:
10qk

10qk

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Cytec Industries Inc. (CYT) filed Quarterly Report for the period ended 2010-09-30.

Cytec Industries Inc. has a market cap of $2.46 billion; its shares were traded at around $49.58 with a P/E ratio of 15.2 and P/S ratio of 0.9. The dividend yield of Cytec Industries Inc. stocks is 0.1%.CYT is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC, Mario Gabelli of GAMCO Investors, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

Manufacturing cost of sales was $658.2 or 78.6% of sales in the third quarter of 2010, compared with $605.4, or 81.8% of sales in the third quarter of 2009. The 3.2% decrease in manufacturing cost as a percentage of sales, is primarily due to improved manufacturing cost leverage on the increased volume obtained across our segments and lower restructuring charges. Total manufacturing costs increased by $52.8 due to $64.5 related to increased raw material costs, $25.1 due to higher raw material volumes, and $14.9 due to higher freight and period costs related to the increased sales volumes. Additionally, manufacturing costs increased by $6.3 related to the elimination of the 2009 short term cost reductions discussed above. The third quarter of 2010 includes $3.5 of costs primarily associated with additional restructuring to consolidate our manufacturing operations at one of our European facilities. These increases were partially offset by favorable fixed cost absorption of $20.1 related to the increased sales volume as well as our initiative to lower inventory levels in 2009, favorable changes in exchange rates of $16.1

Selling and technical services expenses were $51.5 in the third quarter of 2010 versus $48.6 in the third quarter of 2009. Research and process development expenses were $18.0 versus $17.2 in the prior year. Administrative and general expenses were $32.8 versus $29.6 in the prior year. Overall operating expenses increased $6.9 due to the elimination of the 2009 short term cost reductions discussed above of $7.0 and higher costs to support increased volumes of $3.5. These negative impacts were partially offset by favorable changes in exchange rates of $2.3 and reduced restructuring costs of $1.4.

Net income for the third quarter of 2010 was $37.7 ($0.75 per diluted share), a $25.2 increase from the net earnings of $12.5 ($0.26 per diluted share) in the same period in 2009. Included in the third quarter of 2010 was $2.2 of after-tax expenses primarily related to restructuring costs discussed above. Included in the third quarter of 2009 was a $15.3 of after-tax expenses related to restructuring costs, an after-tax loss of $5.5 associated with the repurchase of debt under a tender offer, and an after-tax gain of $5.7 associated with the transfer of ownership of land to a third party.

Earnings from operations were $19.5 or 5% of sales in 2010, compared with earnings from operations of $18.5 or 6% of sales in 2009. The $1.0 increase in earnings is principally due to the favorable impacts of $29.9 from higher selling prices, $8.1 of improved plant leverage on increased volume as well as the initiative to lower inventories in 2009, and $6.0 from increased selling volumes. These positive impacts were largely offset by higher raw material costs of $34.7, higher costs of $6.1 related to the elimination of the short term cost savings initiatives and higher manufacturing and operating expenses, increased freight costs of $1.9, and changes in exchange rates of $0.2.

Earnings from operations were $9.1 or 14% of sales in 2010, compared with $3.1 or 5% in 2009. The $6.0 increase in earnings is principally due to the improvement in demand with $3.3 related to improved plant leverage on increased volume as well as the initiative to lower inventories in 2009, $2.7 related to increased selling volumes and improved product mix, and $1.2 related to increased selling prices. These positive impacts were partially offset by increased freight costs of $0.5 due to higher selling volumes, $0.5 due to the elimination of the short term savings initiatives and higher manufacturing and operating expenses, and unfavorable changes in exchange rates of $0.4.

Earnings from operations were $27.9 or 14% of sales in 2010, compared with $18.3 or 11% of sales in 2009. The $9.6 increase in earnings includes increased selling volumes of $15.6, benefits primarily associated with higher fixed cost absorption into inventory due to increased production levels, as well as the initiative to lower inventories in 2009, of $7.9, increased selling prices of $2.7, and changes in exchange rates of $0.9. These positive impacts were partially offset by $15.1 due to the elimination of the short term savings initiatives and higher manufacturing and operating expenses to meet the increasing demand levels and new business opportunities, $1.5 due to higher raw materials costs, and $0.9 due to increased freight costs.

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