Cytec Industries Inc. is a global specialty chemicals and materials company focused on developing manufacturing and selling value-added products with sales. The company's products serve a diverse range of end markets including aerospace adhesives automotive and industrial coatings chemical intermediates inks mining and plastics. The Company use its technology and application development expertise to create chemical and material solutions that are formulated to perform specific and important functions in the finished products of our customers. Cytec Industries Inc. has a market cap of $936.5 million; its shares were traded at around $19.86 with a P/E ratio of 8.2 and P/S ratio of 0.2. The dividend yield of Cytec Industries Inc. stocks is 2.6%. Cytec Industries Inc. had an annual average earning growth of 5.6% over the past 10 years.
Highlight of Business Operations:Manufacturing cost of sales was $497.8, or 81.3% of sales in the first quarter of 2009, compared with $772.7, or 79.4% of sales in the first quarter of 2008. The 1.9% increase in manufacturing cost as a percent of sales is primarily due to unfavorable fixed manufacturing cost leverage due to lower volume, partially offset by the favorable impact of lower raw material costs. Manufacturing costs decreased $274.9 due to $188.4 related to lower selling volumes, $63.8 of lower costs of which $60.0 is related to lower raw material costs and $3.8 is primarily related to lower fixed manufacturing costs. The $3.8 of lower manufacturing costs is comprised of $10.7 of lower fixed manufacturing cost spending attributable to our cost reduction initiatives, partially offset by $6.9 of unfavorable fixed cost absorption
Selling and technical services was $49.4 in the first quarter of 2009 versus $58.6 in the first quarter of 2008. Research and process development was $17.9 versus $21.7 in the prior year. Administrative and general expenses were $29.6 versus $29.0 in the prior year. Changes in exchange rates decreased costs in the first quarter of 2009 by approximately $4.7, $1.1, and $1.8 for selling and technical, research and process development, and administrative and general expenses, respectively. In addition, operating expenses in 2009 reflect $5.5 of net savings as compared to 2008 related to cost savings measures instituted in our Specialty Chemical segments, partially offset by additional costs incurred related to 2009 cost reduction initiatives. The first quarter of 2009 includes a net restructuring charge of $0.5, $0.2 and $0.4 for selling and technical services, research and development and administrative and general expenses, respectively. The first quarter of 2008 includes a net restructuring charge of $0.8, $0.5 and $0.3 for selling and technical services, research and development and administrative and general expenses, respectively. See Note 4 to the consolidated financial statements for additional detail.
Net loss for 2009 was $0.1 ($0.00 per diluted share), a decrease compared to the net earnings of $49.1 ($1.01 per diluted share) in 2008. Included in the first quarter of 2009 was a $2.2 after-tax expense related to restructuring costs, 1.0 after tax gain related to the sale of certain of our polyurethane assets in Europe and a $1.6 of after-tax expenses related to the planned exit of our polyurethane product line assets in Asia of which $1.2 represents incremental accelerated depreciation of certain assets at the site and $0.4 represents additional expenses associated with the planned exit. Included in the first quarter of 2008 was a $2.5 after-tax expense related to restructuring costs and a $0.9 after-tax charge related to incremental accelerated depreciation on our Pampa, Texas manufacturing site that we have decided to exit and relocate the manufacturing to one of our other existing facilities.
Loss from operations was $20.7 or -9% of sales in 2009, compared with earnings from operations of $20.6 or 5% of sales in 2008. The $41.3 decrease in earnings is principally due to the negative impacts of $71.8 due to lower selling volumes and $2.7 of lower fixed cost absorption into inventory due to lower production volumes. These negative impacts were partially offset by favorable impacts of $14.9 from lower freight and fixed manufacturing costs, $5.8 from increases in selling prices, $7.2 from lower operating expenses due to cost savings initiatives, and $4.0 from changes in exchange rates. Raw material costs were flat overall. Manufacturing cost of sales in 2008 also included $1.4 of incremental accelerated depreciation on assets at our Pampa, Texas site given our decision to exit the site and consolidate production.
Earnings from operations were $5.8, or 4% of sales in 2009, compared with $13.7, or 7% in 2008. The $7.9 decrease in earnings is principally due to the negative impacts of $24.1 related to lower selling volumes and $1.4 of lower fixed cost absorption into inventory due to lower production volumes. These negative impacts were partially offset by favorable impacts of $8.6 from increases in selling prices, $1.1 due to lower raw material costs, $3.2 from lower manufacturing costs, $2.7 from lower operating expenses due to cost savings initiatives, and $1.9 from changes in exchange rates.
Cash flows provided by operating activities were $62.6 in 2009 compared with $38.2 in 2008. Trade accounts receivable decreased $52.8 reflecting the reduction in days outstanding from 63 days at December 31, 2008 to 55 days at March 31, 2009. Inventory decreased $44.0 although days on hand were up from 96 days at December 31, 2008 to 105 days at March 31, 2009, reflecting continuing weak demand in the first quarter of 2009. Our production schedules have been further adjusted and we have taken other actions to decrease our inventory levels. Accounts payable decreased $33.6 primarily due to lower purchases and lower raw material prices. Accrued expenses decreased $18.0 primarily due to payments of $12.0 for incentive compensation and $6.0 for customer rebates. We expect to contribute approximately $40.0 to our global pension funds in 2009 of which we expect up to $25.0 of these contributions will be made in equivalent value of Cytec common stock.
Read the The complete ReportCYT is in the portfolios of Arnold Schneider of Schneider Capital Management, Kenneth Fisher of Fisher Asset Management, LLC, Kenneth Fisher of Fisher Asset Management, LLC.