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Contact:
Jodi Allen (Investor Relations)
(973) 357-3283
Cytec Revises Full Year Adjusted
2008 Earnings Per Share and
Announces Several Initiatives to Reduce Cost Base and Improve
Cash
West Paterson, NJ – January 8, 2009 - Cytec Industries Inc.
(NYSE:CYT) announced today a reduction to its adjusted earnings
per share forecast for the full year 2008, a non-cash goodwill
impairment charge to be included in fourth quarter 2008 reported
earnings and a series of restructuring actions.
Shane Fleming, Chairman, President and Chief Executive Officer
commented, “The unprecedented downturn in the global economy
over the last several months has led to a dramatic reduction in
demand for our products across many of our industrial markets
leading to reduced earnings in the fourth quarter. We do not
expect to see a short term turnaround in the economy and, as a
result, we are taking proactive measures to reduce costs,
improve cash management and better position Cytec to focus on
its growth platforms.”
The company now anticipates full year 2008 earnings per share,
after adjusting for special items, to be a range of $3.45 to
$3.50 per share, down from the prior estimate of $3.75 to $3.85
per share.
The Company is also in the process of conducting its annual
impairment test for goodwill. The adverse impact of the current
macroeconomic business environment on the long-term financial
outlook for the Surface Specialties segment has led the Company
to conclude an impairment has occurred related to the carrying
value of the segment’s goodwill. While still preliminary, the
Company expects a pre-tax noncash special item charge up to
approximately $500 million will be included in 2008’s fourth
quarter results to reduce the carrying value of goodwill related
to the Surface Specialties segment.
Restructuring Plan
Mr. Fleming explained, “It is our view that the current economic
environment will extend at least throughout 2009 and we must
therefore take immediate actions to align our cost structure to
the changing and challenging demand environment.”
Cytec’s restructuring initiatives are intended to build on its
market and technology position in engineered materials,
eco-friendly coating resins and mining and phosphine chemistry
while navigating through the challenging conditions in its
markets globally. Cytec expects that these initiatives should
lead to a reduction of approximately 600 employee positions,
approximately 10% of Cytec’s headcount, mostly in the Specialty
Chemicals product lines. While still not finalized, Cytec
anticipates these initiatives should result in an estimated net
pre-tax restructuring special item charge up to $140 million
over the next several quarters which includes an estimated
non-cash charge of around $50 million for the write-off of
assets. Also included in this is an estimated $4 million
restructuring charge in the fourth quarter of 2008. These
actions are targeted to achieve $85 million in annualized cost
savings by the end of 2009.
Cytec has ongoing initiatives to reduce costs and improve
efficiencies in all aspects of its operations, including
consolidation of manufacturing facilities, reduction in excess
manufacturing capacity, migration to regional shared services
and simplifying and streamlining its business processes and
organization. As part of these initiatives, Cytec anticipates,
subject to consultation and negotiation with our Works Councils,
that its site in La Llagosta, Spain will be closed and that
production of certain low margin product lines at its sites in
Drogenbos, Belgium and Hamburg, Germany will be significantly
reduced or shut down.
Dave Drillock, Vice President and Chief Financial Officer
commented, “We are taking the steps necessary to maintain our
financial strength in light of the lower demand we forecast in
2009. A key objective is to achieve a sustainable improvement in
our net working capital and deliver approximately $200 million
in additional cash flow by the end of 2009. Cytec has a strong
balance sheet. With the aggressive actions just noted and taking
into account the current demand outlook, we do not foresee any
difficulties funding our planned investments in our growth
businesses, the restructuring initiatives, debt service and our
current dividend. Going forward, our stock repurchases will be
modest at best given the economic turmoil and uncertainty.”
In closing, Mr. Fleming said, “We are confident that our
initiatives will enable Cytec to navigate through the current
uncertain economic environment and position us well for enhanced
profitability when demand growth returns.”
Earnings Release and Conference Call
Cytec Industries Inc. will report fourth quarter and full year
2008 results after the close of the market on Thursday, January
29, 2009. Further details will be provided in that report and in
the fourth quarter earnings conference call on Friday, January
30, 2009 at 11am ET.
Use of Non-GAAP Measures
Management believes that earnings per share before special
items, which is a non-GAAP measurement, is meaningful to
investors because it provides a view of the Company with respect
to ongoing operating results. Special items represent
significant charges or credits that are important to an
understanding of the Company’s overall operating results in the
period presented. Such non-GAAP measurements are not recognized
in accordance with generally accepted accounting principles
(GAAP) and should not be viewed as an alternative to GAAP
measures of performance.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained
herein, statements contained in this release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Achieving the results
described in these statements involves a number of risks,
uncertainties and other factors that could cause actual results
to differ materially, as discussed in Cytec’s filings with the
Securities and Exchange Commission.
Corporate Profile
Cytec Industries Inc. is a global specialty chemicals and
materials company focused on developing, manufacturing and
selling value-added products. Our products serve a diverse range
of end markets including aerospace, adhesives, automotive and
industrial coatings, chemical intermediates, inks, mining and
plastics. We use our 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.
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