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Cytec Industries Inc CYT
Q2 2013 Earnings Call Transcript

Transcript Call Date 07/19/2013

Operator: Good day and welcome to the Cytec Industries' 2013 Second Quarter Earnings Conference Call. Today's call is being recorded. For opening remarks and introductions, I would like to turn the conference over to Ms. Jodi Allen. Please go ahead.

Jodi Allen - IR: Thank you, Janelle, and good morning, everyone. We appreciate your participation in our conference call. For our call today, Shane Fleming, Chairman, President and Chief Executive Officer will provide an overview of continuing operations; and Dave Drillock, Vice President and Chief Financial Officer, will review the financial results and special items. Shane will then finish with some commentary on our outlook for 2013.

This call is being webcast in listen-only mode, and it will be archived in audio format on our website for three weeks. Throughout the call, we will be referencing the supporting materials, which can be downloaded from our Investor Relations website under Calendar of Events, or you may follow the slides accompanying the webcast today which are also available through our website.

During the course of this presentation and in responses to your questions, you will hear certain forward-looking statements. Our actual results may differ materially. Please read our commentary on forward-looking statements in slide number two of our supporting materials or at the end of our news release or the statements in our quarterly and annual SEC filings.

In addition, our discussion includes certain non-GAAP financial measurements as defined under SEC rules. We have provided a reconciliation of those non-GAAP financial measures to the most directly comparable GAAP measure at the end of our press release. A copy of our press release is available on our website.

Please note that all earnings and forecasted earnings for all periods have been adjusted to include the favorable impact of the change in pension and other post-retirement benefit accounting. We realized we've made a number of changes this quarter, and to assist you we have included a transition schedule to walk you through the changes in our guidance as part of our quarterly schedules on our website. It is on Slide 12 and 13.

Now, let me turn over the call to Shane.

Shane D. Fleming - Chairman, President and CEO: Thanks Jodi, and good morning everyone. I appreciate you joining on the second quarter call.

Beginning with Slide 3 in our supporting materials let me start by saying that I am extremely pleased with our results in the second quarter with the growth platforms delivering strong sales and earnings performance. Revenues in the quarter were $514 million versus $404 million in the prior year quarter. Sales growth was led by Aerospace Materials and In Process Separation which delivered solid result versus the tough comparison period.

Operating earnings for the quarter were $62.6 million, demonstrating significant growth versus $38.1 million in the second quarter 2012. This equates to $1.51 per diluted share, 86% increase over the prior year period EPS of $0.81.

The Aerospace Materials segment delivered sales of $250 million, 15% increase versus the prior year period with 4% coming from volume growth, 3% due to selling price increases and 8% due to acquisition related volumes. The volume growth was mainly driven by higher build rates in the large commercial transport sector as the 787 program continue this ramp up. We also showed some modest growth in single aisle programs. Growth in large commercial transport was slightly offset by some destocking in the military sector. Operating earnings in the quarter were $54.6 million, up 35% versus the prior year quarter. Excluding the acquisition volumes, earnings were up over 30% versus the prior year period.

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