W.R. Grace posts $56.3 million net income for quarter ended March 31

By Caroline Salls

Pittsburgh, April 22 - W. R. Grace & Co.'s overall sales fell to $614.9 million in the quarter ended March 31 from $682.1 million in the same period of 2009, and the company's net income increased to $56.3 million in the first quarter of this year from a $38.9 million net loss in the same period of last year, according to a company news release.

Grace said its first-quarter gross profit percentage increased to 34.8% from 25%.

Excluding sales of the company's ART joint venture in the first quarters of 2010 and 2009, Grace said sales increased 5% overall and 23.2% in emerging regions compared with the first quarter of 2009. The company said emerging regions represented 30.9% of its sales in the first quarter.

This sales increase resulted from favorable currency translation, higher sales volumes and price increases.

According to the release, the improvement in gross profit percentage stemmed primarily from a decrease in raw materials and energy costs and lower factory overhead expenses resulting from the 2009 restructurings.

In addition, Grace said adjusted EBIT grew to $64.3 million from $14.1 million in the first quarter of 2009.

"Our improved profitability reflects better productivity across the company and a much better operating environment," chairman, president and chief executive officer Fred Festa said in the release.

"Our results validate our long-term growth strategy of investing in new products and new geographies, especially emerging regions.

"As we continue to grow, we are well positioned to leverage our cost structure and increase our earnings."

Grace said it completed the sale of a 5% interest in ART, its joint venture with Chevron Products Co., in November and deconsolidated ART's results from its consolidated financial statements on a prospective basis effective Dec. 1.

The company said its net cash used for operating activities for the first quarter of 2010 was $5.6 million, compared with $54.7 million cash provided by operating activities for the same quarter of 2009, which benefited from a significant reduction of net working capital.

Capital expenditures for the first quarter of 2010 were $17.9 million, compared with $16.6 million for the first quarter of 2010.

Grace said it is making strategic capital investments to add capacity for high-margin and high-growth products, including a previously announced polypropylene catalyst investment in Germany and the construction of multiple manufacturing sites for Grace Construction Products in emerging regions.

At March 31, Grace had available liquidity of roughly $844 million, consisting of $782.9 million in cash and cash equivalents and $61.1 million of available credit under various non-U.S. credit facilities.

The company said it believes that these sources and amounts of liquidity and cash flow from operations are sufficient to support its business operations, strategic initiatives and Chapter 11 proceedings until a plan of reorganization is confirmed and it emerges from bankruptcy.

W.R. Grace, a Columbia, Md.-based specialty chemicals company, filed for bankruptcy on April 2, 2001 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 01-01139.

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