W.R. Grace posts $111.6 million fourth-quarter net loss; sales down

By Caroline Salls

Pittsburgh, Feb. 6 - W.R. Grace & Co. posted a fourth-quarter net loss of $111.6 million, or $1.48 per diluted share, stemming from a $365 million non-cash charge recorded in the quarter to adjust the company's asbestos-related liability, according to a company news release.

Net income for the fourth quarter of 2011 was $58.1 million, or $0.77 per diluted share.

Grace said net income for the full year ended Dec. 31 was $94.1 million, or $1.23 per diluted share, compared with $269.4 million, or $3.57 per diluted share, for 2011.

"All three operating segments demonstrated solid organic growth and strong increases in operating earnings. This performance, combined with our disciplined expense control, allowed us to improve margins and stay on track with our longer-term earnings goals," chairman and chief executive officer Fred Festa said in the release.

The company said fourth-quarter sales declined 3.4% from the same period of 2011 to $797.8 million as higher sales volumes and improved base pricing were offset by lower rare earth surcharges and unfavorable currency translation.

Grace said sales in emerging regions represented 39.1% of the total number and grew 16.1% compared to the fourth quarter of 2011.

Adjusted EBIT of $133.4 million increased 23.3% compared to $108.2 million in the 2011 fourth quarter because of higher segment operating income in all three operating segments and lower corporate expenses.

Meanwhile, the company said sales for the full year ended Dec. 31 decreased 1.8% to $3.16 billion as improved base pricing and higher sales volumes were offset by lower rare earth surcharges and unfavorable currency translation.

Sales in emerging regions represented 37% of the 2012 total and grew 15.2% compared to 2011.

W.R. Grace said adjusted EBIT was $517.4 million in 2012, an increase of 8.1% from the previous year.

Net cash provided by operating activities came in at $453.6 million for the year ended Dec. 31, up from $219.4 million at Dec. 31, 2011.

The company said the improved cash flow resulted from reduced working capital requirements and lower pension contributions.

2013 outlook

As of Feb. 6, Grace said it expected 2013 adjusted EBIT to be in the range of $560 million to $580 million, an increase of 8% to 12% compared to 2012 adjusted EBIT of $517.4 million. The company expects 2013 adjusted EBITDA to be in the range of $685 million to $705 million.

The company said its 2013 outlook assumes consolidated sales in the range of $3.2 billion to $3.3 billion with organic growth of 6% to 8% offset by headwinds of about $120 million stemming from lower rare earth-related pricing and unfavorable currency translation.

Grace said it expects capital expenditures in the range of $180 million to $200 million in 2013 and roughly 78 million of diluted shares outstanding at the end of the year.

According to the release, five parties have plan of reorganization confirmation appeals pending before the Third Circuit Court of Appeals.

The company said the timing of its emergence from Chapter 11 will depend on the satisfaction or waiver of the remaining conditions set in its joint plan.

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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