Business News
Momentive Performance Materials Inc. Reports Third Quarter 2010 Results
Wednesday 03. November 2010 - Momentive Performance Materials Inc. ("Momentive Performance Materials" or the "Company") today reported its consolidated results for the fiscal three-month period ended September 26, 2010. Highlights include:
Net sales of $662.2 million compared to $568.4 million in the fiscal three-month period ended September 27, 2009, an increase of 17%.
Adjusted EBITDA of $118.9 million compared to Adjusted EBITDA of $93.5 million in the fiscal three-month period ended September 27, 2009, an increase of 27%. Adjusted EBITDA excludes the EBITDA of one of our subsidiaries that is designated as an Unrestricted Subsidiary under our debt documents of $6 million and $1 million for the quarters ended September 26, 2010 and September 27, 2009, respectively.
Pro Forma Adjusted EBITDA for the twelve-month period ended September 26, 2010 of $526.8 million, which includes cost savings of approximately $50 million that the Company expects to achieve in connection with the shared services agreement that it recently entered into with Momentive Specialty Chemicals Inc.
Operating income of $68.3 million versus operating income of $44.1 million in the fiscal three-month period ended September 27, 2009.
Net income attributable to Momentive Performance Materials of $29.1 million compared to a net loss attributable to Momentive Performance Materials of $25.9 million in the fiscal three-month period ended September 27, 2009.
“In the third quarter, we achieved significant year-over-year increases in sales and Adjusted EBITDA of approximately 17% and 27%, respectively,” said Craig O. Morrison, Chairman and CEO. He added, “We benefited in the quarter from improved volumes across our Silicones business, robust demand in our Quartz segment and an improved cost structure. Inflation in raw material costs, though somewhat offset by pricing actions, and inventory reductions from our planned second quarter build up, however, negatively impacted Adjusted EBITDA comparisons on a sequential basis. Turning to our balance sheet, we are pleased to report that our proposed refinancing of approximately $1.25 billion of our senior unsecured notes has been well received and we expect the related cash tender offers, bond offering and bond exchange to close in November.”
Momentive Performance Materials will host a teleconference to discuss Third Quarter 2010 results on Wednesday, November 3, 2010 at 10:00 a.m. Eastern Time.
Interested parties are asked to dial-in approximately 10 minutes before the call begins at the following numbers:
U.S. Toll-Free: 866.700.0161
Outside of the U.S.: 617.213.8832
Participant Passcode: 75150732
Live Internet access to the call and presentation materials will be available through the Investor Relations section of the Companys website: www.momentive.com/investors. A replay of the call will be available for three weeks beginning at 1 p.m. Eastern Time on November 3, 2010. The playback can be accessed by dialing 888.286.8010 (U.S.) and 617.801.6888 (International). The passcode is 28660777. A replay also will be available through the Investor Relations Section of the Companys website.
Summary Results
The following table sets forth certain historical consolidated financial information, in both dollars and percentages of net sales, for the fiscal three-month periods ended September 26, 2010 and September 27, 2009.
For fiscal three-month period ended
September 26, 2010 September 27, 2009
Net sales $ 662.2 100.0 % $ 568.4 100.0 %
Costs and expenses:
Cost of sales, excluding depreciation 432.3 65.3 % 381.9 67.2 %
Selling, general and administrative expenses 141.0 21.3 % 124.3 21.9 %
Research and development expenses 18.8 2.8 % 14.7 2.6 %
Restructuring and other costs 1.8 0.3 % 3.4 0.6 %
Operating income (loss) 68.3 10.3 % 44.1 7.8 %
Other income (expenses)
Interest expense, net (60.2 ) (9.1 )% (66.4 ) (11.7 )%
Other income (expense), net – – 1.0 0.2 %
Income (Loss) before income taxes 8.1 1.2 % (21.3 ) (3.7 )%
Income taxes (21.2 ) (3.2 )% 3.9 0.7 %
Net income (loss) $ 29.3 4.4 % $ (25.2 ) (4.4 )%
Net (income) loss attributable to the noncontrolling interest (0.2 ) – (0.7 ) (0.1 )%
Net income (loss) attributable to
Momentive Performance Materials Inc. 29.1 4.4 % (25.9 ) (4.6 )%
Net Sales by Segment
Silicones $ 585.4 88.4 % $ 523.4 92.1 %
Quartz 76.8 11.6 % 45.0 7.9 %
Total $ 662.2 100.0 % $ 568.4 100.0 %
Net Sales. Net sales in the fiscal three-month period ended September 26, 2010 were $662.2 million, compared to $568.4 million for the same period in 2009, an increase of 16.5%. The increase was primarily due to an increase in sales volume of 16.0% and an increase in selling prices of 2.2%, partially offset by unfavorable exchange rate fluctuations of 1.7%. Foreign exchange impacts were primarily related to the strengthening of the U.S. dollar against the Euro.
Net sales for our Silicones segment in the fiscal three-month period ended September 26, 2010 were $585.4 million, compared to $523.4 million for the same period in 2009, an increase of 11.8%. The increase was primarily due to an increase in sales volume of 11.8%. Sales volume for our Silicones segment was positively impacted on a year-over-year basis by stronger demand in the electronics, automotive and agriculture sectors. Compared to the second quarter of 2010, net sales for our Silicones segment increased by 1.6% primarily due to increases in selling price and volume partially offset by fluctuations in foreign exchange rates. Most product groups and the Pacific region saw improvements in volume versus the second quarter of 2010. We continue to focus on providing more high-value specialty products to our customers versus lower-margin commoditized or core products.
Net sales for our Quartz segment in the fiscal three-month period ended September 26, 2010 were $76.8 million, compared to $45.0 million for the same period in 2009, an increase of 70.7%. The increase was primarily a result of strong overall demand on a year-over-year basis for semiconductor related products. Compared to the second quarter of 2010, net sales for our Quartz segment grew 1.9% primarily due to improved semiconductor demand on a sequential basis as production levels continued to recover at chipmakers. We expect semiconductor related product sales to remain strong through the first half of 2011.
Cost of Sales, excluding depreciation. Cost of sales, excluding depreciation, in the fiscal three-month period ended September 26, 2010 was $432.3 million, compared to $381.9 million for the same period in 2009, an increase of 13.2%. The increase was primarily due to higher sales volume of 16.0% and inflation in raw material costs of 4.5%, partially offset by higher cost leverage, fluctuations in exchange rates, and deflation in energy related costs.
Cost of sales, excluding depreciation, for our Silicones segment was $390.9 million, compared to $352.7 million for the same period in 2009, an increase of 10.8%. The increase was primarily due to higher sales volume of 11.8% and inflation in raw material costs of 4.9%, partially offset by favorable cost leverage and fluctuations in exchange rates.
Cost of sales, excluding depreciation, for our Quartz segment was $41.4 million, compared to $29.2 million for the same period in 2009, an increase of 41.8%. The increase was primarily due to higher sales volume of 64.6%, partially offset by favorable cost leverage, and lower energy related costs.
Selling, General and Administrative Expenses. Selling, general and administrative expenses in the fiscal three-month period ended September 26, 2010 were $141.0 million, compared to $124.3 million for the same period in 2009, an increase of 13.4%. The increase was primarily due to the impact of temporary pay cuts for certain employees instituted in the second quarter of 2009, which were restored effective as of the first pay period in January 2010, an increase in depreciation and unfavorable fluctuations in foreign currency exchange rates.
Net income (loss) attributable to Momentive Performance Materials. Net income attributable to Momentive Performance Materials was $29.1 million in the fiscal three-month period ended September 26, 2010, compared to a net loss attributable to Momentive Performance Materials of $25.9 million for the same period in 2009. Net income attributable to Momentive Performance Materials in the fiscal three-month period ended September 26, 2010 included a valuation allowance release in certain non-U.S. jurisdictions based on the Company’s assessment that the net deferred tax assets will more likely than not be realized.