SOUTHFIELD, Mich.--(BUSINESS WIRE)--Detrex Corporation (Pink Sheets: DTRX) today announced 2011 full-year net income more than doubled to $4.3 million, or $2.53 per fully diluted share, compared to net income of $2.1 million, or $1.31 per fully diluted share, in 2010. The Company also announced that it will commence paying a quarterly dividend of $0.25 per share payable March 30, 2012 to shareholders of record as of the close of business March 19, 2012.
The 2011 financial results include full-year financials from The Elco Corporation as well as Harvel Plastics, Inc., which was sold January 1, 2012. As a result of the sale, Harvel is reported as a discontinued operation in the year-end financials. Harvel’s 2011 sales were $67.6 million compared to $58.4 million in 2010. Pre-tax earnings grew to $3.6 million from $1.5 million in 2010. Detrex sales from continuing operations consist solely of revenue generated by Elco. The year-on-year sales growth was 38.7% to $48.9 million. Elco’s strong growth was fueled primarily by substantial revenue gains in the export markets. The volume gains, in combination with operating efficiencies, resulted in Elco reporting pre-tax earnings of $10.2 million in 2011, versus $6.9 million in 2010. Elco made capital expenditures ($2.3 million) during 2011 to support growth and enhance technical capabilities and manufacturing capacity. Continued strong financial performance is expected during 2012 as customer interest in Elco products continues to grow.
Detrex said the 105% increase in net earnings was the result of higher earnings from the operating units partially offset by an increase in the Company’s environmental reserve charge. In 2011, the Company spent $2.5 million on environmental matters compared to $2.1 million in 2010. The 2011 spending was concentrated on two projects which represented 65% of the total amount spent. Certain areas were cleaned up at the Company-owned Ashtabula site and past EPA oversight costs were paid. The other site is a former solvent distribution center where sampling and evaluation is ongoing. The uncertainties inherent in environmental matters continued to present a challenge in 2011 as new developments and changed conditions resulted in a $2.7 million charge to increase reserve amounts for several projects. The Company’s 2010 charge to its environmental reserve totaled $0.8 million. At year-end 2011, the reserve was $4.1 million, and Detrex anticipates spending approximately $2.4 million on these matters in 2012. While the Company believes that the recorded reserves are appropriate based on currently available information, the estimates may be subject to change.
The underfunded status of the Company’s pension plans increased in 2011 primarily due to changes in actuarial assumptions. The assumed rate of return on the investment portfolio was reduced from 8.5% to 7.5%; more significantly, the discount rate used in calculating the present value of the liability was reduced to 5.25% from 5.75%. The Harvel pension plan was assumed by the Buyer on January 1, 2012 and therefore is not recognized as part of the pension obligation from continuing operations on the December 31, 2011 balance sheet. The pension plans included in continuing operations had an underfunded balance of $9.0 million at the end of the year. For the remaining pension plans, the Company plans to fund $5.0 million in 2012.
“The achievements in 2011 marked a significant step in our quest to effectively position Detrex to deliver shareholder value. Not only did we achieve strong operational and financial results, but we also succeeded in monetizing the value in Harvel,” said Detrex President and CEO Tom Mark. “Moving forward, we will continue to evaluate and embrace strategic opportunities to generate shareholder value, including the payment of a quarterly dividend.”
In 2011, the Company’s bank debt decreased by $1.4 million to $15.3 million as a result of strong cash generation at Elco. The major outlays for the year were capital expenditures of $4.5 million, pension funding of $1.9 million, and environmental spending of $2.5 million. As previously noted, Detrex’s bank debt was fully paid down in the beginning of January 2012, and the Company has secured a new $5 million term loan and $5 million revolving credit facility with JP Morgan Chase.
About Detrex Corporation
Founded in 1925, Detrex Corporation is a manufacturer of specialty chemical products for the global industrial manufacturing markets through its subsidiary The Elco Corporation. Elco is a leading manufacturer of high performance specialty chemicals including additives for industrial petroleum products and high purity hydrochloric acid.
Forward Looking Statements
Statements included in this press release that are not historical in nature are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Act”). The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target” and similar expressions identify forward-looking statements. The Company cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. Certain risks and uncertainties are identified from time to time in the Company’s reports. Some factors that could cause results to differ materially from those projected in the forward-looking statements include: market conditions, environmental remediation costs, pension expense and funding requirements, liquidation value of assets, and marketability of real estate and the market value and future liquidity of Detrex stock. The Company claims the protection of the safe harbor for forward-looking statements contained in the 1995 Act.
| Detrex Corporation and Subsidiaries | ||||||||||
| Condensed Consolidated Statement of Income | ||||||||||
| Years Ended December 31, 2011 and 2010 | ||||||||||
| (unaudited, in thousands) | ||||||||||
| 2011 | 2010 | |||||||||
| Net sales | $ | 48,918 | $ | 35,289 | ||||||
| Cost of sales | 32,878 | 22,953 | ||||||||
| Selling, general and administrative expense | 7,869 | 7,342 | ||||||||
| Provision for depreciation and amortization | 1,033 | 1,022 | ||||||||
| Provision for corporate environmental reserves | 2,711 | 755 | ||||||||
| Interest expense | 493 | 731 | ||||||||
| Other Income (Expense), net | 14 | (63 | ) | |||||||
| Income from continuing operations | ||||||||||
| before income taxes | 3,948 | 2,423 | ||||||||
| Provision for income taxes | 1,525 | 894 | ||||||||
| Net Income from continuing operations | 2,423 | 1,529 | ||||||||
| Discontinued operations: | ||||||||||
| Income from operation of Harvel Plastics, Inc., net of income tax | 2,209 | 693 | ||||||||
| Net income | 4,632 | 2,222 | ||||||||
| Net income attributable to noncontrolling interest | 355 | 134 | ||||||||
| Net income attributable to Detrex Corporation | $ | 4,277 | $ | 2,088 | ||||||
| Basic earnings per common share: | ||||||||||
| From continuing operations attributable to Detrex shareholders | $ | 1.45 | $ | 0.97 | ||||||
| From discontinued operations attributable to Detrex shareholders | 1.10 | 0.35 | ||||||||
| Net earnings per share attributable to Detrex shareholders: | $ | 2.55 | $ | 1.32 | ||||||
| Fully diluted earnings per common share: | ||||||||||
| From continuing operations attributable to Detrex shareholders | $ | 1.43 | $ | 0.96 | ||||||
| From discontinued operations attributable to Detrex shareholders | 1.10 | 0.35 | ||||||||
| Net earnings per share attributable to Detrex shareholders: | $ | 2.53 | $ | 1.31 | ||||||
| Shares outstanding,basic | 1,676 | 1,583 | ||||||||
| Shares outstanding,fully diluted | 1,692 | 1,595 | ||||||||
| Condensed Consolidated Balance Sheet | ||||||||||
| (unaudited - in thousands) | ||||||||||
| Dec 31 | Dec 31 | |||||||||
| 2011 | 2010 | |||||||||
| Assets | ||||||||||
| Current Assets: | ||||||||||
|
Continuing operations |
$ | 13,064 | $ | 9,058 | ||||||
| Assets held for sale | 16,039 | $ | 16,820 | |||||||
| Property and equipment, net | 9,773 | 8,534 | ||||||||
| Other assets: | ||||||||||
|
Continuing operations |
6,705 | 7,792 | ||||||||
| Assets held for sale | 8,549 | 8,114 | ||||||||
| Total assets | $ | 54,130 | $ | 50,318 | ||||||
| Liabilities and stockholders' equity | ||||||||||
| Current liabilities: | ||||||||||
| Continuing operations | $ | 12,248 | $ | 11,654 | ||||||
| Against assets held for sale | 4,797 | 4,662 | ||||||||
| Non-current liabilities: | ||||||||||
| Continuing operations | 21,336 | 20,884 | ||||||||
| Against assets held for sale | 3,825 | 2,972 | ||||||||
| Detrex Corporation shareholders' equity | 9,303 | 7,165 | ||||||||
| Noncontrolling interest | 2,621 | 2,981 | ||||||||
| Total equity | 11,924 | 10,146 | ||||||||
| Total liabilities and stockholders' equity | $ | 54,130 | $ | 50,318 | ||||||