Business News

Momentive Specialty Chemicals Inc. Announces Preliminary Third Quarter 2010 Results

Friday 22. October 2010 - Momentive Specialty Chemicals Inc. ("Momentive Specialty Chemicals" or the "Company"), formerly known as Hexion Specialty Chemicals, Inc., today announced preliminary results for the third quarter ended September 30, 2010.

Momentive Specialty Chemicals expects to record sales of approximately $1.4 billion, operating income of $183 million to $192 million and Segment EBITDA (earnings before interest, taxes, depreciation and amortization) of $198 million to $204 million in the third quarter of 2010. (Note: Segment EBITDA is a non-GAAP financial measure and is defined and reconciled to the closest GAAP calculation later in this release.) In addition, the Company expects Pro Forma Adjusted EBITDA for the last twelve months of $688 million to $694 million, including 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 Performance Materials Inc. As anticipated, third quarter 2010 sales continued to gradually improve compared to the results achieved in the second quarter of 2010, while third quarter 2010 Segment EBITDA reflected the Company’s improved cost structure resulting from its ongoing productivity program, improved market conditions in select markets and pricing actions.
The Company recorded revenues of $1.08 billion, operating income of $77 million and Segment EBITDA of $128 million in the third quarter of 2009.
Momentive Specialty Chemicals expects to be in compliance with all of the terms of its outstanding indebtedness, including the financial covenants, at the end of the third quarter of 2010. Momentive Specialty Chemicals estimates that its net debt was approximately $3.52 billion at September 30, 2010, even with $3.52 billion at June 30, 2010. The Company also estimates that it had liquidity of approximately $412 million as of September 30, 2010, which is comprised of cash plus available borrowings under its credit facilities and includes an equity commitment from certain affiliates of Apollo Global Management.
“Our anticipated third quarter 2010 EBITDA represents record results for the Company,” said Craig O. Morrison, Chairman and CEO. “During the third quarter of 2010, our year-over-year Segment EBITDA increase was largely driven by continued top-line gains and operating leverage from our ongoing productivity program.”
Momentive Specialty Chemicals Inc. Preliminary Q3’10 Results Final.doc
Momentive Specialty Chemicals expects to file a more detailed press release regarding its third quarter 2010 results on Form 8-K, as well as file its Form 10-Q for the period ended September 30, 2010, in early November 2010, with an accompanying investor conference call to follow shortly thereafter.
Reconciliation of Segment EBITDA to Operating Income
Segment EBITDA is defined as EBITDA adjusted to exclude certain non-cash and certain non- recurring expenses. Segment EBITDA is the primary performance measure used by the Company’s senior management, the chief operating decision-maker and the board of directors to evaluate operating results and allocate capital resources among segments. Segment EBITDA is also the profitability measure used to set management and executive incentive compensation goals. Segment EBITDA is not intended to represent any measure of performance in accordance with generally accepted accounting principles, or GAAP, and the Company’s calculation and use of this measure may differ from those of other companies. These non-GAAP measures should not be used in isolation or as a substitute for measures of performance or liquidity and should not be considered an alternative to operating income under GAAP for purposes of evaluating the Company’s results of operations, prepared in accordance with GAAP.