Morton International Reports Q1 Comparison Earnings
19 October 1998
Morton International Reports Earnings Per Share of 36 Cents for the First Quarter Versus 39 Cents a Year Ago
CHICAGO, Oct. 19 -- Sales for the first quarter of fiscal
year 1999 declined by 1 percent compared to the prior year while net income
dropped by 16 percent. Earnings per share on a diluted basis were down 8
percent to 36 cents a share.
Morton Chairman and Chief Executive Officer S. Jay Stewart said, "We knew
comparisons in this quarter versus last year's strong first quarter would be
difficult considering the impact of the Asian problems and pricing declines in
selected chemical product lines as well as ice control salt. We are pleased
with the performance of several of our product lines in this tough economic
environment including powder coatings, performance chemicals and waterbased
polymers."
Specialty Chemicals
Sales for the specialty chemical segment declined by 2 percent to
$426.3 million in the first quarter. Operating earnings in the same period
were $64.4 million, a 12 percent decrease. Operating margins for the segment
were 15 percent versus 17 percent a year ago.
Among the product lines which showed sales improvement in the quarter
ended Sept. 30, 1998, were packaging adhesives due to the Poliolchimica
acquisition, industrial adhesives, waterbased polymers, performance chemicals,
dyes, powder coatings and industrial coatings. Product lines whose operating
earnings grew in the quarter included waterbased polymers, performance
chemicals, dyes, and powder coatings. The most significant decreases during
the current quarter were in electronic materials and polysulfide sealants.
For the total business, volume slipped by approximately 1 percent while
price/mix declined by 2 and a half percent. Offsetting those were a 2 percent
increase in sales due to acquisitions. The impact of foreign exchange was
neutral in the quarter versus last year's fourth quarter.
Salt
Salt sales of $167.5 million were flat with last year's first quarter
sales. Operating earnings for the first quarter came in 16 percent below last
year at $22.8 million. Operating margins declined to 14 percent.
North American salt sales in the first quarter of fiscal 1999 were
modestly ahead of last year, but European salt sales came in below the first
quarter of fiscal 1998. Although North American ice control salt sales were
5 percent below last year due to lower pricing, the strong performance of salt
for water conditioning contributed to the overall salt performance. Operating
earnings declined in the quarter due in large part to lower current year
production levels of ice control salt. Also, the impact of two strikes in the
quarter, one in Rittman, Ohio, and the other at Salins du Girard in the south
of France contributed to the reduced earnings. Both strikes were settled
after approximately two weeks.
Corporate
During the first quarter Morton bought back approximately 5.5 million
shares of its stock, leaving only 0.2 million remaining of the second 10
million share board authorization. Since May 1997, Morton has acquired
19.8 million shares of its common stock.
The company maintained tight control over corporate administrative costs
in the quarter, although net interest costs increased by $2.7 million. Most
of the increase was due to a decline in interest income as the company
purchased its shares.
Morton International is a Chicago-based manufacturer and marketer of
specialty chemicals and salt.
Comparative results through September 30:
(in millions, except per share data)
Three Months Ended
September 30
1998 1997
Net sales $593.8 $601.3
Interest, royalties
and sundry income 6.2 10.1
600.0 611.4
Deductions from income:
Cost of products sold 403.6 408.8
Selling, administrative and
general expense 100.8 94.9
Research and development expense 14.9 14.4
Interest expense 6.4 5.6
Amortization of goodwill 3.3 3.0
Income taxes 25.6 30.5
554.6 557.2
Net income $45.4 $54.2
Basic earnings per share $.36 $.40
Diluted earnings per share $.36 $.39
Shares used in computation
(in thousands)
Basic earnings per share 124,787 135,796
Diluted earnings per share 125,760 137,888
Business Segment Information
Three Months Ended
September 30
Sales 1998 1997
Specialty Chemicals $426.3 $433.7
Salt 167.5 167.6
$593.8 $601.3
Profit(1)
Specialty Chemicals $64.4 $72.8
Salt 22.8 27.0
$87.2 $99.8
(1) Business segment profit is before income taxes, interest income,
interest expense and allocation of corporate administrative expenses.