Chemtura Corporation today announced financial results for the third quarter ended September 30, 2012. We also filed with the Securities and Exchange Commission our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012. For the third quarter of 2012, Chemtura reported net sales of $743 million and net earnings attributable to Chemtura on a GAAP basis of $9 million, or $0.09 per share. Net earnings attributable to Chemtura on a managed basis were $34 million, or $0.35 per share.

Third Quarter 2012 Financial Results

The discussion below includes financial information on both a GAAP and non-GAAP managed basis. We present managed basis financial information as management uses this information internally to evaluate and direct the performance of our operations and believes that managed basis financial information provides useful information to investors. A reconciliation of GAAP and managed basis financial information is provided in the supplemental schedules included in this release.

CEO Remarks

"We delivered a compelling performance in the third quarter of 2012 despite the lackluster economic environment with managed basis net earnings per share increasing by 67% and Adjusted EBITDA up by 24% compared to the third quarter of 2011," commented Craig A. Rogerson, Chairman, President and CEO of Chemtura. "Each of our segments met or exceeded prior year Adjusted EBITDA. Perhaps of greatest significance, Adjusted EBITDA for the twelve months ended September 30, 2012 was $413 million, which is a record high for this portfolio of businesses since the formation of Chemtura."

"This quarter Chemtura AgroSolutions again led our performance improvement," Mr. Rogerson noted. "With the benefit of a new sales strategy, Latin American sales grew significantly and the benefits of the introduction of new products and registrations combined with cost reduction expanded margins continued to drive profitability improvements. In our Industrial Engineered Products segment we were able to offset much of the weak conditions in the electronics market through growth from insulation foams, mercury control and healthcare applications for bromine based products. With control on pricing and costs, the segment was able to increase Adjusted EBITDA by almost 20% year-on-year and sustain percentage margins."

Mr. Rogerson continued, "For all of our businesses, innovation of both products and applications combined with strong management of selling prices and raw material costs and fixed cost reductions permitted them to expand margins and profitability despite the uncertain macroeconomic conditions to deliver another quarter of year-on-year improvement for Chemtura."

Outlook

Commenting on the fourth quarter of 2012 outlook, Mr. Rogerson observed, "With continuing economic uncertainty, we are unlikely to see recovery in industrial demand in the fourth quarter and there remains a risk of further weakening. We continue to look beyond the macroeconomic environment to focus on gaining revenues from sales from new products and applications while maintaining tight control on costs. Sequentially, Chemtura AgroSolutions and Consumer Products will contribute less than they did in the third quarter due to normal seasonality. Despite these challenges, we continue to target year-over-year performance improvement in the fourth quarter of 2012."

Third Quarter 2012 Business Segment Highlights

Industrial Performance Products' net sales decreased $28 million or 8% as a result of a $28 million decline in sales volume and a $3 million impact from unfavorable foreign currency translation, offset by a $3 million year-on-year increase in selling prices. Operating income on a managed basis increased $1 million in the third quarter of 2012 to $32 million, primarily reflecting the increase in selling prices and $5 million in lower raw material and other costs, offset by sales volume and changes in product mix of $7 million. On a GAAP basis, operating income was unchanged as compared to the same period last year as 2012 was impacted by accelerated depreciation of $1 million associated with the closure of our Pedrengo, Italy facility. Sales volume across the segment reflected a continued weakness in demand for many of our products in Asia and Europe with the largest year-over-year impact experienced by our petroleum additive products. Our ability to maintain operating income improvements given weak market conditions is the result of slightly higher selling prices coupled with moderating raw material and other costs.

Industrial Engineered Products' net sales decreased $9 million or 4% reflecting a $9 million impact from lower sales volumes and $4 million from unfavorable foreign currency translation, offset by a benefit of $4 million from year-on-year increases in selling prices. Operating income increased $5 million from the third quarter of 2011. The increase in operating income reflected $6 million in lower raw material costs, $4 million from the benefit of selling price increases and a $1 million decrease in other costs, offset by $5 million in unfavorable manufacturing costs and variances and $1 million from lower sales volume and product mix changes. Demand for electronic goods, tin-based organometallics and traditional polyolefin catalysts has weakened over the prior year due to the current economic environment. Continuing growth in targeted end markets such as insulation foam, mercury control and healthcare coupled with price increases over prior year and control of raw material and other costs mitigated these sales volume declines and the resulting manufacturing variances. We experienced unfavorable manufacturing absorption variances for certain product lines due to lower production volumes than in the third quarter of 2011 coupled with the impacts of new production capacity placed in service in recent months.

Consumer Products' net sales decreased $2 million or 2% which reflected a $3 million impact from unfavorable foreign currency translation offset by $1 million of higher sales volume. Operating income increased $4 million to $10 million, benefiting from strong production volume, reflecting the season long improvement in volumes which generated favorable manufacturing variances. Volumes improved moderately over the prior year primarily in North America, but this was more than offset by unfavorable foreign exchange translation related to our European revenues. Margins were impacted by moderate raw material inflation in an environment where pricing is set annually.

Chemtura AgroSolutions' net sales increased $9 million or 9%, resulting from $10 million in higher sales volume and $2 million in higher selling prices, offset by a $3 million impact from unfavorable foreign currency translation. Operating income increased $10 million reflecting a $4 million increase from volume and favorable product mix, $2 million lower SG&A and R&D (collectively "SGA&R") costs, the higher selling prices and a $2 million decrease in other costs. Our change to a direct selling approach in Brazil has had a positive effect this quarter and we benefited from a strong growing season as well. North America finished strongly led by an increase in seed treatment products as a result of a warmer than normal weather pattern. Operating income reflected the benefit of our strong volumes and the improvements in our cost base following a restructuring that was implemented in the latter part of 2011.

Corporate expenses for the third quarter of 2012 decreased to $24 million compared with $28 million in 2011. Corporate expenses include amortization expense related to intangible assets of $8 million and $9 million for the third quarters of 2012 and 2011, respectively.

Third Quarter 2012 Results - GAAP

Consolidated net sales for the third quarter of 2012 were $743 million or $30 million lower than 2011 driven primarily by weakening sales volumes in our Industrials segments. While we realized $9 million from higher selling prices, we were unable to offset the effects of a $26 million decline in volume and a $13 million impact due to unfavorable foreign currency translation. Our Industrial segments continue to experience weaker demand, particularly in Asia and Europe. Demand for electronics was weak in our Industrial Engineering Products segment but the decline was offset to a large extent by expansion in other end markets, such as foam insulations, mercury control and healthcare. We experienced stronger volumes in our Chemtura AgroSolutions segment as the result of a new direct sales approach in a strong Brazilian growing season coupled with warm weather at the end of the North American season. Volumes in our Consumer Products business improved moderately over the prior year but this was offset by the negative foreign exchange on our European revenue.

Gross profit for the third quarter of 2012 was $192 million, an increase of $18 million compared with the third quarter of 2011. Gross profit as a percentage of net sales increased to 26% as compared with 23% in the same quarter of 2011. Gross profit benefited from $9 million in higher selling prices, $9 million in lower raw material costs and a $4 million decrease in other costs, offset by a $4 million reduction in volume and product mix.