Grace Posts Profit Beat, Lifts Sales Forecast
Chemicals and building products maker W.R. Grace, which is operating under bankruptcy protection, posted a 24% jump in quarterly profit on Thursday and boosted its revenue forecast.
Delaware Judge Judith Fitzgerald said earlier this week that she had prepared a draft of a ruling that would release W.R. Grace from bankruptcy and hoped to issue it by year's end, Chief Financial Officer Hudson LaForce told Reuters. Despite its bankruptcy status, W.R. Grace remains bullish on the future, lifting its 2010 sales forecast to a range of $2.64 billion to $2.66 billion from a previous outlook of $2.60 billion to $2.65 billion.
"The new outlook is a function primarily of how well the businesses are functioning," LaForce said.
For the third quarter, the company posted net income of $54.9 million, or 74 cents per share, compared with $44.4 million, or 61 cents per share, a year earlier. Excluding one-time items, profit was 75 cents per share. By that measure, analysts expected 65 cents, according to Thomson Reuters I/B/E/S.
Jefferies & Co analyst Laurence Alexander said the earnings showed W.R. Grace offers investors a key chance to get in on the economic recovery due to several near-term catalysts as it emerges from bankruptcy.
Revenue fell 9.5% to $682.1 million. The year-ago period included results from the Advanced Refining Technologies joint venture with Chevron, which began operations in 2001.
Last November W.R. Grace sold a 5% stake in the joint venture back to Chevron, bringing each company's share to 50%. That triggered an accounting change, whereby W.R. Grace no longer lists the joint venture's revenue as part of its own, but rather as an equity stake on the balance sheet, executives said.
"On an apples-to-apples basis, our sales were flat year-over-year," LaForce said.
W.R. Grace's Davison unit, which makes refinery catalysts, specialty catalysts and engineered materials, saw sales increase 2.6%.
But sales in the construction business, which supplies building materials and chemicals fell 4.6%.
"The biggest part of that change was currency," LaForce said. "Our biggest single exposure is the euro."
The Columbia, Maryland-based company cut costs by 7.8% year over year.
