W. R. Grace & Co. announced first quarter net income of US$52.7 million, or US$0.72 per diluted share. Net income for the prior year quarter was US$50.1 million, or US$0.64 per diluted share.
“We are on track to meet our 2015 goals,” said Fred Festa, Grace’s Chairman and Chief Executive Officer. “We achieved good earnings growth and very good cash flow growth. Our team is managing the volatility in oil prices and currencies well, and turning it into competitive advantage where we can. Catalysts Technologies delivered over 6% volume growth in specialty catalysts. Construction Products delivered double digit growth in North America.”
First quarter net sales of US$720.6 million decreased 3.2% compared with the prior year quarter due to unfavourable currency translation (-5.9%), partially offset by higher sales volumes (+2.1%) and improved pricing (+0.6%). Segment gross margin (which excludes pension costs) of 36.8% increased 50 basis points compared with the prior year quarter. Adjusted EBIT of US$117.0 million increased 5.1% from the prior year quarter, or approximately 15% at constant currency. Adjusted EBIT margin of 16.2% increased 130 basis points compared with the prior year quarter. Adjusted EBIT return on invested capital was 32.2% on a trailing four quarter basis, compared with 27.2% as of 31 March 2014.
As of 23 April 2015, Grace affirms its outlook for 2015 adjusted EBIT in the range of US$675 million to US$705 million on a constant currency basis, an increase of 8% to 13% compared with 2014. The company expects 2015 adjusted EBITDA to be in the range of US$815 million to US$845 million on a constant currency basis, an increase of 7% to 11% compared with 2014. The company expects adjusted EPS to be in the range of US$5.05 to US$5.45 per share on a constant currency basis, an increase of 14% to 23% over 2014. Using current exchange rates, including the euro at US$1.07, we would expect a currency headwind to adjusted EBIT of approximately US$60 million and to Adjusted EPS of approximately US$0.55 per share.
The company continues to expect 2015 adjusted free cash flow to be at least US$430 million, including a favourable impact to 2015 cash flow of approximately US$120 million, equivalent to US$1.65 per share, due to Grace's low cash tax rate compared with its expected effective tax rate. The company is unable to make an estimate of the amount of the annual mark to market pension adjustment or 2015 net income.
Adapted from press release by Rosalie Starling
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