ST. LOUIS, Sept. 14 /PRNewswire-FirstCall/ -- Solutia Inc. , a leading global specialty chemicals and materials company, has raised its full-year 2009 adjusted EBITDA guidance from continuing operations to a range of $340 million to $360 million, and its full-year 2009 cash from operations less capital expenditures guidance to approximately $125 million. The previous guidance was an adjusted EBITDA range of $325 million to $350 million and cash from operations less capital expenditures of approximately $100 million.
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Net sales were $281 million for two months ended August 31 or a monthly average of $141 million, compared to $410 million for the second quarter or a monthly average of $137 million. The sequential improvement in sales was primarily driven by higher volumes in the automotive markets despite the seasonal slowdown typically experienced in the third quarter versus the second quarter. Adjusted EBITDA was $72 million for two months ended August 31 or a monthly average of $36 million, compared to $96 million for the second quarter or a monthly average of $32 million. Adjusted EBITDA margin was 25.6 percent for two months ended August 31, compared to 23.4 percent for the second quarter. Cash from continuing operations less capital expenditures for the two months ended August 31 was $23 million.
"The combination of improving sales volumes, increased manufacturing utilization rates and our intense focus on reducing operating costs continues to drive our margin expansion," said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia Inc. "The momentum established with our operating performance following the sale of our nylon business in the second quarter has continued to build in the first two months of the third quarter and pushed the expectation of our EBITDA and cash flow guidance for the year above our previous estimates."
As of the end of August, Solutia's net debt (gross debt less cash) was $1,088 million and its liquidity (cash on hand plus available borrowings) was $237 million. This compares to net debt of $1,108 million and liquidity of $211 million as of the end of the second quarter.
Reconciliation of Income from Continuing Operations to Adjusted EBITDA from Continuing Operations Successor Successor --------- --------- Two Months Three Months Ended Ended (dollars in millions) August 31, 2009 June 30, 2009 --------------- ------------- Income from Continuing Operations $17 $25 Plus: Income Tax Expense 7 10 Interest Expense 21 30 Depreciation and Amortization 18 26 Net Income attributable to noncontrolling interest (1) (1) Events affecting comparability, pre-tax (see below) 8 2 Non-cash Stock Compensation Expense 2 4 --- --- Adjusted EBITDA from Continuing Operations $72 $96 === === Summary of Events Affecting Comparability (Gains) and Charges affecting comparability, pre-tax other items are as follows: Two Months Ended Three Months Ended August 31, 2009 June 30, 2009 (dollars in millions) --------------- --------------- $6 $- Loss on the sale of the Plastic Products North American business 2 5 Severance and retraining costs related to the general corporate restructuring 1 Charges related to the closure of the SAFLEX(R) production line at the Trenton, Michigan Facility - (4) Net charges (gains) related to the closure of the Ruabon, Wales Facility --- --- $8 $2 === === Use of Non-U.S. GAAP Financial Information
For the purpose of this press release, the company has provided guidance in the form of adjusted EBITDA. We define (i) EBITDA as earnings before interest expense, income taxes, depreciation and amortization, less net income attributable to non-controlling interest and reorganization items, and (ii) Adjusted EBITDA as EBITDA excluding gains and losses, cost overhang associated with the recent sale of our Integrated Nylon business, and non-cash stock compensation expense. EBITDA and Adjusted EBITDA are not determined in accordance with generally accepted accounting principles in the United States (GAAP). The company believes that these non-GAAP financial measures are useful to investors because they allow investors to assess the company's performance in the way that management and lenders do. Our debt covenants and certain management reporting are measured against certain of these non-GAAP financial measures. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of net sales.
Forward Looking Statements
This press release contains forward-looking statements, including, but not limited to statements about projected financial performance which can be identified by the use of words such as "believes," "expects," "may," "will," "intends," "plans," "estimates" or "anticipates," or other comparable terminology, or by discussions of strategy, plans or intentions. These statements are based on management's current expectations and assumptions about the industries in which Solutia operates. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the accuracy of our assumptions and those risk and uncertainties described in Solutia's most recent Annual Report on Form 10-K, including under "Cautionary Statement About Forward Looking Statements" and "Risk Factors", and Solutia's quarterly reports on Form 10-Q. These reports can be accessed through the "Investors" section of Solutia's website at http://www.solutia.com/ . Solutia disclaims any intent or obligation to update or revise any forward-looking statements in response to new information, unforeseen events, changed circumstances or any other occurrence.
These statements are based on our current operating premise that the automotive and construction industries, particularly the domestic and European markets, will continue to experience minimal or negative growth in 2009. We expect lower volumes for the third quarter in 2009 vs. 2008. We are expecting an increase in volumes in the fourth quarter of 2009 vs. 2008, principally due to the low volumes we experienced in the fourth quarter of 2008. Further, our guidance is premised upon our belief that the cost reduction and cost containment actions taken year to date to mitigate some of the impact of a weakened demand profile are maintained throughout the duration of 2009.
Corporate Profile
Solutia is a market-leading performance materials and specialty chemicals company. The company focuses on providing solutions for a better life through a range of products, including: Saflex interlayer for laminated glass; CPFilms aftermarket window films sold under the LLumar brand and others; and technical specialties including the Flexsys family of chemicals for the rubber industry, Skydrol aviation hydraulic fluid and Therminol heat transfer fluid. Solutia's businesses are world leaders in each of their market segments. With its headquarters in St. Louis, Missouri, USA, the company operates globally with approximately 3,100 employees in more than 60 locations. More information is available at http://www.solutia.com/ .
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Solutia Inc.
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Web Site: http://www.solutia.com/
