The Urethane Blog

Q3 M&A Activity

Chemical Deal Results

Seller	Buyer	Business	Date
Acme Southern	Colonial Chemical Solutions	distribution	3rd Quarter 2014
Schumann/Steier	Trecora Resources	SSI Chusei (polyethylene wax and custom processing) - $73v	3rd Quarter 2014
Sigma-Aldrich	Merck KGaA	acquisition of whole company (life science and high technology chemicals, biochemicals and other products for research and applied labs and industrial and commercial markets) - $2,740s/$17,000v	3rd Quarter 2014
Epic Industries	Simoniz® USA	cleaning chemicals for commercial and institutional applications	3rd Quarter 2014
Performance Compounding LLC	Lehmann & Voss & Co.	compounds based on engineering resins and fluoropolymers	3rd Quarter 2014
Mereco Technologies	Protex	epoxies, urethanes, silicones and materials for electronics applications	3rd Quarter 2014
Apollo Management and other shareholders	Eastman	Taminco (alkylamines and derivatives) - $1,200s/$2,800v	3rd Quarter 2014
Catacel Corporation	Johnson Matthey	metal foil coated catalysts and sorbents technology	3rd Quarter 2014
Auriga Industries	FMC	Cheminova (crop protection) - $1,200s/$1,820v	3rd Quarter 2014
Bemis	Platinum Equity	MACtac (pressure sensitive materials) - $553s/$170v	3rd Quarter 2014

Seller	Buyer	Business	Date
Chevron Phillips Chemical	Solvay	Ryton-brand polyphenylene sulfide business - $220v	3rd Quarter 2014
AnMar International	Cellmark Chemicals	acquisition of whole company (manufacture and distribution of vitamins, plant extracts, nutraceutical ingredients, amino acids and other fine chemicals)	3rd Quarter 2014
Graham Partners	Olympus Partners	Innovative Xcessories & Services (vehicle customization products for OEMs, dealers and consumers)	3rd Quarter 2014
Chemque	Royal Adhesives (Arsenal Capital)	polyurethane foams and adhesives	3rd Quarter 2014
DuPont	Mitsui	copper fungicide	3rd Quarter 2014
HP Spartacote	Laticrete	floor coatings	3rd Quarter 2014
CP Chemicals	Umicore	refining and recycling of cobalt- and nickel-containing secondary materials	3rd Quarter 2014
Knowlton Technologies	Eastman	fiber-entangled composite materials	3rd Quarter 2014
ECLI Products	Quaker Chemical	specialty grease - $52v	3rd Quarter 2014
Maroon Group	CI Capital Partners	sale of majority stake in company (distribution of additives and pigments for plastics and other industries)	3rd Quarter 2014

Seller	Buyer	Business	Date
Flora Tech	Hallstar	Florasolv® natural esters	3rd Quarter 2014
RoundTable Healthcare Partners	Lubrizol	Vesta (catheters and tubing based on silicone and thermoplastics)	3rd Quarter 2014
Solvay	CCMP Capital Advisors	Eco Services (US-based sulfuric acid virgin production and regeneration) - $890v	3rd Quarter 2014
Rockwood Holdings	Albemarle	acquisition of whole company (lithium, surface treatment) - $6,200v	3rd Quarter 2014
Krud Kutter	RPM (Rust-Oleum)	cleaners and removers for residential, commercial and industrial environments - $13s	3rd Quarter 2014
BASF	Alpek	expandable polystrene	3rd Quarter 2014
Polioles (50/50 JV between BASF and Alpek)	BASF	polyurethanes	3rd Quarter 2014
Polioles (50/50 JV between BASF and Alpek)	Alpek	expandable polystyrene	3rd Quarter 2014
Muralo Paint	California Products	paints and coatings	3rd Quarter 2014
Kardoes Rubber	Hexpol	rubber compounding	3rd Quarter 2014

Seller	Buyer	Business	Date
Wild Flavors	ADM	acquisition of whole company (flavors) - €2,300v	3rd Quarter 2014
AKZO	Kemira	paper chemicals - €243s/€153v	3rd Quarter 2014

 

http://www.chemicaldeals.com/Results.aspx?searchtext=&quarter=3rd+Quarter+2014

 

 

 

 

 

 

 

 

 

Tempur Sealy Conference Call Highlights

Mark Sarvary - President and CEO

Thanks, Mark. Good evening, everyone, and thanks for joining us. Today, I will provide an overview of our performance in the third quarter, and then discuss the progress we’re making on our key strategic growth initiatives in 2014. I will then turn the call over to Dale, who will provide details on the third quarter financial results and our updated 2014 guidance.

Our performance during the third quarter was strong. We executed well on our strategic initiatives which led to better than expected sales and a solid increase in earnings. In total, our third quarter sales increased 12.5% with double-digit growth across each of our three business segments and adjusted EPS increased 21%. So far in 2014, we’ve generated a $181 million of operating cash flow and have lowered our total debt by a $190 million.

Tempur North America performed very well and we’re encouraged by the growth and share gains we have seen. Sales were an all-time quarterly record, up 16% in Q3 and after starting the year in negative territory are now up 7% year-to-date. The new products are doing very well and our focus on adjustable basis over the past year is paying off.

The new TEMPUR-Cloud and Contour beds have reignited growth of Tempur-Pedic. It’s been the fastest growing new products in our history. The innovative easy refresh top cover and the integrated smart climate system have been clear differentiators and received well by consumers and retailers.

Another important development has been the growth in adjustable bases. Our adjustable base sales have been growing for Tempur-Pedic in each of the past 10 years, where we’ve seen a major acceleration in 2014. We attribute this to our newly expanded offering and a greater selling focus by retailers and RSAs. During Q3 orders for adjustable bases were unprecedented especially around our Labor Day live it up promotions.

Now this could result in product availability challenges and we did our best to minimize impact to our customers during the period and we have since meaningfully stepped up our inventory. To give you some context, our tax rates in Q3 were nearly doubled the rate of last year.

Tempur North America’s margins are also getting better both gross and operating margins. However, they were somewhat lower than we expected due to the significant increase in adjustable base mix. We’re also pleased with the growth of Sealy. Sealy sales increased 11% in total, but were up 16% in the U.S. Like Tempur, Sealy is gaining share and in the U.S. is up 11% year-to-date. We attribute the success to our strong product range and increased distribution to some of our most important customers.

Posturepedic, which was introduced last year, continues to do very well and the new Stearns & Foster Sealy and Optimum products that we introduced this year are also growing nicely. However, Sealy’s margins were lower than our plan. This can be explained to a large extend by manufacturing efficiencies resulting from near record demand. And I want to thank our entire operations team for the long hours and hard work that was put into meeting this demand.

Still, we need greater consistency and predictability from our supply chain operations. We have recently begun a major initiative to improve productivity and flexibility across the entire Sealy manufacturing footprint.

Tempur International also had good growth, although slightly lower than we had planned. Tempur sales were up mid single-digits with growth in Asia and Latin America. Europe however, remains uneven. And we saw further weakness in Central Europe in markets like Germany and Benelux.

As we discussed in July, we acquired the Sealy brand rights in Japan and Continental Europe. And in quarter three we began rolling out Stearns & Foster and Sealy hybrid products to a select number of customers in Europe. These rollouts have been slower out of the gate than we had expected, which led to some pressure on profitability in Q3. That said we remain confident that there were significant opportunities and we expect better performance with more meaningful sales and earnings contributions in 2015.

I’ll now talk briefly about our four key growth initiatives, which as you know, are product innovation, marketing, our desire to be easier to do business with and international expansion.

As we look into 2015, we see another strong year of innovation.

Our plans call for several Tempur and Sealy product line introductions that we believe have the potential to generate significant incremental growth. Like we did with our 2014 launches, we’re working with our key retailers and using consumer research and testing to ensure their success in the marketplace.

I’m not going to provide specific details on these new products tonight for obvious competitive reasons, but look forward to sharing them with you early next year.

In addition to innovation, we’re also making good progress with respect to our marketing initiatives. During the third quarter, we maintained a healthy rate of advertising and are planning for solid rate of investment in the fourth quarter.

Our new national TV ads which feature real Tempur-Pedic owners with our new mattresses and adjustable bases have been very effective. And together with the double-digit increase in TV ad impressions, they are driving traffic into retail stores as well as increasing website traffic and retailer locator searches. We also continue to support Stearns & Foster, Optimum and Posturepedic with consumer advertising, including TV, digital and print.

The third strategic initiative is our commitment to being the easiest to do business with. We continue to improve our distribution and warehouse network to capitalize on shipping Tempur and Sealy products together and have recently announced the integration of our Tempur and Sealy U.S. sales forces; both initiatives will help improve customer service.

The organization has worked hard over the last 18 months to integrate the two businesses. And following the combination of the sales forces, the consolidation will be effectively complete. The integration overall has gone very well and cost synergies continue to be captured at a faster rate than projected.

Our fourth strategic initiative is international expansion in new and existing geographies. I just mentioned our recent acquisitions of Sealy brand rights in Japan and Europe and we’re also advancing several other initiatives around the world. Earlier this month, we amended our credit agreement to give us greater flexibility to pursue acquisition opportunities including licensees, distributors and joint ventures.

To summarize, we entered 2014 with an aggressive plan to reposition our company for growth by investing in new products and marketing. It required a significant investment but it is paying off. It’s great to be back in the position where we’re reporting double-digit growth. However, we have work to do in improving our margins and that will be a key focus going forward. We look forward to providing you an update on our progress when we report early next year. And in addition, we plan to present a thorough review of our long-term strategy and outlook at our next investor day in New York on February 18, 2015.

http://seekingalpha.com/article/2621255-tempur-sealy-internationals-tpx-ceo-mark-sarvary-on-q3-2014-results-earnings-call-transcript?part=single

Recticel Results

Press Release of Recticel - 31 October 2014

TRADING UPDATE FOR THIRD QUARTER 2014 • Combined 3Q sales: from EUR 307.9 million to EUR 309.5 million; +0.5%. • Combined year-to-date sales: from EUR 940.5 million to EUR 954.8 million; +1.5%. • Combined net financial debt: amounted to EUR 193.2, compared to EUR 168.8 million per 30 September 2013 and to EUR 191.8 million per 30 June 2014. Combined sales increased from EUR 307.9 million in 3Q2013 to EUR 309.5 million in 3Q2014 (+0.5%). Over the first nine months, combined sales increased by +1.5% from EUR 940.5 million to EUR 954.8 million. After a good 1Q2014 (+4.9%) and a much softer 2Q2014 (-0.9%), sales increased by +0.5% during 3Q2014. After a slightly positive 1H2014 (+1.1%) the Insulation segment accelerated its growth in 3Q2014 (+3.9%). Flexible Foams and Bedding segments increased their sales in the third quarter by respectively +3.3% and +0.5%, in overall still weak European comfort and bedding markets. As expected, the Automotive segment recorded lower sales in 3Q2014 (-6.5%), as a consequence of planned program phase-outs at the end of 1H2014.

Warren Anderson Dies

Warren Anderson, 92, Dies; Faced India Plant Disaster

By DOUGLAS MARTINOCT. 30, 2014

 

Photo

 

Warren M. Anderson in 1984. Credit Ron Frehm/Associated Press

Warren M. Anderson, a Brooklyn carpenter’s son who ascended to the top of the Union Carbide Corporation, where he grappled with the ravages of a poisonous gas leak at the company’s plant in Bhopal, India, in 1984 that killed thousands in one of history’s most lethal industrial accidents, died on Sept. 29 at a nursing home in Vero Beach, Fla. He was 92.

His death, which was not announced by his family, was confirmed from public records.

In an interview with The New York Times five months after the tragedy, Mr. Anderson spoke of his feelings of loss and helplessness. “You wake up in the morning thinking, can it have occurred?” he said. “And then you know it has and you know it’s something you’re going to have to struggle with for a long time.”

Mr. Anderson was highly praised for his courage in going to Bhopal four days after the accident, where he was immediately arrested. But after quickly paying bail, he never returned to face trial.

The Indian government made multiple requests to extradite him, and officially labeled him a fugitive. A judge there called him an “absconder.”

In 2010, after eight low-level Indian executives of Union Carbide’s Bhopal subsidiary were convicted of negligence, a writer for rediff.com, an Indian news site, visited Mr. Anderson’s immaculately landscaped home in the Hamptons. Reflecting Indian public opinion that he deserved punishment as the ultimate culprit, the writer imagined a future that never happened: “10 to 20 years in a dirty, overcrowded, rat-infested Indian prison.”

The Bhopal horror began around midnight on Dec. 2-3, 1984, when a chemical reaction in a plant that made insecticides caused a leak of toxic gases that swept through the surrounding community. The government of the Indian state of Madhya Pradesh confirmed 3,787 deaths as a result. Unofficial estimates exceeded 10,000. More than a half-million people were injured, with many dying from illnesses including lung cancer, kidney failure and liver disease.

In 1989, Union Carbide paid $470 million to the Indian government to settle litigation stemming from the disaster. But the Indian public, cheered on by politicians and the news media, never stopped urging the prosecution of Mr. Anderson, and arrest warrants were periodically issued.

With the support of the United States government, he escaped extradition. And he eluded subpoenas in civil cases by living quietly and migrating between his homes in Vero Beach; Greenwich, Conn.; and Bridgehampton, N.Y.

The Indian government and Indian activists contended that slack management and deferred maintenance caused the disaster. Union Carbide blamed sabotage. The company further pointed out that it owned just 51 percent of the company, and left oversight to local executives. It denied that it had been mixing dangerous chemicals in India to save money; it would be less expensive, the company said, to make the pesticide in the United States and sell it in India.

Union Carbide insisted that the settlement agreement ended any possibility of prosecuting Mr. Anderson.

Mr. Anderson had devoted his life to climbing the Union Carbide corporate ladder, arriving at work at 7 a.m. and frequently moving from city to city. His major concern before the accident was disappointing financial results: In 1979, when he was president and chief operating officer, the company had predicted its sales would reach $13 billion in 1983. In fact they were around $9 billion, and earnings dropped more than 90 percent.

After he became chairman and chief executive in 1982, he improved productivity and sales, and acquired several companies, including STP Oil. Ecologists said Union Carbide began shaking off the reputation as a polluter that had long dogged it. Mr. Anderson ruled over an empire with 700 plants in more than three dozen countries.

Then came Bhopal. For the first time in his life, Mr. Anderson couldn’t sleep; at one point he holed up for a week at a hotel in Stamford, Conn. He and his wife, Lillian, spent evenings reading newspaper articles about the tragedy to each other. When they went to restaurants, he was afraid to be seen laughing because people “might not think it was appropriate,” he told The Times.

But he told The Associated Press that he was determined to find something positive in the darkness. Although he acknowledged that “people look at me and think I’m out of my mind to say that this may be a good event,” he envisioned the disaster leading to new safety procedures.

Mr. Anderson was born in Brooklyn on Nov. 29, 1921, to Swedish immigrants who lived in the borough’s Bay Ridge section. They named him for Warren G. Harding, who was the president at the time. He helped his father, a carpenter, install floors, and delivered copies of The Brooklyn Eagle.

He won football and academic scholarships to Colgate, where he majored in chemistry. After graduating in 1942, he enlisted in the Navy and trained to be a fighter pilot, but never saw combat. He played football for a Navy team that had the legendary Bear Bryant as coach. After his discharge, he made the rounds of chemical companies and took the first job offered him — by Union Carbide.

He started as a salesman and later oversaw operations in Europe, Latin America, Africa and the Middle East. He worked in the company’s chemicals, plastics, gas, metals and carbon businesses. While working for Union Carbide, he earned a law degree from Western Reserve University (now Case Western Reserve) in 1956.

In 1986, at age 65, he retired from Union Carbide. In later years he gardened and fished with his wife, who survives him, and baked Swedish bread, following an old family recipe.

His death passed almost unnoticed until an article appeared in Vero Beach 32963, the weekly newspaper of the Vero Beach barrier island.

In 1984, an article in The Times said that in dealing with Bhopal, Union Carbide, which is now part of Dow Chemical, had to find a balance between “the instincts of human compassion, the demands of public relations and the dictates of corporate survival.”

The article noted that a paperweight on Mr. Anderson’s desk quoted his favorite Chinese proverb, suggesting his preferred light-handed approach: “Leader is best when people barely know he exists.”

http://www.nytimes.com/2014/10/31/business/w-m-anderson-92-dies-led-union-carbide-in-80s-.html?smid=tw-share

Happy Halloween!

Chemtura Tender Offer

Chemtura Announces Commencement of $300 Million Modified Dutch Auction Tender Offer For Its Common Stock

Chemtura Corporation 18 minutes ago GlobeNewswire

 

PHILADELPHIA, Oct. 31, 2014 (GLOBE NEWSWIRE) -- Chemtura Corporation (CHMT) (Euronext Paris:CHMT) ("Chemtura") today announced that it is commencing a modified "Dutch auction" tender offer to purchase for cash shares of its common stock for an aggregate purchase price of no more than $300 million.

Pursuant to the tender offer, company stockholders may tender all or a portion of their shares (1) at a price specified by the tendering stockholder of not less than $21.50 and not more than $24.50 per share or (2) without specifying a purchase price, in which case their shares will be purchased at the purchase price determined in accordance with the tender offer. When the tender offer expires, Chemtura will determine the lowest price within the range of prices specified above (the "purchase price") enabling Chemtura to purchase up to $300 million in the aggregate of its common stock. Stockholders will receive the purchase price in cash, subject to applicable withholding and without interest, for shares tendered at prices equal to or less than the purchase price, subject to the conditions of the tender offer, including the provisions relating to proration, "odd lot" priority and conditional tenders in the event that the aggregate cost to purchase all of the shares validly tendered and not validly withdrawn at or below the purchase price exceeds $300 million. These provisions are described in the Offer to Purchase and in the Letter of Transmittal relating to the tender offer that will be distributed to stockholders. Chemtura also reserves the right to purchase up to an additional 2% of its shares outstanding without extending the tender offer. All shares purchased by Chemtura will be purchased at the same price. All shares tendered at prices higher than the purchase price will be promptly returned to stockholders.

The tender offer will not be conditioned upon any minimum number of shares being tendered; however, the tender offer will be subject to a number of other terms and conditions specified in the Offer to Purchase, including the closing of the sale of Chemtura's agrochemicals business, Chemtura AgroSolutions. The tender offer and withdrawal rights will expire at the end of the day, 12:00 midnight, New York City time, on December 1, 2014, unless extended or terminated by Chemtura. Tenders of shares must be made prior to the expiration of the tender offer and may be withdrawn at any time prior to the expiration of the tender offer. Stockholders wishing to tender their shares but who are unable to deliver them physically or by book-entry transfer prior to the expiration of the tender offer, or who are unable to make delivery of all required documents to the depositary prior to the expiration of the tender offer, may tender their shares by complying with the procedures set forth in the Offer to Purchase for tendering by notice of guaranteed delivery. Georgeson Inc. will serve as information agent for the tender offer. Wells Fargo Securities, LLC is acting as dealer manager. Computershare Trust Company, N.A. is acting as the depositary for the tender offer.

Chemtura's board of directors has authorized the tender offer. However, none of the company, the company's board of directors, the dealer manager, the information agent or the depositary makes any recommendation to stockholders as to whether to tender or refrain from tendering their shares or as to the price or prices at which stockholders may choose to tender their shares. No person is authorized to make any such recommendation. Stockholders must make their own decision as to whether to tender their shares and, if so, how many shares to tender and the price or prices at which their shares should be tendered. In doing so, stockholders should read carefully the information in, or incorporated by reference in, the Offer to Purchase and in the Letter of Transmittal (as they may be amended or supplemented), including the purposes and effects of the offer. Stockholders are urged to discuss their decisions with their own tax advisors, financial advisors and/or brokers.

http://finance.yahoo.com/news/chemtura-announces-commencement-300-million-120000605.html

Tempur Sealy Q3 Results

Tempur Sealy Reports Third Quarter 2014 Results

Thu October 30, 2014 4:11 PM|PR Newswire  | About: TPX

 

 

 

 

  

 

LEXINGTON, Ky., Oct. 30, 2014 /PRNewswire/ -- Tempur Sealy International, Inc. (NYSE: TPX), the world's largest bedding provider, today announced financial results for the third quarter ending September 30, 2014. The Company also updated financial guidance for 2014.

THIRD QUARTER FINANCIAL SUMMARY

• Earnings per diluted share ("EPS") under U.S. generally accepted accounting principles ("GAAP") in the third quarter of 2014 were $0.60 compared to GAAP EPS of $0.65 in the third quarter of 2013. The 2014 results reflect a discrete tax item associated with the repatriation of foreign earnings. The 2014 and 2013 results reflect integration and transaction costs, and certain non-recurring interest expense and financing costs.
• Adjusted EPS (which is a non-GAAP measure) increased 21% to $0.88 in the third quarter of 2014 as compared to adjusted EPS of $0.73 in the third quarter of 2013. For additional information regarding adjusted EPS and adjusted net income (which are non-GAAP measures), please refer to the reconciliations and other information included in the attached schedules.
• GAAP net income in the third quarter of 2014 was $37.1 million as compared to GAAP net income of $40.2 million for the third quarter of 2013. The Company reported adjusted net income of $54.8 million for the third quarter of 2014 as compared to adjusted net income of $44.9 million for the third quarter of 2013, a 22% increase.
• Total net sales increased 12.5% to $827.4 million in the third quarter of 2014 from $735.5 million in the third quarter of 2013. The net sales increase was driven by double digit sales growth in each of the Company's three business segments.
• Gross profit margin was 38.5% in the third quarter of 2014 as compared to 40.6% in the third quarter of 2013. The gross profit margin decreased primarily as a result of lower Sealy and Tempur International gross profit margins, offset partially by an increase in Tempur North America's gross profit margin.
• Operating income was $87.1 million in the third quarter of 2014 as compared to $81.2 million in the third quarter of 2013. Operating income in the third quarter of 2014 included $10.5 million of integration costs and in the third quarter of 2013 included $8.5 million of transaction and integration costs related to the Sealy acquisition.
• EBITDA for the third quarter of 2014 was $106.2 million as compared to $107.0 million for the third quarter of 2013. Adjusted EBITDA (this and EBITDA are non-GAAP measures) for the third quarter of 2014 was $119.5 million as compared to $115.5 million for the third quarter of 2013.
• Year to date through September 30, 2014, the Company has reduced total debt by $189.7 million. The Company ended the quarter with consolidated funded debt less qualified cash of $1.6 billion. The ratio of consolidated funded debt less qualified cash to adjusted EBITDA was 4.1 times, calculated in accordance with the Company's senior secured credit facility. For additional information regarding EBITDA, adjusted EBITDA and consolidated funded debt less qualified cash (all of which are non-GAAP measures), please refer to the reconciliations and other information included in the attached schedules.

Tempur Sealy International, Inc. CEO Mark Sarvary commented, "Overall we are pleased with our third quarter performance. We executed well on our strategic initiatives which led to better than expected sales and a solid increase in earnings.  Tempur North America in particular performed very well, achieving record quarterly sales and a significant improvement in operating margin. Both Sealy and Tempur International sales grew well, but their margins were below plan and constrained our overall profitability. In addition, our year-to-date operating cash flow of $181 million has allowed us to significantly reduce our total debt."

Business Segment Highlights

The Company's business segments include Tempur North America, Tempur International, and Sealy. The Company's "Bedding" product sales include mattresses, foundations, and adjustable foundations and "Other products" include pillows and various other comfort products and components.

Tempur North America net sales increased 15.8% to $280.6 million in the third quarter of 2014 from $242.4 million in the third quarter of 2013. Bedding net sales increased 19.5% to $263.6 million in the third quarter of 2014 from $220.6 million in the third quarter of 2013. Net sales of Other products decreased 22.0% to $17.0 million from $21.8 million in the third quarter of 2013. Tempur North America's operating margin improved significantly year-over-year, driven by an increase in gross margin and operating expense leverage on higher sales.

Tempur International net sales increased 10.9% to $114.5 million in the third quarter of 2014 from $103.2 million in the third quarter of 2013. On a constant currency basis, Tempur International sales increased 10.7%. Bedding net sales increased 10.7% to $84.7 million in the third quarter of 2014 from $76.5 million in the third quarter of 2013. Net sales of Other products increased 11.6% to $29.8 million in the third quarter of 2014 from $26.7 million in the third quarter of 2013. Tempur International's operating margin declined year-over-year due to a decline in gross margin and higher operating expenses primarily related to startup costs associated with Sealy Europe.

Sealy net sales increased 10.9% to $432.3 million in the third quarter of 2014 from $389.9 million in the third quarter of 2013. Bedding net sales increased 11.4% to $407.0 million in the third quarter of 2014 from $365.2 million in the third quarter of 2013. Net sales of Other products increased 2.4% to $25.3 million in the third quarter of 2014 from $24.7 million in the third quarter of 2013. Sealy's operating margin declined year-over-year due primarily to a decline in gross margin, offset partially by operating expense leverage on higher sales.

http://seekingalpha.com/pr/11512915-tempur-sealy-reports-third-quarter-2014-results?app=n

Crest Foam Market Update

29 October 2014

 

Crest Foam Industries                                          

100 Carol Place
Moonachie, NJ  

Recently Crest Foam Industries encountered an equipment failure in one of its key processes.  As a result, certain equipment has been destroyed rendering Crest Foam Industries commercially impracticable to fully fulfill its production and delivery obligations to its customers based on this sudden and unforeseen circumstance.

The duration of this interruption has not yet been completely determined, but please be assured that every effort to develop alternative supply options are underway.  Additionally, we have many of our operational engineering resources dedicated to bringing the Crest Foam plant back to operating capacity as safely and expeditiously as possible.  With the continued and strong support of our parent company INOAC Corporation, we expect to make Crest Foam Industries the premier technical foam manufacturer.

As we pursue the investigation to determine the root cause of this abrupt failure, we have remained in contact with our valued customers. But most importantly, we have the safety of our team members and the community in which we operate at the forefront of our considerations.

Del Felter

Senior Vice President
Industrial, Consumer and Medical
INOAC USA, Inc.

Benzene Falling Again

Benzene sees monthly uptick in liquidity

29 Oct 2014, 5.35 pm GMT

Houston, 29 October (Argus) — US benzene fell this week in a flurry of trading ahead of the November contract price negotiations.

So far a total of 160,000 bl of November delivery benzene traded this week, surpassing the 120,000 bl seen the previous week, as market participants move more aggressively to influence the contract price.

During the final week of the current month, contract negotiations for the following month are typically discussed between participating producers and buyers, a number which tends to reflect the average spot price for the final week of the current month. During the last five calendar days of September, a total of 280,000 bl of benzene traded.

One market participant observed the contract price for November will likely be below the 400¢/USG mark, given that month-long spot pricing for October remains well below the 422¢/USG October contract price. November ddp benzene deals traded between 375¢/USG and 384¢/USG on Monday and Tuesday.

An average of the eight November deals traded so far this week, including ddp and fob barrels, would peg the contract price for November somewhere near 382.06¢/USG.

During the last calendar week of September, spot benzene deals averaged 421.61¢/USG, in line with the 422¢/USG October contract price settlement.

Contract negotiations for November are ongoing, and typically settle by the last day of the month, which falls on Friday, October 31.

http://www.argusmedia.com/News/Article?id=939317

Urethane Highlights from Huntsman Investors Call

Peter Huntsman - President & CEO

Thank you, Kurt. Good morning, everyone. Thank you for joining us. Let's turn to slide number 3. Adjusted EBITDA for our polyurethanes division in the third quarter 2014 was $187 million. During the quarter we experienced a manufacturing disruption at our Port Neches, Texas facility which negatively impacted EBITDA by approximately $30 million.

Demand for our MDI remains strong. Global sales volumes grew 5% compared to the prior year despite a weak European economy which led to flat sales in Europe.

Our Asia business continues to expand. Within China our sales volumes grew 7% in the third quarter, albeit at a slower pace than the second quarter. Asian growth was led by strong double-digit growth in our differentiated and consumer-driven automotive and furniture markets.

North America was the real highlight in the third quarter, with volume growth at 12%. Demand in our 2 largest North American markets were strong, with insulation growing at more than 20%, and composite wood products increasing 9%.

As a reminder, we have scheduled maintenance for the first quarter of 2015 at our PO/MTBE facility in Port Neches, Texas. We currently estimate that the facility will be offline for approximately 60 days, beginning around the 1st of February. The EBITDA impact will be approximately $60 million. This amount includes lost revenue and unabsorbed fixed costs for the period.

In addition the maintenance costs will be approximately $90 million. However, these costs are capitalized and amortized over approximately 5 years until the next scheduled maintenance outage, reducing future EBITDA over that future period of time.

The total cost of the maintenance will be approximately $150 million. We expect a typical seasonal slowdown in the fourth quarter as MDI demand slows and PO/MTBE prices soften.

Kimo Esplin - EVP & CFO

Thanks, Peter. Slide 8 – in the third quarter of 2014 compared to the prior year, our adjusted EBITDA decreased to $356 million from $376 million, as a result of our PO/MTBE manufacturing outage, which impacted EBITDA by approximately $30 million. Sales volumes decreased in large part due to the deselection of lower-margin business.

Average selling prices improved across the majority of our divisions, which more than offset higher raw material costs. Compared to the prior quarter, our EBITDA decreased $7 million. Our average selling prices improved, offsetting lower sales volumes.

Slide 9 – our year-over-year consolidated sales revenue for the third quarter increased 1%. This was primarily due to higher average selling prices of 3%, offset by a decrease in sales volumes of 3%.

From a regional perspective, US and Canada improved 12% and Asia Pacific improved 11%. Europe decreased 4% along with our rest of world category which is primarily comprised of Latin America, the Middle East and Africa, which decreased 7% as a result of our PO/MTBE manufacturing disruption.

Third-quarter revenue increased across the majority of our divisions compared to the prior year. Polyurethanes is our largest division. It made up 45% of our total revenue in the third quarter and grew 1%.

MDI urethanes revenue increased 8%, which more than offset the negative impact from the PO/MTBE manufacturing disruption.

P.J. Juvekar - Citigroup

Good morning. Peter, if you take a step back, your volume EBITDA really hasn't grown in 2 years. It peaked in 2012 and then it has been flat to slightly down each year. Can you talk about reasons behind that and why do you think EBITDA will turn around next year and begin to grow when we have all this capacity coming online in China?

Peter Huntsman - President & CEO

We do have capacity coming in China. We also see quite a bit of growth coming on in China, and the pricing that's coming on China. As I look at the opportunities around MDI urethane performance, we continue to do well in that particular business.

I continue to see growth in the earnings in MDI and MDI-related downstream businesses and so forth. So, I would continue to be quite optimistic about MDI and where it's going.

Kimo Esplin - EVP & CFO

P.J., if you go back all the way to 2009 – if you go back 6 years – each year consistently our urethanes, MDI urethanes business has improved. So, again, 2014 over 2013 by a significant amount. Roughly 10% year-to-date EBITDA improvement on the urethane side. So, 6 years of consistent improvement.

What we've had is some PO/MTBE noise. PO/MTBE, when you adjust for the outage, is pretty flat with last year.

James Sheehan - SunTrust Robinson Humphrey

Good morning. Thanks for taking my question.

Just wondering if you could give us your broader thoughts on oil prices, and the impact on some of your feedstocks like butane. Do you see the drop in oil prices as overall a positive or negative for Huntsman over the next year?

Peter Huntsman - President & CEO

For Huntsman, almost categorically across the board, assuming we don't see – I'm more concerned about severe volatility, both up and down, than necessarily higher or lower. But, by and large, we benefit by lower oil prices. As butane prices drop, benzene prices, all of our major raw materials related to the price of oil, we are going to see a fall-off in our raw materials.

As we see a fall-off in our raw materials, most of the products that we produce, as I look across the gambit – MDI, armines, our epoxies and so forth – most of the products we produce are operating in the high 80%s or the low 90% capacity utilization. So, with falling raw materials, you're going to be able to grab some of that additional margin. I would think that falling raw materials is something that, by and large, ought to be something that's positive for us, and certainly will help our working capital, as well.

James Sheehan - SunTrust Robinson Humphrey

Thanks. And could you also give us your sense of where MDI operating rates are today in each region of the world?

Peter Huntsman - President & CEO

I think that we're probably, region by region, I think that we'd probably be around 90%-ish when you look at the North American markets. I think that you're probably looking at, in the European market you're probably less than that. And Asia I think you're probably in the high 80%s, pushing 90%.

It's a tough one for us to get a handle on because so much of our MDI is not sold as MDI. We sell very little actual MDI. We're selling more and more downstream derivatives.

So, as we look at capacity utilization, we're looking at the utilization, the impact of that 2 or 3 steps further down the chain as we look at formulations and systems and so forth. Our objective is to see where capacity utilization has less impact on the business than perhaps it did in the last cycle.

But I would say globally I think the market is somewhere around 90%, give or take 1 or 2 points on either side. Regionally US has a bit of a tighter feel to it. Asia feels about that way and Europe is probably a bit sluggish in the high 80%s.

Frank Mitsch - Wells Fargo Securities, LLC

Terrific. And speaking on the polyurethane's business, when you were talking about it, you also mentioned that I think you had insulation, North American insulation up 20% and composite wood products up 9%. Obviously the housing data wouldn't suggest that level of jump. Can you expand upon that and how we should think about that playing out in the future, as well?

Peter Huntsman - President & CEO

Again, as I look at it among housing start-ups, I look at it around product substitution and so forth, as I look at our last quarters, I look at the orders thus far into the fourth quarter around MDI polyurethane's, and so forth, Frank, I'm not seeing anything that would tell me – yes, things aren't going through the roof in the fourth quarter but I'm not seeing any slowdown that wouldn't be typical of seasonality.

Kimo Esplin - EVP & CFO

If you look at the growth rates in insulation, remember, we have a large commercial business, but also we're seeing a lot of substitution on the residential side with spray foam that's substituting fiberglass. So, you may be seeing higher growth rates than underlying housing because of that substitution.

Frank Mitsch - Wells Fargo Securities, LLC

All right, that makes sense. Thanks so much.

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