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Arch Chemicals Third Quarter 2005 Earnings Exceed Guidance; Reaffirms Full Year Outlook.

Article Excerpt
NORWALK, Conn. -- Arch Chemicals, Inc. (NYSE: ARJ):

Highlights:

--Sales for 2005 increased approximately 14 percent over the third quarter 2004.

--Third quarter earnings from continuing operations were $0.28 per share.

--Full year earnings are expected to range from $1.20 to $1.30 per share.

Arch Chemicals, Inc. (NYSE: ARJ) announced for the third quarter 2005, sales were $314.2 million compared to $276.8 million in the corresponding period in 2004. Segment operating income was $15.3 million in 2005 compared to $8.4 million in 2004. Earnings per share from continuing operations were $0.28 for the third quarter 2005 on $6.7 million of income, compared to $0.07 on income of $1.6 million a year ago.

"Our strong third quarter earnings, which were up significantly year over year and exceeded our prior guidance, were driven by continued strong results in performance urethanes, record sales of biocides for building products and antidandruff shampoos, as well as improved performance in water products and industrial coatings," said Chairman, President and CEO Michael E. Campbell. "Looking forward, we are focused on mitigating rising energy and raw material costs by increasing prices and reducing costs."

The following compares segment sales and operating income for the third quarters of 2005 and 2004 (including equity in earnings of affiliated companies and excluding restructuring and certain unallocated expenses of the corporate headquarters):

Treatment Products

Treatment Products reported sales of $252.4 million and operating income of $15.2 million compared with sales of $234.7 million and operating income of $17.1 million in 2004.

HTH Water Products

HTH water products reported sales of $95.8 million and an operating loss of $2.3 million for 2005 compared to sales of $83.0 million and an operating loss of $6.9 million for 2004.

Sales increased $12.8 million, or approximately 15 percent, principally due to higher North American residential swimming pool volumes and, to a lesser extent, favorable pricing and foreign currency rates. The increase in sales volumes resulted from higher demand for branded chlorinated isocyanurates (Pace(R)) as well as branded and non-branded calcium hypochlorite.

Operating results improved $4.6 million primarily as a result of the higher sales and lower selling and administration costs due to cost containment initiatives in North America and lower legal expenses. Gross margin was comparable with the prior period as the impact of higher sales was offset by unfavorable product mix and higher product sourcing costs principally due to the new import duties.

Personal Care and Industrial Biocides

Personal care and industrial biocides reported sales of $66.9 million and operating income of $11.5 million compared to sales and operating income of $65.5 million and $16.9 million, respectively, in 2004.

Sales increased $1.4 million, or approximately two percent, principally due to higher volumes, partially offset by lower pricing. The higher volumes were attributable to continued strong demand for biocides used in antidandruff products and in industrial applications, including marine antifouling paints and building products. This increase in demand was partially offset by lower volumes resulting from a loss of market share to new entrants into a mature segment within...