Cytec Realigns Strategic Focus, Pursues Options for Paper Chemicals
WEST PATERSON, N.J. - Cytec Industries Inc. (NYSE:CYT) announced today that it has realigned the focus of its business portfolio to accelerate earnings growth. In a related action, Cytec said it is pursuing strategic options for its paper chemicals business.
Strategic Review Produces Aggressive Plan to Accelerate Growth and Returns
Cytec Chairman, President, and Chief Executive Officer, David Lilley said, "We recently concluded a strategic review of our business portfolio. Due to differences in our businesses' current performance and long term potential, we have realigned our strategic focus.
"Cytec businesses which currently are or have the capability of being in the #1 or #2 position in their markets, with long term sustainable competitive advantages, and with the capability of achieving sales-driven earnings growth exceeding 10 percent annually over a business cycle, are our platforms for growth. We are identifying the Cytec units meeting these criteria as our Platform businesses."
The Cytec businesses in this group are: Specialty Resins, Water Soluble Polymers, Mining Chemicals, Phosphine Chemicals, and Cytec Fiberite, our Specialty Materials business.
"Our other businesses will support the growth of our Platform businesses through greater utilization of their existing assets. We are identifying these businesses as our Value businesses," Said Mr. Lilley.
The Cytec businesses in this group are: Polymer Additives, Surfactants & Specialty Monomers and Building Block Chemicals.
Strategic Plan Identifies Platform Businesses to Grow Sales and Earnings
Mr. Lilley continued, "We expect our Platform businesses to achieve sales growth considerably in excess of economic growth, to invest in research and development, and to increase capacity as they grow. In addition to their organic growth, we expect them to grow through strategic acquisitions. In the last three years, we have completed eight such acquisitions.
Strategic Plan Identifies Value Businesses to Support Financial Goals
"Value businesses will support Cytec's sales and profit growth through a greater focus on manufacturing productivity and return on assets. These units will provide significant positive net cash flow and increase their economic value with a more intense focus on asset management.
Paper Chemicals Business has Strong Product Leadership Positions
"Our strategic review indicated that the value of our paper chemicals business may be enhanced by reviewing all strategic options. Credit Suisse First Boston Corporation has been retained to assist Cytec in this effort.
"The Paper Chemicals business had 1999 proforma sales of approximately $100 million with strong positions in the printing, writing, towel and tissue paper markets. Cytec is a technology leader in ASA internal sizing, surface sizing, temporary wet strength resins, dry strength resins and retention/drainage aids.
"The Paper Chemicals business is part of the Water and Industrial Process Chemicals segment, which had 1999 sales of $373 million and operating profits of $44 million. The segment also includes: water soluble polymers, mining chemicals and phosphine chemicals."
Earnings, Strong Cash Flow, Balance Sheet, Enhanced by Portfolio Alignment
Mr. Lilley concluded, "The aggressive execution of our strategic plan is expected to accelerate Cytec's earnings per share growth, and generate even stronger cash flow for investment in growth. This is consistent with our primary mission of enhancing shareholder value.
"We are acting from a position of strength. In 1999 Cytec's net operating cash flow of $200 million funded $77 million of capital investments, share repurchases of $42 million, and strategic acquisitions totaling $70 million. Our balance sheet remains strong, reflecting a decrease in1999 year-end net debt levels, and an investment grade rating of our public debt.
"Proceeds from the disposition of assets, if any, will support the growth of our Platform businesses' global expansion, new product development, operational excellence, and strategic acquisitions. Our share price presents an opportunity to continue repurchasing Cytec stock under the current $100 million authorization, but this will be balanced with investments in Platform businesses. The actions we have taken and those we will take over the next year will continue to demonstrate the commitment of Cytec Industries to increasing shareholder value."
Corporate Profile
Cytec Industries Inc. is a specialty chemicals and materials technology company with 1999 sales of $1.4 billion and diluted earnings per share of $2.73. Its growth strategies are based on developing technologically advanced customer solutions for global markets, including: aerospace, plastics, industrial coatings, mining, paper and water treatment. Cytec is in the S & P Mid-cap 400 index.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Achieving the results described in these statements involves a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed in Cytec's filings with the Securities and Exchange Commission.
Contact: Cytec Industries, West Paterson William (Bill) Cleary (investment community) (973) 357-3298 George Yuro (973) 357-3319