DETREX CORPORATION - (DTRX.PK) Contact: Thomas E. Mark
Phone: (248) 358-5800 FAX: (248) 799-7192

 

March 7, 2008

PRESS RELEASE

Detrex Corporation Reports Profit for 2007

Southfield, Michigan – March 7, 2008 - Detrex Corporation (OTCQX: DTRX), a diversified manufacturer of PVC and CPVC pipe, duct and shapes and specialty chemicals including lubricant additives and high purity hydrochloric acid, today announced 2007 full year pre-tax income from continuing operations of $4,067,107, compared to $2,340,350 in 2006.

The combined sales of the two business units was $91.2 million in 2007 compared to $97 million in the record prior year, as economic conditions returned to more normal levels in 2007 following unusually favorable conditions for both units in 2006. Harvel Plastics, Inc. generated sales of $67.5 million in 2007. This is $4 million below 2006 as the result of lower selling prices combined with reduced sales of fire sprinkler pipe due to the end of a temporary manufacturing arrangement for a large customer. The Elco Corporation had 2007 sales of $23.7 million which is $1.7 million below 2006 levels. This is largely due to a few large international customers that purchased large inventories in 2006 that sustained them for a good portion of 2007.

The 2007 net income including discontinued operations was $1,980,627, or $1.22 per fully diluted share compared to $1,063,321, or $0.66 per fully diluted share, in the prior year. The 2006 results included an environmental charge of $3,800,000; in 2007 no environmental reserve adjustments were necessary. In 2007 after-tax charges of $89,900 were made to discontinued operations for matters related to holding costs and workers’ compensation expenses compared to an after-tax charge of $450,878 made in 2006 for such matters. Net income in 2007 reflects income tax expense which is significantly greater than the actual 2007 tax payments of $456,000; this is because the Company is not required to pay Federal income tax due to utilization of significant tax loss carryforwards.


Significant progress was made on environmental remediation projects during 2007 as a number of the large legacy matters were either completed or negotiated to a settlement for amounts already reserved for. During the year, cash outlays for these matters were $2.2 million and the reserve remaining at the close of the year was $5.7 million. In 2008 $3.2 million of this amount is expected to be spent.

In 2007 bank debt increased by approximately $1.6 million as cash flow from operations covered the bulk of the $9 million in cash outlays for capital expenditures, environmental remediation, pension funding and inventory buildup for Harvel’s new Dallas warehouse. In 2008 combined outlays are expected to be approximately at the same levels. Continued operating performance is important to the company’s ability to meet these obligations.

Commenting on the Company’s results for 2007, President and CEO Tom Mark said, “We accomplished a great deal on many fronts in 2007. Both of our operating units performed well and generated cash for reinvesting in the businesses and discharging legacy liabilities. We made significant progress with environmental matters, both in terms of funding the projects and securing greater certainty about the scope and cost for the remaining issues. We also made sizeable cash contributions to the Company’s pension plans. We believe that we made strides toward the point where the legacy liabilities will no longer significantly affect the value of the Company.”

Statements included in this press release that are not historical in nature are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Act”). The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target” and similar expressions identify forward-looking statements. The Company cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. Certain risks and uncertainties are identified from time to time in the Company’s reports. Some factors that could cause results to differ materially from those projected in the forward-looking statements include: market conditions, environmental remediation costs, pension expense and funding requirements, liquidation value of assets, and marketability of real estate and the market value and future liquidity of Detrex stock. The Company claims the protection of the safe harbor for forward-looking statements contained in the 1995 Act.

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