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

 

July 24, 2008

PRESS RELEASE

Detrex Corporation Reports Profit for the Second Quarter of 2008

Southfield, Michigan – July 24, 2008 - Detrex Corporation (DTRX.PK), a diversified manufacturer of PVC and CPVC pipe, duct and shapes and specialty chemicals including lubricant additives and high purity hydrochloric acid, today announced second quarter pre-tax income from continuing operations of $1,034,416 compared to pre-tax income from continuing operations of $837,370 in the same period last year. On a year-to-date basis, pre-tax income from continuing operations was $1,948,832 compared to $1,820,086 for the first six months of the prior year.

Net income for the second quarter of 2008 was $568,930, or $0.35 per fully diluted share, compared to net income of $460,553, or $0.28 per fully diluted share, in the second quarter of last year. Year-to-date net income was $1,071,857, or $0.67 per fully diluted share, compared to $1,001,047, or $0.62 per fully diluted share, in 2007.

Second quarter net sales increased 22.6% to $27.5 million from $22.5 million in the comparable period last year. On a year-to-date basis, sales were $52.2 million, an increase of $5.4 million or 11.5% compared to the prior year. The second quarter and year-to-date increase in sales was the result of gains in both of the corporation’s subsidiaries, the Elco Corporation and Harvel Plastics, Inc. Sales and earnings for the Elco Corporation in the second quarter and year-to-date were ahead of the corresponding periods in the prior year due to strong export sales and increased sales of higher value product to existing domestic customers combined with several new domestic accounts. Harvel’s sales in the second quarter were 26% above the same period in the prior year due to the successful introduction of a new product line, strong export sales, higher prices, and continued strength in industrial and commercial construction markets. Second quarter earnings were also above the prior year, however year-to-date earnings were below year-ago levels due to lower margins. Both companies are experiencing margin pressure due to significantly higher costs for most raw materials; where possible, manufacturing cost reductions and selling price increases are being implemented. Overall, gross margin increased slightly both for the quarter and year-to-date compared to the same periods in 2007; however, the gross margin expressed as a percentage of sales declined in both due to raw material cost increases. Selling, general and administrative expenses were higher than year ago levels primarily due to sales and performance-based incentive accruals; reduced interest expenses, resulting from lower interest rates, contributed to the year-over-year improvement in earnings.

Commenting on the Company’s results, President and CEO Tom Mark said, “We are pleased with the performance of both businesses in this challenging economic environment. Fortunately our sales performance is strong which helps to offset the adverse impact of significant raw material cost escalation. We will continue to aggressively seek opportunities and adapt to changing market conditions in order to sustain the current performance. This performance is essential to our ability to invest in and grow the businesses while working down the legacy liabilities.”

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.

Back to News