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

 

July 27, 2012

PRESS RELEASE

Detrex Corporation Reports Profit for the Second Quarter of 2012

Southfield, Michigan – July 27, 2012 - Detrex Corporation (DTRX.PK), announced today 2012 second quarter net income from continuing operations of $584,696, or $0.34 per fully diluted share, compared to net income from continuing operations of $660,784, or $0.41 per fully diluted share, in the second quarter of 2011. Net income including discontinued operations in the second quarter of 2012 was $183,515, or $0.11 per fully diluted share, compared to $1,267,351, or $0.78 per fully diluted share in the first quarter of 2011. The year-to-date net income including the gain on the sale of Harvel reported in discontinued operations was $17,855,495, or $10.38 per fully diluted share, compared to $2,536,496, or $1.56 per fully diluted share in 2011 which includes net income from Harvel in discontinued operations. The Company also announced that it will pay a $0.25 quarterly dividend on August 30, 2012 to shareholders of record as of July 31, 2012.

Second quarter net sales declined 12% to $11.1 million from $12.7 million in the comparable period last year. This reduction was the result of a general industry slow-down in the last two months of the quarter, in combination with lower sales to certain repeat customers and the absence of 2011 tolling revenues that did not repeat this year. Sales through June 2012 were $23.4 million which represents a decrease of $0.8 million or 3% compared to the prior year; this decline is attributable to the second quarter slow- down. While Elco continues to generate new business, this volume has been more than offset by softer demand from existing customers.

Earnings declined in the second quarter 2012 compared to the prior year due to the margin impact of lower sales and an increase in Elco’s SG&A expenses. The SG&A increase reflects the ongoing cost in 2012 of resources that were added in the second half of 2011 to support the significant 2011 volume growth. The Company’s 2nd quarter 2012 provision for environmental expense of $600,000 ($1.2 million YTD) compared to the second quarter 2011 provision of $550,000 ($1.0 million YTD) reflect the Company’s practice of replenishing the environmental reserve by an amount at least equal to expected spending. Net income in the second quarter 2012 includes a reduction to the after-tax gain on the Harvel sale of $401,181 related to the year-end audited financials; the year-to-date net gain on the Harvel sale is $16,544,544. Harvel’s 2011 2nd quarter net income of $606,567 and $1,248,745 year to date, are reported in discontinued operations.

“While we experienced a slow-down in sales during the second quarter as conditions softened and expect that this may continue for several months to come, we are continuing to pursue additional business opportunities and will adjust costs accordingly.” said President and CEO, Tom Mark. “Our financial condition is strong, and we are continuing to investigate strategic opportunities to enhance shareholder value.”

A portion of the cash generated from the sale of Harvel has been used to reduce or retire a number of liabilities and to pay dividends. At June 30th, cash and investments were $10.7 million and the Company had no debt. The major year-to-date cash outlays were contributions to the pension plan of $5.4 million (including $5 million of discretionary pension contributions paid in the 1st quarter), capital expenditures of $1.2 million, income tax payments of $3.1 million, and environmental expenditures of $0.8 million. In addition, $4.2 million in dividends have been paid year-to-date and the Harvel sale post-closing adjustments have been paid.

About Detrex Corporation
Founded in 1925, Detrex Corporation through its subsidiary The Elco Corporation is a leading manufacturer of high performance specialty chemicals including additives for industrial petroleum products and high purity hydrochloric acid.

Forward Looking Statements
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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