The Lubrizol Corporation announced that consolidated earnings for the third quarter ended September 30, 2009, were $170.5 million, including after-tax restructuring and impairment charges of $3.9 million. These charges primarily were related to the closure of production facilities in the Lubrizol Advanced Materials segment and additional expenses associated with the cost reduction actions the company initiated in the first quarter of 2009. Comparable earnings for the third quarter of 2008 were $63.2 million, which included after-tax restructuring and impairment charges of $3.8 million, primarily related to the closure of a Lubrizol Additives blending facility in Canada and business improvement initiatives in the company's Performance Coatings product line.

Consolidated revenues for the third quarter decreased 6 percent to $1.27 billion compared with $1.36 billion in the third quarter of 2008. The year-over-year decrease in revenues was attributable to lower volumes and unfavorable currency that more than offset an improvement in the combination of price and product mix. Included in these factors was the incremental impact from acquisitions completed in 2008, which contributed 2 percent to consolidated revenues in the third quarter of 2009. 

Excluding the restructuring and impairment charges in both periods, adjusted earnings were $174.4 million, for the third quarter of 2009 compared with $67.0 million for the third quarter of 2008. 

Adjusted earnings for the third quarter of 2009 increased compared with the prior-year third quarter largely due to disciplined margin management, cost savings initiatives that lowered manufacturing costs and reduced selling, technical, administrative and research (STAR) expenses, contributions from the 2008 acquisitions and an insurance recovery for previously incurred environmental remediation costs. These positive factors impacting earnings more than offset the effect of lower volume, increased performance-based compensation expense and higher net interest expense. 

Commenting on the results, CEO James Hambrick stated, "Additives and Advanced Materials generated very strong results in the quarter as both segments continued to deliver valued technology to customers while also managing margins and controlling discretionary expenses. We anticipated potential earnings upside from improved sequential volumes and both segments did benefit from higher than expected shipments. In my opinion, Additives' recent results are best-in-class and represent the level of performance necessary to properly support the type of investments needed for our customers." 

For the first nine months of 2009, consolidated revenues decreased 14 percent to $3.40 billion compared with $3.94 billion for the first nine months of 2008. Consolidated earnings were $366.6 million, including after-tax restructuring and impairment charges of $18.0 million. Earnings for the first nine months of 2008 were $214.9 million, including after-tax restructuring and impairment charges of $15.9 million. Excluding the restructuring and impairment charges from both periods, earnings of $386 million for the nine months of 2009 compared with $231 million for the first nine months of 2008. 

The company increased its September 14, 2009, earnings guidance. The company's guidance for 2009 earnings is now in the range of $6.82 to $7.02 per diluted share ($465 million to $478 million), including restructuring and impairment charges of $.28 per diluted share ($19 million), primarily related to cost reductions initiated in the first quarter of 2009, impaired preliminary process engineering design work and the closure of production facilities. In 2008, the company reported a loss of $0.97 per share, including restructuring and impairment charges of $5.04 per share, largely related to the impairment of goodwill, and other adjustments of $.02 per share. Excluding the special charges from both years, the company projects 2009 adjusted earnings in the range of $7.10 to $7.30 per diluted share, which compares with 2008 adjusted earnings of $4.09 per diluted share. 

Key updated assumptions for this revised guidance and cash flow include: 

• STAR expenses for the full year unchanged compared with 2008;
• An effective tax rate of 30.0 percent for the year;
• The euro to average $1.50 in the fourth quarter of the year;
• Capital expenditures of approximately $150 million to $155 million ; and
• Average shares outstanding of approximately 69.0 million. 

Regarding the 2009 earnings outlook, Hambrick added, "Our outlook reflects some upward pressure on raw materials, particularly in Additives where we are already taking appropriate pricing action. Additionally, in this atypical year, forecasting sales volumes for the fourth quarter is more challenging than usual given the potential for year-end inventory reductions by our customers." 

"Even with our strong performance this year, we anticipate another year of earnings growth for the corporation in 2010. I believe our performance is sustainable and that earnings will benefit from both broader economic recovery as well as from our organic growth initiatives of product innovation and geographic expansion. We will continue to manage for sustainable growth as we diligently pursue our seventh consecutive year of increased earnings."