ST. LOUIS, April 23 /PRNewswire-FirstCall/ -- Sigma-Aldrich Corporation, a leading Life Science and High Technology company, reported that its first quarter 2009 diluted EPS grew by 6% to $0.68 from $0.64 in the first quarter of 2008.
Reported sales for the first quarter of 2009 were $519 million, a decline of 9% from the first quarter of 2008. Excluding a 10% currency impact, first quarter sales grew organically by 1% from a year ago. Organic sales for the Company's Research business grew over 3%, with individual business unit growth ranging from 2% to 7%, driven largely by moderate to strong growth in sales in Europe and CAPLA (Canada, Asia Pacific and Latin America) to customers in academia, the pharmaceutical industry and in government. Organic sales for SAFC, the Company's Specialty Fine Chemicals business, declined 5% in Q1 2009 as stable sales to U.S. customers were offset by sales declines to custom pharmaceutical and hi-tech customers in international markets. Quarterly comparisons and a reconciliation of reported to adjusted (organic) sales growth are on page 7.
Pretax and net income margins in the first quarter 2009 increased by 180 and 150 basis points, respectively. This performance reflects proactive steps taken by management that provided benefits from strategic pricing actions, global supply chain activities and lower S,G&A costs. These benefits, together with reduced interest costs and a lower effective tax rate, collectively offset the adverse currency impact on earnings in the quarter. Excluding the negative impact of currency, EPS would have been $0.81 in the first quarter of 2009. A reconciliation of proforma to reported EPS is on page 8.
Free cash flow for the first quarter of 2009 was $86 million, a 22% increase when compared to the same period a year ago. This increase in cash flow was primarily due to lower levels of working capital. A reconciliation of net cash provided by operating activities to free cash flow is on page 8.
Management reaffirmed its full year 2009 organic sales expectation for growth in a low single digit range. This expected sales growth results from new product launches and our global sales initiatives. Some of the results achieved in the first quarter from these activities were:
2009 Outlook on Sales Growth and EPS:
CEO's STATEMENT:
Commenting on first quarter 2009 performance and full year 2009 expectations, President and CEO Jai Nagarkatti said: "We are very pleased with our performance in the first quarter of 2009 and our ability to improve our profitability even with the challenges of current market conditions and the headwind from currency. We fully believe that the life science and high technology markets we serve will rebound and that we can take market share with the new activities we have added for 2009 through 2011 to continue the differentiation that has been key to our success."
Nagarkatti continued, "We believe we can achieve similar performance for all of 2009 under similar challenging market conditions. We have continued to invest in our new initiatives that are aimed at enabling us to achieve above-market rate organic sales growth and enhance that through contributions from technology acquisitions and our innovation efforts."
OTHER INFORMATION:
Cash Flow and Debt: Cash flow from operations for Q1 2009 was $114 million compared to $89 million for 2008. This improvement was largely due to a lower level of cash required for working capital. This cash flow enabled the Company to repay $74 million in short term debt, invest $28 million in property, plant and equipment additions and return $18 million to shareholders through a 12% increase in the 2009 quarterly dividend. The Company's debt to capital ratio was reduced to 31.3% at March 31, 2009 from 34.6% at December 31, 2008. The Company has not experienced any problem in placing its short-term debt in the current credit market environment.
Share Repurchase:
Another 0.2 million shares were acquired in the first quarter of 2009 at an average share price of $36.05. There were 122.1 million shares outstanding at March 31, 2009. The Company has 7.5 million remaining authorized shares for purchase, but the timing and number of shares purchased, if any, depends upon market conditions and other factors.
About Sigma-Aldrich: Sigma-Aldrich is a leading Life Science and High Technology company. Our biochemical and organic chemical products and kits are used in scientific research, including genomic and proteomic research, biotechnology, pharmaceutical development, and as key components in pharmaceutical, diagnostic and other high technology manufacturing. We have customers in life science companies, university and government institutions, hospitals and in industry. Over one million scientists and technologists use our products. Sigma-Aldrich operates in 38 countries and has 7,800 employees providing excellent service worldwide. We are committed to accelerating our Customers' success through leadership in Life Science, High Technology and Service. For more information about Sigma-Aldrich, please visit our award winning web site at www.sigma-aldrich.com.
Non-GAAP Financial Measures: The Company uses certain non-GAAP financial measures to supplement its GAAP disclosures. The Company does not, and does not suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. These non-GAAP measures may not be consistent with the presentation by similar companies in the Company's industry. Whenever the Company uses such non-GAAP measures, it provides a reconciliation of such measures to the most closely applicable GAAP measure. See the Supplemental Financial Information on page 8 for these reconciliations.
With over 60% of sales denominated in currencies other than the U.S. dollar, management uses currency adjusted growth, and believes it is useful to investors, to judge the Company's controllable, local currency performance. Organic sales growth data presented in this release is proforma data and excludes currency impacts. While we are able to report currency impacts after the fact, we are unable to estimate changes that may occur later in 2009 to applicable exchange rates and are thus unable to reconcile the projected non-GAAP, currency adjusted internal growth rates to reported GAAP growth rates for the year 2009. Any significant changes in currency exchange rates would likely have a significant impact on our reported growth rates due to the volume of our sales denominated in foreign currencies.
Management reports both GAAP and adjusted sales and income and comparisons to reflect what it believes are ongoing and/or comparable operating results excluding currency impacts. Management excludes this item in judging its historical performance and in assessing its expected future performance. Management also uses free cash flow (defined on page 6), a non-GAAP measure, to judge its performance and ability to pursue opportunities that enhance shareholder value. Management believes this non-GAAP information is useful to investors as well.
Cautionary Statement: This release contains forward-looking statements relating to future performance, goals, strategic actions and initiatives and similar intentions and beliefs, including the "2009 Outlook on Sales Growth and EPS", "CEO's Statement" and "Other Information-Share Repurchase" sections contained above and other statements regarding the Company's expectations, goals, beliefs, intentions and the like regarding future sales, earnings, share repurchases, acquisitions and other matters. These statements involve assumptions regarding Company operations, investments and acquisitions and conditions in the markets the Company serves. Although the Company believes its expectations are based on reasonable assumptions, such statements are subject to risks and uncertainties, including, among others, certain economic, political and technological factors. Actual results could differ materially from those stated or implied in this news release, due to, but not limited to, such factors as (1) declining global economic conditions, (2) changes in pricing and the competitive environment and the global demand for our products, (3) fluctuations in foreign currency exchange rates, (4) changes in research funding and the success of research and development activities, (5) dependence on uninterrupted manufacturing operations, (6) changes in the regulatory environment in which the Company operates, (7) changes in worldwide tax rates or tax benefits from domestic and international operations, including the matters described in Note 9- Income Taxes- to the Consolidated Financial Statements in the Company's Form 10-K report for the year ended December 31, 2008, (8) exposure to litigation, including product liability claims, (9) the ability to maintain adequate quality standards, (10) reliance on third party package delivery services, (11) the impact of acquisitions and success in integrating and obtaining projected results from the acquisitions, (12) other changes in the business environment in which the Company operates, and (13) the outcome of the matters described in Note 10-Contingent Liabilities and Commitments-to the Consolidated Financial Statements in the Company's Form 10-K report for the year ended December 31, 2008. A further discussion of the Company's risk factors can be found in Item 1A of the Company's Form 10-K report for the year ended December 31, 2008. The Company does not undertake any obligation to update these forward-looking statements.
CONTACT: Kirk A. Richter, Treasurer of Sigma-Aldrich Corporation,
+1-314-286-8004
Web site: http://www.sigma-aldrich.com/
