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Home > Press > Sigma-Aldrich (Nasdaq: SIAL) Reports Fourth Quarter Diluted EPS of $0.68. Ends 2008 With Record Sales and Earnings and Raises Quarterly Cash Dividend

Abstract:
Sigma-Aldrich, a leading Life Science and High Technology company, reported that its fourth quarter 2008 diluted EPS grew by 6% to $0.68 from $0.64 in the same quarter of 2007.

Sigma-Aldrich (Nasdaq: SIAL) Reports Fourth Quarter Diluted EPS of $0.68. Ends 2008 With Record Sales and Earnings and Raises Quarterly Cash Dividend

ST LOUIS, MO | Posted on February 11th, 2009

Reported sales of $510 million in the fourth quarter 2008 declined by 4% compared to 2007. Excluding the impact of currency, sales in the fourth quarter grew 3% from a year ago. Fourth quarter organic sales for the Company's Research business grew 4%, while the Specialty Fine Chemicals business (SAFC) organic sales were in-line with prior year level.

Operating margin in the fourth quarter 2008 increased by 30 basis points to 22.5% from the same period of 2007, reflecting benefits from process improvements, global supply chain initiatives, cost containment initiatives and recent strategic pricing actions.

For the full year 2008, reported sales grew by 8% compared with 2007, to a record $2.2 billion. Excluding the benefit of currency and acquisitions, overall sales grew by 5%, with Research and SAFC sales up by 6% and 3%, respectively. Reported diluted EPS for 2008 increased by 13% from 2007 to a record $2.65.

Other 2008 Highlights:

-- Expanded full year operating margin by 40 basis points to 22.9% through higher sales, operating process improvements and strategic pricing actions.

-- Reported strong net income and free cash flow of $342 million and $314 million, respectively, for the full year.

-- Realized currency benefits of $.02 and $.27 in reported, diluted EPS for the fourth quarter and full year, respectively.

-- Achieved sales to CAPLA (Canada, Asia Pacific, Latin America) markets of 22% of total sales.

-- Increased fourth quarter sales through the Company's award winning web site by 5%. Web based sales now represent 42% of worldwide Research-based sales in the fourth quarter.

-- Enhanced the breadth of scientific knowledge with 70 new technology in-licenses in 2008 bringing total in-licenses held to over 600.

-- Received recognition for CompoZr Zinc Finger Nuclease (ZFN), a breakthrough gene editing technology, as one of the "Top 10 Innovations of 2008" by The Scientist magazine.

2009 Outlook on Sales Growth and EPS:

-- While the demand for Sigma-Aldrich's products continued to be healthy in the fourth quarter of 2008, the current uncertainty in the global markets reduces future visibility, making it difficult to forecast sales with a desirable level of certainty. Demand from several of the Company's key markets is expected to decline in 2009, but with new program launches, global sales initiatives and market share gains, the Company expects to be able to achieve low single digit organic sales growth in 2009. Currency is expected to reduce otherwise reportable growth in 2009 by approximately 7% if exchange rates remain at current levels.

-- The negative impact of currency on EPS is expected to be about $0.30 in 2009 if exchange rates remain at current levels. The Company plans to offset this impact through growth in organic sales, supply chain optimization, and other operational process improvements, and expects to report 2009 pre-tax margins and an EPS at or slightly above 2008 levels.

Dividend:

At a meeting held on February 10, 2009, the Company's Directors declared an 11.5% increase in its quarterly cash dividend to $.145 per share. The dividend is payable on March 16, 2009 to shareholders of record on March 2, 2009.

CEO's STATEMENT:

Commenting on 2008 performance and 2009 expectations, President and CEO Jai Nagarkatti said: "Despite a challenging environment, we are pleased with our 2008 performance and our ability to improve our profitability. The initiatives that have been key to growth over the last three years are performing well. Looking forward, we are accelerating activities on a number of these initiatives. We are also elevating our efforts in other areas where significant performance improvements can contribute to enhanced growth in sales and profits. And, finally, we are finding other new and innovative ways to differentiate our Company in both life science and high technology applications by building on our unrivalled scientific knowledge and global logistics capabilities."

Nagarkatti continued, "We attribute our 2008 performance to our ability to win market share and drive operating performance faster than sales. Our long-term objective is to achieve above-market rate organic sales growth and enhance that through contributions from technology acquisitions and our innovation efforts. In the near term we expect challenging market conditions and plan to respond by maintaining tight control of our costs without sacrificing the commitment to our growth initiatives. We will approach 2009 with the same passion and energy that has driven our success in the past and exit this recession as a much stronger company than ever before."

OTHER INFORMATION:

Share Repurchase:

Another 3.3 million shares were acquired during the fourth quarter of 2008 at an average share price of $39.45. There were 122.1 million shares outstanding at December 31, 2008. The Company expects to repurchase the 7.7 million remaining authorized shares, but the timing and number of shares purchased, if any, depends upon market conditions and other factors.

Cash Flow and Debt:

Cash flow from operations for 2008 was $404 million compared to $417 million for 2007. Cash from higher net income and deferred income taxes was offset by pension plan contributions used to cover market declines in pension investments and increased inventories. This cash flow, together with a $181 million increase in debt, enabled the Company to fund $421 million for share repurchases, pay $90 million for property and equipment additions and return $65 million to shareholders through a 13% increase in the 2008 quarterly dividend. The Company's debt to capital ratio at December 31, 2008 was 34.6%. The Company has not experienced any problem in placing its short-term debt in recent weeks.

####

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 37 countries and has 7,900 employees providing excellent service worldwide. We are committed to accelerating our Customers' success through leadership in Life Science, High Technology and Service.

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.

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, and where indicated, acquisition impacts. While we are able to report currency impacts after the fact, we are unable to estimate changes that may occur 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 also reports both GAAP and adjusted sales and income and comparisons to reflect what it believes is ongoing and/or comparable operating results excluding currency impacts and the sales benefit from acquisitions. Management excludes these other items in judging its historical performance and in assessing its expected future performance. Management also uses free cash flow, a non-GAAP measure, to judge its performance. 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", "CEO's Statement" and "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 4 -- Uncertainty in Income Taxes -- to the Consolidated Financial Statements in the Company's Form 10-Q report for the quarter ended September 30, 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 13 -- Contingent Liabilities and Commitments -- to the Consolidated Financial Statements in the Company's Form 10-Q report for the quarter ended September 30, 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, 2007. The Company does not undertake any obligation to update these forward-looking statements.


                          SIGMA-ALDRICH CORPORATION
                Consolidated Statements of Income (Unaudited)
                    (in millions except per share amounts)

                                             Three Months    Twelve Months
                                         Ended December 31, Ended December 31,
                                            2008    2007     2008      2007
    Net sales                              $509.8  $532.1  $2,200.7  $2,038.7
      Cost of products sold                 244.9   266.9   1,070.8   1,002.7
    Gross profit                            264.9   265.2   1,129.9   1,036.0
      Selling, general and administrative
       expenses                             134.2   131.6     561.6     517.1
      Research and development expenses      16.1    15.7      64.5      59.3
    Operating income                        114.6   117.9     503.8     459.6
      Interest, net                           3.4     4.5      14.3      22.0
    Income before income taxes              111.2   113.4     489.5     437.6
      Provision for income taxes             26.9    28.5     148.0     126.5
    Net income                              $84.3   $84.9    $341.5    $311.1

    Net income per share - Basic            $0.68   $0.66     $2.70     $2.38
    Net income per share - Diluted          $0.68   $0.64     $2.65     $2.34

    Weighted average number of shares
     outstanding - Basic                    123.1   129.6     126.3     130.6
    Weighted average number of shares
     outstanding - Diluted                  124.8   132.4     128.8     133.1



                          SIGMA-ALDRICH CORPORATION
                         Consolidated Balance Sheets
                                (in millions)

                                                  (Unaudited)
                                                  December 31,    December 31,
                                                     2008              2007
    Assets
    Current assets:
      Cash and cash equivalents                     $251.8            $237.6
      Accounts receivable, net                       269.8             276.3
      Inventories                                    661.8             653.6
      Deferred taxes                                  45.9              57.7
      Other current assets                            79.9              57.3
        Total current assets                       1,309.2           1,282.5

    Property, plant and equipment, net               660.4             681.5
    Goodwill, net                                    388.3             420.3
    Intangibles, net                                 120.6             136.9
    Other assets                                      78.0             107.9
    Total assets                                  $2,556.5          $2,629.1

    Liabilities and Stockholders' Equity
    Current liabilities:
      Notes payable and current maturities
       of long-term debt                            $528.8            $331.3
      Accounts payable                               114.6             131.0
      Accrued payroll and payroll taxes               58.6              55.0
      Accrued income taxes                            41.1              47.1
      Other accrued expenses                          50.8              70.6
        Total current liabilities                    793.9             635.0

    Long-term debt                                   200.1             207.0
    Deferred post-retirement benefits                 39.5              36.9
    Deferred taxes                                    18.6              42.3
    Other liabilities                                125.2              91.3
      Total liabilities                            1,177.3           1,012.5

    Stockholders' equity:
      Common stock                                   201.8             201.8
      Capital in excess of par value                 133.0             109.7
      Common stock in treasury                    (1,935.3)         (1,534.1)
      Retained earnings                            2,954.4           2,679.3
      Accumulated other comprehensive income          25.3             159.9
        Total stockholders' equity                 1,379.2           1,616.6

    Total liabilities and stockholders' equity    $2,556.5          $2,629.1



                          SIGMA-ALDRICH CORPORATION
              Consolidated Statements of Cash Flows (Unaudited)
                                (in millions)

                                                         Twelve Months
                                                       Ended December 31,
                                                     2008              2007
    Cash flows from operating activities:
      Net income                                    $341.5            $311.1
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:
        Depreciation and amortization                 98.6              97.8
        Deferred income taxes                         18.1             (21.7)
        Stock-based compensation expense              12.2              19.0
        Loss on equity investments, net                5.3               0.2
        Other                                          1.7              (2.6)
      Changes in assets and liabilities:
        Increase in accounts receivable               (4.0)             (7.3)
        Increase in inventories                      (37.5)            (25.2)
        Increase/(decrease) in accrued income taxes   (0.1)             25.0
        Increase/(decrease) in accrued
         pension obligation                          (20.6)              2.6
        Other                                        (11.2)             18.1
          Net cash provided by operating activities  404.0             417.0

    Cash flows from investing activities:
      Property, plant and equipment additions        (89.9)            (77.6)
      Proceeds from sale of property, plant
       and equipment                                   1.1               1.3
      Proceeds from sale of equity investments        11.6               8.8
      Acquisitions of businesses, net of
       cash acquired                                  (6.1)            (67.6)
      Other, net                                      (3.4)            (13.9)
        Net cash used in investing activities        (86.7)           (149.0)

    Cash flows from financing activities:
      Net issuance of short-term debt                270.5              61.8
      Repayment of long-term debt                    (90.0)            (69.7)
      Payment of dividends                           (65.4)            (60.0)
      Treasury stock purchases                      (421.2)           (184.3)
      Exercise of stock options                       23.8              32.4
      Excess tax benefits from stock-based
       payments                                        8.4               7.8
        Net cash used in financing activities       (273.9)           (212.0)

    Effect of exchange rate changes on cash          (29.2)              7.8
    Net change in cash and cash equivalents           14.2              63.8
    Cash and cash equivalents at January 1           237.6             173.8
    Cash and cash equivalents at December 31        $251.8            $237.6

    Free cash flow (1)                              $314.1            $339.4

    (1) Net cash provided by operating activities less property, plant and
        equipment additions.



                          SIGMA-ALDRICH CORPORATION
               Supplemental Financial Information - (Unaudited)

    Sales Growth by Business Unit

                                                     Three Months
                                               Ended December 31, 2008

                                             Currency                Adjusted
                                  Reported    Impact    Acquisition  (Organic)

    Research Essentials             (1.7%)    (7.6%)        - %         5.9%
    Research Specialties            (4.0%)    (7.0%)        - %         3.0%
    Research Biotech                (3.1%)    (6.0%)        - %         2.9%
    Research Chemicals              (3.2%)    (7.0%)        - %         3.8%
    SAFC                            (6.6%)    (6.4%)        - %        (0.2%)
    Total                           (4.2%)    (6.8%)        - %         2.6%



                                                    Twelve Months
                                               Ended December 31, 2008

                                             Currency                Adjusted
                                  Reported    Impact    Acquisition  (Organic)

    Research Essentials              7.7%      2.8%         - %         4.9%
    Research Specialties             9.4%      3.0%         - %         6.4%
    Research Biotech                10.0%      3.0%         - %         7.0%
    Research Chemicals               9.1%      2.9%         - %         6.2%
    SAFC                             5.2%      2.0%        0.7%         2.5%
    Total                            7.9%      2.7%        0.2%         5.0%



    Business Unit Sales
    (in millions)
                                     First  Second   Third   Fourth
                                    Quarter Quarter Quarter  Quarter   Total
                                     2007    2007    2007    2007      2007

    Research Essentials              $99.4   $96.4   $95.6   $99.3    $390.7
    Research Specialties             187.3   183.7   184.6   197.9     753.5
    Research Biotech                  76.0    73.5    72.9    79.6     302.0
    Research Chemicals               362.7   353.6   353.1   376.8   1,446.2
    SAFC                             133.2   153.9   150.1   155.3     592.5
    Total Customer Sales            $495.9  $507.5  $503.2  $532.1  $2,038.7



                                    First   Second   Third   Fourth
                                   Quarter  Quarter Quarter  Quarter   Total
                                    2008     2008    2008    2008      2008

    Research Essentials             $110.1  $109.4  $103.8   $97.6    $420.9
    Research Specialties             213.3   214.5   206.3   190.0     824.1
    Research Biotech                  88.7    86.4    80.0    77.1     332.2
    Research Chemicals               412.1   410.3   390.1   364.7   1,577.2
    SAFC                             157.5   170.4   150.5   145.1     623.5
    Total Customer Sales            $569.6  $580.7  $540.6  $509.8  $2,200.7

    NOTE: 2007 Business Unit sales data reflects reclassifications to conform
          to the 2008 classification that reflects transfers of certain
          products between business units to better align the selling effort
          for those products with their primary customers.



                          SIGMA-ALDRICH CORPORATION
               Supplemental Financial Information - (Unaudited)

    Reconciliation of Proforma to Reported Net Income

                                             Net Income     Diluted Earnings
                                           (in millions)       Per Share
                                            Three Months      Three Months
                                                Ended            Ended
                                             December 31,     December 31,
                                             2008    2007     2008    2007

    Proforma net income before currency
     impact                                 $81.3    $84.9   $0.66   $0.64
    Currency impact                           3.0       -     0.02      -
    Total reported net income               $84.3    $84.9   $0.68   $0.64



                                             Net Income    Diluted Earnings
                                           (in millions)      Per Share
                                           Twelve Months    Twelve Months
                                               Ended            Ended
                                            December 31,     December 31,
                                             2008   2007     2008    2007

    Proforma net income before currency
     impact                                $305.6   $311.1   $2.38   $2.34
    Currency impact                          35.9       -     0.27      -
    Total reported net income              $341.5   $311.1   $2.65   $2.34



    Income Statement Ratios


                                       Three Months Ended  Twelve Months Ended
                                            December 31,      December 31,
                                           2008     2007     2008     2007

    Gross profit                           52.0%    49.8%    51.3%    50.8%
    S,G&A expenses                         26.3%    24.7%    25.5%    25.4%
    Operating income                       22.5%    22.2%    22.9%    22.5%
    Pretax income                          21.8%    21.3%    22.2%    21.5%

    Effective tax rate                     24.2%    25.1%    30.2%    28.9%



    Reconciliation of Free cash flow

                                                         Twelve Months
                                                       Ended December 31,
                                                     2008              2007

    Net cash provided by operating activities       $404.0            $417.0
    Less: Property, plant and equipment additions    (89.9)            (77.6)
    Free cash flow                                  $314.1            $339.4

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