Detrex Corporation Reports Profit for the Second Quarter of 2011

SOUTHFIELD, Mich.--(BUSINESS WIRE)--Detrex Corporation (Pink Sheets: DTRX), a diversified manufacturer of PVC and CPVC pipe, duct and shapes and specialty chemicals including additives for industrial petroleum products and high purity hydrochloric acid, today announced second quarter 2011 net income of $1,267,352, or $0.78 per fully diluted share, compared to net income of $769,029, or $0.49 per fully diluted share, in the second quarter of last year. Year-to-date net income was $2,536,496 or $1.56 per fully diluted share, compared to net income of $1,114,238, or $0.70 per fully diluted share, in the same period of 2010.

Second quarter net sales increased 22% to $29.5 million from $24.2 million in the comparable period last year. On a year-to-date basis, sales were $58.9 million, an increase of $13.5 million, or 29.8% compared to the prior year. The second quarter and year-to-date increase in sales was the result of gains in both of the Company’s subsidiaries, The Elco Corporation and Harvel Plastics, Inc.

The year-to-date sales increase was comprised of 51.7% growth at Elco and 17.9% growth at Harvel. Elco continued to generate growth from generally improved market demand as well as new business. Harvel’s growth was the result of improving conditions in its industrial end markets as well as increased penetration in a number of sectors. Both companies achieved additional volume across almost all product lines, and the sales increase also reflects higher pricing due to the effects of rising raw material costs.

The earnings improvement is the result of a combination of higher volume, better margins from improved pricing power and continued expense control. A portion of the earnings improvement was offset by an environmental charge of $550,000 in the second quarter and $1 million year-to-date which reflect the Company’s current practice of replenishing the environmental reserve by an amount at least equal to spending in the current year. No such charges were made in the first half of 2010.

The growth in the first half of the year resulted in a working capital increase of $2.96 million, however this increase in working capital leveled off in the second quarter and began to decline as receivables began to catch up. As a result, bank debt increased by approximately $1.7 million in the first half of the year, which includes a decrease of $783,000 in the second quarter. Detrex said it continued to manage liquidity very closely to continue to fund its legacy liabilities. Nonetheless, the Company maintained ample availability under its current credit agreement.

Commenting on the Company’s results for the first half of 2011, President and CEO Tom Mark said, “Both Harvel and Elco are achieving remarkable results in an economic environment that is still challenging. We remain optimistic about continued solid performance in the months to come based on the value of our product offering and relationships with our customers. Raw material costs have been increasing significantly, and we are striving to adjust selling prices proportionately.”

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.