Fitch Ratings Affs Engelhard's 'A-' Sr Unsec Rtg; Rtg Outlook Pos.Business Editors CHICAGO--(BUSINESS WIRE)--June 5, 2002 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. Engelhard Corporation's (Engelhard) 'A-' senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. rating and its 'F2' short-term rating. The Rating Outlook remains Positive. Engelhard's ratings are supported by the company's leading market positions, its commitment to debt reduction, and its potential for continued strong earnings. The company's leading position in environmental catalyst technologies suggests strong earnings potential in the context of tightening air emission standards Emission standards are requirements that set specific limits to the amount of pollutants that can be released into the environment. Many emission standards focus on regulating pollutants released by automobiles (motor cars) and other powered vehicles but they can also regulate and vehicle emission standards. Additionally, Engelhard has reduced total debt significantly over the last two years from approximately $951 million in 1999 to approximately $627 million in 2001. EBITDA-to-interest increased to 9.3 times (x) in 2001 from 7.2x in 1999. Similarly, total debt-to-EBITDA declined to 1.4x in 2001 from 2.2x in 1999. Although debt reduction has been significant, acquisition and share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. activity may limit debt reduction in the near term. Engelhard tends to execute small 'bolt-on' acquisitions; however, the company could consider a larger acquisition based on attractive opportunities in the market. Engelhard is also considering a bond issuance to term out some of its short-term borrowings, a move that would reduce its exposure to the commercial paper market. As of March 31, 2002, Engelhard's short-term borrowings were approximately 62% of total balance sheet debt. The Rating Outlook remains Positive, indicating the likelihood that Engelhard will continue to enhance its credit statistics and debt position in the near term. Fitch expects credit statistics to remain strong in 2002. The Environmental Technologies business is expected to benefit from stricter emission-control regulations. Process Technologies will likely benefit from growth in custom process catalysts and value-added refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar catalysts, although overall demand may be weak. The Appearance and Performance Technologies business will likely benefit from recent asset re-deployment and productivity programs, as well as new product development. Earnings from Engelhard's Materials Services business will likely continue to decline to more normal levels from the exceptional levels experienced in 2000 due to lower platinum prices. Engelhard Corporation is a surface and materials science materials science Study of the properties of solid materials and how those properties are determined by the material's composition and structure, both macroscopic and microscopic. company that develops technologies to improve customers' products and processes. A Fortune 500 company, Engelhard is a world-leading provider of technologies for environmental, process, appearance, and performance applications. In 2001, the company had nearly $5.1 billion in revenue and $436 million in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become . |
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