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MacDermid Reports Increased Sales in Q1

Friday, April 28, 2006

Press release from the issuing company

DENVER--April 27, 2006-- MacDermid, Incorporated a worldwide manufacturer of proprietary specialty chemical products and materials for the electronics, metal finishing and printing industries today announced financial results for the first quarter ended March 31, 2006. Sales of $ 200.4 million were $30.1 million higher, a 17.7% increase over the same period in 2005. Autotype added $24.6 million. Sales were strong in Advanced Surface Finishing reflecting demand in Asia, and share gain in North America. Foreign currency was unfavorable by $5.8 million. Sales in constant dollars increased by 21.9%. Diluted earnings per share of $0.43 were 13.2% higher than the $0.38 per share from operations in 2005. Adding back the $0.05 in special charges results in underlying earnings of $.48 a share, up 26.3% from the prior year. Special charges in the quarter included: * $1.9 million to recognize costs for the investigation of a potential acquisition. * $0.6 million non-cash cumulative currency translation adjustment (CTA) arising from the liquidation of a dormant subsidiary. This expense is included in operating expenses as part of the loss on disposal of assets. These expenses reduced earnings by $0.05 per share In addition there were offsetting expenses and income including restructuring charges of $1.5 million which were largely offset by a contingent environmental reserve that arose some years ago upon the disposal of a subsidiary and which expired at the end of March 2006. Also, in the quarter a small equipment business in North America was sold. Included in operating expenses, as part of the loss on disposal of assets, is an amount of $1.7 million arising from this disposal. An offsetting $1.9 million tax reduction arose from the sale. This reduction in tax caused our reported tax rate to be 27.2% for the quarter, whereas our effective tax rate from operations was 33.7% for the quarter (32.5% in 2005). The net affect of this transaction was an after tax gain of $0.2 million. These expenses reduced Operating Profit by $4.1 million. Owner Earnings, a measure of free cash flow (defined below and shown in BOLD in the attached Condensed Consolidated Summary of Cash Flows), were a negative $0.9 million for the quarter ended March 31 2006, the same as for the prior year. The reason for this is primarily the increase in the investment in working capital as shown in the cash flow statement. Cash retained as of March 31, 2006 is $ 83.0 million. Dan Leever Chairman and CEO said, "One must be careful about extrapolating one successful quarter to a trend. Nevertheless, there were encouraging signs this quarter. Operating profit before special charges was up by 16.9%. ASF had a great quarter. Asia revenues were excellent and we finally began to see the result of the share gain effort in North America. ColorSpan continues to prosper. Autotype built on a strong fourth quarter with an even better first quarter adding $0.05 per share. Cost synergies will begin to show as the year progresses. The quarter included several negatives including order pattern and front end loaded R&D expenses in Printing Solutions. We expect these items to improve as the year progresses. The North American packaging printing business continues to suffer. We are working diligently on turning this business around."




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