- The Washington Times - Monday, November 17, 2003

Shares of Richmond chemical-additive company Ethyl Corp. hit a six-month high last week as the company reported strong quarterly earnings and an expanded contract with ConocoPhillips.

Stock prices for Ethyl Corp., trading on the New York Stock Exchange at $8.82 six months ago, closed at $18.20 yesterday. Shares hit a six-month high Wednesday at $19.19.

Ethyl Corp. earlier this month signed an agreement with ConocoPhillips, the Houston petroleum company, to supply detergent additives to all of the company’s gasoline products at Conoco, Phillips 66 and 76 service stations. Terms of the deal were not disclosed.

Ethyl spokesman David Fiorenza predicted more of the company’s long-term sales growth would come from fuel additives as demand for the company’s other business in vehicle-lubricant additives waned.

“Consumers want vehicles that require fewer oil and lubricant changes, and answer to that demand reduces demand,” for lubricant additives, Mr. Fiorenza said. “On the flip side, consumers also want better gas, so there is an increase in demand for fuel with additives.”

The rise in petroleum-additive sales, up 14 percent in the third quarter ended Sept. 30, helped push up overall sales by 14 percent to $197 million from $173 million in the third quarter last year.

Third-quarter income rose 1 percent to $10.3 million (61 cents per share) from $10.2 million (61 cents) a year earlier. The company also lowered its debt by $68 million to $222 million, close to Ethyl’s “comfort zone” of $150 million to $200 million.

That lowered debt has positioned Ethyl for more acquisitions, said Robert Ottenstein, an analyst with Morgan Stanley & Co. Inc., a New York financial services company.

“The firm noted that it is spending more time looking at ways to invest for growth and that it has identified some potential acquisition opportunities [both small and large],” Mr. Ottenstein said in a recent report.

Mr. Fiorenza said the company is not looking at any specific companies to buy in the near-term future.

But a large acquisition would be a “key risk” to the company, Mr. Ottenstein said. “Ethyl has had a strong run this year, but we believe that other names in the group have a better risk/return profile,” he said, rating the stock as neutral.

Mr. Ottenstein does not own any Ethyl stock but Morgan Stanley is seeking a business relationship with the company.

Robert Robotti, analyst with New York brokerage firm Robotti & Co. Inc., said he was encouraged by Ethyl’s “positive but erratic” profits.

“The company has stabilized its engine oil additive business and increased its petroleum additive business. But it’s still in a highly competitive market,” Mr. Robotti said, advising investors to “accumulate” or buy the stock.

While Robotti & Co. does not have a banking relationship with Ethyl, Mr. Robotti owns about 668,000 company shares.


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