Net income for the second quarter of 2012 included a $22.8 million non-cash benefit resulting from releasing a substantial portion of the Company’s deferred tax valuation allowance. This release was due to the Company’s improved operating results and the determination that it is more likely than not that expected future taxable income will be sufficient to utilize most of the Company’s deferred tax assets.
After applying a normalized tax rate of 39%, excluding the release of the deferred tax valuation allowance and excluding other items the Company does not consider to be part of regular operating activities, adjusted net income for the second quarter of 2012 was $6.5 million, or $0.24 per diluted share, compared to adjusted net income of $5.6 million, or $0.23 per diluted share, for the same quarter in 2011. Pre-tax items identified to arrive at adjusted net income totaled $4.3 million in the second quarter of 2012, including $2.6 million of costs related to acquisitions, $0.9 million of lease termination and severance charges, and $0.8 million of unusual legal and claims settlement expenses. Adjusted net income for the second quarter of 2011 was derived by excluding a restructuring credit of $0.5 million, and then applying a normalized tax rate of 39%. A reconciliation of net income to adjusted net income is included in the attached financial exhibits.
“Second quarter earnings and year-to-date performance improved from last year, and we anticipate improvement in the second half of the year as we realize further benefits from our recent acquisitions, improve utilization of start-up energy assets, and stabilize our chemical segment volumes via driver additions,” said Gary Enzor, Chief Executive Officer.