Goldman Sachs' First Take Of Nalco Holding (NLC)

Goldman Sachs took a look at Nalco Holding NLC in a research report published this morning, and stated that Goldman Sachs will review its earnings estimate and target price after a conference call with Nalco Holdings tomorrow morning. In the report, Goldman Sachs states, "Nalco (NLC) reported adjusted 4Q2010 operating EPS of $0.51 (excludes $28.1 mn negative impact of early debt extinguishment and associated tax adjustment) versus our and consensus estimates of $0.41. NLC showed strong top-line growth with sales up 11% yoy, as all the regions recorded strong organic sales growth with North America (14%) and Asia leading (14%) followed by Latin America (2%). Underlying adjusted EBITDA of $188.7 mn was in line with consensus at $189.9 mn. The EPS beat reflected a much lower effective tax rate of 14% vs. our 35% estimate. The sales strength was eroded by elevated feedstock costs and increased sales to lower margin end markets as gross margins dropped -228bp yoy (43.9% vs. our 46.2% estimate). The Energy Services segment outperformed with organic sales growth of 12% yoy. The Adomite drilling business unit continues to benefit from increased drilling activity in both the domestic and international markets. Sales at the Paper Services segment increased 8% yoy driven by ~20% growth in Asia Pacific, although margins declined sharply by 327bp owing to an increase in raw material costs. The Water Services segment delivered 8% organic sales growth, fueled by customer strength in metals & mining and chemicals." Shares of Nalco Holding were at $30.94 in after hours trading at the time of posting, reflecting no change in the shares from Tuesday's market close.