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Cytec Selected for LEAP-1 Program

Zacks Equity Research

Specialty materials and chemicals company Cytec Industries Inc. (CYT) has been chosen as the preferred advanced materials supplier for the Leading Edge Aviation Propulsion (LEAP) high-bypass turbofan engine program. The LEAP engine program has been developed by CFM International, a joint venture between Snecma (Safran) and GE Aviation.

Cytec’s advanced composite materials to be used in the LEAP-1 engine program are expected to reduce the weight of an aircraft by 500 pounds, fuel consumption by 15%, nitrogen oxide emissions by 50% and noise by 15 decibels. The next-generation LEAP-1 engines have already been selected for the C919 program, COMAC’s new single-aisle commercial jet and can be opted for Airbus’s A320neo program.

Cytec, who has already bee been selected for Leap-1A and Leap-1C applications, now plans to expand its production capacities in Europe and the U.S. in order to support the LEAP engine program. Cytec makes advanced prepregs, resins and adhesives that are broadly used in aerospace and high performance industrial applications. Cytec’s aggregate products also include a range of process materials.

Cytec’s CYCOM PR520 RTM resin system will be used in the LEAP-1 engine through its fan blades and containment cases. CYCOM PR520 is uniquely designed with superior damage tolerance and good strain characteristics that are primarily required for structure aerospace applications. CYCOM PR520’s characteristics also help in assuring full fiber wetting and broadening the resin infusion processing window.

Cytec reported its first-quarter 2013 results on Apr 18. The company reported adjusted (excluding special items) earnings from continuing operations of 75 cents per share in the quarter, missing the Zacks Consensus Estimate of 86 cents.

Cytec posted a net profit of $33.5 million (or 73 cents per share) in the reported quarter, down roughly 37% from net earnings of $53.1 million (or $1.14 a share) recorded in the year-ago quarter. Revenues increased roughly 26% year over year to $477.4 million in the reported quarter, but missed the Zacks Consensus Estimate of $494 million.

Cytec cut its adjusted diluted earnings per share estimate for 2013 to a range of $4.50 to $4.75 from the previous guidance of $4.70 to $4.95. The company remains optimistic about both its short-term and long–term growth opportunities despite there being some risk associated with the global economy, which would mostly have a negative impact on the Industrial Materials segment.

Cytec currently maintains a Zacks Rank #3 (Hold).

Other companies in the chemical industry having favorable Zacks Rank are Shin-Etsu Chemical Co., Ltd. (SHECY), Methanex Corporation (MEOH) and PPG Industries Inc. (PPG). While Shin-Etsu Chemical and Methanex hold a Zacks Rank #1 (Strong Buy), PPG Industries retains a Zacks Rank #2 (Buy).

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Read the Full Research Report on CYT

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