Hercules to buy back stock, issue a dividend The firm's share price fell yesterday, despite a quarterly profit.

Posted: July 24, 2007

Hercules Inc. announced yesterday that it had turned a profit for the second quarter compared with a loss in the same period a year earlier. It also said it would pay a dividend for the first time in seven years.

Besides the quarterly dividend of 5 cents a share, the Wilmington chemical company said it would buy back up to $200 million of its shares.

The dividend payment and stock repurchase are steps that typically boost a company's share price, but Hercules shares fell 25 cents, or 1.2 percent, to $21.16 yesterday as investors waited for the earnings announcement after the market closed.

In the last month, Hercules' stock had climbed 20 percent as rising interest rates took pressure off the company's pension liabilities and the sale of its FiberVisions business last year improved the company's free cash flow.

"Whenever you've had a run, having a swing of 2 or 3 percent is perfectly understandable," said Laurence Alexander, an analyst with Jefferies & Co. Inc., of New York.

The Wilmington company said global sales of its water-soluble chemicals pushed profit to $34.5 million after it lost $51.6 million in the same quarter a year earlier.

Hercules' sales for the quarter grew 9.6 percent to $549 million.

The dividend will be payable Oct. 19 to shareholders of record on Sept. 28. The company last paid a dividend, 8 cents a share, in September 2000. Two months later, it suspended future payouts to save $34 million a year.

The new payment will cost Hercules $23.2 million a year, based on 116.6 million shares outstanding as of the end of April.

Under the stock repurchase plan, the company will buy back shares through 2009.

"We remain committed to growing our high-return portfolio of businesses, focusing on both internal investment and appropriate acquisition opportunities," said president and chief executive officer Craig Rogerson in a statement after the dividend announcement.

The company also announced yesterday that it had received $240 million in state and federal tax refunds and paid $124 million in May as part of a lawsuit against its subsidiary, Vertac Chemical Corp.

A federal court in April said the company should pay for environmental cleanup at a Vietnam War-era Agent Orange plant in Arkansas.

Hercules makes chemicals for home, office and industrial uses. The company is a major producer of chemicals for making paper.

Contact staff writer Joseph Galante at 215-854-5194 or jgalante@phillynews.com.

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