Minerals Technologies Inc. Reports Diluted Earnings Per Share of $0.70 for the Second Quarter; Sales Increase 8 Percent to $202.4 Million
NEW YORK--(BUSINESS WIRE)--July 24, 2003--Minerals Technologies Inc. (NYSE: MTX) today reported second quarter net income of $14.3 million, a 2-percent increase over the $14.0 million reported in the second quarter of 2002. Diluted earnings per common share were $0.70 compared with $0.67 in the same period last year, a 4-percent increase. The results include the effect of the company's agreement with International Paper Company (IP), which reduced earnings by approximately $0.04 per share for the quarter. On May 28, 2003, the company announced that it had reached a two-part agreement with International Paper to extend eight satellite precipitated calcium carbonate (PCC) plant supply contracts and that it had initiated joint efforts to develop new mineral-based products for papermaking applications. As part of this technology effort, the company acquired an exclusive license for patented technology held by International Paper relating to the use of novel fillers, such as PCC and fiber composites, in manufacturing paper and paperboard.
"We are satisfied with our overall financial performance considering the underlying weakness in the economy during the latter part of the second quarter," said Paul R. Saueracker, chairman, president and chief executive officer. "We are also extremely pleased that we have resolved the outstanding issues regarding PCC supply with International Paper, our largest customer."
Under the agreement, eight contracts between International Paper and Minerals Technologies for operation of satellite PCC plants at IP mills in the United States and Europe have been extended to various dates up to 2015, each in accordance with its terms. Minerals Technologies' sales to International Paper in 2002 represented approximately 11.5 percent of the company's total sales.
Worldwide sales in the quarter increased 8 percent to $202.4 million from $186.8 million in the previous year. Foreign exchange had a favorable impact on sales of approximately $9 million, or 5 percentage points of sales growth. Income from operations of $21.6 million was 3 percent higher than the $21.0 million reported for the second quarter of 2002.
For the first six months of 2003, net income declined 6 percent to $25.8 million from $27.5 million last year. In the first quarter of 2003, the company adopted SFAS No. 143, "Accounting for Asset Retirement Obligations." The cumulative effect of this accounting change was a non-cash after-tax charge to earnings of approximately $3.4 million. Excluding the cumulative effect of this accounting change, which was related to retirement obligations associated with the company's satellite PCC facilities and its mining properties, net income for the first six months would have increased 6 percent to $29.2 million from $27.5 million. Diluted earnings per common share decreased 5 percent to $1.27 from $1.33 for the same period in 2002. For the six months of 2003, diluted earnings per share before the cumulative effect of the accounting change increased 8 percent to $1.44 from $1.33.
Worldwide sales for the first six months of 2003 increased 10 percent to $403.8 million from $365.8 million reported last year. The favorable impact of foreign exchange on sales for the first six months of 2003 represented approximately 4 percentage points of growth. Operating income for the first six months of 2003 was $44.1 million, a 4-percent increase over the $42.4 million reported in the first half of 2002.
Sales in the Specialty Minerals segment, which includes the PCC and Processed Minerals product lines, increased 8 percent to $137.4 million from $127.7 million in the comparable quarter of 2002. Income from operations for the second quarter of 2003 was approximately $15.6 million, the same amount as the previous year. Growth in operating income for this segment was affected by the agreement with International Paper and the December 2002 shutdown of a satellite PCC plant in Maine. For the first six months of 2003, Specialty Minerals sales increased 9 percent to $275.1 million from $252.0 million in the same period in 2002. Income from operations for the six months increased 1 percent to $31.1 million from $30.8 million for the same period last year.
Worldwide sales of PCC, which is used primarily in the manufacturing processes of the paper industry, increased 3 percent to $106.6 million compared with $103.3 million in the second quarter of 2002. For the six months, PCC sales increased 5 percent, to $215.8 million from $206.2 million last year.
Sales of PCC used for filling and coating paper had a 2-percent growth in tonnage in the second quarter, despite weakness in the worldwide paper industry and the shutdown of its satellite PCC facility at Great Northern Paper Company in Millinocket, Maine, which was idled in December 2002 before Great Northern entered into bankruptcy. The Great Northern paper mills have since been sold, and Minerals Technologies expects the satellite PCC facility to resume operation in 2004.
"Despite the continued decline in the worldwide uncoated free-sheet paper market -- our primary end-use market -- our PCC business continued to grow," said Mr. Saueracker. "This growth came from the ramp-up of new and recently expanded facilities and from the favorable effects of foreign exchange."
Sales of Specialty PCC, used in non-paper applications, continued to be weak as a result of poor industry conditions and a more competitive environment in the consumer market for calcium-fortified products.
Worldwide sales of Processed Minerals products increased 26 percent in the second quarter to $30.8 million from $24.4 million in the same period in 2002. Excluding the September 2002 acquisition of Polar Minerals Inc., sales growth was 4 percent. For the six months, sales of Processed Minerals products increased 29 percent to $59.3 million from $45.8 million for the first half of 2002. This growth was also primarily attributable to the Polar Minerals acquisition. These products are used in the building materials, steel, polymers, ceramics, paints and coatings, glass and other manufacturing industries.
Sales in the Refractories segment, the products of which are used primarily in the steel industry, increased 10 percent to $65.0 million from $59.1 million in the same period of 2002. Income from operations increased 11 percent to $6.0 million from $5.4 million in the same period of 2002. This segment was affected by weakness in Asia and North America. For the first six months of 2003, net sales of refractory products were $128.7 million, a 13-percent increase from $113.8 million reported in the first half of 2002. Income from operations for the six months increased 12 percent to $13.0 million from the $11.6 million in the prior year.
"Although our first half 2003 results were positive and reflect the success of our key strategies and programs, we are seeing signs of weakness in the worldwide economy that could adversely affect our financial performance," said Mr. Saueracker.
This press release contains some forward-looking statements. Actual results may differ materially from these expectations. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this document should be evaluated together with the many uncertainties that affect our businesses, particularly those mentioned in the cautionary statements of our 2002 Form 10-K and in our other reports filed with the Securities and Exchange Commission.
For further information about Minerals Technologies Inc., call 1-888-MTX-NEWS (689-6397); or, look on the Internet at http://www.mineralstech.com/.
CONSOLIDATED STATEMENT OF INCOME
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
(thousands of dollars, except per share data)
(unaudited)
Second Quarter % Six months %
------------------ ------------------
2003 2002 Change 2003 2002 Change
-------- -------- ------ -------- -------- ------
Net sales $202,374 $186,828 8 $403,824 $365,828 10
Operating costs and
expenses:
Cost of goods sold 152,378 140,662 8 304,061 274,086 11
Marketing and
administrative
expenses 21,862 19,357 13 42,999 37,793 14
Research and
development
expenses 6,535 5,825 12 12,620 11,529 9
-------- -------- -------- --------
Income from
operations 21,599 20,984 3 44,144 42,420 4
Non-operating
deductions - net 1,441 1,021 41 2,468 2,959 (17)
-------- -------- -------- --------
Income before
provision for taxes
on income and
minority interests 20,158 19,963 1 41,676 39,461 6
Provision for taxes
on income 5,494 5,599 (2) 11,628 11,234 4
Minority interests 381 367 4 848 687 23
-------- -------- -------- --------
Income before
cumulative effect
of accounting change 14,283 13,997 2 29,200 27,540 6
Cumulative effect of
accounting change,
net of tax 0 0 3,433 0
-------- -------- -------- --------
Net income $ 14,283 $ 13,997 2 $ 25,767 $ 27,540 (6)
-------- -------- -------- --------
Weighted average
number of common
shares outstanding:
Basic 20,094 20,457 20,105 20,221
Diluted 20,335 20,973 20,279 20,768
Earnings per share:
Basic
Before cumulative
effect of
accounting
change $ 0.71 $ 0.68 4 $ 1.45 $ 1.36 7
Cumulative effect
of accounting
change 0 0 (0.17) 0
-------- -------- -------- --------
Basic
earnings
per share $ 0.71 $ 0.68 4 $ 1.28 $ 1.36 (6)
-------- -------- -------- --------
Diluted
Before cumulative
effect of
accounting change $ 0.70 $ 0.67 4 $ 1.44 $ 1.33 8
Cumulative effect of
accounting change 0 0 (0.17) 0
-------- -------- -------- --------
Diluted
earnings
per share $ 0.70 $ 0.67 4 $ 1.27 $ 1.33 (5)
-------- -------- -------- --------
Cash dividends
declared per common
share $ 0.025 $ 0.025 $ 0.05 $ 0.05
-------- -------- -------- --------
1) For the periods ended June 29, 2003 and June 30, 2002.
2) Sales increased approximately 4% in the United States in the second
quarter and 6% for the first six months of 2003. International
sales increased approximately 15% in the second quarter and 18%
for the first six months of 2003.
3) Effective January 1, 2003, the Company adopted SFAS No. 143,
"Accounting for Asset Retirement Obligations." Upon adoption, the
Company recorded a non-cash after-tax charge to earnings of
approximately $3.4 million for the cumulative effect of this
accounting change related to retirement obligations associated
with the Company's PCC satellite facilities and its mining
properties. Excluding the cumulative effect adjustment, the
Company recorded additional depreciation and accretion expenses of
approximately $0.2 million in the second quarter and $0.4 million
for the first six months of 2003. Such charges are included in
cost of goods sold.
4) The results of operations for the interim period ended June 29,
2003 are not necessarily indicative of the results that ultimately
might be achieved for the current year.
5) The analyst conference call to discuss operating results for the
second quarter is scheduled for July 25, 2003 at 11:00 AM and will
be broadcast over the Company's website (www.mineralstech.com).
The broadcast will remain on the Company's website for no less
than one year.
MINERALS TECHNOLOGIES INC AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
(In Thousands of Dollars)
June 29, December 31,
2003* 2002**
----------------- -----------------
Current assets:
Cash & cash equivalents 45,771 31,762
Accounts receivable, net 148,299 129,608
Inventories 82,065 82,909
Other current assets 50,958 46,686
----------------- -----------------
Total current assets 327,093 290,965
Property, plant and equipment 1,178,394 1,116,004
Less accumulated depreciation 622,094 578,580
----------------- -----------------
Net property, plant &
equipment 556,300 537,424
Goodwill 51,721 51,291
Other assets and deferred charges 33,042 20,197
----------------- -----------------
Total assets 968,156 899,877
----------------- -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt 32,503 31,331
Accounts payable 38,701 37,435
Other current liabilities 62,310 55,171
----------------- -----------------
Total current liabilities 133,514 123,937
Long-term debt 99,037 89,020
Other non-current liabilities 99,703 92,763
----------------- -----------------
Total liabilities 332,254 305,720
Total shareholders' equity 635,902 594,157
----------------- -----------------
Total liabilities and
shareholders' equity 968,156 899,877
----------------- -----------------
*Unaudited.
**Condensed from audited financial statements.
CONTACT: Minerals Technologies Inc. Rick Honey, 212-878-1831
SOURCE: Minerals Technologies Inc.