Minerals Technologies Inc. Reports Record Second Quarter Diluted Earnings Per Share from Continuing Operations of $0.98, an 18-Percent Increase over Prior Year
Total Earnings per Share was $1.22 including Gain on Sale of
Assets
Company Also Declares Regular Dividend of $0.05 per Share on its
Common Stock
NEW YORK--(BUSINESS WIRE)--July 24, 2008--Minerals Technologies Inc. (NYSE: MTX) today reported second quarter diluted earnings per common share of $1.22 compared with $0.74 per share in the second quarter of 2007. Earnings from continuing operations were $0.98 per share for the second quarter compared with $0.83 per share from continuing operations in the same period of 2007--an 18-percent increase. The company also recorded income of $0.24 per share from discontinued operations in the quarter compared with a loss of $0.09 in the prior year. This was attributable primarily to a gain on sales of two idle facilities. Net income for the quarter was $23.3 million, a 62-percent increase over the $14.4 million reported in the second quarter of 2007.
Worldwide sales in the quarter increased 10 percent to $299.8 million from $271.4 million in the previous year. Foreign exchange had a favorable impact on sales of approximately $14.1 million, or 5 percentage points of growth. The additional sales growth was primarily attributable to price increases necessitated by higher raw material and energy costs and by volume increases. Operating income was $28.8 million, a 7-percent increase over the $26.9 million reported in the second quarter of 2007. Return on Capital for the second quarter was 9.2 percent on an annualized basis, excluding the gain on asset sales, compared to 6.8 percent for the second quarter of 2007.
"Our second quarter results showed an improved profitability over the same period last year despite a difficult business environment and escalating raw materials and energy costs," said Joseph C. Muscari, chairman and chief executive officer. "We continue to derive savings from both the restructuring program we announced in the third quarter of 2007 and our continuous improvement initiatives."
In the second quarter, sales in the Specialty Minerals segment, which includes the Precipitated Calcium Carbonate (PCC) and Processed Minerals product lines, increased 5 percent to $189.1 million from $180.8 million in the comparable quarter of 2007. Operating income for the second quarter of 2007 was $20.1 million, a 9-percent increase over the $18.4 million reported the previous year and was 10.6 percent of sales.
Worldwide net sales of PCC increased 6 percent in the second quarter to $158.0 million from $149.5 million in the same period in 2007. Paper PCC sales increased 6 percent in the second quarter to $142.2 million from $133.9 million in the same period last year primarily due to foreign exchange, which had a favorable impact on sales of approximately $8.1 million. Total Paper PCC volumes declined slightly due to weakness in the North American and European markets.
Sales of Processed Minerals products for the second quarter were $31.1 million, a 1-percent decline from the $31.3 million reported for the same period in 2007. Talc sales declined 2 percent to $9.5 million from $9.7 million in the prior year. Ground Calcium Carbonate (GCC) sales were flat. The Processed Minerals product line continues to be affected by weakness in the residential and commercial construction markets, as well as the automotive market. Housing starts are at their lowest levels in 17 years, and the automotive sector remains on a downward trend. As a result, volumes declined 7 percent from the same period in the prior year.
Second quarter net sales in the Refractories segment, which primarily serves the steel industry, increased 22 percent to $110.7 million from $90.6 million in the same period of 2007. This increase was attributable to increased selling prices to mitigate significant raw materials cost increases, a more favorable product mix in the Refractory product line and strong demand in the Metallurgical product line. Also, foreign exchange had a favorable impact on sales of approximately $6.0 million, or 7 percentage points of growth. Operating income for the Refractories segment in the second quarter of 2008 increased 5 percent to $8.9 million from $8.5 million in the same period last year and was 8.0 percent of sales as compared with 9.4 percent of sales in the prior year. This margin compression was the result of increased costs for magnesium oxide, the primary raw material for production of refractory materials, and for other raw materials as well as additional restructuring charges.
Sales of Refractory Products and Systems for steel and other industrial applications increased 23 percent in the second quarter to $89.8 million from $73.1 million last year. Sales of Metallurgical Products increased 19 percent in the second quarter to $20.9 million compared with $17.5 million in the same period last year, primarily due to increased volume.
First Half Results
In the first half of 2008, diluted earnings per common share was $2.12 of which $1.86 was from continuing operations, a 26-percent increase over the $1.48 recorded in the prior year. The company also reported income of $0.26 per share for discontinued operations as compared with a loss of $0.18 per share during the same period in 2007. Net income for the first half was $40.5 million, a 61-percent increase over the $25.2 million reported in the prior year.
Worldwide sales for the first six months of 2008 increased 8 percent to $577.3 million from the $536.9 million reported last year. Foreign exchange had a favorable impact on sales of approximately $26.1 million or 5 percentage points of growth; and, additional sales growth was attributable to price increases. Operating income for the first six months of 2008 was $55.9 million, a 13-percent increase over the $49.6 million reported in the first half of 2007.
"This marks our second consecutive record quarter for earnings in the company's history," said Mr. Muscari. "Our performance for the first half of 2008 is the direct result of the fundamental changes made in the company last year. We now have a stronger operating platform and are better positioned to face the challenges confronting us as we go forward. However, we expect market and economic conditions in the second half--especially escalating raw material costs--to be more difficult. Consequently, because of these factors, we don't expect our second half to be as strong as the first."
The company also declared a regular quarterly dividend of $0.05 per share on its common stock. The dividend is payable on September 17, 2008 to stockholders of record on September 1, 2008.
Minerals Technologies has scheduled an analyst conference call for Friday, July 25, 2008 at 11:00 a.m. to discuss operating results for the second quarter. The conference call will be broadcast over the company's website, www.mineralstech.com.
This press release may contain forward-looking statements, which describe or are based on current expectations; in particular, statements of anticipated changes in the business environment in which the company operates and in the company's future operating results. Actual results may differ materially from these expectations. In addition, any statements that are not historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates," and similar expressions) should also be considered to be forward-looking statements. 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 risk factors and other cautionary statements in our 2007 Annual Report on Form 10-K and in our other reports filed with the Securities and Exchange Commission.
CONSOLIDATED STATEMENTS OF INCOME
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
(in thousands, except per share data)
(unaudited)
Quarter Ended % Growth
---------------------------- ------------
March
June 29, 31, July 1, Prior Prior
2008 2008 2007 Year Qtr.
-------- -------- -------- ------------
Net sales $299,794 $277,520 $271,432 10% 8%
Cost of goods sold 237,512 216,785 211,318 12% 10%
-------- -------- -------- ------ -----
Production margin 62,282 60,735 60,114 4% 3%
Marketing and
administrative expenses 26,590 26,040 26,570 0% 2%
Research and development
expenses 6,014 6,120 6,600 (9)% (2)%
Restructuring and other *
charges 899 1,432 0 (37)%
-------- -------- -------- ------ -----
Income from
operations 28,779 27,143 26,944 7% 6%
Non-operating income
(deductions) - net (724) (1,514) (1,749) (59)% (52)%
-------- -------- -------- ------ -----
Income before provision
for taxes on income,
minority interests and
discontinued operations 28,055 25,629 25,195 11% 9%
Provision for taxes on
income 8,653 7,945 8,245 5% 9%
Minority interests 713 853 823 (13)% (16)%
-------- -------- -------- ------ -----
Income from continuing
operations 18,689 16,831 16,127 16% 11%
Income (loss) from *
discontinued operations,
net of tax 4,646 376 (1,753) (365)%
-------- -------- -------- ------ -----
Net income $ 23,335 $ 17,207 $ 14,374 62% 36%
-------- -------- -------- ------ -----
* Percentage not meaningful
Weighted average number
of common shares
outstanding:
Basic 18,937 19,076 19,202
Diluted 19,065 19,179 19,457
Earnings per share:
Basic:
Income from continuing
operations $ 0.99 $ 0.88 $ 0.84 18% 13%
Income (Loss) from * *
discontinued
operations 0.24 0.02 (0.09)
-------- -------- -------- ------ -----
Net income $ 1.23 $ 0.90 $ 0.75 64% 37%
-------- -------- -------- ------ -----
Diluted:
Income from continuing
operations $ 0.98 $ 0.88 $ 0.83 18% 11%
Income (Loss) from * *
discontinued
operations 0.24 0.02 (0.09)
-------- -------- -------- ------ -----
Net income $ 1.22 $ 0.90 $ 0.74 65% 36%
-------- -------- -------- ------ -----
Cash dividends declared
per common share $ 0.05 $ 0.05 $ 0.05
-------- -------- --------
* Percentage not meaningful
Six Months Ended % Growth
----------------------- --------
June 29, July 1, Prior
2008 2007 Year
----------- ---------- --------
Net sales $ 577,314 $ 536,915 8%
Cost of goods sold 454,297 420,281 8%
---------- ---------- --------
Production margin 123,017 116,634 5%
Marketing and administrative
expenses 52,630 53,469 (2)%
Research and development expenses 12,134 13,528 (10)%
Restructuring and other charges 2,331 0 *
---------- ---------- --------
Income from operations 55,922 49,637 13%
Non-operating income
(deductions) - net (2,238) (4,428) (49)%
---------- ----------
Income before provision for taxes
on income, minority interests and
discontinued operations 53,684 45,209 19%
Provision for taxes on income 16,598 14,808 12%
Minority interests 1,566 1,671 (6)%
---------- ---------- --------
Income from continuing operations 35,520 28,730 24%
Income (loss) from discontinued *
operations, net of tax 5,022 (3,535)
---------- ---------- --------
Net income $ 40,542 $ 25,195 61%
---------- ---------- --------
* Percentage not meaningful
Weighted average number of common
shares outstanding:
Basic 19,006 19,133
Diluted 19,114 19,358
Earnings per share:
Basic:
Income from continuing
operations $ 1.87 $ 1.50 25%
Income (Loss) from discontinued *
operations 0.26 (0.18)
---------- ---------- --------
Net income $ 2.13 $ 1.32 61%
---------- ----------
Diluted:
Income from continuing
operations $ 1.86 $ 1.48 26%
Income (Loss) from discontinued *
operations 0.26 (0.18)
---------- ---------- --------
Net income $ 2.12 $ 1.30 63%
---------- ---------- --------
Cash dividends declared per common
share $ 0.10 $ 0.10
---------- ----------
* Percentage not meaningful
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
1) For the periods ended June 29, 2008 and July 1, 2007
2) Sales increased 6% in the United States in the second quarter of
2008 as compared with second quarter 2007. International sales
increased 15% in the second quarter of 2008 as compared with
second quarter 2007. Sales increased 5% in the United States for
the first six months of 2008 as compared with the first six
months of 2007. International sales increased 11% for the first
six months of 2008 as compared with the first six months of 2007.
3) In the third quarter of 2007, the Company initiated a plan to
realign its operations as a result of an in-depth strategic
review of its operations. Additional restructuring charges
recorded in the second quarter and first half of 2008 associated
with this realignment were as follows (millions of dollars):
Second First Half
Restructuring and other costs Quarter 2008
---------- ----------
Severance and other employee
benefits $ 0.9 $ 1.8
Other exit costs 0.0 0.5
---------- ----------
$ 0.9 $ 2.3
========== ==========
4) During the fourth quarter of 2007, the Company exited its
Synsil(R) Products product line and reclassified such operations
as discontinued. In addition, the Company reclassified to
discontinued operations its two Midwest plants located in Mt.
Vernon, Indiana and Wellsville, Ohio. All assets held are
classified as held for disposal as of June 29, 2008 and December
31, 2007. During the second quarter of 2008, the Company sold two
of its idle Synsil operations in Chester, South Carolina, and
Woodville, Ohio for approximately $ 7.5 million. This resulted in
a pre-tax gain of approximately $6.5 million ($4.3 million after-
tax) that was recorded in discontinued operations.
The following table details selected financial information for the
businesses included within discontinued operations in the
Consolidated Statements of Income (millions of dollars):
Three Months Ended Six Months
Ended
------------------- ------------
June March July June July
29, 31, 1, 29, 1,
2008 2008 2007 2008 2007
----- ----- ----- ----- -----
Net sales $ 6.4 $ 6.3 $ 8.0 $12.7 $16.1
----- ----- ----- ----- -----
Production margin 0.7 0.7 (1.5) 1.5 (3.1)
Total expenses 0.2 0.2 1.2 0.5 2.4
Restructuring charges
(reversals) (0.2) (0.1) 0.0 0.3 0.0
----- ----- ----- ----- -----
Income (loss) from
operations 0.7 0.6 (2.7) 1.3 (5.5)
Provision for taxes on
income 0.3 0.2 (0.9) 0.6 (2.0)
----- ----- ----- ----- -----
Income (loss) from
operations, net of tax 0.4 0.4 (1.8) 0.7 (3.5)
Pre-tax gains on sales of
discontinued business 6.5 0.0 0.0 6.5 0.0
Provision for taxes on gains (2.2) 0.0 0.0 (2.2) 0.0
----- ----- ----- ----- -----
Income (loss) from
discontinued operations,
net of tax $ 4.7 $ 0.4 $(1.8) $ 5.0 $(3.5)
----- ----- ----- ----- -----
5) The following table reflects the components of non-operating
income and deductions (millions of dollars):
Six Months
Three Months Ended Ended
------------------- ------------
June March July June July
29, 31, 1, 29, 1,
2008 2008 2007 2008 2007
----- ----- ----- ----- -----
Interest income $ 1.0 $ 1.1 $ 0.6 $ 2.1 $ 1.1
Interest expense (1.1) (1.5) (2.6) (2.6) (5.1)
Foreign exchange gains
(losses) (0.3) (0.8) 0.2 (1.1) (0.1)
Other deductions (0.3) (0.3) 0.1 (0.6) (0.2)
----- ----- ----- ----- -----
Non-operating
deductions, net $(0.7) $(1.5) $(1.7) $(2.2) $(4.3)
----- ----- ----- ----- -----
6) The analyst conference call to discuss operating results for the
second quarter is scheduled for Friday, July 25, 2008 at 11:00
a.m. 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.
SUPPLEMENTARY DATA
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
(millions of dollars)
(unaudited)
Quarter Ended % Growth
--------------------- -----------
SALES DATA June March July
29, 31, 1, Prior Prior
2008 2008 2007 Year Qtr.
------ ------ ----- ----- -----
United States $158.3 $148.5 $148.7 6% 7%
International 141.5 129.0 122.7 15% 10%
------ ------ ----- ----- -----
Net Sales $299.8 $277.5 $271.4 10% 8%
------ ------ ----- ----- -----
Paper PCC $142.2 $137.9 $133.9 6% 3%
Specialty PCC 15.8 15.3 15.6 1% 3%
------ ------ ----- ----- -----
PCC Products $158.0 $153.2 $149.5 6% 3%
------ ------ ----- ----- -----
Talc $ 9.5 $ 9.2 $ 9.7 (2)% 3%
Ground Calcium Carbonate 21.6 18.4 21.6 0% 17%
------ ------ ----- ----- -----
Processed Minerals Products $ 31.1 $ 27.6 $ 31.3 (1)% 13%
------ ------ ----- ----- -----
Specialty Minerals Segment $189.1 $180.8 $180.8 5% 5%
------ ------ ----- ----- -----
Refractory products $ 89.8 $ 79.1 $ 73.1 23% 14%
Metallurgical Products 20.9 17.6 17.5 19% 19%
------ ------ ----- ----- -----
Refractories Segment $110.7 $ 96.7 $ 90.6 22% 14%
------ ------ ----- ----- -----
Net Sales $299.8 $277.5 $271.4 10% 8%
------ ------ ----- ----- -----
SEGMENT OPERATING INCOME DATA
Specialty Minerals Segment $ 20.1 $ 18.4 $ 18.4 9% 9%
------ ------ ----- ----- -----
Refractories Segment $ 8.9 $ 8.8 $ 8.5 5% 1%
------ ------ ----- ----- -----
Unallocated Corporate Expenses $ (0.2) $ (0.1) $ 0.0 * 100%
------ ------ ----- ----- -----
Consolidated $ 28.8 $ 27.1 $ 26.9 7% 6%
------ ------ ----- ----- -----
Six Months Ended % Growth
----------------------- ----------
SALES DATA June 29, July 1,
2008 2007 Prior Year
------------- ---------- ----------
United States $ 306.8 $ 293.5 5%
International 270.5 243.4 11%
----------- ----------
Net Sales $ 577.3 $ 536.9 8%
----------- ----------
Paper PCC $ 280.0 $ 267.6 5%
Specialty PCC 31.1 30.5 2%
----------- ----------
PCC Products $ 311.1 $ 298.1 4%
----------- ----------
Talc $ 18.7 $ 19.1 (2)%
Ground Calcium Carbonate 40.1 39.6 1%
----------- ----------
Processed Minerals Products $ 58.8 $ 58.7 0%
----------- ----------
Specialty Minerals Segment $ 369.9 $ 356.8 4%
----------- ----------
Refractory products $ 168.9 $ 144.7 17%
Metallurgical Products 38.5 35.4 9%
----------- ----------
Refractories Segment $ 207.4 $ 180.1 15%
----------- ----------
Net Sales $ 577.3 $ 536.9 8%
----------- ----------
SEGMENT OPERATING INCOME DATA
Specialty Minerals Segment $ 38.5 $ 34.4 12%
----------- ----------
Refractories Segment $ 17.8 $ 15.2 17%
----------- ----------
Unallocated Corporate Expenses $ (0.4) $ 0.0 *
----------- ---------- ----------
Consolidated $ 55.9 $ 49.6 13%
----------- ----------
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands of Dollars)
June 29, December 31,
2008* 2007**
------------ ------------
Current assets:
Cash & cash equivalents $ 138,979 $ 128,985
Short-term investments 13,210 9,697
Accounts receivable, net 211,906 180,868
Inventories 128,654 103,373
Prepaid expenses and other current
assets 27,289 22,773
Assets held for disposal 22,099 27,614
------------ ------------
Total current assets 542,137 473,310
Property, plant and equipment 1,386,821 1,351,843
Less accumulated depreciation 907,639 862,457
------------ ------------
Net property, plant & equipment 479,182 489,386
Goodwill 71,816 71,964
Prepaid pension costs 54,625 53,667
Other assets and deferred charges 35,481 40,566
------------ ------------
Total assets $ 1,183,241 $ 1,128,893
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 19,368 $ 9,518
Current maturities of long-term debt 397 7,210
Accounts payable 78,016 66,084
Restructuring liabilities 4,695 14,479
Other current liabilities 59,091 65,057
Liabilities of assets held for
disposal-current 3,312 4,801
------------ ------------
Total current liabilities 164,879 167,149
Long-term debt 101,221 111,006
Other non-current liabilities 113,872 99,565
------------ ------------
Total liabilities 379,972 377,720
Total shareholders' equity 803,269 751,173
------------ ------------
Total liabilities and
shareholders' equity $ 1,183,241 $ 1,128,893
------------ ------------
* Unaudited.
**Condensed from audited financial
statements.
CONTACT: Minerals Technologies Inc.
Rick B. Honey, 212-878-1831
SOURCE: Minerals Technologies Inc.