Minerals Technologies Reports Diluted Earnings Per Share of $1.18 for the Third Quarter
NEW YORK--(BUSINESS WIRE)--Oct. 23, 2003--Minerals Technologies Inc. (NYSE: MTX)
-- Reversal of Tax Accrual Increased Net Income $11.5 Million, or
$0.56 Per Share, for the Quarter
-- Company Signs First Contract With Major Glass Manufacturer for
Use of Synsil(R) Products
Minerals Technologies Inc. (NYSE: MTX) today reported third quarter net income of $24.3 million, a 71-percent increase over the $14.2 million reported in the third quarter of 2002. Diluted earnings per common share increased 69 percent to $1.18 from $0.70 in the same period last year.
"In the third quarter, the statute of limitations expired on tax returns for earlier years, which resulted in the company reversing certain tax accruals," said Paul R. Saueracker, chairman, president and chief executive officer. "This one-time, non-cash item reduced our 2003 tax provision and increased net income in the quarter by $11.5 million, or $0.56 per share."
Mr. Saueracker continued: "We are pleased to announce that Minerals Technologies has signed its first commercial contract with a major glass manufacturer for use of our Synsil(R) products. At the request of the glass manufacturer, we will not disclose its name. We would also like to point out that this is simply the first step forward in the commercialization of Synsil(R) products, our line of synthetic silicates, which originated in our research and development laboratories."
Worldwide sales in the quarter were up 3 percent to $198.2 million from $192.1 million in the previous year. Foreign exchange had a favorable impact on sales of approximately $6.0 million for the quarter, or approximately 3 percentage points of growth. Income from operations decreased 10 percent to $19.5 million from $21.6 million in the third quarter of 2002.
"We experienced a difficult third quarter due to poor business conditions in the paper and steel industries, our largest customer markets," said Mr. Saueracker. "Both paper and steel experienced slowdowns and production curtailments. Steel production capacity utilization in the United States was down significantly from the previous two quarters and the prior year, and there were several announced shutdowns of European steel mills. On the paper side, shipments of uncoated freesheet, our largest market segment, continued to be slow."
For the first nine months of 2003, net income increased 20 percent to $50.0 million from $41.8 million in the same period 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, which was related to retirement obligations associated with the company's satellite PCC facilities and its mining properties, was a non-cash, after-tax charge to earnings of approximately $3.4 million. Income before the cumulative effect of this accounting change for the first nine months increased 28 percent, including the reversal of the tax accruals, to $53.5 million from $41.8 million. Diluted earnings per common share increased 22 percent to $2.46 from $2.02 for the first nine months of 2003. For the nine months, diluted earnings per share before the cumulative effect of the accounting change increased 30 percent to $2.63 from $2.02.
Worldwide sales for the nine months of 2003 were $602.1 million, an 8-percent increase over the $558.0 million in the comparable period last year. Foreign exchange had a favorable impact on sales of approximately 4 percentage points of growth. Operating income for the first nine months was $63.7 million, a 1-percent decrease from the $64.0 million in the first nine months of 2002.
Worldwide sales in the Specialty Minerals segment, which includes the Precipitated Calcium Carbonate (PCC) and Processed Minerals product lines, increased 5 percent in the third quarter to $139.1 million from $132.1 million in the prior year. Income from operations in the third quarter of 2003 was $15.0 million, an 11-percent decrease from the $16.9 million in the prior year. Growth in operating income for this segment was affected by the agreement with International Paper Company and the December 2002 shutdown of a satellite PCC plant in Maine. The agreement with International Paper extended eight satellite PCC plant supply contracts and initiated joint efforts to develop new mineral-based products for papermaking applications.
For the nine months, Specialty Minerals sales were up 8 percent to $414.2 million from $384.2 million for the same period in 2002. Specialty Minerals recorded income from operations of $46.1 million, a 3-percent decrease from the $47.8 million for the first nine months of 2002.
Worldwide sales of PCC, which is used primarily in the manufacturing processes of the paper industry, were $108.5 million, a 1-percent increase over the $107.6 million reported in the third quarter of 2002. PCC sales for the nine months increased 3 percent to $324.4 million from $313.8 million during the same period in 2002.
Paper PCC volume from satellites declined 2 percent for the third quarter, primarily due to paper mill slowdowns and the temporary shutdown of the satellite PCC plant in Millinocket, Maine. In addition, the agreement the company made with International Paper Company in May of this year reduced sales by approximately two percentage points of growth.
During the quarter, the company began operation of its new satellite PCC plant in Malaysia, at a paper mill owned by Sabah Forest Industries Sdn.Bhd. The satellite PCC plant produces filler-grade PCC for the paper mill and will be equivalent to one unit. A unit represents between 25,000 and 35,000 tons of PCC produced annually. The company now has 54 satellite plants operating in 17 countries.
Specialty PCC, which is used primarily for non-paper applications, continued to be weak as a result of poor industry conditions and competition in the calcium supplement markets.
In Processed Minerals, third-quarter sales increased 25 percent to $30.6 million from $24.5 million in the same quarter of last year. The majority of that growth came from the company's September 2002 acquisition of the assets of Polar Minerals Inc. Excluding Polar Minerals, sales growth would have been 8 percent. For the nine months, Processed Minerals sales increased 28 percent to $89.9 million from $70.4 million in the same period last year. Excluding the acquisition, this growth was approximately 6 percent. Processed Minerals products, which include ground calcium carbonate, lime and talc, are used in the building materials, steel, polymers, ceramics, paints and coatings, glass and other manufacturing industries.
In the company's Refractories segment, sales for the third quarter were $59.1 million, a 1-percent decline from the $60.0 million for the third quarter of 2002. Most of the decline in sales came from poor market conditions in North America and Europe, which experienced a number of steel mill slowdowns and shutdowns. Sales for the nine months of 2003 in the Refractories segment were $187.8 million, an 8-percent increase over the $173.8 million from the previous year. Operating income for the third quarter in Refractories declined 4 percent to $4.5 million from $4.7 million in the third quarter of 2002. For the nine months, Refractories operating income was $17.5 million, an 8-percent increase over the $16.3 million reported for the nine months in 2002.
"During the quarter, we saw a significant number of steel customers reduce production capacity, especially in North America and Europe," said Mr. Saueracker. "In addition, expenses in the Refractories segment have increased as we develop an infrastructure for Asia, particularly in China, where new steel capacity is growing rapidly."
Mr. Saueracker concluded: "Numerous reports indicate the economy is improving, but as of now, we do not see any significant improvement in the industries we serve."
Minerals Technologies will sponsor a conference call tomorrow, October 24, at 11 a.m. The conference call will be broadcast live on the company web site, which can be found at www.mineralstech.com.
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 in our 2002 Form 10-K and in our other reports filed with the Securities and Exchange Commission.
CONSOLIDATED STATEMENT OF INCOME
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
(thousands of dollars, except per share data)
(unaudited)
Third Quarter %
--------------------
2003 2002 Change
---- ---- ------
Net sales $ 198,234 $ 192,134 3
Operating costs and expenses:
Cost of goods sold 150,748 145,737 3
Marketing and administrative expenses 21,854 19,464 12
Research and development expenses 6,093 5,304 15
------ ------
Income from operations 19,539 21,629 (10)
Non-operating deductions - net 1,100 1,081 2
------ ------
Income before provision for taxes
on income and minority interests 18,439 20,548 (10)
Provision for taxes on income (6,338) 5,853 *
Minority interests 526 482 9
---- ----
Income before cumulative effect of
accounting change 24,251 14,213 71
Cumulative effect of accounting change,
net of tax 0 0
-- --
Net income $ 24,251 $ 14,213 71
------- -------
Weighted average number of common
shares outstanding:
Basic 20,185 20,201
Diluted 20,489 20,366
Earnings per share:
Basic
Before cumulative effect of
accounting change $ 1.20 $ 0.70 71
Cumulative effect of accounting change 0 0
- -
Basic earnings per share $ 1.20 $ 0.70 71
---- ----
Diluted
Before cumulative effect of
accounting change $ 1.18 $ 0.70 69
Cumulative effect of
accounting change 0 0
- -
Diluted earnings per share $ 1.18 $ 0.70 69
---- ----
Cash dividends declared per common
share $ 0.025 $ 0.025
----- -----
1) For the periods ended September 28, 2003 and September 29, 2002.
2) Sales increased approximately 2% in the United States in the third
quarter and 5% for the first nine months of 2003. International
sales increased approximately 5% in the third quarter and 14% for
the first nine months of 2003.
3) As a result of the expiration during the third quarter of the
statute of limitations on the Company's U.S. tax returns for
earlier years, certain tax accruals have been reversed. This
one-time, non-cash item will result in a reduction to the tax
provision for 2003 of approximately $15 million, and a reduction
to the overall effective tax rate for 2003 from 27.9% to 8.8%. The
revision to the effective tax rate, together with the year-to-date
adjustment to the Company's tax provision resulting from this
change, had the effect of increasing net income in the third
quarter by $11.5 million or $0.56 per share.
4) 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 third quarter and $0.6 million
for the first nine months of 2003. Such charges are included in
cost of goods sold.
5) The results of operations for the interim period ended September
28, 2003 are not necessarily indicative of the results that
ultimately might be achieved for the current year.
6) The analyst conference call to discuss operating results for
the third quarter is scheduled for October 24, 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.
CONSOLIDATED STATEMENT OF INCOME
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
(thousands of dollars, except per share data)
(unaudited)
Nine months %
--------------------
2003 2002 change
---- ----
Net sales $ 602,058 $ 557,962 8
Operating costs and expenses:
Cost of goods sold 454,809 419,823 8
Marketing and administrative
expenses 64,853 57,257 13
Research and development expenses 18,713 16,833 11
------- ------
Income from operations 63,683 64,049 (1)
Non-operating deductions - net 3,568 4,040 (12)
------ -----
Income before provision for taxes
on income and minority interests 60,115 60,009 0
Provision for taxes on income 5,290 17,087 (69)
Minority interests 1,374 1,169 18
------ -----
Income before cumulative effect of
accounting change 53,451 41,753 28
Cumulative effect of accounting change, 3,433 0
net ------ -
Net income $ 50,018 $ 41,753 20
------- ------
Weighted average number of common
shares outstanding:
Basic 20,132 20,216
Diluted 20,349 20,635
Earnings per share:
Basic
Before cumulative effect of accounting
change $ 2.65 $ 2.07 28
Cumulative effect of accounting
change (0.17) 0
------ -
Basic earnings per share $ 2.48 $ 2.07 20
---- ----
Diluted
Before cumulative effect of accounting
change $ 2.63 $ 2.02 30
Cumulative effect of accounting change (0.17) 0
------ -
Diluted earnings per share $ 2.46 $ 2.02 22
---- ----
Cash dividends declared per common
share $ 0.075 $ 0.075
----- -----
1) For the periods ended September 28, 2003 and September 29, 2002.
2) Sales increased approximately 2% in the United States in the third
quarter and 5% for the first nine months of 2003. International
sales increased approximately 5% in the third quarter and 14% for
the first nine months of 2003.
3) As a result of the expiration during the third quarter of the
statute of limitations on the Company's U.S. tax returns for
earlier years, certain tax accruals have been reversed. This
one-time, non-cash item will result in a reduction to the tax
provision for 2003 of approximately $15 million, and a reduction
to the overall effective tax rate for 2003 from 27.9% to 8.8%. The
revision to the effective tax rate, together with the year-to-date
adjustment to the Company's tax provision resulting from this
change, had the effect of increasing net income in the third
quarter by $11.5 million or $0.56 per share.
4) 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 third quarter and $0.6 million
for the first nine months of 2003. Such charges are included in
cost of goods sold.
5) The results of operations for the interim period ended September
28, 2003 are not necessarily indicative of the results that
ultimately might be achieved for the current year.
6) The analyst conference call to discuss operating results for
the third quarter is scheduled for October 24, 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)
September December
28, 31,
2003* 2002**
---------- ----------
Current assets:
Cash & cash equivalents 56,799 31,762
Accounts receivable, net 151,425 129,608
Inventories 86,520 82,909
Other current assets 59,682 46,686
---------- ----------
Total current assets 354,426 290,965
Property, plant and equipment 1,193,596 1,116,004
Less accumulated depreciation 638,771 578,580
---------- ----------
Net property, plant & equipment 554,825 537,424
Goodwill 51,732 51,291
Other assets and deferred charges 35,593 20,197
---------- ----------
Total assets 996,576 899,877
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt 32,228 31,331
Accounts payable 42,416 37,435
Other current liabilities 48,508 55,171
---------- ----------
Total current liabilities 123,152 123,937
Long-term debt 99,536 89,020
Other non-current liabilities 103,494 92,763
---------- ----------
Total liabilities 326,182 305,720
Total shareholders' equity 670,394 594,157
---------- ----------
Total liabilities and shareholders'
equity 996,576 899,877
---------- ----------
* Unaudited.
**Condensed from audited financial statements.
CONTACT: Minerals Technologies Inc.
Rick Honey, 212-878-1831
SOURCE: Minerals Technologies Inc.