Minerals Technologies Reports Fourth Quarter Diluted Earnings Per Share Of $0.86
Company Records Net Loss of $3.31 per Share for Full Year 2007 Due
to the Realignment Program Initiated in the Third Quarter
Company Declares Regular Quarterly Dividend of $0.05 per Share
NEW YORK--(BUSINESS WIRE)--Jan. 31, 2008--Minerals Technologies Inc. (NYSE: MTX) today reported net income of $16.8 million, or $0.86 per share, for the fourth quarter 2007, compared with $10.5 million, or $0.55 per share in the same period of 2006.
"As part of the realignment and restructuring program initiated in the third quarter of 2007, the company recorded additional restructuring charges of $0.14 per share in the fourth quarter," said Joseph C. Muscari, chairman and chief executive officer. "However, these charges were largely offset by the initial savings generated from that program. The benefits of the restructuring will continue into 2008 with targeted annualized future savings between $15 million and $20 million."
Fourth quarter earnings included certain favorable special items. The company recognized a business interruption insurance recovery gain of approximately $0.10 per share and a similar amount for one-time compensation and employee benefit adjustments. In addition, the company realized favorable effects of an inventory revaluation in the fourth quarter due to the increasing cost of raw materials in the Refractories segment. This will result in higher cost of sales in the first quarter of 2008.
Fourth quarter results and all prior periods reflect the transfer of the Synsil(R) product line and the two plants in the Midwest that process imported ores to discontinued operations. The loss from discontinued operations was $0.03 per share in the fourth quarter of 2007 compared with a loss of $0.13 per share in 2006.
The company's worldwide sales in the fourth quarter increased 8 percent to $274.3 million compared with $254.8 million in the prior year. Foreign exchange had a favorable impact on sales of approximately 5 percentage points of growth. Operating income increased 7 percent to $24.1 million from the $22.4 million recorded in the same period in 2006.
Worldwide sales for the full year 2007 were $1.08 billion, a 5-percent increase over the $1.02 billion reported in 2006. For the year, foreign exchange had a favorable impact on sales of 3 percentage points of growth. The company recorded an operating loss for the full year 2007 of $8.5 million. Included in the loss from operations were an impairment of assets charge of $94.1 million and restructuring costs of $16.0 million.
As a result, the loss from continuing operations for 2007 was $25.7 million compared to a profit of $56.1 million in 2006. The loss from discontinued operations for the year was $37.8 million compared with a loss of $6.1 million in 2006. Included in the loss from discontinued operations was a pre-tax impairment of assets charge of $46.8 million and restructuring charges of $2.3 million. The net loss for the full year was $63.5 million compared with a profit of $50.0 million in 2006. The company's loss per share was $3.31 in 2007 compared with earnings of $2.53 per diluted share in 2006.
For the fourth quarter, worldwide sales in the company's Specialty Minerals segment, which consists of precipitated calcium carbonate (PCC) and Processed Minerals, were $180.4 million, a 9-percent increase over the $164.9 million in the same period of 2006. Foreign exchange had a favorable impact on sales for the quarter of approximately 5 percentage points of growth. For the full year 2007, Specialty Minerals sales increased 6 percent to $716.6 million compared with $675.6 million for 2006. Foreign exchange had a favorable impact on sales of approximately 3 percentage points of growth. For the fourth quarter, income from operations of $16.3 million increased 21 percent from the $13.5 million in the prior year. Included in income from operations were restructuring costs of $1.3 million in the fourth quarter of 2007. For the full year, Specialty Minerals incurred an operating loss of $20.0 million compared to a profit of $60.5 million recorded in the prior year. Included in the 2007 loss from operations were an impairment of assets charge of $79.3 million and restructuring costs of $11.3 million
Worldwide sales of PCC, which is used mainly in the manufacturing processes of the paper industry, increased 11 percent from $138.5 million in the fourth quarter of 2006 to $154.1 million in the same period of 2007. For the full year, PCC sales increased 8 percent from $557.0 million in 2006 to $602.6 million in 2007. Sales growth was attributable to increased selling prices from the pass through to customers of raw material cost increases and to foreign currency. Paper PCC sales volume decreased slightly from the prior year. Increased PCC volumes at several facilities were more than offset by paper industry consolidations, primarily in North America.
Worldwide sales of Processed Minerals products decreased slightly in the fourth quarter to $26.3 million from $26.4 million in the same period of the prior year. For the full year, Processed Minerals product sales decreased 4 percent to $114.0 million in 2007 from $118.6 million in 2006. This decrease was primarily due to weakness in the residential construction industry. Processed Minerals products, which include ground calcium carbonate and talc, are used in the building materials, polymers, ceramics, paints and coatings, glass and other manufacturing industries.
In the company's Refractories segment, sales in the fourth quarter were $93.9 million, a 4-percent increase over the $89.9 million recorded in the fourth quarter of 2006. Foreign exchange had a favorable impact on sales of $5.8 million for the fourth quarter. Sales for the full year for the Refractories segment were $361.1 million, a 4-percent increase over the $347.9 million in 2006. Foreign exchange had a favorable impact on sales of $11.9 million for the year, or 3 percentage points of sales growth. Sales from the Turkish acquisition made in late 2006 contributed an additional 4 percentage points of growth in 2007.
Operating income in the fourth quarter for the Refractories segment was $7.8 million, a 12-percent decrease from the $8.9 million recorded during the same period in 2006. Included in income from operations were restructuring costs of $2.6 million in the fourth quarter of 2007. For the full year, Refractories' operating income was $11.5 million, a 64-percent decrease from the $31.9 million recorded in the previous year. Included in income from operations were an impairment of assets charge of $14.8 million and restructuring costs of $4.7 million.
"The year 2007 was one of transition during which we took the necessary steps--by realigning and restructuring our operations--to strengthen our basic foundation," said Mr. Muscari. "We eliminated underperforming assets and will now be able to focus on our core competencies. In 2008, we expect to achieve higher returns on capital and higher rates of profitable growth. However, we are concerned about the state of the economy and the potential impact it may have on our product lines."
The company also declared a regular quarterly dividend of $0.05 per share on its common stock. The dividend is payable on March 19, 2008 to stockholders of record on February 28, 2008.
Minerals Technologies will sponsor a conference call tomorrow, February 1, at 11 a.m. The conference call will be broadcast live on the company web site: www.mineralstech.com.
This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 which describe or are based on current expectations. 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 2006 Annual Report on Form 10-K and in our other reports filed with the Securities and Exchange Commission.
For further information about Minerals Technologies Inc. look on
the internet at http://www.mineralstech.com/
CONSOLIDATED STATEMENTS OF INCOME
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
(in thousands, except per share data)
(unaudited)
% %
Fourth Quarter Growth Full Year Growth
------------------- ------ ----------------------- ------
Prior Prior
2007 2006 Year 2007 2006 Year
--------- --------- ------ ----------- ----------- ------
Net sales $274,259 $254,783 8% $1,077,721 $1,023,544 5%
Cost of
goods sold 214,649 200,392 7% 845,136 798,730 6%
-------- -------- ------ ---------- ---------- ------
Production
margin 59,610 54,391 10% 232,585 224,814 3%
Marketing
and admini-
strative
expenses 25,550 25,275 1% 104,649 104,633 0%
Research and
development
expenses 6,131 6,724 (9)% 26,348 27,753 (5)%
Impairment
Charges 0 0 * 94,070 0 *
Restruc-
turing and
other
charges 3,867 0 * 16,017 0 *
-------- -------- ------ ---------- ---------- ------
Income
(loss) from
operations 24,062 22,392 7% (8,499) 92,428 (109)%
Non-
operating
income
(deductions)
- net 2,736 (2,358) (216)% (3,000) (5,870) (49)%
-------- -------- ------ ---------- ----------
Income
(loss)
before
provision
for taxes
on income,
minority
interests
and
discontinued
operations 26,798 20,034 34% (11,499) 86,558 (113)%
Provision
for taxes
on income 8,711 6,233 40% 11,266 26,992 (58)%
Minority
interests 743 651 14% 2,904 3,441 (16)%
-------- -------- ------ ---------- ---------- ------
Income
(loss) from
continuing
operations 17,344 13,150 32% (25,669) 56,125 (146)%
Loss from
discontinued
operations,
net of tax (582) (2,646) (78)% (37,845) (6,174) *
-------- -------- ------ ---------- ---------- ------
Net income
(loss) $ 16,762 $ 10,504 60% $ (63,514) $ 49,951 (227)%
-------- -------- ------ ---------- ---------- ------
* Percentage
not
meaningful
Weighted
average
number of
common
shares
outstanding:
Basic 19,238 19,098 19,190 19,600
Diluted 19,444 19,249 19,404 19,738
Earnings
(loss) per
share:
Basic:
Income
(loss) from
continuing
operations $ 0.90 $ 0.69 30% $ (1.34) $ 2.86 (147)%
Loss from
discontinued
operations (0.03) (0.14) (79)% (1.97) (0.31) *
-------- -------- ------ ---------- ---------- ------
Net income
(loss) $ 0.87 $ 0.55 58% $ (3.31) $ 2.55 (230)%
-------- -------- ------ ---------- ----------
Diluted:
Income
(loss) from
continuing
operations $ 0.89 $ 0.68 31% $ (1.34) $ 2.84 (147)%
Loss from
discontinued
operations (0.03) (0.13) (77)% (1.97) (0.31) *
-------- -------- ------ ---------- ---------- ------
Net income
(loss) $ 0.86 $ 0.55 56% $ (3.31) $ 2.53 (231)%
-------- -------- ------ ---------- ---------- ------
Cash
dividends
declared
per common
share $ 0.05 $ 0.05 $ 0.20 $ 0.20
-------- -------- ---------- ----------
* Percentage not meaningful
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
1) Sales increased 3% in the United States in the fourth quarter of
2007 as compared with fourth quarter 2006. International sales
increased 14% in the fourth quarter of 2007 as compared with fourth
quarter 2006. Sales decreased 2% in the United States for full year
of 2007 as compared with full year of 2006. International sales
increased 15% for full year 2007 as compared with full year 2006.
2) 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. This realignment resulted in impairment of assets
charges and restructuring charges for the fourth quarter and full
year of 2007 from continuing operations as follows (millions of
dollars):
Fourth Full
Impairment of assets charges Quarter Year
------- -------
Paper PCC $ 0.0 $65.3
Specialty PCC 0.0 12.7
----- -----
Total PCC 0.0 78.0
Processed Minerals 0.0 1.3
----- -----
Specialty Minerals
Segment 0.0 79.3
Refractories Segment 0.0 14.8
----- -----
Consolidated $ 0.0 $94.1
===== =====
Restructuring and other costs
Severance and other employee
benefits $ 4.3 $13.5
Contract termination costs (0.5) 1.8
Other exit costs 0.1 0.7
----- -----
$ 3.9 $16.0
===== =====
The restructuring program will result in a reduction of
approximately 200 employees, or 7%, of the company's worldwide
workforce.
The restructuring also resulted in inventory write-downs of $0.2
million in the third quarter which were included in cost of
goods sold.
The impairment of assets charge for the full year includes a
write-down of an intangible asset of $0.5 million related to
customer relationships associated with a recent acquisition in
the Refractories segment.
3) During the fourth quarter of 2006, the Company liquidated its
wholly-owned subsidiary in Hadera, Israel and classified this
business as a discontinued operation. The Company had previously
operated a one-unit satellite PCC facility at this location.
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 are classified as
held for disposal as of December 31, 2007.
The following table details selected financial information for the
businesses included within discontinued operations in the
Consolidated Statements of Income (millions of dollars):
Fourth Quarter Full Year
--------------- --------------
2007 2006 2007 2006
------- ------ ------- ------
Net sales $ 6.4 $ 8.1 $ 30.2 $37.2
----- ----- ------ -----
Production margin 0.1 (0.7) (5.3) (3.4)
Total expenses 0.8 1.0 4.1 4.0
Impairment of assets 0.0 0.0 46.8 0.0
Restructuring charges 0.1 0.0 2.3 0.0
----- ----- ------ -----
Loss from operations (0.8) (1.7) (58.5) (7.4)
----- ----- ------ -----
Foreign currency translation
loss arising from liquidation
of investment in foreign entity 0.0 (1.6) 0.0 (1.6)
----- ----- ------ -----
Loss from discontinued
operations, net of tax $(0.6) $(2.6) $(37.8) $(6.1)
----- ----- ------ -----
The restructuring also resulted in inventory write-downs of
$1.2 million in the third quarter which were included in cost
of goods sold.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
4) To supplement the Company's consolidated financial statements
presented in accordance with GAAP, the following is a presentation of
the Company's non-GAAP income (loss), excluding special items, for
the fourth quarter and full year ended December 31, 2007 and 2006,
respectively. The Company's management believes these non-GAAP
measures provide meaningful supplemental information regarding its
performance as inclusion of such special items are not indicative of
the Company's ongoing operating results and thereby affect the
comparability of results between periods. The Company feels inclusion
of these non-GAAP measures also provides consistency in its financial
reporting and facilitates investors' understanding of historic
operating trends.
(Millions of dollars, except per
share data) Fourth Quarter Full Year
----------------- ----------------
2007 2006 2007 2006
-------- -------- -------- --------
Net Income (loss), as reported $ 16.8 $ 10.5 $ (63.5) $ 50.0
Special items:
Inventory writedowns included in
cost of goods sold 0.0 0.0 1.4 0.0
SG&A reversals related to
restructuring (1.4) 0.0 (1.4) 0.0
Impairment of long-lived assets 0.0 0.0 140.9 0.0
Restructuring and other costs 4.0 0.0 18.3 0.0
Insurance recovery gains (3.0) 0.0 (3.0) (1.8)
Related tax effects on special
items 0.1 0.0 (37.7) (0.7)
Reverse minority interest
portion of impairment charge 0.0 0.0 (0.2) 0.0
Net income, excluding special
items $ 16.3 $ 10.5 $ 54.8 $ 48.9
Basic earnings per share,
excluding special items $ 0.85 $ 0.55 $ 2.85 $ 2.49
Diluted earnings per share,
excluding special items $ 0.84 $ 0.55 $ 2.82 $ 2.48
Included in SG&A expenses in the fourth quarter were one-time
reversals of unvested long-term incentive compensation accruals of
approximately $1.4 million or $0.05 per share, after-tax, related
to the restructuring.
Earnings in the above table include the initial savings realized
from the realignment program.
5) The following table reflects the components of non-operating income
and deductions (thousands of dollars):
Fourth Quarter Full Year
----------------- ----------------
2007 2006 2007 2006
-------- -------- -------- --------
Interest income $ 1,270 $ 490 $ 3,083 $ 1,762
Interest expense (1,473) (2,670) (8,701) (8,319)
Insurance recovery gains 2,962 -- 2,962 1,822
Foreign exchange gains (losses) 598 (45) 513 (268)
Other deductions (621) (131) (857) (867)
------- ------- ------- -------
Non-operating deductions, net $ 2,736 $(2,356) $(3,000) $(5,870)
------- ------- ------- -------
During the first quarter of 2006, the Company recognized an
insurance recovery gain of approximately $1.8 million for property
damage sustained in 2004 at the Easton, Pennsylvania facility
related to a storm.
During the fourth quarter of 2007, the Company recognized a business
interruption insurance recovery gain of approximately $3.0 million
relating to the aforementioned storm.
6) The analyst conference call to discuss operating results for the
fourth quarter is scheduled for Friday, February 1, 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)
Fourth % %
Quarter Growth Full Year Growth
------------- ------------------
Prior Prior
SALES DATA 2007 2006 Year 2007 2006 Year
------ ------ ------- --------- -------- -------
United States $143.6 $139.9 3% $ 581.9 $ 592.6 (2)%
International 130.7 114.9 14% 495.8 430.9 15%
----- ----- ------- -------- ------- -------
Net Sales $274.3 $254.8 8% $1,077.7 $1,023.5 5%
----- ----- ------- -------- ------- -------
Paper PCC $139.5 $125.5 11% $ 542.0 $ 500.6 8%
Specialty PCC 14.6 13.0 12% 60.6 56.4 7%
----- ----- ------- -------- ------- -------
PCC Products $154.1 $138.5 11% $ 602.6 $ 557.0 8%
----- ----- ------- -------- ------- -------
Talc $ 9.0 $ 8.9 1% $ 37.3 $ 38.9 (4)%
Ground Calcium
Carbonate 17.3 17.5 (1)% 76.7 79.7 (4)%
----- ----- ------- -------- ------- -------
Processed
Minerals
Products $ 26.3 $ 26.4 (0)% $ 114.0 $ 118.6 (4)%
----- ----- ------- -------- ------- -------
Specialty
Minerals Segment $180.4 $164.9 9% $ 716.6 $ 675.6 6%
----- ----- ------- -------- ------- -------
Refractory products $ 76.3 $ 71.2 7% $ 290.5 $ 264.6 10%
Metallurgical
Products 17.6 18.7 (6)% 70.6 83.3 (15)%
----- ----- ------- -------- ------- -------
Refractories
Segment $ 93.9 $ 89.9 4% $ 361.1 $ 347.9 4%
----- ----- ------- -------- ------- -------
Net Sales $274.3 $254.8 8% $1,077.7 $1,023.5 5%
----- ----- ------- -------- ------- -------
SEGMENT OPERATING
INCOME (LOSS) DATA
Specialty Minerals
Segment $ 16.3 $ 13.5 21% $ (20.0) $ 60.5 (133)%
----- ----- ------- -------- ------- -------
Refractories
Segment $ 7.8 $ 8.9 (12)% $ 11.5 $ 31.9 (64)%
----- ----- ------- -------- ------- -------
Consolidated $ 24.1 $ 22.4 8% $ (8.5) $ 92.4 (109)%
----- ----- ------- -------- ------- -------
* percentage not meaningful
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands of Dollars)
December 31, December 31,
2007* 2006**
------------ ------------
Current assets:
Cash & cash equivalents $ 128,985 $ 67,929
Short-term investments 9,697 8,380
Accounts receivable, net 180,868 188,784
Inventories 103,373 129,894
Prepaid expenses and other current
assets 22,773 16,775
Assets held for disposal 27,614 0
---------- ----------
Total current assets 473,310 411,762
Property, plant and equipment 1,351,843 1,478,922
Less accumulated depreciation 862,457 826,125
---------- ----------
Net property, plant & equipment 489,386 652,797
Goodwill 71,964 68,977
Prepaid pension costs 53,667 25,717
Other assets and deferred charges 40,566 33,871
---------- ----------
Total assets $ 1,128,893 $ 1,193,124
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 9,518 $ 87,644
Current maturities of long-term debt 7,210 2,063
Accounts payable 66,084 60,963
Restructuring liabilities 14,479 0
Other current liabilities 65,306 61,393
Liabilities of assets held for disposal 4,801 0
---------- ----------
Total current liabilities 167,398 212,063
Long-term debt 111,006 113,351
Other non-current liabilities 99,565 115,153
---------- ----------
Total liabilities 377,969 440,567
Total shareholders' equity 750,924 752,557
---------- ----------
Total liabilities and shareholders'
equity $ 1,128,893 $ 1,193,124
---------- ----------
* Unaudited.
** Condensed from audited financial statements.
CONTACT: Minerals Technologies Inc.
Rick B. Honey, 212-878-1831
SOURCE: Minerals Technologies Inc.