Release Details

 

·	Acquisition Highly Accretive to Earnings

·	Synergies Continue to Track Ahead of Target

·	Operating Income, Excluding Special Items, increased 139% for the Fourth Quarter and 89% for the Full Year

·	Strong Cash Flows of $120 Million in Fourth Quarter; Debt Repayment of $100 Million in Second Half of 2014

·	Company Restructures Operations to Improve Performance

 

 

New York, January 29-Minerals Technologies (NYSE: MTX) today reported record earnings per diluted share from continuing operations of $1.22, excluding special items, for the fourth quarter of 2014, a 100-percent increase over the $0.61 per diluted share recorded in the fourth quarter of 2013. Reported earnings per diluted share for the quarter were $0.61.

 

For the full year 2014, the company reported record earnings per diluted share from continuing operations of $4.00, excluding special items, compared with earnings of $2.42 per diluted share in the prior year, an increase of 65 percent. Reported earnings per diluted share from continuing operations were $2.59 for the full year.

 

"Minerals Technologies achieved its fifth consecutive year of record financial results with all five business segments contributing double digit operating income margins," said Joseph C. Muscari, chairman and chief executive offer. "For the fourth quarter, the company recorded a 100-percent increase in earnings per share, which illustrates the high level of accretion generated from the May 2014 acquisition of AMCOL International. We continue to integrate the three new business segments smoothly and are approximately 15 months ahead of our target to achieve $50 million in synergies in the first two years."

 

 

Minerals Technologies' fourth quarter worldwide sales increased 101 percent to $516.0 million from $256.6 million in the same period in 2013.

 

The company's operating income for the fourth quarter was $74.1 million, excluding special items, compared with the $31.0 million recorded in the same period in 2013, a 139-percent increase. Reported operating income for the fourth quarter was $42.6 million.

 

Cash flow from operations for the quarter was $119.8 million compared with $44.2 million in 2013.

 

Fourth quarter worldwide sales for the Specialty Minerals segment, which includes the precipitated calcium carbonate (PCC) and Processed Minerals product lines, decreased 4 percent to $159.6 million.

 

Income from operations for the Specialty Minerals segment in the quarter increased 3 percent to $24.7 million, excluding special items. Income from operations as a percentage of sales expanded to 15.5 percent compared with 14.4 percent of sales in the fourth quarter of 2013. This increase was attributable to cost and expense control, productivity improvements and improved profitability in the Processed Minerals product line. Operating income, as reported, was $24.4 million.

 

Worldwide sales of PCC decreased 7 percent to $128.6 million, primarily as a result of decreased volumes from the closing of two paper mills in Alabama and France in the first quarter of 2014.  Foreign exchange had an unfavorable impact of 3 percentage points on PCC sales. Processed Minerals products fourth quarter sales increased 8 percent to $31.0 million. Talc sales increased 9 percent and ground calcium carbonate (GCC) sales increased 7 percent.

 

Fourth quarter sales in the Refractories segment, which primarily serves the steel industry, increased 4 percent to $92.9 million. Foreign exchange had an unfavorable effect on sales of 4 percentage points. Operating income, excluding special items, in the fourth quarter of 2014 was $12.1 million, a 26-percent increase over the $9.6 million recorded in the prior year. This was primarily attributable to increased sales and profits in Europe and the Americas, higher equipment income, productivity improvements and expense control in the quarter. Operating income, as reported, was $14.2 million.

 

Refractory products sales increased 6 percent to $72.5 million. Metallurgical products sales decreased 4 percent for the quarter to $20.4 million.

 

The newly acquired business segments-Performance Materials, Construction Technologies and Energy Services-contributed to the strong financial performance. The fourth quarter was the second full quarter of contribution from the former AMCOL International businesses.

 

Sales in the Performance Materials segment were $141.4 million, with operating income of $21.5 million, representing 15.2 percent of sales, excluding special items. Sales in the Construction Technologies segment were $46.0 million for the quarter with an operating income of $4.6 million, excluding special items, which represents operating income margin of 10.0 percent and a continuation of its improved performance. The Energy Services segment generated sales of $76.1 million for the fourth quarter, with operating income of $13.2 million and a 17.3 percent operating income margin, excluding special items.

 

The double digit margins achieved by all three of these business segments were a result of good cost and expense control and the realization of synergies.

 

 

Worldwide sales for the full year grew 69 percent to $1.725 billion. Operating income for the full year, excluding special items, increased 89 percent to $234.5 million from $124.4 million in 2013. Reported operating income for the full year was $168.8 million. Cash flow from operations for the year was $314.1 million; and the company paid down $100 million of acquisition-related debt in the second half of 2014.

 

Full-year worldwide sales for the Specialty Minerals segment decreased 3 percent to $650.1 million. Income from operations, excluding special items, for Specialty Minerals increased slightly to $98.8 million in 2014, and represents 15.2 percent of sales.

 

"Our Paper PCC business unit continues to make progress expanding geographically, especially in China, where a new satellite plant went into operation mid-year and four other satellite plants are under construction," said Mr. Muscari. "Two major developments in China during 2014 were the signing of contracts for PCC use in packaging, and for the deployment of our NewYield(TM) integrated process technology. The company also signed four agreements for its FulFill® E-325 high filler technology."

 

In June, Minerals Technologies signed an agreement with Zhejiang Zhengda Paper Group Co. Ltd. for a 50,000 metric ton per year satellite PCC plant that will produce coating-grade PCC for packaging at a paper mill in Zhejiang Province, China. And, in August, the company signed an agreement with Sun Paper Group to deploy the newly introduced NewYield(TM) Integrated Process Technology at Sun's pulp and paper operations in Shandong Province, China. NewYield(TM) is a breakthrough technology that converts a paper and pulp mill waste stream into a functional pigment for filling paper. This technology eliminates the cost of environmental disposal and remediation of certain waste streams to papermakers.

 

Sales in the Refractories segment increased 3 percent to $359.7 million from $348.4 million in 2014. Operating income, excluding special items, increased 25 percent to $41.7 million, and represents 11.6 percent of sales. This improvement is a result of strong profitability in Europe and the Middle East, higher equipment profits and productivity improvements.

 

During 2014, the Refractories segment, entered into two new multi-year refractory maintenance agreements with steel makers based on the cost per ton of steel produced. The company initiated a three-year agreement with Bhushan Steel Ltd. in India, and a two-year arrangement with Tata Steel Europe in the United Kingdom. Cost-per-ton contracts provide longer-term stability and a closer working relationship with the customer.

 

The revenue contribution from Performance Materials, Construction Technologies and Energy Services since the May 9, 2014 acquisition was $715.2 million. Performance Materials sales for the eight months were $352.8 million with operating income of $51.3 million, excluding special items, representing 14.5 percent of sales. Construction Technologies continued its strong turnaround performance reporting revenues for the eight months of $152.3 million with operating income of $18.7 million and an operating margin of 12.3 percent, excluding special items; and, Energy Services contributed sales of $210.1 million with operating income of $31.6 million and a 15 percent operating income margin, excluding special items. The contribution from all three business segments was the result of stable market conditions, good cost and expense control and realization of synergies.

 

"The acquisition of AMCOL International has transformed Minerals Technologies-doubling our size to a $2 billion company and broadening our platform for growth," said Mr. Muscari. "We are the world leader in both precipitated calcium carbonate and bentonite with demonstrated expertise in fine particle technology. As a high performance global operating company, we will continue to pursue our strategies of geographic expansion and new product innovation from our broadened base."

----------

 

As a result of the strategic business review to improve business performance, the company continued the restructuring program initiated in the second quarter of 2014. There were $31.4 million in special items incurred in the fourth quarter related to the continuation of that restructuring program and to the realignment of the company's business operations. Minerals Technologies announced an additional 2 percent reduction of its workforce over the previously announced 8 percent reduction for a total permanent reduction of approximately 10 percent of its workforce. The company has also realigned its business operations to improve efficiencies and profitability through consolidation of certain manufacturing operations. Minerals Technologies will close three Construction Technologies' operations-two in Europe and one in Asia-and consolidate these operations into others in these regions.  The company will also close and consolidate the operations of one of the Performance Materials blending facilities in the U.S.  In addition, we are combining several of the acquired and legacy MTI administrative offices, specifically in Mumbai, Istanbul, and Shanghai and closing our office in Belgium.

 

----------

----------

 

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 2013 Annual Report on Form 10-K and in our other reports filed with the Securities and Exchange Commission.

####

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
(in millions, except per share data)
(unaudited)
		Quarter Ended												% Growth								Year Ended								% Growth
		Dec. 31,				Sep. 28,				Dec. 31,				Prior				Prior				Dec. 31,				Dec. 31,				Prior
		2014				2014				2013				Qtr.				Year				2014				2013				Year
Net sales
Product sales		$	439.9			$	458.1			$	256.6				(4	)%			71	%		$	1,514.9			$	1,018.2				49	%
Service revenue			76.1				85.4				0.0				(11	)%			*				210.1				0.0				*
Total net sales			516.0				543.5				256.6				(5	)%			101	%			1,725.0				1,018.2				69	%
Cost of sales
Cost of goods sold			329.5				337.8				197.6				(2	)%			67	%			1,141.5				784.5				46	%
Cost of service revenue			54.1				60.7				0.0				(11	)%			*				148.1				0.0				*
Total cost of sales			383.6				398.5				197.6				(4	)%			94	%			1,289.6				784.5				64	%
Production margin			132.4				145.0				59.0				(9	)%			124	%			435.4				233.7				86	%
Marketing and administrative expenses			50.0				59.7				22.9				(16	)%			118	%			177.4				89.2				99	%
Research and development expenses			6.4				6.6				5.1				(3	)%			25	%			24.4				20.1				21	%
Amortization expense of intangible assets acquired			1.9				1.9				0.0				*				*				4.8				0.0				*
Acquisition related transaction and integration costs			2.4				4.2				0.0				(43	)%			*				19.1				0.0				*
Restructuring and other charges			31.4				5.8				0.0				*				*				43.2				0.0				*
Insurance / litigation settlement (gain)			(2.3	)			0.0				(2.5	)			*				*				(2.3	)			(2.5	)			*
Income from operations			42.6				66.8				33.5				(36	)%			27	%			168.8				126.9				33	%
Interest expense, net			(16.6	)			(16.0	)			0.1				*				*				(41.8	)			(0.3	)			*
Premium on early extinguishment of debt			0.0				0.0				0.0				*				*				(5.8	)			0.0				*
Other non-operating income (deductions), net			1.3				0.9				(0.7	)			*				*				1.8				(2.9	)			*
Total non-operating deductions, net			(15.3	)			(15.1	)			(0.6	)			*				*				(45.8	)			(3.2	)			*
Income from continuing operations before tax and equity in earnings			27.3				51.7				32.9				(47	)%			(17	)%			123.0				123.7				(1	)%
Provision for taxes on income			6.0				14.4				9.3				(58	)%			(35	)%			30.8				34.5				(11	)%
Equity in earnings of affiliates, net of tax			0.6				0.3				0.0				*				*				1.2				0.0				*
Income from continuing operations, net of tax			21.9				37.6				23.6				(42	)%			(7	)%			93.4				89.2				5	%
Income (loss) from discontinued operations, net of tax			0.1				0.2				0.0				*				*				2.1				(5.7	)			*
Consolidated net income			22.0				37.8				23.6				(42	)%			(7	)%			95.5				83.5				14	%
Less: Net income attributable to non-controlling interests			0.7				0.8				1.0				(13	)%			(30	)%			3.1				3.2				(3	)%
Net Income attributable to Minerals Technologies Inc. (MTI)		$	21.3			$	37.0			$	22.6				(42	)%			(6	)%		$	92.4			$	80.3				15	%
Weighted average number of common shares outstanding:
Basic			34.6				34.5				34.4												34.5				34.7
Diluted			34.9				34.8				34.8												34.8				35.0
Earnings per share attributable to MTI:
Basic:
Income from continuing operations attributable to MTI		$	0.61			$	1.07			$	0.66				(43	)%			(8	)%		$	2.62			$	2.48				5	%
Income (loss) from discontinued operations attributable to MTI			0.01				0.00				0.00				*				*				0.06				(0.16	)			*
Net Income attributable to MTI common shareholders		$	0.62			$	1.07			$	0.66				(42	)%			(6	)%		$	2.68			$	2.32				15	%
Diluted:
Income from continuing operations attributable to MTI		$	0.61			$	1.06			$	0.65				(42	)%			(6	)%		$	2.59			$	2.46				5	%
Income (loss) from discontinued operations attributable to MTI			0.00				0.00				0.00				*				*				0.06				(0.16	)			*
Net Income attributable to MTI common shareholders		$	0.61			$	1.06			$	0.65				(42	)%			(6	)%		$	2.65			$	2.30				15	%
Cash dividends declared per common share		$	0.05			$	0.05			$	0.05											$	0.20			$	0.20
* Percentage not meaningful