Minerals Technologies Reports First Quarter 2020 Earnings of $1.12 Per Share, or $1.13 Per Share, Excluding Special Items
Highlights:
- First Quarter Sales of
$418 Million - Operating Margins Increased 200 Basis Points Sequentially, Excluding Special Items
- Strong Liquidity of Over
$400 Million , Including$218 Million Cash and Equivalents - COVID-19 Pandemic Impacted Sales by Approximately
$7 Million
Worldwide net sales were
“MTI’s first quarter results underscore our team’s strong execution as we navigated through weakness in some end markets as well as the outbreak of COVID-19,” said
COVID-19 Update
MTI is closely adhering to all government regulations globally as they are issued. Applicable governmental directives across
The COVID-19 pandemic affected sales by approximately
The current economic environment related to the rapidly evolving global pandemic, which is slowing business activity in several key end-markets, is expected to further impact MTI’s second quarter results.
Segment Information
Performance Materials and Specialty Minerals
Sales in the Minerals businesses, which include the Performance Materials and Specialty Minerals segments, decreased 6 percent in the first quarter to
Performance Materials segment sales decreased 7 percent to
Metalcasting sales decreased 16 percent, primarily due to weaker foundry demand in the
Operating income for the segment was
The Performance Materials segment provides a wide range of bentonite-based and synthetic materials for industrial and consumer markets and for non-residential construction, environmental remediation and infrastructure projects worldwide.
Specialty Minerals segment sales, which consist of the Precipitated Calcium Carbonate (PCC) and Processed Minerals product lines, decreased 5 percent in the first quarter to
Worldwide sales of PCC, which is used mainly in the manufacturing processes of the paper industry, decreased 6 percent to
Processed Minerals sales decreased 1 percent to
Segment operating income was
Refractories and Energy Services
Sales in the Service businesses, which include the Refractories and Energy Services segments, were relatively flat compared to the prior year at
Refractories segment sales decreased 7 percent to
Segment operating income was
Energy Services segment sales rose 24 percent to
Operating income increased 33 percent to
FORWARD-LOOKING STATEMENTS
This press release may contain "forward‐looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations and forecasts of future events such as new products, revenues and financial performance, and are not limited to describing historical or current facts. They can be identified by the use of words such as “believes,” “expects,” “plans,” “intends,” “anticipates,” and other words and phrases of similar meaning. Forward-looking statements are necessarily based on assumptions, estimates and limited information available at the time they are made. A broad variety of risks and uncertainties, both known and unknown, as well as the inaccuracy of assumptions and estimates, can affect the realization of the expectations or forecasts in these statements. Actual future results may vary materially. Significant factors that could affect the expectations and forecasts include the duration and scope of the COVID-19 pandemic, and government and other third-party responses to it; worldwide general economic, business, and industry conditions, including the effects of the COVID-19 pandemic on the global economy; the cyclicality of our customers’ businesses and their changing demands; the dependence of certain of our product lines on the commercial construction and infrastructure markets, the domestic building and construction markets, and the automotive market; our ability to effectively achieve and implement our growth initiatives; our ability to service our debt; our ability to comply with the covenants in our senior secured credit facility; our ability to renew or extend long term sales contracts for our PCC satellite operations; consolidation in customer industries, principally paper, foundry and steel; compliance with or changes to regulation in the areas of environmental, health and safety, and tax; claims for legal, environmental and tax matters or product stewardship issues; our ability to successfully develop new products; our ability to ability to defend our intellectual property; the increased risks of doing business abroad; the availability of raw materials and access to ore reserves at our mining operations; increases in costs of raw materials, energy, or shipping; our ability to compete in very competitive industries; operating risks and capacity limitations affecting our production facilities; seasonality of some of our segments; cybersecurity and other threats relating to our information technology systems; and other risk factors and cautionary statements in our 2019 Annual Report on Form 10‐K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed with the
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| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
| (in millions, except per share data) | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| Quarter Ended | % Growth | |||||||||||||||||
| 2020 | 2019 | 2019 | Prior Qtr. | Prior Year | ||||||||||||||
| Net sales | ||||||||||||||||||
| Product sales | $ | 392.3 | $ | 416.6 | $ | 417.4 | (6)% | (6)% | ||||||||||
| Service revenue | 25.2 | 23.6 | 20.3 | 7% | 24% | |||||||||||||
| Total net sales | 417.5 | 440.2 | 437.7 | (5)% | (5)% | |||||||||||||
| Cost of sales | ||||||||||||||||||
| Cost of goods sold | 294.1 | 317.3 | 314.0 | (7)% | (6)% | |||||||||||||
| Cost of service revenue | 16.6 | 15.2 | 14.0 | 9% | 19% | |||||||||||||
| Total cost of sales | 310.7 | 332.5 | 328.0 | (7)% | (5)% | |||||||||||||
| Production margin | 106.8 | 107.7 | 109.7 | (1)% | (3)% | |||||||||||||
| Marketing and administrative expenses | 43.4 | 49.3 | 42.9 | (12)% | 1% | |||||||||||||
| Research and development expenses | 5.1 | 5.4 | 4.8 | (6)% | 6% | |||||||||||||
| Litigation expenses | 0.6 | 5.3 | 0.0 | * | * | |||||||||||||
| Income from operations | 57.7 | 47.7 | 62.0 | 21% | (7)% | |||||||||||||
| Interest expense, net | (9.3) | (9.9) | (11.4) | (6)% | (18)% | |||||||||||||
| Other non-operating income (deductions), net | 0.6 | (2.8) | (1.4) | (121)% | (143)% | |||||||||||||
| Total non-operating deductions, net | (8.7) | (12.7) | (12.8) | (31)% | (32)% | |||||||||||||
| Income from operations before tax and equity in earnings | 49.0 | 35.0 | 49.2 | 40% | (0)% | |||||||||||||
| Provision for taxes on income | 9.7 | 5.8 | 9.3 | 67% | 4% | |||||||||||||
| Equity in earnings of affiliates, net of tax | 0.3 | 0.4 | 0.1 | (25)% | 200% | |||||||||||||
| Consolidated net income | 39.6 | 29.6 | 40.0 | 34% | (1)% | |||||||||||||
| Less: Net income attributable to non-controlling interests | 1.0 | 0.6 | 0.9 | 67% | 11% | |||||||||||||
| Net Income attributable to |
$ | 38.6 | $ | 29.0 | $ | 39.1 | 33% | (1)% | ||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||
| Basic | 34.4 | 34.8 | 35.2 | |||||||||||||||
| Diluted | 34.4 | 34.9 | 35.3 | |||||||||||||||
| Earnings per share attributable to MTI: | ||||||||||||||||||
| Basic | $ | 1.12 | $ | 0.83 | $ | 1.11 | 35% | 1% | ||||||||||
| Diluted | $ | 1.12 | $ | 0.83 | $ | 1.11 | 35% | 1% | ||||||||||
| Cash dividends declared per common share | $ | 0.05 | $ | 0.05 | $ | 0.05 | ||||||||||||
| * Percentage not meaningful | ||||||||||||||||||
| MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES | |||||||||||
| NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
| 1 | ) | For comparative purposes, the quarterly periods ended |
|||||||||
| 2 | ) | To supplement the Company's consolidated financial statements presented in accordance with GAAP, the following is a presentation of the Company's non-GAAP earnings per share, excluding special items, for the quarterly periods ended |
|||||||||
| (millions of dollars) | Quarter Ended | ||||||||||
| 2020 | 2019 | 2019 | |||||||||
| Net income attributable to MTI | $ | 38.6 | $ | 29.0 | $ | 39.1 | |||||
| % of sales | 9.2% | 6.6% | 8.9% | ||||||||
| Special items: | |||||||||||
| Litigation expenses | 0.6 | 5.3 | 0.0 | ||||||||
| Related tax effects on special items | (0.2) | (1.3) | 0.0 | ||||||||
| Net income attributable to MTI, excluding special items | $ | 39.0 | $ | 33.0 | $ | 39.1 | |||||
| % of sales | 9.3% | 7.5% | 8.9% | ||||||||
| Diluted earnings per share, excluding special items | $ | 1.13 | $ | 0.95 | $ | 1.11 | |||||
| 3 | ) | Free cash flow is defined as cash flow from continuing operations less capital expenditures. The following is a presentation of the Company's non-GAAP free cash flow for the quarterly periods ended |
|||||||||
| Quarter Ended | |||||||||||
| (millions of dollars) | |||||||||||
| 2020 | 2019 | 2019 | |||||||||
| Cash flow from operations | $ | 30.3 | $ | 79.8 | $ | 30.8 | |||||
| Capital expenditures | 16.6 | 13.2 | 17.6 | ||||||||
| Free cash flow | $ | 13.7 | $ | 66.6 | $ | 13.2 | |||||
| Depreciation and Amortization Expense | $ | 22.9 | $ | 24.8 | $ | 24.5 | |||||
| 4 | ) | The following table reflects the components of non-operating income and deductions: | |||||||||
| (millions of dollars) | Quarter Ended | ||||||||||
| 2020 | 2019 | 2019 | |||||||||
| Interest income | $ | 0.3 | $ | 0.6 | $ | 0.5 | |||||
| Interest expense | (9.6) | (10.5) | (11.9) | ||||||||
| Foreign exchange gains (losses) | 2.3 | (1.3) | 0.9 | ||||||||
| Other deductions | (1.7) | (1.5) | (2.3) | ||||||||
| Non-operating deductions, net | $ | (8.7) | $ | (12.7) | $ | (12.8) | |||||
| 5 | ) | The analyst conference call to discuss operating results for the first quarter is scheduled for |
|||||||||
| SUPPLEMENTARY DATA | |||||||||||||||||||||
| (millions of dollars) | |||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||
| Quarter Ended | % Growth | ||||||||||||||||||||
| SALES DATA | % of | % of | % of | ||||||||||||||||||
| 2020 | Total Sales | 2019 | Total Sales | 2019 | Total Sales | Prior Qtr. | Prior Year | ||||||||||||||
| $ | 226.9 | 54 | % | $ | 233.8 | 53 | % | $ | 231.7 | 53 | % | (3 | )% | (2 | )% | ||||||
| International | 190.6 | 46 | % | 206.4 | 47 | % | 206.0 | 47 | % | (8 | )% | (7 | )% | ||||||||
| $ | 417.5 | 100 | % | $ | 440.2 | 100 | % | $ | 437.7 | 100 | % | (5 | )% | (5 | )% | ||||||
| Metalcasting | $ | 61.7 | 15 | % | $ | 73.2 | 17 | % | $ | 73.2 | 17 | % | (16 | )% | (16 | )% | |||||
| Household, Personal Care & Specialty Products | 96.2 | 23 | % | 96.2 | 22 | % | 94.8 | 22 | % | 0 | % | 1 | % | ||||||||
| Environmental Products | 11.5 | 3 | % | 14.6 | 3 | % | 15.9 | 4 | % | (21 | )% | (28 | )% | ||||||||
| Building Materials | 16.8 | 4 | % | 17.4 | 4 | % | 15.3 | 3 | % | (3 | )% | 10 | % | ||||||||
| Performance Materials Segment | $ | 186.2 | 45 | % | $ | 201.4 | 46 | % | $ | 199.2 | 46 | % | (8 | )% | (7 | )% | |||||
| Paper PCC | $ | 85.1 | 20 | % | $ | 93.0 | 21 | % | $ | 91.5 | 21 | % | (8 | )% | (7 | )% | |||||
| Specialty PCC | 17.5 | 4 | % | 16.0 | 4 | % | 18.1 | 4 | % | 9 | % | (3 | )% | ||||||||
| PCC Products | $ | 102.6 | 25 | % | $ | 109.0 | 25 | % | $ | 109.6 | 25 | % | (6 | )% | (6 | )% | |||||
| Ground Calcium Carbonate | $ | 22.6 | 5 | % | $ | 21.2 | 5 | % | $ | 22.3 | 5 | % | 7 | % | 1 | % | |||||
| Talc | 11.9 | 3 | % | 11.6 | 3 | % | 12.5 | 3 | % | 3 | % | (5 | )% | ||||||||
| Processed Minerals Products | $ | 34.5 | 8 | % | $ | 32.8 | 7 | % | $ | 34.8 | 8 | % | 5 | % | (1 | )% | |||||
| Specialty Minerals Segment | $ | 137.1 | 33 | % | $ | 141.8 | 32 | % | $ | 144.4 | 33 | % | (3 | )% | (5 | )% | |||||
| Total Minerals Businesses | $ | 323.3 | 77 | % | $ | 343.2 | 78 | % | $ | 343.6 | 79 | % | (6 | )% | (6 | )% | |||||
| Refractory Products | $ | 55.8 | 13 | % | $ | 60.5 | 14 | % | $ | 62.0 | 14 | % | (8 | )% | (10 | )% | |||||
| Metallurgical Products | 13.2 | 3 | % | 12.9 | 3 | % | 11.8 | 3 | % | 2 | % | 12 | % | ||||||||
| Refractories Segment | $ | 69.0 | 17 | % | $ | 73.4 | 17 | % | $ | 73.8 | 17 | % | (6 | )% | (7 | )% | |||||
| Energy Services Segment | $ | 25.2 | 5 | % | $ | 23.6 | 5 | % | $ | 20.3 | 5 | % | 7 | % | 24 | % | |||||
| Total Service Businesses | $ | 94.2 | 23 | % | $ | 97.0 | 22 | % | $ | 94.1 | 21 | % | (3 | )% | 0 | % | |||||
| $ | 417.5 | 100 | % | $ | 440.2 | 100 | % | $ | 437.7 | 100 | % | (5 | )% | (5 | )% | ||||||
| SUPPLEMENTARY DATA | |||||||||||||
| (millions of dollars) | |||||||||||||
| (unaudited) | |||||||||||||
| Quarter Ended | % Growth | ||||||||||||
| Prior | Prior | ||||||||||||
| SEGMENT OPERATING INCOME DATA | 2020 | 2019 | 2019 | Qtr. | Year | ||||||||
| Performance Materials Segment | $ | 24.1 | $ | 23.2 | $ | 26.3 | 4% | (8)% | |||||
| % of Sales | 12.9% | 11.5% | 13.2% | ||||||||||
| Specialty Minerals Segment | $ | 20.3 | $ | 19.4 | $ | 22.0 | 5% | (8)% | |||||
| % of Sales | 14.8% | 13.7% | 15.2% | ||||||||||
| Total Minerals Businesses | $ | 44.4 | $ | 42.6 | $ | 48.3 | 4% | (8)% | |||||
| % of Sales | 13.7% | 12.4% | 14.1% | ||||||||||
| Refractories Segment | $ | 11.2 | $ | 10.4 | $ | 12.1 | 8% | (7)% | |||||
| % of Sales | 16.2% | 14.2% | 16.4% | ||||||||||
| Energy Services Segment | $ | 3.2 | $ | 2.5 | $ | 2.4 | 28% | 33% | |||||
| % of Sales | 12.7% | 10.6% | 11.8% | ||||||||||
| Total Service Businesses | $ | 14.4 | $ | 12.9 | $ | 14.5 | 12% | (1)% | |||||
| % of Sales | 15.3% | 13.3% | 15.4% | ||||||||||
| Unallocated and Other Corporate Expenses | $ | (1.1) | $ | (7.8) | $ | (0.8) | * | 38% | |||||
| Consolidated | $ | 57.7 | $ | 47.7 | $ | 62.0 | 21% | (7)% | |||||
| % of Sales | 13.8% | 10.8% | 14.2% | ||||||||||
| SPECIAL ITEMS | |||||||||||||
| Performance Materials Segment | $ | 0.0 | $ | 0.0 | $ | 0.0 | * | * | |||||
| Specialty Minerals Segment | $ | 0.0 | $ | 0.0 | $ | 0.0 | * | * | |||||
| Total Minerals Businesses | $ | 0.0 | $ | 0.0 | $ | 0.0 | * | * | |||||
| Refractories Segment | $ | 0.0 | $ | 0.0 | $ | 0.0 | * | * | |||||
| Energy Services Segment | $ | 0.0 | $ | 0.0 | $ | 0.0 | * | * | |||||
| Total Service Businesses | $ | 0.0 | $ | 0.0 | $ | 0.0 | * | * | |||||
| Unallocated and Other Corporate Expenses | $ | 0.6 | $ | 5.3 | $ | 0.0 | * | * | |||||
| Consolidated | $ | 0.6 | $ | 5.3 | $ | 0.0 | * | * | |||||
| To supplement the Company's consolidated financial statements presented in accordance with GAAP, the following is a presentation of the Company's non-GAAP operating income, excluding special items (set forth in the above table), for the quarterly periods ended |
|||||||||||||
| Quarter Ended | % Growth | ||||||||||||
| SEGMENT OPERATING INCOME, | |||||||||||||
| EXCLUDING SPECIAL ITEMS | 2020 | 2019 | 2019 | Prior Qtr. | Prior Year | ||||||||
| Performance Materials Segment | $ | 24.1 | $ | 23.2 | $ | 26.3 | 4% | (8)% | |||||
| % of Sales | 12.9% | 11.5% | 13.2% | ||||||||||
| Specialty Minerals Segment | $ | 20.3 | $ | 19.4 | $ | 22.0 | 5% | (8)% | |||||
| % of Sales | 14.8% | 13.7% | 15.2% | ||||||||||
| Total Minerals Businesses | $ | 44.4 | $ | 42.6 | $ | 48.3 | 4% | (8)% | |||||
| % of Sales | 13.7% | 12.4% | 14.1% | ||||||||||
| Refractories Segment | $ | 11.2 | $ | 10.4 | $ | 12.1 | 8% | (7)% | |||||
| % of Sales | 16.2% | 14.2% | 16.4% | ||||||||||
| Energy Services Segment | $ | 3.2 | $ | 2.5 | $ | 2.4 | 28% | 33% | |||||
| % of Sales | 12.7% | 10.6% | 11.8% | ||||||||||
| Total Service Businesses | $ | 14.4 | $ | 12.9 | $ | 14.5 | 12% | (1)% | |||||
| % of Sales | 15.3% | 13.3% | 15.4% | ||||||||||
| Unallocated Corporate Expenses | $ | (0.5) | $ | (2.5) | $ | (0.8) | * | (38)% | |||||
| Consolidated | $ | 58.3 | $ | 53.0 | $ | 62.0 | 10% | (6)% | |||||
| % of Sales | 14.0% | 12.0% | 14.2% | ||||||||||
| * Percentage not meaningful | |||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| ASSETS | |||||||
| (In Millions of Dollars) | |||||||
| 2020* | 2019** | ||||||
| Current assets: | |||||||
| Cash & cash equivalents | $ | 214.3 | $ | 241.6 | |||
| Short-term investments | 3.8 | 1.6 | |||||
| Accounts receivable, net | 382.7 | 376.2 | |||||
| Inventories | 252.0 | 253.3 | |||||
| Prepaid expenses and other current assets | 44.8 | 46.5 | |||||
| Total current assets | 897.6 | 919.2 | |||||
| Property, plant and equipment | 2,234.5 | 2,257.0 | |||||
| Less accumulated depreciation | 1,199.9 | 1,204.2 | |||||
| Net property, plant & equipment | 1,034.6 | 1,052.8 | |||||
| 805.6 | 807.4 | ||||||
| Intangible assets | 200.3 | 203.0 | |||||
| Other assets and deferred charges | 131.0 | 130.2 | |||||
| Total assets | $ | 3,069.1 | $ | 3,112.6 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Short-term debt | $ | 100.9 | $ | 101.2 | |||
| Current maturities of long-term debt | 1.8 | 2.1 | |||||
| Accounts payable | 158.0 | 163.4 | |||||
| Other current liabilities | 120.8 | 131.8 | |||||
| Total current liabilities | 381.5 | 398.5 | |||||
| Long-term debt | 824.9 | 824.3 | |||||
| Deferred income taxes | 181.7 | 180.6 | |||||
| Other non-current liabilities | 269.0 | 274.6 | |||||
| Total liabilities | 1,657.1 | 1,678.0 | |||||
| Total MTI shareholders' equity | 1,379.8 | 1,402.7 | |||||
| Non-controlling Interests | 32.2 | 31.9 | |||||
| Total shareholders' equity | 1,412.0 | 1,434.6 | |||||
| Total liabilities and shareholders' equity | $ | 3,069.1 | $ | 3,112.6 | |||
| * | Unaudited | ||||||
| ** | Condensed from audited financial statements. | ||||||
Source: Minerals Technologies Inc.