Minerals Technologies Reports Fourth Quarter Diluted Earnings Per Share of $0.63; Full Year 2005 Diluted Earnings Per Share Were $2.59 on Sales of $995.8 Million
NEW YORK--(BUSINESS WIRE)--Jan. 26, 2006--Minerals Technologies Inc. (NYSE: MTX) today reported net income of $12.6 million, a 14-percent decrease from the $14.6 million recorded in the fourth quarter of 2004. Diluted earnings per common share decreased 10 percent to $0.63 compared with $0.70 in the prior year.
"Minerals Technologies had a difficult fourth quarter," said Paul R. Saueracker, chairman, president and chief executive officer. "We experienced higher raw material and energy costs; reduced margins as a result of paper mill and paper machine shutdowns, primarily due to continuing capacity rationalization in the paper industry; and weakness in the steel industry, particularly in Europe."
Worldwide sales in the fourth quarter increased 2 percent to $253.5 million from $248.5 million in the prior year. Foreign exchange had an unfavorable impact on sales of approximately $2.2 million or about 1 percentage point of growth. Operating income decreased 18 percent to $17.8 million from $21.7 million in the fourth quarter of 2004. Sales and operating income were affected negatively by six fewer business days in the fourth quarter of 2005 as compared with 2004.
Worldwide sales for the full year 2005 were $995.8 million, an 8-percent increase over $923.7 million reported in 2004. Foreign exchange had a favorable impact on sales of approximately $10.3 million, or 1 percentage point of growth. The company's operating income for the full year 2005 was $81.8 million compared with $89.1 million, an 8-percent decline from 2004.
Net income for the full year decreased 9 percent to $53.3 million from $58.6 million in 2004. Diluted earnings per share were $2.59, an 8-percent decrease from $2.82 in the previous year.
For the fourth quarter, worldwide sales in the company's Specialty Minerals segment, which consists of precipitated calcium carbonate (PCC) and Processed Minerals, were $170.3 million, a 4-percent increase over the $164.5 million in the same period in 2004. For the full year, Specialty Minerals sales increased 7 percent to $668.0 million compared with $623.4 million for 2004. For the fourth quarter, income from operations of $10.1 million decreased 20 percent from the $12.7 million in the prior year. Specialty Minerals' operating income for the full year was $53.5 million, a 10-percent decrease from $59.7 million in 2004.
Worldwide sales of PCC, which is used mainly in the manufacturing processes of the paper industry, increased 3 percent from $130.1 million in the fourth quarter of 2004 to $133.8 million in the same period in 2005. For the full year, PCC sales increased 8 percent from $484.7 million in 2004 to $521.3 million. Paper PCC sales volume from satellite plants increased 2 percent for the fourth quarter and 4 percent for the full year.
In 2005, worldwide printing and writing paper production totaled an estimated 112.1 million metric tons, a 1.1-percent increase over 2004, according to Resource Information Systems Inc. (RISI). Demand for uncoated freesheet, which is the company's largest market for PCC, increased slightly in 2005 versus 2004 and RISI forecasts no growth for 2006.
"Even with this sluggish production, coupled with paper mill and paper machine shutdowns, we were still able to increase our paper PCC volumes for the full year to more than 3.8 million tons from about 3.7 million tons produced in 2004 due primarily to the ramp up of the two new satellite PCC plants in China and the new merchant facility in Germany," said Mr. Saueracker. "Despite the start-up issues in China and Germany, we are seeing continuous improvement in the operation of the plants in China and we are experiencing increasing demand for our unique coating products produced at our plant in Germany."
The Specialty PCC product line, which is used in non-paper applications, increased 5 percent in the fourth quarter to $13.4 million from $12.8 million in the same period last year. For the full year, Specialty PCC sales increased 10 percent, from $50.7 million to $55.6 million in 2005.
Worldwide sales of Processed Minerals products increased 6 percent in the fourth quarter to $36.5 million from $34.4 million in the same period of the prior year. For the full year, Processed Minerals product sales increased 6 percent to $146.7 million from $138.7 million in 2004. 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 for the fourth quarter were $83.2 million, a decrease of 1 percent from $84.0 million in the fourth quarter of 2004. Sales for the full year for the Refractories segment were $327.8 million, a 9-percent increase over $300.3 million in 2004.
Sales of refractory products and systems to steel and other industrial applications decreased 15 percent in the fourth quarter to $58.3 million from $68.3 million in the prior year. The weakness in the steel industry, particularly in Europe, had an adverse effect on this product line. Sales of metallurgical products grew 59 percent in the fourth quarter to $24.9 million from $15.7 million in the same period in the prior year. This increase was primarily attributable to a combination of strong volume growth at both of the company's manufacturing facilities and to price increases due to the substantial escalation of raw material costs for this product line.
Operating income for the fourth quarter for the Refractories segment was $7.7 million compared with $10.0 million during the same period in 2004. It should be noted that in the fourth quarter of 2004, the Refractories segment recorded approximately $2.3 million in recoveries of previously written-off bad debt relating to steel company bankruptcies. For the full year, Refractories' operating income was $28.3 million, down 7 percent from $30.4 million in the previous year.
"In 2005, the Refractories segment experienced a downturn in steel production in its two major markets--North America and Europe," said Mr. Saueracker.
During the fourth quarter, the company announced that it had reached a settlement with Omya AG of pending commercial and patent litigation. As part of the settlement, Omya AG was also granted a non-exclusive license for the term of the patents in exchange for royalty payments.
"Minerals Technologies also announced in the fourth quarter that it would construct its second 200,000-ton per year capacity merchant manufacturing facility in Cleburne, Texas, to produce SYNSIL(R) Products, our innovative new raw material for the glass industry that we believe provides a value-added alternative to the conventional glass manufacturing process," said Mr. Saueracker. "This plant will initially supply the material to a glass manufacturer that has signed a multi-year contract to purchase SYNSIL(R) Products."
In conclusion, Mr. Saueracker said: "Our financial performance for 2005 was disappointing. During the coming year, Minerals Technologies faces a number of challenges, including many posed by the worldwide economy. I believe, however, that we have the correct strategies in place and the new technologies that will allow us to leverage sales growth into improved profitability."
Minerals Technologies will sponsor a conference call tomorrow, January 27, at 11 a.m. The conference call will be broadcast live on the company web site: www.mineralstech.com.
This press release contains some forward-looking statements, which describe or are based on the company's current expectations. 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 of our 2004 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)
Fourth Quarter
--------------------- %
2005 2004 Change
---------- ---------- --------
Net sales $ 253,458 $ 248,478 2
Operating costs and expenses:
Cost of goods sold 202,716 192,932 5
Marketing and administrative expenses 25,395 26,164 (3)
Research and development expenses 7,206 7,810 (8)
Bad debt expenses (recoveries) 54 (1,204) *
Acquisition termination costs 0 997 *
Restructuring charges 0 119 *
Write-down of impaired assets 265 0 *
---------- ----------
Income from operations 17,822 21,660 (18)
Non-operating deductions - net (161) 1,412 (111)
---------- ----------
Income before provision for taxes on
income and minority interests 17,983 20,248 (11)
Provision for taxes on income 4,897 5,182 (5)
Minority interests 438 424 3
---------- ----------
Net income $ 12,648 $ 14,642 (14)
---------- ----------
Weighted average number of common
shares outstanding:
Basic 20,056 20,522
Diluted 20,212 20,785
Earnings per share:
Basic earnings per share $ 0.63 $ 0.71 (11)
---------- ----------
Diluted earnings per share $ 0.63 $ 0.70 (10)
---------- ----------
Cash dividends declared per common
share $ 0.05 $ 0.05
---------- ----------
* Percentage not meaningful
Full Year
--------------------- %
2005 2004 Change
---------- ---------- --------
Net sales $ 995,838 $ 923,667 8
Operating costs and expenses:
Cost of goods sold 784,807 709,032 11
Marketing and administrative expenses 100,392 92,844 8
Research and development expenses 29,062 28,996 0
Bad debt expenses (recoveries) (518) 1,576 *
Acquisition termination costs 0 997 *
Restructuring charges 0 1,145 *
Write-down of impaired assets 265 0 *
---------- ----------
Income from operations 81,830 89,077 (8)
Non-operating deductions - net 3,545 4,505 (21)
---------- ----------
Income before provision for taxes on
income and minority interests 78,285 84,572 (7)
Provision for taxes on income 23,289 24,299 (4)
Minority interests 1,732 1,710 1
---------- ----------
Net income $ 53,264 $ 58,563 (9)
---------- ----------
Weighted average number of common
shares outstanding:
Basic 20,345 20,530
Diluted 20,567 20,769
Earnings per share:
Basic earnings per share $ 2.62 $ 2.85 (8)
---------- ----------
Diluted earnings per share $ 2.59 $ 2.82 (8)
---------- ----------
Cash dividends declared per common
share $ 0.20 $ 0.20
---------- ----------
* Percentage not meaningful
1) Sales increased in the United States approximately 4% in the fourth
quarter and 8% for the full year of 2005. International sales
decreased slightly in the fourth quarter and increased 8% for the
full year of 2005.
2) Sales and operating income were negatively impacted by six fewer
business days in the fourth quarter of 2005 as compared with the
fourth quarter of 2004.
3) During the fourth quarter of 2005, the Company reached a settlement
of pending commercial and patent litigation. The litigation
settlement resulted in non-operating income of approximately $2.1
million. The costs of defending such litigation were included in
marketing and administrative expenses.
4) During the fourth quarter of 2005, the Company recorded an
impairment of assets charge of $0.3 million due to the expected
closure in the first quarter of our satellite PCC facility at
Cornwall, Ontario, resulting from the expected paper mill
shutdown. The Company also accelerated depreciation at this
facility resulting in an additional $0.2 million charge which is
included in cost of goods sold.
5) The Company recorded restructuring charges of $0.1 million in the
fourth quarter of 2004 and $1.1 million for the full year of 2004
related to the program announced in December 2003. These charges
relate to workforce reductions from business units and
organization levels throughout the Company's worldwide operations.
6) The Company recognized acquisition termination costs of
approximately $1.0 million in the fourth quarter of 2004 which
were not allocated to the reporting segments.
7) The Company received bad debt recoveries in the fourth quarter of
2004 of approximately $2.3 million related to steel customer
bankruptcies, in which the Company had previously written off the
related accounts receivable.
SUPPLEMENTARY SALES DATA
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
(millions of dollars)
(unaudited)
Fourth Quarter Full Year
----------------- % ----------------- %
2005 2004 Change 2005 2004 Change
-------- -------- ------ -------- -------- ------
United States $ 153.2 $ 147.9 4 $ 600.1 $ 558.2 8
International $ 100.3 $ 100.6 (0) $ 395.7 $ 365.5 8
Paper PCC $ 120.4 $ 117.3 3 $ 465.7 $ 434.0 7
Specialty PCC 13.4 12.8 5 55.6 50.7 10
-------- -------- -------- --------
PCC Products $ 133.8 $ 130.1 3 $ 521.3 $ 484.7 8
-------- -------- -------- --------
Talc $ 13.1 $ 12.2 7 $ 54.2 $ 51.6 5
Other Processed
Minerals Products 23.4 22.2 5 92.5 87.1 6
-------- -------- -------- --------
Processed Minerals
Products $ 36.5 $ 34.4 6 $ 146.7 $ 138.7 6
-------- -------- -------- --------
Specialty Minerals
Segment $ 170.3 $ 164.5 4 $ 668.0 $ 623.4 7
-------- -------- -------- --------
Refractory products $ 58.3 $ 68.3 (15) $ 239.3 $ 243.0 (2)
Metallurgical
Products 24.9 15.7 59 88.5 57.3 54
-------- -------- -------- --------
Refractories
Segment $ 83.2 $ 84.0 (1) $ 327.8 $ 300.3 9
-------- -------- -------- --------
Net Sales $ 253.5 $ 248.5 2 $ 995.8 $ 923.7 8
-------- -------- -------- --------
MINERALS TECHNOLOGIES INC AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
(In Thousands of Dollars)
December 31, December 31,
2005* 2004**
------------ ------------
Current assets:
Cash & cash equivalents 53,450 105,767
Short-term investments -- 7,200
Accounts receivable, net 184,272 156,276
Inventories 118,895 106,125
Prepaid expenses and other current assets 20,223 20,303
------------ ------------
Total current assets 376,840 395,671
Property, plant and equipment 1,380,298 1,330,176
Less accumulated depreciation 751,553 715,891
------------ ------------
Net property, plant & equipment 628,745 614,285
Goodwill 52,512 53,729
Prepaid benefit costs 68,350 61,617
Other assets and deferred charges 30,435 29,600
------------ ------------
Total assets 1,156,882 1,154,902
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt 62,847 30,000
Current maturities of long-term debt 53,698 3,917
Accounts payable 61,323 56,381
Other current liabilities 55,046 62,555
------------ ------------
Total current liabilities 232,914 152,853
Long-term debt 40,306 94,811
Other non-current liabilities 112,547 107,925
------------ ------------
Total liabilities 385,767 355,589
Total shareholders' equity 771,115 799,313
------------ ------------
Total liabilities and shareholders'
equity 1,156,882 1,154,902
------------ ------------
* Unaudited.
**Condensed from audited financial statements.
CONTACT: Minerals Technologies Inc.
Rick B. Honey, 212-878-1831
SOURCE: Minerals Technologies Inc.