Amcol International 8-K Results of Operations and Financial Condition

AMCOL International Corporation (NYSE: ACO) Reports Third Quarter Results

HOFFMAN ESTATES, IL--(Marketwire - October 22, 2010) - AMCOL International Corporation (NYSE: ACO) today reported 2010 third quarter net income attributable to AMCOL shareholders of $0.55 per diluted share as compared to $0.43 per diluted share in the prior year's period. The current period includes charges due to operational issues from our domestic personal care products group, within the Minerals & Materials segment of $.06 per diluted share, and a gain on foreign currency transactions of $.05 per diluted share.

Net sales increased 22.3% to $233.5 million for the quarter ended September 30, 2010 from $190.9 million in the 2009 period. Operating profit increased 17.1% over the 2009 third quarter to $22.5 million. Foreign currency translation did not have a material impact on our comparative results for the quarter.

Net sales for the nine-month period ended September 30, 2010 increased 19.5% to $629.1 million, compared with $526.5 million for the 2009 period. Operating profit increased 32.1% over the 2009 period to $57.0 million. Foreign currency translation did not have a material impact on our comparative results for the nine-month period.

This release should be read in conjunction with the attached unaudited condensed consolidated financial statements. Further discussion of items and events impacting earnings are included later in this press release.

"Overall, it was a good quarter, especially in our Minerals & Materials segment," said Larry Washow, AMCOL President and Chief Executive Officer. "Our Environmental and Oilfield Services segments were generally in line with our expectations."

Washow continued, "The Minerals & Materials segment had another strong quarter as a stable US business combined with growth in Asia and solid results in Europe produced a good revenue number. The operational issues in domestic personal care products hurt our margins, however, we believe we have addressed these issues and do not expect similar charges going forward. Expected start-up losses from the South Africa chrome business also impacted margins in the quarter. Our other consumer related products are performing well and we have seen nice improvement in basic minerals. We believe we are well positioned across the segment with metalcasting continuing to show strength around the world."

"As expected, Environmental generated their highest quarterly revenue of the year. The margins were down as the business mix included more sales from contracting services, which tends to have lower margins. Building materials revenue is up somewhat from last year, but we still do not see significant improvement in the market," Washow continued.

"Oilfield Services revenue was up substantially from last year, and improved sequentially as well; nearly all of our business lines showed growth. Coil tubing sales in particular have been expanding and we look for it to perform well in the months ahead. We continue to improve our overseas service capability as we look for stronger growth prospects than those we see in the Gulf of Mexico," Washow added.

"The performance of the Minerals & Materials segment continues to be very encouraging and was a key contributor to the third quarter. Although the holidays will impact the fourth quarter, we expect continued margin improvement from Minerals & Materials into the fourth quarter. Activity in the Environmental segment is still soft, but we are seeing some larger projects develop and contracting services should continue to expand. Oilfield Services is also well positioned to wrap up a better year in revenue, and we are working to improve margins," Washow concluded.

STATEMENT OF OPERATIONS HIGHLIGHTS:

The statement of operations highlights are supported by the segment results schedules included in this press release.

Net sales: The following discusses the reasons for the increased revenue by segment for the 2010 third quarter as compared to the prior year's quarter.

Minerals & Materials: The majority of the revenue improvement was due to increased volumes, principally in domestic and Asian metalcasting markets, resulting from increased demand for castings for automobiles and heavy equipment. Our basic minerals group had increased volumes driven by greater demand for drilling products for oil and gas wells.

Environmental: The revenue increase is principally due to increased demand for our European contracting services and our domestic building materials and drilling products.

Oilfield Services: The majority of the increase is due to greater demand for services from our domestic coiled tubing and Australian operations.

Transportation: Approximately one third of the revenue increase was due to increased fuel-surcharges and the remainder was from greater demand for consumer product shipments.

Gross profit: Gross profit increased $4.6 million, or 8.6%, from the 2009 third quarter, while gross margin decreased 310 basis points to 25.1%.

Minerals & Materials: Gross profit increased $4.2 million, or 21.0%, from the 2009 quarter, and gross margins decreased 50 basis points to 21.7%, principally due to the operational issues in domestic personal care products, and start-up losses in our South African chrome sand business, offset by greater volumes and increased operating efficiencies.

Environmental: Gross profit decreased $1.9 million, or 8.5%, from the 2009 quarter. Gross margins decreased 650 basis points to 29.0%. The decrease in gross margin is principally due to an increase in sales in our lower margin contracting services and increased competition in lining technologies products.

Oilfield Services: Gross profit increased $2.3 million, or 24.3% from the 2009 quarter. Gross margin decreased 400 basis points to 29.0% due to changes in the composition of revenues by service offering.

General, selling and administrative expenses (GS&A): GS&A expenses increased $1.3 million, or 3.9%, from the prior year quarter due to increased employee compensation and benefits costs.

Interest expense, net: Interest expense, net, decreased $.3 million due to reduced overall average interest rates on average debt levels that were comparable to the prior year quarter.

Other, net: Other, net is comprised mostly of foreign currency transaction and currency derivative gains and losses. The $2.1 million increase is due to increased gains from foreign currency transactions.

Income taxes: The third quarter results include income tax expense of $5.2 million versus an expense of $3.3 million in the prior year period. The increased expense results from greater pre-tax income. The effective tax rate increased as a greater portion of pre-tax income was generated in our domestic operations, which typically are subject to higher tax rates than those in effect in foreign countries.

Income (loss) from affiliates and joint ventures: The $0.4 million reduction from the prior year is due to lower earnings in our Indian and Russian joint ventures and affiliates.

Share count: Our weighted average common and common equivalent shares outstanding increased 1.6% to 31.6 million; but did not have a material impact on our quarterly diluted earnings per share attributable to AMCOL shareholders.

FINANCIAL POSITION AND CASH FLOW HIGHLIGHTS:

Long-term debt increased $22.7 million to $229.7 million during the nine months ended September 30, 2010. During that time, we have invested in working capital to support our revenue growth, purchased the remaining 47% of the chrome mine in South Africa, and invested in a related chrome processing plant. Total long-term debt, net represented 36.1% of capitalization at September 30, 2010 as compared to 35.3% at December 31, 2009. Cash and cash equivalents decreased $7.3 million to $20.3 million at September 30, 2010 as compared to December 31, 2009.

Net working capital increased $35.1 million from December 31, 2009 to $238.8 million at September 30, 2010. The increase in working capital was due to increased sales volumes.

Cash flow generated from operating activities was $35.2 million for year-to-date September 30, 2010 compared with $90.6 million in the prior year period. Throughout 2009, we decreased our working capital levels significantly in response to the economic recession and lower sales volumes. Thus, we generated significantly less cash flows from operations in the 2010 period as working capital levels have increased since the prior year end due to the increase in sales volumes.

Capital expenditures for year-to-date September 30, 2010 were $37.9 million, of which $13.6 million relates to our construction of our chrome processing facility in South Africa. Excluding our corporate building, comparative amounts in the 2009 period were $39.6 million. The 2009 period also included $17.7 million of expenditures to purchase 53% of the aforementioned chrome mine and start constructing the related processing facility.

In September 2010, we purchased the remaining 47% of the noncontrolling South Africa chrome mine for $10.8 million, which is reflected in the financing section of the cash flow statement as purchase of noncontrolling interests.

Dividends through September 30, 2010 remained roughly the same over the prior year period as our dividend per share has remained constant at $0.18 per quarter per share since the third quarter of 2008.

This release contains certain forward-looking statements regarding AMCOL's expected performance for future periods and actual results for such periods might materially differ. Such forward-looking statements are subject to uncertainties, which include, but are not limited to, actual growth in AMCOL's various markets, utilization of AMCOL's plants, currency exchange rates, currency devaluation, delays in development, production and marketing of new products, integration of acquired businesses, and other factors detailed from time to time in AMCOL's annual report and other reports filed with the Securities and Exchange Commission. AMCOL undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in AMCOL's expectations.

AMCOL International, headquartered in Hoffman Estates, IL, produces and markets a wide range of specialty mineral products used for industrial, environmental and consumer-related applications. AMCOL is the parent of American Colloid Company, CETCO (Colloid Environmental Technologies Company), CETCO Oilfield Services Company and the transportation operations, Ameri-co Carriers, Inc. and Ameri-co Logistics, Inc. AMCOL's common stock is traded on the New York Stock Exchange under the symbol ACO. AMCOL's web address is www.amcol.com. AMCOL's third quarter conference call will be available live today at 11 a.m. ET on the AMCOL website or by dialing 1.888.466.4509.

Financial tables follow.

AMCOL INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In thousands, except per share data)

	Nine Months Ended						Three Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Net sales	$	629,115		$	526,539		$	233,451		$	190,920
Cost of sales		465,304			382,320			174,962			137,069
Gross profit		163,811			144,219			58,489			53,851
General, selling and administrative expenses		106,785			101,047			35,967			34,626
Operating profit		57,026			43,172			22,522			19,225
Other income (expense):
Interest expense, net		(7,092	)		(9,399	)		(2,542	)		(2,833	)
Other, net		2,066			(2,595	)		2,183			119
		(5,026	)		(11,994	)		(359	)		(2,714	)
Income before income taxes and income (loss) from affiliates and joint ventures		52,000			31,178			22,163			16,511
Income tax expense		12,894			6,388			5,193			3,271
Income before income (loss) from affiliates and joint ventures		39,106			24,790			16,970			13,240
Income (loss) from affiliates and joint ventures		266			(921	)		337			721
Net income (loss)		39,372			23,869			17,307			13,961
Net income (loss) attributable to noncontrolling interests		(322	)		296			(110	)		661
Net income (loss) attributable to AMCOL shareholders	$	39,694		$	23,573		$	17,417		$	13,300
Weighted average common shares outstanding		31,137			30,735			31,225			30,766
Weighted average common and common equivalent shares outstanding		31,498			30,973			31,565			31,061
Basic earnings per share attributable to AMCOL shareholders	$	1.27		$	0.77		$	0.56		$	0.43
Diluted earnings per share attributable to AMCOL shareholders	$	1.26		$	0.76		$	0.55		$	0.43
Dividends declared per share	$	0.54		$	0.54		$	0.18		$	0.18

AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS		September 30,		December 31,
		2010		2009
	(unaudited)			*
Current assets:
Cash and equivalents		$	20,326	$	27,669
Accounts receivable, net			201,092		148,260
Inventories			105,469		96,173
Prepaid expenses			12,938		12,509
Deferred income taxes			7,706		6,525
Income tax receivable			9,158		2,431
Other			5,979		463
Total current assets			362,668		294,030
Noncurrent assets:
Property, plant, equipment, mineral rights and reserves:
Land and mineral rights			60,523		57,898
Depreciable assets			448,494		414,617
			509,017		472,515
Less: accumulated depreciation and depletion			253,018		236,269
			255,999		236,246
Goodwill			71,260		71,156
Intangible assets, net			44,370		47,185
Investments in and advances to affiliates and joint ventures			33,544		32,228
Available-for-sale securities			17,917		25,563
Other assets			22,278		27,852
Total noncurrent assets			445,368		440,230
		$	808,036	$	734,260
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	61,830	$	40,335
Accrued liabilities			62,029		49,981
Total current liabilities			123,859		90,316
Noncurrent liabilities:
Long-term debt			229,690		207,017
Pension liabilities			21,420		20,403
Deferred compensation			7,980		7,544
Other long-term liabilities			19,691		29,208
Total noncurrent liabilities			278,781		264,172
Equity:
Common stock			320		320
Additional paid in capital			91,666		84,830
Retained earnings			298,149		275,200
Accumulated other comprehensive income			24,615		32,174
			414,750		392,524
Less:
Treasury stock			10,608		14,377
Total AMCOL shareholders' equity			404,142		378,147
Noncontrolling interest			1,254		1,625
Total equity			405,396		379,772
		$	808,036	$	734,260
* Condensed from audited financial statements.

AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(In thousands)
	Nine Months Ended
	September 30,
	2010			2009
Cash flow from operating activities:
Net income	$	39,372		$	23,869
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation, depletion, and amortization		26,470			26,781
Other non-cash charges		3,174			9,023
Changes in assets and liabilities, net of effects of acquisitions:
Decrease (increase) in current assets		(69,385	)		35,096
Decrease (increase) in noncurrent assets		(2,298	)		(1,257	)
Increase (decrease) in current liabilities		34,832			(7,480	)
Increase (decrease) in noncurrent liabilities		2,999			4,586
Net cash provided by (used in) operating activities		35,164			90,618
Cash flow from investing activities:
Capital expenditures		(37,944	)		(39,637	)
Capital expenditures - corporate building		-			(9,651	)
Proceeds from sale of depreciable assets - corporate building		-			9,651
Receipts from Chrome Corp		-			6,000
Investments in and advances to affiliates and joint ventures		(2,047	)		(2,647	)
Other		1,210			2,384
Net cash used in investing activities		(38,781	)		(33,900	)
Cash flow from financing activities:
Net change in outstanding debt		21,004			(42,467	)
Purchase of noncontrolling interest		(11,873	)		-
Proceeds from sales of treasury stock		3,252			1,005
Purchases of treasury stock		-			(165	)
Dividends		(16,745	)		(16,526	)
Excess tax benefits from stock-based compensation		394			464
Net cash provided by (used in) financing activities		(3,968	)		(57,689	)
Effect of foreign currency rate changes on cash		242			897
Net increase (decrease) in cash and cash equivalents		(7,343	)		(74	)
Cash and cash equivalents at beginning of period		27,669			19,441
Cash and cash equivalents at end of period	$	20,326		$	19,367

AMCOL INTERNATIONAL CORPORATION

SEGMENT RESULTS (unaudited)

QUARTER-TO-DATE

Three Months Ended September 30,

Minerals and Materials	2010				2009				2010 vs 2009
	(Dollars in Thousands)
Net sales	$	110,332	100.0	%	$	89,021	100.0	%	$	21,311	23.9	%
Cost of sales		86,383	78.3	%		69,232	77.8	%		17,151	24.8	%
Gross profit		23,949	21.7	%		19,789	22.2	%		4,160	21.0	%
General, selling and
administrative expenses		11,608	10.5	%		9,317	10.5	%		2,291	24.6	%
Operating profit		12,341	11.2	%		10,472	11.7	%		1,869	17.8	%

	Three Months Ended September 30,
Environmental	2010				2009				2010 vs 2009
	(Dollars in Thousands)
Net sales	$	72,373	100.0	%	$	64,493	100.0	%	$	7,880		12.2	%
Cost of sales		51,418	71.0	%		41,603	64.5	%		9,815		23.6	%
Gross profit		20,955	29.0	%		22,890	35.5	%		(1,935	)	-8.5	%
General, selling and
administrative expenses		12,404	17.1	%		12,135	18.8	%		269		2.2	%
Operating profit		8,551	11.9	%		10,755	16.7	%		(2,204	)	-20.5	%

	Three Months Ended September 30,
Oilfield Services	2010				2009				2010 vs 2009
	(Dollars in Thousands)
Net sales	$	41,204	100.0	%	$	29,109	100.0	%	$	12,095	41.6	%
Cost of sales		29,249	71.0	%		19,491	67.0	%		9,758	50.1	%
Gross profit		11,955	29.0	%		9,618	33.0	%		2,337	24.3	%
General, selling and
administrative expenses		7,876	19.1	%		6,522	22.4	%		1,354	20.8	%
Operating profit		4,079	9.9	%		3,096	10.6	%		983	31.8	%

	Three Months Ended September 30,
Transportation	2010				2009				2010 vs 2009
	(Dollars in Thousands)
Net sales	$	14,284	100.0	%	$	12,487	100.0	%	$	1,797	14.4	%
Cost of sales		12,654	88.6	%		10,933	87.6	%		1,721	15.7	%
Gross profit		1,630	11.4	%		1,554	12.4	%		76	4.9	%
General, selling and
administrative expenses		876	6.1	%		861	6.9	%		15	1.7	%
Operating profit		754	5.3	%		693	5.5	%		61	8.8	%

	Three Months Ended September 30,
Corporate	2010			2009			2010 vs 2009
	(Dollars in Thousands)
Intersegment shipping sales	$	(4,742	)	$	(4,190	)	$	(552	)
Intersegment shipping costs		(4,742	)		(4,190	)		(552	)
Gross profit		-			-			-
General, selling and
administrative expenses		3,203			5,791			(2,588	)	-44.7	%
Operating loss		3,203			5,791			(2,588	)	-44.7	%

AMCOL INTERNATIONAL CORPORATION

SEGMENT RESULTS (unaudited)

YEAR-TO-DATE

	Nine Months Ended September 30,
Minerals and Materials	2010				2009				2010 vs 2009
	(Dollars in Thousands)
Net sales	$	314,417	100.0	%	$	244,657	100.0	%	$	69,760	28.5	%
Cost of sales		238,918	76.0	%		193,774	79.2	%		45,144	23.3	%
Gross profit		75,499	24.0	%		50,883	20.8	%		24,616	48.4	%
General, selling and
administrative expenses		32,526	10.3	%		27,020	11.0	%		5,506	20.4	%
Operating profit		42,973	13.7	%		23,863	9.8	%		19,110	80.1	%

	Nine Months Ended September 30,
Environmental	2010				2009				2010 vs 2009
	(Dollars in Thousands)
Net sales	$	175,707	100.0	%	$	164,096	100.0	%	$	11,611		7.1	%
Cost of sales		123,634	70.4	%		107,580	65.6	%		16,054		14.9	%
Gross profit		52,073	29.6	%		56,516	34.4	%		(4,443	)	-7.9	%
General, selling and
administrative expenses		35,725	20.3	%		34,913	21.3	%		812		2.3	%
Operating profit		16,348	9.3	%		21,603	13.1	%		(5,255	)	-24.3	%

	Nine Months Ended September 30,
Oilfield Services	2010				2009				2010 vs 2009
	(Dollars in Thousands)
Net sales	$	111,052	100.0	%	$	93,140	100.0	%	$	17,912		19.2	%
Cost of sales		79,313	71.4	%		60,554	65.0	%		18,759		31.0	%
Gross profit		31,739	28.6	%		32,586	35.0	%		(847	)	-2.6	%
General, selling and
administrative expenses		21,879	19.7	%		20,123	21.6	%		1,756		8.7	%
Operating profit		9,860	8.9	%		12,463	13.4	%		(2,603	)	-20.9	%

	Nine Months Ended September 30,
Transportation	2010				2009				2010 vs 2009
	(Dollars in Thousands)
Net sales	$	39,987	100.0	%	$	35,336	100.0	%	$	4,651		13.2	%
Cost of sales		35,487	88.7	%		31,102	88.0	%		4,385		14.1	%
Gross profit		4,500	11.3	%		4,234	12.0	%		266		6.3	%
General, selling and
administrative expenses		2,536	6.3	%		2,551	7.2	%		(15	)	-0.6	%
Operating profit		1,964	5.0	%		1,683	4.8	%		281		16.7	%

	Nine Months Ended September 30,
Corporate	2010			2009			2010 vs 2009
	(Dollars in Thousands)
Intersegment shipping sales	$	(12,048	)	$	(10,690	)	$	(1,358	)
Intersegment shipping costs		(12,048	)		(10,690	)		(1,358	)
Gross profit		-			-			-
General, selling and
administrative expenses		14,119			16,440			(2,321	)	-14.1	%
Operating loss		(14,119	)		(16,440	)		2,321		-14.1	%

AMCOL INTERNATIONAL CORPORATION

SUPPLEMENTARY INFORMATION (unaudited)

QUARTER-TO-DATE

Composition of Sales by Geographic Region	Three Months Ended September 30, 2010
	Americas	EMEA	Asia Pacific	Total
Minerals and materials	29.6%	8.1%	9.6%	47.3%
Environmental	14.9%	13.7%	2.4%	31.0%
Oilfield services	14.2%	0.6%	2.8%	17.6%
Transportation	4.1%	0.0%	0.0%	4.1%
Total - current year's period	62.8%	22.4%	14.8%	100.0%
Total from prior year's comparable period	64.0%	25.1%	10.9%	100.0%

	Three Months Ended September 30, 2010
	vs.
Percentage of Revenue Growth by Component	Three Months Ended September 30, 2009
		Base Business	Acquisitions	Foreign Exchange	Total
Minerals and materials		11.0%	0.0%	0.2%	11.2%
Environmental		4.3%	0.2%	-0.4%	4.1%
Oilfield services		5.9%	0.0%	0.4%	6.3%
Transportation		0.7%	0.0%	0.0%	0.7%
Total		21.9%	0.2%	0.2%	22.3%
% of growth		97.8%	0.9%	1.3%	100.0%

	Three Months Ended September 30,
Minerals and Materials Product Line Sales		2010	2009	% change
	(Dollars in Thousands)
Metalcasting		$      53,632	$      38,097	40.8%
Specialty materials		27,211	26,661	2.1%
Pet products		15,848	16,959	-6.6%
Basic minerals		12,015	6,348	89.3%
Other product lines		1,626	956	*
Total		110,332	89,021	23.9%
* Not meaningful.

	Three Months Ended September 30,
Environmental Product Line Sales		2010	2009	% change
	(Dollars in Thousands)
Lining technologies		$      33,407	$      33,484	-0.2%
Building materials		15,822	14,227	11.2%
Contracting services		16,148	11,243	43.6%
Drilling products		6,996	5,539	26.3%
Total		72,373	64,493	12.2%

AMCOL INTERNATIONAL CORPORATION

SUPPLEMENTARY INFORMATION (unaudited)

YEAR-TO-DATE

Composition of Sales by Geographic Region	Nine Months Ended September 30, 2010
		Americas	EMEA	Asia Pacific	Total
Minerals and materials		31.6%	8.6%	9.8%	50.0%
Environmental		13.4%	12.0%	2.5%	27.9%
Oilfield services		14.7%	0.6%	2.4%	17.7%
Transportation		4.4%	0.0%	0.0%	4.4%
Total - current year's period		64.1%	21.2%	14.7%	100.0%
Total from prior year's comparable period		65.9%	23.5%	10.6%	100.0%

	Nine Months Ended September 30, 2010
	vs.
Percentage of Revenue Growth by Component	Nine Months Ended September 30, 2009
		Organic	Acquisitions	Foreign Exchange	Total
Minerals and materials		12.4%	0.0%	0.8%	13.2%
Environmental		1.5%	0.2%	0.5%	2.2%
Oilfield services		2.9%	0.0%	0.5%	3.4%
Transportation		0.6%	0.0%	0.0%	0.6%
Total		17.4%	0.2%	1.8%	19.4%
% of growth		89.3%	1.0%	9.7%	100.0%

	Nine Months Ended September 30,
Minerals and Materials Product Line Sales		2010	2009	% change
	(Dollars in Thousands)
Metalcasting		$    147,829	$    100,592	47.0%
Specialty materials		80,074	71,330	12.3%
Pet products		46,739	49,729	-6.0%
Basic minerals		34,790	20,288	71.5%
Other product lines		4,985	2,718	*
Total		314,417	244,657	28.5%
* Not meaningful.

	Nine Months Ended September 30,
Environmental Product Line Sales		2010	2009	% change
	(Dollars in Thousands)
Lining technologies		$      84,994	$      78,768	7.9%
Building materials		41,863	41,704	0.4%
Contracting services		30,787	27,382	12.4%
Drilling products		18,063	16,242	11.2%
Total		175,707	164,096	7.1%

For further information, contact:

Don Pearson

Vice President & Chief Financial Officer

847.851.1500