United States Lime & Minerals (USLM) 10-Q 31 Oct 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 28, 2016
Document and Entity Information
Entity Registrant Name	UNITED STATES LIME & MINERALS INC
Entity Central Index Key	82,020
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		5,564,575
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 68,940	$ 59,926
Trade receivables, net	19,385	15,889
Inventories, net	12,713	14,728
Prepaid expenses and other current assets	718	1,418
Total current assets	101,756	91,961
Property, plant and equipment	281,391	271,686
Less accumulated depreciation and depletion	(177,961)	(167,308)
Property, plant and equipment, net	103,430	104,378
Other assets, net	144	160
Total assets	205,330	196,499
Current liabilities:
Accounts payable	4,216	6,022
Accrued expenses	3,276	2,720
Total current liabilities	7,492	8,742
Deferred tax liabilities, net	19,495	19,184
Other liabilities	1,856	1,946
Total liabilities	28,843	29,872
Stockholders' equity:
Common stock	656	655
Additional paid-in capital	22,572	21,642
Retained earnings	206,545	194,798
Less treasury stock, at cost	(53,286)	(50,468)
Total stockholders' equity	176,487	166,627
Total liabilities and stockholders' equity	$ 205,330	$ 196,499

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues
Lime and limestone operations	$ 38,096	$ 36,452	$ 103,626	$ 97,593
Natural gas interests	554	577	1,490	1,950
Total revenues	38,650	37,029	105,116	99,543
Cost of revenues:
Labor and other operating expenses	24,064	22,695	67,603	64,563
Depreciation, depletion and amortization	4,017	3,967	11,855	11,736
Total cost of revenues	28,081	26,662	79,458	76,299
Gross profit	10,569	10,367	25,658	23,244
Selling, general and administrative expenses	2,482	2,467	7,213	7,266
Operating profit	8,087	7,900	18,445	15,978
Other expenses (income):
Interest expense	63	57	185	969
Other (income) expense, net	(115)	(54)	(238)	651
Total other expense (income)	(52)	3	(53)	1,620
Income before income taxes	8,139	7,897	18,498	14,358
Income tax expense	2,058	2,221	4,664	3,758
Net income	$ 6,081	$ 5,676	$ 13,834	$ 10,600
Net income per share of common stock:
Basic (in dollars per share)	$ 1.09	$ 1.01	$ 2.48	$ 1.89
Diluted (in dollars per share)	1.09	1.01	2.48	1.89
Cash dividends per share of common stock (in dollars per share)	$ 0.125	$ 0.125	$ 0.375	$ 0.375

CONDENSED CONSOLIDATED STATEME4

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Percentage	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues
Lime and limestone operations (as a percent)	98.60%	98.40%	98.60%	98.00%
Natural gas (as a percent)	1.40%	1.60%	1.40%	2.00%
Total revenues (as a percent)	100.00%	100.00%	100.00%	100.00%
Cost of revenues:
Labor and other operating expenses (as a percent)	62.30%	61.30%	64.30%	64.80%
Depreciation, depletion and amortization (as a percent)	10.40%	10.70%	11.30%	11.80%
Total cost of revenues (as a percent)	72.70%	72.00%	75.60%	76.60%
Gross profit (as a percent)	27.30%	28.00%	24.40%	23.40%
Selling, general and administrative expenses (as a percent)	6.40%	6.70%	6.90%	7.30%
Operating profit (as a percent)	20.90%	21.40%	17.50%	16.10%
Other expenses (income):
Interest expense (as a percent)	0.20%	0.10%	0.10%	1.00%
Other (income) expense, net (as a percent)	(0.30%)	(0.10%)	(0.20%)	0.70%
Total other expense (income) (as a percent)	(0.10%)	0.00%	(0.10%)	1.70%
Income before income taxes (as a percent)	21.00%	21.40%	17.60%	14.40%
Income tax expense (as a percent)	5.30%	6.00%	4.40%	3.80%
Net income (as a percent)	15.70%	15.30%	13.20%	10.70%

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Consolidated Statements of Comprehensive Income
Net income	$ 10,600
Other comprehensive income
Mark to market of interest rate hedges, net of tax expense of $241 for the nine-month period 2015	422
Minimum pension liability adjustments, net of tax expense of $344 for the nine-month period 2015	602
Total other comprehensive income	1,024
Comprehensive income	$ 11,624

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Consolidated Statements of Comprehensive Income
Mark to market of interest rate hedges, tax expense	$ 241
Minimum pension liability adjustments, tax expense (benefit)	$ 344

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
OPERATING ACTIVITIES:
Net income	$ 13,834	$ 10,600
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	12,032	11,916
Amortization of deferred financing costs	11	25
Deferred income taxes	311	(353)
Loss (gain) on sale of property, plant and equipment	107	(137)
Stock-based compensation	778	908
Changes in operating assets and liabilities:
Trade receivables, net	(3,496)	(1,770)
Inventories, net	2,015	(685)
Prepaid expenses and other current assets	700	1,623
Other assets	5	(20)
Accounts payable and accrued expenses	(341)	208
Other liabilities	(86)	585
Net cash provided by operating activities	25,870	22,900
INVESTING ACTIVITIES:
Purchase of property, plant and equipment	(12,230)	(8,080)
Proceeds from sale of property, plant and equipment	126	263
Net cash used in investing activities	(12,104)	(7,817)
FINANCING ACTIVITIES:
Repayment of term loans		(16,667)
Cash dividends paid	(2,087)	(2,099)
Proceeds from exercise of stock options	153	28
Purchase of treasury shares	(2,818)	(158)
Net cash used in financing activities	(4,752)	(18,896)
Net increase (decrease) in cash and cash equivalents	9,014	(3,813)
Cash and cash equivalents at beginning of period	59,926	58,332
Cash and cash equivalents at end of period	$ 68,940	$ 54,519

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2016
Basis of Presentation
Basis of Presentation	1. Basis of Presentation The condensed consolidated financial statements included herein have been prepared by United States Lime & Minerals, Inc. (the “Company”) without independent audit. In the opinion of the Company’s management, all adjustments of a normal and recurring nature necessary to present fairly the financial position, results of operations, comprehensive income and cash flows for the periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2015. The results of operations for the three- and nine-month periods ended September 30, 2016 are not necessarily indicative of operating results for the full year.

Organization

Organization	9 Months Ended
	Sep. 30, 2016
Organization
Organization	2. Organization The Company is headquartered in Dallas, Texas, and operates through two business segments. Through its Lime and Limestone Operations, the Company is a manufacturer of lime and limestone products, supplying primarily the construction (including highway, road and building contractors), environmental (including municipal sanitation and water treatment facilities and flue gas treatment processes), industrial (including paper and glass manufacturers), metals (including steel producers), roof shingle, oil and gas services and agriculture (including poultry and cattle feed producers) industries. The Company operates lime and limestone plants and distribution facilities in Arkansas, Colorado, Louisiana, Oklahoma and Texas through its wholly owned subsidiaries, Arkansas Lime Company, Colorado Lime Company, Texas Lime Company, U.S. Lime Company, U.S. Lime Company – Shreveport, U.S. Lime Company – St. Clair and U.S. Lime Company – Transportation. The Company’s Natural Gas Interests segment is held in its wholly owned subsidiary, U.S. Lime Company – O & G, LLC (“U.S. Lime O & G”). Under a lease agreement (the “O & G Lease”), U.S. Lime O & G has royalty interests ranging from 15.4% to 20% and a 20% non-operating working interest, resulting in an overall average revenue interest of 34.7%, with respect to oil and gas rights in 33 wells drilled and currently producing on the Company’s approximately 3,800 acres of land located in Johnson County, Texas, in the Barnett Shale Formation. Through U. S. Lime O & G, the Company also has a drillsite and production facility lease agreement and subsurface easement (the “Drillsite Agreement”) relating to approximately 538 acres of land contiguous to the Company’s Johnson County, Texas property. Pursuant to the Drillsite Agreement, the Company receives a 3% royalty interest and a 12.5% non-operating working interest, resulting in a 12.4% revenue interest, in the six wells drilled and currently producing from pad sites located on the Company’s property.

Accounting Policies

Accounting Policies	9 Months Ended
	Sep. 30, 2016
Accounting Policies
Accounting Policies	3. Accounting Policies Revenue Recognition. The Company recognizes revenue for its Lime and Limestone Operations in accordance with the terms of its purchase orders, contracts or purchase agreements, which are generally upon shipment, and when payment is considered probable. Revenues include external freight billed to customers with related costs in cost of revenues. The Company’s returns and allowances are minimal. External freight billed to customers included in 2016 and 2015 revenues was $7.8 million and $6.4 million for the three-month periods, and $20.1 million and $17.9 million for the nine-month periods, respectively, which approximates the amount of external freight included in cost of revenues. Sales taxes billed to customers are not included in revenues. For its Natural Gas Interests, the Company recognizes revenue in the month of production and delivery. Successful-Efforts Method Used for Natural Gas Interests. The Company uses the successful-efforts method to account for oil and gas exploration and development expenditures. Under this method, drilling, completion and workover costs for successful exploratory wells and all development well costs are capitalized and depleted using the units-of-production method. Costs to drill exploratory wells that do not find proved reserves are expensed. Comprehensive Income. Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities, such as mark-to-market gains or losses on interest rate hedges and minimum pension liability adjustments, are reported as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. Fair Values of Financial Instruments. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values, in determining the fair value of its financial assets and liabilities. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. There were no changes in the methods and assumptions used in measuring fair value. New Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers, which stipulates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract(s); (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract(s); and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will be effective for the Company beginning January 1, 2018, with early adoption permitted for annual periods beginning after December 15, 2016. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its Consolidated Financial Statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for many leases classified as operating leases under previous US GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those fiscal years) and early adoption is permitted. The Company is currently evaluating the impact of adoption of ASU 2016-02 on its Consolidated Financial Statements. In March 2016, the FASB issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718) (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016 (including interim periods within those fiscal years) and early adoption is permitted. The Company does not expect the adoption of ASU 2016-09 to have a material effect on the its Consolidated Financial Statements.

Business Segments

Business Segments	9 Months Ended
	Sep. 30, 2016
Business Segments
Business Segments	4. Business Segments The Company has identified two business segments based on the distinctness of their activities and products: Lime and Limestone Operations and Natural Gas Interests. All operations are in the United States. In evaluating the operating results of the Company’s segments, management primarily reviews revenues and gross profit. The Company does not allocate corporate overhead or interest costs to its business segments. The following table sets forth operating results and certain other financial data for the Company’s two business segments (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Revenues 2016 2015 2016 2015 Lime and limestone operations $ $ $ $ Natural gas interests Total revenues $ $ $ $ Depreciation, depletion and amortization Lime and limestone operations $ $ $ $ Natural gas interests Total depreciation, depletion and amortization $ $ $ $ Gross profit Lime and limestone operations $ $ $ $ Natural gas interests Total gross profit $ $ $ $ Capital expenditures Lime and limestone operations $ $ $ $ Natural gas interests Total capital expenditures $ $ $ $

Income Per Share of Common Stoc

Income Per Share of Common Stock	9 Months Ended
	Sep. 30, 2016
Income Per Share of Common Stock
Income Per Share of Common Stock	5. Income Per Share of Common Stock The following table sets forth the computation of basic and diluted income per common share (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income for basic and diluted income per common share $ $ $ $ Weighted-average shares for basic income per common share Effect of dilutive securities: Employee and director stock options (1) Adjusted weighted-average shares and assumed exercises for diluted income per common share Basic net income per common share $ $ $ $ Diluted net income per common share $ $ $ $ (1) Excludes 7.5 stock options for the 2016 periods, and 34.8 and 17.4 stock options for the three- and nine-month periods 2015, as anti-dilutive because the exercise price exceeded the average per share market price for the periods presented.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Loss	9 Months Ended
	Sep. 30, 2016
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss	6. Accumulated Other Comprehensive Loss The following table presents the components of comprehensive income (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income $ $ $ $ Minimum pension liability adjustments — — — Reclassification to interest expense — — — Deferred income tax expense — — — Mark to market of interest rate hedges — — — Comprehensive income $ $ $ $ Amounts reclassified to interest expense were for payments made by the Company pursuant to the Company’s interest rate hedges in 2015.

Inventories, Net

Inventories, Net	9 Months Ended
	Sep. 30, 2016
Inventories, Net
Inventories	7. Inventories, Net Inventories are valued principally at the lower of cost, determined using the average cost method, or market. Costs for raw materials and finished goods include materials, labor, and production overhead. Inventories, net consisted of the following (in thousands): September 30, December 31, 2016 2015 Lime and limestone inventories: Raw materials $ $ Finished goods $ $ Service parts inventories $ $

Banking Facilities and Debt

Banking Facilities and Debt	9 Months Ended
	Sep. 30, 2016
Banking Facilities and Debt
Banking Facilities and Debt	8. Banking Facilities and Debt On May 7, 2015, the Company amended its credit agreement with Wells Fargo Bank, N.A. (the “Lender”) to, among other things, provide for a $75 million revolving credit facility (the “New Revolving Facility”) and reduce the interest rate margins and commitment fees (the “Amendment”). The Amendment also provides for an incremental four-year accordion feature to borrow up to an additional $50 million on the same terms, subject to approval by the Lender or another lender selected by the Company. The terms of the Amendment provide for a final maturity of the New Revolving Facility and any incremental loan on May 7, 2020; interest rates, at the Company’s option, of LIBOR plus a margin of 1.000% to 2.000% or the Lender’s Prime Rate plus a margin of 0.000% to plus 1.000%; and a commitment fee range of 0.200% to 0.350% on the undrawn portion of the New Revolving Facility. The New Revolving Facility interest rate margins and commitment fee are determined quarterly in accordance with a pricing grid based upon the Company’s Cash Flow Leverage Ratio, defined as the ratio of the Company’s total funded senior indebtedness to earnings before interest, taxes, depreciation, depletion, amortization and stock-based compensation expense (“EBITDA”) for the 12 months ended on the last day of the most recent calendar quarter, plus pro forma EBITDA from any businesses acquired during the period. Pursuant to a security agreement, dated August 25, 2004, the New Revolving Facility is secured by the Company’s existing and hereafter acquired tangible assets, intangible assets and real property. The maturity of the New Revolving Facility and any incremental loans can be accelerated if any event of default, as defined under the credit agreement, occurs. The Company may pay dividends so long as it remains in compliance with the provisions of the Company’s credit agreement, and may purchase, redeem or otherwise acquire shares of its common stock so long as its pro forma Cash Flow Leverage Ratio is less than 3.00 to 1.00 and no default or event of default exists or would exist after giving effect to such stock repurchase. Prior to the Amendment, the Company’s credit agreement had included a ten-year $40 million term loan (the “Term Loan”), a ten-year $20 million multiple draw term loan (the “Draw Term Loan”) and a $30 million revolving credit facility (the “Revolving Facility”) (collectively, the “Credit Facilities”). The Term Loan required quarterly principal payments of $0.8 million, with a final principal payment of $7.5 million due on December 31, 2015. The Draw Term Loan required quarterly principal payments of $0.4 million, with a final principal payment of $5.4 million due on December 31, 2015. The Revolving Facility was scheduled to mature on June 1, 2015. The maturity of the Term Loan, the Draw Term Loan and the Revolving Facility could have been accelerated if any event of default, as defined under the Credit Facilities, had occurred. The Company had interest rate hedges, with the Lender as the counterparty to the hedges, that fixed LIBOR through maturity at 4.695%, 4.875% and 5.500% on the outstanding balance of the Term Loan, 75% of the outstanding balance of the Draw Term Loan and 25% of the outstanding balance of the Draw Term Loan, respectively. As discussed below, the Company repurchased these hedges during the second quarter 2015. Based on the LIBOR margin of 1.750% prior to the Amendment, the Company’s interest rates had been: 6.445% on the outstanding balance of the Term Loan; 6.625% on 75% of the outstanding balance of the Draw Term Loan; and 7.250% on 25% of the outstanding balance of the Draw Term Loan. The hedges had been effective as defined under applicable accounting rules. Therefore, changes in fair value of the hedges were reflected in comprehensive income. The Company would have been exposed to credit losses in the event of non-performance by the counterparty to the hedges. The Company paid $0.2 million in quarterly settlement payments pursuant to its hedges during the first quarter 2015. These payments were included in interest expense in the Condensed Consolidated Statements of Operations. On May 7, 2015, the Company paid off the $15.4 million balance then outstanding on the Term Loan and Draw Term Loan, as well as paid $0.5 million to repurchase the related hedges, from cash on hand. The cost to repurchase the hedges was included in interest expense in the second quarter 2015. The Company had letters of credit totaling $0.7 million issued on the New Revolving Facility at September 30, 2016, but no draws.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2016
Income Taxes
Income Taxes	9. Income Taxes The Company has estimated that its effective income tax rate for 2016 will be approximately 25.2%. As in prior periods, the primary reason for the effective rate being below the federal statutory rate is due to statutory depletion, which is allowed for income tax purposes and is a permanent difference between net income for financial reporting purposes and taxable income.

Dividends and Share Repurchases

Dividends and Share Repurchases	9 Months Ended
	Sep. 30, 2016
Dividends and Share Repurchases
Dividends and Share Repurchases	10. Dividends and Share Repurchases On September 16, 2016, the Company paid $0.7 million in cash dividends, based on a dividend of $0.125 (12.5 cents) per share on its common stock, to shareholders of record at the close of business on August 16, 2016. On June 17, 2016, the Company paid $0.7 million in cash dividends, based on a dividend of $0.125 (12.5 cents) per share on its common stock, to shareholders of record at the close of business on May 27, 2016. On March 18, 2016, the Company paid $0.7 million in cash dividends, based on a dividend of $0.125 (12.5 cents) per share on its common stock, to shareholders of record at the close of business on February 26, 2016. In December 2015, the Company commenced a publicly announced share repurchase program to purchase up to $10 million of its common stock. Pursuant to that program, the Company repurchased 50,068 shares in the first quarter 2016 at a weighted-average price of $53.52 per share. No shares were repurchased during either the second or third quarter 2016. Since the commencement of the share repurchase program through September 30, 2016, the Company has repurchased 53,154 shares at a weighted-average price of $53.59 per share.

Employee Retirement Plan

Employee Retirement Plan	9 Months Ended
	Sep. 30, 2016
Employee Retirement Plan
Employee Retirement Plan	11. Employee Retirement Plan During the second quarter 2015, after receipt of a favorable determination letter from the Internal Revenue Service, the Company terminated a noncontributory defined benefit plan that, prior to the termination, covered substantially all of the union employees previously employed by its wholly owned subsidiary, Corson Lime Company (the “Corson Plan”). In 1997, the Company sold substantially all of the assets of Corson Lime Company, and the benefits for participants in the Corson Plan were frozen. As a result of the termination of the Corson Plan, the Company made a cash payment of $0.2 million and recognized a second quarter 2015 expense of $0.9 million ($0.6 million, net of tax benefit), included in Other (income) expense, net, that was previously included in Accumulated other comprehensive loss. The following table sets forth the Pre-Settlement, Settlement and Post-Settlement as of June 30, 2015 (in thousands): June 30, 2015 Pre-Settlement Settlement Post-Settlement Projected benefit obligation $ $ $ — Fair value of plan assets — Underfunded status $ — $ — $ —

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2016
Subsequent Events
Subsequent Events	12. Subsequent Events On October 27, 2016, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.125 (12.5 cents) per share on the Company’s common stock. This dividend is payable on December 16, 2016 to shareholders of record at the close of business on November 25, 2016.

Accounting Policies (Policies)

Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2016
Accounting Policies
Revenue Recognition	Revenue Recognition. The Company recognizes revenue for its Lime and Limestone Operations in accordance with the terms of its purchase orders, contracts or purchase agreements, which are generally upon shipment, and when payment is considered probable. Revenues include external freight billed to customers with related costs in cost of revenues. The Company’s returns and allowances are minimal. External freight billed to customers included in 2016 and 2015 revenues was $7.8 million and $6.4 million for the three-month periods, and $20.1 million and $17.9 million for the nine-month periods, respectively, which approximates the amount of external freight included in cost of revenues. Sales taxes billed to customers are not included in revenues. For its Natural Gas Interests, the Company recognizes revenue in the month of production and delivery.
Successful-Efforts Method Used for Natural Gas Interests	Successful-Efforts Method Used for Natural Gas Interests. The Company uses the successful-efforts method to account for oil and gas exploration and development expenditures. Under this method, drilling, completion and workover costs for successful exploratory wells and all development well costs are capitalized and depleted using the units-of-production method. Costs to drill exploratory wells that do not find proved reserves are expensed.
Comprehensive Income	Comprehensive Income. Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities, such as mark-to-market gains or losses on interest rate hedges and minimum pension liability adjustments, are reported as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income.
Fair Values of Financial Instruments	Fair Values of Financial Instruments. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values, in determining the fair value of its financial assets and liabilities. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. There were no changes in the methods and assumptions used in measuring fair value.
New Accounting Pronouncements	New Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers, which stipulates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract(s); (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract(s); and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will be effective for the Company beginning January 1, 2018, with early adoption permitted for annual periods beginning after December 15, 2016. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its Consolidated Financial Statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for many leases classified as operating leases under previous US GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those fiscal years) and early adoption is permitted. The Company is currently evaluating the impact of adoption of ASU 2016-02 on its Consolidated Financial Statements. In March 2016, the FASB issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718) (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016 (including interim periods within those fiscal years) and early adoption is permitted. The Company does not expect the adoption of ASU 2016-09 to have a material effect on the its Consolidated Financial Statements.

Business Segments (Tables)

Business Segments (Tables)	9 Months Ended
	Sep. 30, 2016
Business Segments
Schedule of operating results and certain other financial data for the business segments)	The following table sets forth operating results and certain other financial data for the Company’s two business segments (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Revenues 2016 2015 2016 2015 Lime and limestone operations $ $ $ $ Natural gas interests Total revenues $ $ $ $ Depreciation, depletion and amortization Lime and limestone operations $ $ $ $ Natural gas interests Total depreciation, depletion and amortization $ $ $ $ Gross profit Lime and limestone operations $ $ $ $ Natural gas interests Total gross profit $ $ $ $ Capital expenditures Lime and limestone operations $ $ $ $ Natural gas interests Total capital expenditures $ $ $ $

Income Per Share of Common St22

Income Per Share of Common Stock (Tables)	9 Months Ended
	Sep. 30, 2016
Income Per Share of Common Stock
Schedule of computation of basic and diluted income per common share	The following table sets forth the computation of basic and diluted income per common share (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income for basic and diluted income per common share $ $ $ $ Weighted-average shares for basic income per common share Effect of dilutive securities: Employee and director stock options (1) Adjusted weighted-average shares and assumed exercises for diluted income per common share Basic net income per common share $ $ $ $ Diluted net income per common share $ $ $ $ (1) Excludes 7.5 stock options for the 2016 periods, and 34.8 and 17.4 stock options for the three- and nine-month periods 2015, as anti-dilutive because the exercise price exceeded the average per share market price for the periods presented.

Accumulated Other Comprehensi23

Accumulated Other Comprehensive Loss (Tables)	9 Months Ended
	Sep. 30, 2016
Accumulated Other Comprehensive Loss
Schedule of components of comprehensive income	The following table presents the components of comprehensive income (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income $ $ $ $ Minimum pension liability adjustments — — — Reclassification to interest expense — — — Deferred income tax expense — — — Mark to market of interest rate hedges — — — Comprehensive income $ $ $ $

Inventories, Net (Tables)

Inventories, Net (Tables)	9 Months Ended
	Sep. 30, 2016
Inventories, Net
Schedule of inventories, net	Inventories, net consisted of the following (in thousands): September 30, December 31, 2016 2015 Lime and limestone inventories: Raw materials $ $ Finished goods $ $ Service parts inventories $ $

Employee Retirement Plan (Table

Employee Retirement Plan (Tables)	9 Months Ended
	Sep. 30, 2016
Employee Retirement Plan
Schedule of funded status of the Plan accrued pension benefit obligation	The following table sets forth the Pre-Settlement, Settlement and Post-Settlement as of June 30, 2015 (in thousands): June 30, 2015 Pre-Settlement Settlement Post-Settlement Projected benefit obligation $ $ $ — Fair value of plan assets — Underfunded status $ — $ — $ —

Organization (Details)

Organization (Details)	9 Months Ended
	Sep. 30, 2016asegment
Organization
Number of business segments | segment	2
O & G Lease
Organization
Area of land (in acres)	3,800
U.S. Lime O & G | O & G Lease
Organization
Percentage of non-operating working interest	20.00%
Overall average revenue interest (as a percent)	34.70%
Number of wells	33
U.S. Lime O & G | O & G Lease | Minimum
Organization
Percentage of royalty interest	15.40%
U.S. Lime O & G | O & G Lease | Maximum
Organization
Percentage of royalty interest	20.00%
U.S. Lime O & G | Drillsite Agreement
Organization
Percentage of royalty interest	3.00%
Percentage of non-operating working interest	12.50%
Overall average revenue interest (as a percent)	12.40%
Number of wells	6
Area of land under a lease (in acres)	538

Accounting Policies (Details)

Accounting Policies (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue Recognition
External freight billed to customers included in revenue	$ 7.8	$ 6.4	$ 20.1	$ 17.9

Business Segments (Details)

Business Segments (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)segment	Sep. 30, 2015USD ($)
Business segments
Number of business segments | segment			2
Revenues	$ 38,650	$ 37,029	$ 105,116	$ 99,543
Depreciation, depletion and amortization	4,017	3,967	11,855	11,736
Gross profit	10,569	10,367	25,658	23,244
Capital expenditures	4,330	1,770	12,230	8,080
Lime and limestone operations
Business segments
Revenues	38,096	36,452	103,626	97,593
Depreciation, depletion and amortization	3,827	3,786	11,279	11,175
Gross profit	10,503	10,320	25,677	22,826
Capital expenditures	4,320	1,766	12,216	8,069
Natural gas interests
Business segments
Revenues	554	577	1,490	1,950
Depreciation, depletion and amortization	190	181	576	561
Gross profit	66	47	(19)	418
Capital expenditures	$ 10	$ 4	$ 14	$ 11

Income Per Share of Common St29

Income Per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income per share of common stock:
Net income for basic and diluted income per common share	$ 6,081	$ 5,676	$ 13,834	$ 10,600
Weighted-average shares for basic income per share	5,565,000	5,600,000	5,569,000	5,599,000
Effect of dilutive securities:
Employee and director stock options (in shares)	4,000	4,000	3,000	6,000
Adjusted weighted-average shares and assumed exercises for diluted income per share	5,569,000	5,604,000	5,572,000	5,605,000
Basic net income per common share (in dollars per share)	$ 1.09	$ 1.01	$ 2.48	$ 1.89
Diluted net income per common share (in dollars per share)	$ 1.09	$ 1.01	$ 2.48	$ 1.89
Options
Anti-dilutive securities
Anti-dilutive shares of common stock excluded from the calculation of dilutive securities	7,500	34,800	7,500	17,400

Accumulated Other Comprehensi30

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Components of comprehensive income
Net income	$ 6,081	$ 5,676	$ 13,834	$ 10,600
Minimum pension liability adjustments				946
Reclassification to interest expense				678
Deferred income tax expense				(585)
Mark to market of interest rate hedges				(15)
Comprehensive income	$ 6,081	$ 5,676	$ 13,834	$ 11,624

Inventories, Net (Details)

Inventories, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Lime and limestone inventories:
Raw materials	$ 5,265	$ 6,627
Finished goods	1,473	2,049
Total	6,738	8,676
Service parts inventories	5,975	6,052
Total inventories	$ 12,713	$ 14,728

Banking Facilities and Debt (De

Banking Facilities and Debt (Details)	May 07, 2015USD ($)	Mar. 31, 2015USD ($)	May 06, 2015USD ($)	Sep. 30, 2016USD ($)
Interest rate swaps
Interest rate hedges
Quarterly settlement payment pursuant to hedges	$ 500,000	$ 200,000
Minimum | LIBOR
Banking facilities and other debt
Interest rate margin (as a percent)			1.75%
Maximum
Interest rate hedges
Pro forma Cash Flow Leverage Ratio to be maintained to purchase, redeem or otherwise acquire shares of common stock				3
New Revolving Facility
Banking facilities and other debt
Maximum borrowing capacity	$ 75,000,000
Accordion feature period	4 years
Maximum borrowing capacity accordion feature	$ 50,000,000
Time period used for Cash Flow Leverage Ratio under the new revolving facility	12 months
New Revolving Facility | Minimum
Banking facilities and other debt
Commitment fee (as a percent)	0.20%
New Revolving Facility | Minimum | LIBOR
Banking facilities and other debt
Interest rate margin (as a percent)	1.00%
New Revolving Facility | Minimum | Lender's prime rate
Banking facilities and other debt
Interest rate margin (as a percent)	0.00%
New Revolving Facility | Maximum
Banking facilities and other debt
Commitment fee (as a percent)	0.35%
New Revolving Facility | Maximum | LIBOR
Banking facilities and other debt
Interest rate margin (as a percent)	2.00%
New Revolving Facility | Maximum | Lender's prime rate
Banking facilities and other debt
Interest rate margin (as a percent)	1.00%
Term Loan And Draw Term Loan
Banking facilities and other debt
Outstanding Term loan and Draw term loan paid off	$ 15,400,000
Term Loan
Banking facilities and other debt
Term			10 years
Face amount of term loan			$ 40,000,000
Quarterly principal payments			800,000
Final principal payment			$ 7,500,000
Term Loan | LIBOR | Interest rate swaps
Interest rate hedges
LIBOR (as a percent)			4.695%
Current interest rate (as a percent)			6.445%
Draw Term Loan
Banking facilities and other debt
Term			10 years
Face amount of term loan			$ 20,000,000
Quarterly principal payments			400,000
Final principal payment			$ 5,400,000
75% of the outstanding balance of the Draw Term Loan | Interest rate swaps
Interest rate hedges
Percentage of outstanding balance of debt hedged			75.00%
75% of the outstanding balance of the Draw Term Loan | LIBOR | Interest rate swaps
Interest rate hedges
LIBOR (as a percent)			4.875%
Current interest rate (as a percent)			6.625%
25% of the outstanding balance of the Draw Term Loan | Interest rate swaps
Interest rate hedges
Percentage of outstanding balance of debt hedged			25.00%
25% of the outstanding balance of the Draw Term Loan | LIBOR | Interest rate swaps
Interest rate hedges
LIBOR (as a percent)			5.50%
Current interest rate (as a percent)			7.25%
Revolving Facility
Banking facilities and other debt
Maximum borrowing capacity			$ 30,000,000
Letters of credit outstanding				$ 700,000

Income Taxes (Details)

Income Taxes (Details)	9 Months Ended
	Sep. 30, 2016
Income Taxes
Effective income tax rate (as a percent)	25.20%

Dividends and Share Repurchas34

Dividends and Share Repurchases (Details) - USD ($) $ / shares in Units, $ in Thousands	Sep. 16, 2016	Jun. 17, 2016	Mar. 18, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Dec. 31, 2015
Dividends and Share Repurchases
Cash dividends paid	$ 700	$ 700	$ 700				$ 2,087	$ 2,099
Cash dividend (in dollars per share)	$ 0.125	$ 0.125	$ 0.125
Dividends payable date of record	Aug. 16, 2016	May 27, 2016	Feb. 26, 2016
Share repurchase program amount authorized										$ 10,000
Shares repurchased (in shares)				0	0	50,068
Weighted average price per share (in dollars per share)						$ 53.52
Shares paid for tax withholding for share-based compensation									53,154
Weighted average per share prices for shares used to pay tax withholding liability (in dollars per share)									$ 53.59

Employee Retirement Plan (Detai

Employee Retirement Plan (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015
Employee Retirement Plan
Cash payment on termination of the plan	$ 200
Expense on providing contractual termination benefits recognized	900
Expense on providing contractual termination benefits recognized, net of tax benefit	$ 600
Funded status
Projected benefit obligation, Pre Settlement		$ 2,039
Fair value of plan assets, Pre Settlement		2,039
Projected benefit obligation, Settlement		(2,039)
Fair value of plan assets, Settlement		$ (2,039)

Subsequent Events (Details)

Subsequent Events (Details) - $ / shares	Oct. 27, 2016	Sep. 16, 2016	Jun. 17, 2016	Mar. 18, 2016
Subsequent event
Quarterly cash dividend declared (in dollars per share)		$ 0.125	$ 0.125	$ 0.125
Dividends payable date of record		Aug. 16, 2016	May 27, 2016	Feb. 26, 2016
Subsequent event
Subsequent event
Quarterly cash dividend declared (in dollars per share)	$ 0.125
Dividends payable date declared	Oct. 27, 2016
Dividends payable date of record	Nov. 25, 2016
Dividends payable date to be paid	Dec. 16, 2016