United States Lime & Minerals (USLM) 10-Q 27 Oct 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 26, 2017
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, 2017
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		5,576,676
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 82,245	$ 74,712
Trade receivables, net	18,242	16,781
Inventories, net	12,531	12,433
Prepaid expenses and other current assets	1,576	1,110
Total current assets	114,594	105,036
Property, plant and equipment	297,813	285,594
Less accumulated depreciation and depletion	(190,216)	(180,613)
Property, plant and equipment, net	107,597	104,981
Other assets, net	168	142
Total assets	222,359	210,159
Current liabilities:
Accounts payable	4,921	5,587
Accrued expenses	2,925	3,521
Total current liabilities	7,846	9,108
Deferred tax liabilities, net	18,784	19,832
Other liabilities	1,496	1,580
Total liabilities	28,126	30,520
Stockholders' equity:
Common stock	657	657
Additional paid-in capital	23,975	22,831
Accumulated other comprehensive income (loss)	114	(223)
Retained earnings	223,076	209,770
Less treasury stock, at cost	(53,589)	(53,396)
Total stockholders' equity	194,233	179,639
Total liabilities and stockholders' equity	$ 222,359	$ 210,159

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues
Lime and limestone operations	$ 36,428	$ 38,096	$ 107,910	$ 103,626
Natural gas interests	506	554	1,695	1,490
Total revenues	36,934	38,650	109,605	105,116
Cost of revenues
Labor and other operating expenses	23,142	24,064	70,447	67,603
Depreciation, depletion and amortization	4,240	4,017	12,530	11,855
Total cost of revenues	27,382	28,081	82,977	79,458
Gross profit	9,552	10,569	26,628	25,658
Selling, general and administrative expenses	2,657	2,482	7,595	7,213
Operating profit	6,895	8,087	19,033	18,445
Other expenses (income)
Interest expense	56	63	174	185
Other income, net	(261)	(115)	(665)	(238)
Total other expense (income)	(205)	(52)	(491)	(53)
Income before income taxes	7,100	8,139	19,524	18,498
Income tax expense	1,433	2,058	3,959	4,664
Net income	$ 5,667	$ 6,081	$ 15,565	$ 13,834
Net income per share of common stock
Basic (in dollars per share)	$ 1.02	$ 1.09	$ 2.79	$ 2.48
Diluted (in dollars per share)	1.01	1.09	2.79	2.48
Cash dividends per share of common stock (in dollars per share)	$ 0.135	$ 0.125	$ 0.405	$ 0.375

CONDENSED CONSOLIDATED STATEME4

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Percentage	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues
Lime and limestone operations (as a percent)	98.60%	98.60%	98.50%	98.60%
Natural gas interests (as a percent)	1.40%	1.40%	1.50%	1.40%
Total revenues (as a percent)	100.00%	100.00%	100.00%	100.00%
Cost of revenues
Labor and other operating expenses (as a percent)	62.70%	62.30%	64.30%	64.30%
Depreciation, depletion and amortization (as a percent)	11.50%	10.40%	11.40%	11.30%
Total cost of revenues (as a percent)	74.20%	72.70%	75.70%	75.60%
Gross profit (as a percent)	25.80%	27.30%	24.30%	24.40%
Selling, general and administrative expenses (as a percent)	7.20%	6.40%	6.90%	6.90%
Operating profit (as a percent)	18.60%	20.90%	17.40%	17.50%
Other expenses (income)
Interest expense (as a percent)	0.10%	0.20%	0.20%	0.10%
Other income, net (as a percent)	(0.70%)	(0.30%)	(0.60%)	(0.20%)
Total other expense (income) (as a percent)	(0.60%)	(0.10%)	(0.40%)	(0.10%)
Income before income taxes (as a percent)	19.20%	21.00%	17.80%	17.60%
Income tax expense (as a percent)	3.90%	5.30%	3.60%	4.40%
Net income (as a percent)	15.30%	15.70%	14.20%	13.20%

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Condensed Consolidated Statements of Comprehensive Income
Net income	$ 5,667	$ 6,081	$ 15,565	$ 13,834
Other comprehensive income
Mark to market of foreign exchange hedges, net of tax expense of $34 and $195 for the three months and nine months ended September 30, 2017, respectively	58		337
Total other comprehensive income	58		337
Comprehensive income	$ 5,725	$ 6,081	$ 15,902	$ 13,834

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017
Condensed Consolidated Statements of Comprehensive Income
Mark to market on foreign exchange hedges, tax expense	$ 34	$ 195

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
OPERATING ACTIVITIES:
Net income	$ 15,565	$ 13,834
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	12,711	12,032
Amortization of deferred financing costs	11	11
Deferred income taxes	(1,243)	311
Loss on disposition of property, plant and equipment	78	107
Stock-based compensation	1,073	778
Changes in operating assets and liabilities:
Trade receivables, net	(1,461)	(3,496)
Inventories, net	(448)	2,015
Prepaid expenses and other current assets	(325)	700
Other assets	2	5
Accounts payable and accrued expenses	(1,963)	(341)
Other liabilities	(42)	(86)
Net cash provided by operating activities	23,958	25,870
INVESTING ACTIVITIES:
Purchase of property, plant and equipment	(14,504)	(12,230)
Proceeds from sale of property, plant and equipment	459	126
Net cash used in investing activities	(14,045)	(12,104)
FINANCING ACTIVITIES:
Cash dividends paid	(2,259)	(2,087)
Proceeds from exercise of stock options	72	153
Purchase of treasury shares	(193)	(2,818)
Net cash used in financing activities	(2,380)	(4,752)
Net increase in cash and cash equivalents	7,533	9,014
Cash and cash equivalents at beginning of period	74,712	59,926
Cash and cash equivalents at end of period	$ 82,245	$ 68,940

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2017
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, 2016. The results of operations for the three- and nine-month periods ended September 30, 2017 are not necessarily indicative of operating results for the full year.

Organization

Organization	9 Months Ended
	Sep. 30, 2017
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, 2017
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 2017 and 2016 revenues was $5.8 million and $6.7 million for the three-month periods, and $17.8 million and $17.6 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 and foreign exchange derivative instruments designated as hedges, 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. Specific inputs used to value the Company’s foreign exchange hedges were Euro to U.S. Dollar exchange rates for the expected future payment dates for the Company’s commitments denominated in Euros. See Note 6. There were no changes in the methods and assumptions used in measuring fair value. The Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2017 and December 31, 2016, respectively, are summarized below (in thousands): Significant Other Observable Inputs (Level 2) September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Valuation Technique Foreign exchange hedges $ 181 $ (352) $ 181 $ (352) Cash flows approach 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. Almost all of the Company’s purchase orders, contracts or purchase agreements do not contain performance obligations other than delivery of the agreed upon product, which is primarily FOB shipping point. Thus, the Company generally recognizes revenue upon shipment of the product. While the Company is still in the process of completing an analysis of all of its revenue generating activities and the contracts which might impact its revenue generating activities in light of the new standard, the Company does not believe that any of its revenue streams will be materially affected by the adoption of ASU 2014-09, and therefore it does not expect its Consolidated Statements of Operations will be materially affected. The Company plans to adopt ASU 2014-09 beginning January 1, 2018 using the modified retrospective approach and recognize a cumulative effect of the change, if any, to opening retained earnings in the year of adoption. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (“ASU 2016-02”), “Leases,” which requires the recognition of lease assets and lease liabilities by lessees for all leases greater than one year in duration and classified as operating leases under previous guidance. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those periods, with early adoption permitted. ASU 2016-02 must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. As of December 31, 2016, the Company’s undiscounted minimum contractual commitments under long-term leases, which were not recorded on the Company’s December 31, 2016 Consolidated Balance Sheet, was $6.8 million, which is an estimate of the effect on total assets and total liabilities that the new accounting standard could have on that date. The Company is currently evaluating the effect that this standard will have on the Company’s Consolidated Financial Statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (“ASU 2016-09”), “Compensation – Stock Compensation,” which requires that excess tax benefits (which represent the excess of actual tax benefits received at the date of vesting or settlement over the vesting period or upon issuance of share-based payments) and tax deficiencies (which represents the amount by which actual tax benefits received at the date of vesting or settlement is lower than the benefits recognized over the vesting period or upon issuance of share-based payments) be recorded in the income statement as a reduction or increase of income taxes when an award vests. It also requires excess tax benefits to be classified as an operating activity in the statement of cash flows rather than a financing activity. In addition, it simplifies other aspects of share-based payment transactions, including classification of awards that permit repurchase to satisfy statutory tax withholding requirements and classification of tax payments on behalf of employees on the statement of cash flows. The Company adopted this guidance in the first quarter 2017, and it did not have a material effect on the Company’s Condensed Consolidated Financial Statements. In August 2017, the FASB issued Accounting Standards Update No. 2017-12 (“ASU 2017-12”), “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This standard better aligns an entity’s risk management activities and financial reporting for hedging relationships and enhances the transparency and understandability of hedge results through improved disclosures. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company is currently assessing the effect that this standard will have on the Company’s Consolidated Financial Statements.

Business Segments

Business Segments	9 Months Ended
	Sep. 30, 2017
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 2017 2016 2017 2016 Lime and limestone operations $ 36,428 $ $ 107,910 $ Natural gas interests 506 1,695 Total revenues $ 36,934 $ 38,650 $ 109,605 $ 105,116 Depreciation, depletion and amortization Lime and limestone operations $ 4,048 $ 3,827 $ 11,935 $ 11,279 Natural gas interests 192 190 595 576 Total depreciation, depletion and amortization $ 4,240 $ 4,017 $ 12,530 $ 11,855 Gross profit (loss) Lime and limestone operations $ 9,476 $ $ 26,218 $ 25,677 Natural gas interests 76 66 410 (19) Total gross profit $ 9,552 $ 10,569 $ 26,628 $ 25,658 Capital expenditures Lime and limestone operations $ 6,362 $ $ 14,502 $ 12,216 Natural gas interests — 10 2 14 Total capital expenditures $ 6,362 $ 4,330 $ 14,504 $ 12,230

Income Per Share of Common Stoc

Income Per Share of Common Stock	9 Months Ended
	Sep. 30, 2017
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, 2017 2016 2017 2016 Net income for basic and diluted income per common share $ 5,667 $ 6,081 $ 15,565 $ 13,834 Weighted-average shares for basic income per common share 5,577 5,577 5,569 Effect of dilutive securities: Employee and director stock options (1) 10 9 3 Adjusted weighted-average shares and assumed exercises for diluted income per common share 5,587 5,569 5,586 5,572 Basic net income per common share $ 1.02 $ 1.09 $ 2.79 $ 2.48 Diluted net income per common share $ 1.01 $ 1.09 $ 2.79 $ 2.48 (1) Excludes 7.5 stock options for the 2016 periods as anti-dilutive because the exercise price exceeded the average per share market price for the period.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income (Loss)	9 Months Ended
	Sep. 30, 2017
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)	6. Accumulated Other Comprehensive Income (Loss) The following table presents the components of comprehensive income (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net income $ 5,667 $ 6,081 $ 15,565 $ 13,834 Mark to market of foreign exchange hedges 92 — 532 — Deferred income tax expense (34) — (195) — Comprehensive income $ 5,725 $ 6,081 $ 15,902 $ 13,834 In November 2016, to hedge against potential losses due to changes in the Euro to U.S. Dollar exchange rates, the Company entered into foreign exchange (“FX”) hedges with Wells Fargo Bank, N.A. as the counterparty to the FX hedges to fix the exchange rate for 5.5 million Euros in connection with a contractual obligation related to the St. Clair kiln project. The Company will be exposed to credit losses in the event of non-performance by the counterparty to the FX hedges. The FX hedges have been effective as defined under applicable accounting rules. Therefore, changes in fair value of the FX hedges are reflected in comprehensive income. Due to the weakening of the U.S. Dollar, compared to the Euro, in the 2017 periods, the change in the fair value of the remaining 3.7 million Euro FX hedges resulted in an asset of $181 thousand at September 30, 2017, which is included in prepaid expenses and other current assets ($142 thousand) and other assets, net ($39 thousand) at September 30, 2017. Due to the strengthening of the U.S. Dollar, compared to the Euro, in the period from when the Company entered into the FX hedges through December 31, 2016, the fair value of the FX hedges resulted in a liability of $352 thousand at December 31, 2016, which is included in accrued expenses ($309 thousand) and other liabilities ($43 thousand) at December 31, 2016.

Inventories, Net

Inventories, Net	9 Months Ended
	Sep. 30, 2017
Inventories, Net
Inventories, Net	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, 2017 2016 Lime and limestone inventories: Raw materials $ 4,502 $ 4,811 Finished goods 1,852 2,070 $ 6,354 $ 6,881 Service parts inventories 6,177 5,552 $ 12,531 $ 12,433

Banking Facilities and Debt

Banking Facilities and Debt	9 Months Ended
	Sep. 30, 2017
Banking Facilities and Debt
Banking Facilities and Debt	8. Banking Facilities and Debt The Company’s credit agreement with Wells Fargo Bank, N.A. (the “Lender”) provides for a $75 million revolving credit facility (the “Revolving Facility”) and 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 Revolving Facility and any incremental loan mature on May 7, 2020. Interest rates are, at the Company’s option, LIBOR plus a margin of 1.000% to 2.000%, or the Lender’s Prime Rate plus a margin of 0.000% to 1.000%; and a commitment fee range of 0.200% to 0.350% on the undrawn portion of the Revolving Facility. The 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 Revolving Facility is secured by the Company’s existing and hereafter acquired tangible assets, intangible assets and real property. The maturity of the Revolving Facility and any incremental loans can be accelerated if any event of default, as defined under the credit agreement, occurs. The Company’s maximum Cash Flow Leverage Ratio is 3.50 to 1. As of October 27, 2016, the Company amended its credit agreement to increase the letter of credit sublimit under the Revolving Facility from $5 million to $10 million. 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. As of September 30, 2017, the Company had no debt outstanding and no draws on the Revolving Facility other than $7.0 million of letters of credit, including $6.5 million related to the St. Clair kiln project, which count as draws against the available commitment under the Revolving Facility.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2017
Income Taxes
Income Taxes	9. Income Taxes The Company has estimated that its effective income tax rate for 2017 will be 20.3%. The primary reasons 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, and income tax credits associated with the ongoing construction of the St. Clair kiln project.

Dividends

Dividends	9 Months Ended
	Sep. 30, 2017
Dividends
Dividends	10. Dividends On September 15, 2017, the Company paid $0.8 million in cash dividends, based on a dividend of $0.135 (13.5 cents) per share on its common stock, to shareholders of record at the close of business on August 25, 2017. On June 16, 2017, the Company paid $0.8 million in cash dividends, based on a dividend of $0.135 (13.5 cents) per share on its common stock, to shareholders of record at the close of business on May 26, 2017. On March 17, 2017, the Company paid $0.8 million in cash dividends, based on a dividend of $0.135 (13.5 cents) per share on its common stock, to shareholders of record at the close of business on February 24, 2017.

Subsequent Event

Subsequent Event	9 Months Ended
	Sep. 30, 2017
Subsequent Event.
Subsequent Event	11. Subsequent Event On October 26, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.135 (13.5 cents) per share on the Company’s common stock. This dividend is payable on December 15, 2017 to shareholders of record at the close of business on November 24, 2017.

Accounting Policies (Policies)

Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2017
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 2017 and 2016 revenues was $5.8 million and $6.7 million for the three-month periods, and $17.8 million and $17.6 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 and foreign exchange derivative instruments designated as hedges, 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. Specific inputs used to value the Company’s foreign exchange hedges were Euro to U.S. Dollar exchange rates for the expected future payment dates for the Company’s commitments denominated in Euros. See Note 6. There were no changes in the methods and assumptions used in measuring fair value. The Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2017 and December 31, 2016, respectively, are summarized below (in thousands): Significant Other Observable Inputs (Level 2) September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Valuation Technique Foreign exchange hedges $ 181 $ (352) $ 181 $ (352) Cash flows approach
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. Almost all of the Company’s purchase orders, contracts or purchase agreements do not contain performance obligations other than delivery of the agreed upon product, which is primarily FOB shipping point. Thus, the Company generally recognizes revenue upon shipment of the product. While the Company is still in the process of completing an analysis of all of its revenue generating activities and the contracts which might impact its revenue generating activities in light of the new standard, the Company does not believe that any of its revenue streams will be materially affected by the adoption of ASU 2014-09, and therefore it does not expect its Consolidated Statements of Operations will be materially affected. The Company plans to adopt ASU 2014-09 beginning January 1, 2018 using the modified retrospective approach and recognize a cumulative effect of the change, if any, to opening retained earnings in the year of adoption. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (“ASU 2016-02”), “Leases,” which requires the recognition of lease assets and lease liabilities by lessees for all leases greater than one year in duration and classified as operating leases under previous guidance. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those periods, with early adoption permitted. ASU 2016-02 must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. As of December 31, 2016, the Company’s undiscounted minimum contractual commitments under long-term leases, which were not recorded on the Company’s December 31, 2016 Consolidated Balance Sheet, was $6.8 million, which is an estimate of the effect on total assets and total liabilities that the new accounting standard could have on that date. The Company is currently evaluating the effect that this standard will have on the Company’s Consolidated Financial Statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (“ASU 2016-09”), “Compensation – Stock Compensation,” which requires that excess tax benefits (which represent the excess of actual tax benefits received at the date of vesting or settlement over the vesting period or upon issuance of share-based payments) and tax deficiencies (which represents the amount by which actual tax benefits received at the date of vesting or settlement is lower than the benefits recognized over the vesting period or upon issuance of share-based payments) be recorded in the income statement as a reduction or increase of income taxes when an award vests. It also requires excess tax benefits to be classified as an operating activity in the statement of cash flows rather than a financing activity. In addition, it simplifies other aspects of share-based payment transactions, including classification of awards that permit repurchase to satisfy statutory tax withholding requirements and classification of tax payments on behalf of employees on the statement of cash flows. The Company adopted this guidance in the first quarter 2017, and it did not have a material effect on the Company’s Condensed Consolidated Financial Statements. In August 2017, the FASB issued Accounting Standards Update No. 2017-12 (“ASU 2017-12”), “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This standard better aligns an entity’s risk management activities and financial reporting for hedging relationships and enhances the transparency and understandability of hedge results through improved disclosures. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company is currently assessing the effect that this standard will have on the Company’s Consolidated Financial Statements.

Accounting Policies (Tables)

Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2017
Accounting Policies
Schedule of the entity's financial liabilities measured at fair value on a recurring basis (in thousands)	Significant Other Observable Inputs (Level 2) September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Valuation Technique Foreign exchange hedges $ 181 $ (352) $ 181 $ (352) Cash flows approach

Business Segments (Tables)

Business Segments (Tables)	9 Months Ended
	Sep. 30, 2017
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 2017 2016 2017 2016 Lime and limestone operations $ 36,428 $ $ 107,910 $ Natural gas interests 506 1,695 Total revenues $ 36,934 $ 38,650 $ 109,605 $ 105,116 Depreciation, depletion and amortization Lime and limestone operations $ 4,048 $ 3,827 $ 11,935 $ 11,279 Natural gas interests 192 190 595 576 Total depreciation, depletion and amortization $ 4,240 $ 4,017 $ 12,530 $ 11,855 Gross profit (loss) Lime and limestone operations $ 9,476 $ $ 26,218 $ 25,677 Natural gas interests 76 66 410 (19) Total gross profit $ 9,552 $ 10,569 $ 26,628 $ 25,658 Capital expenditures Lime and limestone operations $ 6,362 $ $ 14,502 $ 12,216 Natural gas interests — 10 2 14 Total capital expenditures $ 6,362 $ 4,330 $ 14,504 $ 12,230

Income Per Share of Common St22

Income Per Share of Common Stock (Tables)	9 Months Ended
	Sep. 30, 2017
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, 2017 2016 2017 2016 Net income for basic and diluted income per common share $ 5,667 $ 6,081 $ 15,565 $ 13,834 Weighted-average shares for basic income per common share 5,577 5,577 5,569 Effect of dilutive securities: Employee and director stock options (1) 10 9 3 Adjusted weighted-average shares and assumed exercises for diluted income per common share 5,587 5,569 5,586 5,572 Basic net income per common share $ 1.02 $ 1.09 $ 2.79 $ 2.48 Diluted net income per common share $ 1.01 $ 1.09 $ 2.79 $ 2.48 (1) Excludes 7.5 stock options for the 2016 periods as anti-dilutive because the exercise price exceeded the average per share market price for the period.

Accumulated Other Comprehensi23

Accumulated Other Comprehensive Income (Loss) (Tables)	9 Months Ended
	Sep. 30, 2017
Accumulated Other Comprehensive Income (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, 2017 2016 2017 2016 Net income $ 5,667 $ 6,081 $ 15,565 $ 13,834 Mark to market of foreign exchange hedges 92 — 532 — Deferred income tax expense (34) — (195) — Comprehensive income $ 5,725 $ 6,081 $ 15,902 $ 13,834

Inventories, Net (Tables)

Inventories, Net (Tables)	9 Months Ended
	Sep. 30, 2017
Inventories, Net
Schedule of inventories, net	Inventories, net consisted of the following (in thousands): September 30, December 31, 2017 2016 Lime and limestone inventories: Raw materials $ 4,502 $ 4,811 Finished goods 1,852 2,070 $ 6,354 $ 6,881 Service parts inventories 6,177 5,552 $ 12,531 $ 12,433

Organization (Details)

Organization (Details)	9 Months Ended
	Sep. 30, 2017asegment
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 - Revenue R

Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenue Recognition
External freight billed to customers included in revenue	$ 5.8	$ 6.7	$ 17.8	$ 17.6

Accounting Policies - Fair Valu

Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Values of Financial Instruments
Foreign exchange hedges assets	$ 181
Foreign exchange hedges liabilities		$ (352)
Recurring | Fair value | Cash flows approach
Fair Values of Financial Instruments
Foreign exchange hedges assets	181
Foreign exchange hedges liabilities		(352)
Recurring | Fair value | Significant Other Observable Inputs (Level 2) | Cash flows approach
Fair Values of Financial Instruments
Foreign exchange hedges assets	$ 181
Foreign exchange hedges liabilities		$ (352)

Accounting Policies - New Accou

Accounting Policies - New Accounting Pronouncements (Details) $ in Millions	Dec. 31, 2016USD ($)
Accounting Policies
Undiscounted minimum contractual commitments under long-term operating leases	$ 6.8

Business Segments (Details)

Business Segments (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2017USD ($)segment	Sep. 30, 2016USD ($)
Business segments
Number of business segments | segment			2
Revenues	$ 36,934	$ 38,650	$ 109,605	$ 105,116
Depreciation, depletion and amortization	4,240	4,017	12,530	11,855
Gross profit (loss)	9,552	10,569	26,628	25,658
Capital expenditures	6,362	4,330	14,504	12,230
Lime and limestone operations
Business segments
Revenues	36,428	38,096	107,910	103,626
Depreciation, depletion and amortization	4,048	3,827	11,935	11,279
Gross profit (loss)	9,476	10,503	26,218	25,677
Capital expenditures	6,362	4,320	14,502	12,216
Natural gas interests
Business segments
Revenues	506	554	1,695	1,490
Depreciation, depletion and amortization	192	190	595	576
Gross profit (loss)	$ 76	66	410	(19)
Capital expenditures		$ 10	$ 2	$ 14

Income Per Share of Common St30

Income Per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income per share of common stock:
Net income for basic and diluted income per common share	$ 5,667	$ 6,081	$ 15,565	$ 13,834
Weighted-average shares for basic income per common share	5,577,000	5,565,000	5,577,000	5,569,000
Effect of dilutive securities:
Employee and director stock options (in shares)	10,000	4,000	9,000	3,000
Adjusted weighted-average shares and assumed exercises for diluted income per common share	5,587,000	5,569,000	5,586,000	5,572,000
Basic net income per common share (in dollars per share)	$ 1.02	$ 1.09	$ 2.79	$ 2.48
Diluted net income per common share (in dollars per share)	$ 1.01	$ 1.09	$ 2.79	$ 2.48
Options
Anti-dilutive securities
Anti-dilutive shares of common stock excluded from the calculation of dilutive securities		7,500		7,500

Accumulated Other Comprehensi31

Accumulated Other Comprehensive Income (Loss) (Details) $ in Thousands, € in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2017USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2017EUR (€)	Dec. 31, 2016USD ($)	Nov. 30, 2016EUR (€)
Components of comprehensive income
Net income	$ 5,667	$ 6,081	$ 15,565	$ 13,834
Mark to market of foreign exchange hedges	92		532
Deferred income tax expense	(34)		(195)
Comprehensive income	5,725	$ 6,081	15,902	$ 13,834
Foreign exchange hedges assets	181		181
Foreign exchange hedges liabilities						$ 352
Other current assets
Components of comprehensive income
Foreign exchange hedges assets	142		142
Other assets, net
Components of comprehensive income
Foreign exchange hedges assets	$ 39		$ 39
Accrued Expenses
Components of comprehensive income
Foreign exchange hedges liabilities						309
Other liabilities
Components of comprehensive income
Foreign exchange hedges liabilities						$ 43
Foreign Exchange Contract | Designated as Hedging Instrument
Components of comprehensive income
Notional amount | €					€ 3.7		€ 5.5

Inventories, Net (Details)

Inventories, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Lime and limestone inventories:
Raw materials	$ 4,502	$ 4,811
Finished goods	1,852	2,070
Total	6,354	6,881
Service parts inventories	6,177	5,552
Total inventories	$ 12,531	$ 12,433

Banking Facilities and Debt (De

Banking Facilities and Debt (Details) $ in Millions	May 07, 2015USD ($)	Sep. 30, 2017USD ($)	Oct. 27, 2016USD ($)	Oct. 26, 2016USD ($)
Banking facilities and other debt
Total Debt		$ 0
Maximum
Banking facilities and other debt
Pro forma Cash Flow Leverage Ratio to be maintained to purchase, redeem or otherwise acquire shares of common stock		3
Cash flow leverage ratio	3.50
Revolving Facility
Banking facilities and other debt
Maximum borrowing capacity	$ 75
Accordion feature period	4 years
Maximum borrowing capacity accordion feature	$ 50
Letters of credit outstanding		$ 7
The amount of letters of credit outstanding related to the St Clair kiln project		$ 6.5
Revolving Facility | Minimum
Banking facilities and other debt
Commitment fee (as a percent)	0.20%
Revolving Facility | Minimum | LIBOR
Banking facilities and other debt
Interest rate margin (as a percent)	1.00%
Revolving Facility | Minimum | Lender's prime rate
Banking facilities and other debt
Interest rate margin (as a percent)	0.00%
Revolving Facility | Maximum
Banking facilities and other debt
Commitment fee (as a percent)	0.35%
Revolving Facility | Maximum | LIBOR
Banking facilities and other debt
Interest rate margin (as a percent)	2.00%
Revolving Facility | Maximum | Lender's prime rate
Banking facilities and other debt
Interest rate margin (as a percent)	1.00%
Letter of Credit
Banking facilities and other debt
Maximum borrowing capacity			$ 10	$ 5

Income Taxes (Details)

Income Taxes (Details)	9 Months Ended
	Sep. 30, 2017
Income Taxes
Effective income tax rate (as a percent)	20.30%

Dividends (Details)

Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands	Sep. 15, 2017	Jun. 16, 2017	Mar. 17, 2017	Sep. 30, 2017	Sep. 30, 2016
Dividends
Cash dividends paid	$ 800	$ 800	$ 800	$ 2,259	$ 2,087
Cash dividend (in dollars per share)	$ 0.135	$ 0.135	$ 0.135
Dividends payable date of record	Aug. 25, 2017	May 26, 2017	Feb. 24, 2017

Subsequent Event (Details)

Subsequent Event (Details) - $ / shares	Oct. 26, 2017	Sep. 15, 2017	Jun. 16, 2017	Mar. 17, 2017
Subsequent event
Quarterly cash dividend declared (in dollars per share)		$ 0.135	$ 0.135	$ 0.135
Dividends payable date of record		Aug. 25, 2017	May 26, 2017	Feb. 24, 2017
Subsequent event
Subsequent event
Dividends payable date declared	Oct. 26, 2017
Quarterly cash dividend declared (in dollars per share)	$ 0.135
Dividends payable date to be paid	Dec. 15, 2017
Dividends payable date of record	Nov. 24, 2017