United States Lime & Minerals (USLM) 10-Q 27 Jul 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 24, 2018
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	Jun. 30, 2018
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		5,597,950
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 82,346	$ 85,000
Trade receivables, net	20,923	16,473
Inventories, net	12,257	13,546
Prepaid expenses and other current assets	2,558	2,996
Total current assets	118,084	118,015
Property, plant and equipment	317,902	300,236
Less accumulated depreciation and depletion	(197,909)	(190,518)
Property, plant and equipment, net	119,993	109,718
Other assets, net	605	713
Total assets	238,682	228,446
Current liabilities:
Accounts payable	6,234	6,263
Accrued expenses	2,425	3,096
Total current liabilities	8,659	9,359
Deferred tax liabilities, net	13,504	12,374
Other liabilities	1,432	1,461
Total liabilities	23,595	23,194
Stockholders' equity:
Common stock	660	659
Additional paid-in capital	25,092	24,307
Accumulated other comprehensive (loss) income	(3)	86
Retained earnings	243,294	233,905
Less treasury stock, at cost	(53,956)	(53,705)
Total stockholders' equity	215,087	205,252
Total liabilities and stockholders' equity	$ 238,682	$ 228,446

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues
Total revenues	$ 39,242	$ 36,518	$ 74,529	$ 72,671
Cost of revenues
Labor and other operating expenses	25,317	23,626	49,390	47,305
Depreciation, depletion and amortization	4,288	4,054	8,465	8,290
Total cost of revenues	29,605	27,680	57,855	55,595
Gross profit	9,637	8,838	16,674	17,076
Selling, general and administrative expenses	2,565	2,518	5,066	4,938
Operating profit	7,072	6,320	11,608	12,138
Other (income) expense
Interest expense	63	59	125	118
Interest and other income, net	(459)	(225)	(812)	(404)
Total other (income) expense	(396)	(166)	(687)	(286)
Income before income tax expense	7,468	6,486	12,295	12,424
Income tax expense	830	1,208	1,395	2,526
Net income	$ 6,638	$ 5,278	$ 10,900	$ 9,898
Net income per share of common stock
Basic (in dollars per share)	$ 1.19	$ 0.95	$ 1.95	$ 1.77
Diluted (in dollars per share)	1.18	0.94	1.95	1.77
Cash dividends per share of common stock (in dollars per share)	$ 0.135	$ 0.135	$ 0.270	$ 0.270
Lime and limestone operations
Revenues
Total revenues	$ 38,557	$ 35,965	$ 73,271	$ 71,482
Natural gas interests
Revenues
Total revenues	$ 685	$ 553	$ 1,258	$ 1,189

CONDENSED CONSOLIDATED STATEME4

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Percentage	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues
Total revenue (as a percent)	100.00%	100.00%	100.00%	100.00%
Cost of revenues
Labor and other operating expenses (as a percent)	64.50%	64.70%	66.30%	65.10%
Depreciation, depletion and amortization (as a percent)	11.00%	11.10%	11.40%	11.40%
Total cost of revenues (as a percent)	75.50%	75.80%	77.60%	76.50%
Gross profit (as a percent)	24.50%	24.20%	22.40%	23.50%
Selling, general and administrative expenses (as a percent)	6.50%	6.90%	6.80%	6.80%
Operating profit (as a percent)	18.00%	17.30%	15.60%	16.70%
Other (income) expense
Interest expense (as a percent)	0.20%	0.10%	0.20%	0.20%
Interest and other income, net (as a percent)	(1.20%)	(0.60%)	(1.10%)	(0.60%)
Total other (income) expense (as a percent)	(1.00%)	(0.50%)	(0.90%)	(0.40%)
Income before income tax expense (as a percent)	19.00%	17.80%	16.50%	17.10%
Income tax expense (as a percent)	2.10%	3.30%	1.90%	3.50%
Net income (as a percent)	16.90%	14.50%	14.60%	13.60%
Lime and limestone operations
Revenues
Total revenue (as a percent)	98.30%	98.50%	98.30%	98.40%
Natural gas interests
Revenues
Total revenue (as a percent)	1.70%	1.50%	1.70%	1.60%

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 6,638	$ 5,278	$ 10,900	$ 9,898
Other comprehensive (loss) income
Mark to market of foreign exchange hedges, net of tax benefit (expense) of $17 and $27 for the three months and six months ended June 30, 2018, respectively, and $(143) and $(161) for the three months and six months ended June 30, 2017, respectively	(55)	248	(89)	279
Total other comprehensive (loss) income	(55)	248	(89)	279
Comprehensive income	$ 6,583	$ 5,526	$ 10,811	$ 10,177

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Mark to market on foreign exchange hedges, tax benefit (expense)	$ 17	$ (143)	$ 27	$ (161)

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
OPERATING ACTIVITIES:
Net income	$ 10,900	$ 9,898
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	8,572	8,393
Amortization of deferred financing costs	15	7
Deferred income taxes	1,157	(852)
Loss on disposition of property, plant and equipment	345	28
Stock-based compensation	713	655
Changes in operating assets and liabilities:
Trade receivables, net	(4,450)	(2,106)
Inventories, net	1,289	737
Prepaid expenses and other current assets	438	(70)
Other assets	93	(2)
Accounts payable and accrued expenses	(697)	(267)
Other liabilities	(145)	227
Net cash provided by operating activities	18,230	16,648
INVESTING ACTIVITIES:
Purchase of property, plant and equipment	(19,378)	(8,585)
Proceeds from sale of property, plant and equipment	183	443
Net cash used in investing activities	(19,195)	(8,142)
FINANCING ACTIVITIES:
Cash dividends paid	(1,511)	(1,506)
Proceeds from exercise of stock options	73	72
Purchase of treasury shares	(251)	(193)
Net cash used in financing activities	(1,689)	(1,627)
Net (decrease) increase in cash and cash equivalents	(2,654)	6,879
Cash and cash equivalents at beginning of period	85,000	74,712
Cash and cash equivalents at end of period	$ 82,346	$ 81,591

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2018
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, 2017. The results of operations for the three- and six-month periods ended June 30, 2018 are not necessarily indicative of operating results for the full year.

Organization

Organization	6 Months Ended
	Jun. 30, 2018
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), industrial (including paper and glass manufacturers), environmental (including municipal sanitation and water treatment facilities and flue gas treatment processes), metals (including steel producers), oil and gas services, roof shingle 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	6 Months Ended
	Jun. 30, 2018
Accounting Policies
Accounting Policies	3. Accounting Policies Revenue Recognition. The Company recognizes revenue for its Lime and Limestone Operations when obligations under the terms of a contract, purchase order or purchase agreement are satisfied, which are generally upon shipment. Revenues are measured as the amount of consideration expected to be received in exchange for transferring products. 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 2018 and 2017 revenues was $6.8 million and $5.9 million, for the three-month periods, and $12.7 and $12.0 million for the six-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. The Company operates its Lime and Limestone Operations within a single geographic region and derives its revenues from the sale of lime and limestone products. Revenues from the Company’s Natural Gas Interests are from the Company’s royalty and non-operating working interests in Johnson County, Texas. Revenues disaggregated between contracts for the Company’s Lime and Limestone Operations and its Natural Gas Interests are included in Note 4 to the condensed consolidated financial statements. The majority of the Company’s trade receivables are unsecured. Payment terms for all trade receivables are based on the underlying purchase orders, contracts or purchase agreements. Credit losses relating to trade receivables have generally been within management expectations and historical trends. Uncollected trade receivables are charged-off when identified by management to be unrecoverable. The Company maintains an allowance for doubtful accounts to reflect estimated losses resulting from the failure of customers to make required payments. 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 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 June 30, 2018 and December 31, 2017, respectively, are summarized below (in thousands): Significant Other Observable Inputs (Level 2) June 30, December 31, June 30, December 31, 2018 2017 2018 2017 Valuation Technique Foreign exchange hedges $ (3) $ 111 $ (3) $ 111 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 Company adopted ASU 2014-09 and all related amendments on January 1, 2018 and analyzed contracts which might impact its revenue recognition using the modified retrospective approach. There was no impact of initially applying the new standard on the opening balance of retained earnings, and there has been no restatement of comparative periods. The Company expects the impact of adoption of ASU 2014-09 to be immaterial to the financial statements on an ongoing basis. 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. 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. Based on its existing leases, the Company estimates the effect on total assets and total liabilities will be approximately $3.0 million, with the addition of a right-of-use asset and related liability. The Company is continuing to evaluate the effect that this standard will have on the Company’s 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 evaluating the effect that this standard will have on the Company’s Consolidated Financial Statements. In February 2018, the FASB issued Accounting Standards Update No. 2018-02 (“ASU 2018-02”), “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”). The amendments in ASU 2018-02 are effective for fiscal years beginning after December 15, 2018 and for interim periods therein. The Company does not believe this standard will have a material effect on the Company’s Consolidated Financial Statements.

Business Segments

Business Segments	6 Months Ended
	Jun. 30, 2018
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, interest expense or interest income 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 June 30, Six Months Ended June 30, Revenues 2018 2017 2018 2017 Lime and limestone operations $ 38,557 $ $ 73,271 $ Natural gas interests 685 1,258 Total revenues $ 39,242 $ 36,518 $ 74,529 $ 72,671 Depreciation, depletion and amortization Lime and limestone operations $ 4,129 $ 3,855 $ 8,141 $ 7,886 Natural gas interests 159 199 324 404 Total depreciation, depletion and amortization $ 4,288 $ 4,054 $ 8,465 $ 8,290 Gross profit Lime and limestone operations $ 9,327 $ $ 16,120 $ 16,742 Natural gas interests 310 116 554 334 Total gross profit $ 9,637 $ 8,838 $ 16,674 $ 17,076 Capital expenditures Lime and limestone operations $ 5,333 $ $ 19,378 $ 8,583 Natural gas interests — — — 2 Total capital expenditures $ 5,333 $ 4,376 $ 19,378 $ 8,585

Income Per Share of Common Stoc

Income Per Share of Common Stock	6 Months Ended
	Jun. 30, 2018
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 June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income for basic and diluted income per common share $ 6,638 $ 5,278 $ 10,900 $ 9,898 Weighted-average shares for basic income per common share 5,595 5,593 5,576 Effect of dilutive securities: Employee and director stock options (1) 8 8 10 Adjusted weighted-average shares and assumed exercises for diluted income per common share 5,603 5,588 5,601 5,586 Basic net income per common share $ 1.19 $ 0.95 $ 1.95 $ 1.77 Diluted net income per common share $ 1.18 $ 0.94 $ 1.95 $ 1.77 (1) Excludes 2 and 10 stock options for the three- and six-month 2018 periods, respectively, as anti-dilutive because the exercise price exceeded the average per share market price for the period.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income	6 Months Ended
	Jun. 30, 2018
Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income	6. Accumulated Other Comprehensive Income The following table presents the components of comprehensive income (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income $ 6,638 $ 5,278 $ 10,900 $ 9,898 Mark to market of foreign exchange hedges (72) 391 (116) 440 Deferred income tax benefit (expense) 17 (143) 27 (161) Comprehensive income $ 6,583 $ 5,526 $ 10,811 $ 10,177 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. (“Wells Fargo”) 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, of which FX hedges with respect to 0.7 million Euros remained outstanding at June 30, 2018. In May 2018, the Company entered into additional FX hedges with Wells Fargo to fix the exchange rate for 2.2 million Euros in connection with a contractual obligation related to the purchase and installation of equipment at Arkansas Lime Company. At June 30, 2018 and December 31, 2017, the Company had total FX hedges fixing the exchange rates for 2.9 million Euros and 2.2 million Euros, respectively. 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 changes in the U.S. Dollar, compared to the Euro, in the 2018 periods, the fair value of the hedges resulted in a liability of $3 thousand at June 30, 2018, which is included in accrued expenses. Due to changes in the U.S. Dollar, compared to the Euro, in the period from when the Company entered into the 2016 FX hedges through December 31, 2017, the fair value of the FX hedges resulted in an asset of $111 thousand at December 31, 2017, which is included in prepaid expenses and other current assets ($83 thousand) and other assets, net ($28 thousand) at December 31, 2017.

Inventories, Net

Inventories, Net	6 Months Ended
	Jun. 30, 2018
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): June 30, December 31, 2018 2017 Lime and limestone inventories: Raw materials $ 4,068 $ 5,105 Finished goods 2,027 2,266 6,095 7,371 Service parts inventories 6,162 6,175 $ 12,257 $ 13,546

Banking Facilities and Debt

Banking Facilities and Debt	6 Months Ended
	Jun. 30, 2018
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 loans 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. 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’s maximum Cash Flow Leverage Ratio is 3.50 to 1. 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 June 30, 2018, the Company had no debt outstanding and no draws on the Revolving Facility other than $1.3 million of letters of credit, including $0.9 million related to the St. Clair kiln project, which count as draws against the available commitment under the Revolving Facility.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2018
Income Taxes
Income Taxes	9. Income Taxes The 2017 Tax Act reduced the federal statutory rate on corporations from 35% to 21% beginning in 2018. The Company has estimated that its effective income tax rate for 2018 will be 11.3%. The primary reasons for the effective rate being below the federal statutory rate is due to research and development tax credits associated with the ongoing construction of the St. Clair kiln project and 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

Dividends	6 Months Ended
	Jun. 30, 2018
Dividends
Dividends	10. Dividends On June 15, 2018, 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 25, 2018. On March 16, 2018, 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 23, 2018.

Subsequent Event

Subsequent Event	6 Months Ended
	Jun. 30, 2018
Subsequent Event.
Subsequent Event	11. Subsequent Event On July 25, 2018, 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 September 14, 2018 to shareholders of record at the close of business on August 24, 2018.

Accounting Policies (Policies)

Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2018
Accounting Policies
Revenue Recognition	Revenue Recognition. The Company recognizes revenue for its Lime and Limestone Operations when obligations under the terms of a contract, purchase order or purchase agreement are satisfied, which are generally upon shipment. Revenues are measured as the amount of consideration expected to be received in exchange for transferring products. 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 2018 and 2017 revenues was $6.8 million and $5.9 million, for the three-month periods, and $12.7 and $12.0 million for the six-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. The Company operates its Lime and Limestone Operations within a single geographic region and derives its revenues from the sale of lime and limestone products. Revenues from the Company’s Natural Gas Interests are from the Company’s royalty and non-operating working interests in Johnson County, Texas. Revenues disaggregated between contracts for the Company’s Lime and Limestone Operations and its Natural Gas Interests are included in Note 4 to the condensed consolidated financial statements. The majority of the Company’s trade receivables are unsecured. Payment terms for all trade receivables are based on the underlying purchase orders, contracts or purchase agreements. Credit losses relating to trade receivables have generally been within management expectations and historical trends. Uncollected trade receivables are charged-off when identified by management to be unrecoverable. The Company maintains an allowance for doubtful accounts to reflect estimated losses resulting from the failure of customers to make required payments.
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 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 June 30, 2018 and December 31, 2017, respectively, are summarized below (in thousands): Significant Other Observable Inputs (Level 2) June 30, December 31, June 30, December 31, 2018 2017 2018 2017 Valuation Technique Foreign exchange hedges $ (3) $ 111 $ (3) $ 111 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 Company adopted ASU 2014-09 and all related amendments on January 1, 2018 and analyzed contracts which might impact its revenue recognition using the modified retrospective approach. There was no impact of initially applying the new standard on the opening balance of retained earnings, and there has been no restatement of comparative periods. The Company expects the impact of adoption of ASU 2014-09 to be immaterial to the financial statements on an ongoing basis. 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. 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. Based on its existing leases, the Company estimates the effect on total assets and total liabilities will be approximately $3.0 million, with the addition of a right-of-use asset and related liability. The Company is continuing to evaluate the effect that this standard will have on the Company’s 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 evaluating the effect that this standard will have on the Company’s Consolidated Financial Statements. In February 2018, the FASB issued Accounting Standards Update No. 2018-02 (“ASU 2018-02”), “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”). The amendments in ASU 2018-02 are effective for fiscal years beginning after December 15, 2018 and for interim periods therein. The Company does not believe this standard will have a material effect on the Company’s Consolidated Financial Statements.

Accounting Policies (Tables)

Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2018
Accounting Policies
Schedule of the entity's financial liabilities measured at fair value on a recurring basis (in thousands)	The Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017, respectively, are summarized below (in thousands): Significant Other Observable Inputs (Level 2) June 30, December 31, June 30, December 31, 2018 2017 2018 2017 Valuation Technique Foreign exchange hedges $ (3) $ 111 $ (3) $ 111 Cash flows approach

Business Segments (Tables)

Business Segments (Tables)	6 Months Ended
	Jun. 30, 2018
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 June 30, Six Months Ended June 30, Revenues 2018 2017 2018 2017 Lime and limestone operations $ 38,557 $ $ 73,271 $ Natural gas interests 685 1,258 Total revenues $ 39,242 $ 36,518 $ 74,529 $ 72,671 Depreciation, depletion and amortization Lime and limestone operations $ 4,129 $ 3,855 $ 8,141 $ 7,886 Natural gas interests 159 199 324 404 Total depreciation, depletion and amortization $ 4,288 $ 4,054 $ 8,465 $ 8,290 Gross profit Lime and limestone operations $ 9,327 $ $ 16,120 $ 16,742 Natural gas interests 310 116 554 334 Total gross profit $ 9,637 $ 8,838 $ 16,674 $ 17,076 Capital expenditures Lime and limestone operations $ 5,333 $ $ 19,378 $ 8,583 Natural gas interests — — — 2 Total capital expenditures $ 5,333 $ 4,376 $ 19,378 $ 8,585

Income Per Share of Common St22

Income Per Share of Common Stock (Tables)	6 Months Ended
	Jun. 30, 2018
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 June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income for basic and diluted income per common share $ 6,638 $ 5,278 $ 10,900 $ 9,898 Weighted-average shares for basic income per common share 5,595 5,593 5,576 Effect of dilutive securities: Employee and director stock options (1) 8 8 10 Adjusted weighted-average shares and assumed exercises for diluted income per common share 5,603 5,588 5,601 5,586 Basic net income per common share $ 1.19 $ 0.95 $ 1.95 $ 1.77 Diluted net income per common share $ 1.18 $ 0.94 $ 1.95 $ 1.77 (1) Excludes 2 and 10 stock options for the three- and six-month 2018 periods, respectively, as anti-dilutive because the exercise price exceeded the average per share market price for the period.

Accumulated Other Comprehensi23

Accumulated Other Comprehensive Income (Tables)	6 Months Ended
	Jun. 30, 2018
Accumulated Other Comprehensive Income
Schedule of components of comprehensive income	The following table presents the components of comprehensive income (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income $ 6,638 $ 5,278 $ 10,900 $ 9,898 Mark to market of foreign exchange hedges (72) 391 (116) 440 Deferred income tax benefit (expense) 17 (143) 27 (161) Comprehensive income $ 6,583 $ 5,526 $ 10,811 $ 10,177

Inventories, Net (Tables)

Inventories, Net (Tables)	6 Months Ended
	Jun. 30, 2018
Inventories, Net
Schedule of inventories, net	Inventories, net consisted of the following (in thousands): June 30, December 31, 2018 2017 Lime and limestone inventories: Raw materials $ 4,068 $ 5,105 Finished goods 2,027 2,266 6,095 7,371 Service parts inventories 6,162 6,175 $ 12,257 $ 13,546

Organization (Details)

Organization (Details)	6 Months Ended
	Jun. 30, 2018asegment
Organization
Number of business segments | segment	2
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
Area of land (in acres)	3,800
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		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue Recognition
External freight billed to customers included in revenue	$ 6.8	$ 5.9	$ 12.7	$ 12

Accounting Policies - Fair Valu

Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Values of Financial Instruments
Foreign exchange hedges assets		$ 111
Foreign exchange hedges liabilities	$ (3)
Recurring | Fair value | Cash flows approach
Fair Values of Financial Instruments
Foreign exchange hedges assets		111
Foreign exchange hedges liabilities	(3)
Recurring | Fair value | Significant Other Observable Inputs (Level 2) | Cash flows approach
Fair Values of Financial Instruments
Foreign exchange hedges assets		$ 111
Foreign exchange hedges liabilities	$ (3)

Accounting Policies - New Accou

Accounting Policies - New Accounting Pronouncements (Details) - Accounting Standards Update 2016-02 $ in Millions	Jun. 30, 2018USD ($)
New Accounting Pronouncements
Right-of-use asset	$ 3
Right-of-use liability	$ 3

Business Segments (Details)

Business Segments (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018USD ($)	Jun. 30, 2017USD ($)	Jun. 30, 2018USD ($)segment	Jun. 30, 2017USD ($)
Business segments
Number of business segments | segment			2
Revenues	$ 39,242		$ 74,529
Depreciation, depletion and amortization	4,288	$ 4,054	8,465	$ 8,290
Gross profit (loss)	9,637	8,838	16,674	17,076
Capital expenditures	5,333	4,376	19,378	8,585
Lime and limestone operations
Business segments
Depreciation, depletion and amortization	4,129	3,855	8,141	7,886
Gross profit (loss)	9,327	8,722	16,120	16,742
Capital expenditures	5,333	4,376	19,378	8,583
Natural gas interests
Business segments
Depreciation, depletion and amortization	159	199	324	404
Gross profit (loss)	310	116	554	334
Capital expenditures				2
Lime and limestone operations | Lime and limestone operations
Business segments
Revenues	38,557		73,271
Natural gas interests | Natural gas interests
Business segments
Revenues	$ 685		$ 1,258
Before adoption of 606
Business segments
Revenues		36,518		72,671
Before adoption of 606 | Lime and limestone operations | Lime and limestone operations
Business segments
Revenues		35,965		71,482
Before adoption of 606 | Natural gas interests | Natural gas interests
Business segments
Revenues		$ 553		$ 1,189

Income Per Share of Common St30

Income Per Share of Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income per share of common stock:
Net income for basic and diluted income per common share	$ 6,638	$ 5,278	$ 10,900	$ 9,898
Weighted-average shares for basic income per common share	5,595	5,578	5,593	5,576
Effect of dilutive securities:
Employee and director stock options (in shares)	8	10	8	10
Adjusted weighted-average shares and assumed exercises for diluted income per common share	5,603	5,588	5,601	5,586
Basic net income per common share (in dollars per share)	$ 1.19	$ 0.95	$ 1.95	$ 1.77
Diluted net income per common share (in dollars per share)	$ 1.18	$ 0.94	$ 1.95	$ 1.77
Options
Anti-dilutive securities
Anti-dilutive shares of common stock excluded from the calculation of dilutive securities	2		10

Accumulated Other Comprehensi31

Accumulated Other Comprehensive Income (Details) $ in Thousands, € in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018USD ($)	Jun. 30, 2017USD ($)	Jun. 30, 2018USD ($)	Jun. 30, 2017USD ($)	Jun. 30, 2018EUR (€)	May 31, 2018EUR (€)	Dec. 31, 2017USD ($)	Dec. 31, 2017EUR (€)	Nov. 30, 2016EUR (€)
Components of comprehensive income
Net income	$ 6,638	$ 5,278	$ 10,900	$ 9,898
Mark to market of foreign exchange hedges	(72)	391	(116)	440
Deferred income tax (expense) benefit	17	(143)	27	(161)
Comprehensive income	6,583	$ 5,526	10,811	$ 10,177
Foreign exchange hedges assets							$ 111
Foreign exchange hedges liabilities	$ 3		$ 3
Prepaid expenses and other current assets
Components of comprehensive income
Foreign exchange hedges assets							83
Other assets, net
Components of comprehensive income
Foreign exchange hedges assets							$ 28
Foreign Exchange Contract
Components of comprehensive income
Foreign exchange hedges liabilities | €					€ 0.7
Foreign Exchange Contract | Designated as Hedging Instrument
Components of comprehensive income
Notional amount | €					€ 2.9	€ 2.2		€ 2.2	€ 5.5

Inventories, Net (Details)

Inventories, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Lime and limestone inventories:
Raw materials	$ 4,068	$ 5,105
Finished goods	2,027	2,266
Total	6,095	7,371
Service parts inventories	6,162	6,175
Total inventories	$ 12,257	$ 13,546

Banking Facilities and Debt (De

Banking Facilities and Debt (Details) $ in Millions	May 07, 2015USD ($)	Jun. 30, 2018USD ($)	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		$ 1.3
The amount of letters of credit outstanding related to the St Clair kiln project		$ 0.9
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)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Income Taxes
Statutory income tax rate (as a percent)	21.00%	35.00%
Effective income tax rate (as a percent)	11.30%

Dividends (Details)

Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands	Jun. 15, 2018	Mar. 16, 2018	Jun. 30, 2018	Jun. 30, 2017
Dividends
Cash dividends paid	$ 800	$ 800	$ 1,511	$ 1,506
Cash dividend (in dollars per share)	$ 0.135	$ 0.135
Dividends payable date of record	May 25, 2018	Feb. 23, 2018

Subsequent Event (Details)

Subsequent Event (Details) - $ / shares	Jul. 25, 2018	Jun. 15, 2018	Mar. 16, 2018
Subsequent event
Quarterly cash dividend declared (in dollars per share)		$ 0.135	$ 0.135
Dividends payable date of record		May 25, 2018	Feb. 23, 2018
Subsequent event
Subsequent event
Dividends payable date declared	Jul. 25, 2018
Quarterly cash dividend declared (in dollars per share)	$ 0.135
Dividends payable date to be paid	Sep. 14, 2018
Dividends payable date of record	Aug. 24, 2018