For further information, contact: Gary L. Castagna
Senior Vice President & CFO
847.394.8730
AMCOL INTERNATIONAL (NYSE:ACO)
REPORTS FIRST QUARTER EARNINGS PER SHARE UP 13 PERCENT
ARLINGTON HEIGHTS, IL., APRIL 20, 2007--AMCOL International Corporation
(NYSE:ACO) today reported 2007 first quarter net income of $10.8 million or
$0.35 per diluted share, compared with $9.7 million or $0.31 per diluted share
in the same prior-year period.
Net sales rose 15% percent to $163.7 million for the quarter ended March 31,
2007, compared with $142.8 million for the 2006 period. Acquisitions and
favorable foreign currency translation represented approximately $12.6 million
and $4.5 million, respectively, of the first-quarter sales growth. Operating
profit improved by 22 percent over the 2006 period to $14.7 million.
Current-period operating profit includes earnings from acquisitions and
favorable foreign currency translation of $2.1 million and $0.5 million,
respectively.
This release should be read in conjunction with the attached unaudited condensed
consolidated financial statements. Further discussion of items and events
impacting earnings are included in the Financial Overview.
"With overall earnings per share up 13 percent and sales up 15 percent, we had
what would typically be characterized as a good first quarter in 2007," said
Larry Washow, AMCOL President and Chief Executive Officer. "We saw an
encouraging improvement in margins in our Minerals segment despite the soft U.S.
metalcasting business. And, although the Environmental segment's first-quarter
results were good, they were affected by difficult weather in the United States.
MORE
AMCOL Q1 2007 EARNINGS
Page 2 of 8
"We don't anticipate significant improvement in our metalcasting business, but
we do expect continued positive results in our Environmental segment moving into
the second and third quarters, which are typically stronger quarters for that
segment."
At the same time, Washow says, "Results in our Oilfield Services segment were
disappointing, and despite the increase in overall sales, our profitability
didn't reflect the growth we would have expected. Our sales increase was due in
large part to recent strategic acquisitions, which also were associated with
additional overhead costs. We anticipate stronger performance in coming quarters
as our volumes continue to grow again in part on the strength of the
acquisitions."
Washow adds, "The decline in revenue and profitability in the Transportation
segment reflects a softness in the economy as well as some of our domestic
businesses. Lastly, with a higher level of debt, interest expense has an effect
on the bottom line."
FINANCIAL OVERVIEW
First Quarter Operating Results
The following table details the consolidated sales growth components over the
2006 first quarter:
Foreign
Base Business Acquisitions Exchange Total
------------ ------------ ------------ ------------
Minerals (0.5)% 3.1% 1.4% 4.0%
Environmental 3.2% 1.3% 1.6% 6.1%
Oilfield Services 0.2% 4.4% 0.2% 4.8%
Transportation (0.2)% -- -- (0.2)%
- ---------------------- ------------ ------------ ------------ ------------
Total 2.7% 8.8% 3.2% 14.7%
- ---------------------- ------------ ------------ ------------ ------------
% of Growth 18.4% 60.2% 21.4% 100%
- ---------------------- ------------ ------------ ------------ ------------
The Minerals segment's base business sales declined due to a slowdown in the
domestic metalcasting operations. The other Minerals segment product lines -
specialty minerals and pet products - saw higher base business sales.
Environmental base business sales grew primarily due to higher shipments in
Europe and Asia. Oilfield Services experienced a slowdown in its well testing
and filtration services operations late in the quarter.
Gross margin for the quarter was 26.6 percent compared with 25.0 percent in the
prior-year first quarter. The Minerals, Environmental and Oilfield Services
segments improved gross margin over the 2006 period. Favorable product mix and
geographical sales distribution primarily accounted for the improvement.
Transportation showed a slight decline over the prior-year period.
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AMCOL Q1 2007 EARNINGS
Page 3 of 8
General, selling and administrative expenses were $28.8 million in the 2007
first quarter, an increase of $5.1 million or 22 percent over the 2006 period.
The Oilfield Services segment accounted for approximately one-half of the
increase as it incurred higher personnel costs and amortization expense
associated with acquisitions completed in 2006. Operating expenses at the
recently acquired Liquid Boot business, higher personnel costs in Europe and
foreign currency translation led to the increase in the Environmental segment.
Operating margin for the quarter was 9.0 percent compared with 8.4 percent in
the prior-year period. The improvement was principally due to the higher gross
margin reported in the current period.
Net interest expense increased by approximately $1.5 million over the prior-year
quarter due to higher average debt levels and increased interest rates.
The Company's effective tax rate was 26.3 percent for the first quarter of 2007
versus 28.9 percent for the same period in 2006. The 2006 quarter included
additional expense for adjustments related to previously recorded tax
liabilities.
Income from affiliates and joint ventures contributed approximately $0.05 and
$0.04 per diluted share in the 2007 and 2006 reporting periods, respectively.
The Company's India-based investments contributed most of the earnings.
The weighted average number of common and common equivalent shares was 31.0
million and 30.9 million for the quarters ended March 31, 2007 and 2006,
respectively.
Financial Position
Long-term debt increased to $155.6 million at March 31, 2007 compared to $112.4
million at December 31, 2006. The increase was primarily due to funding
acquisitions, greater working capital levels and capital expenditures. Debt
represented 34 percent of total capitalization at March 31, 2007, compared with
28 percent at December 31, 2006. Cash and cash equivalents were $23.8 million at
March 31, 2007 compared with $17.8 million at December 31, 2006.
Working capital increased to $195.8 million at March 31, 2007 from $173.3
million at December 31, 2006. The current ratio was 3.7-to-1 and 3.2-to-1 at
March 31, 2007, and December 31, 2006, respectively.
Cash flow provided by operating activities was $6.3 million year-to-date as of
March 31, 2007 compared with cash used in operating activities of $4.1million in
the prior-year period.
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AMCOL Q1 2007 EARNINGS
Page 4 of 8
Investing activities in the 2007 quarter included two acquisitions - Liquid Boot
Technologies, included in the Environmental segment, and the Microsponge(R)
business of Cardinal Health Care Company, included in the Minerals segment. The
acquisitions and payments associated with previous transactions totaled $27.2
million through the first quarter of the year. Capital expenditures amounted to
$10.9 million year-to-date as of March 31, 2007, compared with $9.3 million for
the same period in 2006. Expenditures related to Minerals segment projects
accounted for the increase over the prior-year period.
There were no share repurchases during the first quarter of the year. Dividends
declared year-to-date through March 31, 2007, increased by 28% over the
prior-year period to $4.2 million.
This release contains certain forward-looking statements regarding AMCOL's
expected performance for future periods and actual results for such periods
might materially differ. Such forward-looking statements are subject to
uncertainties, which include, but are not limited to, actual growth in AMCOL's
various markets, utilization of AMCOL's plants, currency exchange rates,
currency devaluation, delays in development, production and marketing of new
products, integration of acquired businesses, and other factors detailed from
time to time in AMCOL's annual report and other reports filed with the
Securities and Exchange Commission. AMCOL undertakes no duty to update any
forward-looking statement to conform the statement to actual results or changes
in AMCOL's expectations.
AMCOL International, headquartered in Arlington Heights, IL, produces and
markets a wide range of specialty mineral products used for industrial,
environmental and consumer-related applications. AMCOL is the parent of American
Colloid Co., CETCO (Colloid Environmental Technologies Company), CETCO Oilfield
Services Company and the transportation operations, Ameri-co Carriers, Inc. and
Ameri-co Logistics, Inc. AMCOL's common stock is traded on the New York Stock
Exchange under the symbol ACO. AMCOL's web address is www.amcol.com. AMCOL's
first quarter conference call will be available live today at 11 a.m. EDT on the
AMCOL website.
================================================================================
Financial tables follow.
AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
Three Months Ended
March 31,
----------------------
2007 2006
--------- ---------
Net sales $ 163,728 $ 142,764
Cost of sales 120,229 107,035
--------- ---------
Gross profit 43,499 35,729
General, selling and administrative expenses 28,805 23,682
--------- ---------
Operating profit 14,694 12,047
--------- ---------
Other income (expense):
Interest expense, net (1,942) (477)
Other, net (167) 212
--------- ---------
(2,109) (265)
--------- ---------
Income before income taxes and income from affiliates and
joint ventures 12,585 11,782
Income tax expense (benefit) 3,311 3,408
--------- ---------
Income before income from affiliates and joint ventures 9,274 8,374
Income from affiliates and joint ventures 1,566 1,337
--------- ---------
Net income $ 10,840 $ 9,711
========= =========
Weighted average common shares outstanding 30,153 29,774
Weighted average common and common equivalent shares outstanding 31,017 30,894
Basic earnings per share $ 0.36 $ 0.33
Diluted earnings per share $ 0.35 $ 0.31
Dividends declared per share $ 0.14 $ 0.11
AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS March 31, December 31,
2007 2006
(unaudited) *
----------- -----------
Current assets:
Cash and equivalents $ 23,844 $ 17,805
Accounts receivable, net 141,850 133,432
Inventories 87,219 84,612
Prepaid expenses 10,159 10,142
Deferred income taxes 4,551 4,648
Other 761 1,045
----------- -----------
Total current assets 268,384 251,684
----------- -----------
Investments in and advances to affiliates and joint ventures 35,512 31,049
----------- -----------
Property, plant, equipment, mineral rights and reserves:
Land and mineral rights 17,895 17,428
Depreciable assets 315,787 305,013
----------- -----------
333,682 322,441
Less: accumulated depreciation 187,311 181,669
----------- -----------
146,371 140,772
----------- -----------
Other assets:
Goodwill 50,607 40,341
Intangible assets, net 39,190 25,611
Deferred income taxes 7,999 6,643
Other assets 17,472 15,124
----------- -----------
115,268 87,719
----------- -----------
$ 565,535 $ 511,224
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 28,993 $ 26,107
Accrued income taxes 2,798 4,844
Accrued liabilities 40,817 47,432
----------- -----------
Total current liabilities 72,608 78,383
----------- -----------
Long-term debt 155,641 112,448
----------- -----------
Minority interests in subsidiaries 276 276
Pension liabilities 12,676 13,209
Other liabilities 18,915 12,090
----------- -----------
31,867 25,575
----------- -----------
Stockholders' equity:
Common stock 320 320
Additional paid in capital 77,848 76,686
Retained earnings 226,177 219,690
Accumulated other comprehensive income 18,148 16,658
----------- -----------
322,493 313,354
Less:
Treasury stock 17,074 18,536
----------- -----------
305,419 294,818
----------- -----------
$ 565,535 $ 511,224
=========== ===========
* Condensed from audited financial statements.
AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(In thousands)
Three Months Ended
March 31,
------------------------
2007 2006
---------- ----------
Cash flow from operating activities:
Net income $ 10,840 $ 9,711
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation, depletion, and amortization 6,714 4,907
Changes in assets and liabilities, net of effects of acquisitions:
Decrease (Increase) in current assets (7,091) (7,873)
Decrease (Increase) in noncurrent assets (954) (2,610)
Increase (decrease) in current liabilities (5,134) (7,946)
Increase (decrease) in noncurrent liabilities (133) (276)
Other 2,013 (10)
---------- ----------
Net cash provided by (used in) operating activities 6,255 (4,097)
---------- ----------
Cash flow from investing activities:
Acquisition of land, mineral rights, and depreciable assets (10,876) (9,311)
Acquisitions, net of cash (27,204) (1,289)
Investments in and advances to affiliates and joint ventures (2,466) (110)
Investments in restricted cash (957) --
Other 489 272
---------- ----------
Net cash provided by (used in) investing activities (41,014) (10,438)
---------- ----------
Cash flow from financing activities:
Net change in outstanding debt 42,800 12,491
Proceeds from sales of treasury stock 886 1,513
Purchases of treasury stock -- (1,119)
Dividends declared (4,204) (3,291)
Excess tax benefits from stock-based compensation 927 1,650
---------- ----------
Net cash provided by (used in) financing activities 40,409 11,244
---------- ----------
Effect of foreign currency rate changes on cash 389 743
---------- ----------
Net increase (decrease) in cash and cash equivalents 6,039 (2,548)
---------- ----------
Cash and cash equivalents at beginning of period 17,805 15,997
---------- ----------
Cash and cash equivalents at end of period $ 23,844 $ 13,449
========== ==========
AMCOL INTERNATIONAL CORPORATION
SEGMENT RESULTS (unaudited)
Minerals Three Months Ended March 31,
- ------------------------------- ------------------------------------------------------------------
2007 2006 2007 vs 2006
-------------------- ---------------------- --------------------
(Dollars in Thousands)
------------------------------------------------------------------
Net sales $ 85,813 100.0% $ 80,071 100.0% $ 5,742 7.2%
Cost of sales 69,014 80.4% 65,179 81.4% 3,835 5.9%
-------- ----- -------- ----- --------
Gross profit 16,799 19.6% 14,892 18.6% 1,907 12.8%
General, selling and
administrative expenses 7,542 8.8% 7,004 8.7% 538 7.7%
-------- ----- -------- ----- --------
Operating profit 9,257 10.8% 7,888 9.9% 1,369 17.4%
Environmental Three Months Ended March 31,
- ------------------------------- ------------------------------------------------------------------
2007 2006 2007 vs 2006
-------------------- ---------------------- --------------------
(Dollars in Thousands)
------------------------------------------------------------------
Net sales $ 48,698 100.0% $ 40,158 100.0% $ 8,540 21.3%
Cost of sales 31,163 64.0% 25,879 64.4% 5,284 20.4%
-------- ----- -------- ----- --------
Gross profit 17,535 36.0% 14,279 35.6% 3,256 22.8%
General, selling and
administrative expenses 11,292 23.2% 9,493 23.6% 1,799 19.0%
-------- ----- -------- ----- --------
Operating profit 6,243 12.8% 4,786 12.0% 1,457 30.4%
Oilfield Services Three Months Ended March 31,
- ------------------------------- ------------------------------------------------------------------
2007 2006 2007 vs 2006
-------------------- ---------------------- --------------------
(Dollars in Thousands)
------------------------------------------------------------------
Net sales $ 21,964 100.0% $ 14,972 100.0% $ 6,992 46.7%
Cost of sales 14,077 64.1% 9,896 66.1% 4,181 42.2%
-------- ----- -------- ----- --------
Gross profit 7,887 35.9% 5,076 33.9% 2,811 55.4%
General, selling and
administrative expenses 4,721 21.5% 2,131 14.2% 2,590 121.5%
-------- ----- -------- ----- --------
Operating profit 3,166 14.4% 2,945 19.7% 221 7.5%
Transportation Three Months Ended March 31,
- ------------------------------- ------------------------------------------------------------------
2007 2006 2007 vs 2006
-------------------- ---------------------- --------------------
(Dollars in Thousands)
------------------------------------------------------------------
Net sales $ 10,893 100.0% $ 12,471 100.0% $ (1,578) -12.7%
Cost of sales 9,615 88.3% 10,989 88.1% (1,374) -12.5%
-------- ----- -------- ----- --------
Gross profit 1,278 11.7% 1,482 11.9% (204) -13.8%
General, selling and
administrative expenses 738 6.8% 799 6.4% (61) -7.6%
-------- ----- -------- ----- --------
Operating profit 540 4.9% 683 5.5% (143) -20.9%
Corporate Three Months Ended March 31,
- ------------------------------- --------------------------------------------
2007 2006 2007 vs 2006
--------- --------- --------------------
(Dollars in Thousands)
--------------------------------------------
Intersegment shipping sales $ (3,640) $ (4,908)
Intersegment shipping costs (3,640) (4,908)
--------- ---------
Gross profit -- --
Corporate general, selling
and administrative expenses 4,512 4,255 257 6.0%
------ ------
Operating loss 4,512 4,255 257 6.0%