For further information, contact: Gary L. Castagna
Senior Vice President & CFO
847.394.8730
AMCOL INTERNATIONAL (NYSE:ACO) REPORTS 26% INCREASE IN DILUTED EARNINGS PER
SHARE FROM CONTINUING OPERATIONS OVER PRIOR-YEAR SECOND QUARTER
ARLINGTON HEIGHTS, IL., JULY 20, 2007-AMCOL International Corporation (NYSE:ACO)
today reported 2007 second-quarter income from continuing operations of $15.3
million or $0.49 per diluted share, compared with $11.9 million or $0.39 per
diluted share in the same prior-year period. A $0.3 million loss from
discontinued operations, or $0.01 per diluted share, was reported in the second
quarter of 2007 for the sale of a desiccant business based in the U.K. Net
income was $15.0 million, or $0.48 per diluted share in the second quarter of
2007.
Net sales from continuing operations rose 19.4 percent to $182.5 million for the
quarter ended June 30, 2007, compared with $152.7 million for the 2006 period.
Acquisitions and favorable foreign currency translation represented
approximately $15.6 million and $4.1 million, respectively, of the
second-quarter sales growth. Operating profit improved by 29.1 percent over the
2006 period to $19.1 million. Current-period operating profit includes earnings
from acquisitions and favorable foreign currency translation of $3.5 million and
$0.5 million, respectively.
"We saw solid earnings and sales growth overall in the second quarter," says
Larry Washow, AMCOL president and chief executive officer. "The strength of our
acquisitions began to show as they started delivering the value we expected in
both the Environmental and Oilfield Services businesses."
"Additionally, our Environmental business did very well on its own, with organic
business in that division continuing to expand. Oilfield Services demonstrated a
rebound after a softer first quarter, with good sales and profit growth.
MORE
AMCOL Q2 2007 EARNINGS
Page 2 of 10
"One area in which we're focusing attention is Minerals, where gross profits
were up but gross margins were down this quarter. We attribute that to a
combination of product mix and cost issues that we're working on. However, AMCOL
earnings were up more than sales and it was a good quarter for us."
For the six-month period ended June 30, 2007, income from continuing operations
was $26.1 million, or $0.84 per diluted share, compared with $21.6 million, or
$0.70 per diluted share in the prior-year period. Net income for the six-month
period ended June 30, 2007, was $25.8 million, or $0.83 per diluted share
compared with $21.6 million; or $0.70 per diluted share in the prior-year
period.
Net sales from continuing operations for the six-month period ended June 30,
2007, rose 17.0 percent to $346.2 million, compared with $295.5 million for the
2006 period. Acquisitions and favorable foreign currency translation represented
approximately $27.9 million and $8.6 million, respectively, of the sales growth.
Operating profit improved by 25.9 percent over the 2006 period to $33.8 million.
Current-period operating profit includes earnings from acquisitions and
favorable foreign currency translation of $5.5 million and $1.1 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.
FINANCIAL OVERVIEW
Second Quarter Statement of Operations Highlights
Net sales: The following table details the consolidated sales growth
components over the 2006 second quarter:
Base Foreign
Business Acquisitions Exchange Total
Minerals (0.1)% 4.0% 1.1% 5.0%
Environmental 4.5% 2.1% 1.5% 8.1%
Oilfield Services 1.6% 4.1% 0.1% 5.8%
Transportation 0.5% - - 0.5%
Total 6.5% 10.2% 2.7% 19.4%
% of Growth 33.7% 52.6% 13.7% 100%
MORE
AMCOL Q2 2007 EARNINGS
Page 3 of 10
Minerals - Base business sales declined over the 2006 quarter entirely due to
lower shipments to domestic metalcasting markets. Asia-Pacific metalcasting
operations continued to grow. The specialty minerals and pet product lines
realized higher base business sales. Acquisitions continued to meet
expectations, while stronger European and Asian currencies led to the growth
from foreign exchange.
Environmental - Base business sales grew primarily due to higher shipments of
lining technology and building material products in the U.S and Europe.
Contracting service revenues also contributed to the growth over the 2006
quarter. The Liquid Boot acquisition completed in January of this year posted
sales in-line with expectations. Stronger European currencies accounted for
foreign exchange growth.
Oilfield Services - Base business growth was led by higher well testing and
pipeline service revenues primarily generated in Texas and the Gulf of Mexico.
International business, principally in the North Sea and West Africa, was
relatively unchanged compared with the prior-year quarter. The two businesses
acquired in the second half of 2006, Unique Rentals and Nitrogen Specialties,
have both met revenue expectations.
Gross profit: Sales growth, principally generated by the Environmental and
Oilfield Services segments, boosted gross profit by 25.4 percent over the 2006
quarter. Gross margin for the quarter rose to 27.3 percent compared with 26.0
percent in the prior-year quarter.
The Minerals segment suffered a 90 basis point decline in gross margin compared
with the 2006 quarter. Higher manufacturing costs in the U.S. and Asia-Pacific
operations caused the gross margin decline.
The Environmental segment improved gross margin over the 2006 period due to
favorable product mix and higher relative sales in the European markets.
Additionally, the acquired business contributed higher gross margins.
The Oilfield Services segment benefited from higher relative profitability
contributed by acquired businesses. Additionally, margins improved in the base
business operations due to more favorable product/service mix.
General, selling and administrative expenses: The $5.8 million, or 23.3 percent,
increase over the 2006 second quarter was primarily attributed to general,
selling and administration, (GS&A) for acquired businesses. In aggregate,
acquired businesses, including amortization of intangible assets, accounted for
approximately $3.0 million of the increase in the 2007 second quarter.
Within the Minerals segment, acquired business expenses were approximately $0.6
million of the increase over the prior-year quarter. Base business GS&A grew in
the Asia Pacific region due to marketing and start-up costs at the Tianjin,
China and Queensland, Australia operations.
MORE
AMCOL Q2 2007 EARNINGS
Page 4 of 10
Acquired businesses accounted for approximately $1.0 million of the increase
over the prior-year quarter within the Environmental segment. Base business GS&A
increased primarily due to higher marketing and sales expenses at the European
operations.
The Oilfield Services segment incurred approximately $1.4 million of GS&A from
acquired businesses. Base business expenses increased due to higher personnel
costs.
Corporate segment GS&A increased due to higher personnel and professional
service expenses.
Operating profit: The 29.1 percent improvement in operating profit over the 2006
second quarter was in-line with sales and gross profit growth. Operating margin
for the quarter was 10.5 percent compared with 9.7 percent in the prior-year
period. The improvement was principally due to the higher gross margin reported
in the current period.
Interest expense: Net interest expense increased by approximately $1.5 million
over the prior-year quarter due to higher average debt levels and increased
interest rates.
Income taxes: The effective tax rate was 24.7 percent for the second quarter of
2007 compared with 26.6 percent for the same period in 2006. The decline in the
tax rate reflects updated estimates of taxable income distribution between
domestic and overseas businesses.
Income from affiliates and joint ventures: These investments contributed
approximately $0.08 and $0.04 per diluted share in the 2007 and 2006 reporting
periods, respectively. Our investments in Ashapura Minechem Limited and Ashapura
Volclay Limited, both based in India, have continued to increase their
respective contributions to earnings. Ashapura Minechem has been growing
principally due to its bauxite business, a large portion of which is exported to
alumina refineries in China. Alumina is a key raw material used in the
production of aluminum.
Share count: The weighted average number of common and common equivalent shares
remained unchanged at 30.9 million for the quarter ended June 30, 2007 compared
with the same period in 2006.
Key Financial Position points
Long-term debt increased to $168.2 million at June 30, 2007 compared with $112.4
million at December 31, 2006. The increase was primarily due to funding
acquisitions, greater working capital levels and capital expenditures. Debt
represented approximately 35 percent of total capitalization at June 30, 2007,
compared with 28 percent at December 31, 2006. Cash and cash equivalents were
$25.2 million at June 30, 2007 compared with $17.8 million at December 31, 2006.
MORE
AMCOL Q2 2007 EARNINGS
Page 5 of 10
Working capital increased to $201.2 million at June 30, 2007 from $173.3 million
at December 31, 2006. The current ratio was 3.3-to-1 and 3.2-to-1 at June 30,
2007, and December 31, 2006, respectively.
Cash flow provided by operating activities was $25.6 million year-to-date as of
June 30, 2007 compared with $5.7 million in the six-month period in 2006. In
addition to the growth in net income, the 2007 period was aided by higher
non-cash charges and lower relative growth in working capital.
Investing activities in the 2007 six-month period were primarily driven by three
acquisitions which, in aggregate, accounted for $38.4 million. Capital
expenditures amounted to $21.9 million year-to-date as of June 30, 2007,
compared with $20.5 million for the same period in 2006.
Approximately $6.1 million was expended on share repurchases in 2007
year-to-date. A total of 250,000 shares were repurchased, which equates to
approximately $24.34 per share. Dividends declared year-to-date through June 30,
2007, increased by 22% over the prior-year period to $8.4 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
second 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)
Six Months Ended Three Months Ended
June 30, June 30,
2007 2006 2007 2006
Continuing Operations:
Net sales $ 346,182 $ 295,465 $ 182,454 $ 152,701
Cost of sales 252,892 220,041 132,663 113,006
Gross profit 93,290 75,424 49,791 39,695
General, selling and
administrative expenses 59,459 48,549 30,654 24,867
Operating profit 33,831 26,875 19,137 14,828
Other income (expense):
Interest expense, net (4,097) (1,095) (2,155) (618)
Other, net (170) 532 (3) 320
(4,267) (563) (2,158) (298)
Income before income taxes and
income from affiliates and
joint ventures 29,564 26,312 16,979 14,530
Income tax expense (benefit) 7,501 7,268 4,190 3,860
Income before income from
affiliates and joint ventures 22,063 19,044 12,789 10,670
Income from affiliates and
joint ventures 4,032 2,586 2,466 1,249
Income from continuing
operations 26,095 21,630 15,255 11,919
(Loss) Income from discontinued
operations (286) -- (286) --
(286) -- (286) --
Net income $ 25,809 $ 21,630 $ 14,969 $ 11,919
Weighted average common shares
outstanding 30,154 29,880 30,155 29,971
Weighted average common and
common equivalent shares
outstanding 30,951 31,011 30,879 30,937
Basic earnings per share:
Continuing operations $ 0.87 $ 0.72 $ 0.51 $ 0.40
Discontinued operations (0.01) -- (0.01) --
Basic earnings per share $ 0.86 $ 0.72 $ 0.50 $ 0.40
Diluted earnings per share:
Continuing operations $ 0.84 $ 0.70 $ 0.49 $ 0.39
Discontinued operations (0.01) -- (0.01) --
Diluted earnings per share $ 0.83 $ 0.70 $ 0.48 $ 0.39
Dividends declared per share $ 0.28 $ 0.23 $ 0.14 $ 0.12
AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS June 30, December 31,
2007 2006
(unaudited) *
Current assets:
Cash and equivalents $ 25,172 $ 17,805
Accounts receivable, net 152,909 133,432
Inventories 90,541 84,612
Prepaid expenses 12,648 10,142
Deferred income taxes 4,793 4,648
Other 2,006 1,045
Total current assets 288,069 251,684
Investments in and advances to
affiliates and joint ventures 39,416 31,049
Property, plant, equipment, mineral
rights and reserves:
Land and mineral rights 17,170 17,428
Depreciable assets 323,650 305,013
340,820 322,441
Less: accumulated depreciation 185,521 181,669
155,299 140,772
Other assets:
Goodwill 51,993 40,341
Intangible assets, net 43,181 25,611
Deferred income taxes 8,748 6,643
Other assets 17,969 15,124
121,891 87,719
$ 604,675 $ 511,224
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 40,514 $ 26,107
Accrued income taxes 1,896 4,844
Accrued liabilities 44,496 47,432
Total current liabilities 86,906 78,383
Long-term debt 168,237 112,448
Minority interests in subsidiaries 276 276
Pension liabilities 13,056 13,209
Other liabilities 21,486 12,090
34,818 25,575
Stockholders' equity:
Common stock 320 320
Additional paid in capital 78,521 76,686
Retained earnings 236,853 219,690
Accumulated other comprehensive
income 21,365 16,658
337,059 313,354
Less:
Treasury stock 22,345 18,536
314,714 294,818
$ 604,675 $ 511,224
* Condensed from audited financial statements.
AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(In thousands)
Six Months Ended
June 30,
2007 2006
Cash flow from operating activities:
Net income $ 25,809 $ 21,630
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation, depletion, and amortization 13,805 10,089
Changes in assets and liabilities,
net of effects of acquisitions:
Decrease (Increase) in current assets (22,625) (22,563)
Decrease (Increase) in noncurrent assets (1,582) (1,895)
Increase (decrease) in current liabilities 7,289 (1,663)
Increase (decrease) in noncurrent liabilities 7,783 1,024
Other (4,893) (917)
Net cash provided by (used in)
operating activities 25,586 5,705
Cash flow from investing activities:
Acquisition of land, mineral rights,
and depreciable assets (21,906) (20,525)
Acquisitions, net of cash (38,393) (1,270)
Investments in and advances to
affiliates and joint ventures (4,191) (877)
Investments in restricted cash (816) --
Other 2,425 1,096
Net cash provided by (used in)
investing activities (62,881) (21,576)
Cash flow from financing activities:
Net change in outstanding debt 55,564 15,168
Proceeds from sales of treasury stock 1,283 2,380
Purchases of treasury stock (6,115) (3,290)
Dividends (8,393) (6,893)
Excess tax benefits from stock-based compensation 927 1,931
Net cash provided by (used in)
financing activities 43,266 9,296
Effect of foreign currency rate changes on ca 1,396 4,321
Net increase (decrease) in cash and
cash equivalents 7,367 (2,254)
Cash and cash equivalents at beginning of period 17,805 15,997
Cash and cash equivalents at end of period $ 25,172 $ 13,743
AMCOL INTERNATIONAL CORPORATION
SEGMENT RESULTS (unaudited)
Minerals Three Months Ended June 30,
2007 2006 2007 vs 2006
(Dollars in Thousands)
Net sales $85,713 100.0% $78,118 100.0% $7,595 9.7%
Cost of sales 69,381 80.9% 62,470 80.0% 6,911 11.1%
Gross profit 16,332 19.1% 15,648 20.0% 684 4.4%
General, selling
and administrative
expenses 8,018 9.4% 6,948 8.9% 1,070 15.4%
Operating profit 8,314 9.7% 8,700 11.1% (386) -4.4%
Environmental Three Months Ended June 30,
2007 2006 2007 vs 2006
(Dollars in Thousands)
Net sales $65,108 100.0% $52,718 100.0% $12,390 23.5%
Cost of sales 42,521 65.3% 34,752 65.9% 7,769 22.4%
Gross profit 22,587 34.7% 17,966 34.1% 4,621 25.7%
General, selling
and administrative
expenses 12,652 19.4% 10,326 19.6% 2,326 22.5%
Operating profit 9,935 15.3% 7,640 14.5% 2,295 30.0%
Oilfield Services Three Months Ended June 30,
2007 2006 2007 vs 2006
(Dollars in Thousands)
Net sales $23,030 100.0% $14,141 100.0% $8,889 62.9%
Cost of sales 13,660 59.3% 9,572 67.7% 4,088 42.7%
Gross profit 9,370 40.7% 4,569 32.3% 4,801 105.1%
General, selling
and administrative
expenses 4,446 19.3% 2,547 18.0% 1,899 74.6%
Operating profit 4,924 21.4% 2,022 14.3% 2,902 143.5%
Transportation Three Months Ended June 30,
2007 2006 2007 vs 2006
(Dollars in Thousands)
Net sales $13,380 100.0% $12,848 100.0% $532 4.1%
Cost of sales 11,878 88.8% 11,336 88.2% 542 4.8%
Gross profit 1,502 11.2% 1,512 11.8% (10) -0.7%
General, selling
and administrative
expenses 770 5.8% 780 6.1% (10) -1.3%
Operating profit 732 5.4% 732 5.7% - 0.0%
Corporate Three Months Ended June 30,
2007 2006 2007 vs 2006
(Dollars in Thousands)
Intersegment shipping sales $(4,777) $(5,124)
Intersegment shipping costs (4,777) (5,124)
Gross profit - -
Corporate general, selling
and administrative expenses 4,768 4,266 502 11.8%
Operating loss 4,768 4,266 502 11.8%
AMCOL INTERNATIONAL CORPORATION
SEGMENT RESULTS (unaudited)
Minerals Six Months Ended June 30,
2007 2006 2007 vs 2006
(Dollars in Thousands)
Net sales $171,526 100.0% $158,189 100.0% $13,337 8.4%
Cost of sales 138,395 80.7% 127,649 80.7% 10,746 8.4%
Gross profit 33,131 19.3% 30,540 19.3% 2,591 8.5%
General, selling and
administrative
expenses 15,560 9.1% 13,952 8.8% 1,608 11.5%
Operating profit 17,571 10.2% 16,588 10.5% 983 5.9%
Environmental Six Months Ended June 30,
2007 2006 2007 vs 2006
(Dollars in Thousands)
Net sales $113,806 100.0% $92,876 100.0% $20,930 22.5
Cost of sales 73,684 64.7% 60,631 65.3% 13,053 21.5%
Gross profit 40,122 35.3% 32,245 34.7% 7,877 24.4%
General, selling and
administrative
expenses 23,944 21.0% 19,819 21.3% 4,125 20.8%
Operating profit 16,178 14.3% 12,426 13.4% 3,752 30.2%
Oilfield Services Six Months Ended June 30,
2007 2006 2007 vs 2006
(Dollars in Thousands)
Net sales $44,994 100.0% $29,113 100.0% $15,881 54.5%
Cost of sales 27,737 61.6% 19,468 66.9% 8,269 42.5%
Gross profit 17,257 38.4% 9,645 33.1% 7,612 78.9%
General, selling and
administrative
expenses 9,167 20.4% 4,678 16.1% 4,489 96.0%
Operating profit 8,090 18.0% 4,967 17.0% 3,123 62.9%
Transportation Six Months Ended June 30,
2007 2006 2007 vs 2006
(Dollars in Thousands)
Net sales $24,273 100.0% $25,319 100.0% $(1,046) -4.1%
Cost of sales 21,493 88.5% 22,325 88.2% (832) -3.7%
Gross profit 2,780 11.5% 2,994 11.8% (214) -7.1%
General, selling and
administrative
expenses 1,508 6.2% 1,579 6.2% (71) -4.5%
Operating profit 1,272 5.3% 1,415 5.6% (143) -10.1%
Corporate Six Months Ended June 30,
2007 2006 2007 vs 2006
(Dollars in Thousands)
Intersegment shipping sales $(8,417) $(10,032)
Intersegment shipping costs (8,417) (10,032)
Gross profit - -
Corporate general, selling
and administrative
expenses 9,280 8,521 759 8.9%
Operating loss 9,280 8,521 759 8.9%