Exhibit 99.1
AMCOL INTERNATIONAL (NYSE: ACO) REPORTS INCREASE IN DILUTED EARNINGS PER SHARE
FROM CONTINUING OPERATIONS OVER 2005 THIRD QUARTER
ARLINGTON HEIGHTS, Ill., Oct. 20 /PRNewswire-FirstCall/ -- AMCOL
International Corporation (NYSE: ACO) today reported 2006 third quarter income
from continuing operations of $16.0 million or $0.52 per diluted share, compared
with $11.4 million or $0.37 per diluted share in the same prior-year period. The
2006 third quarter income from continuing operations includes a $0.09 per
diluted share net benefit resulting from income tax refunds.
Net income for the quarter ended September 30, 2006 was $16.6 million, or
$0.54 per diluted share, compared with $11.4 million, or $0.37 per diluted
share, in the prior-year period. Net income for the quarter ended September 30,
2006 includes a $0.6 million, or $0.02 per diluted share, benefit from
discontinued operations, reflecting income tax refunds associated with the
absorbent polymers segment that was sold in the second quarter of 2000.
Net sales from continuing operations rose 12 percent to $160.2 million for
the quarter ended September 30, 2006, compared with $142.9 million for the
period in 2005. Operating profit from continuing operations grew over the 2005
third quarter by 3 percent to $16.4 million. Current period operating profit
includes a $0.7 million expense for professional fees relating to the
aforementioned amended tax returns, and prior period gross profit and operating
profit includes a $0.2 million reduction in mining-related taxes due to
legislative changes in Montana. Excluding the effect of these one-time items,
operating profit increased 8.5 percent or $1.3 million over the prior year
period.
For the nine-month period ended September 30, 2006, income from continuing
operations was $37.7 million, or $1.22 per diluted share, compared with $27.9
million, or $0.91 per diluted share in the same period of 2005. As previously
mentioned in this release, the current-year period includes a $0.09 per share
net benefit from income tax refunds. Net income was $38.2 million, or $1.24 per
diluted share, compared with $32.7 million, or $1.06 per diluted share, in the
same period of 2005. Net income for the nine months ended September 30, 2006 and
2005 includes a gain from discontinued operations of $0.02 and $0.15 per diluted
share, respectively.
Net sales from continuing operations were $455.6 million for the nine- month
period ended September 30, 2006, compared with $401.3 million in the prior-year
period, or an increase of 13.5 percent. Operating profit for the period was
$43.3 million compared with $37.7 million in 2005, or an increase of 15 percent.
The current period operating profit includes a $0.7 million expense for
professional fees relating to amended tax returns, and prior period gross profit
and operating profit benefited from a $2.1 million reduction in mining-related
taxes due to legislative changes in Montana. Excluding the effect of these
one-time items, operating profit increased 23.6 percent or $8.4 million over the
prior year period.
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.
In the third quarter of 2006, we began capturing discrete financial
information for our Oilfield services business and reporting it separately. In
accordance with generally accepted accounting principles, we have revised our
segment reporting to reflect the way we now manage and view our business - with
Oilfield services segment reported separately from our Environmental segment. We
have also recast the segment information for prior periods to conform to this
new presentation.
Larry Washow, AMCOL president and chief executive officer said, "Overall we
had a productive quarter, both operationally and financially, with diluted
earnings per share up over the third quarter of 2005 and several targeted
investments completed. Our worldwide operations reported strong results,
benefiting from our Asian mineral groups and our European environmental groups.
The U.S. metalcasting market has shown a flattening, but oil drilling continues
to be strong."
Washow continued, "We have provided detailed information on our Oilfield
Services segment which has built a unique platform and our third quarter results
highlight the effectiveness of this segment. I am particularly pleased with our
portfolio evolution, demonstrating the attractiveness of our product offering to
customers."
"Compared to the strong third quarter the Environmental segment had in 2005,
the segment again had strong sales, offset by weaker than expected margins. We
experienced margin pressure from our newest group, Contracting Services, which
contributed to the segment's sales but is not yet adding to the bottom line.
This Group is working to attain the profit margins we had expected for this
business," Washow commented.
Washow added that the Environmental segment's third quarter general, selling
and administrative expenses were impacted by increased staffing needs to meet
the sales demands but has remained constant at about 19 percent of sales.
FINANCIAL OVERVIEW
Third-Quarter Operating Results
The Environmental segment accounted for approximately 54 percent of the
sales growth in the third quarter. The Minerals segment contributed 29 percent
and the Oilfield Services segment contributed 17 percent, while the
Transportation segment was flat.
Gross margin for the quarter was 26.4 percent compared with 26.7 percent in
the prior-year third quarter. The Oilfield Services segment's gross margin for
the quarter increased 340 basis points while the Environmental and Minerals
segments' gross margin declined by 230 and 30 basis points, respectively. The
Transportation segment's gross margins decreased by 20 basis points.
General, selling and administrative expenses were $25.8 million in the 2006
third quarter, an increase of $3.7 million or 17 percent over the 2005 period.
Higher personnel-related costs in the Environmental and Oilfield Services
segments were the primary causes for the increase. Professional fees related to
the amended income tax returns accounted for approximately $0.7 million of the
increase. Research and development expenses remained constant at $1.5 million in
the third quarter of 2006 versus the third quarter of 2005. The nanocomposites
business, which is included in the Corporate segment, benefited from one-time
adjustments totaling approximately $0.2 million related to depreciation and
obsolete inventory reserves.
Operating margin for the quarter was 10.2 percent compared with 11.2 percent
in the prior-year period. The margin decline was principally impacted by higher
general, selling and administrative expenses.
Interest expense increased by approximately $0.4 million over the prior-
year quarter due to higher average debt levels and increased interest rates.
Other expense for the period was $0.3 million compared with income of $0.2
million in 2005. The change was primarily attributed to foreign exchange losses
incurred at the European subsidiaries.
The Company's effective tax rate was 8.0 percent for the third quarter of
2006 versus 33.1 percent for the same period in 2005. The 2006 period benefited
from favorable tax reductions of approximately $3.4 million relating to amended
tax returns, while the 2005 period included a charge of $1.5 million for
write-off of tax receivables. Excluding the effect of both of these adjustments,
the comparative third quarter effective tax rates for 2006 and 2005 were 29
percent and 23.9 percent, respectively.
Income from affiliates and joint ventures contributed approximately $0.06
per diluted share in the 2006 third quarter compared with $0.03 per diluted
share in the prior-year period. Higher profits earned at the Company's
Indian-based investments led to the increase.
The weighted average number of common and common equivalent shares was
constant at 30.8 million for the quarter ended September 30, 2006 and 2005.
Financial Position
Long-term debt increased to $60.1 million at September 30, 2006 compared to
$34.8 million at December 31, 2005. The increase was primarily due to greater
working capital levels, capital expenditures and acquisitions. Debt represented
18 percent of total capitalization at September 30, 2006, compared with 12
percent at December 31, 2005. Cash and cash equivalents were $15.3 million at
September 30, 2006 compared with $16.0 million at the end of 2005.
Working capital increased to $167.9 million at September 30, 2006 from
$147.9 million at December 31, 2005; our current ratio remained relatively
constant.
Cash flow provided by operating activities was $29.0 million for the year-
to-date nine months ended September 30, 2006 as compared with $17.4 million in
the prior-year period. Higher net income and a lower increase in working capital
contributed to the improvement over the 2005 period.
Capital expenditures amounted to $30.0 million for the year-to-date nine
months ended September 30, 2006, compared with $20.0 million for the same period
in 2005. The increase is primarily due to investments within the Minerals
segment manufacturing plants. The Company expended $11.7 million for
acquisitions in the 2006 period, including approximately $10.5 million in the
third quarter for a business included in the Oilfield Services segment.
During the first nine months of 2006, the Company repurchased 220 thousand
shares of its common stock for $5.6 million, or an average price of $25.24 per
share. The stock repurchase program approved by the Board of Directors in May
2004 expired in the third quarter of 2006.
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 International, headquartered in Arlington Heights, Ill., 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 Co.), Volclay
International, Nanocor 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 third quarter conference call will be available live today at 11 a.m.
EDT on the AMCOL website.
AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
Nine Months Ended Three Months Ended
September 30, September 30,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Continuing Operations:
Net sales $ 455,637 $ 401,322 $ 160,172 $ 142,928
Cost of sales 337,995 296,977 117,954 104,831
Gross profit 117,642 104,345 42,218 38,097
General, selling and
administrative expenses 74,359 66,690 25,810 22,138
Operating profit 43,283 37,655 16,408 15,959
Other income (expense):
Interest expense, net (1,835) (1,195) (740) (390)
Other, net 259 (831) (273) 160
(1,576) (2,026) (1,013) (230)
Income before income taxes and
income from affiliates and
joint ventures 41,707 35,629 15,395 15,729
Income tax expense (benefit) 8,505 9,659 1,237 5,202
Income before income from
affiliates and joint ventures 33,202 25,970 14,158 10,527
Income from affiliates and
joint ventures 4,462 1,942 1,876 915
Income from continuing operations 37,664 27,912 16,034 11,442
Discontinued Operations: 585 4,755 585 -
Income from discontinued operations 585 4,755 585 -
Net income $ 38,249 $ 32,667 $ 16,619 $ 11,442
Weighted average common shares
outstanding 29,903 29,489 29,962 29,649
Weighted average common and common
equivalent shares outstanding 30,874 30,798 30,825 30,832
Basic earnings per share:
Continuing operations $ 1.26 $ 0.95 $ 0.54 $ 0.39
Discontinued operations 0.02 0.16 0.02 -
Basic earnings per share $ 1.28 $ 1.11 $ 0.56 $ 0.39
Diluted earnings per share:
Continuing operations $ 1.22 $ 0.91 $ 0.52 $ 0.37
Discontinued operations 0.02 0.15 0.02 -
Diluted earnings per share $ 1.24 $ 1.06 $ 0.54 $ 0.37
Dividends declared per share $ 0.35 $ 0.28 $ 0.12 $ 0.10
AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2006 2005
------------- ------------
(unaudited) *
ASSETS
Current assets:
Cash $ 15,319 $ 15,997
Accounts receivable, net 134,145 101,725
Inventories 79,364 75,455
Prepaid expenses 12,110 9,068
Current deferred tax assets 3,866 3,698
Income taxes receivable - 4,864
Other 573 402
Total current assets 245,377 211,209
Investments in and advances to
affiliates and joint ventures 29,893 19,730
Property, plant, equipment, mineral
rights and reserves:
Land and mineral rights 15,856 12,761
Depreciable assets 285,378 252,430
301,234 265,191
Less: accumulated depreciation 179,296 165,127
121,938 100,064
Other assets:
Goodwill 26,462 20,644
Intangible assets, net 2,722 3,009
Deferred tax assets 5,275 4,579
Other assets 11,264 9,294
45,723 37,526
$ 442,931 $ 368,529
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 28,766 $ 24,722
Accrued liabilities 48,743 38,547
Total current liabilities 77,509 63,269
Long-term debt 60,100 34,838
Minority interests in subsidiaries 262 259
Deferred compensation 7,823 7,045
Other liabilities 15,186 14,262
23,271 21,566
Stockholders' equity:
Common stock 320 320
Additional paid in capital 76,140 72,194
Retained earnings 211,883 184,125
Accumulated other comprehensive income 13,936 8,644
302,279 265,283
Less:
Treasury stock 20,228 16,427
282,051 248,856
$ 442,931 $ 368,529
* Condensed from audited financial statements.
AMCOL INTERNATIONAL CORPORATION
SEGMENT RESULTS (unaudited)
Nine Months Ended September 30,
---------------------------------------------------------------------------
Minerals 2006 2005 2006 vs 2005
- ------------------------- ----------------------- ----------------------- -----------------------
(Dollars in Thousands)
Net sales $ 237,463 100.0% $ 222,643 100.0% $ 14,820 6.7%
Cost of sales 191,152 80.5% 177,343 79.7% 13,809 7.8%
Gross profit 46,311 19.5% 45,300 20.3% 1,011 2.2%
General, selling
and administrative
expenses 18,093 7.6% 17,041 7.7% 1,052 6.2%
Operating profit 28,218 11.9% 28,259 12.6% (41) -0.1%
Nine Months Ended September 30,
---------------------------------------------------------------------------
Environmental 2006 2005 2006 vs 2005
- ------------------------- ----------------------- ----------------------- -----------------------
(Dollars in Thousands)
Net sales $ 151,996 100.0% $ 128,505 100.0% $ 23,491 18.3%
Cost of sales 99,934 65.7% 83,131 64.7% 16,803 20.2%
Gross profit 52,062 34.3% 45,374 35.3% 6,688 14.7%
General, selling
and administrative
expenses 30,896 20.3% 26,430 20.6% 4,466 16.9%
Operating profit 21,166 14.0% 18,944 14.7% 2,222 11.7%
Nine Months Ended September 30,
---------------------------------------------------------------------------
Oilfield services 2006 2005 2006 vs 2005
- ------------------------- ----------------------- ----------------------- -----------------------
(Dollars in Thousands)
Net sales $ 43,270 100.0% $ 28,710 100.0% $ 14,560 50.7%
Cost of sales 28,558 66.0% 19,502 67.9% 9,056 46.4%
Gross profit 14,712 34.0% 9,208 32.1% 5,504 59.8%
General, selling
and administrative
expenses 7,366 17.0% 5,390 18.8% 1,976 36.7%
Operating profit 7,346 17.0% 3,818 13.3% 3,528 92.4%
Nine Months Ended September 30,
---------------------------------------------------------------------------
Transportation 2006 2005 2006 vs 2005
- ------------------------- ----------------------- ----------------------- -----------------------
(Dollars in Thousands)
Net sales $ 38,619 100.0% $ 36,804 100.0% $ 1,815 4.9%
Cost of sales 34,062 88.2% 32,341 87.9% 1,721 5.3%
Gross profit 4,557 11.8% 4,463 12.1% 94 2.1%
General, selling and
administrative expenses 2,367 6.1% 2,419 6.6% (52) -2.1%
Operating profit 2,190 5.7% 2,044 5.5% 146 7.1%
Nine Months Ended September 30,
-------------------------------------------------
Corporate 2006 2005 2006 vs 2005
- -------------------------------------- ---------- ---------- -----------------------
(Dollars in Thousands)
Intersegment shipping sales $ (15,711) $ (15,340)
Intersegment shipping costs (15,711) (15,340)
Gross profit - -
Corporate general, selling
and administrative expenses 13,591 12,819 772 6.0%
Nanocomposite business
development expenses 2,046 2,591 (545) -21.0%
Operating loss 15,637 15,410 227 1.5%
AMCOL INTERNATIONAL CORPORATION
SEGMENT RESULTS (unaudited)
Three Months Ended September 30,
---------------------------------------------------------------------------
Minerals 2006 2005 2006 vs 2005
- ------------------------- ----------------------- ----------------------- -----------------------
(Dollars in Thousands)
Net sales $ 79,274 100.0% $ 74,318 100.0% $ 4,956 6.7%
Cost of sales 63,503 80.1% 59,275 79.8% 4,228 7.1%
Gross profit 15,771 19.9% 15,043 20.2% 728 4.8%
General, selling and
administrative expenses 5,791 7.3% 5,244 7.1% 547 10.4%
Operating profit 9,980 12.6% 9,799 13.1% 181 1.8%
Three Months Ended September 30,
---------------------------------------------------------------------------
Environmental 2006 2005 2006 vs 2005
- ------------------------- ----------------------- ----------------------- -----------------------
(Dollars in Thousands)
Net sales $ 59,120 100.0% $ 49,832 100.0% $ 9,288 18.6%
Cost of sales 39,303 66.5% 31,999 64.2% 7,304 22.8%
Gross profit 19,817 33.5% 17,833 35.8% 1,984 11.1%
General, selling and
administrative
expenses 10,968 18.6% 9,392 18.8% 1,576 16.8%
Operating profit 8,849 14.9% 8,441 17.0% 408 4.8%
Three Months Ended September 30,
---------------------------------------------------------------------------
Oilfield services 2006 2005 2006 vs 2005
- ------------------------- ----------------------- ----------------------- -----------------------
(Dollars in Thousands)
Net sales $ 14,157 100.0% $ 11,245 100.0% $ 2,912 25.9%
Cost of sales 9,090 64.2% 7,605 67.6% 1,485 19.5%
Gross profit 5,067 35.8% 3,640 32.4% 1,427 39.2%
General, selling
and administrative
expenses 2,797 19.8% 1,963 17.5% 834 42.5%
Operating profit 2,270 16.0% 1,677 14.9% 593 35.4%
Three Months Ended September 30,
---------------------------------------------------------------------------
Transportation 2006 2005 2006 vs 2005
- ------------------------- ----------------------- ----------------------- -----------------------
(Dollars in Thousands)
Net sales $ 13,300 100.0% $ 13,224 100.0% $ 76 0.6%
Cost of sales 11,737 88.2% 11,643 88.0% 94 0.8%
Gross profit 1,563 11.8% 1,581 12.0% (18) -1.1%
General, selling and
administrative expenses 788 5.9% 830 6.3% (42) -5.1%
Operating profit 775 5.9% 751 5.7% 24 3.2%
Three Months Ended September 30,
-------------------------------------------------
Corporate 2006 2005 2006 vs 2005
- -------------------------------------- ---------- ---------- -----------------------
(Dollars in Thousands)
Intersegment shipping sales $ (5,679) $ (5,691)
Intersegment shipping costs (5,679) (5,691)
Gross profit - -
Corporate general,
selling and
administrative expenses 5,070 3,786 1,284 33.9%
Nanocomposite business
development expenses 396 923 (527) -57.1%
Operating loss 5,466 4,709 757 16.1%
AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(In thousands)
Nine Months Ended
September 30,
---------------------------
2006 2005
------------ ------------
Cash flow from operating activities:
Net income $ 38,249 $ 32,667
Adjustments to reconcile net income to net cash:
provided by (used in) operating activities:
Gain on disposal of discontinued operations (585) (4,755)
Depreciation, depletion, and amortization 14,606 14,629
Changes in assets and liabilities,
net of effects of acquisitions:
Decrease (Increase) in current assets (33,693) (25,748)
Decrease (Increase) in noncurrent assets (2,171) (2,190)
Increase (decrease) in current liabilities 14,256 210
Increase (decrease) in noncurrent
liabilities 1,703 1,358
Other (3,400) 1,276
Net cash provided by (used in)
operating activities 28,965 17,447
Cash flow from investing activities:
Acquisition of land, mineral rights,
and depreciable assets (29,980) (19,988)
Acquisitions, net of cash (11,722) (1,997)
Investments in and advances to affiliates
and joint ventures (5,260) (2,336)
Net tax refunds from the sale of
discontinued operations 585 7,300
Other 1,226 2,918
Net cash provided by (used in)
investing activities (45,151) (14,103)
Cash flow from financing activities:
Net change in outstanding debt 22,257 6,151
Proceeds from sales of treasury stock 2,350 1,247
Purchases of treasury stock (5,553) (1,946)
Dividends paid (10,488) (8,308)
Excess tax benefits from
stock-based compensation 1,931 -
Net cash provided by (used in)
financing activities 10,497 (2,856)
Effect of foreign currency rate changes on cash 5,011 (2,939)
Net increase (decrease) in cash and
cash equivalents (678) (2,451)
Cash and cash equivalents at beginning of period 15,997 17,594
Cash and cash equivalents at end of period $ 15,319 $ 15,143
SOURCE AMCOL International Corporation
-0- 10/20/2006
/CONTACT: Jennifer Melsheimer, Investor Relations Manager for AMCOL
International Corporation, +1-847-394-8730/
/Web site: http://www.amcol.com /
(ACO)