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AMCOL International Corporation Message Board

  • steve_382 steve_382 Jul 22, 2011 4:35 PM Flag

    Q2 2011 Earnings and CC - A little disappointing

    Some random thoughts from my notes:

    Just finished listening to the CC and reading the PR. Earnings were pretty disappointing. I had .57 for an estimate and they came in at .43. Revenues were nearly a record, but they couldn't keep the margins where they should be. Still only paying about 50% of earnings to dividends, so the dividend should be plenty safe. Seems like they are guiding lower also.

    Gross margin erosion was significant. Chromite sands business is still having problems, but should improve beginning with Q1 2012. How can they have gross margins dropping in every segment?

    They are pushing some 2011 capex into 2012 to help earnings and the balance sheet a little for the rest of the year.

    Where is Larry Washow when you need him? I am not sure Ryan can live up to Larry's performance. It's not too comforting when he keeps saying that maybe they have been too optimistic about margins. Not sure how the outlook and performance could change so much in 3 months. I have lowered my full year guess to $1.76 per share.

    A couple of Ryan's comments: "We have our work cut out going forward" "I have been working on the earnings call for the last week"

    Couldn't force myself to sell any with it down 13% today, but didn't add any either. I usually add when this drops for no reason, but I didn't feel much optimism in the cc.


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    • A couple of comments from Motley Fool:

      What: Shares of specialty minerals manufacturer Amcol International (NYSE: ACO ) sank 13% Friday after its quarterly results disappointed Wall Street.

      So what: Despite a double-digit rise in revenue, Amcol's second-quarter profit fell 16% to $0.43 per share, versus the average analyst estimate of $0.56 per share. "Our gross margins deteriorated in each of our three major business segments," said CEO Ryan McKendrick, "and led to our disappointing earnings in the second quarter."

      Now what: Investors should expect more short-term turbulence. For the rest of the year, management said it expects upgrades at its chrome sand operations to lead to losses of between $0.08 and $0.12 per share. And it sees continued margin pressure at its oil-field services segment. Of course, with the stock down about 20% over the past two weeks, and now sporting a dividend yield of 2%, much of Amcol's risks might already be priced in.

      • 1 Reply to steve_382
      • One question I have: they talk about margin pressures in South Korea and Thailand because they have to import the bentonite. Well, either competitors do also, or why are they operating there?

        Most disturbing thing to me: probably losing a big contract to a competitor using plastic. Plastic prices are presumably high now, certainly ACO's polypropylene is. Is this a case of an alternative technology becoming more cost effective?

        Three things they have to look forward to: at some point construction will turn up, deep water drilling will pick up and railroad snafus will be eliminated. Hopefully, they will solve the chrome sands problems, but you have to wonder.

        At least no mention was made of problems with production of their cosmetic industry products, so maybe those problems were solved. Also, auto production was hampered by Japan in this quarter.