AMCOL International Corporation (NYSE: ACO) Reports Second Quarter Results

Marketwired

HOFFMAN ESTATES, IL--(Marketwired - Jul 26, 2013) - For the second quarter of 2013, AMCOL International Corporation ( NYSE : ACO ) generated diluted earnings attributable to its shareholders of $0.51 per share versus $0.67 per share in the prior year's quarter. The 2013 quarter's diluted earnings per share would have been $0.06 greater, or $0.57 per share, excluding certain special items, primarily expenses associated with restructuring our construction technologies segment.

Net sales increased $5.4 million to $262.8 million in the 2013 second quarter, and gross profit decreased $2.7 million to $72.0 million. Gross profit margin decreased 160 basis points to 27.4%. Operating profit decreased 19.6% to $25.0 million, and operating profit margin decreased 260 basis points to 9.5%. SG&A expenses increased $3.4 million to $47.0 million and include $1.7 million of restructuring expenses, largely in our construction technologies segment. Our effective tax rate for the 2013 second quarter was 28.6% compared to 27.3% in the prior year period.

"From an operating perspective, while several product lines faced challenges in the quarter, others exhibited strong performance. In performance materials, we were pleased with the steady performance in our metalcasting product line both in the US and in Asia, despite softness in chromite sales. We estimate that lower drilling fluid and chromite product sales within the segment accounted for a $0.09 per share decrease in EPS compared to the prior year's quarter," said AMCOL President and CEO Ryan McKendrick.

"Although our construction technologies segment faced challenges in the quarter, we are seeing sales develop for our new lining technologies products. We also completed the restructuring initiatives we started in early 2013," McKendrick continued.

"Energy services completed another good quarter with sales up 27.2% and operating profit up 14.3%. We are seeing a good rebound in activity in the Gulf of Mexico, but it is offset by lower profitability for domestic land based business. This led to a lower gross profit margin for the segment," McKendrick added.

DETAILED ANALYSIS OF RESULTS

The following paragraphs discuss our most recent results. The statement of operations highlights are supported by the quarterly segment results schedules included in this press release. As they relate to our results as contained in the statement of operations, the following comments relate to our results for the current quarter as compared to the same quarter in the prior year, unless otherwise noted. As they relate to the balance sheet, the following paragraphs highlight our financial condition as of June 30, 2013 as compared to December 31, 2012. As they relate to our statement of cash flows, the following comments compare our results for the six months ending June 30, 2013 as compared to the six months ending June 30, 2012.

The $16.6 million, or 27.2%, increase in revenues from our energy services segment was large enough to offset the decreased sales experienced in our other segments. Energy service segment revenues increased as our filtration services were in greater demand due to increased offshore activity in the Gulf of Mexico. Lower sales volumes in construction technologies account for the $5.3 million decrease in that segment's revenues. Lower volumes, principally in chromite product offerings within metalcasting sales and drilling products within basic minerals, led to the $3.9 million sales decrease in our performance materials segment.

Gross profit margins decreased 160 basis points to 27.4%, with the largest decrease occurring in our energy services segment. There, land based services, particularly coil tubing and well testing offerings, experienced lower prices due to increased competition. Lower volume within our performance materials segment decreased that segment's gross profit margins 200 basis points to 25.2%.

Selling, general and administrative expenses increased $3.4 million and included $1.7 million of restructuring charges, mostly in our construction technologies segment. Excluding restructuring charges, increased employee and related expenses were the main drivers of the increased SG&A costs.

Our cash flows from operating activities decreased $18.5 million to $20.4 million largely due to the decreased net income and increased investments in working capital. The current year-to-date period is not benefitting from the significant decrease in accounts receivable that we experienced in the prior year's period, especially in our energy services segment. Capital expenditures increased, mostly in our energy services segment, and we invested $5.0 million in Novinda in the first quarter of 2013. The combination of these factors led us to borrow $31.2 million more than in the prior year-to-date period. Our quarterly dividend rate increased to $0.20 per share from $0.18 per share in the prior year's second quarter.

This release should be read in conjunction with the attached unaudited, condensed, consolidated financial statements. It 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 Hoffman Estates, IL, develops and markets a wide range of mineral and technology based products and services for use in various industrial, environmental and consumer applications. AMCOL is the parent company of American Colloid Company, CETCO (Colloid Environmental Technologies Company, LLC), CETCO Energy Services Company, LLC 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 quarterly quarter conference call will be available live today at 11 a.m. ET on the AMCOL website via webcast or by dialing 866-225-0198.

Financial tables follow.

   
AMCOL INTERNATIONAL CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(unaudited)  
(In millions, except per share data)  
                         
    Six Months Ended     Three Months Ended  
    June 30,     June 30,  
    2013     2012     2013     2012  
                                 
Net sales   $ 499.5     $ 492.9     $ 262.8     $ 257.4  
Cost of sales     364.4       353.5       190.8       182.7  
  Gross profit     135.1       139.4       72.0       74.7  
                                   
Selling, general, and administrative expenses     93.8       86.9       47.0       43.6  
  Operating profit     41.3       52.5       25.0       31.1  
                                   
Other income (expense):                                
  Interest expense, net     (5.0 )     (5.4 )     (2.5 )     (2.7 )
  Other, net     (1.2 )     (2.7 )     (0.5 )     (0.6 )
      (6.2 )     (8.1 )     (3.0 )     (3.3 )
  Income before income taxes and income (loss) from affiliates and joint ventures     35.1       44.4       22.0       27.8  
Income tax expense     9.9       12.0       6.3       7.6  
  Income before income (loss) from affiliates and joint ventures     25.2       32.4       15.7       20.2  
                                 
Income (loss) from affiliates and joint ventures     1.8       2.4       0.9       1.1  
                                 
  Net income     27.0       34.8       16.6       21.3  
                                 
Net income (loss) attributable to noncontrolling interests     -       (0.2 )     0.1       (0.3 )
                                 
Net income attributable to AMCOL shareholders   $ 27.0     $ 35.0     $ 16.5     $ 21.6  
                                 
Weighted average common shares outstanding     32.4       32.0       32.4       32.0  
                                 
Weighted average common and common equivalent shares outstanding     32.7       32.3       32.7       32.3  
                                 
Earnings per share attributable to AMCOL shareholders                                
                                 
  Basic earnings per share   $ 0.83     $ 1.09     $ 0.51     $ 0.67  
  Diluted earnings per share   $ 0.83     $ 1.08     $ 0.51     $ 0.67  
                                 
Dividends declared per share   $ 0.40     $ 0.36     $ 0.20     $ 0.18  
                                 
                                 
   
AMCOL INTERNATIONAL CORPORATION  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In millions)  
             
ASSETS   June 30,     December 31,  
    2013     2012  
    (unaudited)     *  
  Current assets:                
    Cash and equivalents   $ 26.5     $ 40.0  
    Accounts receivable, net     230.1       202.7  
    Inventories     147.6       153.8  
    Prepaid expenses     22.0       17.0  
    Deferred income taxes     5.4       7.0  
    Income tax receivable     15.7       7.0  
    Other     3.2       2.0  
        Total current assets     450.5       429.5  
                 
  Noncurrent assets:                
    Property, plant, equipment, mineral rights and reserves:                
      Land     11.1       13.0  
      Mineral rights     42.5       48.6  
      Depreciable assets     572.9       552.0  
      626.5       613.6  
      Accumulated depreciation and depletion     (318.9 )     (311.7 )
      307.6       301.9  
                 
  Goodwill     69.5       70.2  
  Intangible assets, net     32.2       33.9  
  Investments in and advances to affiliates and joint ventures     34.3       27.8  
  Available-for-sale securities     10.7       14.6  
  Deferred income taxes     7.6       7.4  
  Other assets     27.1       25.3  
        Total noncurrent assets     489.0       481.1  
  Total Assets   $ 939.5     $ 910.6  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
  Current liabilities:                
    Accounts payable   $ 52.7     $ 51.1  
    Accrued income taxes     9.0       5.0  
    Accrued liabilities     62.6       58.4  
        Total current liabilities     124.3       114.5  
                 
  Noncurrent liabilities:                
    Long-term debt     270.2       248.8  
    Pension liabilities     37.9       37.5  
    Deferred compensation     10.9       9.4  
    Deferred income taxes     11.9       12.8  
    Other long-term liabilities     19.3       22.5  
        Total noncurrent liabilities     350.2       331.0  
                 
  Shareholders' equity:                
    Common stock     0.3       0.3  
    Additional paid in capital     112.7       105.1  
    Retained earnings     369.3       355.2  
    Accumulated other comprehensive income (loss)     (20.5 )     0.8  
  Total AMCOL shareholders' equity     461.8       461.4  
                 
    Noncontrolling interest     3.2       3.7  
                 
        Total equity     465.0       465.1  
                 
  Total Liabilities and Shareholders' Equity   $ 939.5     $ 910.6  
                 
* Condensed from audited financial statements.                
                 
                 
   
AMCOL INTERNATIONAL CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)  
(In millions)  
             
    Six Months Ended  
  June 30,  
  2013     2012  
Cash flow from operating activities:                
  Net income   $ 27.0     $ 34.8  
  Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
    Depreciation, depletion, and amortization     24.3       21.8  
    Other non-cash charges     5.3       7.4  
    Changes in assets and liabilities, net of effects of acquisitions:                
      Decrease (increase) in current assets     (48.3 )     (25.6 )
      Decrease (increase) in noncurrent assets     (2.1 )     (1.2 )
      Increase (decrease) in current liabilities     12.5       0.3  
      Increase (decrease) in noncurrent liabilities     1.7       1.4  
        Net cash provided by (used in) operating activities     20.4       38.9  
                 
Cash flow from investing activities:                
  Capital expenditures     (44.1 )     (32.2 )
  (Increase) decrease in investments and advances (to) from affiliates and joint ventures     (4.9 )     0.1  
  Proceeds from sale of land and depreciable assets     0.5       1.4  
  Other     1.3       0.8  
        Net cash (used in) investing activities     (47.2 )     (29.9 )
                         
Cash flow from financing activities:                
  Net change in outstanding debt     21.6       (9.6 )
  Proceeds from exercise of stock awards     4.4       3.9  
  Dividends paid     (12.9 )     (11.5 )
  Excess tax benefits from stock-based compensation     0.1       0.2  
  Contribution from noncontrolling partner     0.1       -  
        Net cash provided by (used in) financing activities     13.3       (17.0 )
                         
Effect of foreign currency rate changes on cash     -       0.7  
Net increase (decrease) in cash and cash equivalents     (13.5 )     (7.3 )
Cash and cash equivalents at beginning of period     40.0       24.1  
Cash and cash equivalents at end of period   $ 26.5     $ 16.8  
                 
                 
   
AMCOL INTERNATIONAL CORPORATION  
SEGMENT RESULTS (unaudited)  
QUARTER-TO-DATE  
                                     
    Three Months Ended June 30,  
  Performance Materials 2013     2012     2013 vs. 2012  
    (Dollars in Millions)  
                                     
Net sales   $ 127.2       100.0 %   $ 131.1     100.0 %   $ (3.9 )   -3.0 %
Cost of sales     95.1       74.8 %     95.5     72.8 %     (0.4 )   -0.4 %
  Gross profit     32.1       25.2 %     35.6     27.2 %     (3.5 )   -9.8 %
Selling, general and administrative expenses     13.2       10.3 %     13.1     10.0 %     0.1     0.8 %
  Operating profit     18.9       14.9 %     22.5     17.2 %     (3.6 )   -16.0 %
                                             
                                             
                                     
    Three Months Ended June 30,  
Construction Technologies   2013     2012     2013 vs. 2012  
    (Dollars in Millions)  
                                             
Net sales   $ 56.0       100.0 %   $ 61.3     100.0 %   $ (5.3 )   -8.6 %
Cost of sales     38.0       67.9 %     42.6     69.5 %     (4.6 )   -10.8 %
  Gross profit     18.0       32.1 %     18.7     30.5 %     (0.7 )   -3.7 %
Selling, general and administrative expenses     15.2       27.1 %     12.4     20.2 %     2.8     22.6 %
  Operating profit     2.8       5.0 %     6.3     10.3 %     (3.5 )   -55.6 %
                                             
                                             
                                             
    Three Months Ended June 30,  
Energy Services   2013     2012     2013 vs. 2012  
    (Dollars in Millions)  
                                             
Net sales   $ 77.7       100.0 %   $ 61.1     100.0 %   $ 16.6     27.2 %
Cost of sales     57.1       73.5 %     41.9     68.6 %     15.2     36.3 %
  Gross profit     20.6       26.5 %     19.2     31.4 %     1.4     7.3 %
Selling, general and administrative expenses     11.8       15.2 %     11.5     18.8 %     0.3     2.6 %
  Operating profit     8.8       11.3 %     7.7     12.6 %     1.1     14.3 %
                                             
                                             
                                             
    Three Months Ended June 30,  
Transportation   2013     2012     2013 vs. 2012  
    (Dollars in Millions)  
                                             
Net sales   $ 11.5       100.0 %   $ 11.7     100.0 %   $ (0.2 )   -1.7 %
Cost of sales     10.3       89.6 %     10.5     89.7 %     (0.2 )   -1.9 %
  Gross profit     1.2       10.4 %     1.2     10.3 %     (0.0 )   0.0 %
Selling, general and administrative expenses     0.9       7.8 %     0.9     7.7 %     -     0.0 %
  Operating profit     0.3       2.6 %     0.3     2.6 %     (0.0 )   0.0 %
                                             
                                             
                                             
    Three Months Ended June 30,                
  Corporate 2013     2012     2013 vs. 2012                
    (Dollars in Millions)                
                                             
Intersegment sales   $ (9.6 )   $ (7.8 )   $ (1.8 )                    
Intersegment cost of sales     (9.7 )     (7.8 )     (1.9 ...
)                       Gross profit (loss)     0.1       -       0.1                       Selling, general and administrative expenses     5.9       5.7       0.2     3.5 %               Operating loss     (5.8 )     (5.7 )     (0.1 )   1.8 %                                                                                                          
     
AMCOL INTERNATIONAL CORPORATION    
SEGMENT RESULTS (unaudited)    
YEAR-TO-DATE    
                                     
    Six Months Ended June 30,    
Performance Materials   2013     2012     2013 vs. 2012    
    (Dollars in Millions)    
                                             
Net sales   $ 244.4       100.0 %   $ 256.3     100.0 %   $ (11.9 ) -4.6   %
Cost of sales     182.9       74.8 %     187.3     73.1 %     (4.4 ) -2.3   %
  Gross profit     61.5       25.2 %     69.0     26.9 %     (7.5 ) -10.9   %
Selling, general andadministrative expenses     26.7       11.0 %     25.0     9.7 %     1.7   6.8   %
  Operating profit     34.8       14.2 %     44.0     17.2 %     (9.2 ) -20.9   %
                                             
                                             
                                             
    Six Months Ended June 30,    
Construction Technologies   2013     2012     2013 vs. 2012    
    (Dollars in Millions)    
                                             
Net sales   $ 98.8       100.0 %   $ 112.3     100.0 %   $ (13.5 ) -12.0   %
Cost of sales     67.8       68.6 %     79.0     70.3 %     (11.2 ) -14.2   %
  Gross profit     31.0       31.4 %     33.3     29.7 %     (2.3 ) -6.9   %
Selling, general and administrative expenses     30.0       30.4 %     26.1     23.3 %     3.9   14.9   %
  Operating profit     1.0       1.0 %     7.2     6.4 %     (6.2 ) -86.1   %
                                             
                                             
                                             
    Six Months Ended June 30,    
Energy Services   2013     2012     2013 vs. 2012    
    (Dollars in Millions)    
                                             
Net sales   $ 150.8       100.0 %   $ 116.4     100.0 %   $ 34.4   29.6   %
Cost of sales     110.6       73.3 %     81.8     70.3 %     28.8   35.2   %
  Gross profit     40.2       26.7 %     34.6     29.7 %     5.6   16.2   %
Selling, general and administrative expenses     23.2       15.4 %     22.1     19.0 %     1.1   5.0   %
  Operating profit     17.0       11.3 %     12.5     10.7 %     4.5   36.0   %
                                             
                                             
                                             
    Six Months Ended June 30,    
Transportation   2013     2012     2013 vs. 2012    
    (Dollars in Millions)    
                                             
Net sales   $ 21.7       100.0 %   $ 22.8     100.0 %   $ (1.1 ) -4.8   %
Cost of sales     19.4       89.4 %     20.4     89.5 %     (1.0 ) -4.9   %
  Gross profit     2.3       10.6 %     2.4     10.5 %     (0.1 ) -4.2   %
Selling, general and administrative expenses     1.8       8.3 %     1.9     8.3 %     (0.1 ) -5.3   %
  Operating profit     0.5       2.3 %     0.5     2.2 %     (0.0 ) 0.0   %
                                             
                                             
                                             
    Six Months Ended June 30,                
Corporate   2013     2012     2013 vs. 2012                
    (Dollars in Millions)                
                                             
Intersegment sales   $ (16.2 )   $ (14.9 )   $ (1.3 )                    
Intersegment cost of sales     (16.3 )     (15.0 )     (1.3 )                    
  Gross profit (loss)     0.1       0.1       (0.0 )                    
Selling, general and administrative expenses     12.1       11.8       0.3     2.5 %              
Operating loss     (12.0 )     (11.7 )     (0.3 )   2.6 %              
                                             
                                             
         
AMCOL INTERNATIONAL CORPORATION        
SUPPLEMENTARY INFORMATION (unaudited)        
QUARTER-TO-DATE        
                         
Composition of Sales by Geographic Region   Three Months Ended June 30, 2013  
  Americas     EMEA     Asia Pacific     Total  
Performance materials     27.0 %     10.0 %   11.4 %   48.4 %
Construction technologies     8.6 %     9.5 %   3.2 %   21.3 %
Energy services     25.1 %     1.8 %   2.7 %   29.6 %
Transportation & intersegment sales     0.7 %     0.0 %   0.0 %   0.7 %
                             
Total - current year's period     61.4 %     21.3 %   17.3 %   100.0 %
Total from prior year's comparable period     62.8 %     21.7 %   15.5 %   100.0 %
                             
                             
                             
Percentage of Revenue Growth by Component   
 
 
 
 
 
Three Months Ended June 30, 2013
vs.
Three Months Ended June 30, 2012
 
    Organic     Acquisitions     Foreign Exchange     Total  
Performance materials     -1.3 %     0.0 %   -0.2 %   -1.5 %
Construction technologies     -2.3 %     0.0 %   0.2 %   -2.1 %
Energy services     6.5 %     0.0 %   -0.1 %   6.4 %
Transportation & intersegment sales     -0.8 %     0.0 %   0.0 %   -0.8 %
                             
Total     2.1 %     0.0 %   -0.1 %   2.0 %
% of growth     105.0 %     0.0 %   -5.0 %   100.0 %
                             
                             
                             
Performance Materials Product Line Sales   Three Months Ended June 30,        
  2013     2012     % change        
    (Dollars in Millions)        
                             
Metalcasting   $ 70.0     $ 71.0     -1.4 %      
Specialty materials     24.0       28.9     -17.0 %      
Basic minerals     15.4       16.0     -3.7 %      
Pet products     14.6       13.9     5.0 %      
Other product lines     3.2       1.3     146.2 %      
                             
  Total     127.2       131.1     -3.0 %      
                             
                             
                             
                             
Construction Technologies Product Line Sales   Three Months Ended June 30,        
  2013     2012     % change        
    (Dollars in Millions)        
                             
Lining technologies   $ 24.5     $ 27.3     -10.3 %      
Building materials     18.9       19.2     -1.6 %      
Drilling products     10.1       10.5     -3.8 %      
Contracting services     2.5       4.3     -41.9 %      
                             
  Total     56.0       61.3     -8.6 %      
                               
                               
         
AMCOL INTERNATIONAL CORPORATION        
SUPPLEMENTARY INFORMATION (unaudited)        
YEAR-TO-DATE        
                         
Composition of Sales by Geographic Region   Six Months Ended June 30, 2013  
Americas     EMEA     Asia Pacific     Total  
   
Performance materials     27.4 %     10.0 %   11.6 %   49.0 %
Construction technologies     8.4 %     8.4 %   3.0 %   19.8 %
Energy services     25.6 %     1.5 %   3.0 %   30.1 %
Transportation & intersegment sales     1.1 %     0.0 %   0.0 %   1.1 %
                             
Total - current year's period     62.5 %     19.9 %   17.6 %   100.0 %
Total from prior year's comparable period     64.0 %     20.7 %   15.3 %   100.0 %
                             
                             
                             
Percentage of Revenue Growth by Component   Six Months Ended June 30, 2013
vs.
Six Months Ended June 30, 2012
 
    Organic     Acquisitions     Foreign Exchange     Total  
Performance materials     -2.3 %     0.0 %   -0.1 %   -2.4 %
Construction technologies     -2.8 %     0.0 %   0.1 %   -2.7 %
Energy services     7.2 %     0.0 %   -0.2 %   7.0 %
Transportation & intersegment sales     -0.5 %     0.0 %   0.0 %   -0.5 %
                             
Total     1.6 %     0.0 %   -0.2 %   1.4 %
% of growth     114.3 %     0.0 %   -14.3 %   100.0 %
                             
                             
                             
Performance Materials Product Line Sales   Six Months Ended June 30,        
    2013     2012     % change        
    (Dollars in Millions)        
                             
Metalcasting   $ 133.2     $ 133.8     -0.4 %      
Specialty materials     48.6       59.0     -17.6 %      
Basic minerals     30.1       33.3     -9.6 %      
Pet products     28.0       28.1     -0.4 %      
Other product lines     4.5       2.1     114.3 %      
                             
  Total     244.4       256.3     -4.6 %      
                             
                             
                             
Construction Technologies Product Line Sales   Six Months Ended June 30,        
    2013     2012     % change        
    (Dollars in Millions)        
                             
Lining technologies   $ 38.0     $ 46.7     -18.6 %      
Building materials     36.9       37.9     -2.6 %      
Drilling products     19.4       19.1     1.6 %      
Contracting services     4.5       8.6     -47.7 %      
                             
  Total     98.8       112.3     -12.0 %      
                               
                               
Contact:
For further information, contact:
Don Pearson
Senior Vice President & Chief Financial Officer
847.851.1500
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