EX-99.1 2 v111083_ex99-1.htm Unassociated Document

For further information, contact:
Gary L. Castagna
 
Senior Vice President & CFO
 
847.394.8730
 
AMCOL INTERNATIONAL (NYSE:ACO)
REPORTS FIRST QUARTER EARNINGS
 
ARLINGTON HEIGHTS, IL., APRIL 18, 2008—AMCOL International Corporation (NYSE:ACO) today reported 2008 first-quarter net income of $8.6 million or $0.28 per diluted share, compared with $10.8 million or $0.35 per diluted share in the same prior-year period.

Net sales rose 16.9% to $191.4 million for the quarter ended March 31, 2008, compared with $163.7 million for the 2007 period. Acquisitions and favorable foreign currency translation represented approximately $5.9 million and $4.3 million, respectively, of the first-quarter sales growth. Operating profit declined by 13.5% over the 2007 period to $12.7 million. Acquisitions added less than $0.1 million to current-period operating profit while foreign currency translation contributed $0.5 million.

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 Statement of Operations Highlights.

“Sales were up across all segments in the first quarter, and Oilfield Services had operating profit growth of 24.7%,” says Larry Washow, AMCOL President and Chief Executive Officer. “At the same time, however, we experienced a number of issues that dampened our overall performance. Increased energy costs were a significant factor this quarter. Overhead was up due to costs from acquisitions, greater R&D expenditures and higher benefits cost.”
 
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AMCOL Q1 2008 EARNINGS
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“Despite solid sales growth of 15.8% in the Minerals segment, quarter-over-quarter operating profits were down 17.0% from a year ago, primarily because of higher energy costs. Operating margins were flat compared to the fourth quarter of 2007, but we expect to see improvement in margins in the quarters ahead,” Washow continues.

“Sales in the Environmental segment were up 19.6% quarter-over-quarter but operating profit decreased slightly by 4.4%,” he says. “Weather, energy costs, overhead and product mix all played a role, but, again, our expectations for the balance of the year are positive.

In summary, Washow says, “We’re seeing the effects of a number of economic influences, but we are continuing to identify opportunities to improve costs. Given the strength of the energy sector, we expect continued strong performance in Oilfield Services, and the outlook is promising for other segments over the rest of the year, as well.”
 
STATEMENT OF OPERATIONS HIGHLIGHTS:

Net sales: The following table details the consolidated sales growth components over the 2007 first quarter:

 
 
Base Business
 
Acquisitions
 
Foreign
Exchange
 
Total
 
Minerals
   
4.7
%
 
2.8
%
 
0.8
%
 
8.3
%
Environmental
   
3.2
%
 
0.8
%
 
1.8
%
 
5.8
%
Oilfield Services
   
1.3
%
 
-
   
-
   
1.3
%
Transportation
   
1.5
%
 
-
   
-
   
1.5
%
Total
   
10.7
%
 
3.6
%
 
2.6
%
 
16.9
%
% of Growth
   
63.3
%
 
21.3
%
 
15.4
%
 
100
%

Minerals: Approximately one-third of the base business growth was attributed to freight pass-through revenue. Higher shipments in the pet products division led to the increase in freight revenue and contributed to base business volume growth over the 2007 quarter. Base business sales were also aided by higher demand in the Asia-Pacific metalcasting market and certain specialty materials product lines. Pricing was increased in certain product lines and geographical markets; however, higher relative contribution of lower-priced products - mix - lowered sales compared with 2007.

Sales from acquisitions were principally contributed by the Turkish operations followed by a Mexican joint venture business. Foreign exchange benefit resulted from British Pound and Asia-Pacific currency translation.
 
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AMCOL Q1 2008 EARNINGS
Page 3 of 10

Environmental: A 19.6% improvement in sales was primarily generated from the Poland-based operations. Base business growth in building materials division shipments and installation services led to the increase. Additionally, higher shipments of lining technology product lines in the U.S. market contributed to the increase.

Oilfield Services: Demand for water treatment services in the Gulf of Mexico was the largest contributor to base business growth. Additional sales improvement came from emerging geographic markets.

Transportation: Traffic levels increased over the prior-year quarter due to higher demand from consumer products shippers.

Gross profit: Sales growth provided the increase in gross profit; however, gross margin was 24.2% which was a 240 basis point decline from the 2007 quarter.

Minerals: The decline from the prior-year first quarter was primarily attributed to rising energy, production and mining costs in the U.S. Additionally, gross margin was impacted by unfavorable product mix in Europe and higher freight revenues, which do not generate any profit.

Environmental: Within the Environmental segment, gross margin declined by 260 basis points due to sales of lower profit products and services relative to the prior-year quarter. In addition, rising production costs in the U.S.-based operations negatively impacted current-period gross margin.

Oilfield: Oilfield Services gross margin was comparable to the prior-year quarter.

Transportation: The transportation segment suffered a decline of 90 basis points. Under-recovered fuel surcharges were the principal reason for the negative gross margin comparison.

General, selling and administrative expenses (GS&A): The $4.8 million, or 16.8%, increase over the 2007 first quarter was principally caused by the Minerals, Environmental and Corporate segments. Acquired businesses added $1.0 million of GS&A to the current-year quarter.

Minerals: Acquired business expenses were $0.8 million. Base business GS&A grew due to higher research and development expenditures for the specialty materials division and personnel costs in the Asia-Pacific region.

Environmental: GS&A increased primarily due to higher compensation and sales commission expenses at the Poland-based operations.

Corporate: GS&A increased from higher health and welfare benefit expenses.

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AMCOL Q1 2008 EARNINGS
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Operating profit: The decline from the prior-year quarter was primarily caused by the combined effect of relatively low gross profit improvement and higher GS&A costs. Consequently, operating margin declined by 240 basis points.
 
Interest expense: Net interest expense increased by approximately $0.5 million over the prior-year quarter due to higher average debt levels.

Income taxes: The effective tax rate for the first quarter of 2008 was 27.0% compared with 26.3% for the same period in 2007. Lower tax credits were recorded in the current-year quarter. No research and experimentation credit was recorded since legislation allowing this credit lapsed at the end of 2007.

Income from affiliates and joint ventures: Lower profits from our India-based investments accounted for the $0.3 million decline from the prior-year quarter. Delay of large bauxite shipments caused the reduction in earnings.

Share count: Weighted average common and common equivalent shares outstanding were 30.9 million and 31.0 million for the quarters ended March 31, 2008 and 2007, respectively.

FINANCIAL POSITION AND CASH FLOW HIGHLIGHTS:

Funded long-term debt increased to $188.1 million at March 31, 2008 compared to $164.2 million at December 31, 2007. The increase was primarily due to funding higher working capital levels and capital expenditures incurred in the first quarter. Total long-term debt represented 35.5% of capitalization at March 31, 2008, compared with 31.8% at December 31, 2007. Cash and cash equivalents were $33.2 million at March 31, 2008 compared with $25.3 million at December 31, 2007.

As mentioned in our Form 10-K for 2007, during the first quarter, we completed a sale-leaseback transaction pursuant to which we sold land to a third-party and agreed to lease a new corporate headquarters facility on the site. The building is currently under construction and we expect to occupy the building by the end of 2008.  Pursuant to the transaction, the owner will fund anticipated construction costs related to the building, including reimbursing us for expenditures we incurred prior to the transaction. We will account for the building expenditures as a construction in progress asset during the construction period with an offsetting amount recorded as long-term financing debt.  In the quarter during which we take occupancy of the building, we will record a sale of the land and building equal to the total construction costs and land value. 

Working capital increased to $233.1 million at March 31, 2008 from $202.5 million at December 31, 2007. The current ratio was 3.5-to-1 and 3.0-to-1 at March 31, 2008, and December 31, 2007, respectively.

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AMCOL Q1 2008 EARNINGS
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Cash flow generated from operating activities was $4.3 million year-to-date as of March 31, 2008 compared to $6.3 million in the prior-year period. The decrease in net income and changes in working capital caused the decline in operating cash flows compared with the prior-year quarter.

Excluding the corporate building, capital expenditures were the primary investing activity in the 2008 period amounting to $12.9 million compared with $10.9 million in the prior-year period. Expenditures related to Minerals and Oilfield Services segment projects accounted for the increase over the prior-year period.

Approximately $2.0 million has been expended on share repurchases as of March 31, 2008. Eighty-thousand shares were repurchased in the first quarter of 2008 at an average price of $25.45 per share. Dividends declared year-to-date through March 31, 2008, increased by 14.6% over the prior-year period to $4.8 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.

5

 
AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
 
   
Three Months Ended
 
   
March 31,
 
   
2008
 
2007
 
 
          
Net sales
 
$
191,409
 
$
163,728
 
Cost of sales
   
145,059
   
120,229
 
Gross profit
   
46,350
   
43,499
 
               
General, selling and administrative expenses
   
33,638
   
28,805
 
Operating profit
   
12,712
   
14,694
 
Other income (expense):
             
Interest expense, net
   
(2,401
)
 
(1,942
)
Other, net
   
(235
)
 
(167
)
 
   
(2,636
)
 
(2,109
)
               
Income before income taxes and income from affiliates and joint ventures
   
10,076
   
12,585
 
Income tax expense
   
2,717
   
3,311
 
Income before income from affiliates and joint ventures
   
7,359
   
9,274
 
 
             
Income from affiliates and joint ventures
   
1,262
   
1,566
 
Net income
 
$
8,621
 
$
10,840
 
 
             
Weighted average common shares outstanding
   
30,260
   
30,153
 
 
             
Weighted average common and common equivalent shares outstanding
   
30,889
   
31,017
 
 
             
Basic earnings per share
 
$
0.28
 
$
0.36
 
 
             
Diluted earnings per share
 
$
0.28
 
$
0.35
 
 
             
Dividends declared per share
 
$
0.16
 
$
0.14
 

6


AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
ASSETS
 
March 31,
 
December 31,
 
 
 
2008
 
2007
 
 
 
(unaudited)
 
*
 
Current assets:
          
Cash and equivalents
 
$
33,163
 
$
25,282
 
Accounts receivable, net
   
170,285
   
166,835
 
Inventories
   
93,845
   
91,367
 
Prepaid expenses
   
15,292
   
13,529
 
Deferred income taxes
   
4,074
   
4,374
 
Income tax receivable
   
2,760
   
2,768
 
Other
   
7,713
   
475
 
Total current assets
   
327,132
   
304,630
 
 
             
Investments in and advances to affiliates and joint ventures
   
53,349
   
49,309
 
 
             
Property, plant, equipment, mineral rights and reserves:
             
Land and mineral rights
   
21,488
   
21,394
 
Depreciable assets
   
369,478
   
352,100
 
 
   
390,966
   
373,494
 
Less: accumulated depreciation and depletion
   
203,400
   
196,904
 
 
   
187,566
   
176,590
 
Other assets:
             
Goodwill
   
60,226
   
59,840
 
Intangible assets, net
   
39,855
   
41,257
 
Deferred income taxes
   
5,153
   
5,513
 
Other assets
   
14,270
   
15,007
 
 
   
119,504
   
121,617
 
 
 
$
687,551
 
$
652,146
 
 
         
 
         
LIABILITIES AND STOCKHOLDERS' EQUITY
             
 
             
Current liabilities:
             
Accounts payable
 
$
41,517
 
$
44,274
 
Accrued liabilities
   
52,544
   
57,833
 
Total current liabilities
   
94,061
   
102,107
 
 
             
Long-term debt
   
188,127
   
164,232
 
Long-term debt - corporate building
   
10,321
   
-
 
Total long-term debt
   
198,448
   
164,232
 
 
             
Minority interests in subsidiaries
   
543
   
327
 
Pension liabilities
   
8,934
   
7,559
 
Other liabilities
   
25,585
   
25,598
 
 
   
35,062
   
33,484
 
Stockholders’ equity:
             
Common stock
   
320
   
320
 
Additional paid in capital
   
82,160
   
81,599
 
Retained earnings
   
261,969
   
258,164
 
Accumulated other comprehensive income
   
36,968
   
33,248
 
 
   
381,417
   
373,331
 
Less:
             
Treasury stock
   
21,437
   
21,008
 
 
   
359,980
   
352,323
 
 
 
$
687,551
 
$
652,146
 
 
* Condensed from audited financial statements.

7

 
AMCOL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(In thousands)
 
   
Three Months Ended
 
   
March 31,
 
   
2008
 
2007
 
Cash flow from operating activities:
 
 
 
 
 
Net income
 
$
8,621
 
$
10,840
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
             
Depreciation, depletion, and amortization
   
7,435
   
6,714
 
Changes in assets and liabilities, net of effects of acquisitions:
             
Decrease (Increase) in current assets
   
(5,671
)
 
(7,091
)
Decrease (Increase) in noncurrent assets
   
(301
)
 
(954
)
Increase (decrease) in current liabilities
   
(5,624
)
 
(6,634
)
Increase (decrease) in noncurrent liabilities
   
(112
)
 
(133
)
Other
   
(70
)
 
3,513
 
Net cash provided by (used in) operating activities
   
4,278
   
6,255
 
               
Cash flow from investing activities:
             
Capital expenditures
   
(12,932
)
 
(10,876
)
Capital expenditures - corporate building
   
(2,831
)
 
-
 
Acquisitions, net of cash
   
(1,148
)
 
(27,204
)
Investments in and advances to affiliates and joint ventures
   
(2,107
)
 
(2,466
)
Investments in restricted cash
   
(36
)
 
(957
)
Other
   
(5,931
)
 
489
 
Net cash provided by (used in) investing activities
   
(24,985
)
 
(41,014
)
Cash flow from financing activities:
             
Net change in outstanding debt
   
23,404
   
42,800
 
Net change in outstanding debt - corporate building
   
9,463
   
-
 
Proceeds from sales of treasury stock
   
753
   
886
 
Purchases of treasury stock
   
(2,062
)
 
-
 
Dividends
   
(4,816
)
 
(4,204
)
Excess tax benefits from stock-based compensation
   
669
   
927
 
Net cash provided by (used in) financing activities
   
27,411
   
40,409
 
Effect of foreign currency rate changes on cash
   
1,177
   
389
 
Net increase (decrease) in cash and cash equivalents
   
7,881
   
6,039
 
Cash and cash equivalents at beginning of period
   
25,282
   
17,805
 
Cash and cash equivalents at end of period
 
$
33,163
 
$
23,844
 

8

 
AMCOL INTERNATIONAL CORPORATION
SEGMENT RESULTS (unaudited)
 
   
Three Months Ended March 31,
 
Minerals
 
2008
 
2007
 
2008 vs 2007
 
 
 
(Dollars in Thousands)
 
Net sales
 
$
99,344
   
100.0
%
$
85,813
   
100.0
%
$
13,531
   
15.8
%
Cost of sales
   
82,667
   
83.2
%
 
69,014
   
80.4
%
 
13,653
   
19.8
%
Gross profit
   
16,677
   
16.8
%
 
16,799
   
19.6
%
 
(122
)
 
-0.7
%
General, selling and administrative expenses
   
8,990
   
9.0
%
 
7,542
   
8.8
%
 
1,448
   
19.2
%
Operating profit
   
7,687
   
7.8
%
 
9,257
   
10.8
%
 
(1,570
)
 
-17.0
%
 

   
Three Months Ended March 31,
 
Environmental
 
2008
 
2007
 
2008 vs 2007
 
 
 
(Dollars in Thousands)
 
Net sales
 
$
58,219
   
100.0
%
$
48,698
   
100.0
%
$
9,521
   
19.6
%
Cost of sales
   
38,798
   
66.6
%
 
31,163
   
64.0
%
 
7,635
   
24.5
%
Gross profit
   
19,421
   
33.4
%
 
17,535
   
36.0
%
 
1,886
   
10.8
%
General, selling and administrative expenses
   
13,450
   
23.1
%
 
11,292
   
23.2
%
 
2,158
   
19.1
%
Operating profit
   
5,971
   
10.3
%
 
6,243
   
12.8
%
 
(272
)
 
-4.4
%
 

   
Three Months Ended March 31,
 
Oilfield Services
 
2008
 
2007
 
2008 vs 2007
 
 
 
(Dollars in Thousands)
 
Net sales
 
$
24,143
   
100.0
%
$
21,964
   
100.0
%
$
2,179
   
9.9
%
Cost of sales
   
15,441
   
64.0
%
 
14,077
   
64.1
%
 
1,364
   
9.7
%
Gross profit
   
8,702
   
36.0
%
 
7,887
   
35.9
%
 
815
   
10.3
%
General, selling and administrative expenses
   
4,753
   
19.7
%
 
4,721
   
21.5
%
 
32
   
0.7
%
Operating profit
   
3,949
   
16.3
%
 
3,166
   
14.4
%
 
783
   
24.7
%

 
   
Three Months Ended March 31,
 
Transportation
 
2008
 
2007
  2008 vs 2007  
 
 
(Dollars in Thousands)
 
Net sales
 
$
14,350
   
100.0
%
$
10,893
   
100.0
%
$
3,457
   
31.7
%
Cost of sales
   
12,800
   
89.2
%
 
9,615
   
88.3
%
 
3,185
   
33.1
%
Gross profit
   
1,550
   
10.8
%
 
1,278
   
11.7
%
 
272
   
21.3
%
General, selling and administrative expenses
   
770
   
5.4
%
 
738
   
6.8
%
 
32
   
4.3
%
Operating profit
   
780
   
5.4
%
 
540
   
4.9
%
 
240
   
44.4
%
 

   
Three Months Ended March 31,
 
Corporate
  2008   2007   2008 vs 2007  
 
  (Dollars in Thousands)  
Intersegment shipping sales
 
$
(4,647
)
$
(3,640
)
           
Intersegment shipping costs
   
(4,647
)
 
(3,640
)
           
Gross profit
   
-
   
-
             
General, selling and administrative expenses
   
5,675
   
4,512
   
1,163
   
25.8
%
Operating loss
   
5,675
   
4,512
   
1,163
   
25.8
%

9


AMCOL INTERNATIONAL CORPORATION
SUPPLEMENTARY INFORMATION (unaudited)
 
     
Three Months Ended March 31, 2008
 
Composition of Sales by Geographic Region
   
Americas
   
EMEA
   
Asia Pacific
   
Total
 
Minerals
   
37.3
%
 
7.2
%
 
7.4
%
 
51.9
%
Environmental
   
15.0
%
 
13.8
%
 
1.7
%
 
30.4
%
Oilfield services
   
10.7
%
 
1.6
%
 
0.4
%
 
12.6
%
Transportation
   
5.1
%
 
0.0
%
 
0.0
%
 
5.1
%
Total - current year's period
   
68.1
%
 
22.5
%
 
9.5
%
 
100.0
%
Total from prior year's comparable period
   
68.3
%
 
22.9
%
 
8.8
%
 
100.0
%
 

 
   
Three Months Ended March 31, 2008
 
     
vs.
 
     
Three Months Ended March 31, 2007
 
Percentage of Revenue Growth by Component
   
Base Business
   
Acquisitions
   
Foreign Exchange
   
Total
 
Minerals
   
4.7
%
 
2.8
%
 
0.8
%
 
8.3
%
Environmental
   
3.2
%
 
0.8
%
 
1.8
%
 
5.8
%
Oilfield services
   
1.3
%
 
0.0
%
 
0.0
%
 
1.3
%
Transportation
   
1.5
%
 
0.0
%
 
0.0
%
 
1.5
%
Total
   
10.7
%
 
3.6
%
 
2.6
%
 
16.9
%
% of growth
   
63.3
%
 
21.3
%
 
15.4
%
 
100.0
%
 

     
Three Months Ended March 31,
 
Minerals Product Line Sales
   
2008
   
2007
   
% change
 
 
   
(Dollars in Thousands)
 
Metalcasting
 
$
40,678
 
$
36,586
   
11.2
%
Specialty materials
   
25,663
   
20,068
   
27.9
%
Pet products
   
19,523
   
16,488
   
18.4
%
Basic minerals
   
12,041
   
10,927
   
10.2
%
Other product lines
   
1,439
   
1,744
   
*
 
Total
   
99,344
   
85,813
       
 

     
Three Months Ended March 31,
 
Environmental Product Line Sales
   
2008
   
2007
   
% change
 
     
(Dollars in Thousands)
 
Lining technologies
 
$
32,495
 
$
23,992
   
35.4
%
Building materials
   
19,995
   
19,583
   
2.1
%
Other product lines
   
5,729
   
5,123
   
*
 
Total
   
58,219
   
48,698
       
 
                   
* Not meaningful.
                   
 
10