10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ........ to ........  

Commission file number is 000-04197

UNITED STATES LIME & MINERALS, INC.

(Exact name of registrant as specified in its charter)

Texas	75-0789226
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

5429 LBJ Freeway, Suite 230, Dallas, TX	75240
(Address of principal executive offices)	(Zip Code)

(972) 991-8400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.10 par value	USLM	The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer ☒
Non-accelerated filer	☐	Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date: As of April 28, 2021, 5,655,321 shares of common stock, $0.10 par value, were outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

(Unaudited)

	March 31,		December 31,
	2021		2020
ASSETS
Current assets
Cash and cash equivalents	$	89,651	$	83,562
Trade receivables, net		23,957		22,979
Inventories, net		15,409		15,210
Prepaid expenses and other current assets		2,428		2,245
Total current assets		131,445		123,996
Property, plant and equipment		392,631		388,200
Less accumulated depreciation and depletion		(240,993)		(235,739)
Property, plant and equipment, net		151,638		152,461
Operating lease right-of-use assets		1,929		2,226
Other assets, net		398		415
Total assets	$	285,410	$	279,098
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	5,675	$	4,592
Current portion of operating lease liabilities		1,073		1,187
Accrued expenses		3,995		5,809
Total current liabilities		10,743		11,588
Deferred tax liabilities, net		22,271		21,531
Operating lease liabilities, excluding current portion		858		1,030
Other liabilities		1,768		1,757
Total liabilities		35,640		35,906
Stockholders’ equity
Common stock		667		666
Additional paid-in capital		30,003		29,457
Accumulated other comprehensive loss		—		—
Retained earnings		274,312		268,186
Less treasury stock, at cost		(55,212)		(55,117)
Total stockholders’ equity		249,770		243,192
Total liabilities and stockholders’ equity	$	285,410	$	279,098

See accompanying notes to condensed consolidated financial statements.

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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2021				2020
Revenues	$	41,674	100.0	%	$	38,440	100.0	%
Cost of revenues
Labor and other operating expenses		24,593	59.0	%		23,962	62.3	%
Depreciation, depletion and amortization		5,276	12.7	%		4,601	12.0	%
		29,869	71.7	%		28,563	74.3	%
Gross profit		11,805	28.3	%		9,877	25.7	%
Selling, general and administrative expenses		3,067	7.4	%		3,219	8.4	%
Operating profit		8,738	20.9	%		6,658	17.3	%
Other expense (income)
Interest expense		62	0.1	%		62	0.2	%
Interest and other income, net		(34)	(0.1)	%		(247)	(0.7)	%
		28	0.0	%		(185)	(0.5)	%
Income before income tax expense		8,710	20.9	%		6,843	17.8	%
Income tax expense		1,679	4.0	%		1,299	3.4	%
Net income	$	7,031	16.9	%	$	5,544	14.4	%
Net income per share of common stock
Basic	$	1.24			$	0.99
Diluted	$	1.24			$	0.98

See accompanying notes to condensed consolidated financial statements.

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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

(Unaudited)

	Three Months Ended March 31,
	2021		2020
Net income	$	7,031	$	5,544
Other comprehensive loss
Mark to market of foreign exchange hedges, net of tax benefit of $2 for the 2020 period		—		(6)
Total other comprehensive loss		—		(6)
Comprehensive income	$	7,031	$	5,538

See accompanying notes to condensed consolidated financial statements.

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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(dollars in thousands)

(Unaudited)

						Accumulated
	Common Stock			Additional		Other
	Shares			Paid-In		Comprehensive		Retained		Treasury
	Outstanding	Amount		Capital		Loss		Earnings		Stock		Total
Balances at December 31, 2020	5,648,084	$	666	$	29,457	$	—	$	268,186	$	(55,117)	$	243,192
Stock options exercised	3,310		—		—		—		—		—		—
Stock-based compensation	2,685		1		546		—		—		—		547
Treasury shares purchased	(743)		—		—		—		—		(95)		(95)
Cash dividends paid	—		—		—		—		(905)		—		(905)
Net income	—		—		—		—		7,031		—		7,031
Comprehensive income	—		—		—		—		7,031		—		7,031
Balances at March 31, 2021	5,653,336	$	667	$	30,003	$	—	$	274,312	$	(55,212)	$	249,770

						Accumulated
	Common Stock			Additional		Other
	Shares			Paid-In		Comprehensive		Retained		Treasury
	Outstanding	Amount		Capital		Loss		Earnings		Stock		Total
Balances at December 31, 2019	5,622,826	$	663	$	27,464	$	(1)	$	243,566	$	(54,560)	$	217,132
Stock options exercised	2,000		—		81		—		—		—		81
Stock-based compensation	3,063		1		378		—		—		—		379
Treasury shares purchased	(704)		—		—		—		—		(64)		(64)
Cash dividends paid	—		—		—		—		(899)		—		(899)
Net income	—		—		—		—		5,544		—		5,544
Mark to market of foreign exchange hedges, net of $2 tax benefit	—		—		—		(6)		—		—		(6)
Comprehensive (loss) income	—		—		—		(6)		5,544		—		5,538
Balances at March 31, 2020	5,627,185	$	664	$	27,923	$	(7)	$	248,211	$	(54,624)	$	222,167

See accompanying notes to condensed consolidated financial statements.

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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

	Three Months Ended March 31,
	2021		2020
OPERATING ACTIVITIES:
Net income	$	7,031	$	5,544
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		5,341		4,655
Amortization of deferred financing costs		2		2
Deferred income taxes		750		990
Loss (gain) on disposition of property, plant and equipment		3		(13)
Stock-based compensation		547		379
Changes in operating assets and liabilities:
Trade receivables, net		(978)		(200)
Inventories, net		(199)		(146)
Prepaid expenses and other current assets		(183)		249
Other assets		16		14
Accounts payable and accrued expenses		(719)		21
Other liabilities		11		13
Net cash provided by operating activities		11,622		11,508
INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(4,543)		(6,106)
Proceeds from sale of property, plant and equipment		10		16
Net cash used in investing activities		(4,533)		(6,090)
FINANCING ACTIVITIES:
Cash dividends paid		(905)		(899)
Proceeds from exercise of stock options		—		81
Purchase of treasury shares		(95)		(64)
Net cash used in financing activities		(1,000)		(882)
Net increase in cash and cash equivalents		6,089		4,536
Cash and cash equivalents at beginning of period		83,562		54,260
Cash and cash equivalents at end of period	$	89,651	$	58,796

See accompanying notes to condensed consolidated financial statements.

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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by United States Lime & Minerals, Inc. (the “Company”) without independent audit. In the opinion of the Company’s management, all adjustments of a normal and recurring nature necessary to present fairly the financial position, results of operations, comprehensive income and cash flows for the periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2020. The results of operations for the three-month period ended March 31, 2021 are not necessarily indicative of operating results for the full year.

On July 1, 2020, the Company acquired 100% of the equity interest of Carthage Crushed Limestone (“Carthage”), a limestone mining and production company located in Carthage, Missouri, for $8.4 million cash, subject to adjustment for working capital balances acquired. Carthage produces aggregate and pulverized limestone products that are used primarily in the agricultural, construction, roofing, and industrial industries. Carthage contributed $2.2 million of revenues in the three-months ended March 31, 2021, which are included in the condensed consolidated statements of operations.

2. Organization

The Company is a manufacturer of lime and limestone products, supplying primarily the construction (including highway, road and building contractors), industrial (including paper and glass manufacturers), environmental (including municipal sanitation and water treatment facilities and flue gas treatment processes), metals (including steel producers), oil and gas services, roof shingle manufacturers and agriculture (including poultry and cattle feed producers) industries. The Company is headquartered in Dallas, Texas and operates lime and limestone plants and distribution facilities in Arkansas, Colorado, Louisiana, Missouri, Oklahoma and Texas through its wholly owned subsidiaries, Arkansas Lime Company, Colorado Lime Company, Texas Lime Company, U.S. Lime Company, U.S. Lime Company – Shreveport, U.S. Lime Company – St. Clair, ART Quarry TRS LLC (DBA Carthage Crushed Limestone) and U.S. Lime Company – Transportation. In addition, the Company, through its wholly owned subsidiary, U.S. Lime Company – O & G, LLC, has royalty and non-operated working interests in natural gas wells located in Johnson County, Texas, in the Barnett Shale Formation.

3. Accounting Policies

Revenue Recognition. The Company recognizes revenue for its lime and limestone operations when (i) a contract with the customer exists and the performance obligations are identified; (ii) the price has been established; and (iii) the performance obligations have been satisfied, which is generally upon shipment. The Company’s returns and allowances are minimal. Revenues include external freight billed to customers with related costs accounted for as fulfillment costs and included in cost of revenues. External freight billed to customers in each of the first quarters 2021 and 2020 revenues was $7.8 million and $6.9 million, respectively, which approximates the amount of external freight included in cost of revenues. Sales taxes billed to customers are not included in revenues. For its natural gas interests, the Company recognizes revenue in the month of production and delivery.

The Company operates its lime and limestone operations within a single geographic region and derives all revenues from that segment from the sale of lime and limestone products. See Note 4 to the condensed consolidated financial statements for disaggregation of revenues by segment, which the Company believes best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

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Accounts Receivable. The majority of the Company’s trade receivables are unsecured. Payment terms for all trade receivables are based on the underlying purchase orders, contracts or purchase agreements. The Company estimates credit losses relating to trade receivables based on an assessment of the current and forecasted probability of collection, historical trends, economic conditions and other significant events that may impact the collectability of accounts receivables. Due to the relatively homogenous nature of its trade receivables, the Company does not believe there is any meaningful asset-specific differences within its accounts receivable portfolio that would require the portfolio to be grouped below the consolidated level for review of credit losses. Credit losses relating to trade receivables have generally been within management expectations and historical trends. Uncollected trade receivables are charged-off when identified by management to be unrecoverable. The Company maintains an allowance for credit losses to reflect currently expected estimated losses resulting from the failure of customers to make required payments. See Note 7 to the condensed consolidated financial statements.

Leases. The Company determines if an arrangement is a lease at inception. When recording operating leases, the Company records a lease liability based on the net present value of the lease payments over the lease term, using the interest rate implicit in the lease, if known, or an incremental rate on a collateralized basis over a similar term and amount to the lease, and a corresponding right-of-use asset. Operating leases are included in operating lease right-of-use assets, current portion of operating lease liabilities and operating lease liabilities, excluding current portion, on the condensed consolidated balance sheets. Lease expense is recognized over the lease term on a straight-line basis. Lease terms include options to extend the lease when it is reasonably certain the Company will exercise the option. For leases with a term of twelve months or less, the Company does not record a right-of-use asset and a lease liability and records lease expense on a straight-line basis. See Note 10 to the condensed consolidated financial statements.

Fair Values of Financial Instruments. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values, in determining the fair value of its financial assets and liabilities.  These tiers include:  Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.  Specific inputs used to value the Company’s foreign exchange (“FX”) hedges were Euro to U.S. Dollar exchange rates for the expected future payment dates for the Company’s commitments denominated in Euros. The last of these foreign exchange hedges expired in April 2020. See Note 6 to the condensed consolidated financial statements. There were no changes in the methods and assumptions used in measuring fair value during the period.

4. Business Segment

The Company has identified one reportable segment based on the distinctness of the Company’s activities and products: lime and limestone operations. All operations are in the United States. In evaluating the operating results of the Company, management primarily reviews revenues, gross profit and operating profit from the lime and limestone operations. Operating profit from its lime and limestone operations includes all of the Company’s selling, general and administrative costs. The Company does not allocate interest expense and interest and other income (expense), net to its lime and limestone operations. Other revenues, gross profit and operating profit in the Company’s segment disclosures include the Company’s natural gas interest. Other identifiable assets include assets related to its natural gas interests, unallocated corporate assets and cash items.

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The following table sets forth operating results and certain other financial data for the Company’s lime and limestone operations segment and other (in thousands):

	Three Months Ended March 31,
Revenues	2021		2020
Lime and limestone operations	$	41,356	$	38,214
Other		318		226
Total revenues	$	41,674	$	38,440
Depreciation, depletion and amortization
Lime and limestone operations	$	5,137	$	4,413
Other		139		188
Total depreciation, depletion and amortization	$	5,276	$	4,601
Gross profit (loss)
Lime and limestone operations	$	11,804	$	10,039
Other		1		(162)
Total gross profit	$	11,805	$	9,877
Operating profit (loss)
Lime and limestone operations	$	8,737	$	6,820
Other		1		(162)
Total operating profit	$	8,738	$	6,658
Identifiable assets, at period end
Lime and limestone operations	$	191,419	$	186,702
Other		93,991		65,165
Total identifiable assets	$	285,410	$	251,867
Capital expenditures
Lime and limestone operations	$	4,543	$	6,106
Other		—		—
Total capital expenditures	$	4,543	$	6,106

5. Income Per Share of Common Stock

At March 31, 2021, the Company had 15,000,000 shares of common stock authorized and 5,653,336 shares outstanding. On April 30, 2021, shareholders will vote at the Company’s 2021 Annual Meeting of Shareholders on a proposal to increase the number of authorized shares of common stock to 30,000,000.

The following table sets forth the computation of basic and diluted income per common share (in thousands, except per share amounts):

	Three Months Ended March 31,
	2021		2020
Net income for basic and diluted income per common share	$	7,031	$	5,544
Weighted-average shares for basic income per common share		5,651		5,624
Effect of dilutive securities:
Employee and director stock options(1)		13		10
Adjusted weighted-average shares and assumed exercises for diluted income per common share		5,664		5,634
Basic net income per common share	$	1.24	$	0.99
Diluted net income per common share	$	1.24	$	0.98

(1) Excludes 0 and 8 stock options for the three months ended March 31, 2021 and 2020, respectively, as anti-dilutive because the exercise price exceeded the average per share market price for the period.

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6. Accumulated Other Comprehensive Income

The following table presents the components of comprehensive income (in thousands):

	Three Months Ended March 31,
	2021		2020
Net income	$	7,031	$	5,544
Mark to market of foreign exchange hedges		—		(8)
Deferred income tax benefit		—		2
Comprehensive income	$	7,031	$	5,538

In May 2018, to hedge against potential losses due to changes in the Euro to U.S. Dollar exchange rates, the Company entered into FX hedges with a counterparty to the FX hedges to fix the exchange rates. The last of the FX hedges expired in April 2020. The FX hedges were effective as defined under applicable accounting rules. Therefore, changes in the fair value of the FX hedges were reflected in comprehensive income.

7. Trade Receivables, Net

Additions, adjustments and write-offs to the Company’s allowance for credit losses for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

	March 31,
	2021		2020
Beginning balance	$	398	$	361
Additions		—		39
Adjustment for expected credit loss factors		(14)		—
Write-offs		—		—
Ending balance	$	384	$	400

8. Inventories, Net

Inventories are valued principally at the lower of cost, determined using the average cost method, or market. Costs for raw materials and finished goods include materials, labor, and production overhead. Inventories, net consisted of the following (in thousands):

	March 31,		December 31,
	2021		2020
Lime and limestone inventories:
Raw materials	$	4,495	$	4,279
Finished goods		2,713		2,866
		7,208		7,145
Service parts inventories		8,201		8,065
	$	15,409	$	15,210

9. Banking Facilities and Debt

The Company’s credit agreement with Wells Fargo Bank, N.A. (the “Lender”), as amended as of May 2, 2019 and November 21, 2019, provides for a $75 million revolving credit facility (the “Revolving Facility”) and an incremental four year accordion feature to borrow up to an additional $50 million on the same terms, subject to approval by the Lender or another lender selected by the Company. The credit agreement also provides for a $10 million letter of credit sublimit under the Revolving Facility. The Revolving Facility and any incremental loans mature on May 2, 2024.

Interest rates on the Revolving Facility are, at the Company’s option, LIBOR plus a margin of 1.000% to 2.000%, or the Lender’s Prime Rate plus a margin of 0.000% to 1.000%, and a commitment fee range of 0.200% to

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0.350% on the undrawn portion of the Revolving Facility. The Revolving Facility interest rate margins and commitment fee are determined quarterly in accordance with a pricing grid based upon the Company’s Cash Flow Leverage Ratio, defined as the ratio of the Company’s total funded senior indebtedness to earnings before interest, taxes, depreciation, depletion, amortization and stock-based compensation expense (“EBITDA”) for the 12 months ended on the last day of the most recent calendar quarter, plus pro forma EBITDA from any businesses acquired during the period. Pursuant to a security agreement, dated August 25, 2004, the Revolving Facility is secured by the Company’s existing and hereafter acquired tangible assets, intangible assets and real property. The maturity of the Revolving Facility and any incremental loans can be accelerated if any event of default, as defined under the credit agreement, occurs. The Company’s maximum Cash Flow Leverage Ratio is 3.50 to 1.

The Company may pay dividends so long as it remains in compliance with the provisions of the Company’s credit agreement, and it may purchase, redeem or otherwise acquire shares of its common stock so long as its pro forma Cash Flow Leverage Ratio is less than 3.00 to 1.00 and no default or event of default exists or would exist after giving effect to such stock repurchase.

As of March 31, 2021, the Company had no debt outstanding and no draws on the Revolving Facility other than $0.4 million of letters of credit, which count as draws against the available commitment under the Revolving Facility.

10. Leases

The Company has operating leases for the use of equipment, corporate office space, and some of its terminal and distribution facilities. The leases have remaining lease terms of 1 to 7 years, with a weighted-average remaining lease term of 2 years at March 31, 2021 and 3 at December 31, 2020. Some operating leases include options to extend the leases for up to 5 years. The liability for the Company’s operating leases was discounted to present value using a weighted-average discount rate of 3.4% at each of March 31, 2021 and March 31, 2020.

The components of lease costs for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

		Three Months Ended March 31,
	Classification	2021		2020
Operating lease costs (1)	Cost of revenues	$	385	$	385
Operating lease costs (1)	Selling, general and administrative expenses		65		56
Rental revenues	Interest and other income, net		(21)		(27)
Net operating lease costs		$	429	$	414

⁽¹⁾ Includes the costs of leases with a term of 12 months or less.

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As of March 31, 2021, future minimum payments under operating leases that were either non-cancelable or subject to significant penalty upon cancellation, including future minimum payments under renewal options that the Company is reasonably certain to exercise, were as follows (in thousands):

2021 (excluding the three months ended March 31, 2021)	$	873
2022		590
2023		258
2024		186
2025		36
Thereafter		54
Total future minimum lease payments		1,997
Less imputed interest		(66)
Present value of lease liabilities	$	1,931

Supplemental cash flow information pertaining to the Company’s leasing activity for the three months ended March 31, 2021 and 2020 is as follows (in thousands):

	Three Months Ended March 31,
	2021		2020
Cash payments for operating lease liabilities	$	345	$	447
Right-of-use assets obtained in exchange for operating lease obligations	$	11	$	—

11. Income Taxes

The Company has estimated that its effective income tax rate for 2021 will be 19.3%. The primary reason for the effective income tax rate being below the federal statutory rate is due to statutory depletion, which is allowed for income tax purposes and is a permanent difference between net income for financial reporting purposes and taxable income.

12. Dividends

On March 12, 2021, the Company paid $0.9 million in cash dividends, based on a dividend of $0.16 per share of its common stock, to shareholders of record at the close of business on February 19, 2021.

13. Subsequent Event

On April 28, 2021, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.16 per share on the Company’s common stock. This dividend is payable on June 11, 2021 to shareholders of record at the close of business on May 21, 2021.

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ITEM 2:     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements. Any statements contained in this Report that are not statements of historical fact are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this Report, including without limitation statements relating to the Company’s plans, strategies, objectives, expectations, intentions, and adequacy of resources, are identified by such words as “will,” “could,” “should,” “would,” “believe,” “possible,” “potential,” “expect,” “intend,” “plan,” “schedule,” “estimate,” “anticipate” and “project.” The Company undertakes no obligation to publicly update or revise any forward-looking statements. The Company cautions that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations, including without limitation the following: (i) the Company’s plans, strategies, objectives, expectations, and intentions are subject to change at any time at the Company’s discretion; (ii) the Company’s plans and results of operations will be affected by its ability to maintain and increase its revenues and manage its growth; (iii) the Company’s ability to meet short-term and long-term liquidity demands, including meeting the Company’s operating and capital needs, including possible acquisitions and paying dividends, and conditions in the credit and equity markets, including the ability of the Company’s customers to meet their obligations; (iv) interruptions to operations and increased expenses at the Company’s facilities resulting from changes in mining methods or conditions, variability of chemical or physical properties of the Company’s limestone and its impact on process equipment and product quality, inclement weather conditions, natural disasters, accidents, IT systems failures or disruptions, including due to cyber-security incidents or ransomware attacks, utility disruptions, or regulatory requirements; (v) volatile coal, petroleum coke, diesel, natural gas, electricity, transportation and freight costs and the consistent availability of trucks, truck drivers and rail cars to deliver the Company’s products to its customers and solid fuels to its plants on a timely basis at competitive prices; (vi) unanticipated delays or cost overruns in completing modernization and expansion and development projects; (vii) the Company’s ability to expand its lime and limestone operations through projects and acquisitions of businesses with related or similar operations, including the Carthage acquisition, and the Company’s ability to obtain any required financing for such projects and acquisitions, and to sell any resulting increased production at acceptable prices; (viii) inadequate demand and/or prices for the Company’s lime and limestone products due to increased competition from competitors, increasing competition for certain customer accounts, conditions in the U.S. economy, recessionary pressures in, and the impact of government policies on, particular industries, including oil and gas services, utility plants, steel, construction, and industrial, effects of governmental fiscal and budgetary constraints, including the level of highway construction and infrastructure funding, changes to tax law, legislative impasses, extended governmental shutdowns, trade wars, tariffs, economic and regulatory uncertainties under state governments and the United States Administration and Congress, and inability to continue to maintain or increase prices for the Company’s products, including passing through the increased costs of transportation; (ix) ongoing and possible new regulations, investigations, enforcement actions and costs, legal expenses, penalties, fines, assessments, litigation, judgments and settlements, taxes and disruptions and limitations of operations, including those related to climate change, health and safety, and other environmental, social, governance, and sustainability considerations, and those that could impact the Company’s ability to continue or renew its operating permits or successfully secure new permits in connection with its modernization and expansion and development projects; (xi) estimates of reserves and remaining lives of reserves; (xii) the ongoing impact of the novel coronavirus (“COVID-19”) pandemic, including decreased demand, lower prices, and increased costs, and the risk of non-compliance with health and safety protocols and social distancing guidelines, on the Company’s financial condition, results of operations, cash flows, and competitive position; (xiii) the impact of social or political unrest; (xiv) risks relating to mine safety, and reclamation and remediation; and (xv) other risks and uncertainties set forth in this Report or indicated from time to time in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Overview.

We have identified one reportable business segment based on the distinctness of our activities and products: lime and limestone operations. All operations are in the United States. Operating profit from our lime and limestone operations includes all of our selling, general and administrative costs. We do not allocate interest expense and interest and other income (expense), net to our lime and limestone operations.

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Through our lime and limestone operations, we are a manufacturer of lime and limestone products, supplying primarily the construction (including highway, road and building contractors), industrial (including paper and glass manufacturers), environmental (including municipal sanitation and water treatment facilities and flue gas treatment processes), metals (including steel producers), oil and gas services, roof shingle manufacturers and agriculture (including poultry and cattle feed producers) industries. We are headquartered in Dallas, Texas and operate lime and limestone plants and distribution facilities in Arkansas, Colorado, Louisiana, Missouri, Oklahoma and Texas through our wholly owned subsidiaries, Arkansas Lime Company, Colorado Lime Company, Texas Lime Company, U.S. Lime Company, U.S. Lime Company – Shreveport, U.S. Lime Company – St. Clair, ART Quarry TRS LLC (DBA Carthage Crushed Limestone) and U.S. Lime Company – Transportation. The lime and limestone operations represent our principal business.

On July 1, 2020, we acquired Carthage Crushed Limestone (“Carthage”), a limestone mining and production company located in Carthage, Missouri, for $8.4 million cash, subject to adjustment for working capital balances acquired. Carthage provides aggregate and pulverized limestone products that are used primarily in the agricultural, construction, roofing, and industrial industries. Carthage contributed $2.2 million to our revenues for the three months ended March 31, 2021.

In addition to our lime and limestone operations, we hold natural gas interests through our wholly owned subsidiary, U.S. Lime Company – O & G, LLC. The revenues, gross profit and operating profit from our natural gas interests are included in Other for our reportable segment disclosures. Assets related to our natural gas interests, unallocated corporate assets, and cash items are included in Other identified assets.

Revenues increased 8.4% in the first quarter 2021, compared to the first quarter 2020. Carthage contributed $2.2 million to the Company’s revenues for the first quarter 2021. The increase in our lime and limestone revenues in the first quarter 2021 resulted primarily due to the addition of limestone sales by Carthage to agriculture and roofing customers, and increased sales to the Company’s construction customers, partially offset by decreased demand from the Company’s oil and gas services customers. First quarter 2021 revenues were also favorably impacted by increases in the average selling prices for our lime and limestone products.

Gross profit increased 19.5% in the first quarter 2021, compared to the first quarter 2020. The increase in gross profit in the first quarter 2021, compared to the first quarter 2020, resulted primarily from the increased revenues discussed above and increased operating efficiencies.

Federal, state, and local governmental restrictions in response to the COVID-19 pandemic have continued to impact general business activities in the markets for our lime and limestone products. While vaccination programs are having a positive effect on the resumption of normal business activities, the COVID-19 pandemic is ongoing, and its magnitude and continuing effects remain uncertain, and COVID-19 could have a material adverse effect on our financial condition, results of operations, cash flows and competitive position.

In February 2021, the southern United States experienced severe winter storms which interrupted transportation, commerce, and utility services in the affected areas, including the delivery of electricity and natural gas to our plants. While our operations were briefly curtailed, our plants did not sustain any significant damage from the storms.

At our upcoming 2021 Annual Meeting of Shareholders, shareholders will vote on a proposal to increase the number of authorized shares of common stock from 15,000,000 to 30,000,000. If the proposal is approved by the shareholders, possible uses of the additional shares of common stock include, without limitation, future stock splits, stock dividends, rights offerings, acquiring other companies, businesses or products in exchange for shares of common stock, attracting and retaining employees by the issuance of additional securities under our Amended and Restated 2001 Long-Term Incentive Plan and any future equity compensation plans, issuance of securities underlying shares convertible into common stock, and other transactions and corporate purposes for which the board deems it in the best interests of the Company and its shareholders.

Liquidity and Capital Resources.

Net cash provided by operating activities was $11.6 million in the first quarter 2021, compared to $11.5 million in the first quarter 2020, an increase of $0.1 million, or 1.0%. Our net cash provided by operating activities is composed of net income, depreciation, depletion and amortization (“DD&A”), deferred income taxes, other non-cash items included in net income and changes in working capital. In the first quarter 2021, net cash provided by operating

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activities was principally composed of $7.0 million net income, $5.3 million DD&A, $0.8 million deferred income taxes, $0.5 million stock-based compensation, and a $2.1 million decrease from changes in operating assets and liabilities. Changes in operating assets and liabilities in the first quarter 2021 included an increase of $1.0 million in trade receivables, net, and a decrease of $0.7 million in accounts payable and accrued expenses. In the first quarter 2020, net cash provided by operating activities was principally composed of $5.5 million net income, $4.7 million DD&A, $1.0 million deferred income taxes, $0.4 million stock-based compensation, and a $49 thousand decrease from changes in operating assets and liabilities. Changes in operating assets and liabilities in the first quarter 2020 included an increase of $0.2 million in trade receivables, net, and a decrease of $0.2 million in prepaid expenses and other assets.

We had $4.5 million in capital expenditures in the first quarter 2021, compared to $6.1 million in the first quarter 2020. Net cash used in financing activities was $1.0 million in the first quarter 2021, compared to $0.9 million in the first quarter 2020, consisting primarily of cash dividends paid in each period.

Cash and cash equivalents increased $6.1 million to $89.7 million at March 31, 2021, from $83.6 million at December 31, 2020.

We are not committed to any planned capital expenditures until actual orders are placed for equipment. As of March 31, 2021, we had commitments for open purchase orders totaling $5.0 million for the purchase of capital equipment.

Our credit agreement with Wells Fargo Bank, N.A. (the “Lender”), as amended as of May 2, 2019 and November 21, 2019, provides for a $75 million revolving credit facility (the “Revolving Facility”) and an incremental four-year accordion feature to borrow up to an additional $50 million on the same terms, subject to approval by the Lender or another lender selected by us. The credit agreement also provides for a $10 million letter of credit sublimit under the Revolving Facility. The Revolving Facility and any incremental loans mature on May 2, 2024.

Interest rates on the Revolving Facility are, at our option, LIBOR plus a margin of 1.000% to 2.000%, or the Lender’s Prime Rate plus a margin of 0.000% to 1.000%; and a commitment fee range of 0.200% to 0.350% on the undrawn portion of the Revolving Facility. The Revolving Facility interest rate margins and commitment fee are determined quarterly in accordance with a pricing grid based upon our Cash Flow Leverage Ratio, defined as the ratio of our total funded senior indebtedness to earnings before interest, taxes, depreciation, depletion, amortization and stock-based compensation expense (“EBITDA”) for the 12 months ended on the last day of the most recent calendar quarter, plus pro forma EBITDA from any businesses acquired during the period. Pursuant to a security agreement, dated August 25, 2004, the Revolving Facility is secured by our existing and hereafter acquired tangible assets, intangible assets and real property. The maturity of the Revolving Facility and any incremental loans can be accelerated if any event of default, as defined under the credit agreement, occurs. Our maximum Cash Flow Leverage Ratio is 3.50 to 1.

We may pay dividends so long as we remain in compliance with the provisions of our credit agreement, and we may purchase, redeem or otherwise acquire shares of our common stock so long as our pro forma Cash Flow Leverage Ratio is less than 3.00 to 1.00 and no default or event of default exists or would exist after giving effect to such stock repurchase.

At March 31, 2021, we had no debt outstanding and no draws on the Revolving Facility other than $0.4 million of letters of credit which count as draws against the available commitment under the Revolving Facility. We believe that, absent a significant acquisition, cash on hand and cash flows from operations will be sufficient to meet our operating needs, ongoing capital needs, including current and possible future modernization, expansion, and development projects, and liquidity needs and allow us to pay regular quarterly cash dividends for the near future.

Results of Operations.

Revenues in the first quarter 2021 were $41.7 million, compared to $38.4 million in the first quarter 2020, an increase of $3.2 million, or 8.4%. Revenues from our lime and limestone operations in the first quarter 2021 increased $3.1 million, or 8.2%, to $41.4 million from $38.2 million in the first quarter 2020. The increase in lime and limestone revenues in the first quarter 2021 resulted primarily from a 6.8% increase in sales volumes of the Company’s lime and limestone products discussed above and a 1.4% increase in the average selling prices for our lime and limestone products. Revenues also included $0.3 million and $0.2 million in the first quarters 2021 and 2020, respectively, from our natural gas interests.

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Gross profit was $11.8 million in the first quarter 2021 compared to $9.9 million in the first quarter 2020, an increase of $1.9 million, or 19.5%. Gross profit from our lime and limestone operations in the first quarter 2021 was $11.8 million, compared to $10.0 million in the first quarter 2020, an increase of $1.8 million, or 17.6%. The increase in gross profit in 2021, compared to 2020, resulted primarily from the increased revenues discussed above and increased operating efficiencies. Gross profit from our natural gas interests was essentially break even in the first quarter 2021, compared to a $0.2 million loss in 2020.

Selling, general and administrative expenses (“SG&A”) were $3.1 million in the first quarter 2021, compared to $3.2 million in the first quarter 2020. As a percentage of revenues, SG&A was 7.4% and 8.4% in the first quarters 2021 and 2020, respectively. The decrease in SG&A was primarily due to legal expenses associated with the acquisition of Carthage in the first quarter 2020 and lower travel cost in the first quarter 2021, partially offset by increased stock-based compensation which was principally due to higher prices for the Company’s common stock.

Interest expense was $62 thousand in each of the first quarters 2021 and 2020. We had no outstanding debt during either period. Interest and other income, net was $34 thousand in the first quarter 2021, compared to $247 thousand in the first quarter 2020, a decrease of $213 thousand. The decrease in interest income was due to reduced interest rates in the first quarter 2021, compared to the first quarter 2020.

Income tax expense was $1.7 million in the first quarters 2021, compared to $1.3 million in the first quarter 2020, an increase of $0.4 million, or 29.3%. Our effective income tax rate was 19.3% and 19.0% in the first quarters 2021 and 20120, respectively. Our effective income tax rate was reduced from the federal rate primarily due to statutory depletion, which is allowed for income tax purposes and is a permanent difference between net income for financial reporting purposes and taxable income.

Our net income was $7.0 million ($1.24 per share diluted) in the first quarter 2021, compared to net income of $5.5 million ($0.98 per share diluted) in the first quarter 2020, an increase of $1.5 million, or 26.8%.

ITEM 3:     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk.

We could be exposed to changes in interest rates, primarily as a result of floating interest rates on the Revolving Facility. There was no outstanding balance on the Revolving Facility subject to interest rate risk at March 31, 2021. Any future borrowings under the Revolving Facility would be subject to interest rate risk. See Note 9 of Notes to Condensed Consolidated Financial Statements.

ITEM 4:     CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report. Based upon that evaluation, the CEO and CFO concluded that our disclosure controls and procedures as of the end of the period covered by this Report were effective.

No change in our internal control over financial reporting occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.     OTHER INFORMATION

ITEM 2:     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Our Amended and Restated 2001 Long-Term Incentive Plan allows employees and directors to pay the exercise price for stock options and the tax withholding liability upon the lapse of restrictions on restricted stock by payment in cash and/or delivery of shares of common stock.   In the first quarter 2021, pursuant to these provisions, we repurchased 743 shares at a price of $129.21 per share, the fair market value of one share of our common stock on the date that they were tendered for payment of tax withholding liability upon the lapse of restrictions on restricted stock.

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ITEM 4:    MINE SAFETY DISCLOSURES

Under Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of SEC Regulation S-K, each operator of a coal or other mine is required to include disclosures regarding certain mine safety results in its periodic reports filed with the SEC. The operation of our quarries, underground mine and plants is subject to regulation by the federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977. The required information regarding certain mining safety and health matters, broken down by mining complex, for the quarter ended March 31, 2021 is presented in Exhibit 95.1 to this Report.

We believe we are responsible to employees to provide a safe and healthy workplace environment. We seek to accomplish this by: training employees in safe work practices; openly communicating with employees; following safety standards and establishing and improving safe work practices; involving employees in safety processes; and recording, reporting and investigating accidents, incidents and losses to avoid reoccurrence.

Following passage of the Mine Improvement and New Emergency Response Act of 2006, MSHA significantly increased the enforcement of mining safety and health standards on all aspects of mining operations. There has also been an increase in the dollar penalties assessed for citations and orders issued in recent years.

ITEM 6:    EXHIBITS

The Exhibit Index set forth below is incorporated by reference in response to this Item.

EXHIBIT INDEX

EXHIBIT
NUMBER	DESCRIPTION
31.1	Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer.
32.1	Section 1350 Certification by the Chief Executive Officer.
32.2	Section 1350 Certification by the Chief Financial Officer.
95.1	Mine Safety Disclosures.
101 104	Interactive Data Files (formatted as Inline XBRL). Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	UNITED STATES LIME & MINERALS, INC.
April 29, 2021	By:	/s/ Timothy W. Byrne
		Timothy W. Byrne
		President and Chief Executive Officer
		(Principal Executive Officer)
April 29, 2021	By:	/s/ Michael L. Wiedemer
		Michael L. Wiedemer
		Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

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EX-31.1

EXHIBIT 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

I, Timothy W. Byrne, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United States Lime & Minerals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: April 29, 2021	/s/ Timothy W. Byrne
	Timothy W. Byrne
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

I, Michael L. Wiedemer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United States Lime & Minerals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: April 29, 2021	/s/ Michael L. Wiedemer
	Michael L. Wiedemer
	Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

I, Timothy W. Byrne, Chief Executive Officer of United States Lime & Minerals, Inc. (the “Company”), hereby certify that, to my knowledge:

(1) The Company’s periodic report on Form 10-Q for the quarterly period ended March 31, 2021 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 29, 2021	/s/ Timothy W. Byrne
	Timothy W. Byrne
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

I, Michael L. Wiedemer, Chief Financial Officer of United States Lime & Minerals, Inc. (the “Company”), hereby certify that, to my knowledge:

(1) The Company’s periodic report on Form 10-Q for the quarterly period ended March 31, 2021 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 29, 2021	/s/ Michael L. Wiedemer
	Michael L. Wiedemer
	Vice President and Chief Financial Officer

EX-95.1

EXHIBIT 95.1

MINE SAFETY DISCLOSURES

The following disclosures are provided pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of SEC Regulation S-K, which require certain disclosures by companies required to file periodic reports under the Securities Exchange Act of 1934, as amended, that operate mines regulated under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”).

The Mine Act has been construed as authorizing MSHA to issue citations and orders pursuant to the legal doctrine of strict liability, or liability without fault. If, in the opinion of an MSHA inspector, a condition that violates the Mine Act or regulations promulgated pursuant to it exists, then a citation or order will be issued regardless of whether the operator had any knowledge of, or fault in, the existence of that condition. Many of the Mine Act standards include one or more subjective elements, so that issuance of a citation or order often depends on the opinions or experience of the MSHA inspector involved and the frequency and severity of citations and orders will vary from inspector to inspector.

Whenever MSHA believes that a violation of the Mine Act, any health or safety standard, or any regulation has occurred, it may issue a citation or order which describes the violation and fixes a time within which the operator must abate the violation. In some situations, such as when MSHA believes that conditions pose a hazard to miners, MSHA may issue an order requiring cessation of operations, or removal of miners from the area of the mine, affected by the condition until the hazards are corrected. Whenever MSHA issues a citation or order, it has authority to propose a civil penalty or fine, as a result of the violation, that the operator is ordered to pay.

The table that follows reflects citations, orders, violations and proposed assessments issued to the Company by MSHA during the quarter ended March 31, 2021 and all pending legal actions as of March 31, 2021. Due to timing and other factors, the data may not agree with the mine data retrieval system maintained by MSHA. The proposed assessments for the quarter ended March 31, 2021 were taken from the MSHA system as of April 27, 2021.

Additional information follows about MSHA references used in the table:

● Section 104(a) Citations: The total number of citations received from MSHA under section 104(a) of the Mine Act for alleged violations of health or safety standards that could significantly and substantially contribute to a serious injury if left unabated.

● Section 104(b) Orders: The total number of orders issued by MSHA under section 104(b) of the Mine Act, which represents a failure to abate a citation under section 104(a) within the period of time prescribed by MSHA. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated.

● Section 104(d) Citations and Orders: The total number of citations and orders issued by MSHA under section 104(d) of the Mine Act for unwarrantable failure to comply with mandatory health or safety standards.

● Section 110(b)(2) Violations: The total number of flagrant violations issued by MSHA under section 110(b)(2) of the Mine Act.

● Section 107(a) Orders: The total number of orders issued by MSHA under section 107(a) of the Mine Act for situations in which MSHA determined an imminent danger existed.

Citations and orders can be contested before the Federal Mine Safety and Health Review Commission (the “Commission”), and as part of that process, are often reduced in severity and amount, and are sometimes dismissed. The Commission is an independent adjudicative agency that provides administrative trial and appellate review of legal disputes arising under the Mine Act. These cases may involve, among other questions, challenges by operators to citations, orders and penalties they have received from MSHA, or complaints of discrimination by miners under section 105 of the Mine Act.

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			Section
			104(d)			Proposed
	Section	Section	Citations	Section	Section	MSHA		Pending
	104 S & S	104(b)	and	110(b)(2)	107(a)	Assessments(2)		Legal
Mine(1)	Citations	Orders	Orders	Violations	Orders	($ in thousands)	Fatalities	Actions(3)
Texas Lime Company	—	—	—	—	—	—	—	—
Arkansas Lime Company
Plant	—	—	—	—	—	—	—	—
Limedale Quarry	2	—	—	—	—	1.8	—	—
U.S. Lime Company—St. Clair	2	—	—	—	—	0.8	—	—
Carthage Crushed Limestone	1	—	—	—	—	0.7	—	—
Colorado Lime Company
Monarch Quarry	—	—	—	—	—	—	—	—
Delta Plant	—	—	—	—	—	—	—	—

(1) The definition of a mine under section 3 of the Mine Act includes the mine, as well as other items used in, or to be used in, or resulting from, the work of extracting and processing limestone, such as roads, land, structures, facilities, equipment, machines, tools, kilns, and other property. These other items associated with a single mine have been aggregated in the totals for that mine.

(2) The proposed MSHA assessments issued during the reporting period do not necessarily relate to the citations or orders issued by MSHA during the reporting period or to any pending contests reported above.

(3) Includes any pending legal actions before the Commission involving such mine as of March 31, 2021. Any pending legal actions were initiated by the Company. The pending legal actions may relate to the citations or orders issued by MSHA during the reporting period or to citations or orders issued in prior periods. Due to timing and other factors, the data may not agree with the mine data retrieval system maintained by MSHA. There were no legal actions resolved or instituted during the reporting period.

Pattern or Potential Pattern of Violations. During the quarter ended March 31, 2021, none of the mines operated by the Company received written notice from MSHA of either (a) a pattern of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to mine health or safety hazards under section 104(e) of the Mine Act or (b) the potential to have such a pattern.

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2021	Apr. 28, 2021
Cover Abstract
Entity Registrant Name	UNITED STATES LIME & MINERALS INC
Entity Central Index Key	0000082020
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	000-04197
Entity Incorporation, State or Country Code	TX
Entity Tax Identification Number	75-0789226
Entity Address, Address Line One	5429 LBJ Freeway, Suite 230
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75240
City Area Code	972
Local Phone Number	991-8400
Title of 12(b) Security	Common stock, $0.10 par value
Trading Symbol	USLM
Security Exchange Name	NASDAQ
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		5,655,321
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 89,651	$ 83,562
Trade receivables, net	23,957	22,979
Inventories, net	15,409	15,210
Prepaid expenses and other current assets	2,428	2,245
Total current assets	131,445	123,996
Property, plant and equipment	392,631	388,200
Less accumulated depreciation and depletion	(240,993)	(235,739)
Property, plant and equipment, net	151,638	152,461
Operating lease right-of-use assets	1,929	2,226
Other assets, net	398	415
Total assets	285,410	279,098
Current liabilities:
Accounts payable	5,675	4,592
Current portion of operating lease liabilities	1,073	1,187
Accrued expenses	3,995	5,809
Total current liabilities	10,743	11,588
Deferred tax liabilities, net	22,271	21,531
Operating lease liabilities, excluding current portion	858	1,030
Other liabilities	1,768	1,757
Total liabilities	35,640	35,906
Stockholders' equity:
Common stock	667	666
Additional paid-in capital	30,003	29,457
Retained earnings	274,312	268,186
Less treasury stock, at cost	(55,212)	(55,117)
Total stockholders' equity	249,770	243,192
Total liabilities and stockholders' equity	$ 285,410	$ 279,098

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues
Revenues	$ 41,674	$ 38,440
Cost of revenues
Labor and other operating expenses	24,593	23,962
Depreciation, depletion and amortization	5,276	4,601
Total cost of revenues	29,869	28,563
Gross profit	11,805	9,877
Selling, general and administrative expenses	3,067	3,219
Operating profit	8,738	6,658
Other expense (income)
Interest expense	62	62
Interest and other income, net	(34)	(247)
Total other expense (income)	28	(185)
Income before income tax expense	8,710	6,843
Income tax expense	1,679	1,299
Net income	$ 7,031	$ 5,544
Net income per share of common stock
Basic (in dollars per share)	$ 1.24	$ 0.99
Diluted (in dollars per share)	$ 1.24	$ 0.98

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Percentage	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues
Revenues (as a percent)	100.00%	100.00%
Cost of revenues
Labor and other operating expenses (as a percent)	59.00%	62.30%
Depreciation, depletion and amortization (as a percent)	12.70%	12.00%
Total cost of revenues (as a percent)	71.70%	74.30%
Gross profit (as a percent)	28.30%	25.70%
Selling, general and administrative expenses (as a percent)	7.40%	8.40%
Operating profit (as a percent)	20.90%	17.30%
Other expense (income)
Interest expense (as a percent)	0.10%	0.20%
Interest and other income, net (as a percent)	(0.10%)	(0.70%)
Total other expense (income) (as a percent)	0.00%	(0.50%)
Income before income tax expense (as a percent)	20.90%	17.80%
Income tax expense (as a percent)	4.00%	3.40%
Net income (as a percent)	16.90%	14.40%

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 5,544
Other comprehensive loss
Mark to market of foreign exchange hedges, net of tax benefit of $2 for 2020 period	(6)
Total other comprehensive loss	(6)
Comprehensive income	$ 5,538

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Mark to market on foreign exchange hedges, net of tax benefit of $0 for each of the three and nine months ended September 30, 2020, and $8 and $7 for the three months and nine months ended September 30, 2019, respectively	$ 2	$ 2

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Retained Earnings	Treasury Stock	Total
Balances at Dec. 31, 2019	$ 663	$ 27,464	$ (1)	$ 243,566	$ (54,560)	$ 217,132
Balances (in shares) at Dec. 31, 2019	5,622,826
Increase (Decrease) in Stockholders' Equity
Stock options exercised		81				81
Stock options exercised (in shares)	2,000
Stock-based compensation	$ 1	378				379
Stock-based compensation (in shares)	3,063
Treasury shares purchased					(64)	(64)
Treasury shares purchased (in shares)	(704)
Cash dividends paid				(899)		(899)
Net income				5,544		5,544
Mark to market of foreign exchange hedges, net of tax benefit of $2 for 2020 period			(6)			(6)
Comprehensive income			(6)	5,544		5,538
Balances at Mar. 31, 2020	$ 664	27,923	$ (7)	248,211	(54,624)	222,167
Balances (in shares) at Mar. 31, 2020	5,627,185
Balances at Dec. 31, 2020	$ 666	29,457		268,186	(55,117)	243,192
Balances (in shares) at Dec. 31, 2020	5,648,084
Increase (Decrease) in Stockholders' Equity
Stock options exercised (in shares)	3,310
Stock-based compensation	$ 1	546				547
Stock-based compensation (in shares)	2,685
Treasury shares purchased					(95)	(95)
Treasury shares purchased (in shares)	(743)
Cash dividends paid				(905)		(905)
Net income				7,031		7,031
Comprehensive income				7,031		7,031
Balances at Mar. 31, 2021	$ 667	$ 30,003		$ 274,312	$ (55,212)	$ 249,770
Balances (in shares) at Mar. 31, 2021	5,653,336

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
Mark to market of foreign exchange hedges, tax expense (benefit)	$ (2)	$ (2)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
OPERATING ACTIVITIES:
Net income	$ 7,031	$ 5,544
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	5,341	4,655
Amortization of deferred financing costs	2	2
Deferred income taxes	750	990
Loss (gain) on disposition of property, plant and equipment	3	(13)
Stock-based compensation	547	379
Changes in operating assets and liabilities:
Trade receivables, net	(978)	(200)
Inventories, net	(199)	(146)
Prepaid expenses and other current assets	(183)	249
Other assets	16	14
Accounts payable and accrued expenses	(719)	21
Other liabilities	11	13
Net cash provided by operating activities	11,622	11,508
INVESTING ACTIVITIES:
Purchase of property, plant and equipment	(4,543)	(6,106)
Proceeds from sale of property, plant and equipment	10	16
Net cash used in investing activities	(4,533)	(6,090)
FINANCING ACTIVITIES:
Cash dividends paid	(905)	(899)
Proceeds from exercise of stock options		81
Purchase of treasury shares	(95)	(64)
Net cash used in financing activities	(1,000)	(882)
Net increase in cash and cash equivalents	6,089	4,536
Cash and cash equivalents at beginning of period	83,562	54,260
Cash and cash equivalents at end of period	$ 89,651	$ 58,796

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Basis of Presentation

3 Months Ended

Mar. 31, 2021

Basis of Presentation

Basis of Presentation

1. Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by United States Lime & Minerals, Inc. (the “Company”) without independent audit. In the opinion of the Company’s management, all adjustments of a normal and recurring nature necessary to present fairly the financial position, results of operations, comprehensive income and cash flows for the periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2020. The results of operations for the three-month period ended March 31, 2021 are not necessarily indicative of operating results for the full year.

On July 1, 2020, the Company acquired 100% of the equity interest of Carthage Crushed Limestone (“Carthage”), a limestone mining and production company located in Carthage, Missouri, for $8.4 million cash, subject to adjustment for working capital balances acquired. Carthage produces aggregate and pulverized limestone products that are used primarily in the agricultural, construction, roofing, and industrial industries. Carthage contributed $2.2 million of revenues in the three-months ended March 31, 2021, which are included in the condensed consolidated statements of operations.

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Organization

3 Months Ended

Mar. 31, 2021

Organization

Organization

2. Organization

The Company is a manufacturer of lime and limestone products, supplying primarily the construction (including highway, road and building contractors), industrial (including paper and glass manufacturers), environmental (including municipal sanitation and water treatment facilities and flue gas treatment processes), metals (including steel producers), oil and gas services, roof shingle manufacturers and agriculture (including poultry and cattle feed producers) industries. The Company is headquartered in Dallas, Texas and operates lime and limestone plants and distribution facilities in Arkansas, Colorado, Louisiana, Missouri, Oklahoma and Texas through its wholly owned subsidiaries, Arkansas Lime Company, Colorado Lime Company, Texas Lime Company, U.S. Lime Company, U.S. Lime Company – Shreveport, U.S. Lime Company – St. Clair, ART Quarry TRS LLC (DBA Carthage Crushed Limestone) and U.S. Lime Company – Transportation. In addition, the Company, through its wholly owned subsidiary, U.S. Lime Company – O & G, LLC, has royalty and non-operated working interests in natural gas wells located in Johnson County, Texas, in the Barnett Shale Formation.

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Accounting Policies

3 Months Ended

Mar. 31, 2021

Accounting Policies

Accounting Policies

3. Accounting Policies

Revenue Recognition. The Company recognizes revenue for its lime and limestone operations when (i) a contract with the customer exists and the performance obligations are identified; (ii) the price has been established; and (iii) the performance obligations have been satisfied, which is generally upon shipment. The Company’s returns and allowances are minimal. Revenues include external freight billed to customers with related costs accounted for as fulfillment costs and included in cost of revenues. External freight billed to customers in each of the first quarters 2021 and 2020 revenues was $7.8 million and $6.9 million, respectively, which approximates the amount of external freight included in cost of revenues. Sales taxes billed to customers are not included in revenues. For its natural gas interests, the Company recognizes revenue in the month of production and delivery.

The Company operates its lime and limestone operations within a single geographic region and derives all revenues from that segment from the sale of lime and limestone products. See Note 4 to the condensed consolidated financial statements for disaggregation of revenues by segment, which the Company believes best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Accounts Receivable. The majority of the Company’s trade receivables are unsecured. Payment terms for all trade receivables are based on the underlying purchase orders, contracts or purchase agreements. The Company estimates credit losses relating to trade receivables based on an assessment of the current and forecasted probability of collection, historical trends, economic conditions and other significant events that may impact the collectability of accounts receivables. Due to the relatively homogenous nature of its trade receivables, the Company does not believe there is any meaningful asset-specific differences within its accounts receivable portfolio that would require the portfolio to be grouped below the consolidated level for review of credit losses. Credit losses relating to trade receivables have generally been within management expectations and historical trends. Uncollected trade receivables are charged-off when identified by management to be unrecoverable. The Company maintains an allowance for credit losses to reflect currently expected estimated losses resulting from the failure of customers to make required payments. See Note 7 to the condensed consolidated financial statements.

Leases. The Company determines if an arrangement is a lease at inception. When recording operating leases, the Company records a lease liability based on the net present value of the lease payments over the lease term, using the interest rate implicit in the lease, if known, or an incremental rate on a collateralized basis over a similar term and amount to the lease, and a corresponding right-of-use asset. Operating leases are included in operating lease right-of-use assets, current portion of operating lease liabilities and operating lease liabilities, excluding current portion, on the condensed consolidated balance sheets. Lease expense is recognized over the lease term on a straight-line basis. Lease terms include options to extend the lease when it is reasonably certain the Company will exercise the option. For leases with a term of twelve months or less, the Company does not record a right-of-use asset and a lease liability and records lease expense on a straight-line basis. See Note 10 to the condensed consolidated financial statements.

Fair Values of Financial Instruments. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values, in determining the fair value of its financial assets and liabilities.  These tiers include:  Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.  Specific inputs used to value the Company’s foreign exchange (“FX”) hedges were Euro to U.S. Dollar exchange rates for the expected future payment dates for the Company’s commitments denominated in Euros. The last of these foreign exchange hedges expired in April 2020. See Note 6 to the condensed consolidated financial statements. There were no changes in the methods and assumptions used in measuring fair value during the period.

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Business Segment

3 Months Ended

Mar. 31, 2021

Business Segment

Business Segment

4. Business Segment

The Company has identified one reportable segment based on the distinctness of the Company’s activities and products: lime and limestone operations. All operations are in the United States. In evaluating the operating results of the Company, management primarily reviews revenues, gross profit and operating profit from the lime and limestone operations. Operating profit from its lime and limestone operations includes all of the Company’s selling, general and administrative costs. The Company does not allocate interest expense and interest and other income (expense), net to its lime and limestone operations. Other revenues, gross profit and operating profit in the Company’s segment disclosures include the Company’s natural gas interest. Other identifiable assets include assets related to its natural gas interests, unallocated corporate assets and cash items.

The following table sets forth operating results and certain other financial data for the Company’s lime and limestone operations segment and other (in thousands):

	Three Months Ended March 31,
Revenues	2021		2020
Lime and limestone operations	$	41,356	$	38,214
Other		318		226
Total revenues	$	41,674	$	38,440
Depreciation, depletion and amortization
Lime and limestone operations	$	5,137	$	4,413
Other		139		188
Total depreciation, depletion and amortization	$	5,276	$	4,601
Gross profit (loss)
Lime and limestone operations	$	11,804	$	10,039
Other		1		(162)
Total gross profit	$	11,805	$	9,877
Operating profit (loss)
Lime and limestone operations	$	8,737	$	6,820
Other		1		(162)
Total operating profit	$	8,738	$	6,658
Identifiable assets, at period end
Lime and limestone operations	$	191,419	$	186,702
Other		93,991		65,165
Total identifiable assets	$	285,410	$	251,867
Capital expenditures
Lime and limestone operations	$	4,543	$	6,106
Other		—		—
Total capital expenditures	$	4,543	$	6,106

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Income Per Share of Common Stock

3 Months Ended

Mar. 31, 2021

Income Per Share of Common Stock

Income Per Share of Common Stock

5. Income Per Share of Common Stock

At March 31, 2021, the Company had 15,000,000 shares of common stock authorized and 5,653,336 shares outstanding. On April 30, 2021, shareholders will vote at the Company’s 2021 Annual Meeting of Shareholders on a proposal to increase the number of authorized shares of common stock to 30,000,000.

The following table sets forth the computation of basic and diluted income per common share (in thousands, except per share amounts):

	Three Months Ended March 31,
	2021		2020
Net income for basic and diluted income per common share	$	7,031	$	5,544
Weighted-average shares for basic income per common share		5,651		5,624
Effect of dilutive securities:
Employee and director stock options(1)		13		10
Adjusted weighted-average shares and assumed exercises for diluted income per common share		5,664		5,634
Basic net income per common share	$	1.24	$	0.99
Diluted net income per common share	$	1.24	$	0.98

(1) Excludes 0 and 8 stock options for the three months ended March 31, 2021 and 2020, respectively, as anti-dilutive because the exercise price exceeded the average per share market price for the period.

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Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2021

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

6. Accumulated Other Comprehensive Income

The following table presents the components of comprehensive income (in thousands):

	Three Months Ended March 31,
	2021		2020
Net income	$	7,031	$	5,544
Mark to market of foreign exchange hedges		—		(8)
Deferred income tax benefit		—		2
Comprehensive income	$	7,031	$	5,538

In May 2018, to hedge against potential losses due to changes in the Euro to U.S. Dollar exchange rates, the Company entered into FX hedges with a counterparty to the FX hedges to fix the exchange rates. The last of the FX hedges expired in April 2020. The FX hedges were effective as defined under applicable accounting rules. Therefore, changes in the fair value of the FX hedges were reflected in comprehensive income.

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Trade Receivables, Net

3 Months Ended

Mar. 31, 2021

Trade Receivables, Net

Trade Receivables, Net

7. Trade Receivables, Net

Additions, adjustments and write-offs to the Company’s allowance for credit losses for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

	March 31,
	2021		2020
Beginning balance	$	398	$	361
Additions		—		39
Adjustment for expected credit loss factors		(14)		—
Write-offs		—		—
Ending balance	$	384	$	400

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Inventories, Net

3 Months Ended

Mar. 31, 2021

Inventories, Net

Inventories, Net

8. Inventories, Net

Inventories are valued principally at the lower of cost, determined using the average cost method, or market. Costs for raw materials and finished goods include materials, labor, and production overhead. Inventories, net consisted of the following (in thousands):

	March 31,		December 31,
	2021		2020
Lime and limestone inventories:
Raw materials	$	4,495	$	4,279
Finished goods		2,713		2,866
		7,208		7,145
Service parts inventories		8,201		8,065
	$	15,409	$	15,210

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Banking Facilities and Debt

3 Months Ended

Mar. 31, 2021

Banking Facilities and Debt

Banking Facilities and Debt

9. Banking Facilities and Debt

The Company’s credit agreement with Wells Fargo Bank, N.A. (the “Lender”), as amended as of May 2, 2019 and November 21, 2019, provides for a $75 million revolving credit facility (the “Revolving Facility”) and an incremental four year accordion feature to borrow up to an additional $50 million on the same terms, subject to approval by the Lender or another lender selected by the Company. The credit agreement also provides for a $10 million letter of credit sublimit under the Revolving Facility. The Revolving Facility and any incremental loans mature on May 2, 2024.

Interest rates on the Revolving Facility are, at the Company’s option, LIBOR plus a margin of 1.000% to 2.000%, or the Lender’s Prime Rate plus a margin of 0.000% to 1.000%, and a commitment fee range of 0.200% to

0.350% on the undrawn portion of the Revolving Facility. The Revolving Facility interest rate margins and commitment fee are determined quarterly in accordance with a pricing grid based upon the Company’s Cash Flow Leverage Ratio, defined as the ratio of the Company’s total funded senior indebtedness to earnings before interest, taxes, depreciation, depletion, amortization and stock-based compensation expense (“EBITDA”) for the 12 months ended on the last day of the most recent calendar quarter, plus pro forma EBITDA from any businesses acquired during the period. Pursuant to a security agreement, dated August 25, 2004, the Revolving Facility is secured by the Company’s existing and hereafter acquired tangible assets, intangible assets and real property. The maturity of the Revolving Facility and any incremental loans can be accelerated if any event of default, as defined under the credit agreement, occurs. The Company’s maximum Cash Flow Leverage Ratio is 3.50 to 1.

The Company may pay dividends so long as it remains in compliance with the provisions of the Company’s credit agreement, and it may purchase, redeem or otherwise acquire shares of its common stock so long as its pro forma Cash Flow Leverage Ratio is less than 3.00 to 1.00 and no default or event of default exists or would exist after giving effect to such stock repurchase.

As of March 31, 2021, the Company had no debt outstanding and no draws on the Revolving Facility other than $0.4 million of letters of credit, which count as draws against the available commitment under the Revolving Facility.

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Leases

3 Months Ended

Mar. 31, 2021

Leases

Leases

10. Leases

The Company has operating leases for the use of equipment, corporate office space, and some of its terminal and distribution facilities. The leases have remaining lease terms of 1 to 7 years, with a weighted-average remaining lease term of 2 years at March 31, 2021 and 3 at December 31, 2020. Some operating leases include options to extend the leases for up to 5 years. The liability for the Company’s operating leases was discounted to present value using a weighted-average discount rate of 3.4% at each of March 31, 2021 and March 31, 2020.

The components of lease costs for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

		Three Months Ended March 31,
	Classification	2021		2020
Operating lease costs (1)	Cost of revenues	$	385	$	385
Operating lease costs (1)	Selling, general and administrative expenses		65		56
Rental revenues	Interest and other income, net		(21)		(27)
Net operating lease costs		$	429	$	414

⁽¹⁾ Includes the costs of leases with a term of 12 months or less.

As of March 31, 2021, future minimum payments under operating leases that were either non-cancelable or subject to significant penalty upon cancellation, including future minimum payments under renewal options that the Company is reasonably certain to exercise, were as follows (in thousands):

2021 (excluding the three months ended March 31, 2021)	$	873
2022		590
2023		258
2024		186
2025		36
Thereafter		54
Total future minimum lease payments		1,997
Less imputed interest		(66)
Present value of lease liabilities	$	1,931

Supplemental cash flow information pertaining to the Company’s leasing activity for the three months ended March 31, 2021 and 2020 is as follows (in thousands):

	Three Months Ended March 31,
	2021		2020
Cash payments for operating lease liabilities	$	345	$	447
Right-of-use assets obtained in exchange for operating lease obligations	$	11	$	—

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Income Taxes

3 Months Ended

Mar. 31, 2021

Income Taxes

Income Taxes

11. Income Taxes

The Company has estimated that its effective income tax rate for 2021 will be 19.3%. The primary reason for the effective income tax rate being below the federal statutory rate is due to statutory depletion, which is allowed for income tax purposes and is a permanent difference between net income for financial reporting purposes and taxable income.

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Dividends

3 Months Ended

Mar. 31, 2021

Dividends

Dividends

12. Dividends

On March 12, 2021, the Company paid $0.9 million in cash dividends, based on a dividend of $0.16 per share of its common stock, to shareholders of record at the close of business on February 19, 2021.

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Subsequent Events

3 Months Ended

Mar. 31, 2021

Subsequent Events.

Subsequent Events

13. Subsequent Event

On April 28, 2021, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.16 per share on the Company’s common stock. This dividend is payable on June 11, 2021 to shareholders of record at the close of business on May 21, 2021.

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Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2021

Accounting Policies

Revenue Recognition

Revenue Recognition. The Company recognizes revenue for its lime and limestone operations when (i) a contract with the customer exists and the performance obligations are identified; (ii) the price has been established; and (iii) the performance obligations have been satisfied, which is generally upon shipment. The Company’s returns and allowances are minimal. Revenues include external freight billed to customers with related costs accounted for as fulfillment costs and included in cost of revenues. External freight billed to customers in each of the first quarters 2021 and 2020 revenues was $7.8 million and $6.9 million, respectively, which approximates the amount of external freight included in cost of revenues. Sales taxes billed to customers are not included in revenues. For its natural gas interests, the Company recognizes revenue in the month of production and delivery.

The Company operates its lime and limestone operations within a single geographic region and derives all revenues from that segment from the sale of lime and limestone products. See Note 4 to the condensed consolidated financial statements for disaggregation of revenues by segment, which the Company believes best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Accounts Receivable

Accounts Receivable. The majority of the Company’s trade receivables are unsecured. Payment terms for all trade receivables are based on the underlying purchase orders, contracts or purchase agreements. The Company estimates credit losses relating to trade receivables based on an assessment of the current and forecasted probability of collection, historical trends, economic conditions and other significant events that may impact the collectability of accounts receivables. Due to the relatively homogenous nature of its trade receivables, the Company does not believe there is any meaningful asset-specific differences within its accounts receivable portfolio that would require the portfolio to be grouped below the consolidated level for review of credit losses. Credit losses relating to trade receivables have generally been within management expectations and historical trends. Uncollected trade receivables are charged-off when identified by management to be unrecoverable. The Company maintains an allowance for credit losses to reflect currently expected estimated losses resulting from the failure of customers to make required payments. See Note 7 to the condensed consolidated financial statements.

Leases

Leases. The Company determines if an arrangement is a lease at inception. When recording operating leases, the Company records a lease liability based on the net present value of the lease payments over the lease term, using the interest rate implicit in the lease, if known, or an incremental rate on a collateralized basis over a similar term and amount to the lease, and a corresponding right-of-use asset. Operating leases are included in operating lease right-of-use assets, current portion of operating lease liabilities and operating lease liabilities, excluding current portion, on the condensed consolidated balance sheets. Lease expense is recognized over the lease term on a straight-line basis. Lease terms include options to extend the lease when it is reasonably certain the Company will exercise the option. For leases with a term of twelve months or less, the Company does not record a right-of-use asset and a lease liability and records lease expense on a straight-line basis. See Note 10 to the condensed consolidated financial statements.

Fair Values of Financial Instruments

Fair Values of Financial Instruments. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values, in determining the fair value of its financial assets and liabilities.  These tiers include:  Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.  Specific inputs used to value the Company’s foreign exchange (“FX”) hedges were Euro to U.S. Dollar exchange rates for the expected future payment dates for the Company’s commitments denominated in Euros. The last of these foreign exchange hedges expired in April 2020. See Note 6 to the condensed consolidated financial statements. There were no changes in the methods and assumptions used in measuring fair value during the period.

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Business Segment (Tables)

3 Months Ended

Mar. 31, 2021

Business Segment

Schedule of operating results and certain other financial data for the business segment)

The following table sets forth operating results and certain other financial data for the Company’s lime and limestone operations segment and other (in thousands):

	Three Months Ended March 31,
Revenues	2021		2020
Lime and limestone operations	$	41,356	$	38,214
Other		318		226
Total revenues	$	41,674	$	38,440
Depreciation, depletion and amortization
Lime and limestone operations	$	5,137	$	4,413
Other		139		188
Total depreciation, depletion and amortization	$	5,276	$	4,601
Gross profit (loss)
Lime and limestone operations	$	11,804	$	10,039
Other		1		(162)
Total gross profit	$	11,805	$	9,877
Operating profit (loss)
Lime and limestone operations	$	8,737	$	6,820
Other		1		(162)
Total operating profit	$	8,738	$	6,658
Identifiable assets, at period end
Lime and limestone operations	$	191,419	$	186,702
Other		93,991		65,165
Total identifiable assets	$	285,410	$	251,867
Capital expenditures
Lime and limestone operations	$	4,543	$	6,106
Other		—		—
Total capital expenditures	$	4,543	$	6,106

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Income Per Share of Common Stock (Tables)

3 Months Ended

Mar. 31, 2021

Income Per Share of Common Stock

Schedule of computation of basic and diluted income per common share

The following table sets forth the computation of basic and diluted income per common share (in thousands, except per share amounts):

	Three Months Ended March 31,
	2021		2020
Net income for basic and diluted income per common share	$	7,031	$	5,544
Weighted-average shares for basic income per common share		5,651		5,624
Effect of dilutive securities:
Employee and director stock options(1)		13		10
Adjusted weighted-average shares and assumed exercises for diluted income per common share		5,664		5,634
Basic net income per common share	$	1.24	$	0.99
Diluted net income per common share	$	1.24	$	0.98

(1) Excludes 0 and 8 stock options for the three months ended March 31, 2021 and 2020, respectively, as anti-dilutive because the exercise price exceeded the average per share market price for the period.

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Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2021

Accumulated Other Comprehensive Income

Schedule of components of comprehensive income

The following table presents the components of comprehensive income (in thousands):

	Three Months Ended March 31,
	2021		2020
Net income	$	7,031	$	5,544
Mark to market of foreign exchange hedges		—		(8)
Deferred income tax benefit		—		2
Comprehensive income	$	7,031	$	5,538

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Trade Receivables, Net (Tables)

3 Months Ended

Mar. 31, 2021

Trade Receivables, Net

Schedule of additions and write-offs to allowance for doubtful accounts

Additions, adjustments and write-offs to the Company’s allowance for credit losses for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

	March 31,
	2021		2020
Beginning balance	$	398	$	361
Additions		—		39
Adjustment for expected credit loss factors		(14)		—
Write-offs		—		—
Ending balance	$	384	$	400

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Inventories, Net (Tables)

3 Months Ended

Mar. 31, 2021

Inventories, Net

Schedule of inventories, net

Inventories are valued principally at the lower of cost, determined using the average cost method, or market. Costs for raw materials and finished goods include materials, labor, and production overhead. Inventories, net consisted of the following (in thousands):

	March 31,		December 31,
	2021		2020
Lime and limestone inventories:
Raw materials	$	4,495	$	4,279
Finished goods		2,713		2,866
		7,208		7,145
Service parts inventories		8,201		8,065
	$	15,409	$	15,210

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Leases (Tables)

3 Months Ended

Mar. 31, 2021

Leases

Schedule of lease costs

The components of lease costs for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

		Three Months Ended March 31,
	Classification	2021		2020
Operating lease costs (1)	Cost of revenues	$	385	$	385
Operating lease costs (1)	Selling, general and administrative expenses		65		56
Rental revenues	Interest and other income, net		(21)		(27)
Net operating lease costs		$	429	$	414

⁽¹⁾ Includes the costs of leases with a term of 12 months or less.

Schedule of maturity of lease liability

2021 (excluding the three months ended March 31, 2021)	$	873
2022		590
2023		258
2024		186
2025		36
Thereafter		54
Total future minimum lease payments		1,997
Less imputed interest		(66)
Present value of lease liabilities	$	1,931

Schedule of supplemental cash flow information

	Three Months Ended March 31,
	2021		2020
Cash payments for operating lease liabilities	$	345	$	447
Right-of-use assets obtained in exchange for operating lease obligations	$	11	$	—

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Basis of Presentation (Details) - Carthage Crushed Limestone - USD ($) $ in Millions		3 Months Ended
	Jul. 01, 2020	Mar. 31, 2021
Ownership acquired (as a percent)	100.00%
Cash paid for acquisition	$ 8.4
Revenue of business acquisition		$ 2.2

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Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenue Recognition
External freight billed to customers included in revenue	$ 7.8	$ 6.9

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Business Segment (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($) segment	Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)
Business segments
Number of business segments | segment	1
Revenues	$ 41,674	$ 38,440
Depreciation, depletion and amortization	5,276	4,601
Gross profit (loss)	11,805	9,877
Operating profit (loss)	8,738	6,658
Identifiable assets, at period end	285,410	251,867	$ 279,098
Capital expenditures	4,543	6,106
Lime and limestone operations
Business segments
Depreciation, depletion and amortization	5,137	4,413
Gross profit (loss)	11,804	10,039
Operating profit (loss)	8,737	6,820
Identifiable assets, at period end	191,419	186,702
Capital expenditures	4,543	6,106
Other
Business segments
Depreciation, depletion and amortization	139	188
Gross profit (loss)	1	(162)
Operating profit (loss)	1	(162)
Identifiable assets, at period end	93,991	65,165
Lime and limestone operations | Lime and limestone operations
Business segments
Revenues	41,356	38,214
Natural gas interests | Other
Business segments
Revenues	$ 318	$ 226

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Income Per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Apr. 30, 2021
Anti-dilutive securities
Common stock, authorized shares	15,000,000		30,000,000
Common stock, shares issued	5,653,336
Income per share of common stock:
Net income for basic and diluted income per common share	$ 7,031	$ 5,544
Weighted-average shares for basic income per common share (in shares)	5,651,000	5,624,000
Effect of dilutive securities:
Employee and director stock options (in shares)	13,000	10,000
Adjusted weighted-average shares and assumed exercises for diluted income per common share (in shares)	5,664,000	5,634,000
Basic net income per common share (in dollars per share)	$ 1.24	$ 0.99
Diluted net income per common share (in dollars per share)	$ 1.24	$ 0.98
Options
Anti-dilutive securities
Anti-dilutive shares of common stock excluded from the calculation of dilutive securities	0	8,000

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Components of comprehensive income
Net income	$ 7,031	$ 5,544
Mark to market of foreign exchange hedges		(8)
Deferred income tax benefit		2
Comprehensive income	$ 7,031	$ 5,538

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Trade Receivables, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Additions and write-offs to the company's allowance for doubtful accounts
Beginning balance	$ 398	$ 361
Additions		39
Adjustment for expected credit loss factors	(14)
Ending balance	$ 384	$ 400

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Inventories, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Lime and limestone inventories:
Raw materials	$ 4,495	$ 4,279
Finished goods	2,713	2,866
Total	7,208	7,145
Service parts inventories	8,201	8,065
Total inventories	$ 15,409	$ 15,210

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Banking Facilities and Debt (Details) $ in Millions		3 Months Ended
	May 07, 2015 USD ($)	Mar. 31, 2021 USD ($)	May 02, 2019 USD ($)
Banking facilities and other debt
Total Debt		$ 0.0
Maximum
Banking facilities and other debt
Pro forma Cash Flow Leverage Ratio to be maintained to purchase, redeem or otherwise acquire shares of common stock		3.00
Cash flow leverage ratio	3.50
Revolving Facility
Banking facilities and other debt
Maximum borrowing capacity			$ 75.0
Accordion feature period	4 years
Maximum borrowing capacity accordion feature	$ 50.0
Letters of credit outstanding		$ 0.4
Revolving Facility | Minimum
Banking facilities and other debt
Commitment fee (as a percent)	0.20%
Revolving Facility | Minimum | LIBOR
Banking facilities and other debt
Interest rate margin (as a percent)	1.00%
Revolving Facility | Minimum | Lender's prime rate
Banking facilities and other debt
Interest rate margin (as a percent)	0.00%
Revolving Facility | Maximum
Banking facilities and other debt
Commitment fee (as a percent)	0.35%
Revolving Facility | Maximum | LIBOR
Banking facilities and other debt
Interest rate margin (as a percent)	2.00%
Revolving Facility | Maximum | Lender's prime rate
Banking facilities and other debt
Interest rate margin (as a percent)	1.00%
Letter of Credit
Banking facilities and other debt
Maximum borrowing capacity		$ 10.0

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Leases - Costs Disclosure (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Leases
Weighted average remaining lease term	2 years		3 years
Lessee, Operating Lease, Existence of Option to Extend [true false]	true
Average discount rate (as a percent)	3.40%		3.40%
Lease cost
Net operating lease costs	$ 429	$ 414
Minimum
Leases
Remaining lease term	1 year		1 year
Maximum
Leases
Remaining lease term	7 years		7 years
Lease extension term	5 years
Lease Term	12 months
Cost of revenues
Lease cost
Operating lease cost	$ 385	385
Selling, general and administrative expense.
Lease cost
Operating lease cost	65	56
Interest and other income, net
Lease cost
Rental revenues	$ (21)	$ (27)

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Leases - Maturity (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Maturity
2021 (excluding the three months ended March 31, 2021)	$ 873
2022	590
2023	258
2024	186
2025	36
Thereafter	54
Total future minimum lease payments	1,997
Less imputed interest	(66)
Present value of lease liabilities	$ 1,931

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Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Leases
Cash payments for operating lease liabilities	$ 345	$ 447
Right-of-use assets obtained in exchange for operating lease obligations	$ 11

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Income Taxes (Details)	3 Months Ended
	Mar. 31, 2021
Income Taxes
Effective income tax rate (as a percent)	19.30%

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Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Mar. 12, 2021	Mar. 31, 2021	Mar. 31, 2020
Dividends
Cash dividends paid	$ 900	$ 905	$ 899
Cash dividend (in dollars per share)	$ 0.16

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Subsequent Events (Details) - $ / shares	Apr. 28, 2021	Mar. 12, 2021
Subsequent event
Quarterly cash dividend declared (in dollars per share)		$ 0.16
Subsequent event
Subsequent event
Dividends payable date declared	Apr. 28, 2021
Quarterly cash dividend declared (in dollars per share)	$ 0.16
Dividends payable date to be paid	Jun. 11, 2021
Dividends payable date of record	May 21, 2021