EX-99.1 2 ex993qte2008.htm News

News

For Immediate Release                                                                     Contact:
October 23, 2008                                                                                 Rick Honey 
                                                                                                               (212) 878-1831

 

MINERALS TECHNOLOGIES REPORTS THIRD QUARTER EARNINGS
PER SHARE FROM CONTINUING OPERATIONS OF $0.85, INCLUDING
 RESTRUCTURING CHARGES OF $0.17 PER SHARE

----------

Board Declares Regular Quarterly Dividend of $0.05 per Share

----------

Highlights:

 •

Earnings per Share were $1.00 on Sales of $295 million.
  •

Annualized rate of Return on Capital for the third quarter was 9.4 percent.
  •

Income from operations, excluding special items, decreased 6 percent from second quarter, but grew 17 percent over prior year.
  •

Sequentially, excluding special items, net income for the third quarter increased 3 percent over the second quarter.

NEW YORK, October 23 - Minerals Technologies Inc. (NYSE: MTX) today reported third quarter diluted earnings per common share of $1.00 compared with a loss of $5.47 in the third quarter of 2007 when the company announced a major restructuring program. Earnings per share from continuing operations were $0.85 in the third quarter and include restructuring charges of $0.17 per share. Earnings per share from discontinued operations were $0.15 for the quarter primarily due to a gain on the sale of an idle facility. Excluding special items, earnings were $1.06 per share in the third quarter as compared with $0.69 per share in the prior year. Net income for the quarter, excluding special items, increased 50 percent to $20.1 million compared with $13.4 million in the third quarter of 2007.

Sequentially, excluding special items, net income for the third quarter increased 3 percent from $19.5 million in the second quarter.

2

"The company delivered a solid performance in a difficult market environment. In particular, we achieved a 9.4 percent annualized rate of Return on Capital for the third quarter," said Joseph C. Muscari, chairman and chief executive officer. "Looking at our end markets, we saw continued contraction in the worldwide paper industry and increased weakness in the construction and automotive industries. Our Refractory segment, however, held up well during the quarter and was in line with steel production, which, however, has since declined."

The company's worldwide sales in the third quarter increased 11 percent to $294.9 million compared to $266.5 million in the previous year. This sales growth was primarily due to increased pricing necessitated by higher raw material costs and to foreign exchange. Income from operations, excluding special items, increased 17 percent in the third quarter to $28.0 million compared with $24.0 million in the prior year.

Sequentially, income from operations, excluding special items, decreased 6 percent from the second quarter of 2008.

The Specialty Minerals segment's worldwide sales in the third quarter increased 4 percent to $186.7 million from $179.5 million in the prior year. Income from operations, excluding special items, in the third quarter of 2008 decreased 9 percent to $16.8 million compared with $18.5 million in the prior year. This decline occurred in both the PCC and Processed Minerals product lines.

Sequentially, income from operations, excluding special items, decreased 17 percent from the second quarter of 2008.

Worldwide sales of PCC, which is used primarily in the manufacturing processes of the paper industry, were $157.2 million, a 5-percent gain over the $150.3 million reported in the third quarter of 2007. This growth was attributable to foreign currency and to increased selling prices from the pass-through to customers of raw material cost increases. Worldwide unit volumes of Paper PCC were down approximately 3 percent from the third quarter of last year.

Sequentially, Paper PCC volumes were down 2 percent from the second quarter of 2008.

There has been a slowdown in demand for printing and writing papers in North America and Europe, which has resulted in paper mill and paper machine shutdowns.

In the Processed Minerals product line, third quarter sales increased 1 percent to $29.5

 

3

 

 million from $29.2 million in the same quarter of last year, due primarily to price increases. This product line continues to be affected by the weakness in the residential and commercial construction markets as well as the automotive market. As a result, volumes have declined 10% from the prior year. Sequentially, volumes were down 5 percent from the second quarter of 2008.

In the company's Refractories segment, sales for the third quarter were $108.2 million, a 24-percent increase from $87.0 million recorded in the third quarter of 2007. Income from operations, excluding special items, in the third quarter of 2008 was $11.6 million compared with $5.5 million during the same period last year.

Sequentially, income from operations, excluding special items, increased 20 percent from the second quarter of 2008.

Sales of refractory products and systems for the steel market and other industrial uses increased 25 percent in the third quarter to $86.7 million from $69.5 million in the same period last year. This increase was attributable to increased selling prices necessitated by significant raw materials cost increases and to the favorable effects of currency. Sales in the metallurgical product line increased 23 percent to $21.5 million from $17.5 million in the third quarter of 2007. This increase was primarily the result of strong steel demand in North America.

Nine Months Results

The company's net income for the first nine months was a record $59.6 million compared with a net loss of $80.3 million for the same period in the prior year. Diluted earnings per share for the nine months were $3.12 compared to a loss of $4.19 per share for the first nine months in 2007. Earnings per share from continuing operations were $2.71 compared with a loss of $2.24 per share in the prior year. Earnings from discontinued operations were $0.41 for the first nine months of 2008 and include gains on the sale of three idle facilities of approximately $0.35 per share. This compares to a loss of $1.95 for the same period in 2007. Excluding special items, earnings were $3.03 per share in 2008 as compared with $1.99 per share in the prior year.

Minerals Technologies' worldwide sales for the first nine months of 2008 increased 9 percent to $872.2 million from $803.5 million in the same period last year. The sales growth was primarily attributable to increased pricing and to foreign exchange. Operating income, excluding special items, for the nine months increased 17 percent to $86.2 million compared with $73.6 

4

million in the prior year.

 The Specialty Minerals segment's worldwide sales for the first nine months of 2008 were up 4 percent to $556.6 million from $536.3 million for the same period in 2007. Specialty Minerals income from operations, excluding special items, was $56.5 million for the first nine months of 2008 compared with $52.9 million in the prior year.

The Refractories segment's sales for the first nine months of 2008 were $315.6 million compared to $267.2 million in the previous year, an 18-percent increase. For the nine months, Refractories segment's operating income, excluding special items, was $30.4 million compared with $20.7 million in the prior year.

"Our performance for the first three-quarters of 2008 is the direct result of the fundamental changes we announced a year ago. We eliminated certain product lines, reduced expenses and placed tighter controls on capital," said Mr. Muscari. "Those changes have better positioned us to face the significant challenges we are now confronting as we move through the fourth quarter and into 2009. Market and economic conditions going forward have become much more uncertain; but we now have a stronger platform and continue to have a solid balance sheet from which to operate."

 

----------

The company also declared a regular quarterly dividend of $0.05 per share on its common stock. The dividend is payable on December 12, 2008 to stockholders of record on November 5, 2008.

----------

Minerals Technologies has scheduled an analyst conference call for Friday, October 24, 2008 at 11:00 a.m. to discuss operating results for the third quarter. The conference call will be broadcast over the company's website, www.mineralstech.com.

####

----------

This press release may contain forward-looking statements, which describe or are based on current expectations; in particular, statements of anticipated changes in the business environment in which the company operates and in the company's future operating results.

 

5

 

 Actual results may differ materially from these expectations. In addition, any statements that are not historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates," and similar expressions) should also be considered to be forward-looking statements. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this document should be evaluated together with the many uncertainties that affect our businesses, particularly those mentioned in the risk factors and other cautionary statements in our 2007 Annual Report on Form 10-K and in our other reports filed with the Securities and Exchange Commission.

 

CONSOLIDATED STATEMENTS OF INCOME
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
(in thousands, except per share data)

(unaudited)

 

 

 

Quarter Ended

% Growth

Nine Months Ended

% Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sept 28,

2008

June 29,

2008

Sept 30,

2007

 

 

 

 

 

Sept 28,

2008

Sept 30,

 

 

 

 

 

Prior Year

Prior
Qtr.

2007

Prior Year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

294,917

$

299,794

$

266,548

 

11%

 

-2%

 

$

872,231

$

803,463

 

9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

235,482

 

237,512

 

210,203

 

12%

 

-1%

 

 

689,779

 

630,484

 

9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production margin

 

59,435

 

62,282

 

56,345

 

5%

 

(5)%

 

 

182,452

 

172,979

 

5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing and administrative expenses

26,009

 

26,590

 

25,630

 

1%

 

(2)%

 

 

78,639

 

79,099

 

(1)%

 

Research and development expenses

5,433

 

6,014

 

6,689

 

(19)%

 

(10)%

 

 

17,567

 

20,217

 

(13)%

 

Restructuring and other charges

5,013

 

899

 

12,150

 

*

 

458%

 

 

7,344

 

12,150

 

 

 

Impairment of assets

 

0

 

0

 

94,070

 

*

 

*

 

 

0

 

94,070

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

22,980

 

28,779

 

(82,194)

 

*

 

(20)%

 

 

78,902

 

(32,557)

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating income (deductions) - net

285

 

(724)

 

(1,309)

 

*

 

*

 

 

(1,953)

 

(5,737)

 

(66)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

on income, minority interests and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

discontinued operations

23,265

 

28,055

 

(83,503)

 

*

 

(17)%

 

 

76,949

 

(38,294)

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for taxes on income

6,329

 

8,653

 

(12,250)

 

*

 

(27)%

 

 

22,927

 

2,558

 

796%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority interests

 

879

 

713

 

490

 

79%

 

23%

 

 

2,445

 

2,161

 

13%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

16,057

 

18,689

 

(71,743)

 

*

 

(14)%

 

 

51,577

 

(43,013)

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of tax

2,951

 

4,646

 

(33,728)

 

*

 

*

 

 

7,973

 

(37,263)

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

19,008

$

23,335

$

(105,471)

 

*

 

(19)%

 

$

59,550

$

(80,276)

 

*

 

* Percentage not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

18,859

 

18,937

 

19,273

 

 

 

 

 

 

18,957

 

19,172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

18,962

 

19,065

 

19,273

 

 

 

 

 

 

19,064

 

19,172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

0.85

$

0.99

$

(3.72)

 

*

 

(14)%

 

$

2.72

$

(2.24)

 

*

 

Income (loss) from discontinued operations

0.16

 

0.24

 

(1.75)

 

*

 

*

 

 

0.42

 

(1.95)

 

*

 

Basic earnings per share

$

1.01

$

1.23

$

(5.47)

 

*

 

(18)%

 

$

3.14

$

(4.19)

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

0.85

$

0.98

$

(3.72)

 

*

 

(13)%

 

$

2.71

$

(2.24)

 

*

 

Income (Loss) from discontinued operations

0.15

 

0.24

 

(1.75)

 

*

 

*

 

 

0.41

 

(1.95)

 

*

 

Diluted earnings per share

$

1.00

$

1.22

$

(5.47)

 

*

 

(18)%

 

$

3.12

$

(4.19)

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

$

0.05

$

0.05

$

0.05

 

 

 

 

 

$

0.15

$

0.15

 

 

 

 

 

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED STATEMENTS OF INCOME

1)

For the periods ended September 28, 2008 and September 30, 2007.

2)

Sales increased in the United States 6% in the third quarter and 5% for the first nine months of 2008 as compared with the comparable periods of the prior year. International sales increased 16% in the third quarter and 13% for the first nine months as compared with the comparable periods of the prior year.

3)

In the third quarter of 2007, the Company initiated a plan to realign its operations as a result of an in-depth strategic review of all of its operations. This realignment resulted in impairment of assets charges and restructuring charges in the third quarter of 2007 as follows:

Impairment of assets charges

Paper PCC

$

65.3

    

Specialty PCC

12.7

    

Total PCC

78.0

    

Processed Minerals

1.3

    

Specialty Minerals Segment

79.3

    

Refractories Segment

14.8

    

Consolidated

$

94.1

    
         
         

Restructuring and other costs

Severance and other employee benefits

$

9.2

    

Contract termination costs

2.3

    

Other exit costs

0.6

    
 

$

12.1

    

Additional restructuring charges recorded in the third quarter and first nine months of 2008 associated with this realignment were as follows (millions of dollars):
   

Third

Second

First Nine Months

Restructuring and other costs

Quarter

Quarter

2008

      

Severance and other employee benefits

$

0.3

  

$

0.9

  

$

2.1

      

Pension settlement loss

4.7

    

0.0

    

4.7

      

Other exit costs

0.0

    

0.0

    

0.5

      
 

$

5.0

  

$

0.9

  

$

7.3

      

As a result of the workforce reduction associated with the restructuring program and the related distribution of pension benefits, the Company recognized a pension settlement loss of $4.7 million in the third quarter of 2008 related to its defined benefit plan in the U.S. in accordance with SFAS 88.

4)

To supplement the Company's consolidated financial statements presented in accordance with GAAP, the following is a presentation of the Company's non-GAAP income (loss), excluding special items, for the three month and nine month periods ended September 28, 2008 and September 30, 2007, respectively and for the three-month period ended June 29, 2008. The Company's management believe these non-GAAP measures provide meaningful supplemental information regarding its performance as inclusion of such special items are not indicative of the ongoing operating results and thereby affect the comparability of results between periods. The Company feels inclusion of these non-GAAP measures also provides consistency in its financial reporting and facilitates investors' understanding of historic operating trends.

 

 

 

Three Months Ended

Nine Months Ended

 

 

 

Sept 28,

June 29,

Sept 30,

Sept 28,

Sept 30,

 

 

 

2008

 

 

2008

 

 

2007

 

 

2008

 

 

2007

 

Net Income (loss), as reported

$

19.0

 

$

23.3

 

$

(105.5)

 

$

59.6

 

$

(80.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventory writedowns included in cost of goods sold

0

 

 

0

 

 

1.4

 

 

0

 

 

1.4

 

Impairment of long-lived assets

0

 

 

0

 

 

140.9

 

 

0

 

 

140.9

 

Restructuring and other costs

5.4

 

 

0.7

 

 

14.3

 

 

7.4

 

 

14.3

 

Gain on sale of assets

(3.7)

 

 

(6.5)

 

 

0.0

 

 

(10.2)

 

 

0.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Related tax effects on special items

(0.6)

 

 

2.0

 

 

(37.5)

 

 

1.0

 

 

(37.5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reverse minority interest portion of impairment charge

0

 

 

0

 

 

(0.2)

 

 

0

 

 

(0.2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, excluding special items

$

20.1

 

$

19.5

 

$

13.4

 

$

57.8

 

$

38.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share, excluding special items

$

1.07

 

$

1.03

 

$

0.70

 

$

3.05

 

$

2.01

 

Diluted earnings per share, excluding special items

$

1.06

 

$

1.02

 

$

0.69

 

$

3.03

 

$

1.99

 

 

5) During the fourth quarter of 2007, the Company exited its Synsil® Products product line and reclassified such operations as discontinued. In addition, the Company reclassified to discontinued operations its two Midwest plants located in Mt. Vernon, Indiana and Wellsville, Ohio. All assets held are classified as held for disposal as of September 28, 2008 and December 31, 2007. The following table details selected financial information for the businesses included within discontinued operations in the Consolidated Statements of Income (millions of dollars):
     

Three Months Ended

Nine Months Ended
     

Sept 28,

June 29,

Sept 30,

Sept 28,

Sept 30,
     

2008

    

2008

    

2007

    

2008

    

2007
                               
 

Net sales

$

6.0

  

$

6.4

  

$

7.7

  

$

18.7

  

$

23.8
                               
 

Production margin

1.5

    

0.7

    

(2.2)

    

3.0

    

(5.3)
 

Total expenses

  

0.2

    

0.2

    

1.0

    

0.6

    

3.3
 

Restructuring charges (reversals)

0.4

    

(0.2)

    

2.1

    

0.1

    

2.1
 

Impairment of assets

0.0

    

0.0

    

46.9

    

0.0

    

46.9
                               
 

Income (loss) from operations

0.9

    

0.7

    

(52.2)

    

2.3

    

(57.6)
 

Provision for taxes on income

0.3

    

0.3

    

(18.5)

    

0.9

    

(20.3)
                               
 

Income (loss) from operations, net of tax

0.6

    

0.4

    

(33.7)

    

1.4

    

(37.3)
 

Pre-tax gains on sales of discontinued business

3.7

    

6.5

    

0.0

    

10.2

    

0.0
 

Provision for taxes on gains

1.3

    

2.3

    

0.0

    

3.6

    

0.0
                               
 

Income (loss) from discontinued operations, net of tax

$

3.0

  

$

4.6

  

$

(33.7)

  

$

8.0

  

$

(37.3)
                               
                               
 

6) The following table reflects the components of non-operating income and deductions (thousands of dollars):
     

Three Months Ended

Nine Months Ended
     

Sept 28,

June 29,

Sept 30,

Sept 28,

Sept 30,
     

2008

    

2008

    

2007

    

2008

    

2007
 

Interest income

$

1.5

    

1.0

  

$

0.7

  

$

3.6

  

$

1.8
 

Interest expense

(1.2)

    

(1.1)

    

(2.0)

    

(3.8)

    

(7.2)
 

Foreign exchange gains (losses)

0.3

    

(0.3)

    

0.0

    

(0.8)

    

(0.1)
 

Other deductions

(0.3)

    

(0.3)

    

0.0

    

(0.9)

    

(0.2)
 

Non-operating income (deductions), net

$

0.3

    

(0.7)

  

$

(1.3)

  

$

(1.9)

  

$

(5.7)
                               

7) The results of operations for the interim period ended September 28, 2008 are not necessarily indicative of the results that ultimately might be achieved for the current year.
                             

8) The analyst conference call to discuss operating results for the third quarter is scheduled for Friday, Ocober 24, 2008 at 11:00 a.m. and will be broadcast over the Company's website (www.mineralstech.com). The broadcast will remain on the Company's website for no less than one year.

 

 

 

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

(In Thousands of Dollars)

 

 

 

 

 

Sept 28,

 

December 31,

 

 

2008*

  

2007**

 

 

 

 

 

Current assets:

 

 

 

 

Cash & cash equivalents

$

151,115

$

128,985

Short-term investments

 

14,758

 

9,697

Accounts receivable, net

 

209,234

 

180,868

Inventories

 

136,631

  

103,373

Prepaid expenses and other current assets

 

22,960

  

22,773

Assets held for disposal

 

19,571

 

27,614

Total current assets

 

554,269

 

473,310

 

 

 

 

 

Property, plant and equipment

 

1,362,118

  

1,351,843

Less accumulated depreciation

 

906,265

 

862,457

Net property, plant & equipment

 

455,853

 

489,386

 

 

 

 

 

Goodwill

 

70,643

  

71,964

Prepaid pension costs

 

39,947

 

53,667

Other assets and deferred charges

 

34,150

  

40,566

 

 

      

 

 

 

 

 

Total assets

$

1,154,862

$

1,128,893

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

Short-term debt

$

14,522

$

9,518

Current maturities of long-term debt

 

371

 

7,210

Accounts payable

 

72,370

 

66,084

Restructuring liabilities

 

3,867

 

14,479

Other current liabilities

 

66,998

 

65,057

Liabilities of assets held for disposal-current

 

1,382

 

4,801

Total current liabilities

 

159,510

  

167,149

 

 

 

 

 

Long-term debt

 

101,221

 

111,006

Other non-current liabilities

 

116,424

  

99,565

Total liabilities

 

377,155

 

377,720

 

 

 

  

 

Total shareholders' equity

 

777,707

 

751,173

 

 

 

 

 

Total liabilities and shareholders' equity

$

1,154,862

$

1,128,893

 

 

  

 

  

 

 

  

 

  

* Unaudited.

 

 

 

 

** Condensed from audited financial statements.