TOR Minerals International Reports Third Quarter 2012 Financial Results
Reports Record Quarterly Sales and Profitability
CORPUS CHRISTI, Texas, Oct. 25, 2012 /PRNewswire/ -- TOR Minerals International (Nasdaq: TORM), producer of synthetic titanium dioxide and color pigments, specialty aluminas, and other high performance mineral fillers, today announced its financial results for the third quarter ended September 30, 2012. Highlights for the third quarter of 2012 as compared to the third quarter of 2011 included:
- 3Q12 sales increased 75 percent to $19.9 million
- 3Q12 diluted net income increased 69 percent to $1.8 million
- 3Q12 diluted EPS: $0.53 versus 3Q11 diluted EPS: $0.33
- Tangible Book Value as of Sept. 30, 2012 was $11.69 per share, versus $9.11 last year
| Sales by Product Group (in 000's) |
3Q12 |
3Q11 |
% |
|||
| TiO2 Pigments |
$ 13,399 |
$ 5,694 |
135% |
|||
| Specialty Aluminas |
4,581 |
4,439 |
3% |
|||
| Other |
1,934 |
1,268 |
53% |
|||
| Total |
$ 19,914 |
$ 11,401 |
75% |
|||
Net sales increased 75 percent during the third quarter of 2012 due to increases in all three of the Company's primary product categories. Titanium dioxide (TiO2) pigments sales, which include HITOX®, TIOPREM® and synthetic rutile (SR) products, were positively affected by $8.8 million of SR sales and increased average selling prices. These factors were more than enough to offset a decline in HITOX volumes, and as a result, TiO2 pigments sales increased 135 percent to $13.4 million. Sales of specialty alumina, which include the ALUPREM®, HALTEX® and OPTILOAD® product groups, increased 3 percent during the third quarter of 2012. The increase in alumina sales was due primarily to an increase in sales volume to a significant U.S. customer, which was partially offset by a decrease in European sales volume.
Commenting on sales trends, Dr. Olaf Karasch, Chief Executive Officer, said, "We posted our 8th consecutive quarter of year-over-year improvement in revenue and earnings. A focus on delivering unique value-added products along with the geographic, product, customer and end-market diversification of our business, has allowed us to overcome the effects of a weak and uncertain global economy and produce another record quarter."
| Margin Table |
3Q12 |
3Q11 |
Change |
|||
| Gross Margin |
19.3% |
20.8% |
- 150 basis points |
|||
| Operating Margin |
12.7% |
10.6% |
+ 210 basis points |
|||
| Net Margin |
9.2% |
9.4% |
- 20 basis points |
During the third quarter of 2012, gross margin decreased by 150 basis points to 19.3 percent primarily due to a shift in the mix of revenue, which included a larger portion of relatively lower margin SR sales. Operating income increased to $2.5 million, or 12.7 percent of sales, compared to operating income of $1.2 million, or 10.6 percent of sales, reported during the same period a year ago. During the third quarter, diluted net income available to common shareholders was a record $1.8 million, an increase of 69 percent as compared to $1.1 million in the same period a year ago. As a percentage of sales, net income declined 20 basis points, primarily related to the increase in the effective tax rate from 5 percent to 22 percent.
"We've made incremental investments in our SR plant this year, which are delivering 5 percent to 7 percent improvement in yields and lowering our production costs. We expect the efficiencies gained from these investments along with increased utilization of our facilities to provide a significant offset to increasing cost pressures from raw materials and rising energy prices," said Dr. Karasch.
"We expect that our TiO2 pigment customers will continue to reduce inventories to levels more closely aligned with near-term demand, and as a result this product group is likely to experience flat to down year-over-year comparisons over the next couple of quarters. While near-term volumes and pricing may be affected by economic weakness and uncertainty, we believe the long-term demand and supply characteristics in the TiO2 business will continue to create growth attractive opportunities for TOR Minerals, as customers increasingly discover the value-added attributes of substituting our HITOX® and TIOPREM® products for commodity TiO2. Offsetting these near-term pressures, we expect our specialty alumina and other revenue categories, which make up more than 50 percent of our historic revenue mix, to continue to show growth. We are also optimistic that beginning next year we will see recurring sales of SR to third parties. Overall, our goal is to continue to deliver on our targeted growth of 15 percent to 20 percent over the next three to five years," concluded Dr. Karasch.
TOR Minerals will host a conference call at 5:00 p.m. Eastern, 4:00 p.m. Central Time, on October 25, 2012, to further discuss third quarter results. The call will be simultaneously webcast, and can be accessed via the News section on the Company's website, www.torminerals.com. Investors and interested parties may participate in the call by dialing 877-407-8033 and referring to conference ID # 401518.
Headquartered in Corpus Christi, Texas, TOR Minerals International is a global manufacturer and marketer of specialty mineral and pigment products for high performance applications with manufacturing and regional offices located in the United States, Netherlands and Malaysia.
This statement provides forward-looking information as that term is defined in the Private Securities Litigation Reform Act of 1995, and, therefore, is subject to certain risks and uncertainties. There can be no assurance that the actual results, business conditions, business developments, losses and contingencies and local and foreign factors will not differ materially from those suggested in the forward-looking statements as a result of various factors, including market conditions, general economic conditions and the risks of a general business slow down or recession, the increasing cost of energy, raw materials and labor, competition, the receptivity of the markets for our anticipated new products, advances in technology, changes in foreign currency rates, freight price increase, commodity price increases, delays in delivery of required equipment and other factors.
Contact for Further Information:
Dave Mossberg
Three Part Advisors, LLC
817-310-0051
| TOR Minerals International, Inc. and Subsidiaries |
||||||||
| Condensed Consolidated Statements of Income |
||||||||
| (Unaudited) |
||||||||
| (In thousands, except per share amounts) |
||||||||
| Three Months |
Nine Months |
|||||||
| 2012 |
2011 |
2012 |
2011 |
|||||
| NET SALES |
$ |
19,914 |
$ |
11,401 |
$ |
46,830 |
$ |
31,475 |
| Cost of sales |
16,068 |
9,026 |
36,127 |
24,703 |
||||
| GROSS MARGIN |
3,846 |
2,375 |
10,703 |
6,772 |
||||
| Technical services and research and development |
90 |
74 |
273 |
206 |
||||
| Selling, general and administrative expenses |
1,242 |
1,098 |
3,825 |
3,322 |
||||
| Gain on disposal of assets |
(6) |
- |
(6) |
- |
||||
| OPERATING INCOME |
2,520 |
1,203 |
6,611 |
3,244 |
||||
| OTHER EXPENSE: |
||||||||
| Interest expense |
(143) |
(139) |
(397) |
(336) |
||||
| Gain (loss) on foreign currency exchange rate |
(24) |
63 |
(21) |
6 |
||||
| Other, net |
- |
- |
1 |
7 |
||||
| INCOME BEFORE INCOME TAX |
2,353 |
1,127 |
6,194 |
2,921 |
||||
| Income tax expense |
516 |
60 |
1,402 |
198 |
||||
| NET INCOME |
$ |
1,837 |
$ |
1,067 |
$ |
4,792 |
$ |
2,723 |
| Less: Preferred Stock Dividends |
- |
- |
- |
15 |
||||
| Basic Income Available to Common Shareholders |
$ |
1,837 |
$ |
1,067 |
$ |
4,792 |
$ |
2,708 |
| Plus: 6% Convertible Debenture Interest Expense |
- |
22 |
36 |
66 |
||||
| Plus: Preferred Stock Dividends |
- |
- |
- |
15 |
||||
| Diluted Income Available to Common Shareholders |
$ |
1,837 |
$ |
1,089 |
$ |
4,828 |
$ |
2,789 |
| Income per common share: |
||||||||
| Basic |
$ |
0.62 |
$ |
0.50 |
$ |
1.77 |
$ |
1.32 |
| Diluted |
$ |
0.53 |
$ |
0.33 |
$ |
1.43 |
$ |
0.86 |
| Weighted average common shares outstanding: |
||||||||
| Basic |
2,968 |
2,122 |
2,714 |
2,052 |
||||
| Diluted |
3,441 |
3,264 |
3,383 |
3,234 |
||||
| TOR Minerals International, Inc. and Subsidiaries |
||||
| Condensed Consolidated Balance Sheets |
||||
| (In thousands, except per share amounts) |
||||
| September 30, |
December 31, |
|||
| (Unaudited) |
||||
| ASSETS |
||||
| CURRENT ASSETS: |
||||
| Cash and cash equivalents |
$ |
1,558 |
$ |
3,381 |
| Trade accounts receivable, net |
14,374 |
4,921 |
||
| Inventories |
20,705 |
18,673 |
||
| Other current assets |
1,629 |
832 |
||
| Total current assets |
38,266 |
27,807 |
||
| PROPERTY, PLANT AND EQUIPMENT, net |
21,554 |
20,138 |
||
| OTHER ASSETS |
24 |
22 |
||
| Total Assets |
$ |
59,844 |
$ |
47,967 |
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
| CURRENT LIABILITIES: |
||||
| Accounts payable |
$ |
4,647 |
$ |
3,222 |
| Accrued expenses |
3,076 |
1,754 |
||
| Notes payable under lines of credit |
4,616 |
2,886 |
||
| Export credit refinancing facility |
2,332 |
1,254 |
||
| Current deferred tax liability |
55 |
46 |
||
| Current maturities - capital leases |
51 |
28 |
||
| Current maturities of long-term debt – financial institutions |
818 |
813 |
||
| Current maturities of long-term debt – convertible debentures |
- |
91 |
||
| Total current liabilities |
15,595 |
10,094 |
||
| LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES |
||||
| Capital leases |
16 |
34 |
||
| Long-term debt – financial institutions |
2,816 |
2,668 |
||
| Long-term debt – convertible debentures, net |
- |
1,127 |
||
| DEFERRED TAX LIABILITY |
1,201 |
619 |
||
| Total liabilities |
19,628 |
14,542 |
||
| COMMITMENTS AND CONTINGENCIES |
||||
| SHAREHOLDERS' EQUITY: |
||||
| Common stock $1.25 par value: authorized, 6,000 shares; |
3,709 |
2,999 |
||
| Additional paid-in capital |
28,971 |
28,222 |
||
| Retained earnings (Accumulated deficit) |
3,033 |
(1,759) |
||
| Accumulated other comprehensive income: |
||||
| Cumulative foreign currency translation adjustment |
4,503 |
3,963 |
||
| Total shareholders' equity |
40,216 |
33,425 |
||
| Total Liabilities and Shareholders' Equity |
$ |
59,844 |
$ |
47,967 |
| TOR Minerals International, Inc. and Subsidiaries |
||||
| Condensed Consolidated Statements of Cash Flows |
||||
| (Unaudited) |
||||
| (In thousands) |
||||
| Nine Months Ended September 30, |
||||
| 2012 |
2011 |
|||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||
| Net Income |
$ |
4,792 |
$ |
2,723 |
| Adjustments to reconcile net income to net cash |
||||
| Depreciation |
1,842 |
1,544 |
||
| Gain on disposal of assets |
(6) |
- |
||
| Share-based compensation |
71 |
53 |
||
| Convertible debenture interest expense |
22 |
50 |
||
| Deferred income taxes |
572 |
158 |
||
| Provision for bad debts |
69 |
- |
||
| Changes in working capital: |
||||
| Trade accounts receivables |
(9,499) |
(1,880) |
||
| Inventories |
(1,601) |
(4,142) |
||
| Other current assets |
(788) |
(478) |
||
| Accounts payable and accrued expenses |
2,684 |
643 |
||
| Net cash used in operating activities |
(1,842) |
(1,329) |
||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||
| Additions to property, plant and equipment |
(3,068) |
(2,733) |
||
| Proceeds from sales of property, plant and equipment |
8 |
- |
||
| Net cash used in investing activities |
(3,060) |
(2,733) |
||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||
| Net proceeds from lines of credit |
1,656 |
339 |
||
| Net proceeds from export credit refinancing facility |
1,032 |
2,428 |
||
| Net proceeds from (payments on) capital leases |
5 |
(44) |
||
| Proceeds from long-term bank debt |
774 |
877 |
||
| Payments on long-term bank debt |
(605) |
(368) |
||
| Proceeds from the issuance of common stock, |
148 |
606 |
||
| Preferred stock dividends paid |
- |
(30) |
||
| Net cash provided by financing activities |
3,010 |
3,808 |
||
| Effect of foreign currency exchange rate fluctuations on cash and cash equivalents |
69 |
(198) |
||
| Net decrease in cash and cash equivalents |
(1,823) |
(452) |
||
| Cash and cash equivalents at beginning of year |
3,381 |
2,559 |
||
| Cash and cash equivalents at end of period |
$ |
1,558 |
$ |
2,107 |
| Supplemental cash flow disclosures: |
||||
| Interest paid |
$ |
397 |
$ |
139 |
| Non-cash financing activities: |
||||
| Conversion of debentures |
$ |
1,240 |
$ |
25 |
SOURCE TOR Minerals International
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