Minerals Technologies Sees 4% Sales Increase in 2015
Minerals Technologies Inc. (MTI) recently announced its results for the fourth quarter and full year 2015. For the full year 2015, the company reported earnings per diluted share of $4.31, excluding special items, compared with earnings of $4.00 per diluted share in the prior year, an increase of 8%. Reported earnings per diluted share were $3.08 for the full year of 2015.
“MTI delivered a solid 2015 performance, denoting our sixth consecutive year of record financial results,” said Joseph Muscari, chairman and CEO. “Our minerals and specialty chemicals businesses contributed double-digit operating income margins during the year, and the 2014 AMCOL acquisition continues to be highly accretive, generating nearly $80 million in synergies. We also continued to restructure the Energy Services and Refractories segments to maximize profitability in light of the weak conditions in the oil and steel markets.”
Minerals Technologies’ fourth quarter worldwide sales decreased 17% to $430 million from $516 million in the same period of 2014. Foreign exchange had an unfavorable impact on sales of $23.9 million, or 5%. The exit from the Coiled Tubing service line in early August 2015 reduced consolidated sales by an additional $17.0 million, or 3%. Income from operations, excluding special items, represented 13.7% of sales, and was $59 million compared with $74.1 million in the fourth quarter of last year.
Weak market conditions in oil and steel resulted in a combined decrease in operating profits for Energy Services and Refractories of $18 million from the same period in the prior year. In addition, foreign exchange had an unfavorable impact on operating income of $4.2 million. The company incurred charges of $28.8 million in special items in the quarter, primarily related to restructuring costs in the Energy Services and Refractories segments and acquisition-related integration costs. Reported operating income in the fourth quarter of 2015 was $37.7 million. The combined effect of these non-recurring items reduced earnings by $0.52 per share. The company expects to realize annualized savings from the restructuring program of approximately $9 million.
The Minerals businesses, which include the Specialty Minerals, Performance Materials and Construction Technologies segments, had a strong quarter. Operating income grew 5% to $53.5 million and represented 16.3% of sales, compared with 14.6% of sales in last year’s fourth quarter. Fourth quarter worldwide sales for the Specialty Minerals segment, which includes the precipitated calcium carbonate (PCC) and Processed Minerals product lines, decreased 1% to $157.7 million. Foreign exchange had an unfavorable impact on sales of $8.2 million, or 5% points. Consequently, sales on a constant currency basis in the segment increased 4%. Worldwide sales of PCC decreased 4% to $123.7 million. On a constant currency basis, PCC sales grew 3%. Paper PCC sales in China grew 92% over 2014 due to the start-up of three new facilities since the fourth quarter of 2014.
Fourth quarter net sales of Processed Minerals products increased 10% to $34 million from $31 million in the prior year, primarily due to a 16% increase in ground calcium carbonate sales. Income from operations for the Specialty Minerals segment in the quarter increased 4% to $25.6 million and represented 16.2% of sales as compared with 15.5% in the prior year. This increase was attributable to volume growth of 5%, improved cost and expense control and productivity improvements that were partially offset by the effects of foreign exchange. Sales in the Performance Materials segment were $131.3 million for the quarter, with foreign exchange having an unfavorable impact on sales of $6 million. Weakness in the agricultural sector affected sales in the Metalcasting product line. Sales in Household, Personal Care and Specialty Products increased 10% due to strong Pet Care and Fabric Care sales. Operating income grew 11% to $23.9 million and represented 18.2% of sales, compared to 15.2% of sales in the prior year. This growth was attributable to increased sales in consumer products and an 8% improvement in productivity Fourth quarter sales in the Construction Technologies segment were $39.4 million. Foreign exchange had an unfavorable impact on sales of $2.1 million. Operating income was $4 million and represented 10.2% of sales.
The Service businesses, which include the Refractories and Energy Services segments, had a difficult quarter due to a significant downturn in both the steel and energy markets. Sales of $101.6 million in the fourth quarter decreased 40% from last year. Operating income decreased from $25.3 million in last year's fourth quarter to $6.3 million in the current year. Net sales in the Refractories segment in the fourth quarter of 2015 were $68.2 million, with foreign exchange having an unfavorable impact on sales of $4.4 million. Operating income, excluding special items, was $5.3 million and represented 7.8% of sales. Sales and operating income were affected by lower sales volumes stemming from continued weak global steel demand. Energy Services segment sales were $33.4 million for the fourth quarter, a 56% decrease from the prior year. The company exited the Coiled Tubing service line in early August, reducing sales by $17 million, or 22%. In addition, foreign exchange had an unfavorable impact on sales of $3.2 million, or 4%. This segment continues to be affected by weak market conditions in the oil and gas sector. Operating income, excluding special items, was $1 million and represented 3% of sales.
Worldwide sales for the full year grew 4% to $1.798 billion. Foreign exchange had an unfavorable impact on sales of $95 million, or 6%. Operating income for the full year, excluding special items, increased 10% to $257.4 million from $234.5 million in 2014. Reported operating income for the full year was $200.3 million. Cash flow from operations for the year was $270 million, and the company paid down $190 million of acquisition-related debt in 2015.
Full-year worldwide sales for the Specialty Minerals segment decreased 4% to $624.6 million. Foreign exchange had an unfavorable impact in sales of $33.5 million, or 5%. On a constant currency basis, sales increased 1%. Income from operations, excluding special items, for Specialty Minerals increased 2% to a record $100.8 million in 2015, and represented 16.1% of sales. Performance Materials sales in 2015 were $514.8 million with record operating income of $95.9 million, representing 18.6% of sales compared to 14.5% in the prior year. Construction Technologies sales in 2015 were $180.1 million with operating income of $22.5 million, representing 12.5% of sales. Energy Services sales for the full year were $182.2 million with operating income, excluding special items of $14.1 million. Full year sales in the Refractories segment were $295.9 million. Foreign exchange had an unfavorable impact on sales of $23.7 million, or 7%. Operating income, excluding special items, was $29.8 million, and represented 10.1% of sales.
“Many factors contributed to our solid 2015 financial performance," said Muscari. “The highly accretive 2014 purchase of AMCOL International doubled our size and created a stronger foundation for future growth-both organically and through acquisition. Today, we are the world’s leader in precipitated calcium carbonate and bentonite with demonstrated expertise in fine particle technology. Our three Minerals-based segments, which comprise about 75% of MTI’s revenues, were the core contributors to our performance, and the fundamentals in these business units remain solid, positioning us for growth in 2016. We will also continue to take the necessary steps to maximize profitability in our two Service-based businesses that face difficult market conditions. Overall, MTI remains a strong operating company focused on our major strategies of geographic expansion and technological innovation, and in 2016 we expect to improve profitability and maintain strong cash flows.”
For more information, visit www.mineralstech.com.