AMCOL International Corporation News

AMCOL International (NYSE: ACO) Reports 18% Increase in Diluted Earnings Per Share From Continuing Operations

ARLINGTON HEIGHTS, Ill., July 18, 2008 PRNewswire-FirstCall — AMCOL International Corporation (NYSE: ACO) today reported 2008 second-quarter income from continuing operations of $17.9 million or $0.58 per diluted share, compared with $15.3 million or $0.49 per diluted share in the same prior-year period.

Net sales from continuing operations rose 28.2% to $233.8 million for the quarter ended June 30, 2008, compared with $182.5 million for the 2007 period. Acquisitions and favorable foreign currency translation represented approximately $8.7 million and $5.4 million, respectively, of the second- quarter sales growth. Operating profit increased by 22.5% over the 2007 period to $23.5 million. Acquisitions added $1.4 million to current-period operating profit while foreign currency translation contributed $0.8 million.

For the six-month period ended June 30, 2008, income from continuing operations was $26.5 million, or $0.86 per diluted share, compared with $26.1 million, or $0.84 per diluted share in the prior-year period. Net income for the six-month period ended June 30, 2008, was $26.5 million, or $0.86 per diluted share compared with $25.8 million, or $0.83 per diluted share in the prior-year period, reflective of a $0.01 charge for discontinued operations that occurred during the second quarter of 2007.

Net sales from continuing operations for the six-month period ended June 30, 2008, rose 22.8 % to $425.3 million, compared with $346.2 million for the 2007 period. Acquisitions and favorable foreign currency translation represented approximately $14.6 million and $9.6 million, respectively, of the sales growth. Operating profit improved by 6.9% over the 2007 period to $36.2 million. Current-year operating profit includes earnings from acquisitions and favorable foreign currency translation of $1.4 million and $1.3 million, respectively.

This release should be read in conjunction with the attached unaudited condensed consolidated financial statements. Further discussion of items and events impacting earnings are included later in this press release.

"We had strong revenue growth across all of our reporting segments this quarter," says Larry Washow, AMCOL President and Chief Executive Officer. "Operating profit grew as well, particularly in Oilfield Services and Environmental. However, it was another quarter where we saw significant energy price increases impacting our margins."

"In spite of the ongoing cost issues, the Minerals segment did deliver gross and operating margin improvement compared to the first quarter of 2008." Washow continued, "We are not at all satisfied with the results, but even with the difficult operating environment we are seeing a positive trend that we expect will continue."

"Also compared to last quarter, the Environmental segment experienced strong growth due to the seasonal nature of its business," Washow stated.

"Oilfield Services benefited from the strong market conditions as well as a mid-quarter acquisition, which is already a positive contributor. Second quarter results show overall sales growth of 63.5%, generating a 77.7% operating profit improvement," Washow added.

"Costs are an ongoing issue as we saw overhead spending increase primarily due to benefits and IT costs, plus additional expenses related to acquisitions. We have also increased our R&D spending," Washow concluded.

STATEMENT OF OPERATIONS HIGHLIGHTS:

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

Minerals: Freight pass-through revenue accounted for approximately one-fourth of the base business growth, principally from the pet products and metal castings divisions. Base business sales were driven by demand in the Asia-Pacific metal casting market and certain specialty materials product lines, notably from customers in South Africa and China, in addition to price increases in U.S. metal castings and basic materials divisions.

Sales from acquisitions were contributed by our operations in Turkey and Mexico.

Environmental: Base business growth in building materials division shipments and installation services in Western Europe and Poland as well as higher shipments in lining technology product lines in the U.S. market contributed to the increase in the quarter.

Oilfield Services: Demand for domestic water treatment services in the Gulf of Mexico was the largest contributor to base business growth. Emerging markets in West Africa and Malaysia represented approximately 28.6% of the revenue growth. The Premium Reeled Tubing ("PRT") acquisition added $3.5 million of revenue in the quarter.

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

Gross profit: Sales growth provided the increase in gross profit; however, gross margin was 26.8%, a 50 basis point decline from the 2007 quarter.

Minerals: The gross margin decline is primarily attributed to rising energy costs and increases in production and mining costs, principally in the U.S., where pricing initiatives reduced the impact of these cost increases on gross margin.

Environmental: Gross margin was comparable to the prior-year quarter.

Oilfield Services: Gross margin improved 110 basis points over the prior quarter due to improved pricing, product mix, emerging markets growth and the acquisition of PRT.

Transportation: Gross margin declined 120 basis points principally due to unrecovered fuel surcharges.

General, selling and administrative expenses (GS&A): GSA expenses increased $8.6 million, a 27.9% increase over the 2007 second quarter. Expenses in each segment increased, with Oilfield Services experiencing the largest increase due to overall growth of the business, entering emerging markets and the acquisition of PRT.

Minerals: Base business GS&A grew due to increased research and development expenditures for the specialty materials division and personnel costs in the Asia-Pacific region.

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

Corporate: GS&A increased $2.1 million due to increasing benefits costs and IT expenses resulting from infrastructure investments.

Operating profit: The increase over the prior-year quarter was primarily caused by the combined effect of the gross profit improvement somewhat offset by increases in GS&A costs, especially in our Corporate segment, which drove the 50 basis points decrease in operating margin.

Interest expense: Net interest expense increased by approximately $0.7 million over the prior-year quarter due to higher average debt levels.

Other, net: The increases represents a currency hedge gain on a position in the Australian dollar for our pending South Africa chrome mine investment, offset by other foreign currency fluctuations and minority interest.

Income taxes: The effective tax rate for the second quarter of 2008 was 26.8% compared with 24.7% for the same period in 2007. This is due to increased operating profit in the U.S., which has higher tax rates than international operations.

Income from joint ventures: Income from our India based investments remained relatively consistent versus prior periods.

Share count: Weighted average common and common equivalent shares outstanding were 31.0 million and 30.9 million for the quarters ended June 30, 2008 and 2007, respectively.

FINANCIAL POSITION AND CASH FLOW HIGHLIGHTS:

Long-term debt increased to $249.5 million at June 30, 2008 compared to $164.2 million at December 31, 2007. The increase was primarily due to funding acquisitions, increased working capital levels and capital expenditures. Total long-term debt represented 40.6% of capitalization at June 30, 2008, compared with 31.8% at December 31, 2007. Cash and cash equivalents were $22.0 million at June 30, 2008 compared with $25.3 million at December 31, 2007.

Working capital increased to $250.3 million at June 30, 2008 from $202.5 million at December 31, 2007. The current ratio was 3.1-to-1 and 3.0-to-1 at June 30, 2008, and December 31, 2007, respectively.

Cash flow used in operating activities was $2.0 million year-to-date as of June 30, 2008 compared to $25.6 million cash being generated in the prior-year period. The increase in working capital caused the decline in operating cash flows compared with the prior-year period, principally due to a greater increase in accounts receivable of $24.7 million.

Excluding the corporate building, acquisitions were the primary investing activity in the 2008 period amounting to $42.3 million, largely due to the PRT acquisition compared with $38.4 million in the prior-year period. Capital expenditures in the 2008 period amounted to $23.3 million compared with $21.0 million in the prior-year period.

Approximately $2.0 million has been expended on share repurchases thru June 30, 2008, with $6.6 million remaining under authorization. Eighty thousand shares were repurchased at an average price of $25.45 per share. Dividends declared year-to-date through June 30, 2008, increased by 15.2% over the prior-year period to $9.7 million.

This release contains certain forward-looking statements regarding AMCOL's expected performance for future periods and actual results for such periods might materially differ. Such forward-looking statements are subject to uncertainties, which include, but are not limited to, actual growth in AMCOL's various markets, utilization of AMCOL's plants, currency exchange rates, currency devaluation, delays in development, production and marketing of new products, integration of acquired businesses, and other factors detailed from time to time in AMCOL's annual report and other reports filed with the Securities and Exchange Commission. AMCOL undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in AMCOL's expectations.

AMCOL International, headquartered in Arlington Heights, IL, produces and markets a wide range of specialty mineral products used for industrial, environmental and consumer-related applications. AMCOL is the parent of American Colloid Co., CETCO (Colloid Environmental Technologies Company), CETCO Oilfield Services Company and the transportation operations, Ameri-co Carriers, Inc. and Ameri-co Logistics, Inc. AMCOL's common stock is traded on the New York Stock Exchange under the symbol ACO. AMCOL's web address is http://www.amcol.com. AMCOL's second quarter conference call will be available live today at 11 a.m. EDT on the AMCOL website.

Financial tables follow. AMCOL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share data) Six Months Ended Three Months Ended June 30, June 30, 2008 2007 2008 2007 Net sales $425,256 $346,182 $233,847 $182,454 Cost of sales 316,246 252,892 171,187 132,663 Gross profit 109,010 93,290 62,660 49,791 General, selling and administrative expenses 72,847 59,459 39,209 30,654 Operating profit 36,163 33,831 23,451 19,137 Other income (expense): Interest expense, net (5,238) (4,097) (2,837) (2,155) Other, net 288 (170) 523 (3) (4,950) (4,267) (2,314) (2,158) Income before income taxes and income from affiliates and joint ventures 31,213 29,564 21,137 16,979 Income tax expense 8,383 7,501 5,666 4,190 Income before income from affiliates and joint ventures 22,830 22,063 15,471 12,789 Income from affiliates and joint ventures 3,643 4,032 2,381 2,466 Income from continuing operations 26,473 26,095 17,852 15,255 (Loss) Income from discontinued operations - (286) - (286) Net income $26,473 $25,809 $17,852 $14,969 Weighted average common shares outstanding 30,336 30,154 30,413 30,155 Weighted average common and common equivalent shares outstanding 30,938 30,951 30,993 30,879 Basic earnings per share: Continuing operations $0.87 $0.87 $0.59 $0.51 Discontinued operations - (0.01) - (0.01) Basic earnings per share $0.87 $0.86 $0.59 $0.50 Diluted earnings per share: Continuing operations $0.86 $0.84 $0.58 $0.49 Discontinued operations - (0.01) - (0.01) Diluted earnings per share $0.86 $0.83 $0.58 $0.48 Dividends declared per share $0.32 $0.28 $0.16 $0.14 AMCOL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) ASSETS June 30, December 31, 2008 2007 (unaudited) * Current assets: Cash and equivalents $21,982 $25,282 Accounts receivable, net 212,999 166,835 Inventories 109,642 91,367 Prepaid expenses 13,279 13,529 Deferred income taxes 5,035 4,374 Income tax receivable - 2,768 Other 7,341 475 Total current assets 370,278 304,630 Investments in and advances to affiliates and joint ventures 62,524 49,309 Property, plant, equipment, mineral rights and reserves: Land and mineral rights 21,594 21,394 Depreciable assets 403,682 352,100 425,276 373,494 Less: accumulated depreciation and depletion 210,258 196,904 215,018 176,590 Other assets: Goodwill 75,153 59,840 Intangible assets, net 55,247 41,257 Deferred income taxes 5,075 5,513 Other assets 16,386 15,007 151,861 121,617 $799,681 $652,146 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $54,580 $44,274 Accrued liabilities 65,401 57,833 Total current liabilities 119,981 102,107 Long-term debt 249,541 164,232 Long-term debt - corporate building 11,081 - Total long-term debt 260,622 164,232 Minority interests in subsidiaries 3,208 327 Pension liabilities 9,302 7,559 Other liabilities 25,525 25,598 38,035 33,484 Stockholders' equity: Common stock 320 320 Additional paid in capital 84,791 81,599 Retained earnings 274,966 258,164 Accumulated other comprehensive income 39,820 33,248 399,897 373,331 Less: Treasury stock 18,854 21,008 381,043 352,323 $799,681 $652,146 * Condensed from audited financial statements. AMCOL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands) Six Months Ended June 30, 2008 2007 Cash flow from operating activities: Net income $26,473 $25,809 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, depletion, and amortization 15,747 13,805 Other non - cash charges (3,199) (4,893) Changes in assets and liabilities, net of effects of acquisitions: Decrease (Increase) in current assets (53,864) (22,625) Decrease (Increase) in noncurrent assets (650) (1,582) Increase (decrease) in current liabilities 12,065 7,289 Increase (decrease) in noncurrent liabilities 1,416 7,783 Net cash provided by (used in) operating activities (2,012) 25,586 Cash flow from investing activities: Capital expenditures (23,313) (21,000) Capital expenditures - corporate building (6,273) (906) Acquisitions, net of cash (42,257) (38,393) Investments in and advances to affiliates and joint ventures (9,715) (4,191) Investments in restricted cash (1,908) (816) Other (5,290) 2,425 Net cash used in investing activities (88,756) (62,881) Cash flow from financing activities: Net change in outstanding debt 84,820 55,564 Net change in outstanding debt - corporate building 11,081 - Proceeds from sales of treasury stock 1,272 1,283 Purchases of treasury stock (2,062) (6,115) Dividends (9,671) (8,393) Excess tax benefits from stock-based compensation 913 927 Net cash provided by financing activities 86,353 43,266 Effect of foreign currency rate changes on cash 1,115 1,396 Net increase (decrease) in cash and cash equivalents (3,300) 7,367 Cash and cash equivalents at beginning of period 25,282 17,805 Cash and cash equivalents at end of period $21,982 $25,172 AMCOL INTERNATIONAL CORPORATION SEGMENT RESULTS (unaudited) QUARTER-TO-DATE Three Months Ended June 30, 2008 2007 2008 vs 2007 Minerals (Dollars in Thousands) Net sales $107,003 100.0% $85,713 100.0% $21,290 24.8% Cost of sales 88,659 82.9% 69,381 80.9% 19,278 27.8% Gross profit 18,344 17.1% 16,332 19.1% 2,012 12.3% General, selling and administrative expenses 9,824 9.2% 8,018 9.4% 1,806 22.5% Operating profit 8,520 7.9% 8,314 9.7% 206 2.5% Three Months Ended June 30, 2008 2007 2008 vs 2007 Environmental (Dollars in Thousands) Net sales $78,041 100.0% $65,108 100.0% $12,933 19.9% Cost of sales 51,165 65.6% 42,521 65.3% 8,644 20.3% Gross profit 26,876 34.4% 22,587 34.7% 4,289 19.0% General, selling and administrative expenses 14,621 18.7% 12,652 19.4% 1,969 15.6% Operating profit 12,255 15.7% 9,935 15.3% 2,320 23.4% Three Months Ended June 30, 2008 2007 2008 vs 2007 Oilfield Services (Dollars in Thousands) Net sales $37,655 100.0% $23,030 100.0% $14,625 63.5% Cost of sales 21,904 58.2% 13,660 59.3% 8,244 60.4% Gross profit 15,751 41.8% 9,370 40.7% 6,381 68.1% General, selling and administrative expenses 7,003 18.6% 4,446 19.3% 2,557 57.5% Operating profit 8,748 23.2% 4,924 21.4% 3,824 77.7% Three Months Ended June 30, 2008 2007 2008 vs 2007 Transportation (Dollars in Thousands) Net sales $16,883 100.0% $13,380 100.0% $3,503 26.2% Cost of sales 15,194 90.0% 11,878 88.8% 3,316 27.9% Gross profit 1,689 10.0% 1,502 11.2% 187 12.5% General, selling and administrative expenses 856 5.1% 770 5.8% 86 11.2% Operating profit 833 4.9% 732 5.5% 101 13.8% Three Months Ended June 30, 2008 2007 2008 vs 2007 Corporate (Dollars in Thousands) Intersegment shipping sales $(5,735) $(4,777) Intersegment shipping costs (5,735) (4,777) Gross profit - - General, selling and administrative expenses 6,905 4,768 2,137 44.8% Operating loss 6,905 4,768 2,137 44.8% AMCOL INTERNATIONAL CORPORATION SEGMENT RESULTS (unaudited) YEAR-TO-DATE Six Months Ended June 30, 2008 2007 2008 vs 2007 Minerals (Dollars in Thousands) Net sales $206,347 100.0% $171,526 100.0% $34,821 20.3% Cost of sales 171,326 83.0% 138,395 80.7% 32,931 23.8% Gross profit 35,021 17.0% 33,131 19.3% 1,890 5.7% General, selling and administrative expenses 18,814 9.1% 15,560 9.1% 3,254 20.9% Operating profit 16,207 7.9% 17,571 10.2% (1,364) -7.8% Six Months Ended June 30, 2008 2007 2008 vs 2007 Environmental (Dollars in Thousands) Net sales $136,260 100.0% $113,806 100.0% $22,454 19.7% Cost of sales 89,963 66.0% 73,684 64.7% 16,279 22.1% Gross profit 46,297 34.0% 40,122 35.3% 6,175 15.4% General, selling and administrative expenses 28,071 20.6% 23,944 21.0% 4,127 17.2% Operating profit 18,226 13.4% 16,178 14.3% 2,048 12.7% Six Months Ended June 30, 2008 2007 2008 vs 2007 Oilfield Services (Dollars in Thousands) Net sales $61,798 100.0% $44,994 100.0% $16,804 37.3% Cost of sales 37,345 60.4% 27,737 61.6% 9,608 34.6% Gross profit 24,453 39.6% 17,257 38.4% 7,196 41.7% General, selling and administrative expenses 11,756 19.0% 9,167 20.4% 2,589 28.2% Operating profit 12,697 20.6% 8,090 18.0% 4,607 56.9% Six Months Ended June 30, 2008 2007 2008 vs 2007 Transportation (Dollars in Thousands) Net sales $31,233 100.0% $24,273 100.0% $6,960 28.7% Cost of sales 27,994 89.6% 21,493 88.5% 6,501 30.2% Gross profit 3,239 10.4% 2,780 11.5% 459 16.5% General, selling and administrative expenses 1,626 5.2% 1,508 6.2% 118 7.8% Operating profit 1,613 5.2% 1,272 5.3% 341 26.8% Six Months Ended June 30, 2008 2007 2008 vs 2007 Corporate (Dollars in Thousands) Intersegment shipping sales $(10,382) $(8,417) Intersegment shipping costs (10,382) (8,417) Gross profit - - General, selling and administrative expenses 12,580 9,280 3,300 35.6% Operating loss 12,580 9,280 3,300 35.6% AMCOL INTERNATIONAL CORPORATION SUPPLEMENTARY INFORMATION (unaudited) QUARTER-TO-DATE Composition of Sales by Geographic Region Three Months Ended June 30, 2008 Americas EMEA Asia Pacific Total Minerals 32.2% 7.0% 6.6% 45.8% Environmental 17.1% 13.9% 2.4% 33.4% Oilfield services 13.1% 2.4% 0.6% 16.1% Transportation 4.8% 0.0% 0.0% 4.8% Total - current year's period 67.1% 23.3% 9.6% 100.0% Total from prior year's comparable period 70.3% 22.1% 7.6% 100.0% Three Months Ended June 30, 2008 Percentage of Revenue vs. Growth by Component Three Months Ended June 30, 2007 Base Foreign Business Acquisitions Exchange Total Minerals 9.1% 1.8% 0.8% 11.7% Environmental 3.9% 1.0% 2.2% 7.1% Oilfield services 6.1% 1.9% 0.0% 8.0% Transportation 1.4% 0.0% 0.0% 1.4% Total 20.5% 4.7% 3.0% 28.2% % of growth 72.7% 16.9% 10.4% 100.0% Minerals Product Three Months Ended June 30, Line Sales 2008 2007 % change (Dollars in Thousands) Metalcasting $44,709 $37,283 19.9% Specialty materials 27,328 20,031 36.4% Pet products 19,179 15,593 23.0% Basic minerals 13,317 11,636 14.4% Other product lines 2,470 1,170 * Total 107,003 85,713 * Not meaningful. Environmental Product Line Sales Three Months Ended June 30, 2008 2007 % change (Dollars in Thousands) Lining technologies $48,452 $39,753 21.9% Building materials 22,858 19,862 15.1% Other product lines 6,731 5,493 * Total 78,041 65,108 * Not meaningful. AMCOL INTERNATIONAL CORPORATION SUPPLEMENTARY INFORMATION (unaudited) YEAR-TO-DATE Composition of Sales by Geographic Region Six Months Ended June 30, 2008 Americas EMEA Asia Pacific Total Minerals 34.5% 7.1% 7.0% 48.5% Environmental 16.2% 13.8% 2.1% 32.0% Oilfield services 12.0% 2.0% 0.5% 14.5% Transportation 4.9% 0.0% 0.0% 4.9% Total - current year's period 67.5% 22.9% 9.5% 100.0% Total from prior year's comparable period 69.4% 22.6% 8.0% 100.0% Six Months Ended June 30, 2008 Percentage of Revenue vs. Growth by Component Six Months Ended June 30, 2007 Base Foreign Business Acquisitions Exchange Total Minerals 7.0% 2.3% 0.8% 10.1% Environmental 3.6% 0.9% 2.0% 6.5% Oilfield services 3.8% 1.0% 0.0% 4.9% Transportation 1.4% 0.0% 0.0% 1.4% Total 15.8% 4.2% 2.8% 22.9% % of growth 69.4% 18.4% 12.2% 100.0% Minerals Product Six Months Ended June 30, Line Sales 2008 2007 % change (Dollars in Thousands) Metalcasting $85,387 $73,869 15.6% Specialty materials 52,991 40,099 32.2% Pet products 38,702 32,081 20.6% Basic minerals 25,358 22,563 12.4% Other product lines 3,909 2,914 * Total 206,347 171,526 * Not meaningful. Environmental Product Line Sales Six Months Ended June 30, 2008 2007 % change (Dollars in Thousands) Lining technologies $80,947 $63,745 27.0% Building materials 42,853 39,445 8.6% Other product lines 12,460 10,616 * Total 136,260 113,806 * Not meaningful.

SOURCE AMCOL International Corporation

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