For Release at 3:00 PM CT on 8/4/16
TOR Minerals International, Inc. Reports Second Quarter Financial Results
CORPUS CHRISTI, Texas, August 4, 2016 – TOR Minerals International, Inc. (Nasdaq: TORM), producer of high performance specialty minerals, today announced its financial results for the second quarter ended June 30, 2016. Highlights for the second quarter of 2016 as compared to the second quarter of 2015 include:
- 2Q16 revenue decreased 1% to $9.9 million
- 2Q16 net income of $87,000, versus 2Q15 net loss of ($107,000)
- 2Q16 diluted net income per share of $0.03, versus 2Q15 net loss per share of ($0.04)
|Revenue by Product Group (in 000’s)||2Q16||2Q15||% Change|
|Specialty Aluminas||$ 5,073||18%|
|Barium Sulfate and Other Products||2,194||2,394||-8%|
|Total||$ 9,850||$ 9,963||-1%|
Net sales decreased one percent during the second quarter of 2016, as an 18 percent increase in specialty alumina sales was offset by a 21 percent decrease in TiO2 pigment sales and an eight percent decrease in barium sulfate and other product sales. The increase in specialty alumina sales, which includes ALUPREM®, HALTEX® and OPTILOAD®, was due to double-digit volume growth in ALUPREM sales in both Europe as well as the United States, which was partially offset by lower average selling price and to a lesser extent by foreign currency exchange rates. Continued growth of OPTILOAD/HALTEX sales also contributed to the year-over-year increase in specialty alumina sales. Barium sulfate and other product sales decreased eight percent year-over-year with decreased volume in both Europe and the United States. The decrease in TiO2 pigment sales was due to lower volume and lower average selling price related to the continued pricing pressure from Chinese producers.
During the second quarter of 2016, gross margin increased to 11.9 percent of sales, versus 9.6 percent during the same period a year ago. Gross margin improvement was related to improved efficiencies and lower raw materials costs, which were partially offset by lower selling prices. In addition, the improvement in gross margin was related to the elimination of idle plant costs at the Company’s SR plant in Malaysia. The company ceased SR production in late 2015, as management determined that it was more cost effective to continue purchasing feedstock material for its TiO2-based products from alternate sources than to resume production at its Malaysian facility.
Operating expenses during the second quarter of 2016 were $1.1 million, flat in comparison with the same period last year. Second quarter net income was $87,000, or $0.03 per diluted share, as compared to a net loss of ($107,000), or ($0.04) per share, during the same period a year ago.
“Strategic initiatives to divest our SR raw material productions assets and continued investments in our specialty alumina and barium sulfate businesses resulted in a return to profitability during the first half, as well as substantial improvements in our balance sheet. We improved our inventory turns from 2.2x to 3.0x, reducing our investment in inventory by more than 30% year-over-year. Our cash balance grew by $2.5 million and we reduced debt levels by $1.3 million during the first half of the year,” said Dr. Olaf Karasch, Chief Executive Officer. “We have lowered the cost structure and the required investment in our TiO2 business to a point where it is now contributing to profit and returns at current production levels. We also expect that several new large-volume specialty alumina applications will be moving into production during the next year, and put the alumina business back on a double-digit growth trajectory for 2016 and for several years to follow. This Spring we finished the expansion of our alumina production facility in the Netherlands, which expanded capacity by approximately 50% and should allow us to meet the expected increase in demand.”
TOR Minerals will host a conference call at 4:00 p.m. Central Time on August 4, 2016, to further discuss second 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 # 13641716.
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, including the present slowdown in U.S. construction 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.
Investor Relations Contact
Three Part Advisors, LLC
TOR Minerals International, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) Three Months Six Months Ended June 30, Ended June 30, 2016 2015 2016 2015 NET SALES $ 9,850 $ 9,963 $ 19,422 $ 20,078 Cost of sales 8,680 9,010 16,927 18,231 GROSS MARGIN 1,170 953 2,495 1,847 Technical services, research and development 52 44 90 99 Selling, general and administrative expenses 1,062 1,039 1,904 2,091 Gain on disposal of assets - - (1) - OPERATING INCOME (LOSS) 56 (130) 502 (343) OTHER EXPENSE: Interest expense, net (47) (60) (97) (140) Gain (loss) on foreign currency exchange rate 10 1 (79) 23 Other, net 16 9 28 9 Total Other Expense (21) (50) (148) (108) INCOME (LOSS) BEFORE INCOME TAX 35 (180) 354 (451) Income tax expense (benefit) (52) (73) 23 (154) NET INCOME (LOSS) $ 87 $ (107) $ 331 $ (297) Earnings (loss) per common share: Basic $ 0.03 $ (0.04) $ 0.10 $ (0.10) Diluted $ 0.03 $ (0.04) $ 0.10 $ (0.10) Weighted average common shares outstanding: Basic 3,402 3,014 3,208 3,014 Diluted 3,459 3,014 3,323 3,014
TOR Minerals International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except per share amounts) June 30, December 31, 2016 2015 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 3,381 $ 813 Trade accounts receivable, net 4,863 3,534 Inventories, net 11,204 13,988 Other current assets 921 878 Total current assets 20,369 19,213 PROPERTY, PLANT AND EQUIPMENT, net 17,288 17,472 DEFERRED TAX ASSET, foreign 44 19 OTHER ASSETS 4 4 Total Assets $ 37,705 $ 36,708 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,953 $ 2,432 Accrued expenses 1,241 1,007 Notes payable under lines of credit - 179 Export credit refinancing facility 627 1,108 Current maturities of long-term debt – financial institutions 1,367 1,485 Total current liabilities 5,188 6,211 LONG-TERM DEBT - FINANCIAL INSTITUTIONS 3,212 3,479 DEFERRED TAX LIABILITY, domestic 169 262 DEFERRED TAX LIABILITY, foreign - - Total liabilities 8,569 9,952 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock $1.25 par value: authorized, 6,000 shares; 3,542 shares issued and outstanding at June 30, 2016 and 3,014 at December 31, 2015 4,428 3,767 Additional paid-in capital 30,458 29,636 Accumulated deficit (4,934) (5,265) Accumulated other comprehensive loss (816) (1,382) Total shareholders' equity 29,136 26,756 Total Liabilities and Shareholders' Equity $ 37,705 $ 36,708
TOR Minerals International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Six Months Ended June 30, 2016 2015 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $ 331 $ (297) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 1,269 1,413 Gain on disposal of assets (1) - Stock-based compensation 85 75 Deferred income tax benefit (121) (157) Inventory reserve 85 - Provision for bad debts (273) - Changes in working capital: Trade accounts receivables (976) (117) Inventories 3,210 2,971 Other current assets (23) (540) Accounts payable and accrued expenses (325) (1,093) Net cash provided by operating activities 3,261 2,255 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (790) (3,104) Net cash used in investing activities (790) (3,104) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from lines of credit 3 2,472 Payments on lines of credit (197) (1,152) Proceeds from export credit refinancing facility 935 3,231 Payments on export credit refinancing facility (1,508) (4,772) Payments on long-term bank debt (537) (531) Proceeds from the issuance of common stock and exercise of warrants 1,398 - Net cash provided by (used in) financing activities 94 (752) Effect of foreign currency exchange rate fluctuations on cash and cash equivalents 3 (165) Net increase (decrease) in cash and cash equivalents 2,568 (1,766) Cash and cash equivalents at beginning of period 813 2,657 Cash and cash equivalents at end of period $ 3,381 $ 891 Supplemental cash flow disclosures: Interest paid $ 77 $ 140 Income taxes paid $ 45 $ 560