Minerals Technologies Inc. Reports Operating Results (10-Q)
Minerals Technologies Inc. has a market cap of $1.11 billion; its shares were traded at around $58.95 with a P/E ratio of 36.4 and P/S ratio of 1.2. The dividend yield of Minerals Technologies Inc. stocks is 0.3%.MTX is in the portfolios of Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations: Consolidated sales for the first quarter of 2010 increased 22% from the prior year to $253.5 million from $208.3 million. Foreign exchange had a favorable impact on sales of approximately $9.2 million or 4 percentage points of growth. Income from operations grew 216% to $23.1 million in the first quarter of 2010 from $7.3 million in the first quarter of 2009. Included in income from operations for the first quarter of 2010 and 2009 were restructuring costs of $0.9 million and $0.5 million, respectively. Net income increased to $15.4 million as compared to $4.2 million in the prior year.
Worldwide net sales of PCC, which is primarily used in the manufacturing process of the paper industry, grew 18% in the first quarter to $145.1 million from $123.1 million in the prior year. Foreign exchange had a favorable impact on sales of approximately $5.8 million, or, 5 percentage points of growth. Unit volumes increased in both product lines. Paper PCC sales increased 16% to $130.7 million in the first quarter of 2010 from $112.5 million in the prior year. Paper PCC volumes increased 13% with volume growth in all regions. Sales of Specialty PCC increased 36% to $14.4 million from $10.6 million in the prior year. Volumes increased 35% in this product line over the prior year.
Net sales in the Refractories segment in the first quarter of 2010 grew 26% to $81.4 million from $64.7 million in the prior year. Foreign exchange had a favorable impact on sales of $3.4 million, or 5 percentage points of growth. Sales of refractory products and systems to steel and other industrial applications grew 17% to $62.6 million from $53.5 million in the prior year as volumes grew 24% but was partially offset by a reduction in equipment sales. Sales of metallurgical products within the Refractories segment increased 68 percent to $18.8 million as compared with $11.2 million in the same period last year on volume growth of 64%. The increased sales in all product lines in this segment are driven by significantly higher volumes globally.
Cost of goods sold was 79.7% of sales compared with 84.0% of sales in the prior year. Production margin increased 55% as compared with a 22% increase on sales. All product lines experienced increased volumes under improved economic conditions and had favorable leveraging due to increased productivity levels and the benefits derived from our restructuring programs. In the Specialty Minerals segment, production margin increased 49% as compared with a 20% increase in sales. This segment had increased volumes of $11.0 million as compared to prior year in both the Processed Minerals and PCC product lines, improved profitability due the contractual recovery of raw material cost increases in its Paper PCC product line of $1.0 million, benefits derived from our announced restructuring programs of $1.1 million and favorable impacts of foreign exchange of $1.0 million. This was partially offset by price concessions of approximately $3.0 million. In the Refractories segment, production margin increased 66% as compared with a 26% increase in sales. This segment s improved profitability was primarily the result of volume increases of $6.8 million and restructuring savings of $1.7 million. This was partially offset by lower equipment sales of approximately $1.0 million.
Restructuring and other costs during the first quarter of 2010 were $0.9 million and primarily related to railcar lease early termination costs of $0.8 million associated with the announced plant closures of our Franklin, Va. and Plymouth, NC. satellite facilities and additional provisions for severance and other employee benefits associated with our 2009 restructuring program of $0.1 million. Restructuring costs were $0.5 million in the first quarter of the prior year and related to additional provisions for severance and other employee benefits associated with our 2008 and 2007 restructuring programs of $0.4 million and $0.1 million, respectively.
The Company expects annualized savings of $16 million to $20 million relating to its 2009 restructuring program of which approximately $10.0 million relates to lower compensation and related expenses and $5.0 million relates to annualized pretax depreciation savings. The Company realized $2.8 million ($11.2 million annualized) in compensation and related expense savings and $1.2 million ($5.0 million annualized) in depreciation savings in the first quarter of 2010.
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