United States Lime & Minerals Inc. (USLM, Financial) filed Quarterly Report for the period ended 2009-09-30.
UNITED STATES LIME & MINERALS is engaged in the production and sale of limestone and lime products. It extracts high-quality limestone from its quarries and then processes the lmestone for sale as aggregate pulverized limestone quicklime and hydrated lime. United States Lime & Minerals Inc. has a market cap of $225.3 million; its shares were traded at around $35.25 with a P/E ratio of 19.3 and P/S ratio of 1.6. United States Lime & Minerals Inc. had an annual average earning growth of 8.1% over the past 5 years.
The Company has a hedge that fixes LIBOR at 4.695% on the outstanding balance of the Term Loan for the period December 30, 2005 through its maturity date, resulting in an interest rate of 5.82% based on the current LIBOR margin of 1.125%. Effective December 30, 2005, the Company also entered into a hedge that fixes LIBOR at 4.875% on 75% of the outstanding balance on the Draw Term Loan through its maturity date, resulting in an interest rate of 6.00% based on the current LIBOR margin of 1.125%. Effective June 30, 2006, the Company entered into a third hedge that fixes LIBOR at 5.50% on the remaining 25% of the outstanding balance of the Draw Term Loan through its maturity date, resulting in an interest rate of 6.625% based on the current LIBOR margin of 1.125%. The hedges have been effective as defined under applicable accounting rules. Therefore, changes in fair value of the interest rate hedges are reflected in comprehensive income (loss). The Company will be exposed to credit losses in the event of non-performance by the counterparty, Wells Fargo Bank, N.A., to the hedges. Due to interest rate declines, the Company marked its interest rate hedges to market at September 30, 2009 and December 31, 2008, resulting in liabilities of $3.9 million and $5.4 million, respectively, that are included in accrued expenses ($1.8 million and $1.6 million, respectively) and other liabilities ($2.1 million and $3.8 million, respectively) on the Companys balance sheets. Pursuant to the interest rate hedges, the Company made payments of $476 thousand and $356 thousand in the third quarter 2009 and 2008, respectively, and $1.3 million and $748 thousand in the first nine months 2009 and 2008, respectively.
Revenues decreased to $31.6 million in the third quarter 2009 from $38.9 million in the third quarter 2008, a decrease of $7.3 million, or 18.8%. Revenues from the Companys Lime and Limestone Operations decreased $3.7 million, or 11.1%, to $29.9 million in the third quarter 2009, compared to the Companys third quarter 2008 level of $33.6 million, while revenues from its Natural Gas Interests decreased $3.6 million, or 67.3%, to $1.7 million in the third quarter 2009 from $5.3 million in the comparable 2008 quarter. For the nine months ended September 30, 2009, revenues decreased to $89.1 million from $113.3 million for the comparable 2008 period, a decrease of $24.3 million, or 21.4%. Revenues from the Companys Lime and Limestone Operations decreased $16.6 million, or 16.5%, to $84.0 million in the first nine months 2009, compared to $100.6 million in the comparable 2008 period, while revenues from its Natural Gas Interests decreased $7.7 million, or 60.5%, to $5.0 million in the first nine months 2009 from $12.7 million in the comparable 2008 period. The decreases in lime and limestone revenues primarily resulted from decreased lime sales volumes, partially offset by average price increases for the Companys lime and limestone products of approximately 11.0% and 9.4% in the third quarter and first nine months 2009, respectively, compared to the comparable 2008 periods.
The Companys gross profit was $8.6 million for the third quarter 2009, compared to $8.9 million for the comparable 2008 quarter, a decrease of $304 thousand, or 3.4%. Gross profit for the first nine months 2009 was $21.7 million, a decrease of $5.2 million, or 19.3%, from $26.9 million for the first nine months 2008. Included in gross profit for the third quarter and first nine months 2009 were $7.5 million and $18.6 million, respectively, from the Companys Lime and Limestone Operations, compared to $4.6 million and $16.3 million, respectively, in the comparable 2008 periods. The improved gross profit and gross profit margins for the Companys Lime and Limestone Operations in the 2009 periods compared to the comparable 2008 periods were due to price increases for the Companys lime and limestone products and reduced costs, partially offset by continuing reduced construction and steel and other industrial demand for the Companys lime products. The improvements in the Companys Lime and Limestone operations resulted in increased overall gross profit margins for the 2009 periods compared to the prior year periods.
Gross profit from the Companys Natural Gas Interests declined to $1.2 million and $3.1 million for the third quarter and first nine months 2009, respectively, from $4.3 million and $10.5 million, respectively, in the comparable 2008 periods, primarily due to the drastic decline in natural gas prices and lower production volumes. Production volumes from the Companys Natural Gas Interests for the third quarter 2009 totaled 302 thousand MCF, sold at an average price of $5.84 per MCF, compared to 448 thousand MCF, sold at an average price of $11.90 per MCF, in the comparable 2008 quarter. Production volumes for the first nine months 2009 from Natural Gas Interests totaled 1.0 BCF sold at an average price of $4.99 per MCF, compared to the first nine months 2008 when 1.1 BCF was produced and sold at an average price of $11.93 per MCF.
Interest expense in the third quarter 2009 decreased $127 thousand, or 15.2%, to $707 thousand, compared to $834 thousand in the third quarter 2008. Interest expense in the first nine months 2009 decreased to $2.2 million from $2.7 million in the first nine months 2008, a decrease of $536 thousand, or 19.7%. The decrease in interest expense in the 2009 periods primarily resulted from a decrease in average outstanding debt due to the repayment of $8.8 million of debt since September 30, 2008.
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UNITED STATES LIME & MINERALS is engaged in the production and sale of limestone and lime products. It extracts high-quality limestone from its quarries and then processes the lmestone for sale as aggregate pulverized limestone quicklime and hydrated lime. United States Lime & Minerals Inc. has a market cap of $225.3 million; its shares were traded at around $35.25 with a P/E ratio of 19.3 and P/S ratio of 1.6. United States Lime & Minerals Inc. had an annual average earning growth of 8.1% over the past 5 years.
Highlight of Business Operations:
Net cash provided by operating activities was $24.1 million in the nine months ended September 30, 2009, compared to $19.7 million in the comparable 2008 period, an increase of $4.5 million, or 22.7%. Net cash provided by operating activities is composed of net income, depreciation, depletion and amortization (DD&A), deferred income taxes and other non-cash items included in net income, and changes in working capital. In the first nine months 2009, cash provided by operating activities was principally composed of $10.6 million net income, $10.3 million DD&A and $1.6 million deferred income taxes, compared to $13.4 million net income, $10.0 million DD&A and $2.0 million deferred income taxes in the first nine months 2008. The most significant change in working capital items during the 2009 period was a net decrease in inventories of $2.2 million, primarily resulting from the Companys reduced lime production and sales volumes. The most significant changes in working capital in the first nine months 2008 were net increases in trade receivables and inventories of $5.7 million and $1.9 million, respectively. The net increase in trade receivables in 2008 primarily resulted from an increase in revenues in the third quarter 2008, compared to the fourth quarter 2007.The Company has a hedge that fixes LIBOR at 4.695% on the outstanding balance of the Term Loan for the period December 30, 2005 through its maturity date, resulting in an interest rate of 5.82% based on the current LIBOR margin of 1.125%. Effective December 30, 2005, the Company also entered into a hedge that fixes LIBOR at 4.875% on 75% of the outstanding balance on the Draw Term Loan through its maturity date, resulting in an interest rate of 6.00% based on the current LIBOR margin of 1.125%. Effective June 30, 2006, the Company entered into a third hedge that fixes LIBOR at 5.50% on the remaining 25% of the outstanding balance of the Draw Term Loan through its maturity date, resulting in an interest rate of 6.625% based on the current LIBOR margin of 1.125%. The hedges have been effective as defined under applicable accounting rules. Therefore, changes in fair value of the interest rate hedges are reflected in comprehensive income (loss). The Company will be exposed to credit losses in the event of non-performance by the counterparty, Wells Fargo Bank, N.A., to the hedges. Due to interest rate declines, the Company marked its interest rate hedges to market at September 30, 2009 and December 31, 2008, resulting in liabilities of $3.9 million and $5.4 million, respectively, that are included in accrued expenses ($1.8 million and $1.6 million, respectively) and other liabilities ($2.1 million and $3.8 million, respectively) on the Companys balance sheets. Pursuant to the interest rate hedges, the Company made payments of $476 thousand and $356 thousand in the third quarter 2009 and 2008, respectively, and $1.3 million and $748 thousand in the first nine months 2009 and 2008, respectively.
Revenues decreased to $31.6 million in the third quarter 2009 from $38.9 million in the third quarter 2008, a decrease of $7.3 million, or 18.8%. Revenues from the Companys Lime and Limestone Operations decreased $3.7 million, or 11.1%, to $29.9 million in the third quarter 2009, compared to the Companys third quarter 2008 level of $33.6 million, while revenues from its Natural Gas Interests decreased $3.6 million, or 67.3%, to $1.7 million in the third quarter 2009 from $5.3 million in the comparable 2008 quarter. For the nine months ended September 30, 2009, revenues decreased to $89.1 million from $113.3 million for the comparable 2008 period, a decrease of $24.3 million, or 21.4%. Revenues from the Companys Lime and Limestone Operations decreased $16.6 million, or 16.5%, to $84.0 million in the first nine months 2009, compared to $100.6 million in the comparable 2008 period, while revenues from its Natural Gas Interests decreased $7.7 million, or 60.5%, to $5.0 million in the first nine months 2009 from $12.7 million in the comparable 2008 period. The decreases in lime and limestone revenues primarily resulted from decreased lime sales volumes, partially offset by average price increases for the Companys lime and limestone products of approximately 11.0% and 9.4% in the third quarter and first nine months 2009, respectively, compared to the comparable 2008 periods.
The Companys gross profit was $8.6 million for the third quarter 2009, compared to $8.9 million for the comparable 2008 quarter, a decrease of $304 thousand, or 3.4%. Gross profit for the first nine months 2009 was $21.7 million, a decrease of $5.2 million, or 19.3%, from $26.9 million for the first nine months 2008. Included in gross profit for the third quarter and first nine months 2009 were $7.5 million and $18.6 million, respectively, from the Companys Lime and Limestone Operations, compared to $4.6 million and $16.3 million, respectively, in the comparable 2008 periods. The improved gross profit and gross profit margins for the Companys Lime and Limestone Operations in the 2009 periods compared to the comparable 2008 periods were due to price increases for the Companys lime and limestone products and reduced costs, partially offset by continuing reduced construction and steel and other industrial demand for the Companys lime products. The improvements in the Companys Lime and Limestone operations resulted in increased overall gross profit margins for the 2009 periods compared to the prior year periods.
Gross profit from the Companys Natural Gas Interests declined to $1.2 million and $3.1 million for the third quarter and first nine months 2009, respectively, from $4.3 million and $10.5 million, respectively, in the comparable 2008 periods, primarily due to the drastic decline in natural gas prices and lower production volumes. Production volumes from the Companys Natural Gas Interests for the third quarter 2009 totaled 302 thousand MCF, sold at an average price of $5.84 per MCF, compared to 448 thousand MCF, sold at an average price of $11.90 per MCF, in the comparable 2008 quarter. Production volumes for the first nine months 2009 from Natural Gas Interests totaled 1.0 BCF sold at an average price of $4.99 per MCF, compared to the first nine months 2008 when 1.1 BCF was produced and sold at an average price of $11.93 per MCF.
Interest expense in the third quarter 2009 decreased $127 thousand, or 15.2%, to $707 thousand, compared to $834 thousand in the third quarter 2008. Interest expense in the first nine months 2009 decreased to $2.2 million from $2.7 million in the first nine months 2008, a decrease of $536 thousand, or 19.7%. The decrease in interest expense in the 2009 periods primarily resulted from a decrease in average outstanding debt due to the repayment of $8.8 million of debt since September 30, 2008.
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