Minerals Technologies Reports net sales decline 3% in Q2 2017

2017-08-04

Highlights:

Strong Operating Margins of 16.5 percent

Continued Strong China Sales Growth – 17 percent in the Second Quarter

Productivity Improvement of 4 percent

Continued Debt Reduction in the Second Quarter

Aug. 03, 2017 - Minerals Technologies Inc. reported second quarter diluted earnings per share of $1.23, excluding special items. Reported earnings were $1.21 per share. 

“The company posted a strong second quarter with continued growth in China driven by our Metalcasting and PCC product lines, as well as improved performance in several other product lines globally,” said Douglas T. Dietrich, Chief Executive Officer. “We also generated strong operating margins across all our businesses.”

            
Worldwide net sales in the second quarter were $414 million compared with $427 million in 2016 with foreign exchange having an unfavorable impact on sales of $3 million. Operating income, as reported, was $68.5 million and represented 16.5 percent of sales, as compared with $39.5 million, or 9.3 percent of sales in the prior year. In 2016, we incurred restructuring charges relating to the exit of certain service lines in the Energy Services segment. Operating income, excluding special items, was $69.5 million and decreased 1 percent from 2016. However, operating margins, excluding special items, improved 2 percent.

Sales in the Minerals businesses, which include the Specialty Minerals and Performance Materials segments, were $327 million compared with $333 million in the prior year. Operating income for the Minerals businesses was $59.1 million and operating margins represented 18.1 percent of sales.  

Sales in the Performance Materials segment decreased 1 percent to $180.3 million compared with $182.5 million in the prior year. Sales in the Metalcasting product line increased 11 percent to $75.7 million principally due to higher volumes in China and North America. Basic Minerals and Building Materials sales both increased 3 percent. These sales increases were offset by lower Fabric Care sales in Asia which affected the Household, Personal Care & Specialty Products product line and by lower Environmental Products sales due to several large projects in 2016 in the U.S. and Brazil that did not reoccur in 2017. Operating income decreased 3 percent to $32.2 million and represented 17.9 percent of sales. The Performance Materials segment provides a wide range of bentonite-based and synthetic materials for industrial and consumer markets and for non-residential construction, environmental remediation and infrastructure projects worldwide.

Second quarter worldwide sales for the Specialty Minerals segment, which consists of the Precipitated Calcium Carbonate (PCC) and Processed Minerals product lines, were $147.0 million compared with $150.6 million in the prior year. Income from operations for the segment was $26.9 million, and operating margins were the same as last year at 18.3 percent of sales.

Worldwide sales of PCC, which is used mainly in the manufacturing processes of the paper industry, were $109.7 million compared with $114.1 million in the prior year. The decrease in sales was due to several paper mill machine shutdowns in North America that occurred in 2016 and was partially offset by 6 percent higher sales in China.  

Second quarter net sales of Processed Minerals products increased 2 percent to $37.3 million as Ground Calcium Carbonate sales increased 3 percent and Talc sales increased 1 percent over the prior year due to higher volumes in the construction and automotive markets. Processed Minerals products are used in the building materials, polymers, ceramics, paints and coatings, glass and other manufacturing industries.

The Service-related businesses, which include the Refractories and Energy Services segments, improved their performance despite continued weakness in the energy sector. Sales of $86.8 million in the second quarter were 8 percent lower than the same period last year. However, operating income for the Service-related businesses, excluding special items, increased 20 percent to $11.5 million in the current year from $9.6 million last year. Operating margins were 13.2 percent of sales compared with 10.2 percent of sales last year.

Second quarter sales in the Refractories segment, which provides products and services primarily to the worldwide steel industry, were $68.9 million and decreased 7 percent from last year. Higher margin equipment sales were offset by lower Metallurgical Product sales and reduced Refractory consumption due to improved steel furnace vessel lining conditions. The Refractories segment operating income increased 2 percent to $10.5 million, and was 15.2 percent of sales compared with 13.9 percent of sales in the prior year.

Energy Services segment sales were $17.9 million in the second quarter, an 11 percent decrease from the prior year, primarily due to continued weak market conditions in the oil and gas sector and the exit of certain on-shore service lines in the second quarter of 2016. Operating income, excluding special items, was $1.0 million and represented 5.6 percent of sales. Energy Services offers a range of patented technologies, products and services for off-shore filtration and well testing to the worldwide oil and gas industry.

“We had both a solid second quarter and first half of 2017,” said Mr. Dietrich. “MTI continues to strengthen its operating foundation and we remain focused on activities to accelerate sales growth.”