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8-K - FORM 8-K, 2014 EARNINGS RELEASE - TOR MINERALS INTERNATIONAL INCx8k2014earnings.htm

EXHIBIT 99.1

 

TOR Minerals International Reports Fourth Quarter and Year-end 2014 Financial Results

CORPUS CHRISTI, Texas, February 25, 2014 - TOR Minerals International, Inc. (Nasdaq: TORM), producer of high performance specialty minerals, today announced its financial results for the fourth quarter and year-ended December 31, 2014.

Full-year 2014 summary

  • 2014 net sales increased 1.5% to $46.7 million
  • 2014 net loss of $554,000, versus 2013 net loss of $1.6 million
  • 2014 net loss per diluted share of ($0.18) per share, versus 2013 loss per share of $(0.54)

Annual Sales Comparison by
Product Group (in 000's)

 

 2014

 

 2013

 

 % Change
2014 vs. 2013

Specialty Aluminas

 $

21,698 

 $

18,089 

20%

Barium Sulfate and Other Products

8,890 

7,997 

11%

TiO2 Pigments

16,142 

19,935 

-19%

Total

 

 $

46,730 

 

 $

46,021 

 

1.5%

During 2014, net sales increased 1.5%, as a 20% increase in sales of specialty alumina products, consisting of our ALUPREM®, HALTEX® and OPTILOAD® offerings, and an 11% increase in sales of Barium Sulfate and Other Products, which include BARTEX® and BARYPREM®, more than offset the 19% decrease in sales of titanium dioxide (TiO2) pigments products, which include HITOX®, TIOPREM® and synthetic rutile (SR) products. 

During 2014, gross profit increased to $6.6 million, or 14.1 percent of sales, as compared to $3.4 million, or 7.4 percent of sales, during 2013.   During 2014, net loss available to common shareholders was $554,000, or ($0.18) per diluted share, as compared to net loss of $1.6 million, or ($0.54) per diluted share, during the same period a year ago.

"Our Specialty Alumina business delivered double-digit year-over-year growth during 2014.  Combined with the strength of our Barium Sulfate and other product groups, for the year we were able to more than offset the tough market conditions and lower utilization levels of our TiO2 business." commented Dr. Olaf Karasch, Chief Executive Officer.  "A favorable product mix shift along with a continued focus to lower costs, also resulted in a substantial improvement to the net loss realized during the year.  The business also delivered a substantial improvement in cash flow during 2014, generating $4.6 million in cash flow from operations, more than half of which was used to pay down debt levels."



Fourth quarter summary

  • 4Q14 net sales decreased 24% to $9.9 million
  • 4Q14 net loss of $1.7 million, versus 4Q13 net loss of $1.8 million
  • 4Q14 net loss per share of ($0.57), versus 4Q13 net loss per share of ($0.60)

Quarterly Sales Comparison by
Product Group (in 000's)

 

 4Q14

 

 4Q13

 

 % Change

Specialty Aluminas

 $

5,012 

 $

5,006 

0.1%

Barium Sulfate and Other Products

1,943 

1,842 

5%

TiO2 Pigments

2,934 

6,144 

-52%

Total

 

 $

9,889 

 

 $

12,992 

 

-24%

During the fourth quarter, net sales decreased 24 percent to $9.9 million, primarily related to a 52 percent decrease in sales of TiO2 pigments products.  The decrease in TiO2 pigment products was primarily related to a decrease in SR sales.  There were no sales of SR to third-party customers during the fourth quarter of 2014, as compared to third-party SR sales of $3.4 million during the fourth quarter of the prior year. The company has historically produced SR as a precursor feedstock to make its differentiated specialty TiO2 pigment products and only opportunistically sold SR products to third parties when market conditions were attractive.

Sales of specialty alumina products increased 0.1 percent and 20 percent for the fourth quarter and full year periods, respectively.   Increased volumes of ALUPREM products to new and existing customers in Europe and U.S. were primarily responsible for the annual sales growth.  Volume increases were offset by lower average selling prices and product mix during the fourth-quarter period.

Sales of Barium Sulfate and Other Products increased 5 percent and 11 percent for the fourth quarter and full year periods, respectively.

During the fourth quarter the company made the strategic decision to take a portion of its production capacity out of service at its Malaysian SR plant and reduce its work force by approximately 50% in that plant. As of the end of December, the company currently has SR in inventory to support production of its specialty TiO2 color pigment products for 12 to 18 months and has secured alternate sources of SR to support a portion of its production going forward.  The company incurred a $2.1 million non-cash loss associated with the write-down in the book value of the production equipment that was taken out of service and incurred approximately $353,000 in severance costs which are reflected in the fourth quarter results.  Going forward the company anticipates a savings in the overall cost of SR as a result of these actions.

During the fourth quarter of 2014, cost of sales was $8.4 million, or 85.3 percent of sales, as compared to $14.3 million, or 110.3 percent of sales, during the fourth quarter of the prior year.  Cost of Sales comparisons were due to significantly higher raw material costs and a $1.3 million write-down of TiO2 related inventory that occurred during the prior year period.

During the fourth quarter, operating expenses increased 21 percent to $1.5 million, primarily related to employee severance costs associated with a reduction in labor force at the company's SR plant in Malaysia.  During the fourth quarter, net loss available to common shareholders was $1.7 million, or ($0.57) per diluted share, as compared to net loss of $1.8 million, or ($0.60) per diluted share, during the same period a year ago.



"We remain optimistic about the outlook for our specialty alumina business, and continue to expect double-digit revenue and profitability growth for this part of our business during 2015.  While difficult market conditions are expected to persist in the TiO2 industry, our outlook for our TiO2 business is stable for 2015," said Dr. Karasch. "The strategic decision to close a portion of our SR plant should result in significant costs savings, reduce investment in raw material inventory and ongoing maintenance costs, and, based on our current outlook, allow us to earn a return on our investment on the TiO2 side of our business.  We plan to continue to invest in the specialty alumina side of our business and have plans to double our plant capacity to meet the anticipated increase in demand over the next 24 months."

TOR Minerals will host a conference call at 5:00 p.m. Eastern, 4:00 p.m. Central Time, on February 27, 2014, to further discuss fourth quarter and full year 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 # 1357317.

Headquartered in Corpus Christi, Texas, TOR Minerals International, Inc. is a global manufacturer and marketer of specialty mineral and pigment products for high performance applications with manufacturing and regional offices located in the United States, Netherlands and Malaysia.

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.

Contact for Further Information:
Dave Mossberg
Three Part Advisors, LLC
817-310-0051



TOR Minerals International, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months
Ended December 31,

 

Twelve Months
Ended December 31,

 

 

2014

 

2013

 

2014

 

2013

NET SALES

 $

9,889 

 $

12,992 

 $

46,730 

 $

46,021 

Cost of sales

8,437 

14,324 

40,111 

42,566 

GROSS MARGIN

 

1,452 

 

(1,332)

 

6,619 

 

3,455 

Technical services and research and development

49 

193 

199 

652 

General, administrative and selling expenses

1,490 

1,078 

4,809 

4,722 

Loss on disposal of assets

2,140 

2,140 

10 

OPERATING LOSS

 

(2,227)

 

(2,603)

 

(529)

 

(1,929)

OTHER INCOME (EXPENSE):

Interest expense

(79)

(103)

(354)

(389)

Gain (loss) on foreign currency exchange rate

104 

11 

114 

(140)

Other, net

18 

28 

18 

Total Other Income (Expense)

43 

(92)

(212)

(511)

LOSS BEFORE INCOME TAX

 

(2,184)

 

(2,695)

 

(741)

 

(2,440)

Income tax benefit

(474)

(891)

(187)

(824)

NET LOSS

 $

(1,710)

 $

(1,804)

 $

(554)

 $

(1,616)

 

 

 

 

 

 

 

 

 

Loss per common share:

Basic

 $

(0.57)

 $

(0.60)

 $

(0.18)

 $

(0.54)

Diluted

 $

(0.57)

 $

(0.60)

 $

(0.18)

 $

(0.54)

Weighted average common shares outstanding:

Basic

3,014 

3,012 

3,014 

3,002 

Diluted

3,014 

3,012 

3,014 

3,002 



TOR Minerals International, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except per share amounts)

 

December 31,

 

 

2014

 

2013

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

 $

2,657 

 $

2,920 

Trade accounts receivable, net

4,915 

4,526 

Inventories, net

20,175 

20,753 

Other current assets

752 

596 

Current deferred tax asset

90 

Total current assets

28,589 

28,795 

PROPERTY, PLANT AND EQUIPMENT, net

18,889 

23,799 

DEFERRED TAX ASSET

45 

OTHER ASSETS

22 

23 

Total Assets

 $

47,545 

 $

52,617 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

 $

3,318 

 $

3,279 

Accrued expenses

1,832 

1,397 

Notes payable under lines of credit

886 

1,477 

Export credit refinancing facility

2,777 

3,866 

Current deferred tax liability

66 

Current maturities - capital leases

12 

Current maturities of long-term debt - financial institutions

1,113 

1,040 

Total current liabilities

9,926 

11,137 

LONG-TERM DEBT - FINANCIAL INSTITUTIONS

1,607 

2,918 

DEFERRED TAX LIABILITY

18 

Total liabilities

11,533 

14,073 

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

Common stock $1.25 par value: authorized, 6,000 shares;
3,014 shares issued and outstanding at December 31, 2014 and
3,012 shares issued and outstanding at December 31, 2013

3,767 

3,765 

Additional paid-in capital

29,503 

29,365 

Retained earnings

1,099 

1,653 

Accumulated other comprehensive income:

Cumulative translation adjustment

1,643 

3,761 

Total shareholders' equity

36,012 

38,544 

Total Liabilities and Shareholders' Equity

 $

47,545 

 $

52,617 



TOR Minerals International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

 

 

Years Ended December 31,

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

Net Loss

$

(554)

$

(1,616)

Adjustments to reconcile net loss to net
cash provided by operating activities:

Depreciation

3,445 

3,157 

Inventory impairment

1,329 

Loss on disposal of assets

2,140 

10 

Share-based compensation

128 

109 

Deferred income tax benefit

(723)

(1,088)

Income Tax Refund

431 

Provision for bad debts

(27)

Changes in working capital:

Trade accounts receivables

(556)

(534)

Inventories

(343)

(5)

Other current assets

(180)

1,172 

Accounts payable and accrued expenses

794 

(1,681)

Net cash provided by operating activities

4,555 

860 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

Additions to property, plant and equipment

(2,064)

(4,230)

Proceeds from sales of property, plant and equipment

Net cash used in investing activities

(2,064)

(4,227)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

Net payments on lines of credit

(437)

(598)

Net proceeds (payments) from export credit refinancing facility

(845)

3,498 

Payments on capital lease

(10)

(35)

Proceeds from long-term bank debt

1,283 

Payments on long-term bank debt

(990)

(840)

Proceeds from the issuance of common stock,
     and exercise of common stock options

12 

271 

Net cash provided by (used in) financing activities

(2,270)

3,579 

Effect of foreign currency exchange rate fluctuations on cash and cash equivalents

(484)

(91)

Net increase (decrease) in cash and cash equivalents

(263)

121 

Cash and cash equivalents at beginning of year

2,920 

2,799 

Cash and cash equivalents at end of year

$

2,657 

$

2,920 

Supplemental cash flow disclosures:

 

 

Interest paid

$

357 

$

396 

Income taxes paid

$

200 

$

866