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TOR Minerals International Reports Fourth Quarter and Year-end 2012 Financial Results

Reports Record Annual Revenue and Net Income

CORPUS CHRISTI, Texas, Feb. 20, 2013 /PRNewswire/ -- TOR Minerals International (Nasdaq: TORM), producer of synthetic titanium dioxide and color pigments, specialty aluminas, and other high performance mineral fillers, today announced its financial results for the fourth quarter and year-ended December 31, 2012. Highlights for the fourth quarter and year-ended December 31, 2012 as compared to the prior year period included:

  • 2012 net sales increased 38% to a record $56.7 million
  • 2012 net income available to common shareholders increased 29% to a record $5.1 million
  • 2012 diluted EPS increased 23% to $1.49 per share
  • 4Q12 net sales increased 3% to $9.8 million
  • 4Q12 net income available to common shareholders was $236,000, versus $1.1 million during the prior year
  • 4Q12 diluted EPS was $0.07, versus 4Q11 diluted EPS of $0.35
  • Shareholders' equity as of December 31, 2012 increased to $12.00 per diluted share, versus $10.33 at the same time last year

 

 Quarterly Sales by Product Group (in 000's) 




 4Q11 


 4Q12 


 % Change 

 TiO2 Pigments 



$

3,807

$

3,643


-4%

 Specialty Aluminas 




4,431


4,650


5%

 Other 




1,308


1,530


17%

 Total 



$

9,546

$

9,823


3%



















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


2010


2011


2012


 % Change
2012 vs. 2011 

 TiO2 Pigments 

$

12,595

$

18,998

$

30,662


61%

 Specialty Aluminas 


14,242


17,461


19,195


10%

 Other 


4,179


4,562


6,796


49%

 Total 

$

31,016

$

41,021

$

56,653


38%

During the year ended December 31, 2012, net sales increased 38 percent to $56.7 million, due to increases in all three of the Company's primary product categories.  Sales of titanium dioxide (TiO2) pigment products, which include HITOX®, TIOPREM® and synthetic rutile (SR) products, increased 61 percent during 2012, primarily due to $10.4 million of SR sales to third parties and increased average selling prices.  These factors were more than enough to offset a decline in HITOX volumes. Specialty alumina sales increased 10 percent during the year primarily due to an increase in sales volume to a significant U.S. customer, which was partially offset by a decrease in European sales volume.  Other product sales increased 49 percent, primarily due to increased volumes from new and existing BARTEX® customers in the United States.

During the fourth quarter of 2012, net sales increased 3 percent to $9.8 million, as a 5 percent increase in specialty alumina sales and a 17 percent increase in other product sales were offset by a 4 percent decrease in Titanium dioxide (TiO2) pigments sales.  As expected, pricing and volumes of Titanium dioxide (TiO2) pigments products, which include HITOX®, TIOPREM® and synthetic rutile (SR) products, continued to be affected by weakness in the broader market for TiO2. Factors affecting specialty alumina and other product sales were consistent with those earlier in the year.

Commenting on sales trends, Dr. Olaf Karasch, Chief Executive Officer, said, "Our continued focus on delivering unique value-added products along with the geographic, product, customer and end-market diversification of our business, has allowed us to overcome the effects of a weak and uncertain global economy and produce our third consecutive year of record sales and earnings.  While our TiO2 pigment sales declined slightly during the fourth quarter, we outperformed the double-digit sales declines we have seen from other commodity TiO2 producers.  In addition, our end-market and geographic diversification allowed us to overcome significant headwinds in Europe.  Despite a 30 percent sales decline in alumina sales in that region, we posted a double-digit increase in total specialty alumina sales worldwide."

During the fourth quarter of 2012, gross margin decreased to 13.0 percent of sales versus 26.4 percent during the same period a year ago.  The decrease in gross margin was primarily the result of lower utilization of the SR production plant Malaysia, combined with increased maintenance, raw materials and energy costs.  The Company said that during the fourth quarter of 2012, our Malaysian SR plant underwent significant construction and maintenance work, which is expected to be completed during the first quarter of 2013. While lower utilization levels will continue to affect profitability during the first quarter of 2013, the work is designed to generate significant improvement in yields and reduce production costs.   Operating expenses decreased 5.9 percent to $1.3 million, primarily related to a decrease in salaries and legal expenses.  During the fourth quarter, net income available to common shareholders was $236,000, or $0.07 per diluted share, as compared to $1.1 million, or $0.35 per diluted share, during the same period a year ago.

During the year ended December 31, 2012, gross margin decreased by 150 basis points to 21.1 percent of sales, as increases in raw materials, maintenance and indirect labor were only partially offset by higher average selling prices.  Operating expenses increased 9.9 percent to $5.4 million, primarily related to sales commissions and consulting fees.  During 2012, net income available to common shareholders was $5.1 million, or $1.49 per diluted share, as compared to $3.9 million, or $1.21 per diluted share, during the same period a year ago.

"Inflated customer inventory levels and soft demand trends have led to decreased volumes and pricing across the TiO2 industry.  We expect these market conditions to persist through the first half of 2013 and will likely continue to negatively affect both volumes and pricing for our TiO2 pigments and third-party sales of SR for the next several quarters.  In addition to lower utilization and pricing, we expect near-term profitability to be negatively affected by increased costs of raw materials and energy.  To offset these factors, we are making incremental investments in our Malaysian SR plant to improve yields and reduce our production costs.  Longer term, we believe the demand and supply characteristics in the TiO2 industry will continue to create attractive opportunities for TOR Minerals, as customers increasingly discover the value-added attributes of substituting our HITOX® and TIOPREM® products for commodity TiO2," said Dr. Karasch.  "While near-term pressure may impede our ability to deliver growth in our TiO2 business during the next several quarters, we expect continued growth in our specialty alumina and other product categories during 2013.  Our strategic focus remains on product innovation and continued reduction in our production costs with an objective to deliver on our targeted growth of 15% to 20% over the next three to five years."

TOR Minerals will host a conference call at 5:00 p.m. Eastern, 4:00 p.m. Central Time, on February 20, 2013, to further discuss fourth 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 # 408254. 

Headquartered in Corpus Christi, Texas, TOR Minerals International 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 Income

(In thousands, except per share amounts)





















(Unaudited)







Three Months
Ended December 31,


Twelve Months
Ended December 31,



2012


2011


2012


2011

NET SALES

$

9,823

$

9,546

$

56,653

$

41,021

Cost of sales


8,546


7,024


44,673


31,727

GROSS MARGIN


1,277


2,522


11,980


9,294

Technical services and research and development


111


81


384


287

General, administrative and selling expenses


1,204


1,317


5,029


4,639

Gain on disposal of assets


-


(1)


(6)


(1)

OPERATING INCOME


(38)


1,125


6,573


4,369

OTHER INCOME (EXPENSE):









Interest expense


(74)


(135)


(471)


(471)

Loss on foreign currency exchange rate


(29)


(29)


(50)


(23)

Other, net


(1)


2


-


9

INCOME BEFORE INCOME TAX


(142)


963


6,052


3,884

Income tax (benefit) expense 


(378)


(150)


1,024


48

NET INCOME

$

236

$

1,113

$

5,028

$

3,836

Less:  Preferred Stock Dividends


-


1


-


16

Basic Income  Available to Common Shareholders

$

236

$

1,112

$

5,028

$

3,820

Plus: 6% Convertible Debenture Interest Expense


-


21


22


87

Plus:  Preferred Stock Dividends


-


1


-


16

Diluted Income Available to Common Shareholders

$

236

$

1,134

$

5,050

$

3,923










Income per common share:









Basic

$

0.08

$

0.51

$

1.81

$

1.84

Diluted

$

0.07

$

0.35

$

1.49

$

1.21

Weighted average common shares outstanding:









Basic


2,980


2,160


2,781


2,079

Diluted


3,424


3,239


3,394


3,235

 

 

TOR Minerals International, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)








December 31,



2012


2011

ASSETS





CURRENT ASSETS:





Cash and cash equivalents

$

2,799

$

3,381

Trade accounts receivable, net


3,972


4,921

Inventories 


22,895


18,673

Other current assets


1,822


832

Total current assets


31,488


27,807

PROPERTY, PLANT AND EQUIPMENT, net 


22,933


20,138

OTHER ASSETS


25


22

Total Assets

$

54,446

$

47,967






LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Accounts payable

$

4,608

$

3,222

Accrued expenses


1,864


1,754

Notes payable under lines of credit


2,109


2,886

Export credit refinancing facility


394


1,254

Current deferred tax liability


173


46

Current maturities - capital leases


33


28

Current maturities of long-term debt – financial institutions


1,202


813

Current maturities - convertible debentures


-


91

Total current liabilities


10,383


10,094

LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES 





Capital leases


12


34

Long-term debt – financial institutions


2,316


2,668

Long-term debt – convertible debentures, net


-


1,127

Deferred tax liability


1,007


619

Total liabilities


13,718


14,542

COMMITMENTS AND CONTINGENCIES 





SHAREHOLDERS' EQUITY: 





Common stock $1.25 par value:  authorized, 6,000 shares;
2,987 and 2,400 shares issued and outstanding
at 12/31/2012 and 12/31/2011, respectively


3,733


2,999

Additional paid-in capital


29,017


28,222

Retained earnings (Accumulated deficit)


3,269


(1,759)

Accumulated other comprehensive income:





Cumulative translation adjustment


4,709


3,963

Total shareholders' equity


40,728


33,425

Total Liabilities and Shareholders' Equity

$

54,446

$

47,967

 

 

TOR Minerals International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)








Year Ended December 31,



2012


2011

CASH FLOWS FROM OPERATING ACTIVITIES:





Net Income

$

5,028

$

3,836

Adjustments to reconcile net income to net cash
provided by (used in) operating activities:





Depreciation


2,470


2,078

Gain on disposal of assets


(6)


(1)

Share-based compensation


90


59

Warrant interest expense


22


67

Deferred income taxes


120


(9)

Provision for bad debts


69


-

Changes in working capital:





Trade accounts receivables


936


(1,081)

Inventories


(3,777)


(7,845)

Other current assets


(598)


(116)

Accounts payable and accrued expenses


1,385


1,094

Net cash provided (used in) by operating activities


5,739


(1,918)






CASH FLOWS FROM INVESTING ACTIVITIES:





Additions to property, plant and equipment


(4,881)


(3,535)

Proceeds from sales of property, plant and equipment


7


2

Net cash used in investing activities


(4,874)


(3,533)






CASH FLOWS FROM FINANCING ACTIVITIES:





Net proceeds from (payments on) lines of credit


(869)


2,087

Net proceeds from (payments on) export
credit refinancing facility


(906)


997

Proceeds from capital lease


-


11

Payments on capital lease


(18)


(11)

Proceeds from long-term bank debt


866


972

Payments on long-term bank debt


(862)


(790)

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


198


3,356

Preferred stock dividends paid


-


(31)

Net cash (used in) provided by financing activities


(1,591)


6,591

Effect of exchange rate fluctuations on cash and cash equivalents


144


(318)

Net (decrease) increase in cash and cash equivalents


(582)


822

Cash and cash equivalents at beginning of year


3,381


2,559

Cash and cash equivalents at end of year

$

2,799

$

3,381






Supplemental cash flow disclosures:





Interest paid

$

429

$

471

Income taxes paid

$

742

$

7

Non-cash financing activities





Conversion of debenture

$

1,450

$

25

 

SOURCE TOR Minerals International

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