AMCOL International (NYSE: ACO) Reports First Quarter Earnings

ARLINGTON HEIGHTS, Ill., April 18 /PRNewswire-FirstCall/ -- AMCOL International Corporation today reported 2008 first-quarter net income of $8.6 million or $0.28 per diluted share, compared with $10.8 million or $0.35 per diluted share in the same prior-year period.

Net sales rose 16.9% to $191.4 million for the quarter ended March 31, 2008, compared with $163.7 million for the 2007 period. Acquisitions and favorable foreign currency translation represented approximately $5.9 million and $4.3 million, respectively, of the first-quarter sales growth. Operating profit declined by 13.5% over the 2007 period to $12.7 million. Acquisitions added less than $0.1 million to current-period operating profit while foreign currency translation contributed $0.5 million.

This release should be read in conjunction with the attached unaudited condensed consolidated financial statements. Further discussion of items and events impacting earnings are included in the Statement of Operations Highlights.

"Sales were up across all segments in the first quarter, and Oilfield Services had operating profit growth of 24.7%," says Larry Washow, AMCOL President and Chief Executive Officer. "At the same time, however, we experienced a number of issues that dampened our overall performance. Increased energy costs were a significant factor this quarter. Overhead was up due to costs from acquisitions, greater R&D expenditures and higher benefits cost."

"Despite solid sales growth of 15.8% in the Minerals segment, quarter-over-quarter operating profits were down 17.0% from a year ago, primarily because of higher energy costs. Operating margins were flat compared to the fourth quarter of 2007, but we expect to see improvement in margins in the quarters ahead," Washow continues.

"Sales in the Environmental segment were up 19.6% quarter-over-quarter but operating profit decreased slightly by 4.4%," he says. "Weather, energy costs, overhead and product mix all played a role, but, again, our expectations for the balance of the year are positive.

In summary, Washow says, "We're seeing the effects of a number of economic influences, but we are continuing to identify opportunities to improve costs. Given the strength of the energy sector, we expect continued strong performance in Oilfield Services, and the outlook is promising for other segments over the rest of the year, as well."

STATEMENT OF OPERATIONS HIGHLIGHTS:

Net sales: The following table details the consolidated sales growth components over the 2007 first quarter:

Base Foreign Business Acquisitions Exchange Total Minerals 4.7 % 2.8 % 0.8 % 8.3 % Environmental 3.2 % 0.8 % 1.8 % 5.8 % Oilfield Services 1.3 % - - 1.3 % Transportation 1.5 % - - 1.5 % Total 10.7 % 3.6 % 2.6 % 16.9 % % of Growth 63.3 % 21.3 % 15.4 % 100 %

Minerals: Approximately one-third of the base business growth was attributed to freight pass-through revenue. Higher shipments in the pet products division led to the increase in freight revenue and contributed to base business volume growth over the 2007 quarter. Base business sales were also aided by higher demand in the Asia-Pacific metalcasting market and certain specialty materials product lines. Pricing was increased in certain product lines and geographical markets; however, higher relative contribution of lower-priced products -- mix -- lowered sales compared with 2007.

Sales from acquisitions were principally contributed by the Turkish operations followed by a Mexican joint venture business. Foreign exchange benefit resulted from British Pound and Asia-Pacific currency translation.

Environmental: A 19.6% improvement in sales was primarily generated from the Poland-based operations. Base business growth in building materials division shipments and installation services led to the increase. Additionally, higher shipments of lining technology product lines in the U.S. market contributed to the increase.

Oilfield Services: Demand for water treatment services in the Gulf of Mexico was the largest contributor to base business growth. Additional sales improvement came from emerging geographic markets.

Transportation: Traffic levels increased over the prior-year quarter due to higher demand from consumer products shippers.

Gross profit: Sales growth provided the increase in gross profit; however, gross margin was 24.2% which was a 240 basis point decline from the 2007 quarter.

Minerals: The decline from the prior-year first quarter was primarily attributed to rising energy, production and mining costs in the U.S. Additionally, gross margin was impacted by unfavorable product mix in Europe and higher freight revenues, which do not generate any profit.

Environmental: Within the Environmental segment, gross margin declined by 260 basis points due to sales of lower profit products and services relative to the prior-year quarter. In addition, rising production costs in the U.S.-based operations negatively impacted current-period gross margin.

Oilfield: Oilfield Services gross margin was comparable to the prior-year quarter.

Transportation: The transportation segment suffered a decline of 90 basis points. Under-recovered fuel surcharges were the principal reason for the negative gross margin comparison.

General, selling and administrative expenses (GS&A): The $4.8 million, or 16.8%, increase over the 2007 first quarter was principally caused by the Minerals, Environmental and Corporate segments. Acquired businesses added $1.0 million of GS&A to the current-year quarter.

Minerals: Acquired business expenses were $0.8 million. Base business GS&A grew due to higher research and development expenditures for the specialty materials division and personnel costs in the Asia-Pacific region.

Environmental: GS&A increased primarily due to higher compensation and sales commission expenses at the Poland-based operations.

Corporate: GS&A increased from higher health and welfare benefit expenses.

Operating profit: The decline from the prior-year quarter was primarily caused by the combined effect of relatively low gross profit improvement and higher GS&A costs. Consequently, operating margin declined by 240 basis points.

Interest expense: Net interest expense increased by approximately $0.5 million over the prior-year quarter due to higher average debt levels.

Income taxes: The effective tax rate for the first quarter of 2008 was 27.0% compared with 26.3% for the same period in 2007. Lower tax credits were recorded in the current-year quarter. No research and experimentation credit was recorded since legislation allowing this credit lapsed at the end of 2007.

Income from affiliates and joint ventures: Lower profits from our India-based investments accounted for the $0.3 million decline from the prior-year quarter. Delay of large bauxite shipments caused the reduction in earnings.

Share count: Weighted average common and common equivalent shares outstanding were 30.9 million and 31.0 million for the quarters ended March 31, 2008 and 2007, respectively.

FINANCIAL POSITION AND CASH FLOW HIGHLIGHTS:

Funded long-term debt increased to $188.1 million at March 31, 2008 compared to $164.2 million at December 31, 2007. The increase was primarily due to funding higher working capital levels and capital expenditures incurred in the first quarter. Total long-term debt represented 35.5% of capitalization at March 31, 2008, compared with 31.8% at December 31, 2007. Cash and cash equivalents were $33.2 million at March 31, 2008 compared with $25.3 million at December 31, 2007.

As mentioned in our Form 10-K for 2007, during the first quarter, we completed a sale-leaseback transaction pursuant to which we sold land to a third-party and agreed to lease a new corporate headquarters facility on the site. The building is currently under construction and we expect to occupy the building by the end of 2008. Pursuant to the transaction, the owner will fund anticipated construction costs related to the building, including reimbursing us for expenditures we incurred prior to the transaction. We will account for the building expenditures as a construction in progress asset during the construction period with an offsetting amount recorded as long-term financing debt. In the quarter during which we take occupancy of the building, we will record a sale of the land and building equal to the total construction costs and land value.

Working capital increased to $233.1 million at March 31, 2008 from $202.5 million at December 31, 2007. The current ratio was 3.5-to-1 and 3.0-to-1 at March 31, 2008, and December 31, 2007, respectively.

Cash flow generated from operating activities was $4.3 million year-to-date as of March 31, 2008 compared to $6.3 million in the prior-year period. The decrease in net income and changes in working capital caused the decline in operating cash flows compared with the prior-year quarter.

Excluding the corporate building, capital expenditures were the primary investing activity in the 2008 period amounting to $12.9 million compared with $10.9 million in the prior-year period. Expenditures related to Minerals and Oilfield Services segment projects accounted for the increase over the prior- year period.

Approximately $2.0 million has been expended on share repurchases as of March 31, 2008. Eighty-thousand shares were repurchased in the first quarter of 2008 at an average price of $25.45 per share. Dividends declared year-to-date through March 31, 2008, increased by 14.6% over the prior-year period to $4.8 million.

This release contains certain forward-looking statements regarding AMCOL's expected performance for future periods and actual results for such periods might materially differ. Such forward-looking statements are subject to uncertainties, which include, but are not limited to, actual growth in AMCOL's various markets, utilization of AMCOL's plants, currency exchange rates, currency devaluation, delays in development, production and marketing of new products, integration of acquired businesses, and other factors detailed from time to time in AMCOL's annual report and other reports filed with the Securities and Exchange Commission. AMCOL undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in AMCOL's expectations.

AMCOL International, headquartered in Arlington Heights, IL, produces and markets a wide range of specialty mineral products used for industrial, environmental and consumer-related applications. AMCOL is the parent of American Colloid Co., CETCO (Colloid Environmental Technologies Company), CETCO Oilfield Services Company and the transportation operations, Ameri-co Carriers, Inc. and Ameri-co Logistics, Inc. AMCOL's common stock is traded on the New York Stock Exchange under the symbol ACO. AMCOL's web address is http://www.amcol.com/. AMCOL's first quarter conference call will be available live today at 11 a.m. EDT on the AMCOL website.

Financial tables follow. AMCOL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share data) Three Months Ended March 31, 2008 2007 Net sales $191,409 $163,728 Cost of sales 145,059 120,229 Gross profit 46,350 43,499 General, selling and administrative expenses 33,638 28,805 Operating profit 12,712 14,694 Other income (expense): Interest expense, net (2,401) (1,942) Other, net (235) (167) (2,636) (2,109) Income before income taxes and income from affiliates and joint ventures 10,076 12,585 Income tax expense 2,717 3,311 Income before income from affiliates and joint ventures 7,359 9,274 Income from affiliates and joint ventures 1,262 1,566 Net income $8,621 $10,840 Weighted average common shares outstanding 30,260 30,153 Weighted average common and common equivalent shares outstanding 30,889 31,017 Basic earnings per share $0.28 $0.36 Diluted earnings per share $0.28 $0.35 Dividends declared per share $0.16 $0.14 AMCOL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) ASSETS March 31, December 31, 2008 2007 (unaudited) * Current assets: Cash and equivalents $33,163 $25,282 Accounts receivable, net 170,285 166,835 Inventories 93,845 91,367 Prepaid expenses 15,292 13,529 Deferred income taxes 4,074 4,374 Income tax receivable 2,760 2,768 Other 7,713 475 Total current assets 327,132 304,630 Investments in and advances to affiliates and joint ventures 53,349 49,309 Property, plant, equipment, mineral rights and reserves: Land and mineral rights 21,488 21,394 Depreciable assets 369,478 352,100 390,966 373,494 Less: accumulated depreciation and depletion 203,400 196,904 187,566 176,590 Other assets: Goodwill 60,226 59,840 Intangible assets, net 39,855 41,257 Deferred income taxes 5,153 5,513 Other assets 14,270 15,007 119,504 121,617 $687,551 $652,146 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $41,517 $44,274 Accrued liabilities 52,544 57,833 Total current liabilities 94,061 102,107 Long-term debt 188,127 164,232 Long-term debt - corporate building 10,321 - Total long-term debt 198,448 164,232 Minority interests in subsidiaries 543 327 Pension liabilities 8,934 7,559 Other liabilities 25,585 25,598 35,062 33,484 Stockholders' equity: Common stock 320 320 Additional paid in capital 82,160 81,599 Retained earnings 261,969 258,164 Accumulated other comprehensive income 36,968 33,248 381,417 373,331 Less: Treasury stock 21,437 21,008 359,980 352,323 $687,551 $652,146 * Condensed from audited financial statements. AMCOL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands) Three Months Ended March 31, 2008 2007 Cash flow from operating activities: Net income $8,621 $10,840 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, depletion, and amortization 7,435 6,714 Changes in assets and liabilities, net of effects of acquisitions: Decrease (Increase) in current assets (5,671) (7,091) Decrease (Increase) in noncurrent assets (301) (954) Increase (decrease) in current liabilities (5,624) (6,634) Increase (decrease) in noncurrent liabilities (112) (133) Other (70) 3,513 Net cash provided by (used in) operating activities 4,278 6,255 Cash flow from investing activities: Capital expenditures (12,932) (10,876) Capital expenditures - corporate building (2,831) - Acquisitions, net of cash (1,148) (27,204) Investments in and advances to affiliates and joint ventures (2,107) (2,466) Investments in restricted cash (36) (957) Other (5,931) 489 Net cash provided by (used in) investing activities (24,985) (41,014) Cash flow from financing activities: Net change in outstanding debt 23,404 42,800 Net change in outstanding debt - corporate building 9,463 - Proceeds from sales of treasury stock 753 886 Purchases of treasury stock (2,062) - Dividends (4,816) (4,204) Excess tax benefits from stock-based compensation 669 927 Net cash provided by (used in) financing activities 27,411 40,409 Effect of foreign currency rate changes on cash 1,177 389 Net increase (decrease) in cash and cash equivalents 7,881 6,039 Cash and cash equivalents at beginning of period 25,282 17,805 Cash and cash equivalents at end of period $33,163 $23,844 AMCOL INTERNATIONAL CORPORATION SEGMENT RESULTS (unaudited) Minerals Three Months Ended March 31, 2008 2007 2008 vs 2007 (Dollars in Thousands) Net sales $99,344 100.0% $85,813 100.0% $13,531 15.8% Cost of sales 82,667 83.2% 69,014 80.4% 13,653 19.8% Gross profit 16,677 16.8% 16,799 19.6% (122) -0.7% General, selling and administrative expenses 8,990 9.0% 7,542 8.8% 1,448 19.2% Operating profit 7,687 7.8% 9,257 10.8% (1,570) -17.0% Environmental Three Months Ended March 31, 2008 2007 2008 vs 2007 (Dollars in Thousands) Net sales $58,219 100.0% $48,698 100.0% $9,521 19.6% Cost of sales 38,798 66.6% 31,163 64.0% 7,635 24.5% Gross profit 19,421 33.4% 17,535 36.0% 1,886 10.8% General, selling and administrative expenses 13,450 23.1% 11,292 23.2% 2,158 19.1% Operating profit 5,971 10.3% 6,243 12.8% (272) -4.4% Oilfield Services Three Months Ended March 31, 2008 2007 2008 vs 2007 (Dollars in Thousands) Net sales $24,143 100.0% $21,964 100.0% $2,179 9.9% Cost of sales 15,441 64.0% 14,077 64.1% 1,364 9.7% Gross profit 8,702 36.0% 7,887 35.9% 815 10.3% General, selling and administrative expenses 4,753 19.7% 4,721 21.5% 32 0.7% Operating profit 3,949 16.3% 3,166 14.4% 783 24.7% Transportation Three Months Ended March 31, 2008 2007 2008 vs 2007 (Dollars in Thousands) Net sales $14,350 100.0% $10,893 100.0% $3,457 31.7% Cost of sales 12,800 89.2% 9,615 88.3% 3,185 33.1% Gross profit 1,550 10.8% 1,278 11.7% 272 21.3% General, selling and administrative expenses 770 5.4% 738 6.8% 32 4.3% Operating profit 780 5.4% 540 4.9% 240 44.4% Corporate Three Months Ended March 31, 2008 2007 2008 vs 2007 (Dollars in Thousands) Intersegment shipping sales $(4,647) $(3,640) Intersegment shipping costs (4,647) (3,640) Gross profit - - General, selling and administrative expenses 5,675 4,512 1,163 25.8% Operating loss 5,675 4,512 1,163 25.8% AMCOL INTERNATIONAL CORPORATION SUPPLEMENTARY INFORMATION (unaudited) Composition of Sales by Geographic Region Three Months Ended March 31, 2008 Americas EMEA Asia Pacific Total Minerals 37.3% 7.2% 7.4% 51.9% Environmental 15.0% 13.8% 1.7% 30.4% Oilfield services 10.7% 1.6% 0.4% 12.6% Transportation 5.1% 0.0% 0.0% 5.1% Total - current year's period 68.1% 22.5% 9.5% 100.0% Total from prior year's comparable period 68.3% 22.9% 8.8% 100.0% Percentage of Revenue Growth by Component Three Months Ended March 31, 2008 vs. Three Months Ended March 31, 2007 Base Acquisitions Foreign Business Exchange Total Minerals 4.7% 2.8% 0.8% 8.3% Environmental 3.2% 0.8% 1.8% 5.8% Oilfield services 1.3% 0.0% 0.0% 1.3% Transportation 1.5% 0.0% 0.0% 1.5% Total 10.7% 3.6% 2.6% 16.9% % of growth 63.3% 21.3% 15.4% 100.0% Minerals Product Line Sales Three Months Ended March 31, 2008 2007 % change (Dollars in Thousands) Metalcasting $40,678 $36,586 11.2% Specialty materials 25,663 20,068 27.9% Pet products 19,523 16,488 18.4% Basic minerals 12,041 10,927 10.2% Other product lines 1,439 1,744 * Total 99,344 85,813 * Not meaningful. Environmental Product Line Sales Three Months Ended March 31, 2008 2007 % change (Dollars in Thousands) Lining technologies $32,495 $23,992 35.4% Building materials 19,995 19,583 2.1% Other product lines 5,729 5,123 * Total 58,219 48,698 * Not meaningful.