<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ........ to ........
Commission file number is 000-4197
UNITED STATES LIME & MINERALS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 75-0789226
------------------------------ --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13800 MONTFORT DRIVE, SUITE 330, DALLAS, TX 75240
- -------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
(972) 991-8400
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of April 24, 2000, 3,981,644
shares of common stock, $0.10 par value, were outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 19,149 $ 18,021
Trade receivables, net 4,925 4,166
Inventories 4,469 4,266
Prepaid expenses and other assets 536 163
------------- -------------
Total current assets 29,079 26,616
Property, plant and equipment, at cost: 87,340 82,511
Less accumulated depreciation and depletion (36,416) (35,381)
------------- -------------
Property, plant and equipment, net 50,924 47,130
Deferred tax asset, net 2,212 2,136
Other assets, net 1,716 1,806
------------- -------------
Total assets $ 83,931 $ 77,688
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt and
revolving credit facility $ 3,333 $ 2,500
Accounts payable 3,241 1,953
Accrued expenses 1,377 1,580
------------- -------------
Total current liabilities 7,951 6,033
Long-term debt, excluding current installments 46,667 42,500
Other liabilities 354 358
------------- -------------
Total liabilities 54,972 48,891
Stockholders' Equity:
Common stock 529 529
Additional paid-in-capital 14,819 14,819
Retained earnings 27,538 27,376
------------- -------------
42,886 42,724
Less treasury stock at cost:
1,312,401 shares of common stock (13,927) (13,927)
------------- -------------
Total stockholders' equity 28,959 28,797
------------- -------------
Total liabilities and stockholders' equity $ 83,931 $ 77,688
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE> 3
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------------------------------
2000 1999
------------------------- ------------------------
<S> <C> <C> <C> <C>
REVENUES $ 7,686 100.0% $ 6,931 100.0%
Cost of revenues:
Labor and other operating expenses 4,595 59.8% 3,981 57.4%
Depreciation, depletion and amortization 1,122 14.6% 1,073 15.5%
---------- ---------- ---------- ----------
5,717 74.4% 5,054 72.9%
---------- ---------- ---------- ----------
GROSS PROFIT 1,969 25.6% 1,877 27.1%
Selling, general and administrative expenses 955 12.4% 918 13.2%
---------- ---------- ---------- ----------
OPERATING PROFIT 1,014 13.2% 959 13.9%
Other expenses (income):
Interest expense 904 11.7% 343 4.9%
Other income, net (240) (3.1%) (11) (0.0%)
---------- ---------- ---------- ----------
664 8.6% 332 4.9%
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 350 4.6% 627 9.0%
---------- ---------- ---------- ----------
Income tax expense 88 1.2% 169 2.4%
---------- ---------- ---------- ----------
NET INCOME $ 262 3.4% $ 458 6.6%
========== ========== ========== ==========
INCOME PER SHARE OF COMMON STOCK:
Basic $ 0.07 $ 0.12
========== ==========
Diluted $ 0.07 $ 0.12
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 262 $ 458
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, depletion and amortization 1,225 1,116
Deferred income taxes (benefit) (76) 329
Loss on sale of property, plant and equipment 0 1
Current assets, net change[1] (1,334) 46
Other assets 24 (57)
Current liabilities, net change[2] 1,085 (1,751)
Other liabilities (5) 292
------------ ------------
Net cash provided by operating activities $ 1,181 $ 434
INVESTING ACTIVITIES:
Purchase of property, plant and equipment $ (4,953) $ (1,607)
Proceeds from sale of property, plant and equipment 0 60
------------ ------------
Net cash used in investing activities $ (4,953) $ (1,547)
FINANCING ACTIVITIES:
Payment of common stock dividends $ (100) $ (99)
Proceeds from borrowings on term loan 5,000 --
Principal payments on term loan -- (661)
Proceeds from borrowing on revolving credit facility -- 2,000
------------ ------------
Net cash provided by financing activities $ 4,900 $ 1,240
------------ ------------
Net increase in cash 1,128 127
Cash at beginning of period 18,021 688
------------ ------------
Cash at end of period $ 19,149 $ 815
============ ============
Supplemental cash flow information:
Interest paid $ 904 $ 347
============ ============
Income taxes paid $ 395 $ --
============ ============
</TABLE>
[1] Exclusive of net change in cash
[2] Exclusive of net change in current portion of debt
See accompanying notes to condensed consolidated financial statements.
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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements included herein have been
prepared by the Company without independent audit. In the opinion of the
Company's management, all adjustments of a normal and recurring nature
necessary to present fairly the financial position, results of operations
and cash flows for the periods presented have been made. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the period ended December 31,
1999. The results of operations for the three-month period ended March 31,
2000 are not necessarily indicative of operating results for the full year.
2. Inventories
<TABLE>
<CAPTION>
Inventories consisted of the following at:
(In thousands of dollars) MARCH 31, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
Lime and limestone inventories:
Raw materials $ 1,641 $ 1,499
Finished goods 992 955
------------ ------------
2,563 2,454
Service parts 1,836 1,812
------------ ------------
Total inventories $ 4,469 $ 4,266
============ ============
</TABLE>
3. Long-Term Debt
On April 22, 1999, the Company entered into a new credit agreement with a
consortium of commercial banks for a $50,000,000 Senior Secured Term Loan
(the "Loan"). The Loan is repayable over a period of approximately 8 years,
maturing on March 30, 2007, and requires monthly principal payments of
$277,777.78 beginning April 30, 2000, with a final principal payment of
$26,944,444.26 on March 30, 2007, which equates to a 15-year amortization.
The Company agreed to pay a fee equivalent to 2-1/2% of the Loan value to
the placement agent. The fee due on the first $30,000,000 advanced was paid
on closing, and the fee due on the remaining $20,000,000 was paid in
September 1999 when the first installment of this portion was funded.
Upon execution of the Loan agreement, the first $30,000,000 was advanced,
of which approximately $20,000,000 was used to retire all existing bank
loans, with the balance to be used primarily for the modernization and
expansion of the Arkansas operations. Under the terms of the Loan
agreement, the remaining $20,000,000 of the Loan facility was drawn down in
four equal quarterly installments beginning June 30, 1999, and ending March
30, 2000, and will be used
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exclusively for the Arkansas project. Commencement of the draw down of the
quarterly installments was conditional upon the Company receiving an
operating air permit for the first phase of the Arkansas project by
December 31, 1999. In September 1999, the Company received an operating air
permit for the first phase of the modernization and expansion of its
Arkansas plant, and immediately placed construction orders. As a
consequence of receiving this permit, during September the Company drew
down a further $10,000,000, making a total of $40,000,000 advanced under
the terms of the Loan. The final two installments of $5,000,000 each were
drawn down on December 30, 1999 and March 30, 2000.
As of April 22, 1999, the Company also entered into a second amendment of
its amended and restated loan and security agreement with the lead bank
that provides for a $4,000,000 revolving credit facility. This agreement
contained essentially the same terms as the previous agreement and had a
maturity date of April 21, 2000. The Company has renewed this agreement,
which now expires May 31, 2001.
The Loan is secured by a first lien on substantially all of the Company's
assets, with the exception of accounts receivable and inventories that have
been used to secure the amended $4,000,000 revolving credit facility. The
interest rate on the first $30,000,000 of the Loan is 8.75%. In addition to
the fixed interest rate, there is a servicing fee of 0.125% of the
outstanding principal balance due to the administrative agent. Subsequent
installments bear a fixed rate of interest at the date they are funded at
3.52% above the secondary market yield of the United States Treasury
obligation maturing May 15, 2005. On September 24, 1999, the Company drew
down $5,000,000, bearing an interest rate of 9.54%. On September 30, 1999,
the Company drew down a further $5,000,000, bearing an interest rate of
9.35%. On December 30, 1999, the Company drew down another $5,000,000,
bearing an interest rate of 9.94%. On March 30, 2000, the Company drew down
the final $5,000,000, bearing an interest rate of 10.02%. The revolving
credit facility bears interest at LIBOR plus 1.40%, which rate will
increase in accordance with a defined rate spread based upon the Company's
then-current ratio of total funded debt to earnings before interest, taxes,
depreciation and amortization (EBITDA).
The Loan agreement contains covenants that restrict the incurrence of debt,
guaranties and liens, and places certain restrictions on the payment of
dividends and the sale of significant assets. The Company is also required
to meet minimum debt service coverage ratios on an on-going basis and
maintain a minimum level of tangible net worth.
A summary of outstanding debt at the dates indicated is as follows:
(In thousands of dollars)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------- -------------
<S> <C> <C>
Term loan $ 50,000 $ 45,000
Revolving credit facility -- --
------------- -------------
Subtotal 50,000 45,000
Less current installments and
revolving credit facility 3,333 2,500
------------- -------------
Long-term debt, excluding current
installments and revolving credit facility $ 46,667 $ 42,500
============= =============
</TABLE>
The carrying amount of the Company's long-term debt approximates its fair value.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $1,181,000 for the three months
ended March 31, 2000, as compared to $434,000 for the three months ended March
31, 1999. The increase in cash provided by operating activities was primarily
attributable to the increase in accounts payable due in the first quarter of
2000, as compared to the first quarter of 1999.
The Company invested $4,953,000 in capital expenditures in the first three
months of 2000, compared to $1,607,000 in the same period last year. Capital
expenditures of approximately $4,181,000 were related to the modernization and
expansion project at the Arkansas facility in the first three months of 2000.
The planned second production line for pulverized limestone at the Texas plant
will be commenced upon issue of the required state permit, which is now
anticipated in May 2000, and commissioning is anticipated during the third
quarter.
As currently planned, the Arkansas modernization and expansion project will be
completed in two phases: Phase I covers the redevelopment of the quarry plant,
rebuilding of the railroad, establishment of an out-of-state terminal, and
installation of a rotary kiln with a preheater, along with increased product
storage and loading capacity. Construction is well underway, and the Company
anticipates producing lime from the new plant during the third quarter of 2000.
At March 31, 2000, the Company had cash or cash equivalents totaling
$19,149,000, compared with $18,021,000 at December 31,1999. The Company took the
final $5,000,000 drawdown on its $50,000,000 Senior Secured Term Loan (the
"Loan") on March 30, 2000.
Phase II of the Arkansas project would further expand the plant capacity through
the installation of a second kiln with additional storage capacity. Although the
Company could determine to defer Phase II depending upon such factors as
securing satisfactory permits, market demand and the availability of financing,
it currently plans to complete Phase II in the first half of 2001.
The Arkansas improvements should allow the Company to better serve its customers
by improving both quality and service while increasing the production capacity
of quicklime and hydrated lime. With the improvements, the Company expects to be
in a better position to compete for customers who currently cannot use the
Company's lime in their processes due to insufficient production capacity at the
plant or quality constraints. The rotary kiln will have lower operating costs
and a greater capacity than the six shaft kilns currently in use. In addition to
increasing capacity, this kiln will also be able to consistently produce
high-quality lime for use by certain manufacturing customers who currently do
not buy lime from the Arkansas facility. The storage, screening, and load-out
facilities will also substantially reduce the amount of time required for the
loading of bulk quicklime trucks and railcars. The planned modernization and
expansion project will increase both production and shipping capacity, will
lower operating costs, and will allow for a more efficient utilization of the
work force.
Phase I of the Arkansas project is currently projected to cost approximately
$25,500,000. If Phase II proceeds on schedule, it is currently estimated to cost
approximately $9,500,000. The Company intends to finance the Arkansas project
through a combination of internally generated funds and bank
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<PAGE> 8
borrowings. There can be no assurance that sufficient funds will be available to
the Company to complete Phase II of the Arkansas project as currently
contemplated.
The Company is not contractually committed to any planned capital expenditures
until actual orders are placed for equipment. As of March 31, 2000, the Company
had approximately $10,000,000 of liability for open equipment and construction
orders. All future billings related to the Arkansas project will be recorded as
work is performed and billed to the Company.
As of March 31, 2000, the Company had $50,000,000 in total debt outstanding, up
from the $45,000,000 at December 31, 1999. The additional borrowing in March
2000 was the final $5,000,000 drawdown under the Loan agreement, which will be
used to fund the Arkansas modernization and expansion project.
RESULTS OF OPERATIONS
Revenues increased from $6,931,000 in the first quarter of 1999 to $7,686,000 in
the first quarter of 2000, an increase of $755,000, or 10.9%. This resulted from
a 6.6% increase in sales volume and a 4.3% increase in prices. Demand remained
strong in both the Texas and Arkansas markets relative to the winter quarter.
Sales prices continue to be firm.
The Company's gross profit was $1,969,000 for the first quarter of 2000,
compared to $1,877,000 for the first quarter of 1999, a 4.9% increase. Gross
profit margin as a percentage of revenues for the first quarter of 2000
decreased to 25.6% from 27.1% in 1999. The gross profit margin was negatively
impacted by an extensive planned maintenance outage on the largest kiln at our
Texas operation, in order to maximize availability during the peak summer
months. Increased fuel costs, particularly natural gas, also contributed to the
decline in gross profit margin. The Company is taking steps to mitigate the
effects of increased fuel costs, particularly natural gas, at the Texas plant
where the recently completed modernization project now enables various fuels to
be utilized or blended.
Selling, general and administrative expenses ("SG&A") increased by $37,000, or
4.0%, to $955,000 in the first quarter of 2000, as compared to $918,000 in the
first quarter of 1999. However, as a percentage of sales, SG&A decreased to
12.4% as compared to 13.2% in the first quarter a year ago. The primary reason
for the increase is the SG&A cost associated with the Colorado Lime Company
operations in Salida, Colorado, which the Company acquired in June 1999.
Interest expense in the first quarter of 2000 was $904,000 net, after $200,000
had been capitalized as part of the Arkansas project costs, as compared to
$343,000 in 1999. The increase in interest was attributable to the increased
debt incurred to finance the project at Arkansas Lime Company.
Other income increased by $229,000 to $240,000 in the first quarter of 2000, as
compared to $11,000 in the first quarter of 1999. The increase was attributable
to interest income received on funds held in escrow to finance the redevelopment
of the Company's Arkansas operations.
The Company reported net income of $262,000 ($0.07 per share) during the first
quarter of 2000, compared to net income of $458,000 ($0.12 per share) during the
first quarter of 1999.
EBITDA (earnings before interest, taxes, depreciation and amortization) was
$2,479,000 for the first quarter of 2000, an increase of 18.8% from first
quarter 1999 EBITDA of $2,086,000.
8
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FORWARD-LOOKING STATEMENTS. Any statements contained in this Quarterly Report
that are not statements of historical fact are forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. Forward-looking
statements in this Report, including without limitation, statements relating to
the Company's plans, strategies, objectives, expectations, intentions, and
adequacy of resources, are identified by such words as "will," "could,"
"should," "believe," "expect," "intend," "plan," "schedule," "estimate," and
"project." The Company undertakes no obligation to publicly update or revise any
forward-looking statements. Investors are cautioned that forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from expectations, including without limitation the following:
(i) the Company's plans, strategies, objectives, expectations, and intentions
are subject to change at any time at the discretion of the Company; (ii) the
Company's plans and results of operations will be affected by the Company's
ability to manage its growth and modernization; and (iii) other risks and
uncertainties, including without limitation, those risks and uncertainties
indicated from time to time in the Company's filings with the Securities and
Exchange Commission, including the Company's Form 10-K for the fiscal year ended
December 31, 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not Applicable.
9
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PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
11 Statement re computation of per share earnings
27 Financial Data Schedule
b. Reports on Form 8-K:
The Company filed no Reports on Form 8-K during the quarter ended
March 31, 2000.
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED STATES LIME & MINERALS, INC.
May 10, 2000 By: /s/ Herbert G.A. Wilson
------------------------------------
Herbert G.A. Wilson
President and Chief Executive Officer
(Principal Executive Officer)
May 10, 2000 By: /s/ Larry T. Ohms
------------------------------------
Larry T. Ohms
Vice President of Finance, Corporate
Controller and Secretary
(Principal Financial and Accounting Officer)
11
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UNITED STATES LIME & MINERALS, INC.
Quarterly Report on Form 10-Q
Quarter Ended
March 31, 2000
Index to Exhibits
Exhibit No. Exhibit
- ---------- ----------------------------------------------
11 Statement re computation of per share earnings
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
STATEMENT RE COMPUTATION
OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
2000 1999
------------- -------------
<S> <C> <C>
Numerator:
Net income for basic and diluted earnings per share $ 262,000 $ 458,000
------------- -------------
Denominator:
Denominator for basic earnings per common share -
weighted-average shares
3,981,664 3,977,189
Effect of dilutive securities:
Employee stock options -- 2,310
------------- -------------
Denominator for diluted earnings per common share -
weighted-average shares
3,981,664 3,979,499
============= =============
Basic earnings per common share $ 0.07 $ 0.12
============= =============
Diluted earnings per common share $ 0.07 $ 0.12
============= =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 19,149
<SECURITIES> 0
<RECEIVABLES> 4,925
<ALLOWANCES> 0
<INVENTORY> 4,469
<CURRENT-ASSETS> 29,079
<PP&E> 87,340
<DEPRECIATION> (36,416)
<TOTAL-ASSETS> 83,391
<CURRENT-LIABILITIES> 7,951
<BONDS> 0
0
0
<COMMON> 529
<OTHER-SE> 28,430
<TOTAL-LIABILITY-AND-EQUITY> 83,391
<SALES> 7,686
<TOTAL-REVENUES> 7,686
<CGS> 5,717
<TOTAL-COSTS> 5,717
<OTHER-EXPENSES> 715
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 904
<INCOME-PRETAX> 350
<INCOME-TAX> 88
<INCOME-CONTINUING> 262
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 262
<EPS-BASIC> 0.07
<EPS-DILUTED> 0.07
</TABLE>
