Business Context and Reporting Period
Company: United States Lime & Minerals, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: March 31, 1996
Business Overview: The company operates lime and mineral production facilities, including a plant in Arkansas. As of April 12, 1996, 3,861,853 shares of common stock were outstanding.
Key Financial Metrics
| Metric (in thousands) | Q1 1996 | Q1 1995 |
|---|---|---|
| Revenues | $8,523 | $8,649 |
| Gross Profit | $1,810 | $1,919 |
| Gross Margin | 21.24% | 22.19% |
| Operating Profit | $705 | $701 |
| Net Income | $503 | $426 |
| Diluted EPS | $0.13 | $0.11 |
| Operating Cash Flow | $851 | $1,222 |
| Capital Expenditures | ($1,691) | ($1,011) |
| Cash and Equivalents (End of Period) | $24 | $157 |
| Total Debt (Current + Long-term) | $5,238 | N/A |
Material Changes vs. Prior Period
- Revenue: Decreased 1.5% to $8.523 million, driven by an 8.4% decline in sales volume partially offset by a 6.9% increase in prices.
- Profitability: Net income increased 18.1% to $503,000 despite lower gross profit, primarily due to a 9.3% reduction in Selling, General, and Administrative (SG&A) expenses and lower interest costs.
- Cash Flow: Operating cash flow declined 30.4% to $851,000. Cash and cash equivalents dropped significantly from $1.161 million to $24,000 due to high capital expenditures.
- Capital Spending: Capital expenditures increased 67.2% to $1.691 million, reflecting investment in new infrastructure.
Outlook, Risks, and Management Commentary
- New Kiln Project: The company is proceeding with a new kiln at its Arkansas plant, expected to cost $9-10 million. This project aims to expand the customer base and meet specific chemical needs.
- Regulatory Status: Project progress was delayed by state regulatory requirements. A new plant-wide permit was obtained, and the permitting process for the new kiln is expected to be secured by the end of 1996.
- Financing: The new kiln will be financed through internally generated funds and/or alternative financing sources.
- Operational Factors: Lower gross profit margins were attributed to decreased shipments and production volumes caused by poor weather in the first quarter.
- Unusual Items: "Other, net" income increased due to timber sales and a final payment from a 1993 judgment. SG&A reductions included recoveries of doubtful accounts.
Investor Verification Checklist
- Liquidity Position: Verify the sustainability of operations with only $24,000 in cash and cash equivalents at period end.
- Capital Project Execution: Monitor the timeline and cost overruns for the $9-10 million Arkansas kiln project.
- Debt Obligations: Review the schedule for current installments of long-term debt ($1.143 million) and total debt service requirements.
- Seasonality Impact: Assess the extent to which Q1 results were impacted by weather-related production delays versus structural demand changes.
- Deferred Costs: Confirm the absorption of $557,000 in deferred costs related to the Q1 plant shut-down into future inventory.