Business Context and Reporting Period
Company: United States Lime & Minerals, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 1995
Business Overview: The company operates in the lime and minerals sector, producing aggregates and lime products. As of July 17, 1995, 3,836,063 shares of common stock were outstanding.
Key Financial Metrics
| Metric (in thousands) | Q2 1995 | Q2 1994 | YTD 6mo 1995 | YTD 6mo 1994 |
|---|---|---|---|---|
| Revenues | $11,458 | $10,165 | $20,107 | $16,928 |
| Gross Profit | $3,242 | $2,327 | $5,235 | $3,036 |
| Gross Margin | 28.3% | 22.9% | 26.0% | 17.9% |
| Operating Profit | $1,969 | $1,039 | $2,670 | $514 |
| Net Income | $1,440 | $1,154 | $1,866 | $428 |
| Diluted EPS | $0.38 | $0.30 | $0.49 | $0.11 |
| Cash from Operations (YTD) | $3,713 | $888 | ||
| Free Cash Flow (YTD) | ||||
| Total Debt (Current + Long-term) | $7,496 (as of June 30, 1995) | |||
| Cash & Equivalents | $663 (as of June 30, 1995) |
Material Changes vs. Prior Period
- Revenue Growth: Q2 1995 revenue increased 12.7% year-over-year, driven by a 14.3% increase in sales volume despite a 1.6% decrease in prices. YTD revenue grew 18.8%.
- Profitability Expansion: Net income for Q2 1995 rose 24.8% to $1.44 million. YTD net income surged 336% to $1.87 million compared to $428,000 in the prior year.
- Margin Improvement: Gross profit margin improved to 28.3% in Q2 1995 from 22.9% in Q2 1994, attributed to higher volume and production efficiencies.
- One-Time Items: The prior year (1994) included a $425,000 benefit from the expiration of post-closing obligations related to the 1992 sale of Virginia Lime Company assets, which inflated 1994 comparables for "Other, net" income.
- Dividends: The company paid its first cash dividend since 1986 in Q2 1995 (2.5 cents per share).
Outlook, Risks, and Management Commentary
- Capital Projects: Management has approved a $5-6 million project to build a new kiln at the Arkansas plant to expand the customer base and meet specific chemical needs not currently served.
- Market Conditions: Demand remained strong in the first half of 1995, though management noted some slowing in the construction aggregates market during the second quarter.
- Liquidity: Operating cash flow improved significantly to $3.7 million YTD. The company maintains a fixed interest rate of 7.95% on its $8 million Term Loan through February 1997.
- Deferred Costs: $216,000 in deferred costs related to a planned plant shut-down in Q1 1995 are included in prepaid expenses and will be absorbed into inventory later in the year.
Investor Verification Checklist
- Verify the sustainability of the 14.3% volume increase given the noted slowing in the construction aggregates market.
- Confirm the timeline and funding sources for the $5-6 million Arkansas kiln expansion project.
- Review the impact of the one-time $425,000 benefit in 1994 to ensure accurate year-over-year comparisons of "Other, net" income.
- Monitor the company's ability to maintain gross margins if price decreases continue to outpace volume growth.
- Assess the liquidity position relative to the $7.5 million total debt obligation and upcoming capital expenditures.