News

TOR Minerals International, Inc. Reports Fourth Quarter and Year-end 2015 Financial Results

[STK] NASDAQ-SMALL:TORM

[IN] MNG PRM

[SU] ERN CCA

TO BUSINESS EDITORS:

TOR Minerals International, Inc. Reports Fourth Quarter and Year-end

2015 Financial Results

CORPUS CHRISTI, Texas, March 3, 2016 /PRNewswire/ –TOR Minerals

International, Inc. (Nasdaq: TORM), producer of high performance

specialty minerals, today announced its financial results for the

fourth quarter and year-ended December 31, 2015.

Full-year 2015 summary

— 2015 net sales decreased 21% to $37.1 million

— 2015 net loss of $6.4 million, versus 2014 net loss of $554,000

— 2015 loss per diluted share of ($2.11) per share, versus net loss

per diluted share of $(0.18)

— 2015 Adjusted EBITDA of $2.1 million, versus $5.1 million during

2014

— 2015 cash flow from operations of $3.4 million, versus 2014 cash

flow from operations of $4.6 million

Annual Sales Comparison by Product Group (in 000’s) 2015 2014 % Change 2015 vs. 2014

Specialty Aluminas $ 16,781 $ 21,698 -23%

Barium Sulfate and Other Products 9,154 9,546 -4%

TiO2Pigments 11,124 15,486 -28%

Total $ 37,059 $ 46,730 -21%

During 2015, net sales decreased 21 per cent primarily due to a

decrease in volumes across all product categories and, to a lesser

extent, from the negative effect of foreign currency translation and

lower average selling prices. The negative effect of foreign currency

translation was responsible for approximately 20 to 25 per cent of the

decrease in each of the three products groups. The decrease in

Specialty Alumina sales was primarily due to lower unit volumes from a

U.S. large customer, which was only partially offset by increased

volumes in Europe and increased volumes of the Company’s

Haltex/Optiload products. The decrease in TiO2 pigments sales was

primarily due to lower unit volumes resulting from continued weakness

in the global TiO2 market, as well as aggressive pricing pressure from

producers of white TiO2 in China and other producers.

During 2015, gross margin decreased 9.1 percentage points to 5.1

per cent of sales. Due to continued weakness in the TiO2 market, the

Company recorded a $1.7 million non-cash inventory adjustment to

further reduce the carrying value of its TiO2 finished goods and raw

materials, as well as a reserve for obsolescence inventory. The

remaining year-over-year decrease in gross margin was related to lower

average selling prices and lower utilization at the Company’s plant in

Malaysia. The Company also recorded a separate non-cash charge of

$2.9 million during the fourth quarter of 2015 related to the loss of

disposal of its TiO2 feedstock production fixed assets, as management

determined that it was more cost effective to continue purchasing

feedstock material for its TiO2-based products from alternate sources

than to resume production at its Malaysian facility. During 2015,

operating expenses decreased seven per cent to $4.7 million, as lower

salaries expense was partially offset by an increase in bad debt

expense. During 2015, net loss was $6.4 million, or ($2.11) per

diluted share, as compared to net loss of $554,000, or ($0.18) per

diluted share, during the same period a year ago.

“Our outlook for our Specialty Alumina business is positive. Despite

the downturn in the European economy, Specialty Alumina sales volumes

in Europe increased four per cent year over year. In anticipation of

growth from existing products and new large-volume applications, we

invested in our Specialty Alumina production facilities during 2015,

more than doubling the plant’s capacity,” commented Dr. Olaf Karasch,

Chief Executive Officer. “Our TiO2 business remained challenged by

persistent pricing pressure from Chinese producers that is affecting

the entire industry. While difficult market conditions are expected

to persist in the TiO2 industry, we have taken significant cost out of

our TiO2 business such that we believe that we can produce income from

this segment at low volume levels. Despite the revenue challenges and

significant non-cash charges, our operations delivered a substantial

cash flow during 2015, generating $3.4 million in cash flow from

operations, which was re-invested to add capacity to our alumina

operations.”

Fourth quarter summary

— 4Q15 net sales decreased 19% to $8.0 million

— 4Q15 net loss of $5.9 million, versus 4Q14 net loss of $1.7 million

— 4Q15 loss per share of ($1.97), versus 4Q14 net loss per diluted

share of ($0.57)

— 4Q15 cash flow from operations of $37,000, versus 4Q14 cash used in

operations of ($53,000)

Quarterly Sales Comparison by Product Group (in 000’s) 4Q15 4Q14 % Change

Specialty Aluminas $ 3,830 $ 5,012 -24%

Barium Sulfate and Other Products 1,978 1,943 2%

TiO2Pigments 2,185 2,934 -26%

Total $ 7,993 $ 9,889 -19%

During the fourth quarter, net sales decreased 19 per cent to $8.0

million, as we experienced a 24 per cent decrease in Specialty Aluminas

and a 26 per cent decrease in TiO2 Pigments, which was partially offset

by a 2 per cent increase in our Barium Sulfate and Other Products

sales. The decrease in Specialty Alumina sales was primarily due to

lower unit volumes from a large customer and the negative affect of

foreign currency translation, which was only partially offset by

increased volumes in Europe and increase volumes of the Company’s

Haltex/Optiload products. In addition to the negative effect of

foreign currency translation, the decrease in TiO2 pigment sales was

due to lower volume and lower average selling price related to the

continued pricing pressure from Chinese producers. Despite the

negative affect of foreign currency translation, sales of Barium

Sulfate and Other Products increased two per cent during the fourth

quarter. The increase in sales of Barium Sulfate and Other Products

was due to both new business and expanded use by existing customers.

Year-over-year comparisons during the fourth quarter income/(loss)

were made difficult due to significant non-cash charges during both

periods. During the fourth quarter, operating expenses increased 22

per cent to $4.4 million, primarily related to the non-cash loss on

disposal of assets at the Company’s Malaysian subsidiary related to

the SR production. During the fourth quarter, net loss available to

common shareholders was $5.9 million, or ($1.97) per diluted share, as

compared to net loss of $1.7 million, or ($0.57) per diluted share,

during the same period a year ago.

“Due to the strategic moves we have made to diversify our revenue

base, position the company for growth and lower our cost structure in

an effort improve returns, we are better positioned to weather the

headwinds that have resulted in disappointing financial comparisons

this year, and remain optimistic about our business for the next

several years,” said Dr. Karasch. “We expect our Specialty Alumina

and Barium Sulfate business to resume volume growth from current

levels and we remain optimistic about the outlook for these categories

for the next several years. To meet anticipated demand for existing

and new Specialty Alumina applications, we are completing the process

of expanding our production capacity. Growth in other areas of our

business has diversified our revenue base and resulted in our TiO2

business having less impact on our overall results. In addition, by

significantly lowering our cost structure and inventory requirements,

we are better positioned to generate positive contribution from our

TiO2 business despite difficult market conditions that are likely to

persist for the next several years. Overall, we intend to drive

improvement in returns with faster inventory turnover and lower

production costs, while refocusing investment in areas that can

provide opportunities for greater growth and contribute attractive

returns.”

TOR Minerals will host a conference call at 5:00 p.m. Eastern, 4:00

p.m. Central Time, on March 3, 2016, to further discuss fourth quarter

and full year 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 #

13630651.

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

labour, 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.

Non-GAAP Financial Measures and Pro-Forma Results

This press release includes the following financial measure defined as

“non-GAAP financial measures” by the Securities and Exchange

Commission: Adjusted-EBITDA. Adjusted-EBITDA may be different from

non-GAAP financial measures used by other companies. The presentation

of this financial information, which is not prepared under any

comprehensive set of accounting rules or principles, is not intended

to be considered in isolation or as a substitute for the financial

information prepared and presented in accordance with generally

accepted accounting principles. Reconciliations of this non-GAAP

financial measures to the nearest comparable GAAP measures is provided

in the table below.

Non-GAAP EBITDA includes items such as impairment charges, allowance

for doubtful accounts, non-cash charges related to inventory

impairments and and non-cash charges related to the disposal of

assets. The Company believes this non-GAAP measure provides useful

information to both management and investors by excluding certain

expenses, gains and losses or net purchases of property and equipment,

as the case may be, which may not be indicative of its core operation

results and business outlook.

Contact for Further Information: Dave Mossberg Three Part Advisors,

LLC 817-310-0051

TOR Minerals International, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended December 31, Twelve Months Ended December 31,

2015 2014 2015 2014

NET SALES $ 7,993 $ 9,889 $ 37,059 $ 46,730

Cost of sales 9,075 8,437 35,183 40,111

GROSS MARGIN (1,082) 1,452 1,876 6,619

Technical services and research and development 35 49 178 199

General, administrative and selling expenses 1,447 1,490 4,481 4,809

Loss on disposal/impairment of assets 2,912 2,140 2,950 2,140

OPERATING LOSS (5,476) (2,227) (5,733) (529)

OTHER INCOME (EXPENSE):

Interest expense (31) (79) (208) (354)

Gain (loss) on foreign currency exchange rate (14) 104 (148) 114

Other, net income (expense) 6 18 24 28

Total Other Income (Expense) (28) 43 (321) (212)

LOSS BEFORE INCOME TAX (5,504) (2,184) (6,054) (741)

Income tax (benefit) expense 442 (474) 310 (187)

NET LOSS $ (5,946) $ (1,710) $ (6,364) $ (554)

Loss per common share:

Basic and diluted $ (1.97) $ (0.57) $ (2.11) $ (0.18)

Weighted average common shares outstanding:

Basic and diluted 3,014 3,014 3,014 3,014

TOR Minerals International, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except per share amounts)

December 31,

2015 2014

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 813 $ 2,657

Trade accounts receivable, net 3,534 4,915

Inventories, net 13,988 20,175

Other current assets 878 752

Total current assets 19,213 28,499

PROPERTY, PLANT AND EQUIPMENT, net 17,472 18,889

DEFERRED TAX ASSET, foreign 19 716

OTHER ASSETS 4 22

Total Assets $ 36,708 $ 48,126

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable $ 2,432 $ 3,318

Accrued expenses 1,007 1,832

Notes payable under lines of credit 179 886

Export credit refinancing facility 1,108 2,777

Current maturities of long-term debt – financial institutions 1,485 1,113

Total current liabilities 6,211 9,926

LONG-TERM DEBT – FINANCIAL INSTITUTIONS 3,479 1,607

DEFERRED TAX LIABILITY, domestic 262 581

Total liabilities 9,952 12,114

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY:

Common stock $1.25 par value: authorized, 6,000 shares; 3,014 shares issued and outstanding at December 31, 2015 and 2014 3,767 3,767

Additional paid-in capital 29,636 29,503

(Accumulated deficit) Retained earnings (5,265) 1,099

Accumulated other comprehensive income (loss) (1,382) 1,643

Total shareholders’ equity 26,756 36,012

Total Liabilities and Shareholders’ Equity $ 36,708 $ 48,126

TOR Minerals International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

Years Ended December 31,

2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Loss $ (6,364) $ (554)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation 2,863 3,445

Inventory impairment 1,749 –

Loss on disposal/impairment of assets 2,950 2,140

Share-based compensation 133 128

Deferred income tax expense (benefit) 378 (723)

Provision (benefit) for bad debts 297 (27)

Changes in working capital:

Trade accounts receivables 861 (556)

Inventories 2,246 (343)

Other current assets (157) (180)

Federal income tax refund – 431

Accounts payable and accrued expenses (1,457) 794

Net cash provided by operating activities 3,499 4,555

CASH FLOWS FROM INVESTING ACTIVITIES:

Additions to property, plant and equipment (5,662) (2,064)

Proceeds from sales of property, plant and equipment 18 –

Net cash used in investing activities (5,644) (2,064)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from lines of credit 6,578 3,051

Payments on lines of credit (7,349) (3,488)

Proceeds from export credit refinancing facility 4,220 7,935

Payments on export credit refinancing facility (5,194) (8,780)

Payments on capital lease – (10)

Proceeds from long-term bank debt 3,641 –

Payments on long-term bank debt (1,032) (990)

Proceeds from the issuance of common stock, and exercise of common stock options – 12

Net cash provided by (used in) financing activities 864 (2,270)

Effect of foreign currency exchange rate fluctuations on cash and cash equivalents (563) (484)

Net decrease in cash and cash equivalents (1,844) (263)

Cash and cash equivalents at beginning of year 2,657 2,920

Cash and cash equivalents at end of year $ 813 $ 2,657

Supplemental cash flow disclosures:

Interest paid $ 134 $ 357

Income taxes paid $ 386 $ 200

Non-cash investing activities:

Capital expenditures financed through accounts payable and accrued expenses $ 355 $ –

TOR Minerals International, Inc. and Subsidiaries

Reconciliation of Non-GAAP Items

(In thousands)

(Unaudited)

Twelve Months Ended December 31,

2015 2014

Net Loss $ (6,364) $ (554)

Adjustments:

Depreciation and Amortization 2,863 3,445

Interest Expense 208 354

Bad Debt Expense 297 (27)

(Gain) Loss on Foreign Currency Exchange Rate 137 (114)

Income Tax (benefit) expense 310 (187)

Non-cash Inventory Impairment 1,749 –

Non-Cash Loss on Disposal/Impairment of Assets 2,950 2,140

Adjusted EBITDA $ 2,150 $ 5,057

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SOURCE TOR Minerals International, Inc.

-0- 03/03/2016

/Web Site: http://www.torminerals.com

(NASDAQ-SMALL:TORM) /

CO: TOR Minerals International, Inc.

ST: Texas

IN: MNG PRM

SU: ERN CCA

PRN

— DA37553 —

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