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[October 2007]
Minerals Technologies Realigns Operations
Minerals Technologies Inc (New York, USA) has announced that its Board of Directors approved a plan to realign its business operations to improve profitability and increase shareholder value, resulting in a pre-tax charge of US$157 million. The company said the realignment would better position the company for future success by focusing on and leveraging its core strengths. Earnings per share were US$0.69 before the restructuring and impairment charges; and the charge resulted in a US$5.47 per share net loss for the third quarter.
"By exiting some businesses and consolidating some product lines, we'll be returning to our core competencies," said Joseph Muscari, Chairman and CEO. "With this stronger foundation, we can leverage on our competitive advantages with a more effective strategy for profitable growth that will mean improved returns for our shareholders."
On 24 October 2007, the Board of Directors also authorised an additional share repurchase programme of US$75 million over a two-year period. This brings the total amount currently available for share repurchase to more than US$100 million.
As a result of the realignment, the company will exit certain businesses, consolidate some product lines and record a charge resulting from impairment of assets of US$140.9 million. In addition, the company recorded restructuring charges of US$4.2 million related to these exit activities. As part of the ongoing initiative to better control operating costs and overhead expense, as well as improve efficiency, the company will reduce its workforce by approximately 200, or 7% of its 2,800 worldwide employees. This will result in estimated severance costs between US$14 million and US$15 million, of which US$10.1 million was recognised in the third quarter. The major components of the realignment are:
-- Minerals Technologies has decided to exit its Synsil® Products product line. The company will sell both Synsil® Products manufacturing facilities in Chester, South Carolina, and Cleburne, Texas, and the customer sampling facility in Woodville, Ohio. This product line will be reclassified to discontinued operations in the fourth quarter of 2007.
The company concluded that the current product form of Synsil® is not suitable to penetrate a significant portion of the market as previously envisioned. The initial success achieved in certain market segments proved unsustainable at higher operating/fill rates in major glass market segments
-- The company will realign its Processed Minerals product line, which consists of four mines and processing facilities in the USA and two plants in the Midwest that process imported ores.
The two Midwest plants located in Mount Vernon, Indiana, and Wellsville, Ohio, which were acquired in 2002 and process primarily Chinese talc ores, will be held for sale and reclassified to discontinued operations in the fourth quarter of 2007.
This realignment will result in a change of direction from a diversified product line that included processing imported ore to an integrated ‘mine to market’ strategy.
-- Going forward, four fully integrated operations will be the focus of the ‘mine to market’ strategy, three of which produce ground calcium carbonate, primarily for the construction and automotive sectors. These are in Adams, Massachusetts; Canaan, Connecticut; and Lucerne Valley, California. The fourth facility mines and produces talc in Barretts, Montana.
-- The company will also consolidate its Specialty PCC operation in the USA. Specialty PCC customers serviced from the Brookhaven, Mississippi, facility will be transferred to the company's Adams, Massachusetts, plant and the assets at Brookhaven will be held for sale.
-- The company plans to modify the marketing strategy for its coating PCC products worldwide and plans to convert from a merchant business model to a satellite business model - one that has proven successful in the past in the coating PCC product line. This would result in consolidation of the merchant coating PCC operations in Europe.
It is the company's intention to cease operation of the coating PCC merchant facility in Hermalle, Belgium, at which time it would be held for sale. Current commercial customers would be transferred to the coating PCC merchant facility in Walsum, Germany. The Walsum facility will also focus on supporting new product and market development activities for the satellite PCC programme.
-- Slower than anticipated market penetration in China required the company to record an impairment of assets charge at its manufacturing facility there. Accordingly, the company also modified its support infrastructure for that operation.
Minerals Technologies remains committed to its strategy to penetrate the Asian steel market - especially China, which is the world's largest steel producer. The refractories manufacturing facility in China positions the company to take advantage of that future growth. In addition, the company will continue to move with its large global customers to other, higher growth regions of the world like India, Eastern Europe, Brazil and Russia.
Other details are available via the website.
ENDS