United States Lime & Minerals(USLM) - 2019 Q4 - Annual Report

Revenue and Profitability - Revenues increased by 9.6% in 2019 compared to 2018, with Lime and Limestone Operations revenues rising by 10.6% due to an 8.6% increase in sales volumes and a 2.0% increase in average product prices [112]. - Revenues for 2019 increased to $158.3 million from $144.4 million in 2018, an increase of $13.8 million, or 9.6% [155]. - Revenues from Lime and Limestone Operations in 2019 increased $15.1 million, or 10.6%, to $157.0 million from $141.9 million in 2018, primarily due to increased sales volumes and a 2.0% average price increase [155]. - Gross profit increased by 36.7% in 2019, with Lime and Limestone Operations gross profit rising by 42.6%, attributed to increased revenues, lower fuel costs, and improved operating efficiencies from a new kiln [115]. - Gross profit increased to $41.7 million for 2019 from $30.5 million for 2018, an increase of $11.2 million, or 36.7% [156]. - Total gross profit for 2019 was $41,676, an increase of 36.9% from $30,486 in 2018 [274]. - Operating profit for lime and limestone operations reached $30,543 in 2019, a significant increase from $18,998 in 2018 [274]. - Net income rose by $6.4 million, or 32.4%, in 2019, with net income per fully diluted share increasing to $4.64 from $3.51 in 2018 [117]. - Net income increased to $26.1 million ($4.64 per share diluted) in 2019, compared to $19.7 million ($3.51 per share diluted) in 2018, an increase of $6.4 million, or 32.4% [161]. - Net income for 2019 was $26,056, a 32.5% increase from $19,685 in 2018 [205]. Capital Expenditures and Investments - Capital investments totaled $27.1 million in 2019, while dividends paid amounted to $33.1 million, including a special cash dividend of $30.0 million [118]. - The new kiln at St. Clair began producing commercially salable quicklime in Q2 2019, with total expenditures on the kiln and modernization project reaching $44.2 million, expected to total approximately $50 million upon completion [119]. - The company expects to spend approximately $12.0 million per year over the next several years for capital and re-equipping projects in Lime and Limestone Operations [170]. - Capital expenditures related to environmental matters were $1,156,000 in 2019, slightly up from $1,152,000 in 2018 [236]. - Capital expenditures for lime and limestone operations in 2019 totaled $27,100, a decrease of 49.6% from $53,762 in 2018 [274]. Cash Flow and Liquidity - Net cash provided by operating activities was $47.0 million in 2019, compared to $38.7 million in 2018, an increase of $8.3 million, or 21.4% [171]. - Cash dividends paid in 2019 totaled $33,058, significantly higher than $3,022 in 2018 [213]. - The company believes that cash on hand and cash flows from operations will be sufficient to meet operating and capital needs, including modernization and expansion projects [179]. - The company had no debt outstanding as of December 31, 2019, and had $0.4 million of letters of credit issued under the Revolving Facility [177]. - Cash and cash equivalents decreased to $54,260 at the end of 2019 from $67,218 at the end of 2018, a decline of 19.3% [213]. - The company’s cash and cash equivalents at commercial banking institutions exceeded federally insured limits, indicating a strong liquidity position [222]. Dividends and Shareholder Returns - A special cash dividend of $30.0 million was paid in Q4 2019, with an increased regular quarterly cash dividend of $0.16 declared for 2020 [120]. - The company paid cash dividends of $5.89 per share in 2019, which included a special dividend of $5.35 per share [240]. - The company declared an increased quarterly cash dividend of $0.16 per share on January 30, 2020 [277]. Tax and Regulatory Matters - The effective income tax rate for 2019 was 15.7%, compared to 8.7% in 2018, reflecting an increase in income tax expense of $3.0 million [160]. - The income tax expense for 2019 was $4,844, representing 15.7% of pretax income, compared to $1,883 (8.7%) in 2018 and a benefit of $(2,205) in 2017 [256]. - Deferred tax liabilities increased to $17,218 in 2019 from $12,365 in 2018, primarily due to lime and limestone property, plant, and equipment [258]. Impairments and Losses - The company recognized an impairment charge of $0.9 million in 2019 related to long-lived assets due to decreased prices for natural gas and natural gas liquids [158]. - The Company reported an impairment charge of $930,000 in 2019 related to its natural gas interests due to decreased prices for natural gas and natural gas liquids [229]. - Other segment reported an operating loss of $1,297 in 2019, impacted by a $930 impairment charge [274]. Operational Efficiency and Challenges - The company is focused on maintaining and increasing lime and limestone prices to offset rising costs amid competitive pressures [132]. - Modernization and expansion projects have enhanced production capacity and efficiency, although demand and prices have not fully utilized this capacity [133]. - Selling, general and administrative expenses (SG&A) increased to $11.5 million for 2019, an increase of $1.0 million, or 9.7% [157]. Assets and Liabilities - Total assets as of December 31, 2019, were $247,037, a slight increase from $244,671 in 2018 [203]. - Total liabilities increased to $29,905 in 2019 from $21,704 in 2018, marking a 37.8% rise [203]. - Total contractual obligations as of December 31, 2019, amounted to $14.225 million, with $3.322 million in operating leases and $7.928 million in purchase obligations [178]. Miscellaneous - The company recognized revenue from external freight billed to customers of $28,397,000 in 2019, compared to $25,637,000 in 2018, indicating a growth of approximately 6.9% [218]. - The total inventory value as of December 31, 2019, was $13,388,000, a slight increase from $12,846,000 in 2018 [224]. - The allowance for doubtful accounts decreased to $361,000 in 2019 from $430,000 in 2018, reflecting improved credit management [223]. - The carrying value of the Company’s asset retirement obligations (AROs) was $1,482,000 as of December 31, 2019, down from $1,519,000 in 2018 [231]. - The company has adopted a new accounting principle for leases effective January 1, 2019, using the modified retrospective method [189].