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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ........ to ........
Commission file number is
000-04197
UNITED STATES LIME & MINERALS, INC.
(Exact name of registrant as specified in its charter)
Texas 75-0789226
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5429 LBJ Freeway, Suite 230 75240
,
Dallas
,
TX
(Address of principal executive offices) (Zip Code)
(
972
)
991-8400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $0.10 par value USLM The Nasdaq Stock Market LLC
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes
No
Indicate by check mark whether the Registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T ((s)232.405 of this chapter) during the preceding 12
months (or for such shorter period that the Registrant was required to submit
such files).
Yes
No
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of "large accelerated filer,"
"accelerated filer," "smaller reporting company," and "emerging growth
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the Registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined
in Rule
12b-2 of the Exchange Act). Yes
No
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date: As of April 29, 2024,
5,709,154
shares of common stock, $0.10 par value, were outstanding.
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(Unaudited)
March 31, December 31,
2024 2023
ASSETS
Current assets
Cash and cash equivalents $ 206,995 $ 187,964
Trade receivables, net 42,155 38,052
Inventories 25,724 24,313
Prepaid expenses and other current assets 4,001 4,640
Total current assets 278,875 254,969
Property, plant and equipment 474,280 469,598
Less accumulated depreciation and depletion ( (
294,604 289,803
) )
Property, plant and equipment, net 179,676 179,795
Operating lease right-of-use assets 4,897 5,273
Other assets, net 548 565
Total assets $ 463,996 $ 440,602
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 6,980 $ 7,404
Current portion of operating lease liabilities 1,520 1,582
Accrued expenses 10,746 8,505
Total current liabilities 19,246 17,491
Deferred tax liabilities, net 24,421 24,659
Operating lease liabilities, excluding current portion 3,601 3,919
Other liabilities 1,412 1,429
Total liabilities 48,680 47,498
Stockholders' equity
Common stock 674 674
Additional paid-in capital 39,191 37,820
Retained earnings 433,512 412,499
Less treasury stock, at cost ( (
58,061 57,889
) )
Total stockholders' equity 415,316 393,104
Total liabilities and stockholders' equity $ 463,996 $ 440,602
See accompanying notes to condensed consolidated financial statements.
2
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
2024 2023
Revenues $ 71,687 100.0 % $ 66,777 100.0 %
Cost of revenues
Labor and other operating expenses 35,101 49.0 % 37,029 55.5 %
Depreciation, depletion and amortization 5,979 8.3 % 5,756 8.6 %
41,080 57.3 % 42,785 64.1 %
Gross profit 30,607 42.7 % 23,992 35.9 %
Selling, general and administrative expenses 4,848 6.8 % 4,152 6.2 %
Operating profit 25,759 35.9 % 19,840 29.7 %
Other (income) expense, net ( ( % ( ( %
2,540 3.6 1,507 2.3
) ) ) )
Income before income tax expense 28,299 39.5 % 21,347 32.0 %
Income tax expense 5,860 8.2 % 4,243 6.4 %
Net income $ 22,439 31.3 % $ 17,104 25.6 %
Net income per share of common stock
Basic $ 3.93 $ 3.01
Diluted $ 3.92 $ 3.00
See accompanying notes to condensed consolidated financial statements.
3
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)
(Unaudited)
Common Stock Additional
Shares Paid-In Retained Treasury
Outstanding Amount Capital Earnings Stock Total
Balances at December 31, 2023 5,704,556 $ 674 $ 37,820 $ 412,499 $ ( $ 393,104
57,889
)
Stock options exercised 2,400 - 130 - - 130
Stock-based compensation 2,957 - 1,241 - - 1,241
Treasury shares purchased ( - - - ( (
687 172 172
) ) )
Cash dividends paid - - - ( - (
1,426 1,426
) )
Net income - - - 22,439 - 22,439
Balances at March 31, 2024 5,709,226 $ 674 $ 39,191 $ 433,512 $ ( $ 415,316
58,061
)
Common Stock Additional
Shares Paid-In Retained Treasury
Outstanding Amount Capital Earnings Stock Total
Balances at December 31, 2022 5,682,079 $ 671 $ 34,528 $ 342,504 $ ( $ 321,088
56,615
)
Stock options exercised 5,762 1 112 - - 113
Stock-based compensation 3,124 - 812 - - 812
Treasury shares purchased ( - - - ( (
646 98 98
) ) )
Cash dividends paid - - - ( - (
1,137 1,137
) )
Net income - - - 17,104 - 17,104
Balances at March 31, 2023 5,690,319 $ 672 $ 35,452 $ 358,471 $ ( $ 337,882
56,713
)
See accompanying notes to condensed consolidated financial statements.
4
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
Three Months Ended March 31,
2024 2023
OPERATING ACTIVITIES:
Net income $ 22,439 $ 17,104
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization 6,054 5,828
Amortization of deferred financing costs 2 2
Deferred income taxes ( (
238 161
) )
Gain on disposition of property, plant and equipment ( (
93 70
) )
Stock-based compensation 1,241 812
Changes in operating assets and liabilities:
Trade receivables, net ( (
4,103 4,764
) )
Inventories ( (
1,411 2,467
) )
Prepaid expenses and other current assets 639 609
Other assets 15 (
6
)
Accounts payable and accrued expenses 2,643 3,738
Other liabilities ( 19
21
)
Net cash provided by operating activities 27,167 20,644
INVESTING ACTIVITIES:
Purchase of property, plant and equipment ( (
6,824 5,451
) )
Proceeds from sale of property, plant and equipment 156 120
Net cash used in investing activities ( (
6,668 5,331
) )
FINANCING ACTIVITIES:
Cash dividends paid ( (
1,426 1,137
) )
Proceeds from exercise of stock options 130 113
Purchase of treasury shares ( (
172 98
) )
Net cash used in financing activities ( (
1,468 1,122
) )
Net increase in cash and cash equivalents 19,031 14,191
Cash and cash equivalents at beginning of period 187,964 133,384
Cash and cash equivalents at end of period $ 206,995 $ 147,575
See accompanying notes to condensed consolidated financial statements.
5
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1.
Basis of Presentation
The condensed consolidated financial statements included herein have been
prepared by United States Lime & Minerals,
Inc. (the "Company") without independent audit. In the opinion of the
Company's management, all adjustments of a normal and recurring nature
necessary to present fairly the financial position, results of operations, and
cash flows for the periods presented have been made. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
of America ("US GAAP") have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form
10-K for the period ended December 31, 2023. The results of operations for the
three-month period ended March 31, 2024 are not necessarily indicative of
operating results for the full year.
2.
Organization
The Company is a manufacturer of lime and limestone products, supplying
primarily the construction (including highway, road and building contractors),
industrial (including paper and glass manufacturers), metals (including steel
producers), environmental (including municipal sanitation and water treatment
facilities and flue gas treatment processes), roof shingle manufacturers, oil
and gas services, and agriculture (including poultry producers) industries.
The Company is headquartered in Dallas, Texas and operates lime and limestone
plants and distribution facilities in Arkansas, Colorado, Louisiana, Missouri,
Oklahoma, and Texas through its wholly owned subsidiaries, Arkansas Lime
Company, ART Quarry TRS LLC (DBA Carthage Crushed Limestone), Colorado Lime
Company, Mill Creek Dolomite, LLC ("Mill Creek"), Texas Lime Company, U.S.
Lime Company, U.S. Lime Company-Shreveport, U.S. Lime Company-St.
Clair, and U.S. Lime Company-Transportation. In addition, the Company, through
its wholly owned subsidiary, U.S. Lime Company-O & G, LLC, has royalty and
non-operated working interests in natural gas wells located in Johnson County,
Texas, in the Barnett Shale Formation.
3.
Accounting Policies
Revenue Recognition.
The Company recognizes revenue for its lime and limestone operations when (i)
a contract with the customer exists and the performance obligations are
identified; (ii) the price has been established; and (iii) the performance
obligations have been satisfied, which is generally upon shipment. The
Company's returns and allowances are minimal. Revenues include external
freight billed to customers with related costs accounted for as fulfillment
costs and included in cost of revenues. External freight billed to customers
included in 2024 and 2023 revenues was
$
11.2
million and $
11.7
million, for the respective three months ended March 31, which approximates
the amount of external freight included in cost of revenues. Sales taxes
billed to customers are not included in revenues. For its natural gas
interests, the Company recognizes revenue in the month of production and
delivery.
Trade Receivables.
The majority of the Company's trade receivables are unsecured. Payment terms
for all trade receivables are based on the underlying purchase orders,
contracts, or purchase agreements, and are generally fixed, short-term and do
not contain a significant financing component. The Company estimates credit
losses relating to trade receivables based on an assessment of the current and
forecasted probability of collection, historical trends, economic conditions,
and other significant events that may impact the collectability of accounts
receivables. Due to the relatively homogenous nature of its trade receivables,
the Company does not believe there is any meaningful asset-specific
differences within its trade receivables portfolio that would require the
portfolio to be grouped below the consolidated level for review of credit
losses. Credit losses relating to trade receivables have generally been within
management expectations and historical trends. Uncollected trade receivables
are charged-off when identified by management to be unrecoverable. The Company
maintains an allowance for credit losses to reflect currently expected
estimated losses resulting from the failure of customers to make required
payments.
6
4.
Reportable Segment
The Company has identified
one
reportable segment based on the distinctness of the Company's activities and
products: lime and limestone operations. All operations are in the United
States. In evaluating the operating results of the Company, management
primarily reviews revenues, gross profit, and operating profit from the lime
and limestone operations. Operating profit from the Company's lime and
limestone operations includes all of the Company's selling, general and
administrative costs. The Company does not allocate interest income and
expense and other expense to its lime and limestone operations. Other
identifiable assets include assets related to the Company's natural gas
interests, unallocated corporate assets, and cash items.
Operating results and certain other financial data for the three months ended
March 31, 2024 and 2023 for the Company's lime and limestone operations
segment and other are as follows (in thousands):
Three Months Ended March 31,
Revenues 2024 2023
Lime and limestone operations $ 71,470 $ 66,538
Other 217 239
Total revenues $ 71,687 $ 66,777
Depreciation, depletion and amortization
Lime and limestone operations $ 5,857 $ 5,630
Other 122 126
Total depreciation, depletion and amortization $ 5,979 $ 5,756
Gross profit (loss)
Lime and limestone operations $ 30,683 $ 24,058
Other ( (
76 66
) )
Total gross profit $ 30,607 $ 23,992
Operating profit (loss)
Lime and limestone operations $ 25,839 $ 19,909
Other ( (
80 69
) )
Total operating profit $ 25,759 $ 19,840
Identifiable assets, at period end
Lime and limestone operations $ 252,551 $ 235,693
Other 211,445 152,052
Total identifiable assets $ 463,996 $ 387,745
Capital expenditures
Lime and limestone operations $ 6,824 $ 5,451
Other - -
Total capital expenditures $ 6,824 $ 5,451
7
5.
Income and Dividends Per Share of Common Stock
At March 31, 2024, the Company had
30,000,000
shares of common stock authorized and
5,709,226
shares outstanding. On May 2, 2024, shareholders will vote at the Company's
2024 Annual Meeting of Shareholders on a proposal to increase the number of
authorized shares of common stock to
45,000,000
.
The following table sets forth the computation of basic and diluted income per
common share (in thousands, except per share amounts):
Three Months Ended March 31,
2024 2023
Net income for basic and diluted income per common share $ 22,439 $ 17,104
Weighted-average shares for basic income per common share 5,707 5,685
Effect of dilutive securities:
Employee and director stock options 18 13
(1)
Adjusted weighted-average shares and assumed exercises for diluted income per common share 5,725 5,698
Basic net income per common share $ 3.93 $ 3.01
Diluted net income per common share $ 3.92 $ 3.00
(1) No
stock options were excluded due to being antidilutive.
The Company paid $
0.25
and $
0.20
of cash dividends per share of common stock in the three months ended March
31, 2024 and 2023, respectively.
6.
Inventories
Inventories are valued principally at the lower of cost, determined using the
average cost method, or net realizable value. Costs for raw materials and
finished goods include materials, labor, and production overhead. Inventories
consisted of the following (in thousands):
March 31, December 31,
2024 2023
Lime and limestone inventories:
Raw materials $ 8,998 $ 7,834
Finished goods 3,347 3,107
12,345 10,941
Parts inventories 13,379 13,372
$ 25,724 $ 24,313
7.
Banking Facilities and Debt
At March 31, 2024, the Company's credit agreement with Wells Fargo Bank, N.A.
(the "Lender"), as amended as of August 3, 2023, provided for a
$
75
million revolving credit facility (the "Revolving Facility") and an incremental
four-year
accordion feature to borrow up to an additional
$
50
million on the same terms, subject to approval by the Lender or another lender
selected by the Company. The credit agreement also provides for a
$
10
million letter of credit sublimit under the Revolving Facility. The Revolving
Facility and any incremental loans mature on August 3, 2028.
Interest rates on the Revolving Facility are, at the Company's option, SOFR,
plus a SOFR adjustment rate of
0.10
%, plus a margin of
1.000
% to
2.000
%, or the Lender's Prime Rate, plus a margin of
0.000
% to
1.000
%, and a commitment fee range of
0.225
% to
0.350
%
on the undrawn portion of the Revolving Facility. The Revolving Facility
interest rate margins and commitment fee are determined quarterly in
accordance with a pricing grid based upon the Company's Cash Flow Leverage
Ratio, defined as the ratio of the Company's total funded senior indebtedness
to earnings before interest, taxes, depreciation, depletion, amortization, and
stock-based compensation expense
8
("EBITDA") for the 12 months ended on the last day of the most recent calendar
quarter, plus pro forma EBITDA from any businesses acquired during the period.
Pursuant to a security agreement, dated August 25, 2004, the Revolving
Facility is secured by the Company's existing and hereafter acquired tangible
assets, intangible assets, and real property. The maturity of the Revolving
Facility and any incremental loans can be accelerated if any event of default,
as defined under the credit agreement, occurs. The Company's maximum Cash Flow
Leverage Ratio is
3.50
to 1.
The Company may pay dividends so long as it remains in compliance with the
provisions of the Company's credit agreement, and it may purchase, redeem, or
otherwise acquire shares of its common stock so long as its pro forma Cash
Flow Leverage Ratio is less than
3.00
to 1.00 and no default or event of default exists or would exist after giving
effect to such stock repurchase.
As of March 31, 2024, the Company had
no
debt outstanding and no draws on the Revolving Facility other than $
0.5
million of letters of credit, which count as draws against the available
commitment under the Revolving Facility.
8.
Leases
The Company has operating leases for the use of equipment, corporate office
space, and some of its terminal and distribution facilities. The leases have
remaining lease terms of
0
to
7 years
, with a weighted-average remaining lease term of
4
years at both March 31, 2024 and December 31, 2023. Some operating leases
include options to extend the leases for up to
5 years
and are only considered in the lease terms if the Company is reasonably
certain it will exercise the option to extend.
The components of lease costs for the three months ended March 31, 2024 and
2023 were as follows (in thousands):
Three Months Ended March 31,
Classification 2024 2023
Operating lease costs Cost of revenues $ 585 $ 770
(1)
Operating lease costs Selling, general and administrative expenses 76 41
(1)
Rental revenues Revenues ( (
122 117
) )
Rental revenues Other (income) expense, net ( (
36 16
) )
Net operating lease costs $ 504 $ 678
(1) Includes the costs of leases with a term of
one year
or less.
As of March 31, 2024, future minimum payments under operating leases that were
either non-cancelable or subject to significant penalty upon cancellation,
including future minimum payments under renewal options that the Company is
reasonably certain to exercise, were as follows (in thousands):
2024 (excluding the three months ended March 31, 2024) $ 1,264
2025 1,397
2026 1,349
2027 936
2028 404
Thereafter 100
Total future minimum lease payments 5,450
Less imputed interest (
329
)
Present value of lease liabilities $ 5,121
Supplemental cash flow information pertaining to the Company's leasing
activity for the three months ended March 31, 2024 and 2023 is as follows (in
thousands):
Three Months Ended March 31,
2024 2023
Cash payments for lease liabilities included in operating cash flows $ 450 $ 417
Right-of-use assets obtained in exchange for operating lease obligations $ - $ 81
9
9.
Income Taxes
The Company has estimated that its effective income tax rate for 2024 will be
20.7
%
. The primary reason for the effective income tax rate being below the federal
statutory rate is due to statutory depletion, which is allowed for income tax
purposes and is a permanent difference between net income for financial
reporting purposes and taxable income.
10.
Dividends
On March 15, 2024, the Company paid $
1.4
million in cash dividends, based on a dividend of $
0.25
per share of its common stock, to shareholders of record at the close of
business on February 23, 2024.
11.
Subsequent Event
On
April 30, 2024
, the Company's Board of Directors declared a regular quarterly cash dividend of
$
0.25
per share on the Company's common stock. This dividend is payable on
June 14, 2024
, to shareholders of record at the close of business on
May 24, 2024
.
10
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements.
Any statements contained in this Report that are not statements of historical
fact are forward-
looking statements as defined in the Private Securities Litigation Reform Act
of 1995. Forward-
looking statements in this Report, including without limitation statements
relating to the Company's plans, strategies, objectives, expectations,
intentions, and adequacy of resources, are identified by such words as "will,"
"could," "should," "would," "believe," "possible," "potential," "expect,"
"intend," "plan," "schedule," "estimate," "anticipate," and "project." The
Company undertakes no obligation to publicly update or revise any
forward-looking statements. The Company cautions that forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from expectations, including without limitation the
following: (i) the Company's plans, strategies, objectives, expectations, and
intentions are subject to change at any time at the Company's discretion; (ii)
the Company's plans and results of operations will be affected by its ability
to maintain and increase its revenues and manage its growth; (iii) the
Company's ability to meet short-term and long-term liquidity demands,
including meeting the Company's operating and capital needs, including
possible acquisitions and paying dividends, and conditions in the credit and
equity markets, including the ability of the Company's customers to meet their
obligations; (iv) interruptions to operations and increased expenses at the
Company's facilities resulting from changes in mining methods or conditions,
variability of chemical or physical properties of the Company's limestone and
its impact on process equipment and product quality, inclement weather
conditions, including more severe and frequent weather events resulting from
climate change, natural disasters, accidents, IT systems failures or
disruptions, including due to cybersecurity threats and incidents, utility
disruptions, supply chain delays and disruptions, labor shortages and
disruptions, or regulatory requirements; (v) volatile coal, petroleum coke,
diesel, natural gas, electricity, and transportation costs and the consistent
availability of trucks, truck drivers, and rail cars to deliver the Company's
products to its customers and solid fuels to its plants on a timely basis at
competitive prices; (vi) the Company's ability to expand its lime and
limestone operations through projects and acquisitions of businesses with
related or similar operations and the Company's ability to obtain any required
financing for such projects and acquisitions, to integrate the projects and
acquisitions into the Company's overall operations, and to sell any resulting
increased production at acceptable prices; (vii)
inadequate demand and/or prices for the Company's lime and limestone products
due to increased competition from competitors, increasing competition for
certain customer accounts, conditions in the U.S. economy, recessionary
pressures in, and the impact of government policies on, particular industries,
including oil and gas services, utility plants, steel, construction, and
industrial, effects of governmental fiscal and budgetary constraints,
including the level of highway construction and infrastructure funding,
changes to tax laws, legislative impasses, extended governmental shutdowns,
downgrades and defaults on U.S. government obligations, trade wars, tariffs,
international incidents, including conflicts in Ukraine, Israel, and the
broader Middle East, oil cartel production and supply actions, sanctions,
economic and regulatory uncertainties under state governments and the United
States Administration and Congress, inflation, Federal Reserve responses to
inflationary concerns, including increased interest rates, and inability to
continue to maintain or increase prices for the Company's products, including
passing through the increased costs of energy, labor, parts and supplies, and
changes in inflationary expectations; (viii) ongoing and possible new
regulations, investigations, enforcement actions and costs, legal expenses,
penalties, fines, assessments, litigation, judgments and settlements, taxes,
and disruptions and limitations of operations, including those related to
climate change, health and safety, human capital, diversity, and other
environmental, social, governance, and sustainability considerations, and
those that could impact the Company's ability to continue or renew its
operating permits or successfully secure new permits in connection with its
modernization and expansion and development projects; (ix) estimates of
resources and reserves and remaining lives of reserves; (x) the impact of
potential global pandemics, epidemics, or disease outbreaks, such as COVID-19,
and governmental responses thereto, including decreased demand, lower prices,
tightened labor and other markets, and increased costs, and the risk of
non-compliance with health and safety protocols, social distancing and mask
guidelines, and vaccination mandates, on the Company's financial condition,
results of operations, cash flows, and competitive position; (xi) the impact
of social or political unrest; (xii) risks relating to mine safety and
reclamation and remediation; and (xiii) other risks and uncertainties set
forth in this Report or indicated from time to time in the Company's filings
with the Securities and Exchange Commission (the "SEC"), including the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2023 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form
8-K.
11
Overview.
We are a manufacturer of lime and limestone products, supplying primarily the
construction (including highway, road and building contractors), industrial
(including paper and glass manufacturers), metals (including steel producers),
environmental (including municipal sanitation and water treatment facilities
and flue gas treatment processes), roof shingle manufacturers, oil and gas
services, and agriculture (including poultry producers) industries. We are
headquartered in Dallas, Texas and operate lime and limestone plants and
distribution facilities in Arkansas, Colorado, Louisiana, Missouri, Oklahoma,
and Texas through our wholly owned subsidiaries, Arkansas Lime Company, ART
Quarry TRS LLC (DBA Carthage Crushed Limestone), Colorado Lime Company, Mill
Creek Dolomite, LLC ("Mill Creek"), Texas Lime Company, U.S. Lime Company,
U.S. Lime Company-Shreveport, U.S. Lime Company-St. Clair, and U.S. Lime
Company-Transportation.
We have identified one reportable segment based on the distinctness of our
activities and products: lime and limestone operations. All operations are in
the United States. Our other operations consists of natural gas interests
through our wholly owned subsidiary, U.S. Lime Company-O&G, LLC. Assets
related to our natural gas interests, unallocated corporate assets, and cash
items are included in other identified assets. We do not believe that our
natural gas interests are material to the current or prior periods.
Our revenues increased 7.4% in the first quarter 2024, compared to the first
quarter 2023. Revenues from our lime and limestone operations increased 7.4%
in the first quarter 2024, compared to the first quarter 2023, due to a 14.6%
increase in the average selling prices for our lime and limestone products,
partially offset by a 7.2% decrease in sales volumes of our lime and limestone
products, principally due to decreased demand from our construction customers,
partially offset by increased demand from our industrial customers. Looking
ahead, we anticipate improved demand from our construction customers.
Our gross profit increased 27.6% in the first quarter 2024, compared to the
first quarter 2023. Gross profit from our lime and limestone operations
increased 27.5% in the first quarter 2024, compared to the first quarter 2023.
The increase in gross profit resulted from the increased revenues discussed
above and a decrease in operating expenses, including lower natural gas fuel
costs.
We paid an increased regular quarterly cash dividend of $0.25 per share in the
first quarter of 2024. On April 30, 2024, our Board of Directors declared a
regular quarterly cash dividend of $0.25 per share on our common stock. The
dividend is payable on June 14, 2024, to shareholders of record at the close
of business on May 24, 2024.
At our upcoming 2024 Annual Meeting of Shareholders, our shareholders will
vote on a proposal to increase the number of authorized shares of our common
stock from 30,000,000 to 45,000,000. If the proposal is approved by the
shareholders, our Board of Directors currently intends to proceed with a stock
split of up to 5-to-1, effected in the form of a stock dividend of up to 4
additional shares on each outstanding share. In addition to having sufficient
authorized shares to effectuate the stock split, our Board believes that the
increase in authorized shares is advisable in order to maintain our business,
financing, and capital-raising flexibility in connection with our working
capital needs and for general corporate purposes.
Liquidity and Capital Resources.
Net cash provided by operating activities was $27.2 million in the first
quarter 2024, compared to $20.6 million in the first quarter 2023, an increase
of $6.5 million, or 31.6%. Our net cash provided by operating activities is
composed of net income, depreciation, depletion and amortization ("DD&A"),
deferred income taxes, stock-based compensation, other non-cash items included
in net income and changes in working capital.
In the first quarter 2024, net cash provided by operating activities was
principally composed of $22.4 million net income, $6.1 million DD&A, and $1.2
million stock-
based compensation, partially offset by $0.2 million deferred income taxes and
a $2.2 million decrease from changes in operating assets and liabilities.
Changes in operating assets and liabilities in the first quarter 2024 included
an increase of $4.1 million in trade receivables, net, due primarily to
increased sales in the first quarter 2024 compared to the fourth quarter 2023,
and an increase of $1.4 million in inventories, partially offset by an
increase of $2.6 in accounts payable and accrued expenses and a decrease of
$0.6 million in prepaid expenses and other current assets. In the first
quarter 2023, net cash provided by operating activities was principally
composed of $17.1 million net income, $5.8 million DD&A, and $0.8 million
stock-based compensation, partially offset by $0.2 million deferred income
taxes and a $2.9 million decrease from changes in operating assets and
liabilities. Changes in operating assets
12
and liabilities in the first quarter 2023 included an increase of $4.8 million
in trade receivables, net,
due primarily from increased sales in the first quarter 2023 compared to the
fourth quarter 2022,
and an increase of $2.5 million in inventories, partially offset by a $3.7
million increase in accounts payable and accrued expenses and a decrease of
$0.6 million in prepaid expenses and other assets.
We had $6.8 million in capital expenditures in the first quarter 2024,
compared to $5.5 million in the first quarter 2023. Net cash used in financing
activities was $1.5 million in the first quarter 2024, compared to $1.1
million in the first quarter 2023, consisting primarily of cash dividends paid
in each period.
Cash and cash equivalents increased $19.0 million to $207.0 million at March
31, 2024 from $188.0 million at December 31, 2023.
We are not committed to any planned capital expenditures until actual orders
are placed for equipment. As of March 31, 2024, we did not have any material
commitments for open purchase orders.
At March 31, 2024, our credit agreement with Wells Fargo Bank, N.A. (the
"Lender"), as amended as of August 3, 2023, provides for a $75 million
revolving credit facility (the "Revolving Facility") and an incremental
four-year accordion feature to borrow up to an additional $50 million on the
same terms, subject to approval by the Lender or another lender selected by
us. The credit agreement also provided for a $10 million letter of credit
sublimit under the Revolving Facility. The Revolving Facility and any
incremental loans mature on August 3, 2028
.
Interest rates on the Revolving Facility are, at our option, SOFR, plus a SOFR
adjustment rate of 0.10%, plus a margin of 1.000% to 2.000%, or the Lender's
Prime Rate, plus a margin of 0.000% to 1.000%, and a commitment fee range of
0.225% to 0.350% on the undrawn portion of the Revolving Facility.
The Revolving Facility interest rate margins and commitment fee are determined
quarterly in accordance with a pricing grid based upon our Cash Flow Leverage
Ratio, defined as the ratio of our total funded senior indebtedness to
earnings before interest, taxes, depreciation, depletion, amortization, and
stock-based compensation expense ("EBITDA") for the 12 months ended on the
last day of the most recent calendar quarter, plus pro forma EBITDA from any
businesses acquired during the period. Pursuant to a security agreement, dated
August 25, 2004, the Revolving Facility is secured by our existing and
hereafter acquired tangible assets, intangible assets, and real property. The
maturity of the Revolving Facility and any incremental loans can be
accelerated if any event of default, as defined under the credit agreement,
occurs. Our maximum Cash Flow Leverage Ratio is 3.50 to 1.
We may pay dividends so long as we remain in compliance with the provisions of
our credit agreement, and we may purchase, redeem or otherwise acquire shares
of our common stock so long as our pro forma Cash Flow Leverage Ratio is less
than 3.00 to 1.00 and no default or event of default exists or would exist
after giving effect to such stock repurchase.
At March 31, 2024, we had no debt outstanding and no draws on the Revolving
Facility other than $0.5 million of letters of credit, which count as draws
against the available commitment under the Revolving Facility. We believe
that, absent a significant acquisition, cash on hand and cash flows from
operations will be sufficient to meet our operating needs, ongoing capital
needs, including current and possible future modernization, expansion, and
development projects, and liquidity needs and allow us to pay regular
quarterly cash dividends for the near future.
Results of Operations.
Revenues in the first quarter 2024 were $71.7 million, compared to $66.8
million in the first quarter 2023, an increase of $4.9 million, or 7.4%.
Revenues from our lime and limestone operations were $71.5 million in the
first quarter 2024, compared to $66.5 million in the first quarter 2023, an
increase of $4.9 million, or 7.4%. The increase in our lime and limestone
revenues in the first quarter 2024 resulted from the increases in the average
selling prices for our lime and limestone products, partially offset by the
decreased sales volumes of our lime and limestone products, principally due to
decreased demand from our construction customers, partially offset by
increased demand from our industrial customers.
Gross profit was $30.6 million in the first quarter 2024, compared to $24.0
million in the first quarter 2023, an increase of $6.6 million, or 27.6%.
Gross profit from our lime and limestone operations in the first quarter 2024
was $30.7 million, compared to $24.1 million in the first quarter 2023, an
increase of $6.6 million, or 27.5%. The increase in
13
lime and limestone gross profit in the first quarter 2024, compared to the
first quarter 2023, resulted from the increased revenues discussed above and a
decrease in operating expenses, including lower natural gas fuel costs.
Selling, general and administrative ("SG&A") expenses were $4.8 million in the
first quarter 2024, compared to $4.2 million in the first quarter 2023, an
increase of $0.7 million, or 16.8%. The increase in SG&A expenses in the first
quarter 2024, compared to the first quarter 2023, was primarily due to
increased personnel expense, including stock-based compensation.
We had no outstanding debt during any of the periods. Other (income) expense,
net was $2.5 million income in the first quarter 2024, compared to $1.5
million income in the first quarter 2023. The increase of $1.0 million in
other (income) expense, net during the first quarter 2024, compared to the
first quarter 2023, was primarily due to interest earned on higher average
balances in our cash and cash equivalents.
Income tax expense was $5.9 million in the first quarter 2024, compared to
$4.2 million in the first quarter 2023. The increase in income tax expense was
primarily due to the increase in income before taxes.
Our net income was $22.4 million ($3.92 per share diluted) in the first
quarter 2024, compared to net income of $17.1 million ($3.00 per share
diluted) in the first quarter 2023, an increase of $5.3 million, or 31.2%.
ITEM 4: CONTROLS AND PROCEDURES
Our management, with the participation of our Chief Executive Officer ("CEO")
and Chief Financial Officer ("CFO"), evaluated the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
Report. Based upon that evaluation, the CEO and CFO concluded that our
disclosure controls and procedures as of the end of the period covered by this
Report were effective.
No change in our internal control over financial reporting occurred during the
most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Our Amended and Restated 2001 Long-Term Incentive Plan allows employees and
directors to pay the exercise price for stock options and the tax withholding
liability upon the lapse of restrictions on restricted stock by payment in
cash and/or delivery of shares of common stock. In the first quarter 2024,
pursuant to these provisions, we purchased 687 shares at a price of $250.02
per share, the fair market value of one share of our common stock on the date
they were tendered for payment of tax withholding liability upon the lapse of
restrictions on restricted stock.
ITEM 4: MINE SAFETY DISCLOSURES
Under Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and Item 104 of SEC Regulation S-
K, each operator of a coal or other mine is required to include disclosures
regarding certain mine safety results in its periodic reports filed with the
SEC. The operation of our quarries, underground mine and plants is subject to
regulation by the federal Mine Safety and Health Administration ("MSHA") under
the Federal Mine Safety and Health Act of 1977. The required information
regarding certain mining safety and health matters, broken down by mining
complex, for the quarter ended March 31, 2024 is presented in Exhibit 95.1 to
this Report.
We believe we are responsible to employees to provide a safe and healthy
workplace environment. We seek to accomplish this by: training employees in
safe work practices; openly communicating with employees; following safety
standards and establishing and improving safe work practices; involving
employees in safety processes; and recording, reporting and investigating
accidents, incidents and losses to avoid reoccurrence.
14
Following passage of the Mine Improvement and New Emergency Response Act of
2006, MSHA significantly increased the enforcement of mining safety and health
standards on all aspects of mining operations. There has also been an increase
in the dollar penalties assessed for citations and orders issued in recent
years.
ITEM 6: EXHIBITS
The Exhibit Index set forth below is incorporated by reference in response to
this Item.
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
31.1 Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer.
31.2 Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer.
32.1 Section 1350 Certification by the Chief Executive Officer.
32.2 Section 1350 Certification by the Chief Financial Officer.
95.1 Mine Safety Disclosures.
101 Interactive Data Files (formatted as Inline XBRL).
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED STATES LIME & MINERALS, INC.
May 1, 2024 By: /s/ Timothy W. Byrne
Timothy W. Byrne
President and Chief Executive Officer
(Principal Executive Officer)
May 1, 2024 By: /s/ Michael L. Wiedemer
Michael L. Wiedemer
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
16
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