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Trecora Resources Announces Fourth Quarter and Full Year 2014 Results

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Record Fourth Quarter Revenues of $74.1 Million

Record Quarterly Petrochemical Volume Levels of 21.6 Million Gallons

Earnings Call to be Held Today at 4:30 pm ET

SUGAR LAND, Texas, March 5, 2015 /PRNewswire/ -- Trecora Resources (NYSE: TREC) a leading provider of high purity specialty chemicals and waxes, today announced financial results for the fourth quarter and year ended December 31, 2014. 

TREC owns and operates a facility in southeast Texas which specializes in high purity hydrocarbons and other petrochemical manufacturing. TREC also owns and operates a leading manufacturer of specialty polyethylene waxes and provider of custom processing services located in the heart of the Petrochemical complex in Pasadena, Texas. In addition, TREC is a 35% owner of Al Masane Al Kobra Mining Co. For more information please access TREC's website at Trecora.com.

"The strong operational performance in the fourth quarter demonstrates our resolve to keep our customers' needs filled.  We delivered record revenue for a fourth quarter, and sold an all-time volume record for our South Hampton Resources subsidiary," said Nick Carter, CEO and President of Trecora Resources.  "We continued to make infrastructure improvements, including the culmination of a three year project to expand the capabilities of our Highway 92 Sales Rack, and the D-Train expansion which we announced last fall is underway and progressing on schedule.  We recently completed a test run and proved we could process an extra 1,000 barrels per day of feed as we had planned for the first phase of the project."

"We also made significant progress integrating Trecora Chemical, including initiating process improvements to ensure the quality and consistency of the finished products, and actually added new quality products during the improvement process.  The expansion of the custom processing distillation and hydrogenation capability is underway with start-up expected in the first quarter of 2016.  Although Al Masane Al Kobra Mining Company (AMAK) negatively impacted our results in the fourth quarter, we are pleased with the new management team's progress and direction, including achieving operational efficiencies, improving metal recoveries, and activating the new precious metal circuit.  We believe that with the operational improvements that are being made, coupled with the predicted stronger metal prices in the second half of the year, the mining project can become additive to our financial results as the year progresses," added Mr. Carter

2014 Fourth Quarter Results

Trecora's fourth quarter revenues totaled $74.1 million, an increase of 11.2% from $66.6 million in the fourth quarter of 2013.

Petrochemical volume was also at record levels for the quarter at 21.6 million gallons, a 9.9% increase from 19.7 million gallon level for the fourth quarter of 2013.

Gross profit for the fourth quarter of 2014 was $12.3 million, compared with $9.8 million in the same period last year. Gross profit margin for the quarter was 16.6% compared with 14.7% for the fourth quarter 2013.

Net income for Trecora Resources in the fourth quarter 2014 was $2.2 million, or $0.09 per diluted share ($0.09 per basic share), compared with $3.2 million or $0.13 per diluted share ($0.13 per basic share) in the fourth quarter of 2013. Some one-time items, including acquisition and integrations costs associated with the purchase of Trecora Chemical, expense associated with the ineffectiveness of our interest rate swap due to the new debt from the acquisition, and an accrual for a lawsuit settlement, negatively impacted net income.

EBITDA for the fourth quarter of 2014 was $6.4 million compared with $6.2 million for the fourth quarter of 2013. Adjusted EBITDA, which removes the effects of AMAK for comparative purposes, for the fourth quarter of 2014 was $6.8 million compared with $6.5 million in 2013.

As of December 31, 2014 cash and cash equivalents were $8.5 million compared with $7.6 million at the close of 2013.  In 2014, cash provided by operations was $23.2 million, cash used in investing activities was $88.9 million and cash provided by financing was $66.6 million.  In 2013, cash provided by operations was $13.2 million, cash used by investing activities was $12.7 million and cash used by financing activities was $2.4 million.  The significant changes in investing and financing activities were primarily due to the purchase of Trecora Chemical and the debt associated with the acquisition.

2014 Full Year Results

For the year, Trecora generated revenues of $289.6 million, an increase of 22.6% over $236.2 million in 2013.  Petrochemical volume for 2014 was at 82.8 million gallons, a 23.4% increase over 67.1 million gallons in 2013.

Gross profit for the full year 2014 was $45.7 million compared with $35.2 million for the full year 2013. Gross profit margin for the year was 15.8% compared with 14.9% in 2013. 

Net Income for the full year 2014 was $15.6 million or $0.63 per diluted share ($0.64 per basic share), compared with $19.5 million or $0.79 per diluted share ($0.81 per basic share), for the full year 2013.  During 2014 we recorded equity in loss from AMAK of $1.1 million; whereas, during 2013 we recorded equity in earnings and gain on additional equity issued by AMAK totaling $8.7 million.

EBITDA for the full year 2014 was $29.3 million compared with $32.5 million for the full year of 2013. Adjusted EBITDA, which removes the effects of AMAK for comparative purposes, for the full year of 2014 was $30.4 million compared with $23.8 million in 2013.

Earnings Call

The conference call and presentation slides will be simulcast live on the Internet, and can be accessed on the investor relations section of the Company's website at http://www.trecora.com or at http://public.viavid.com/player/index.php?id=113264. A replay of the call will also be available through the same link.

To participate via telephone, callers should dial in five to ten minutes prior to the 4:30 pm Eastern start time; domestic callers (U.S. and Canada) should call 1-888-455-2296 or 1-719-325-2323 if calling internationally, using the conference ID 6828051. To listen to the playback, please call 1-877-870-5176 if calling within the United States or 1-858-384-5517 if calling internationally. Use pin number 6828051 for the replay.

Use of Non-GAAP Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP").  This press release contains the non-GAAP measures: EBITDA and Adjusted EBITDA.  Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Forward-Looking Statements

Statements in this press release that are not historical facts are forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon our belief, as well as, assumptions made by and information currently available to us. Because such statements are based upon expectations as to future economic performance and are not statements of fact, actual results may differ from those projected. These risks, as well as others, are discussed in greater detail in Trecora Resources' filings with the Securities and Exchange Commission, including Trecora Resources' Annual Report on Form 10-K for the year ended December 31, 2013, and the Company's subsequent Quarterly Reports on Form 10-Q.  All forward-looking statements included in this press release are based upon information available to the Company as of the date of this press release.

About Trecora Resources (TREC)

TREC owns and operates a facility located in southeast Texas, just north of Beaumont, which specializes in high purity hydrocarbons and other petrochemical manufacturing. TREC also owns and operates a leading manufacturer of specialty synthetic waxes and provider of custom processing services located in the heart of the Petrochemical complex in Pasadena, Texas.  In addition, the Company is the original developer and a 35% owner of Al Masane Al Kobra Mining Co., a Saudi Arabian joint stock company. 

Company Contact:
Nick Carter, President and Chief Executive Officer
(409) 385-8300
ncarter@trecora.com

Investor Relations Contact:
Glenn Garmont or Don Markley
The Piacente Group
212-481-2050
trecora@tpg-ir.com

 

TRECORA RESOURCES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS




December 31,


2014

2013


(thousands of dollars)

ASSETS



CURRENT ASSETS



  Cash and cash equivalents

$   8,506

$   7,608

  Trade receivables, net

28,271

22,069

  Advance to AMAK

-

536

  Prepaid expenses and other assets

3,257

2,179

  Inventories

12,815

12,063

  Deferred income taxes

1,652

1,324

  Taxes receivable

434

571




          Total current assets

54,935

46,350




  PLANT, PIPELINE, AND EQUIPMENT – AT COST

113,130

75,128

    LESS ACCUMULATED DEPRECIATION

(39,319)

(33,203)




  PLANT, PIPELINE, AND EQUIPMENT, NET

73,811

41,925




  GOODWILL

21,750

-

  OTHER INTANGIBLE ASSETS, net

26,235

-

  INVESTMENT IN AMAK

53,023

54,095

  MINERAL PROPERTIES IN THE UNITED STATES

588

588

  OTHER ASSETS

1,732

709




TOTAL ASSETS

$ 232,074

$ 143,667

 

TRECORA RESOURCES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued




December 31,


2014

2013


(thousands of dollars)

LIABILITIES



  CURRENT LIABILITIES



    Accounts payable

$  9,535

$  7,362

    Current portion of derivative instruments

362

292

    Accrued liabilities

5,020

3,162

    Accrued liabilities in Saudi Arabia

495

140

    Current portion of post-retirement benefit

286

278

    Current portion of long-term debt

7,000

1,400

    Current portion of other liabilities

2,183

1,654




          Total current liabilities

24,881

14,288




  LONG-TERM DEBT, net of current portion

73,450

11,839

  POST- RETIREMENT BENEFIT, net of current portion

649

649




  DERIVATIVE INSTRUMENTS, net of current portion

196

319

  OTHER LIABILITIES, net of current portion

1,039

1,369

  DEFERRED INCOME TAXES

10,471

11,984




          Total liabilities

110,686

40,448




COMMITMENTS AND CONTINGENCIES






EQUITY



  Common Stock ‑ authorized 40 million shares of $.10 par value; issued and outstanding, 24.0 million and 23.8 million shares in 2014 and 2013, respectively

2,397

2,383

  Additional Paid-in Capital

48,282

46,064

  Accumulated Other Comprehensive Loss

-

(366)

  Retained Earnings

70,420

54,849

 Total Trecora Resources Stockholders'



   Equity

121,099

102,930

 Noncontrolling interest

289

289

       Total equity

121,388

103,219




     TOTAL LIABILITIES AND EQUITY

$ 232,074

$ 143,667

 

TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

For the years ended December 31,






2014

2013

2012


(thousands of dollars)

Revenues




  Petrochemical and product sales

$ 280,866

$ 230,643

$ 218,512

  Processing

8,777

5,584

4,346


289,643

236,227

222,858

Operating costs and expenses




  Cost of petrochemical, product sales, and Processing (including depreciation of $4,645, $3,518, and $3,053, respectively)

243,900

201,064

192,100

   Gross Profit

45,743

35,163

30,758





General and Administrative Expenses




  General and administrative

19,701

14,672

12,782

  Depreciation

560

521

520


20,261

15,193

13,302





Operating income

25,482

19,970

17,456





Other income (expense)




  Interest expense

(1,042)

(520)

(547)

  Losses on cash flow hedge reclassified from OCI

(378)

(301)

(359)

  Equity in earnings (loss) of AMAK

(1,072)

4,703

(211)

  Gain from additional equity issuance by AMAK

--

3,997

--

  Miscellaneous expense

(272)

(204)

(114)


(2,764)

7,675

(1,231)

 Income before income tax expense

22,718

27,645

16,225





Income tax expense

7,147

8,147

5,904





   Net income

15,571

19,498

10,321





Net loss attributable to Noncontrolling Interest

--

--

--





Net income attributable to Trecora Resources

$ 15,571

$ 19,498

$ 10,321





Net income per common share




    Basic earnings per share (dollars)        

$ 0.64

$ 0.81

$ 0.43

    Diluted earnings per share (dollars)

$ 0.63

$ 0.79

$ 0.42





Weighted average number of common shares outstanding




     Basic

24,188

24,115

24,081

     Diluted

24,896

24,745

24,745

 

TRECORA RESOURCES AND SUBSIDIARIES
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES(1)





THREE MONTHS ENDED

TWELVE MONTHS ENDED


31-Dec

31-Dec


2014

2013

2014

2013


(thousands of dollars)

(thousands of dollars)






NET INCOME

$   2,198

$   3,182

$   15,571

$   19,498






Add back:





  Interest

1,061

211

1,420

821

  Taxes

964

1,628

7,147

8,147

  Depreciation

155

132

560

521

  Depreciation in Cost of sales

2,030

1,021

4,645

3,518






EBITDA

$ 6,408

$ 6,174

$ 29,343

$ 32,505

Less:





Equity in (earnings) loss of AMAK

385

298

1,072

(8,700)

Adjusted EBITDA

$  6,793

$  6,472

$  30,415

$  23,805






(1)This press release includes non-GAAP measures.  Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

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SOURCE Trecora Resources