Press Releases

Trecora Resources Reports Improved Second Quarter 2015 Profitability

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Declining Feedstock Prices Continue to Drive Margin Expansion

Net Income Increases 27% to $6.4 Million

Conference Call at 4:30 pm ET Today

SUGAR LAND, Texas, Aug. 6, 2015 /PRNewswire/ -- Trecora Resources (NYSE: TREC), a leading provider of high purity specialty hydrocarbons and waxes, today announced financial results for the second quarter and six months ended June 30, 2015. 

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.

Second Quarter 2015 Financial Highlights

  • Gross profit of $15.2 million, up 30% from $11.7 million in the second quarter of 2014
  • Gross profit margin of 25.6% compared with 15.7% in the second quarter of 2014
  • Adjusted EBITDA of $12.3 million compared with $9.0 million in the second quarter of 2014
  • Adjusted EBITDA margins of 20.8% compared with 12.0% in the second quarter of 2014
  • Diluted EPS of $0.25 compared with $0.20 in the year-ago period
  • Trecora Chemical contributes revenue of $5.5 million and EBITDA of $0.4 million

Second Quarter 2015 Results
Total revenue in the second quarter was $59.4 million compared with $74.6 million in the second quarter of 2014. The decline in reported revenue was driven by a 41.6% reduction in the average per gallon cost of petrochemical feedstock in the second quarter, which rolls over into the formula pricing mechanism for petrochemical product sales. Consequently, the average sales price of petrochemical products decreased by 24.0%.  The lower feedstock costs more than offset the formula-driven price reductions, and combined with lower excess product sales, resulted in higher profit margins.

Gross profit margin increased to 25.6% in the second quarter of 2015, compared with 15.7% in the second quarter of 2014. This increase in gross profit margin reflects the impact of lower petrochemical feedstock prices.

Total adjusted EBITDA was $12.3 million, an increase of 37.5% over adjusted EBITDA of $9.0 million in the year-ago period. The adjusted EBITDA margin increased to 20.8% in the second quarter of 2015, compared with 12.0% in the second quarter of 2014.

Net income for the second quarter was $6.4 million, or $0.25 per diluted share, compared with net income of $5.0 million, or $0.20 per diluted share, for the second quarter of 2014.

Trecora President and CEO Simon Upfill-Brown commented, "Like last quarter, the Company delivered very good financial and operating results in the second quarter. Led by our South Hampton Resources division, we generated significant profit and margin growth despite sharply lower revenues. Trecora Chemical generated modestly positive EBITDA during the quarter, and wax approvals and new orders continue to grow. Finally, AMAK showed significant improvement in plant availability and throughput this quarter as we continue to drive operational efficiencies. AMAK delivered 'Net Income Before Depreciation, Depletion and Amortization' of just under $4 million in the quarter."

South Hampton Resources (SHR)
Petrochemical volume in the second quarter was 19.6 million gallons, compared with 20.7 million gallons in the second quarter of 2014. Product volume was affected by continued variability in demand from SHR's Canadian oil sands customer.  Excluding Canadian oil sands, prime product volumes in the second quarter of 2015 were up 11.1% from a year ago, indicating a healthy growth of non-oil sands business. SHR's D-Train expansion continues on schedule with approximately 1,000 barrels of feedstock capacity per day (bpd) now online, and an additional 3,000 bpd of feedstock capacity planned by the end of this year. International volume represented 19.4% of total petrochemical volume during the quarter, which is indicative of the decrease in oil sands shipments. SHR continues to engage in active discussions with several potential customers in Asia.

Trecora Chemical (TC)
The integration of TC is largely complete, and the Company continues to make significant progress improving wax quality and consistency. TC's second quarter revenue was $5.5 million, including $1.2 million of custom processing fees. The expansion of the custom processing distillation and hydrogenation capability is underway with completion expected in the first quarter of 2016.  

Al Masane Al Kobra Mining Company (AMAK)
We reported a loss in equity in AMAK of approximately $0.4 million during the second quarter primarily due to there being just one shipment during the second quarter, with delays pushing two shipments into July.  The management team continues to make progress on improving recoveries and overall operating efficiencies. The precious metals circuit was down for most of the second quarter due to governmental concern over storage of the raw material required for the process.  The issue has been resolved, and the circuit should run for most of the second half of 2015.  The talc circuit is now operational leading to further recovery and operational improvements.

Year-to-Date 2015 Results
Total revenue for the six months ended June 30, 2015, was $114.5 million, compared with revenue $138.7 million in the first six months of 2014. Total TC revenue for the six months ended June 30, 2015, was $11.9 million which included $4.2 million of processing fees.

Gross profit for the first six months of 2015 was $30.9 million, compared with $20.4 million in the same period in 2014.  Gross profit margin in the first six months of 2015 was 27.0%, compared with 14.7% in the same period in 2014.

Adjusted EBITDA for the first six months of 2015 was $24.9 million, compared with $14.8 million in the same period in 2014. Adjusted EBITDA margin in the first six months of 2015 was 21.7%, compared with 10.6% in the same period of 2014.

Net income for the first six months of 2015 was $12.2 million, representing an increase of 60% as compared with $7.6 million in the same period of 2014. Diluted EPS were $0.48 compared with $0.31 in the same period of 2014.

Balance Sheet
As of June 30, 2015, cash and cash equivalents were $8.7 million compared with $8.5 million at the close of 2014. Total debt was $77 million. Capital expenditures during the quarter were $9.1 million which included D-train expansion construction and expansion of custom processing capacity at Trecora Chemical.

Earnings Call
Today's 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/index.php?id=115167.  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 1-888-299-7209 or 1-719-785-1753 if calling internationally, using the conference ID 7111970. 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 7111970 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: Adjusted EBITDA and Adjusted EBITDA Margin.  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, 2014, 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, Chairman
(409) 385-8300
ncarter@trecora.com 

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

 

TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS





JUNE 30,

2015

(unaudited)

DECEMBER 31,

2014

ASSETS

(thousands of dollars)

 Current Assets



  Cash and cash equivalents

$  8,654

$  8,506

  Trade receivables, net

22,122

28,271

  Inventories

15,058

12,815

  Prepaid expenses and other assets

3,400

3,257

  Taxes receivable

-

434

  Deferred income taxes

1,481

1,652

          Total current assets

50,715

54,935




  Plant, pipeline and equipment, net

86,652

73,811




  Goodwill

21,798

21,750

  Other intangible assets, net

25,293

26,235

  Investment in AMAK

52,712

53,023

  Mineral properties in the United States

588

588

  Other assets

1,186

1,732




     TOTAL ASSETS

$ 238,944

$ 232,074

LIABILITIES



  Current Liabilities



    Accounts payable

$  8,180

$  9,535

    Current portion of derivative instruments

152

362

    Accrued liabilities

3,407

5,020

    Accrued liabilities in Saudi Arabia

495

495

    Current portion of post-retirement benefit

290

286

    Current portion of long-term debt

7,263

7,000

    Current portion of other liabilities

2,691

2,183

          Total current liabilities

22,478

24,881




  Long-term debt, net of current portion

69,687

73,450

  Post-retirement benefit, net of current portion

649

649

  Derivative instruments, net of current portion

117

196

  Other liabilities, net of current portion

901

1,039

  Deferred income taxes

10,231

10,471

     Total liabilities

104,063

110,686




EQUITY



  Common stock‑authorized 40 million shares of $.10 par value; issued and outstanding 24.1 million and 24.0 million shares in 2015 and 2014, respectively

2,407

2,397

  Additional paid-in capital

49,607

48,282

  Retained earnings

82,578

70,420

  Total Trecora Resources Stockholders' Equity

134,592

121,099

  Noncontrolling Interest

289

289

   Total equity

134,881

121,388




     TOTAL LIABILITIES AND EQUITY

$ 238,944

$ 232,074

 

TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)





THREE MONTHS ENDED

SIX MONTHS ENDED


JUNE 30,

JUNE 30,


2015

2014

2015

2014


(thousands of dollars)

REVENUES





  Petrochemical and Product Sales

$ 56,665

$ 72,842

$ 107,206

$ 135,234

  Processing Fees

2,685

1,711

7,287

3,419


59,350

74,553

114,493

138,653






OPERATING COSTS AND EXPENSES





  Cost of  Sales and Processing





    (including depreciation and amortization of  $1,939, $868, $3,965, and $1,733,  respectively)

44,166

62,853

83,596

118,239






   GROSS PROFIT

15,184

11,700

30,897

20,414






GENERAL AND ADMINISTRATIVE EXPENSES





  General and Administrative

5,523

4,154

11,288

8,343

  Depreciation

170

136

385

275


5,693

4,290

11,673

8,618






OPERATING INCOME

9,491

7,410

19,224

11,796






OTHER INCOME (EXPENSE)





  Interest Income

7

9

13

18

  Interest Expense

(570)

11

(1,183)

(99)

  Losses on Cash Flow Hedge Reclassified from OCI

-

(63)

-

(130)

  Equity in Earnings (Losses) of AMAK

(369)

6

(310)

(344)

  Miscellaneous Expense

(40)

(4)

(14)

(49)


(972)

(41)

(1,494)

(604)






  INCOME BEFORE INCOME TAXES

8,519

7,369

17,730

11,192






  INCOME TAXES

2,145

2,369

5,572

3,593






  NET INCOME

6,374

5,000

12,158

7,599






 NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

--

--

--

--






 NET INCOME ATTRIBUTABLE TO TRECORA RESOURCES

$ 6,374

$ 5,000

$ 12,158

$ 7,599






Basic Earnings per Common Share





  Net Income Attributable to Trecora Resources (dollars)

$ 0.26

$ 0.21

$ 0.50

$ 0.32






  Basic Weighted Average Number of Common Shares Outstanding

24,354

24,165

24,331

24,158






Diluted Earnings per Common Share





  Net Income Attributable to Trecora Resources (dollars)

$ 0.25

$ 0.20

$ 0.48

$ 0.31






  Diluted Weighted Average Number of Common Shares Outstanding

25,155

24,813

25,150

24,866

 

TRECORA RESOURCES AND SUBSIDIARIES

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES(1)





THREE MONTHS ENDED

30-Jun

SIX MONTHS ENDED

30-Jun



2015

2014

2015

2014


(thousands of dollars)






NET INCOME

$   6,374

$   5,000

$   12,158

$   7,599






Add back:





  Interest

570

52

1,183

229

  Taxes

2,145

2,369

5,572

3,593

  Depreciation and amortization

170

136

385

275

  Depreciation and amortization in cost of sales

1,939

868

3,965

1,733






EBITDA

$ 11,198

$ 8,425

$ 23,263

$ 13,429

Share based compensation

764

548

1,289

973

Equity in (earnings) losses of AMAK

369

(6)

310

344

Adjusted EBITDA

$ 12,331

$  8,967

$  24,862

$  14,746






Revenue

$ 59,350

$ 74,553

$ 114,493

$138,653

Adjusted EBITDA Margin

(adjusted EBITDA/revenue)

20.8%

12.0%

21.7%

10.6%


(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