SOUTHFIELD, Mich.–(BUSINESS WIRE)–Detrex Corporation (OTCQX:DTRX), today announced 2015 income from continuing operations and net income of $2.3 million, or $1.33 per fully diluted share. In 2014 income from continuing operations was $1.3 million, or $0.74 per fully diluted share, and net income was $1.0 million, or $0.57 per fully diluted share, after discontinued operations. In 2015 net income includes an $0.3 million pre-tax charge to increase the environmental reserve to $1.8 million. The 2014 net income from continuing operations included a $1.0 million pre-tax environmental charge, and net income includes a $0.3 million after-tax charge for resolving a dispute. In 2015 the Company recorded a $0.3 million State Income tax recovery, net of federal income tax, that was not previously recorded in earnings.
The Company also announced that it will pay a $0.25 quarterly dividend on March 24, 2016 to shareholders of record as of March 11, 2016.
Sales from the Company’s sole subsidiary, The Elco Corporation, were $38.9 million in 2015 compared to $40.8 million in 2014. The primary contributor to this difference was the non-recurrence of low margin tolling revenue of approximately $2 million. The mix of products sold in 2015 changed substantially compared to the prior year as the market for industrial lubricant additives became more competitive due to economic conditions that included the appreciation of the dollar. Importantly, Elco gained a number of product approvals with new and existing customers with a focus on metalworking and grease applications. This additional revenue potential was not fully realized in 2015 due to reductions in the core North American business as market share was maintained while the overall market shrank. We believe that the business is poised for significant revenue growth going forward as market conditions improve.
Elco’s operating margin increased by approximately $0.4 million in 2015 over 2014 in spite of slightly lower sales. Gross margins expressed as a percentage of sales increased to 30.4% in 2015 compared to 28.9% in 2014. This improvement resulted from product mix, lower manufacturing costs and a decline in raw material costs. Elco continued to make investments in sales, R&D and process improvement efforts while certain other overhead expenses declined.
The Company continued to benefit in 2015 from strategic actions to simplify and focus the business while reducing the impact of corporate overhead and legacy costs. The Company’s only environmental liability activities involved the sites that were not included in the 2013 liability transfer transaction, and we continued to make progress on the few retained sites. An additional $0.3 million pre-tax provision was made for future monitoring and maintenance costs. At year-end, the environmental reserve for was $1.8 million, of which approximately $0.3 million is expected to be spent in 2016.
At year-end, the bank loan balance, net of cash on hand, was $1.7 million compared to the 2014 net loan balance of $2.6 million. Significant spending during 2015 included capital expenditures of $1.1 million, environmental spending of $0.5 million and shareholder dividend payments of $1.7 million.
“In 2015 we continued to build a solid foundation for Elco while reducing the effects of legacies associated with the corporate parent. We believe that the Company is now streamlined and positioned for growth as a true specialty chemical Company” said Chairman, President and CEO Tom Mark. “We are in the process of evaluating strategic opportunities to generate shareholder value and will keep you informed of our progress.”
About Detrex Corporation
Founded in 1925, Detrex Corporation through its subsidiary The Elco Corporation is a leading manufacturer of high performance specialty chemicals including additives for industrial petroleum products and high purity hydrochloric acid.
Forward Looking Statements
Statements included in this press release that are not historical in nature are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Act”). The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target” and similar expressions identify forward-looking statements. The Company cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. Certain risks and uncertainties are identified from time to time in the Company’s reports. Some factors that could cause results to differ materially from those projected in the forward-looking statements include: market conditions, environmental remediation costs, pension expense and funding requirements, liquidation value of assets, and marketability of real estate and the market value and future liquidity of Detrex stock. The Company claims the protection of the safe harbor for forward-looking statements contained in the 1995 Act.
|Detrex Corporation and Subsidiaries|
|Condensed Consolidated Statements of Income|
|Years Ended December 31, 2015 and 2014|
|Cost of sales||27,058||28,961|
|Selling, general and administrative expense||7,114||7,477|
|Provision for depreciation and amortization||1,311||1,274|
|Provision for corporate environmental reserves||300||1,000|
|Interest (income) expense, net||96||169|
|Other (Income) Expense, net||13||(12||)|
|Income from continuing operations before income taxes||2,994||1,886|
|Provision for income taxes||692||600|
|Net Income from continuing operations||2,302||1,286|
|Loss from sale of Subsidiary, net of tax||(304||)|
|Basic earnings per common share:|
|From continuing operations||$||1.37||$||0.77|
|From discontinued operations||–||(0.18||)|
|Net earnings per share||$||1.37||$||0.59|
|Fully diluted earnings per common share:|
|From continuing operations||$||1.33||$||0.74|
|From discontinued operations||–||(0.17||)|
|Net earnings per share||$||1.33||$||0.57|
|Shares outstanding,fully diluted||1,726||1,730|
|Condensed Consolidated Balance Sheets|
|Dec 31||Dec 31|
|Property and equipment, net||9,144||9,397|
|Liabilities and stockholders’ equity|
|Detrex Corporation shareholders’ equity||10,794||10,283|
|Total liabilities and stockholders’ equity||$||22,328||$||23,998|