AMCOL International Corporation, a provider of oilfield services and other services to various industries, has reported net sales of $164.4 million for the first quarter of 2009, down 14.4%, compared with the net sales of $191.4 million in the year-ago quarter. It also reported a net income of $4.2 million, or $0.14 per diluted share, for the first quarter of 2009, compared with the net income of $8.6 million, or $0.28 per diluted share, in the year-ago quarter.

Acquisitions comprised $3.8 million of the 2009 first quarter sales growth and foreign currency fluctuations had a $14.7 million unfavorable impact. Operating profit decreased by 20% over the 2008 period to $10.2 million. Acquisitions and foreign currency fluctuations had unfavorable impacts of $0.7 million and $1.3 million, respectively, on current period operating profit.

The global economic slowdown certainly had an impact on our business in the first quarter, but we are encouraged about gross margins which have generally held up in spite of lower volumes, said Larry Washow, president and chief executive officer. Our efforts to improve our balance sheet are showing results with reductions in inventories, receivables and debt.

Washow continued, The Minerals segment reported a significant drop in revenue primarily due to the slowdown in the U.S. metalcasting and oil drilling markets. Lower costs and better pricing delivered gross margin improvement from Q1 2008, although margins were down from the prior quarter.

Sales in the Environmental segment were softer as commercial construction activity slowed around the world. In spite of lower volumes, gross margins were still nearly 32%. The first quarter is always the most difficult for the Environmental segment and, although it will be a challenging year, our Lining Tech business tends to be less volatile than construction products, Washow stated.

The Oilfield Services segment had the revenue benefit of our mid-year acquisition of the coil tubing business, but most of the profitability came from our traditional filtration work. With low oil and gas prices, the demand is down and overall the business is more competitive but we continue to diversify the business through our foreign operations, Washow added.

We are experiencing a difficult year, but by reducing costs, taking advantage of our global footprint, and managing our balance sheet, we believe we are positioned well for a market rebound wherever and whenever it occurs, Washow concluded.

Statement Of Operations Highlights:

Oilfield Services: Demand for domestic water filtration in the Gulf of Mexico was the contributor to base business growth. The premium reeled tubing (PRT) acquisition added $3.8 million of revenue in the first quarter of 2009.

Transportation: Reductions in fuel-surcharge revenue represented 56% of the revenue decrease; the remaining decrease was due to reduced demand for consumer product shipments.

Gross profit: Gross profit reduced to $3.1 million for the first quarter of 2009, or 6.8%, over in the year-ago quarter while gross margin was 26.3%, a 210 basis point improvement from the 2008 quarter.

Oilfield Services: Gross profit raised $2.9 million for the first quarter of 2009, or 33.4%, over in the year-ago quarter and gross margins improved 40 basis points to 36.4%.

Transportation: Gross profit had a small decrease over the previous year quarter and gross margins improved 100 basis points to 11.8% due to lower energy costs.

General, selling and administrative expenses (GS&A): GS&A expenses decreased $0.6 million, a 1.7% decrease over the prior year quarter.

Oilfield Services: GS&A increased $1.9 million, a 40.7% raise over the 2008 quarter, due to costs from the PRT acquisition and higher commissions due to the increase in sales.

Corporate: GS&A increased $0.9 million due to one-time costs for the second quarter and third quarter restatements in 2008 relating to our Indian investment in Ashapura Minechem Limited (Ashapura) as disclosed in our 2008 Form 10-K, and increased personnel and benefits costs.

Operating profit: The decrease from the previous year quarter was due to the combined effect of the decreases in gross profit and GS&A.

Interest expense: Net interest expense raised by $1 million over the year-ago quarter due to higher average debt levels.

Other, net: Other, net increased $1 million, mainly due to foreign currency transaction losses.

Income taxes: The effective tax rate for the first quarter of 2009 was 28.3% compared with 27% for the same period in 2008. The effective tax rate in the first quarter of 2009 includes certain one-time tax adjustments. Excluding these adjustments, the effective tax rate would have been about 25%.

Income and losses from joint ventures: Income and losses from affiliates and joint ventures decreased $1.3 million compared to the year-ago quarter. This is mainly due to our joint venture in India, Ashapura, which generated $1.2 million of earnings in the year-ago quarter and no earnings in the current quarter.

Share count: Weighted average common and common equivalent shares outstanding were comparable for the quarters ended March 31, 2009 and 2008 at 30.9 million shares.

Financial Position And Cash Flow Highlights:

Long-term debt decreased to $253 million at March 31, 2009 compared to $256.8 million at December 31, 2008. The decrease was mainly due to a decline in working capital levels, counterbalanced by greater capital expenditures. Total long-term debt represented 43.4% of capitalization at March 31, 2009, compared with 43.8% at December 31, 2008. Cash and cash equivalents were $32.6 million at March 31, 2009 compared with $19.4 million at December 31, 2008.

Working capital declined to $239.1 million at March 31, 2009 from $262.7 million at December 31, 2008. The decrease in working capital was due to a combination of lower volumes and greater focus on working capital management.

Cash flow generated from operating activities was $40.7 million for year-to-date March 31, 2009 compared to $4.3 million in the year-ago period. This increase was mainly due to the decline in working capital, counterbalanced by the decrease in net income as compared with the year-ago period.