AMCOL International (NYSE: ACO) Reports 26 Percent Increase In Diluted Earnings Per Share From Continuing Operations Over 2005 Second Quarter

ARLINGTON HEIGHTS, Ill., July 21 /PRNewswire-FirstCall/ -- AMCOL International Corporation today reported 2006 second quarter income from continuing operations of $11.9 million or $0.39 per diluted share, compared with $9.5 million or $0.31 per diluted share in the same prior-year period.

Net income for the quarter ended June 30, 2006 was $11.9 million, or $0.39 per diluted share, compared with $14.3 million, or $0.46 per diluted share, in the prior-year period. In the second quarter of 2005, the Company reported a gain from discontinued operations of $0.15 per diluted share, reflecting income tax refunds associated with the absorbent polymers segment that was sold in the second quarter of 2000.

Net sales from continuing operations rose 12 percent to $152.7 million for the quarter ended June 30, 2006, compared with $136.3 million for the period in 2005. Operating profit from continuing operations grew over the 2005 second quarter by 10 percent to $14.8 million. Prior-period gross profit and operating profit benefited from a $1.9 million reduction in mining-related taxes due to legislative changes in Montana. Excluding this non-recurring benefit, operating profit would have increased by 28 percent over the 2005 quarter.

For the six-month period ended June 30, 2006, net sales from continuing operations were $295.5 million compared to $258.4 million in the prior-year period. Income from continuing operations was $21.6 million, or $0.70 per diluted share, compared with $16.5 million, or $0.54 per diluted share in the same period of 2005. Net income was $21.6 million, or $0.70 per diluted share, compared with $21.2 million, or $0.69 per diluted share, in the same period of 2005. Net income for the six months ended June 30, 2005 includes a gain from discontinued operations of $0.15 per diluted share.

This release should be read in conjunction with the attached unaudited condensed consolidated financial statements. Further discussion of items and events impacting earnings are included in the financial overview.

Larry Washow, AMCOL president and chief executive officer said, "AMCOL's second quarter 2006 performance reflects the top-line and earnings momentum of our major segments. Our year-to-date performance reflects 14 percent sales growth, and 24 percent operating profit growth over the 2005 period. Although energy related costs continue to escalate significantly, our revenue improvement is enabling us to maintain strong year over year earnings growth."

"In the minerals segment, our Metalcasting Products Group faces a stable, but solid, castings market. Our customers continue to rely on the high value of our products and technical expertise. Pet Products Group's margins are not yet meeting expectations and significant efforts continue on improving the group's operating results. This segment also benefited from high demand for the Petroleum Products Group's clay and lignite products. Asian metalcasting product demand is increasing-resulting in growing sales and profitability." Washow commented.

Washow continued, "The environmental segment had another fine quarter, with our European operations profiting from the robust demand for its lining technologies and building materials products. This segment was however, negatively impacted by a slow start in the U.S. west coast construction season. In Asia, we are seeing improved profitability in our lining technology and building material operations due to sales of higher margin products and lower operating costs. The Oilfield Services group contributed another strong quarter globally."

Washow added that the environmental segment's second quarter sales were negatively impacted by a slow start in the U.S. west coast construction season.

FINANCIAL OVERVIEW Operating Results

The Environmental segment accounted for approximately 80 percent of the sales growth in the second quarter. The Minerals segment contributed the remaining increase.

Gross margin for the quarter was 26.0 percent compared with 26.8 percent in the prior-year second quarter. The Environmental segment's gross margin for the quarter declined by 20 basis points while the Minerals and Transportation segment's gross margins decreased by 240 basis points and 40 basis points, respectively. As previously mentioned, the 2005 quarter gross profit benefited from a $1.9 million non-recurring tax abatement, which was reported in the Minerals segment. Excluding this benefit, gross margin for the segment would have increased by 10 basis points.

General, selling and administrative expenses were $24.9 million in the 2006 second quarter, an increase of $1.8 million or 8 percent over the 2005 period. Research and development expenses were approximately $1.7 million in the second quarter of 2006, compared to $1.9 in the second quarter of 2005.

Operating margin for the quarter was 9.7 percent compared with 9.9 percent in the prior-year period.

The Company's effective tax rate was 26.6 percent for the second quarter of 2006 versus 24.5 percent for the same period in 2005. The tax rate for the 2005 period benefited from a higher proportion of earnings generated in lower tax jurisdictions. The 2006 period also benefited from favorable tax adjustments. The effective rate for the remainder of year is forecast at approximately 28 percent.

Income from affiliates and joint ventures contributed approximately $0.04 per diluted share in the 2006 second quarter compared with $0.01 per diluted share in the prior-year period.

The weighted average number of common and common equivalent shares was 30.9 million for the quarter ended June 30, 2006, compared with 30.8 million in the prior-year period.

Financial Position

Long-term debt increased to $52.8 million at June 30, 2006 compared to $34.8 million at December 31, 2005. The increase was primarily due to greater working capital levels and capital expenditures. Debt represented 16 percent of total capitalization at June 30, 2006, compared with 12 percent at December 31, 2005. Cash and cash equivalents were $13.7 million at June 30, 2006 compared with $16.0 million at the end of 2005.

Working capital increased to $169.4 million at June 30, 2006 from $147.9 million at December 31, 2005, which also had the effect of increasing the current ratio to 3.8-to-1 versus 3.3-to-1.

Cash flow provided by operating activities was $5.8 million for the year- to-date six months ended June 30, 2006 as compared to $7.0 million in the prior-year period.

Capital expenditures amounted to $20.5 million for the year-to-date six months ended June 30, 2006, compared with $11.7 million for the same period in 2005. The increase in 2006 is primarily attributed to new manufacturing sites in Spain and China.

During the first six months of 2006, the Company repurchased 120 thousand shares of its common stock for $3.2 million, or an average price of $26.83 per share. $4.8 million remains available in the stock repurchase program approved by the Board of Directors in May 2004.

This release contains certain forward-looking statements regarding AMCOL's expected performance for future periods and actual results for such periods might materially differ. Such forward-looking statements are subject to uncertainties, which include, but are not limited to, actual growth in AMCOL's various markets, utilization of AMCOL's plants, currency exchange rates, currency devaluation, delays in development, production and marketing of new products, integration of acquired businesses, and other factors detailed from time to time in AMCOL's annual report and other reports filed with the Securities and Exchange Commission.

AMCOL International, headquartered in Arlington Heights, Ill., produces and markets a wide range of specialty mineral products used for industrial, environmental and consumer-related applications. AMCOL is the parent of American Colloid Co., CETCO (Colloid Environmental Technologies Co.), Volclay International, Nanocor and the transportation operations, Ameri-co Carriers, Inc. and Ameri-co Logistics, Inc. AMCOL's common stock is traded on the New York Stock Exchange under the symbol ACO. AMCOL's web address is http://www.amcol.com/ . AMCOL's second quarter conference call will be available live today at 11 a.m. EDT on the AMCOL website.

Financial tables follow. AMCOL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share data) Six Months Ended Three Months Ended June 30, June 30, 2006 2005 2006 2005 Continuing Operations: Net sales $295,465 $258,394 $152,701 $136,344 Cost of sales 220,041 192,146 113,006 99,776 Gross profit 75,424 66,248 39,695 36,568 General, selling and administrative expenses 48,549 44,552 24,867 23,107 Operating profit 26,875 21,696 14,828 13,461 Other income (expense): Interest expense, net (1,095) (805) (618) (444) Other, net 532 (991) 320 (886) (563) (1,796) (298) (1,330) Income before income taxes and income from affiliates and joint ventures 26,312 19,900 14,530 12,131 Income tax expense (benefit) 7,268 4,457 3,860 2,973 Income before income from affiliates and joint ventures 19,044 15,443 10,670 9,158 Income from affiliates and joint ventures 2,586 1,027 1,249 360 Income from continuing operations 21,630 16,470 11,919 9,518 Discontinued Operations: Gain on 2000 disposal (including income tax benefit of $5,255 in 2005) - 4,755 - 4,755 Income from discontinued operations - 4,755 - 4,755 Net income $21,630 $21,225 $11,919 $14,273 Weighted average common shares outstanding 29,880 29,407 29,971 29,480 Weighted average common and common equivalent shares outstanding 31,011 30,772 30,937 30,773 Basic earnings per share: Continuing operations $0.72 $0.56 $0.40 $0.32 Discontinued operations: Gain on disposal - 0.16 - 0.16 Basic earnings per share $0.72 $0.72 $0.40 $0.48 Diluted earnings per share: Continuing operations $0.70 $0.54 $0.39 $0.31 Discontinued operations: Gain on disposal - 0.15 - 0.15 Diluted earnings per share $0.70 $0.69 $0.39 $0.46 Dividends declared per share $0.23 $0.18 $0.12 $0.09 AMCOL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) ASSETS June 30, December 31, 2006 2005 (unaudited) * Current assets: Cash $13,743 $15,997 Accounts receivable, net 123,437 101,725 Inventories 72,894 75,455 Prepaid expenses 12,396 9,068 Income taxes receivable 3,863 3,698 Current deferred tax assets 4,204 4,864 Assets held for sale 401 402 Total current assets 230,938 211,209 Investments in and advances to affiliates and joint ventures 23,295 19,730 Property, plant, equipment, mineral rights and reserves: Land and mineral rights 15,652 12,761 Depreciable assets 270,958 252,430 286,610 265,191 Less: accumulated depreciation 174,780 165,127 111,830 100,064 Other assets: Goodwill 21,719 20,644 Intangible assets, net 2,493 3,009 Deferred tax assets 5,043 4,579 Other assets 10,994 9,294 40,249 37,526 $406,312 $368,529 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $28,568 $24,722 Accrued liabilities 32,925 38,547 Total current liabilities 61,493 63,269 Long-term debt 52,790 34,838 Minority interests in subsidiaries 262 259 Deferred compensation 7,691 7,045 Other liabilities 14,639 14,262 22,592 21,566 Stockholders' equity: Common stock 320 320 Additional paid in capital 75,500 72,194 Retained earnings 198,859 184,125 Accumulated other comprehensive income 12,858 8,644 287,537 265,283 Less: Treasury stock 18,100 16,427 269,437 248,856 $406,312 $368,529 * Condensed from audited financial statements. AMCOL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands) Six Months Ended June 30, 2006 2005 Cash flow from operating activities: Net income $21,630 $21,225 Adjustments to reconcile net income to net cash: provided by (used in) operating activities: Gain on disposal of discontinued operations - (4,755) Depreciation, depletion, and amortization 10,089 9,828 Changes in assets and liabilities, net of effects of acquisitions: Decrease (Increase) in current assets (22,563) (13,630) Decrease (Increase) in noncurrent assets (1,895) 400 Increase (decrease) in current liabilities (647) (4,962) Increase (decrease) in noncurrent liabilities 1,024 321 Other (1,838) (1,389) Net cash provided by (used in) operating activities 5,800 7,038 Cash flow from investing activities: Acquisition of land, mineral rights, and depreciable assets (20,525) (11,733) Acquisitions, net of cash (1,270) (1,632) Other 219 75 Net cash provided by (used in) investing activities (21,576) (13,290) Cash flow from financing activities: Net change in outstanding debt 15,168 10,255 Proceeds from sales of treasury stock 2,214 944 Purchases of treasury stock (3,219) - Dividends paid (6,893) (5,324) Excess tax benefits from stock-based compensation 1,931 - Net cash provided by (used in) financing activities 9,201 5,875 Effect of foreign currency rate changes on cash 4,321 (2,779) Net increase (decrease) in cash and cash equivalents (2,254) (3,156) Cash and cash equivalents at beginning of period 15,997 17,594 Cash and cash equivalents at end of period $13,743 $14,438 AMCOL INTERNATIONAL CORPORATION SEGMENT RESULTS (unaudited) Six Months Ended June 30, Minerals 2006 2005 2006 vs 2005 (Dollars in Thousands) Net sales $158,189 100.0% $148,325 100.0% $9,864 6.7% Cost of sales 127,649 80.7% 118,068 79.6% 9,581 8.1% Gross profit 30,540 19.3% 30,257 20.4% 283 0.9% General, selling and administrative expenses 12,302 7.8% 11,797 8.0% 505 4.3% Operating profit 18,238 11.5% 18,460 12.4% (222) -1.2% Six Months Ended June 30, Environmental 2006 2005 2006 vs 2005 (Dollars in Thousands) Net sales $121,989 100.0% $96,138 100.0% $25,851 26.9% Cost of sales 80,099 65.7% 63,029 65.6% 17,070 27.1% Gross profit 41,890 34.3% 33,109 34.4% 8,781 26.5% General, selling and administrative expenses 24,497 20.1% 20,465 21.3% 4,032 19.7% Operating profit 17,393 14.2% 12,644 13.1% 4,749 37.6% Six Months Ended June 30, Transportation 2006 2005 2006 vs 2005 (Dollars in Thousands) Net sales $25,319 100.0% $23,580 100.0% $1,739 7.4% Cost of sales 22,325 88.2% 20,698 87.8% 1,627 7.9% Gross profit 2,994 11.8% 2,882 12.2% 112 3.9% General, selling and administrative expenses 1,579 6.2% 1,589 6.7% (10) -0.6% Operating profit 1,415 5.6% 1,293 5.5% 122 9.4% Six Months Ended June 30, Corporate 2006 2005 2006 vs 2005 (Dollars in Thousands) Intersegment shipping sales $(10,032) $(9,649) Intersegment shipping costs (10,032) (9,649) Gross profit - - Corporate general, selling and administrative expenses 8,521 9,033 (512) -5.7% Nanocomposite business development expenses 1,650 1,668 (18) -1.1% Operating loss 10,171 10,701 (530) -5.0% AMCOL INTERNATIONAL CORPORATION SEGMENT RESULTS (unaudited) Three Months Ended June 30, Minerals 2006 2005 2006 vs 2005 (Dollars in Thousands) Net sales $78,118 100.0% $74,877 100.0% $3,241 4.3% Cost of sales 62,470 80.0% 58,094 77.6% 4,376 7.5% Gross profit 15,648 20.0% 16,783 22.4% (1,135) -6.8% General, selling and administrative expenses 6,177 7.9% 6,118 8.2% 59 1.0% Operating profit 9,471 12.1% 10,665 14.2% (1,194) -11.2% Three Months Ended June 30, Environmental 2006 2005 2006 vs 2005 (Dollars in Thousands) Net sales $66,859 100.0% $53,834 100.0% $13,025 24.2% Cost of sales 44,324 66.3% 35,585 66.1% 8,739 24.6% Gross profit 22,535 33.7% 18,249 33.9% 4,286 23.5% General, selling and administrative expenses 12,873 19.3% 10,742 20.0% 2,131 19.8% Operating profit 9,662 14.4% 7,507 13.9% 2,155 28.7% Three Months Ended June 30, Transportation 2006 2005 2006 vs 2005 (Dollars in Thousands) Net sales $12,848 100.0% $12,595 100.0% $253 2.0% Cost of sales 11,336 88.2% 11,059 87.8% 277 2.5% Gross profit 1,512 11.8% 1,536 12.2% (24) -1.6% General, selling and administrative expenses 780 6.1% 816 6.5% (36) -4.4% Operating profit 732 5.7% 720 5.7% 12 1.7% Three Months Ended June 30, Corporate 2006 2005 2006 vs 2005 (Dollars in Thousands) Intersegment shipping sales $(5,124) $(4,962) Intersegment shipping costs (5,124) (4,962) Gross profit - - Corporate general, selling and administrative expenses 4,266 4,672 (406) -8.7% Nanocomposite business development expenses 771 759 12 1.6% Operating loss 5,037 5,431 (394) -7.3%