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United States Lime & Minerals Inc.'s Profit Soars on Tax Benefit

By Matthew DiLallo - Jan 31, 2018 at 8:38PM

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The lime and limestone product maker's earnings wouldn’t have risen anywhere near as much without the impact.

U.S. Lime & Minerals' (USLM 3.66%) financial results ended 2017 on a mixed note. On one hand, it reported solid revenue growth thanks to the continued improvements in the oil and gas market. Profit, meanwhile, soared thanks to the impact of the recently enacted reduction in the U.S. corporate tax rate, which enabled the company to record a large tax benefit in the quarter. However, that tax benefit masked what would have been lackluster earnings resulting from higher costs.

US Lime results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$35.2 million

$34.2 million


Net income

$11.6 million

$3.9 million






Data source: U.S. Lime & Minerals.

A natural gas well with pipelines at sunset.

Image source: Getty Images.

What happened with U.S. Lime this quarter? 

Improving oil and gas prices helped fuel growth in the quarter.

  • Revenue from the company's lime and limestone operations rose 3.1% from last year's fourth quarter to $34.7 million, thanks to increased demand from oil and gas services and industrial customers. However, gross profit from the segment was basically flat at $7.4 million because of higher operating costs.
  • Revenue from the company's natural gas interests slipped 10.8% to $537,000 because of an 11.9% drop in production, partially offset by a slight uptick in the average selling price. Gross profit in the segment, on the other hand, was $318,000, up from $79,000 in the year-ago period, thanks to lower lease operating expenses.
  • Overall, gross profit rose 4.3% to $7.8 million, thanks mainly to the increased earnings from the company's natural gas interests. Net income, however, soared because the company recorded a $6.2 million tax benefit during the quarter -- versus a $1.2 million expense in the year-ago quarter -- because of the one-time impact of the newly lowered U.S. corporate rate on its deferred tax liabilities.

What management had to say 

CEO Timothy Byrne commented on the company's results:

Demand for our lime and limestone products in the fourth quarter and full year 2017 remained steady. ... [W]e continue to seek innovative ways to enhance efficiencies at all of our facilities so we can compete in what remains a challenging pricing environment.

An improvement in the oil market fueled greater demand for lime and limestone products from oil and gas services companies during the quarter, which helped offset weaker demand from construction customers. However, while that helped drive prices higher, profitability didn't follow because costs rose just as quickly. The company is thus looking for ways to improve its profitability.

Looking forward 

In addition to self-help efforts to improve earnings, the continued rebound in the oil and gas market thanks to higher oil prices should keep driving demand from that customer group. Meanwhile, construction spending could pick up in 2018, especially if hurricane-related rebuilding begins and government policies such as lower taxes and increased infrastructure spending take hold.

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United States Lime & Minerals, Inc.
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