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Press release from Marketwire

Opta Minerals Inc. Reports Second Quarter Results for Fiscal 2012

Friday, August 10, 2012

Opta Minerals Inc. Reports Second Quarter Results for Fiscal 201207:30 EDT Friday, August 10, 2012WATERDOWN, ONTARIO--(Marketwire - Aug. 10, 2012) - Opta Minerals Inc. (TSX:OPM), today announced results for the three and six months ended June 30, 2012. All figures are reported in U.S. dollars and are in accordance with International Financial Reporting Standards (IFRS), except where otherwise noted.Financial Highlights (presented in $000s USD except per share amounts):3 months ended June 30, 20123 months ended June 30, 2011Increase (Decrease)%6 months ended June 30, 20126 months ended June 30, 2011Increase (Decrease)%Revenue$31,214$24,787$6,42725.9%$59,546$46,393$13,15328.4%Gross Profit6,8705,4671,40325.7%13,11710,6542,46323.1%22.0%22.1%(0.01%)22.0%23.0%(1.0%)EBITDA12,9043,092(188)(6.1%)7,0516,5524997.6%EBIT21,5242,043(519)(25.4%)4,3754,487(112)(2.5%)Net Earnings1,3221,03528727.7%2,8322,45837415.2%EPS$0.07$0.06$0.01$0.15$0.14$0.011) EBITDA is a non-IFRS measure; refer to Footnotes. 2) EBIT is a non-IFRS measure; refer to Footnotes. David Kruse, President and CEO of Opta Minerals, noted "During the second quarter, Opta Minerals experienced solid revenue growth over the comparable period in 2011. Solid earnings in the steel sector were slightly offset by marginal results in the industrial minerals sector. We have continued to manage production to demand while focussing on our cost structure. We remain cautiously optimistic with the direction of the economic environment in our business."Operational Highlights:Revenue in the Mill and Foundry Products and Services segment increased 42.0% over the comparable quarter in 2011 due largely to the demand for lime blends and chromite and, the acquisition of Babco Industrial Corp. during the first quarter. Revenue in the Abrasive Products Manufacturing and Distribution segment decreased 13.3% over the comparable quarter in 2011 due to a decrease in demand for metallurgical slags. Gross profit increased quarter over quarter. Gross profit as a percentage of revenue has declined slightly as a result of some weakness in the industrial minerals sector and product mix. Selling, general and administrative expenses (SGA) increased to 15.6% of revenue for the second quarter of 2012 from 14.3% for the comparable quarter in 2011. Most of the increase was the result of a bad debt due to the bankruptcy filing of a large American steel producer and customer in the amount of $0.9 million and, costs associated with target acquisitions (see below). Net earnings for the second quarter increased 27.7% over the comparable quarter in 2011. The majority of the increase was due to the recognition of deferred income tax assets from previously unrecognized non-capital loss carry forwards. The foreign exchange loss was $0.5 million for the quarter as compared to a foreign exchange gain of $0.1 million for the same quarter in 2011. The results reflected a year-over-year foreign exchange loss of $0.8 million largely due to the weakness of the Euro. For the three months ended June 30, 2012, cash flow from operating activities before changes in working capital generated $1.6 million versus $2.0 million in the second quarter of 2011. The positive cash flow was used to finance working capital, namely trade receivables. On July 13, 2012, the Company tendered an offer to acquire all of the outstanding shares of WGI Heavy Minerals, Incorporated (WGI), for Cdn $0.60 in cash per share by way of a take-over bid. The offer valued WGI at approximately Cdn $15.5 million on a fully diluted basis. The offer will be funded by bank term debt. The Company's working capital at June 30, 2012 amounted to $15.9 million and total assets were $119.8 million, as compared to $14.7 million and $92.4 million respectively at December 31, 2011. The debt-to-equity ratio at June 30, 2012 was 1.04 to 1.00, versus 0.65 to 1.00 at December 31, 2011. The increased debt-to-equity ratio is largely attributable to the acquisition of Babco Industrial Corp. during the first quarter, financed by bank term debt. Opta Minerals President and CEO, David Kruse, plans to host a conference call at 2:00PM Eastern Standard Time on Friday, August 10th, 2012 to discuss second quarter 2012 results and recent corporate developments. After opening remarks, there will be a question and answer period. This conference call can be accessed with the toll free dial-in number 1-(866) 321-6651 or 1-(416) 642-5212; quote confirmation code 5048710. If you are unable to listen live, the conference call will be archived and can be accessed between August 10th, 2012 and August 17th, 2012, with the toll free dial-in number 1-(888) 203-1112 or 1-(647) 436-0148 followed by pass code 5048710.Opta Minerals is a vertically integrated provider of custom process solutions and industrial mineral products used primarily in the steel, foundry, loose abrasive cleaning, water-jet cutting and municipal water filtration industries. The Company has production and distribution facilities in Ontario, Quebec, Saskatchewan, Louisiana, South Carolina, Virginia, Maryland, Indiana, Michigan, New York, Texas, Florida, Ohio, France and Slovakia. Opta has one of the broadest product lines in the industry. FOOTNOTES: Earnings before income taxes and interest ("EBIT"); and earnings before interest, income taxes, depreciation and amortization ("EBITDA") as defined below, are both non-IFRS earnings measures that do not have standardized measures prescribed by IFRS, and therefore may not be comparable to similar measures presented by other publicly traded companies.For the threeFor the sixMonths EndedMonths EndedJune 30June 302012201120122011$$$$Net Earnings for the Period1,3221,0352,8322,458Finance Expense7634081,419821Income Taxes(561)6001241,208Depreciation and Amortization1,3801,0492,6762,065EBITDA12,9043,0927,0516,552Subtract:Depreciation and Amortization1,3801,0492,6762,065EBIT21,5242,0434,3754,487 Notes 1) The term "EBITDA" refers to earnings before deducting interest expense, provision for income taxes, depreciation and amortization. The Company believes that EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation. EBITDA is not a recognized measure under International Finance Reporting Standards (IFRS), and accordingly, investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with IFRS as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. The Company's method of calculating EBITDA may differ from other issuers and accordingly, EBITDA may not be comparable to similar measures presented by other issuers. 2)The term "EBIT" refers to earnings before income taxes and interest expense. The Company believes that EBIT is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed or taxed. EBIT is a non-IFRS earnings measure that does not have standardized measures prescribed by IFRS, and therefore may not be comparable to similar measures presented by other publicly traded companies. This press release may contain "forward-looking statements" which reflect the current expectations of management of the Company regarding the Company's future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as "may", 'would", "could", "should", "will", "anticipate", "believe", "plan", "expect", "intend", "estimate", "aim", "endeavour", "seek", "predict", "potential" and similar expressions have been used to identify these forward-looking statements. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management of the Company. Forward-looking statements involve significant risks, uncertainties and assumptions. Many factors could cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, without limitation, cancellations of or the failure to renew purchase orders; production and delivery issues; quality, pricing and availability of raw materials; compliance with environmental regulations; exchange rate fluctuations as well as the other risks identified in the "Risk Factors" section of the Company's Annual Information Form and other public filings (copies of which may be obtained at www.sedar.com). Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by this press release. These factors should be considered carefully and reader should not place undue reliance on the forward-looking statements. Although any forward-looking statements contained in this press release are based upon what management currently believes to be reasonable assumptions, the Company cannot assure readers that actual results, performance or achievements will be consistent with these forward- looking statements, and management's assumptions may prove to be incorrect. These forward-looking statements are made as of the date of this press release and, other than as required by law, the Company does not intend, and does not assume any obligation, to update or revise these forward- looking statements, whether as a result of new information, future events or otherwise.Opta Minerals Inc.Interim Condensed Consolidated Balance Sheets As At June 30, 2012(Unaudited)Expressed in Thousands of US Dollars (except per share amounts and number of shares)June 30, 2012 December 31, 2011(Unaudited)(Audited)AssetsCurrentCash and cash equivalents$233$698Trade and other receivables17,36612,515Inventories23,39221,589Derivative financial instruments125-41,11634,802Property, Plant and Equipment24,40819,848Intangible Assets34,84327,319Goodwill14,1356,680Deferred Income Tax Assets5,3053,793$119,807$92,442LiabilitiesCurrentTrade and other payables8,6287,123Borrowings14,72711,026Derivative financial instrument-256Provisions3681,015Other liabilities653444Income taxes payable784168Preference shares454625,20520,078Borrowings32,33916,526Derivative Financial Instrument571-Other Liabilities1,8691,481Deferred Income Tax Liabilities3,8413,192Deferred Income Tax Liability on Intangible Assets10,6598,65074,48449,927Equity Attributable to the Shareholders of the CompanyCapital StockAuthorized without limit as to number -Preference shares (without par value)common sharesIssued -18,068,052 common shares (December 31, 2011 - 18,061,784)17,69417,680Contributed Surplus3,7723,429Accumulated Other Comprehensive Loss(2,516)(2,135)Retained Earnings26,37323,54145,32342,515$119,807$92,442Opta Minerals Inc.Interim Condensed Consolidated Statements of IncomeFor the Three Months Ended June 30, 2012 and 2011(Unaudited)Expressed in Thousands of US Dollars (except per share amounts)June 30,June 30,20122011Revenue$31,214$24,787Cost of Goods Sold24,34419,320Gross Profit6,8705,467ExpensesSelling, general and administrative4,8623,554Other expense (income)484(130)5,3463,424Operating Profit1,5242,043Finance expense763408Profit Before Income Taxes7611,635Income taxes(561)600Profit for the Period Attributable to the Shareholders of the Company$1,322 $ 1,035Earnings per share for the period - basic and diluted0.070.06Opta Minerals Inc.Interim Condensed Consolidated Statements of IncomeFor the Six Months Ended June 30, 2012 and 2011(Unaudited)Expressed in Thousands of US Dollars (except per share amounts)June 30,June 30,20122011Revenue$59,546$46,393Cost of Goods Sold46,42935,739Gross Profit13,11710,654ExpensesSelling, general and administrative8,4806,741Other expense (income)262(574)8,7426,167Operating Profit4,3754,487Finance expense1,419821Profit Before Income Taxes2,9563,666Income taxes1241,208Profit for the Period Attributable to the Shareholders of the Company$2,832$2,458Earnings per share for the period - basic and diluted0.150.14Opta Minerals Inc.Interim Condensed Consolidated Statements of Comprehensive Income For the Three Months Ended June 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsJune 30,June 30,20122011Profit for the Period Attributable to the Shareholders of the Company$1,322$1,035Other Comprehensive IncomeUnrealized (loss) gain on translation of foreign operations(348)263Unrealized (loss) gain on derivative financial instruments(124)81Other comprehensive (loss) income, net of tax(472)344Comprehensive Income Attributable to the Shareholders of the Company$850$1,379Opta Minerals Inc.Interim Condensed Consolidated Statements of Comprehensive Income For the Six Months Ended June 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsJune 30,June 30,20122011Profit for the Period Attributable to the Shareholders of the Company$2,832$2,458Other Comprehensive IncomeUnrealized (loss) gain on translation of foreign operations(208)535Unrealized (loss) gain on derivative financial instruments(173)178Other comprehensive (loss) income, net of tax(381)713Comprehensive Income Attributable to the Shareholders of the Company$2,451$3,171Opta Minerals Inc.Interim Condensed Consolidated Statements of Changes in EquityFor the Six Months Ended June 30, 2012 and 2011(Unaudited)Expressed in Thousands of US Dollars (except number of shares) Number of Shares - Capital Stock Capital StockContributed Surplus - Share-based Payments AOCI* - Cash Flow HedgeAOCI* - Foreign Currency Translation Reserve Retained EarningsTotalEquityAt January 1, 201218,061,784$17,680$3,429$(193)$(1,942)$23,541$42,515Comprehensive IncomeProfit for the period-----2,8322,832Unrealized loss on translation of foreign operations ----(208)-(208)Unrealized loss on financial derivative designated as a cash flow hedge---(173)--(173)Total Comprehensive Income---(173)(208)2,8322,451Transactions with ShareholdersEmployee share purchase plan6,26814----14Share-based payment expense--343---343Total Transactions withShareholders6,26814343---357At June 30, 201218,068,05217,6943,772(366)(2,150)26,37345,323At January 1, 201118,036,97417,6322,781(596)(1,844)19,89137,864Comprehensive IncomeProfit for the period-----2,4582,458Unrealized gain on translation of foreign operations----535-535Unrealized gain on financial derivative designated as a cash flow hedge---178--178Total Comprehensive Income---1785352,4583,171Transactions with ShareholdersEmployee share purchase plan4,80710----10Share-based payment expense--270---270Total Transactions with Shareholders4,80710270---280At June 30, 201118,041,781$17,642$3,051$(418)$(1,309)$22,349$41,315*AOCI - Accumulated Other Comprehensive IncomeOpta Minerals Inc.Interim Condensed Consolidated Statements of Cash FlowsFor the Six Months Ended June 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsJune 30,June 30,20122011Cash Provided by (Used in) -Operating ActivitiesProfit for the period$2,832$2,458Items not affecting cash:Depreciation of property, plant and equipment1,4191,061Amortization of intangible assets1,2571,004Share-based payment expense343270Non-cash finance expense-(9)Deferred income taxes(1,554)(354)Loss on disposal of property, plant and equipment-44,2974,434Changes in non-cash working capitalTrade and other receivables(4,369)(2,325)Inventories(1,446)(3,502)Trade and other payables827951Provisions(647)(484)Income taxes payable610531(728)(395)Financing ActivitiesProceeds from issuance of common shares - net of issuance costs1410Proceeds from borrowings, net of deferred financing costs20,9884,102Repayment of finance lease liability(121)(55)Repayment of borrowings(1,835)(1,274)19,0462,783Investing ActivitiesProceeds on disposal of property, plant and equipment-2Acquisition of subsidiary(17,530)-Additions to property, plant and equipment(1,217)(812)Additions to intangible assets(25)(66)(18,772)(876)Foreign Exchange (Loss) Gain on Cash Held in Foreign Currency(11)26(Decrease) increase in Cash and Cash Equivalents(465)1,538Cash and Cash EquivalentsBeginning of Period698495End of Period$233$2,033Additional Cash Flows Information:Interest paid$1,435$861Income taxes paid1,0331,033Opta Minerals Inc.Segmented InformationFor the Three Months Ended June 30, 2012 and 2011 (Unaudited)Expressed in Thousands of US DollarsIntersegment revenues are recorded at transaction prices, which approximate cost. The Company's assets, operations and employees are located in Canada, the United States and Europe.Three Months Ended June 30, 2012Mill and Foundry Products and ServicesAbrasive Products Manu-facturing and Distribution OperationsUnallocatedTotalExternal revenue by marketCanada$6,880$1,613$-$8,493US13,9954,596-18,591Europe4,06214-4,076Other2034-54Total revenue from external customers24,9576,257-31,214Segment profit before interest expense and income taxes2,239(187)(528)1,524Finance expense---(763)Income taxes---561Profit for the period---1,322Depreciation of property, plant and equipment39629738731Amortization of intangible assets601-48649Expenditures on property, plant and equipment$390$153$63$606Opta Minerals Inc.Segmented InformationFor the Three Months Ended June 30, 2012 and 2011(Unaudited)Expressed in Thousands of US Dollars Three Months Ended June 30, 2011Mill and Foundry Products and ServicesAbrasive Products Manu-facturing and Distribution OperationsUnallocatedTotalExternal revenue by marketCanada$2,496$1,638$-$4,134US10,9755,549-16,524Europe4,057--4,057Other4329-72Total revenue from external customers17,5717,216-24,787Segment profit before interest expense and income taxes2,492(221)(228)2,043Finance expense---(408)Income taxes---(600)Profit for the period---1,035Total assets as at June 30, 201157,49333,6543,96895,115Depreciation of property, plant and equipment23528323541Amortization of intangible assets462739508Goodwill and intangible assets as at June 30, 201131,4383,57142735,436Expenditures on property, plant and equipment$389$116$6$511External revenue by market is attributed to countries based on location of the customer.Included in the mill and foundry products and services segment is revenue from one customer that individually exceeds 10% of the Company's revenue.Opta Minerals Inc.Segmented InformationFor the Six Months Ended June 30, 2012 and 2011 (Unaudited)Expressed in Thousands of US DollarsExternal revenue by market is attributed to countries based on location of the customer.Included in the mill and foundry products and services segment is revenue from one customer that individually exceeds 10% of the Company's revenue.Six Months Ended June 30, 2012Mill and Foundry Products and ServicesAbrasive Products Manu-facturing and Distribution OperationsUnallocatedTotalExternal revenue by marketCanada$11,887$2,878$-$14,765US27,3179,316-36,633Europe8,03914-8,053Other2174-95Total revenue from external customers47,26412,282-59,546Segment profit before interest expense and income taxes5,735(523)(837)4,375Finance expense---(1,419)Income taxes---(124)Profit for the period---2,832Total assets as at June 30, 201282,42633,6593,722119,807Depreciation of property, plant and equipment756590731,419Amortization of intangible assets1,1556961,257Goodwill and intangible assets as at June 30, 201245,1533,55227348,978Expenditures on property, plant and equipment$680$418$119$1,217Opta Minerals Inc.Segmented InformationFor the Six Months Ended June 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsSix Months Ended June 30, 2011Mill and Foundry Products and ServicesAbrasive Products Manu-facturing and Distribution OperationsUnallocatedTotalExternal revenue by marketCanada$4,316$3,089$-$7,405US21,6469,619-31,265Europe7,651--7,651Other4329-72Total revenue from external customers33,65612,737-46,393Segment profit before interest expense and income taxes5,277(836)464,487Finance expense---(821)Income taxes---(1,208)Profit for the period---2,458Depreciation of property, plant and equipment459549531,061Amortization of intangible assets91513761,004Expenditures on property, plant and equipment$494$258$60$812FOR FURTHER INFORMATION PLEASE CONTACT: David KruseOpta Minerals Inc.Chief Executive Officer905-689-7361, ext 405ORPeter FrytersOpta Minerals Inc.Chief Financial Officer and Secretary905-689-7361, ext 405investor_relations@optaminerals.comwww.optaminerals.com