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Press release from Marketwire

Opta Minerals Inc. Reports Third Quarter Results for Fiscal 2012

Wednesday, November 07, 2012

Opta Minerals Inc. Reports Third Quarter Results for Fiscal 201207:30 EST Wednesday, November 07, 2012WATERDOWN, ONTARIO--(Marketwire - Nov. 7, 2012) - Opta Minerals Inc. (TSX:OPM), today announced results for the three and nine months ended September 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 months3 months9 months9 monthsendedendedendedendedSeptember 30,September 30,IncreaseSeptember 30,September 30,Increase20122011(Decrease)%20122011(Decrease)%Revenue$32,980$24,102$8,87836.8%$92,526$70,495$22,03131.3%Gross Profit6,9965,1791,81735.1%20,11315,8334,28027.0%21.2%21.5%(0.3%)21.7%22.5%(0.8%)EBITDA14,5432,5691,97476.8%11,5949,1212,47327.1%EBIT23,0841,5191,565103.0%7,4596,0061,45324.2%Net Earnings1,450628822130.9%4,2823,0861,19638.8%EPS$0.08$0.03$0.05$0.23$0.17$0.061 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 third quarter, Opta Minerals experienced solid revenue growth over the comparable period in 2011. Solid earnings in the steel sector were marginally offset by results in the industrial minerals sector. We recently acquired 94% of the shares of WGI Heavy Minerals, Incorporated (WGI) and intend to acquire the remaining shares under compulsory acquisition provisions. This will conclude our third acquisition in twelve months consistent with our strategic plan to build the organization through a combination of internal growth and acquisitions. We will continue to focus our efforts on integrating these new businesses, generating cash flow, and paying down debt. We are optimistic that our business is well positioned to address changes in the economic environment."Operational Highlights:Net earnings for the third quarter increased 130.9% over the comparable quarter in 2011 and 38.8% on a year over year basis. These increases were attributable to the successful integration of Babco Industrial Corp. (Babco) in the first quarter, the recognition of deferred income tax assets from previously unrecognized non-capital loss carry forwards in the second quarter and revenue growth in the steel and abrasives segments.Revenue in the Mill and Foundry Products and Services (steel) segment increased 32.2% over the comparable quarter in 2011 due largely to the demand for lime blends, metallic magnesium, chromite, and the acquisition of Babco during the first quarter which added petroleum coke to the product portfolio. Revenue in the Abrasive Products Manufacturing and Distribution (abrasives) segment increased 48.5% over the comparable quarter in 2011 due to an increase in demand for metallurgical slags and the acquisition of WGI which contributed to garnet sales. For the nine months ended September 30, the revenue increases represented 37.6% and 14.7%, respectively, for the same segments.Gross profit increased quarter over quarter and year over year. Gross profit as a percentage of revenue declined slightly due to some weakness in the abrasives segment and product mix. Selling, general and administrative expenses (SGA) were reduced to 12.5% of revenue for the third quarter of 2012 from 14.0% for the comparable quarter in 2011. On a year over year basis, SGA were reduced to 13.6% of revenue in 2012 from 14.3% of revenue in 2011. The Company achieved SGA reductions in light of a significant bad debt in the second quarter from the bankruptcy filing of a large American steel producer and customer in the amount of $0.9 million and costs of acquisitions approximating $0.6 million. The foreign exchange gain was $0.2 million for the quarter as compared to a foreign exchange loss of $0.3 million for the same quarter in 2011. The results reflect a year-over-year foreign exchange loss of $0.3 million due to the weakness of the Euro. For the three months ended September 30, 2012, cash flow from operating activities before changes in working capital generated $3.1 million versus $1.9 million in the third quarter of 2011. On a year over year basis, cash flow from continuing operations before changes in working capital generated $7.4 million versus $6.3 million. The positive cash flow was used to finance working capital and repay debt. On July 13, 2012, the Company tendered an offer to acquire all of the outstanding shares of WGI for Cdn $0.60 in cash per share by way of a take-over bid. On August 29, 2012, the Company acquired 94% of the outstanding shares of WGI for Cdn $0.60 cash per share and intends to exercise its rights under compulsory acquisition provisions to purchase the shares not tendered. The purchase price amounted to $15.0 million and was funded by bank term debt. The amount payable to acquire the remaining interest of $0.9 million has been recognized as a financial liability. The Company's working capital at September 30, 2012 amounted to $25.6 million and total assets were $139.5 million, as compared to $14.7 million and $92.4 million respectively at December 31, 2011. The debt-to-equity ratio at September 30, 2012 was 1.27 to 1.00, versus 0.65 to 1.00 at December 31, 2011. The increased debt-to-equity ratio results from the acquisitions of Babco and WGI during the first and third quarters, financed by bank term debt. 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, Idaho, France, Slovakia and Germany. 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 nineMonths EndedMonths EndedSeptember 30September 302012201120122011$$$$Net Earnings for the Period1,4506284,2823,086Finance Expense7574232,1761,244Income Taxes8774681,0011,676Depreciation and Amortization1,4591,0504,1353,115EBITDA14,5432,56911,5949,121Subtract:Depreciation and Amortization1,4591,0504,1353,115EBIT23,0841,5197,4596,006Notes1The 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.2The 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 SheetsAs At September 30, 2012(Unaudited)Expressed in Thousands of US Dollars (except per share amounts and number of shares)September 30,December 31,20122011(Unaudited)(Audited)AssetsCurrentCash and cash equivalents$2,093$698Trade and other receivables22,36512,515Inventories29,33221,58953,79034,802Property, Plant and Equipment29,46119,848Intangible Assets35,52527,319Goodwill14,1986,680Deferred Income Tax Assets6,5323,793$139,506$92,442LiabilitiesCurrentTrade and other payables12,7197,123Borrowings13,47711,026Derivative financial instrument-256Provisions6101,015Other liabilities662444Income taxes payable723168Preference shares474628,23820,078Borrowings46,34316,526Derivative Financial Instrument497-Other Liabilities1,9161,481Deferred Income Tax Liabilities4,6343,192Deferred Income Tax Liability on Intangible Assets10,8528,65092,48049,927Equity Attributable to the Shareholders of the CompanyCapital StockAuthorized without limit as to number -Preference shares (without par value)common sharesIssued - 18,079,617 common shares (December 31, 2011 - 18,061,784)17,71717,680Contributed Surplus3,8983,429Accumulated Other Comprehensive Loss(2,412)(2,135)Retained Earnings27,82323,541Total Equity47,02642,515$139,506$92,442Opta Minerals Inc.Interim Condensed Consolidated Statements of IncomeFor the Three Months Ended September 30, 2012 and 2011(Unaudited)Expressed in Thousands of US Dollars (except per share amounts)September 30,September 30,20122011Revenue$32,980$24,102Cost of Goods Sold25,98418,923Gross Profit6,9965,179ExpensesSelling, general and administrative4,1363,365Other expense (income)(224)2953,9123,660Operating Profit3,0841,519Finance expense757423Profit Before Income Taxes2,3271,096Income taxes877468Profit for the Period Attributable to the Shareholders of the Company$1,450$628Earnings per share for the period - basic and diluted0.080.03Opta Minerals Inc.Interim Condensed Consolidated Statements of IncomeFor the Nine Months Ended September 30, 2012 and 2011(Unaudited)Expressed in Thousands of US Dollars (except per share amounts)September 30,September 30,20122011Revenue$92,526$70,495Cost of Goods Sold72,41354,662Gross Profit20,11315,833ExpensesSelling, general and administrative12,61610,106Other expense (income)38(279)12,6549,827Operating Profit7,4596,006Finance expense2,1761,244Profit Before Income Taxes5,2834,762Income taxes1,0011,676Profit for the Period Attributable to the Shareholders of the Company$4,282$3,086Earnings per share for the period - basic and diluted0.230.17Opta Minerals Inc.Interim Condensed Consolidated Statements of Comprehensive IncomeFor the Three Months Ended September 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsSeptember 30,September 30,20122011Profit for the Period Attributable to the Shareholders of the Company$1,450$628Other Comprehensive IncomeUnrealized (loss) gain on translation of foreign operations106(243)Unrealized (loss) gain on derivative financial instruments(2)86Other comprehensive (loss) income, net of tax104(157)Comprehensive Income Attributable to the Shareholders of the Company$1,554$471Opta Minerals Inc.Interim Condensed Consolidated Statements of Comprehensive IncomeFor the Nine Months Ended September 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsSeptember 30,September 30,20122011Profit for the Period Attributable to the Shareholders of the Company$4,282$3,086Other Comprehensive IncomeUnrealized (loss) gain on translation of foreign operations(102)292Unrealized (loss) gain on derivative financial instruments(175)264Other comprehensive (loss) income, net of tax(277)556Comprehensive Income Attributable to the Shareholders of the Company$4,005$3,642Opta Minerals Inc.Interim Condensed Consolidated Statements of Changes in EquityFor the Nine Months Ended September 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsAOCI* -ContributedForeignNumber ofSurplus -AOCI* -CurrencyShares -CapitalShare-basedCash FlowTranslationRetainedTotalCapital StockStockPaymentsHedgeReserveEarningsEquityAt January 1, 201218,061,784$17,680$3,429$(193)$(1,942)$23,541$42,515Comprehensive IncomeProfit for the period-----4,2824,282Unrealized loss on translation of foreign operations----(102)-(102)Unrealized loss on financial derivative designated as a cash flow hedge---(175)--(175)Total Comprehensive Income---(175)(102)4,2824,005Transactions with ShareholdersEmployee share purchase plan9,88523----23Stock options exercised7,94814----14Share-based payment expense--469---469Total Transactions with Shareholders17,83337469---506At September 30, 201218,079,61717,7173,898(368)(2,044)27,82347,026At January 1, 201118,036,97417,6322,781(596)(1,844)19,89137,864Comprehensive IncomeProfit for the period-----3,0863,086Unrealized gain on translation of foreign operations----292-292Unrealized gain on financial derivative designated as a cash flow hedge---264--264Total Comprehensive Income---2642923,0863,642Transactions with ShareholdersEmployee share purchase plan7,04515----15Stock options exercised15,28028----28Share-based payment expense--457---457Total Transactions with Shareholders22,32543457---500At September 30, 201118,059,299$17,675$3,238$(332)$(1,552)$22,977$42,006Opta Minerals Inc.Interim Condensed Consolidated Statements of Cash FlowsFor the Nine Months Ended September 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsSeptember 30,September 30,20122011Cash Provided by (Used in) -Operating ActivitiesProfit for the period$4,282$3,086Items not affecting cash:Depreciation of property, plant and equipment2,2301,605Amortization of intangible assets1,9051,510Share-based payment expense469457Non-cash finance expense-(28)Deferred income taxes(1,486)(289)Loss on disposal of property, plant and equipment-27,4006,343Changes in non-cash working capitalTrade and other receivables(4,001)(981)Inventories307(1,069)Trade and other payables(117)(1,346)Provisions(633)(537)Income taxes payable558(318)3,5142,092Financing ActivitiesProceeds from issuance of common shares - net of issuance costs3743Proceeds from borrowings, net of deferred financing costs32,6995,975Repayment of finance lease liability(190)(84)Repayment of borrowings(3,012)(2,242)29,5343,692Investing ActivitiesProceeds on disposal of property, plant and equipment-4Acquisition of subsidiary(29,988)-Additions to property, plant and equipment(1,598)(1,572)Additions to intangible assets(62)(66)(31,648)(1,634)Foreign Exchange Loss on Cash Held in Foreign Currency(5)(55)Increase in Cash and Cash Equivalents1,3954,095Cash and Cash EquivalentsBeginning of Period698495End of Period$2,093$4,590Additional Cash Flows Information:Interest paid$2,194$1,297Income taxes paid1,8172,291Opta Minerals Inc.Segmented InformationFor the Three Months Ended September 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 September 30, 2012AbrasiveMill andProducts Manu-Foundryfacturing andProducts andDistributionServicesOperationsUnallocatedTotalExternal revenue by marketCanada$6,420$1,579$-$7,999US12,8747,129-20,003Europe3,4741,040-4,514Other4460-464Total revenue from external customers22,77210,208-32,980Segment profit (loss) before interest expense and income taxes3,388(72)(232)3,084Finance expense---(757)Income taxes---(877)Profit for the period---1,450Depreciation of property, plant and equipment40036843811Amortization of intangible assets600-48648Expenditures on property, plant and equipment$261$75$45$381External 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.The Company evaluates the performance of its operating segments primarily based on income before interest expense and income tax expense.Opta Minerals Inc.Segmented InformationFor the Three Months Ended September 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsThree Months Ended September 30, 2011AbrasiveMill andProducts Manu-Foundryfacturing andProducts andDistributionServicesOperationsUnallocatedTotalExternal revenue by marketCanada$2,458$1,485$-$3,943US10,9965,351-16,347Europe3,772--3,772Other337-40Total revenue from external customers17,2296,873-24,102Segment profit before interest expense and income taxes2,201(511)(171)1,519Finance expense---(423)Income taxes---(468)Profit for the period---628Total assets as at September 30, 201154,79131,3615,72791,879Depreciation of property, plant and equipment23027341544Amortization of intangible assets460640506Goodwill and intangible assets as at September 30, 201130,2143,56436634,144Expenditures on property, plant and equipment$646$96$18$760Opta Minerals Inc.Segmented InformationFor the Nine Months Ended September 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsNine Months Ended September 30, 2012AbrasiveMill andProducts Manu-Foundryfacturing andProducts andDistributionServicesOperationsUnallocatedTotalExternal revenue by marketCanada$18,307$4,457$-$22,764US40,19116,445-56,636Europe11,5131,054-12,567Other25534-559Total revenue from external customers70,03622,490-92,526Segment profit before interest expense and income taxes9,123(595)(1,069)7,459Finance expense---(2,176)Income taxes---(1,001)Profit for the period---4,282Total assets as at September 30, 201281,37855,4402,688139,506Depreciation of property, plant and equipment1,1569581162,230Amortization of intangible assets1,75561441,905Goodwill and intangible assets as at September 30, 201245,2494,20227249,723Expenditures on property, plant and equipment$941$493$164$1,598Opta Minerals Inc.Segmented InformationFor the Nine Months Ended September 30, 2012 and 2011(Unaudited)Expressed in Thousands of US DollarsNine Months Ended September 30, 2011AbrasiveMill andProducts Manu-Foundryfacturing andProducts andDistributionServicesOperationsUnallocatedTotalExternal revenue by marketCanada$6,774$4,574$-$11,348US32,64214,970-47,612Europe11,423--11,423Other4666-112Total revenue from external customers50,88519,610-70,495Segment profit before interest expense and income taxes7,478(1,347)(125)6,006Finance expense---(1,244)Income taxes---(1,676)Profit for the period---3,086Depreciation of property, plant and equipment689822941,605Amortization of intangible assets1,375191161,510Expenditures on property, plant and equipment$1,140$354$78$1,572FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: Opta Minerals Inc.David KrusePresident and Chief Executive OfficerOpta Minerals Inc.Peter FrytersChief Financial Officer and Secretary905-689-7361, ext 405investor_relations@optaminerals.comwww.optaminerals.com