Opta Minerals Inc.
TSX : OPM

Opta Minerals Inc.

March 09, 2010 16:46 ET

Opta Minerals Inc. Reports Fourth Quarter and Year End Results for Fiscal 2009

WATERDOWN, ONTARIO--(Marketwire - March 9, 2010) - Opta Minerals Inc. (TSX:OPM), today announced results for the three and twelve months ended December 31, 2009. All figures are reported in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.

For the three months ended December 31, 2009, the net earnings were $0.6 million, or $0.04 per diluted common share, versus a net loss of ($2.2 million) or ($0.12) per diluted common share for the fourth quarter in 2008. The prior year fourth quarter results included an inventory write down in the amount of $2.8 million. Year to date, the net loss for the twelve months ended December 31, 2009 was ($6.2 million) or ($0.34) per dilutive common share, versus net earnings of $2.5 million or $0.14 per diluted common share during 2008. The year-to-date results include a non-cash and non-taxable goodwill impairment charge in the amount of $7.2 million which was recorded in the third quarter of 2009. Earnings before income taxes and non-controlling interest were $0.6 million for the three months ended December 31, 2009, versus a loss of ($3.0 million) for the comparative period in 2008 which included the inventory write down in the amount of $2.8 million pre-tax. Operating activities have returned to profitability through strengthening in the steel markets and the benefit of our cost saving measures.

Revenues for the three months ended December 31, 2009 decreased 4% to $16.7 million from $17.4 million in 2008. Gross profit for the quarter increased to $3.5 million or 20.8% of revenue, versus $2.7 million or 15.8% of revenue in 2008 excluding the impact of the prior year inventory write down. The improvement in gross profit as a percentage of revenue over the previous period is a result of the benefit of cost saving measures.

David Kruse, President and CEO of Opta Minerals, noted "During the fourth quarter, Opta Minerals continued to see signs of recovery in our related industries and we have continued to increase production to meet the demand. We are pleased with the direction of the economic environment which has resulted in earnings before income taxes, goodwill impairment and non-controlling interest in the amount of $1.6 million for the two quarters ended December 31, 2009. We should note, however, there remains continued uncertainty surrounding steel and abrasive-consuming industries, such as automotive, construction, infrastructure and shipyard activity, which make it difficult to forecast beyond a short horizon. Provided that there are no further unexpected economic deteriorations, we expect to see continued improvement throughout 2010.

Over the past 5 quarters we implemented cost-saving measures to realign operations with current customer demand. Included in these measures was a workforce reduction, as well as, an adjustment to the cost sharing of employee health benefits. In total, all restructuring efforts to date are expected to reduce annual operating costs by approximately $6.0 million compared to the beginning of 2008. During the year we discontinued operations in Attica, New York and sold assets from the operation in exchange for a release of the Company's obligations under an existing lease and service agreement. We consolidated the operations in Quebec into one facility and, during the third quarter, sold one of the warehouses owned by the Company and, during the fourth quarter, negotiated a lease termination agreement for another.

Opta Minerals has generated significant cash flow from working capital reductions during the year ended December 31, 2009, including a substantial reduction in inventory."

For the three months ended December 31, 2009, cash flow from operating activities generated $3.0 million versus $2.1 million in the fourth quarter of 2008. The strong cash flow from operating activities has resulted in a decrease in bank indebtedness in the amount of $2.3 million and payments on long-term debt in the amount of $0.5 million. On a year to date basis, cash flows from operations generated $10.5 million versus $1.9 million during 2008.

Selling, general and administrative expenses decreased $0.3 million during the fourth quarter, from $2.4 million or 14.1% of revenues for the fourth quarter of 2008 to $2.1 million or 12.4% of revenues in the fourth quarter of 2009. Most of the decrease related to reduced professional fees and employee costs resulting from cost reduction measures put in place by management during the past 5 quarters. Year to date, selling, general and administrative expenses have decreased $1.9 million from $11.0 million incurred in 2008 to $9.1 million for 2009. Taking into account the $0.4 million increase in selling, general and administrative expenses incurred at MCP, which was acquired during the third quarter of 2008, total year over year savings are $2.3 million.

During the third quarter, the Company recorded a goodwill impairment charge in the amount of $7.2 million net of a reversal of the contingent consideration accrual previously recorded in Other Long-term Liabilities in the amount of $1.1 million. The Company performed its annual impairment test of goodwill on September 30, 2009. During the third quarter, management determined that there were external market conditions and other circumstances that suggested the carrying value of the goodwill of certain operating units may exceed their fair value. The external market conditions included a decrease in operating results as compared to the prior year and a lower than previously anticipated future operating income growth due to the slow recovery in the global economy.

EBITDA for the quarter increased from ($1.5 million) in 2008 to $2.0 million for the three months ended December 31, 2009. Year to date, the economic slowdown has resulted in a decrease in EBITDA from $9.6 million for 2008 to $6.2 million in 2009. Included in EBITDA for the year ended December 31, 2009 are non-recurring other expense items totaling $0.2 million. This amount is substantially comprised of $0.4 million in restructuring severance costs offset by a gain on sale of fixed assets in our Attica facility in the amount of $0.2 million.

The Company's working capital at December 31, 2009 stood at $12.2 million and total assets were $86.9 million. The debt-to-equity ratio at December 31, 2009 was 0.70 to 1.00.

Subsequent to the acquisition of MCP Mg-Serbien SAS (MCP) during 2008, its unconsolidated losses triggered a statutory requirement in France to increase the capital stock. On December 22, 2009, the Company fulfilled its obligation to increase the value of its shareholdings and, at the same time, the non-controlling interest declined to increase it's prorata share of the shareholdings. As a result, the non-controlling interest's shares were cancelled and the Company increased its ownership in MCP to 100%. Non- controlling interest has been credited by $264,000 with an offsetting reduction to retained earnings. Subsequent to this event, the legal entity was renamed Opta Minerals Europe SAS.

Opta Minerals President and CEO, David Kruse, plans to host a conference call at 10:00AM Eastern Standard Time on Friday March 12th, 2010 to discuss fourth quarter 2009 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-(888) 516-2435 or 1-(719) 325-2289; quote confirmation code 9204026. If you are unable to listen live, the conference call will be archived and can be accessed between March 12th, 2010 and March 19th, 2010, with the toll free dial-in number 1-(888) 203-1112 or (647) 436-0148 followed by pass code 9204026.

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, Louisiana, South Carolina, Virginia, Maryland, Indiana, Michigan, New York, Texas, Florida, 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-GAAP earnings measures that do not have standardized measures prescribed by GAAP, and therefore may not be comparable to similar measures presented by other publicly traded companies.

  For the three   For the twelve
  Months Ended   Months Ended
  December 31   December 31
  2009   2008   2009   2008
  $   $   $   $
 
Net Earnings (Loss) for the Period 616   (2,224 ) (6,205 ) 2,478
Interest Expense 340   528   1,588   2,089
Provision for (recovery of) Income Taxes 6   (799 ) (242 ) 1,034
Depreciation and Amortization 1,049   963   3,851   3,949
Goodwill Impairment -   -   7,198   -
EBITDA1 2,011   (1,532 ) 6,190   9,550
Add (subtract):              
Depreciation and Amortization  (1,049 ) (963 (3,851 ) (3,949)
Goodwill Impairment -   -   (7,198 ) -
Earnings (loss) before income taxes and interest2 962   (2,495 ) (4,859 ) 5,601

Notes

1) The term "EBITDA" refers to earnings before deducting interest expense, provision for income taxes, depreciation and amortization including charges for goodwill impairment. 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 Canadian GAAP, and accordingly, investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with Canadian GAAP 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-GAAP earnings measure that does not have standardized measures prescribed by GAAP, 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.            
Consolidated Statements of Earnings (Loss)            
For the three month periods ended December 31, 2009 and 2008            
Expressed in thousands of U.S. dollars (except per share amounts)            
   
    2009     2008  
   
Revenue $ 16,716   $ 17,365  
Cost of goods sold   13,232     17,463  
Gross Profit (Loss)   3,484     (98 )
   
Selling, general and administrative expenses   2,067     2,443  
Earnings (Loss) Before Undernoted Items, Income Taxes, andNon-controlling Interest   1,417     (2,541 )
   
Interest expense - net   340     528  
Amortization of intangible assets   477     413  
Stock compensation expense   75     97  
Other expenses   (68 )   -  
Foreign exchange gain   (35 )   (556 )
    789     482  
Earnings (Loss) Before Income Taxes and Non-controlling Interest   628     (3,023 )
Provision for (recovery of) income taxes   6     (799 )
Net Earnings (Loss)   622     (2,224 )
   
Net earnings attributable to non-controlling interest   6     -  
Net Earnings (Loss) Attributable to Opta Minerals Inc. $ 616   $ (2,224 )
   
Earnings (loss) per share for the period            
-Basic and diluted $ 0.04   $ (0.12 )
Opta Minerals Inc.  
Consolidated Statements of Earnings (Loss)  
For the twelve month periods ended December 31, 2009 and 2008  
Expressed in thousands of U.S. dollars (except per share amounts)  
   
    2009     2008  
   
Revenue $ 62,526   $ 93,423  
Cost of goods sold   49,445     74,996  
Gross Profit   13,081     18,427  
   
Selling, general and administrative expenses   9,106     10,997  
Earnings Before Undernoted Items, Income Taxes, Goodwill Impairment and Non-controlling Interest   3,975     7,430  
   
Interest expense - net   1,588     2,089  
Amortization of intangible assets   1,844     1,719  
Stock compensation expense   285     301  
Other expenses   237     59  
Foreign exchange gain   (466 )   (250 )
    3,488     3,918  
Earnings Before Income Taxes, Goodwill Impairment and Non-controlling Interest   487     3,512  
Provision for (recovery of) income taxes   (242 )   1,034  
Earnings Before Goodwill Impairment and Non-controlling Interest   729     2,478  
   
Goodwill impairment   7,198     -  
Net Earnings (Loss)   (6,469 )   2,478  
   
Net loss attributable to non-controlling interest   (264 )   -  
Net Earnings (Loss) Attributable to Opta Minerals Inc. $ (6,205 ) $ 2,478  
   
Earnings (loss) per share for the year            
-Basic and diluted $ (0.34 ) $ 0.14  
Opta Minerals Inc.
Consolidated Balance Sheets
Expressed in thousands of U.S. dollars
    2009   2008
Assets        
Current        
  Cash and cash equivalents $ 781 $ 1,377
  Accounts receivable   9,422   9,133
  Inventories   17,181   22,223
  Prepaid expenses and other current assets   628   1,793
  Assets held for sale   -   664
  Income taxes recoverable   584   362
    28,596   35,552
Property, Plant and Equipment   17,796   16,664
Intangible and Other Assets   31,691   32,464
Goodwill   6,019   14,160
Future Income Taxes   2,779   2,406
  $ 86,881 $ 101,246
Liabilities        
Current        
  Bank indebtedness   3,355   7,797
  Accounts payable and accrued liabilities   8,544   7,788
  Current portion of long-term debt   4,495   4,097
  Current portion of preference shares   44   38
    16,438   19,720
Long Term Debt   18,912   20,594
Other Long Term Liabilities   1,387   3,095
Future Income Taxes   2,674   2,849
Future Income Taxes on Intangible Assets   9,213   9,695
    48,624   55,953
 
Shareholders' Equity        
Capital Stock        
  Authorized unlimited number of common shares and preference shares without par value        
  Issued -        
  18,023,193 (December 31, 2008 - 18,003,459) common shares   17,612   17,587
Contributed Surplus   1,950   1,665
Accumulated Other Comprehensive Income   3,502   4,379
Retained Earnings   15,193   21,662
    38,257   45,293
  $ 86,881 $ 101,246
Opta Minerals Inc.  
Consolidated Statements of Cash Flows  
For the three month periods ended December 31, 2009 and 2008  
Expressed in thousands of U.S. dollars  
    2009     2008  
   
Cash Provided By (Used in) -            
             
  Operating Activities            
               
    Net earnings (loss) for the year $ 622   $ (2,224 )
                 
    Items not affecting cash:            
    Amortization of property, plant and equipment   572     550  
    Amortization of intangible assets   477     413  
    Stock compensation expense   75     97  
    Future income taxes   87     (868 )
    Realized foreign exchange gain on foreign operations   (180 )   -  
    Unrealized foreign exchange gain on long term debt   -     (110 )
    Net (gain) loss on disposal of property, plant and equipment   (12 )   8  
    1,641     (2,134 )
    Changes in non-cash working capital            
    Accounts receivable   26     5,090  
    Inventories   294     1,773  
    Prepaid expenses and other current assets   679     (817 )
    Accounts payable and accrued liabilities   721     (872 )
    Income taxes recoverable   (404 )   (916 )
    2,957     2,124  
  Financing Activities            
               
    Proceeds from issuance of common shares - net of issuance costs   6     15  
    Decrease in bank indebtedness   (2,322 )   (3,315 )
    Proceeds from long-term debt   -     528  
    Repayment of long-term debt   (509 )   (402 )
    (2,825 )   (3,174 )
  Investing Activities            
               
    Acquisition of property, plant and equipment   (510 )   (779 )
    Proceeds on disposal of property, plant and equipment   -     4  
    Additional consideration paid on acquisitions   -     (514 )
    (510 )   (1,289 )
   
Foreign Exchange Gain on Cash Held in Foreign Currency   (2 )   55  
Decrease in Cash and Cash Equivalents   (380 )   (2,284 )
             
Cash and Cash Equivalents            
  Beginning of Period   1,161     3,661  
  End of Period $ 781   $ 1,377  
   
Additional Cash Flows Information:            
             
  Interest paid $ 325   $ 497  
  Income taxes paid   324     754  
Opta Minerals Inc.  
Consolidated Statements of Cash Flows  
For the twelve month periods ended December 31, 2009 and 2008  
Expressed in thousands of U.S. dollars  
    2009     2008  
   
Cash Provided By (Used in) -            
               
  Operating Activities            
               
    Net earnings (loss) for the year $ (6,469 ) $ 2,478  
                 
    Items not affecting cash:            
    Amortization of property, plant and equipment   2,007     2,230  
    Amortization of intangible assets   1,844     1,719  
    Goodwill impairment   7,198     -  
    Other expenses   (96 )   -  
    Stock compensation expense   285     301  
    Future income taxes   (1,044 )   (1,248 )
    Realized foreign exchange gain on foreign operations   (798 )   (292 )
    Net loss on disposal of property, plant and equipment   68     43  
    2,995     5,231  
    Changes in non-cash working capital            
    Accounts receivable   65     972  
    Inventories   6,201     (1,769 )
    Prepaid expenses and other current assets   1,219     96  
    Accounts payable and accrued liabilities   284     (2,373 )
    Income taxes recoverable   (221 )   (220 )
    10,543     1,937  
  Financing Activities            
               
    Proceeds from issuance of common shares - net of issuance costs   25     59  
    (Decrease) increase in bank indebtedness   (5,463 )   2,544  
    Proceeds from long-term debt   795     4,750  
    Repayment of long-term debt   (4,648 )   (7,439 )
    (9,291 )   (86 )
  Investing Activities            
               
    Acquisition of property, plant and equipment   (2,507 )   (1,376 )
    Proceeds on disposal of property, plant and equipment   651     58  
    Additional consideration paid on acquisitions   -     (525 )
    Acquisition of companies, net of cash acquired   -     (1,005 )
    (1,856 )   (2,848 )
   
Foreign Exchange Gain on Cash Held in Foreign Currency   8     38  
Decrease in Cash and Cash Equivalents   (596 )   (959 )
             
Cash and Cash Equivalents            
  Beginning of Year   1,377     2,336  
  End of Year $ 781   $ 1,377  
   
Additional Cash Flows Information:            
             
  Interest paid $ 1,677   $ 2,163  
  Income taxes paid   986     2,371  
Opta Minerals Inc.  
Segmented Information  
For the three months ended December 31, 2009  
Expressed in thousands of U.S. dollars  
          Three Months Ended December 31, 2009  
  Mill and foundry Products and services   Abrasive Products manufacturing and Distribution operations   Unallocated   Total  
External revenue by market                        
Canada $ 1,835   $ 1,355   $ -   $ 3,190  
U.S   7,021     3,858     -     10,879  
Europe   2,468     -     -     2,468  
Other   -     179     -     179  
Total revenue from external customers   11,324     5,392     -     16,716  
   
Segment earnings (loss) before interest expense and income taxes   1,198     (164 )   (66 )   968  
Interest expense on long-term debt                     (200 )
Interest expense                     (140 )
Provision for income taxes                     (6 )
Non-controlling interest share of net earnings   (6 )   -     -     (6 )
Net loss for the year                     616  
Amortization of property, plant and equipment   306     246     20     572  
Amortization of intangible assets   471     6     -     477  
Expenditures on property, plant and equipment $ 24   $ 443   $ 43   $ 510  
Opta Minerals Inc.  
Segmented Information  
For the twelve months ended December 31, 2009  
Expressed in thousands of U.S. dollars  
          Twelve Months Ended December 31, 2009  
  Mill and foundry Products and services   Abrasive Products manufacturing and Distribution operations   Unallocated   Total  
                         
External revenue by market                        
Canada $ 7,708   $ 5,447   $ -   $ 13,155  
U.S   24,482     15,537     -     40,019  
Europe   8,874     -     -     8,874  
Other   148     330     -     478  
Total revenue from external customers   41,212     21,314     -     62,526  
   
Segment loss before interest expense and income taxes   (1,749 )   (3,097 )   (277 )   (5,123 )
Interest expense on long-term debt                     (1,054 )
Interest expense                     (534 )
Recovery of income taxes                     242  
Non-controlling interest share of net loss   264     -     -     264  
Net loss for the year                     (6,205 )
Total assets as at December 31, 2009   56,661     28,121     2,099     86,881  
Amortization of property, plant and equipment   1,081     855     71     2,007  
Amortization of intangible assets   1,820     24     -     1,844  
Goodwill impairment   4,101     3,097     -     7,198  
Goodwill and intangible assets as at December 31, 2009   34,105     3,605     -     37,710  
Expenditures on property, plant and equipment $ 204   $ 2,194   $ 109   $ 2,507  
Opta Minerals Inc.  
Segmented Information  
For the three months ended December 31, 2008  
Expressed in thousands of U.S. dollars  
Three Months Ended December 31, 2008  
  Mill and Foundry Products and Services   Abrasive Products Manufacturing and Distribution Operations Unallocated Total  
                     
External revenue by market                    
Canada $ 2,329   $ 1,097 $ - $ 3,426  
U.S   6,915     3,544   -   10,459  
Europe   3,472     4   -   3,476  
Other   -     4   -   4  
Total revenue from external customers   12,716     4,649   -   17,365  
                     
Segment earnings (loss) before interest expense and income taxes   (3,197 )   185   517   (2,495 )
Interest expense on long-term debt                 (386 )
Interest expense                 (142 )
Recovery of income taxes                 799  
Net earnings for the period                 (2,224 )
Amortization of property, plant and equipment   287     242   21   550  
Amortization of intangible assets   402     11   -   413  
                     
Expenditures on property, plant and equipment $ 657   $ 114 $ 8 $ 779  
Opta Minerals Inc.  
Segmented Information  
For the twelve months ended December 31, 2008  
Expressed in thousands of U.S. dollars  
Twelve Months Ended December 31, 2008  
  Mill and foundry Products and services Abrasive Products manufacturing and Distribution operations Unallocated   Total  
                     
External revenue by market                    
Canada $ 12,935 $ 5,267 $ -   $ 18,202  
U.S   44,603   17,005   -     61,608  
Europe   13,490   9   -     13,499  
Other   76   38   -     114  
Total revenue from external customers   71,104   22,319   -     93,423  
                     
Segment earnings (loss) before interest expense and income taxes   4,707   2,962   (2,068 )   5,601  
Interest expense on long-term debt                 (1,521 )
Interest expense                 (568 )
Provision for income taxes                 (1,034 )
Net earnings for the year                 2,478  
Total assets as at December 31, 2008   70,806   27,198   3,242     101,246  
Amortization of property, plant and equipment   1,101   1,006   123     2,230  
Amortization of intangible assets   1,671   48   -     1,719  
Goodwill and intangible assets as at December 31, 2008   39,859   6,765   -     46,624  
Expenditures on property, plant and equipment $ 760 $ 547 $ 69   $ 1,376  

Contact Information