Opta Minerals Inc.
TSX : OPM

Opta Minerals Inc.

November 06, 2007 20:05 ET

Opta Minerals Inc. Reports Record 3rd Quarter Revenue Results for Fiscal 2007

WATERDOWN, ONTARIO--(Marketwire - Nov. 6, 2007) - Opta Minerals Inc. (TSX:OPM), a vertically integrated producer, manufacturer, distributor and recycler of industrial minerals, silica-free loose abrasives, roofing shingle granules, specialty sands and related products, today announced results for the three and nine months ended September 30, 2007. All figures are reported in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.

Opta Minerals reported third quarter revenue for fiscal 2007 of $20.5 million, up 22.3% from the third quarter of 2006 bringing year to date revenue to $55.3 million a 15% increase over the first nine months of 2006. Earnings before interest, income taxes, depreciation and amortisation ("EBITDA") for the quarter were $3.0 million, bringing year to date EBITDA to $8.0 million, an 8% increase over the $7.4 million reported in the first nine months of 2006. Year to date results have been positively affected by the inclusion of a full nine months of results from the Bimac and Rossborough divisions that were acquired in 2006, the acquisition of Newco a.s. during the current quarter, the commencement of commercial production of desulfurization products at the Company's Waterdown Ontario facility, and shipments of products to new U.S. based integrated steel mill customers. Results generated from these activities were partially offset by lower than expected sales volumes into the Canadian abrasive and foundry industries, and lower sales volumes of desulfurization products to several of the Company's significant U.S. customers. Revenues for the three months ended September 30, 2006 were $16.7 million and EBITDA was $2.7 million.

Gross profit for the three months ended September 30, 2007 was $5.1 million, bringing year to date gross profit to $13.6 million a 15% increase over the $11.8 million recorded in the first nine months of 2006. Gross profit for the three months ended September 30, 2006 was $4.4 million or 14% lower than in 2007.

Earnings before income taxes and interest ("EBIT") for the three months ended September 30, 2007 were $2.1 million, bringing year to date EBIT to $5.6 million as compared to $5.5 million for the first nine months ended September 30, 2006. For the three months ended September 30, 2006 the Company reported EBIT of $2.0 million.

Net earnings for the three months ended September 30, 2007 were $1.3 million or $0.07 per diluted common share, brining year to date net earnings to $3.1 million or $0.18 per diluted common share, an 8% increase as compared to $2.9 million for first nine months ended September 30, 2006. For the three months ended September 30, 2006 the Company reported net earnings of $1.0 million.

The Company continues to maintain a strong balance sheet, with working capital of $13.8 million and total assets of $99.8 million. The debt to equity ratio as at September 30, 2007 was 0.90 to 1.00. The Company has cash and available credit facilities of a further $18.5 million. It is intended that these resources will be used to generate further shareholder value through strategic acquisitions and investment in the Company's existing operations.

Recent events from the quarter:

- Expansion into Europe. On September 4, 2007 the Company announced that it had acquired 100% of the outstanding common shares of Newco a.s. ("Newco") of Kosice, Slovakia. For fiscal 2006 Newco recorded revenues of approximately U.S. $7.4 million selling its proprietary desulphurization and refractory products. Each product is produced to the specific requirements of the customers that Newco services within the European steel industry. The acquisition expands Opta's business capabilities into Europe and complements existing operations which supply a wide range of desulphurization products in both the United States and Canada from operations in Indiana and Ontario. The addition of Newco further increases Opta's position in the industrial minerals business and further expands its current position as a key service provider to the steel industry.

David Kruse, President and Chief Executive Officer, said "Opta Minerals performed well in light of a number of market related challenges in the third quarter of 2007. Year to date revenues from operations were $55.3 million, and remain 15% higher than the first nine months results in 2006, while EBITDA has grown 8% from $7.4 million in the first nine months of 2006 to $8.0 million in 2007. A significant portion of this growth pertains to a full nine months results being included in consolidated earnings for companies acquired in 2006 and the results of Newco a.s. which was acquired during the current quarter. These results were partially offset by revenue weakness in the Company's Canadian abrasive and foundry products markets and lower sales volumes to several of the Company's significant U.S. based desulfurization products customers. We remain committed to a blended approach to Company growth that includes both acquisition and organic sources. The Newco transaction is a significant step towards the global expansion of Opta Minerals. Newco sells desulfurization products and services to integrated steel mills in Europe in the same manner as our North American operations perform in Waterdown Ontario and Walkerton Indiana. We are very familiar with the desulphurization operations and will continue to provide unparalleled customer service and quality products to existing and new customers within Europe as we position ourselves for growth in both the industrial minerals and abrasive markets in that region".

Opta Mineral's President and CEO, David Kruse, plans to host a conference call at 10:00 AM Eastern Standard Time, on Friday, November 9th, 2007, to discuss third quarter 2007 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) 904-6251 or (416) 915-8321. If you are unable to listen live, the conference call will be archived and can be accessed at the following replay numbers between November 9th and November 16th, 2007, with the toll free dial-in number 1-(888) 203-1112 or (647) 436-0148 followed by pass code: 7497453.

Opta Minerals is a vertically integrated producer, manufacturer, distributor and recycler of industrial minerals, silica-free loose abrasives, roofing shingle granules, specialty sands and related products for use primarily in the foundry, steel, marine/bridge cleaning and municipal water filtration industries. The Company currently has production and distribution facilities in Ontario, Quebec, Louisiana, South Carolina, Virginia, Maryland, Indiana, Ohio, Michigan, New York and Kosice Slovakia and one of the broadest product lines in the industry.


FOOTNOTES:

Earnings before income taxes an 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 Months
(unaudited) Ended September 30
2007 2006
$ $

Net Earnings for the Period 1,258 1,031
Interest Expense 398 401
Provision for Income taxes 443 567
Depreciation and Amortization 917 746
---------------------
EBITDA(1) 3,016 2,745
Add (subtract):
Depreciation and Amortization (917) (746)
---------------------
Earnings before income taxes and interest(2) 2,099 1,999


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 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
For the three month periods ended September 30, 2007 and 2006
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)

2007 2006
$ $

Revenue 20,485 16,743

Cost of goods sold 15,347 12,331
-----------------------

Gross profit 5,138 4,412

Selling, general and administrative expenses 2,581 2,085
-----------------------

Earnings before the following 2,557 2,327
-----------------------

Interest expense - net 398 401

Amortization of intangible assets 349 259

Stock compensation expense 49 62

Other expense 137 -

Foreign exchange (gain) loss (77) 7
-----------------------

856 729

-----------------------
Earnings before income taxes 1,701 1,598

Provision for income taxes 443 567
-----------------------

Net earnings for the period 1,258 1,031
-----------------------
-----------------------

Earnings per share for the period
Basic and diluted 0.07 0.06



Opta Minerals Inc.
Consolidated Statements of Earnings
For the nine month periods ended September 30, 2007 and 2006
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)

2007 2006
$ $

Revenue 55,337 48,241

Cost of goods sold 41,700 36,406
-----------------------

Gross profit 13,637 11,835

Selling, general and administrative expenses 7,015 5,749
-----------------------

Earnings before the following 6,622 6,086
-----------------------

Interest expense - net 1,153 1,096

Amortization of intangible assets 935 622

Stock compensation expense 118 135

Other expense 137 -

Foreign exchange gain (178) (194)
-----------------------

2,165 1,659

-----------------------
Earnings before income taxes 4,457 4,427

Provision for income taxes 1,344 1,550
-----------------------

Net earnings for the period 3,113 2,877
-----------------------
-----------------------

Earnings per share for the period
Basic and diluted 0.18 0.17



Opta Minerals Inc.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
(Unaudited)

December 31,
September 30, 2006 September 30,
2007 $ 2006
$ $
Assets

Current assets
Cash and cash equivalents 3,999 854 2,685
Accounts receivable 11,298 8,111 8,448
Inventories 17,973 14,057 12,690
Prepaid expenses and other
current assets 2,225 1,492 1,634
Income taxes recoverable - 248 -
-----------------------------------------
34,495 24,762 25,457

Property, plant and equipment
- net 19,940 17,615 15,549

Intangible and other assets
- net 33,091 20,644 18,440

Goodwill 10,425 10,169 7,569

Future Income Taxes 895 803 649
-----------------------------------------
99,846 73,993 67,664
-----------------------------------------
-----------------------------------------

Liabilities

Current liabilities
Bank indebtedness 6,551 6,752 4,323
Accounts payable and accrued
liabilities 6,488 4,891 5,332
Current portion of long-term debt 6,628 2,496 2,589
Current portion of
preference shares 47 39 41
Income taxes payable 971 - 49
-----------------------------------------
20,685 14,178 12,334

Long-term debt 23,706 12,749 12,612

Other long-term liabilities 1,624 2,150 -

Future income taxes 12,660 10,768 9,003
-----------------------------------------
58,675 39,845 33,949
-----------------------------------------

Shareholder's Equity

Capital stock
Authorized: Unlimited number
of common shares and preference
shares without par value

Issued
17,981,256 (December 31, 2006
- 16,964,539, September 30,
2006 - 16,961,563) common shares 17,509 14,082 14,072

Contributed surplus 1,312 1,213 1,178

Retained earnings 18,949 15,960 15,296

Accumulated other
comprehensive income 3,401 2,893 3,169
-----------------------------------------
41,171 34,148 33,715
-----------------------------------------
99,846 73,993 67,664
-----------------------------------------
-----------------------------------------



Opta Minerals Inc.
Consolidated Statements of Cash Flows
For the three month periods ended September 30, 2007 and 2006
(Expressed in thousands of U.S. dollars)
(Unaudited)

2007 2006
$ $

Cash provided by (used in)

Operating activities
Net earnings for the period 1,258 1,031
Items not affecting cash
Amortization of property, plant and equipment 568 487
Amortization of intangible assets 349 259
Amortization of deferred financing costs - 19
Stock compensation expense 49 62
Future income taxes (620) 40
Unrealized foreign exchange (gain) loss on
long term debt (62) 5
---------------
1,542 1,903

Changes in non-cash working capital
Accounts receivable 58 167
Inventories (614) 289
Prepaid expenses and other current assets (862) 149
Accounts payable and accrued liabilities 743 1,179
Income taxes payable 998 (304)
---------------
1,865 3,383

Investing activities
Acquisition of property, plant and equipment (275) (297)
Additional consideration paid on acquisitions (7) (23)
Proceeds on disposal of property, plant and equipment 11 -
Acquisition of company (6,204) -
---------------
(6,475) (320)
---------------

Financing Activities
Proceeds from issuance of common shares 18 11
Decrease in bank indebtedness (2,157) (1,930)
Proceeds from long term debt 21,584 -
Repayment of long term debt (11,251) (290)
Repayment of due from affiliates - 18
---------------
8,194 (2,191)
---------------

Increase in cash and cash equivalents during period 3,584 872

Cash and cash equivalents - Beginning of period 415 1,813
---------------

Cash and cash equivalents - End of period 3,999 2,685
---------------
---------------

Supplemental cash flow information
Interest paid 336 297
Income taxes paid 2 911



Opta Minerals Inc.
Consolidated Statements of Cash Flows
For the nine month periods ended September 30, 2007 and 2006
(Expressed in thousands of U.S. dollars)
(Unaudited)

2007 2006
$ $
Cash provided by (used in)

Operating activities
Net earnings for the period 3,113 2,877
Items not affecting cash
Amortization of property, plant and equipment 1,471 1,254
Amortization of intangible assets 935 622
Amortization of deferred financing costs - 68
Stock compensation expense 118 135
Future income taxes (795) 251
Unrealized foreign exchange gain on long term debt (365) (88)
Net loss on disposal of property, plant and equipment 7 -
-----------------
4,484 5,119

Changes in non-cash working capital
Accounts receivable (1,358) (982)
Inventories (2,194) 2,294
Prepaid expenses and other current assets (209) 101
Accounts payable and accrued liabilities 170 1,135
Income taxes payable 1,194 (425)
-----------------
2,087 7,242

Investing activities
Acquisition of property, plant and equipment (1,675) (1,023)
Additional consideration paid on acquisitions (31) (52)
Proceeds on disposal of property, plant and equipment 29 -
Acquisition of company (6,204) (18,987)
-----------------
(7,881) (20,062)
-----------------

Financing Activities
Deferred financing costs - (66)
Proceeds from issuance of common shares 64 25
(Decrease) increase in bank indebtedness (1,215) 4,286
Proceeds from long term debt 23,081 8,542
Repayment of long term debt (12,991) (772)
Repayment of due from affiliates - 10
Purchase and redemption of preference shares - (26)
-----------------
8,939 11,999
-----------------
Increase (decrease) in cash and cash
equivalents during period 3,145 (821)

Cash and cash equivalents - Beginning of period 854 3,506
-----------------

Cash and cash equivalents - End of period 3,999 2,685
-----------------
-----------------

Supplemental cash flow information
Interest paid 1,290 816
Income taxes paid 977 1,689



Opta Minerals Inc.
Segmented Information
For the three months ended September 30, 2007
(Expressed in thousands of U.S. dollars)
(Unaudited)

For the three month period ended September 30, 2007

Mill and Abrasive
foundry manufacturing
products and
and services distribution
$ operations Unallocated Total
$ $ $
External revenue by market
Canada 3,164 1,963 - 5,127
U.S. 9,637 4,363 - 14,000
Europe 1,326 - - 1,326
Other 22 10 - 32
-------------------------------------------------

Total revenue from
external customers 14,149 6,336 - 20,485
-------------------------------------------------
-------------------------------------------------

Segment net earnings
before interest expense
and income taxes 1,786 917 (604) 2,099

Interest expense on long
term debt 280
Interest expense 118
Provision for income taxes 443
---------

Net earnings 1,258
---------
---------

Total assets as at
September 30, 2007 62,421 34,680 2,745 99,846
-------------------------------------------------
-------------------------------------------------

Amortization of property
plant and equipment 269 292 7 568
-------------------------------------------------
-------------------------------------------------

Amortization of
intangible assets 337 12 - 349
-------------------------------------------------
-------------------------------------------------

Goodwill and intangible
assets as at
September 30, 2007 36,199 7,317 - 43,516
-------------------------------------------------
-------------------------------------------------

Expenditures on property,
plant and equipment 131 143 1 275
-------------------------------------------------
-------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the nine months ended September 30, 2007
(Expressed in thousands of U.S. dollars)
(Unaudited)

For the nine month period ended September 30, 2007

Mill and Abrasive
foundry manufacturing
products and
and services distribution
$ operations Unallocated Total
$ $ $

External revenue by market
Canada 8,569 4,734 - 13,303
U.S. 27,522 12,812 - 40,334
Europe 1,472 - - 1,472
Other 190 38 - 228
-------------------------------------------------

Total revenue from
external customers 37,753 17,584 - 55,337
-------------------------------------------------
-------------------------------------------------

Segment net earnings
before interest
expense and income taxes 4,227 2,934 (1,551) 5,610

Interest expense on
long term debt 817
Interest expense 336
Provision for income taxes 1,344
------

Net earnings 3,113
------
------

Amortization of
property plant
and equipment 640 815 16 1,471
-------------------------------------------------
-------------------------------------------------

Amortization of
intangible assets 899 36 - 935
-------------------------------------------------
-------------------------------------------------

Expenditures on
property, plant
and equipment 539 1,112 24 1,675
-------------------------------------------------
-------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the three months ended September 30, 2006
(Expressed in thousands of U.S. dollars)
(Unaudited)

For the three month period ended September 30, 2006

Mill and Abrasive
Foundry Manufacturing
Products and
and Services distribution
$ operations Unallocated Total
$ $ $

External revenue by market
Canada 2,805 1,994 - 4,799
U.S. 7,623 4,122 - 11,745
Europe 150 - - 150
Other 35 14 - 49
-------------------------------------------------
Total revenue from
external customers 10,613 6,130 - 16,743
-------------------------------------------------
-------------------------------------------------

Segment net earnings
before interest
expense and income taxes 1,296 1,388 (685) 1,999

Interest expense on
long term debt 288
Interest expense 113
Provision for income taxes 567
-------

Net earnings 1,031
-------
-------

Total assets as at
December 31, 2006 40,521 32,421 1,051 73,993
-------------------------------------------------
-------------------------------------------------

Amortization of
property plant and
equipment 180 305 2 487
-------------------------------------------------
-------------------------------------------------

Amortization of
intangible assets 247 12 - 259
-------------------------------------------------
-------------------------------------------------

Goodwill and intangible
assets as at
December 31, 2006 23,768 6,921 - 30,689
-------------------------------------------------
-------------------------------------------------

Expenditures on
property, plant and
equipment 176 80 41 297
-------------------------------------------------
-------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the nine months ended September 30, 2006
(Expressed in thousands of U.S. dollars)
(Unaudited)

For the nine month period ended September 30, 2006

Mill and Abrasive
Foundry Manufacturing
Products and and distribution
Services operations Unallocated Total
$ $ $ $

External revenue by market
Canada 8,390 6,862 - 15,252
U.S. 19,567 12.666 - 32,233
Europe 618 - - 618
Other 109 29 - 138
-------------------------------------------------

Total revenue from
external customers 28,684 19,557 - 48,241
-------------------------------------------------
-------------------------------------------------

Segment net earnings
before interest
expense and income taxes 3,594 3,318 (1,389) 5,523

Interest expense on
long term debt 775
Interest expense 321
Provision for income taxes 1,550
-------

Net earnings 2,877
-------
-------

Amortization of property
plant and equipment 356 896 2 1,254
-------------------------------------------------
-------------------------------------------------

Amortization of
intangible assets 579 43 - 622
-------------------------------------------------
-------------------------------------------------

Expenditures on property,
plant and equipment 510 455 58 1,023
-------------------------------------------------
-------------------------------------------------


Contact Information

  • Opta Minerals Inc.
    David Kruse
    President and Chief Executive Officer
    (905) 689-7361, ext 401
    (905) 689-3915 (FAX)
    or
    Opta Minerals Inc.
    James Wilson
    Chief Financial Officer and Secretary
    (905) 689-7361, ext 401
    (905) 689-3915 (FAX)
    Email: investor_relations@optaminerals.com
    Website: www.optaminerals.com