Opta Minerals Inc.
TSX : OPM

Opta Minerals Inc.

May 07, 2009 18:13 ET

Opta Minerals Inc. Reports First Quarter Results for Fiscal 2009

WATERDOWN, ONTARIO--(Marketwire - May 7, 2009) - Opta Minerals Inc. (TSX:OPM), a vertically integrated provider of custom process solutions and industrial mineral products for use primarily in the steel, foundry, loose abrasive cleaning, water jet cutting and municipal water filtration industries, today announced results for the three months ended March 31, 2009. All figures are reported in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.

Revenues for the three months ended March 31, 2009 decreased 31% to $14.7 million, from $21.4 million in 2008. Gross profit for the quarter decreased by 56% to $2.5 million or 16.7% of revenues versus $5.6 million or 26.0% of revenues in 2008.

David Kruse, President and CEO of Opta Minerals noted "Both ourselves and our customers continue to face an extremely difficult global economic environment. The order books of our steel customers remain low. Continued uncertainty surrounding steel and abrasive consuming industries such as automotive, construction, infrastructure and shipyard activity make it very difficult to forecast beyond a very short horizon.

As the economy deteriorated in the fourth quarter of last year, we implemented cost saving measures to realign operations to the current customer demand. Included in these measures was a workforce reduction, as well as an adjustment to the cost sharing of health benefits with employees. Further cost saving measures have been implemented during the quarter that are expected to reduce annual operating costs by $2.3 million. During the quarter we also consolidated the operations in Quebec into one facility and have entered into a sale arrangement for one of the warehouses owned by the Company. 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. For 2008, the Attica operation generated a loss before tax expense of $345,000.

We generated significant cash flow from working capital reductions in the last 6 months, including a substantial reduction in accounts receivable. We expect continued cash flow from further working capital reductions over the balance of 2009 which we expect will be generated largely from reductions in inventories." For the three months ended March 31, 2009 cash flows from operating activities was $2.7 million versus $4.6 million in the first three months of 2008.

Selling, general and administrative expenses decreased $0.6 million during the first quarter, from $2.9 million or 13.6% of revenues for the first three months of 2008 to $2.3 million or 15.4% of revenues in the first quarter of 2009. The increase relating to costs incurred by MCP acquired in the third quarter of 2008 of $0.2 million were largely offset by a $0.8 million decrease in overall administrative expenses, substantially all of which related to reduced professional fees incurred as well as reduced employee costs resulting from cost reduction measures put in place by management during the past six months.

EBITDA for the quarter decreased 78% from $3.0 million in 2008 to $0.8 million for the three months ended March 31, 2009. These results reflect the impact of a dramatic slowdown in both the steel and abrasive industries that began in the fourth quarter of 2008.

Earnings (loss) before income taxes and interest ("EBIT") for the three months ended March 31, 2009 was $(0.2 million), as compared to $2.0 million for the three months ended March 31, 2008.

Net loss for the three months ended March 31, 2009 was $(0.3 million) or $(0.02) per diluted common share, versus net earnings of $1.1 million or $0.06 per diluted common share for the three months ended March 31, 2008.

The Company continues to maintain working capital of $13.5 million and total assets of $95.2 million. The debt to equity ratio as at March 31, 2009 was 0.68 to 1.00. The Company has cash and available credit facilities of a further $11 million.

Opta Mineral's President and CEO, David Kruse, plans to host a conference call at 10:00 AM Eastern Standard Time, on Monday, May 11, 2009 to discuss first 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-(877) 852-6575 or (719) 325-4842, quote confirmation code 2495455. If you are unable to listen live, the conference call will be archived and can be accessed at the following replay numbers between May 11 and May 18, with the toll free dial-in number 1-(888) 203-1112 or (647) 436-0148 followed by pass code: 8335430.

Opta Minerals is a vertically integrated provider of custom process solutions and industrial mineral products for use primarily in the steel, foundry, loose abrasive cleaning, water jet cutting 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, France and Slovakia and 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 Months
Ended March 31
2009 2008
$ $


Net (Loss) Earnings for the Period (326) 1,099
Interest Expense 424 566
Provision for (recovery of) Income Taxes (309) 338
Depreciation and Amortization 988 983
--------------------
--------------------
EBITDA(1) 777 2,986
Add (subtract):
Depreciation and Amortization (988) (983)
--------------------
--------------------
Earnings before income taxes and interest(2) (211) 2,003


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 March 31, 2009 and 2008
(Expressed in thousands of U.S.
dollars, except per share amounts)
2009 2008
$ $

Revenue 14,726 21,370

Cost of goods sold 12,268 15,815
---------------------

Gross profit 2,458 5,555

Selling, general and administrative expenses 2,266 2,908
---------------------

Earnings before the following 192 2,647
---------------------

Interest expense - net 424 566

Amortization of intangible assets 437 428

Stock compensation expense 70 57

Other income (171) -

Foreign exchange loss 199 159
---------------------

959 1,210

---------------------
(Loss) earnings before income taxes and
non-controlling interest (767) 1,437

(Recovery of) provision for income taxes (309) 338
---------------------

Net (loss) earnings before non-controlling interest (458) 1,099

Non-controlling interest share of net earnings (loss) (132) -
---------------------

Net (loss) earnings (326) 1,099
---------------------

(Loss) earnings per share for the period
Basic and diluted (0.02) 0.06



Opta Minerals Inc.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
March 31, 2009 December 31, 2008
$ $
Assets

Current assets
Cash and cash equivalents 1,374 1,377
Accounts receivable 7,869 9,133
Inventories 18,835 22,223
Prepaid expenses and other
current assets 1,843 1,793
Assets held for sale 634 664
Income taxes recoverable 439 362
----------------------------------
30,994 35,552

Property, plant and equipment - net 16,316 16,664

Intangible and other assets - net 31,729 32,464

Goodwill 13,588 14,160

Future Income Taxes 2,540 2,406
----------------------------------
95,167 101,246
----------------------------------
----------------------------------

Liabilities

Current liabilities
Bank indebtedness 6,972 7,797
Accounts payable and accrued liabilities 6,414 7,788
Current portion of long-term debt 4,105 4,097
Current portion of preference shares 37 38
----------------------------------
17,528 19,720

Long-term debt 18,696 20,594

Other long-term liabilities 2,965 3,095

Future income taxes 2,786 2,849

Future income taxes on intangible assets 9,380 9,695
----------------------------------
51,355 55,953
----------------------------------

Shareholder's Equity

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

Issued
18,008,095 (December 31, 2008 -
18,003,459) common shares 17,594 17,587

Contributed surplus 1,735 1,665

Retained earnings 21,336 21,662

Accumulated other comprehensive income 3,279 4,379
----------------------------------
43,944 45,293
----------------------------------
Non-Controlling Interest (132) -
----------------------------------
95,167 101,246
----------------------------------
----------------------------------



Opta Minerals Inc.
Consolidated Statements of Cash Flows
For the three month periods ended March 31, 2009 and 2008
(Expressed in thousands of U.S. dollars)
2009 2008
$ $

Cash provided by (used in)

Operating activities
Net (loss) earnings for the period (326) 1,099
Items not affecting cash
Amortization of property, plant and equipment 551 555
Amortization of intangible assets 437 428
Non-controlling interest (132) -
Other income (171) -
Stock compensation expense 70 57
Future income taxes (446) (460)
Unrealized foreign exchange gain on long term debt - 152
Realized foreign exchange gain on foreign operations (224) (75)
Net loss on disposal of property, plant and equipment - (6)
---------------------
(241) 1,750
Changes in non-cash working capital
Accounts receivable 1,121 (21)
Inventories 3,137 2,909
Prepaid expenses and other current assets (78) 131
Accounts payable and accrued liabilities (1,124) (376)
Income taxes recoverable (82) 192
---------------------
2,733 4,585
---------------------
Investing activities
Acquisition of property, plant and equipment (920) (119)
Proceeds on disposal of property, plant and equipment - 18
Additional consideration paid on acquisitions - (7)
---------------------
(920) (108)
---------------------
Financing Activities
Proceeds from issuance of common shares 7 12
Decrease in bank indebtedness (482) (326)
Proceeds from long term debt 733 3,075
Repayment of long term debt (2,038) (5,724)
---------------------
(1,780) (2,963)
---------------------

Foreign exchange (loss) gain on cash held in
foreign currency (36) 54
---------------------

(Decrease) increase in cash and cash equivalents
during the period (3) 1,568

Cash and cash equivalents - Beginning of period 1,377 2,336
---------------------

Cash and cash equivalents - End of period 1,374 3,904
---------------------
---------------------

Supplemental cash flow information
Interest paid 558 761
Income taxes paid 196 649



Opta Minerals Inc.
Segmented Information
For the three months ended March 31, 2009
(Expressed in thousands of U.S. dollars)
For the three month period ended March 31, 2009

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

External revenue by
market
Canada 2,192 800 - 2,992
U.S. 6,360 3,321 - 9,681
Europe 1,918 - - 1,918
Other 125 10 - 135
--------------------------------------------------

Total revenue from
external customers 10,595 4,131 - 14,726
--------------------------------------------------
--------------------------------------------------

Segment net earnings
(loss) before interest
expense and income
taxes (364) 72 (51) (343)

Interest expense on
long term debt 267
Interest expense 157
Recovery of income taxes (309)
Non-controlling interest
share of net
earnings (loss) (132)
------

Net loss (326)
--------------------------------------------------
--------------------------------------------------

Total assets as at
March 31, 2009 66,363 25,373 3,431 95,167
--------------------------------------------------
--------------------------------------------------

Amortization of property
plant and equipment 336 200 15 551
--------------------------------------------------
--------------------------------------------------

Amortization of
intangible assets 430 7 - 437
--------------------------------------------------
--------------------------------------------------

Goodwill and intangible
assets as at March
31, 2009 38,966 6,351 - 45,317
--------------------------------------------------
--------------------------------------------------

Expenditures on property,
plant and equipment 88 822 10 920
--------------------------------------------------
--------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the three months ended March 31, 2008
(Expressed in thousands of U.S. dollars)
For the three month period ended March 31, 2008

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

External revenue by
market
Canada 3,125 1,272 - 4,397
U.S. 10,999 3,829 - 14,828
Europe 2,108 - - 2,108
Other 30 7 - 37
--------------------------------------------------

Total revenue from
external customers 16,262 5,108 - 21,370
--------------------------------------------------
--------------------------------------------------

Segment net earnings
(loss) before interest
expense and
income taxes 2,390 736 (1,123) 2,003

Interest expense on
long term debt 388
Interest expense 178
Provision for income
taxes 338
------
Net earnings 1,099

Total assets as at
December 31, 2008 70,806 27,198 3,242 101,246
--------------------------------------------------
--------------------------------------------------

Amortization of property
plant and equipment 273 249 33 555
--------------------------------------------------
--------------------------------------------------

Amortization of
intangible assets 415 13 - 428
--------------------------------------------------
--------------------------------------------------

Goodwill and intangible
assets as at
December 31, 2008 39,859 6,765 - 46,624
--------------------------------------------------
--------------------------------------------------

Expenditures on property,
plant and equipment 5 79 35 119
--------------------------------------------------
--------------------------------------------------


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