Opta Minerals Inc.
TSX : OPM

Opta Minerals Inc.

May 11, 2011 16:00 ET

Opta Minerals Inc. Reports First Quarter Results for Fiscal 2011

21% Increase in Revenue and 62% Increase in Net Earnings

WATERDOWN, ONTARIO--(Marketwire - May 11, 2011) - Opta Minerals Inc. (TSX:OPM), today announced results for the three months ended March 31, 2011. All figures are reported in U.S. dollars and in accordance with International Financial Reporting Standards (IFRS), except where otherwise noted.

Financial Highlights (presented in $000s USD except per share amounts):
3 months3 months
ended Marended MarIncrease
31, 201131, 2010(Decrease)%
Revenue$21,606$17,931$3,67520.5%
Gross Profit5,1874,60358412.7%
24.0%25.7%(1.7%)
EBITDA13,4602,72473627.0%
EBIT22,4441,71772742.3%
Net Earnings1,42387954461.9%
EPS$0.08$0.05$0.03
1 EBITDA is a non-GAAP measure; refer to Footnotes.
2 EBIT is a non-GAAP measure; refer to Footnotes.

David Kruse, President and CEO of Opta Minerals, noted "During the first quarter, Opta Minerals continued to see year-over-year increases in revenue. We have continued to increase production and monitor our cost structure. We are pleased, although cautious, with the continued direction of the economic environment."

Operational Highlights:

  • Revenue growth for the quarter in the Mill and Foundry Products and Services segment increased 35% quarter-over-quarter due to demand for magnesium based reagent blends and the Abrasive Products Manufacturing and Distribution segment decreased 8% quarter-over-quarter due to a reduction in demand for metallurgical slags.
  • Gross profit increased as a result of the strengthening revenues and increased production.
  • Selling, general and administrative expenses decreased to 14.8% of revenue for the first quarter of 2011 from 15.9% for the comparable quarter in 2010. Most of the decrease was a result of the cost reduction initiatives put in place by management during the past few years offset by the strengthening Canadian dollar against the U.S. dollar which impacted the reported value of corporate costs largely denominated in Canadian dollars.
  • Net earnings in the first quarter increased 61.9% over the comparable quarter in 2010. Most of this increase is the result of strong revenue growth, continued focus on cost containment and reduction measures and a foreign exchange gain in the amount of $0.4 million before tax.
  • For the three months ended March 31, 2011, cash flow from operating activities before changes in working capital generated $2.5 million versus $1.6 million in the first quarter of 2010. The strong cash flow was used to finance payments for inventories of $2.1 million and other working capital in the amount of $0.3 million.
  • The CompanyΓǃs working capital at March 31, 2011 amounts to $14.9 million and total assets were $93.5 million, as compared to $11.8 million and $85.9 million respectively for the same period in 2010.
  • The debt-to-equity ratio at March 31, 2011 was 0.69 to 1.00, versus 0.80 to 1.00 at March 31, 2010.

Opta Minerals President and CEO, David Kruse, plans to host a conference call at 10:00AM Eastern Standard Time on Friday, May 13th, 2011 to discuss first quarter 2011 results and recent corporate developments. After opening remarks, there will be a question and answer period. This conference call can be accessed with the toll free dial-in number 1-(866) 321-6651 or 1-(416) 642-5212; quote confirmation code 7195836. If you are unable to listen live, the conference call will be archived and can be accessed between May 13th, 2011 and May 20th, 2011, with the toll free dial-in number 1-(888) 203-1112 or 1-(647) 436-0148 followed by pass code 7195836.

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-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 three
Months Ended
March 31
20112010
$$
Net Earnings for the Period1,423879
Finance Expense413440
Provision for Income Taxes608398
Depreciation and Amortization1,0161,007
EBITDA13,4602,724
Subtract:
Depreciation and Amortization1,0161,007
EBIT22,4441,717

Notes

1 The term "EBITDA" refers to earnings before deducting interest expense, provision for income taxes, depreciation and amortization. The Company believes that EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation. EBITDA is not a recognized measure under International Finance Reporting Standards (IFRS), and accordingly, investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with IFRS as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. The Company's method of calculating EBITDA may differ from other issuers and accordingly, EBITDA may not be comparable to similar measures presented by other issuers.

2 The term "EBIT" refers to earnings before income taxes and interest expense. The Company believes that EBIT is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed or taxed. EBIT is a non-IFRS earnings measure that does not have standardized measures prescribed by IFRS, and therefore may not be comparable to similar measures presented by other publicly traded companies.

This press release may contain "forward-looking statements" which reflect the current operations 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 Consolidated Balance Sheets
As at March 31, 2011, December 31, 2010 and January 1, 2010
(Unaudited)
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
March 31,December 31,January 1,
201120102010
Assets
Current
Cash and cash equivalents$3,519$495$781
Trade and other receivables12,57212,00210,050
Inventories21,37219,25917,181
Income taxes receivable--584
37,46331,75628,596
Property, Plant and Equipment16,95916,41016,875
Intangible Assets29,65029,25531,735
Goodwill6,0196,0196,019
Deferred Income Tax Assets3,4483,1902,779
$93,539$86,630$86,004
Liabilities
Current
Trade and other payables9,2869,1266,803
Borrowings10,5776,6597,850
Provisions1,6761,5601,741
Other liabilities427427531
Income taxes payable503250-
Preference shares484644
22,51718,06816,969
Borrowings16,94816,55918,912
Derivative Financial Instrument7408921,387
Other Liabilities1,4861,4861,813
Deferred Income Tax Liabilities3,5563,2512,509
Deferred Income Tax Liability on Intangible Assets8,5348,5109,213
53,78148,76650,803
Equity Attributable to the Shareholders of the Company
Capital Stock
Authorized unlimited common shares and preference shares without par value
Issued – 18,039,154 (December 31, 2010 – 18,036,974,
January 1, 2010 – 18,023,193) common shares17,63617,63217,612
Contributed Surplus2,8792,7812,301
Accumulated Other Comprehensive Loss(2,071)(2,440)(917)
Retained Earnings21,31419,89116,205
39,75837,86435,201
$93,539$86,630$86,004
Opta Minerals Inc.
Interim Consolidated Income Statements
For the three months ended March 31, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
March 31,March 31,
20112010
Revenue$21,606$17,931
Cost of Goods Sold16,41913,328
Gross Profit5,1874,603
Selling, General and Administrative Expenses3,1872,859
Other Expenses(444)27
Operating Profit2,4441,717
Finance expense413440
Profit for the Period Before Income Tax2,0311,277
Income tax expense608398
Profit for the Period Attributable to the Shareholders of the Company$1,423$879
Earnings per share for the period -
Basic and diluted0.080.05
Opta Minerals Inc.
Interim Statement of Cash Flows
For the three months ended March 31, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
March 31,March 31,
20112010
Cash Provided by (Used in) -
Operating Activities
Profit for the period$1,423$879
Items not affecting cash:
Depreciation of property, plant and equipment520541
Amortization of intangible assets496466
Share-based payment expense9867
Finance expense on finance lease5-
Deferred income taxes(86)(336)
2,4561,617
Changes in non-cash working capital
Trade and other receivables(458)(1,018)
Inventories(2,115)718
Trade and other payables(207)(565)
Provisions116(87)
Income taxes receivable and payable222294
14959
Financing Activities
Proceeds from issuance of common shares – net of issuance costs44
Proceeds from borrowings3,999951
Repayment of finance lease liability(32)-
Repayment of borrowings(659)(350)
3,312605
Investing Activities
Additions to property, plant and equipment(301)(440)
Additions to intangible assets(59)(21)
(360)(461)
Foreign Exchange Gain (Loss) on Cash Held in Foreign Currency58(28)
Increase in Cash and Cash Equivalents3,0241,075
Cash and Cash Equivalents
Beginning of period495781
End of period$3,519$1,856
Additional Cash Flow Information:
Interest paid$416$510
Income taxes paid438402
Opta Minerals Inc.
Interim Segmented Information
For the three months ended March 31, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars

Intersegment 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.

March 31, 2011
Abrasive
products manu-
Mill and foundryfacturing and
products anddistribution
servicesoperationsUnallocatedTotal
External revenue by market:
Canada$1,820$1,451$-$3,271
United States10,6714,070-14,741
Europe3,594--3,594
Total revenue from external customers16,0855,521-21,606
Segment profit before interest expense and income taxes2,784(614)2742,444
Finance expense---(413)
Income tax expense---(608)
Profit for the period---1,423
Total assets as at March 31, 201158,34931,2563,93493,539
Depreciation of property, plant and equipment22426630520
Amortization of intangible assets453637496
Goodwill and intangible assets as at March 31, 201131,6173,57747535,669
Expenditures on property, plant and equipment$105$142$54$301
Opta Minerals Inc.
Interim Segmented Information
For the three months ended March 31, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
March 31, 2010
Abrasive
products manu-
Mill and foundryfacturing and
products anddistribution
servicesoperationsUnallocatedTotal
External revenue by market
Canada$1,815$1,335$-$3,150
United States7,3804,630-12,010
Europe2,724--2,724
Other146-47
Total revenue from external customers11,9206,011-17,931
Segment profit before interest expense and income taxes1,679188(150)1,717
Finance expense---(440)
Income tax expense---(398)
Profit for the period---879
Total assets as at March 31, 201055,50327,9882,45885,949
Depreciation of property, plant and equipment28723024541
Amortization of intangible assets4606-466
Goodwill and intangible assets as at March 31, 201032,8043,6016136,466
Expenditures on property, plant and equipment$37$303$100$440

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