Opta Minerals Inc.
TSX : OPM

Opta Minerals Inc.

March 08, 2011 17:49 ET

Opta Minerals Inc. Reports Fourth Quarter Results for Fiscal 2010

28% Increase in Revenue and 9% Increase in EBITDA(1)

WATERDOWN, ONTARIO--(Marketwire - March 8, 2011) - Opta Minerals Inc. (TSX:OPM), today announced results for the three and twelve months ended December 31, 2010. All figures are reported in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.

Financial Highlights (presented in $000s USD except per share amounts):

  3 months ended Dec 31, 2010   3 months ended Dec 31, 2009   Increase
(Decrease)
  %   12 months ended Dec 31, 2010   12 months ended Dec 31, 2009   Increase
(Decrease)
  %  
                                 
Revenue $ 21,376   $ 16,716   $ 4,660   27.9 % $ 80,868   $ 62,526   $ 18,342   29.3 %
Gross Profit   4,864     3,484     1,380   39.6 %   20,036     13,081     6,955   53.2 %
    22.8 %   20.8 %   2.0 %       24.8 %   20.9 %   3.9 %    
EBITDA1   2,200     2,011     189   9.4 %   11,761     6,190     5,571   90.0 %
EBIT2   1,166     962     204   21.2 %   7,662     (4,859 )   12,521   257.7 %
Net Earnings (Loss)   234     616     (382 ) (62.0 %)   3,751     (6,205 )   9,956   160.5 %
EPS3 $ 0.01   $ 0.04   $ (0.03 )     $ 0.21   $ (0.34 ) $ 0.55      
   
(1) EBITDA is a non-GAAP measure; refer to Footnotes.
(2) EBIT is a non-GAAP measure; refer to Footnotes.
(3) Earnings Per Share includes the impact of an additional non-tax deductible stock compensation expense relating to the cancellation of stock options during the fourth quarter in the amount of $456 or $0.03 per share plus an additional valuation allowance for the benefit of non- capital losses in the amount of $179 or $0.01 per share.

David Kruse, President and CEO of Opta Minerals, noted "During the fourth quarter, Opta Minerals continued to see a steady but modest increase in demand in our related industries. We have continued to increase production and monitor our cost structure. We are pleased although cautious of the continued direction of the economic environment."

Operational Highlights:

  • Revenue growth for the quarter and year in both operating segments as the Mill and Foundry Products and Services segment increased 28% year-over-year due to demand for magnesium based reagent blends and the Abrasive Products Manufacturing and Distribution segment increased 32% year-over-year due to demand for metallurgical slags.

  • Gross profit increase as a result of the strengthening revenues and increased production, combined with the impact of cost reduction measures.

  • Selling, general and administrative expenses remained constant at 12.4% of revenue for the fourth quarter of 2009 and 2010. On a year to date basis, selling, general and administrative expenses declined from 14.6% of revenue for 2009 to 13.1% of revenue 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 which are largely denominated in Canadian dollars.

  • Net earnings in the fourth quarter includes the impact of an additional $456,000 in non-tax deductible stock compensation expense relating to the cancellation of stock options and an increase in the valuation allowance for the benefit of non-capital tax losses in the amount of $179,000. Excluding these items, net earnings would be $869,000 exceeding the results of the fourth quarter of the prior year by $253,000 or $0.01 per share.

  • The prior year included a non-cash goodwill impairment charge in the amount of $7.2 million recorded in the third quarter. Excluding the impact of this charge, pre-tax earnings have increased $5.2 million over the prior year.

  • For the three months ended December 31, 2010, cash flow from operating activities before changes in working capital generated $2.2 million versus $1.6 million in the fourth quarter of 2009. The strong cash flow was used to finance payments on long-term debt in the amount of $2.1 million. On a year to date basis, cash flows from operating activities before changes in working capital generated $7.9 million versus $3.0 million in 2009. The cash flow was used to finance working capital, repayment of long-term debt in the amount of $4.6 million and an investment in property, plant and equipment in the amount of $1.3 million. The cash flow was also used to pay additional consideration on prior acquisitions in the amount of $0.5 million.

  • The Company‟s working capital at December 31, 2010 amounts to $14.1 million and total assets were $88.0 million, as compared to $12.2 million and $86.9 million respectively for the same period in 2009.

  • The debt-to-equity ratio at December 31, 2010 was 0.57 to 1.00, versus 0.70 to 1.00 at December 31, 2009.

Opta Minerals President and CEO, David Kruse, plans to host a conference call at 11:00AM Eastern Standard Time on Thursday, March 10th, 2011 to discuss fourth quarter 2010 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 3511930. If you are unable to listen live, the conference call will be archived and can be accessed between March 11th, 2011 and March 18th, 2011, with the toll free dial-in number 1-(888) 203-1112 or 1-(647) 436-0148 followed by pass code 3511930.

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 Months Ended December 31   For the twelve Months Ended December 31  
  2010   2009   2010   2009  
  $   $   $   $  
                 
Net Earnings (Loss) for the Period 234   616   3,751   (6,205 )
Interest Expense 500   340   1,990   1,588  
Provision for (recovery of) Income Taxes 432   6   1,921   (242 )
Depreciation and Amortization 1,034   1,049   4,099   3,851  
Goodwill Impairment -   -   -   7,198  
                 
EBITDA1 2,200   2,011   11,761   6,190  
Add (subtract):                
Depreciation and Amortization (1,034 ) (1,049 ) (4,099 ) (3,851 )
Goodwill Impairment -   -   -   (7,198 )
Earnings (loss) before income taxes and interest2 1,166   962   7,662   (4,859 )
                 

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", "wil", "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 December 31, 2010 and 2009  
Expressed in Thousands of U.S. Dollars (except per share amounts)  
   
  2010 2009  
           
Revenue $ 21,376 $ 16,716  
           
Cost of Goods Sold   16,512   13,232  
Gross Profit   4,864   3,484  
           
Selling, General and Administrative Expenses   2,657   2,067  
Earnings Before Undernoted Items, Income Taxes and Non-controlling Interest   2,207   1,417  
           
Interest expense on long-term debt   418   200  
Interest expense   82   140  
Amortization of intangible assets   459   477  
Stock compensation expense   559   75  
Other (income) expense   -   (68 )
Foreign exchange loss (gain)   23   (35 )
    1,541   789  
Earnings Before Income Taxes and Non-controlling Interest   666   628  
           
Provision for income taxes   432   6  
Net Earnings Before Non-Controlling Interest   234   622  
   
Net earnings attributable to non-controlling interest   -   6  
Net Earnings Attributable to Opta Minerals Inc. $ 234 $ 616  
           
Earnings per share for the period          
- Basic and diluted $ 0.01 $ 0.04  
 
 
Opta Minerals Inc.
Consolidated Statements of Earnings (Loss)
For the Twelve Month Periods Ended December 31, 2010 and 2009
Expressed in Thousands of U.S. Dollars (except per share amounts)
   
  2010   2009  
   
Revenue $ 80,868   $ 62,526  
   
Cost of Goods Sold   60,832     49,445  
Gross Profit   20,036     13,081  
   
Selling, General and Administrative Expenses   10,564     9,106  
Earnings Before Undernoted Items, Income Taxes, Goodwill Impairment and Non-controlling Interest   9,472     3,975  
   
Interest expense on long-term debt   1,618     1,054  
Interest expense   372     534  
Amortization of intangible assets   1,834     1,844  
Stock compensation expense   777     285  
Other (income) expense   -     237  
Foreign exchange gain   (801 )   (466 )
    3,800     3,488  
Earnings Before Income Taxes, Goodwill Impairment and Non-controlling Interest   5,672     487  
   
Provision for (recovery of) income taxes   1,921     (242 )
Net Earnings Before Goodwill Impairment and Non-controlling Interest   3,751     729  
   
Goodwill impairment   -     7,198  
Net Earnings (Loss) Before Non-controlling Interest   3,751     (6,469 )
   
Net loss attributable to non-controlling interest   -     (264 )
Net Earnings (Loss) Attributable to Opta Minerals Inc. $ 3,751   $ (6,205 )
   
Earnings (loss) per share for the period            
- Basic and diluted $ 0.21   $ (0.34 )
 
 
Opta Minerals Inc.
Consolidated Balance Sheets
 
(Expressed in Thousands of U.S. Dollars)
 
  2010 2009
Assets        
Current        
  Cash and cash equivalents $ 495 $ 781
  Accounts receivable   11,464   9,422
  Inventories   19,259   17,181
  Prepaid expenses and other current assets   538   628
  Income taxes recoverable   -   584
    31,756   28,596
Property, Plant and Equipment   17,273   17,796
Intangible and Other Assets   29,255   31,691
Goodwill   6,496   6,019
Future Income Taxes   3,190   2,779
  $ 87,970 $ 86,881
Liabilities        
Current        
  Bank indebtedness $ 3,546 $ 3,355
  Accounts payable and accrued liabilities   10,686   8,544
  Income taxes payable   250   -
  Current portion of long-term debt   3,113   4,495
  Current portion of preference shares   46   44
    17,641   16,438
Long-term Debt   16,559   18,912
Other Long-term Liabilities   892   1,387
Future Income Taxes   3,409   2,674
Future Income Taxes on Intangible Assets   8,510   9,213
    47,011   48,624
Shareholders' Equity        
Capital Stock        
  Authorized unlimited number of common shares and preference shares without par value        
  Issued -        
  18,036,974 (December 31, 2009 - 18,023,193) common shares   17,632   17,612
Contributed Surplus   2,727   1,950
Accumulated Other Comprehensive Income   1,656   3,502
Retained Earnings   18,944   15,193
    20,600   18,695
    40,959   38,257
  $ 87,970 $ 86,881
 
 
Opta Minerals Inc.
Consolidated Statements of Cash Flows
For the Three Month Periods Ended December 31, 2010 and 2009
Expressed in Thousands of U.S. Dollars
 
   
  2010   2009  
   
Cash Provided By (Used in) -            
  Operating Activities            
    Net earnings for the period $ 234   $ 622  
    Items not affecting cash:            
    Amortization of property, plant and equipment   575     572  
    Amortization of intangible assets   459     477  
    Stock compensation expense   559     75  
    Future income taxes expense   416     87  
    Realized foreign exchange gain on foreign operations   (71 )   (180 )
    Net gain on disposal of property, plant and equipment   -     (12 )
    2,172     1,641  
    Changes in non-cash working capital:            
    Accounts receivable   1,074     26  
    Inventories   1,024     294  
    Prepaid expenses and other current assets   316     679  
    Accounts payable and accrued liabilities   (1,619 )   721  
    Income taxes recoverable / payable   (684 )   (404 )
    2,283     2,957  
  Financing Activities            
    Proceeds from issuance of common shares - net of issuance costs   6     6  
    Increase (decrease) in bank indebtedness   531     (2,322 )
    Repayment of long-term debt   (2,073 )   (509 )
    (1,536 )   (2,825 )
  Investing Activity            
    Acquisition of property, plant and equipment   (175 )   (510 )
    Acquisition of other assets   (510 )   -  
    Additional consideration paid on acquisitions   (477 )   -  
    (1,162 )   (510 )
Foreign Exchange (Loss) Gain on Cash Held in Foreign Currency   1     (2 )
             
Decrease in Cash and Cash Equivalents   (414 )   (380 )
Cash and Cash Equivalents            
  Beginning of Period   909     1,161  
  End of Period $ 495   $ 781  
Additional Cash Flows Information:            
  Interest paid $ 567   $ 325  
  Income taxes paid   753     324  
   
   
Opta Minerals Inc.  
Consolidated Statements of Cash Flows  
For the Twelve Month Periods Ended December 31, 2010 and 2009  
Expressed in Thousands of U.S. Dollars  
   
   
  2010   2009  
   
Cash Provided By (Used in) -            
  Operating Activities            
    Net earnings (loss) for the period $ 3,751   $ (6,469 )
    Items not affecting cash:            
    Amortization of property, plant and equipment   2,265     2,007  
    Amortization of intangible assets   1,834     1,844  
    Goodwill impairment   -     7,198  
    Other (income) expenses   -     (96 )
    Stock compensation expense   777     285  
    Future income taxes recovery   (345 )   (1,044 )
    Realized foreign exchange gain on foreign operations   (346 )   (798 )
    Net loss on disposal of property, plant and equipment   -     68  
    7,936     2,995  
    Changes in non-cash working capital:            
    Accounts receivable   (2,223 )   65  
    Inventories   (2,036 )   6,201  
    Prepaid expenses and other current assets   97     1,219  
    Accounts payable and accrued liabilities   1,947     284  
    Income taxes recoverable / payable   808     (221 )
    6,529     10,543  
  Financing Activities            
    Proceeds from issuance of common shares - net of issuance costs   20     25  
    Increase (decrease) in bank indebtedness   88     (5,463 )
    Proceeds from long-term debt   -     795  
    Repayment of long-term debt   (4,561 )   (4,648 )
    (4,453 )   (9,291 )
  Investing Activity            
    Acquisition of property, plant and equipment   (1,333 )   (2,507 )
    Acquisition of other assets   (510 )   -  
    Additional consideration paid on acquisitions   (477 )   -  
    Proceeds on disposal of property, plant and equipment   -     651  
    (2,320 )   (1,856 )
Foreign Exchange (Loss) Gain on Cash Held in Foreign Currency   (42 )   8  
Decrease in Cash and Cash Equivalents   (286 )   (596 )
Cash and Cash Equivalents            
  Beginning of Year   781     1,377  
  End of Year $ 495   $ 781  
Additional Cash Flows Information:            
  Interest paid $ 2,098   $ 1,677  
  Income taxes paid   1,362     986  
 
 
Opta Minerals Inc.
Segmented Information
For the Three Month Period Ended December 31, 2010
Expressed in Thousands of U.S. Dollars
 
  Three Month Period Ended December 31, 2010  
  Mill and Foundry Products and Services Abrasive Products Manufacturing and Distribution Operations   Unallocated Total  
   
External revenue by market                    
Canada $ 1,807 $ 1,180   $ - $ 2,987  
U.S.   9,127   6,376     -   15,503  
Europe   2,806   -     -   2,806  
Other   21   59     -   80  
Total revenue from external customers $ 13,761 $ 7,615     - $ 21,376  
   
Segment earnings (loss) before interest expense and income taxes   1,265   (304 )   205   1,166  
Interest expense on long-term debt                 (418 )
Interest expense                 (82 )
Provision for income taxes                 (432 )
Net earnings for the period                 234  
Total assets as at December 31, 2010   53,214   31,650     3,106   87,970  
Amortization of property, plant and equipment   230   284     61   575  
Amortization of intangible assets   453   6     -   459  
Goodwill and intangible assets as at December 31, 2010   31,742   3,583     426   35,751  
Expenditures on property, plant and equipment   51   90     34   175  
   
Expenditures on other assets $ - $ -   $ 510 $ 510  
 
 
Opta Minerals Inc.
Segmented Information
For the Twelve Month Period Ended December 31, 2010
Expressed in Thousands of U.S. Dollars
 
  Twelve Month Period Ended December 31, 2010  
  Mill and Foundry Products and Services Abrasive Products Manufacturing and Distribution Operations Unallocated   Total  
   
External revenue by market                    
Canada $ 9,127 $ 5,740 $ -   $ 14,867  
U.S.   32,577   22,136   -     54,713  
Europe   11,019   11   -     11,030  
Other   57   201   -     258  
Total revenue from external customers   52,780   28,088   -     80,868  
   
Segment earnings (loss) before interest expense and income taxes   7,146   623   (107 )   7,662  
Interest expense on long-term debt                 (1,618 )
Interest expense                 (372 )
Provision for income taxes                 (1,921 )
Net earnings for the year                 3,751  
Amortization of property, plant and equipment   1,078   1,037   150     2,265  
Amortization of intangible assets   1,810   24   -     1,834  
Expenditures on property, plant and equipment   250   992   91     1,333  
Expenditures on other assets $ - $ - $ 510   $ 510  
 
 
Opta Minerals Inc.
Segmented Information
For the Three Month Period Ended December 31, 2009
Expressed in Thousands of U.S. Dollars
 
  Three Month Period 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, income taxes and non-controlling interest   1,198     (164 )   (66 )   968  
Interest expense on long-term debt                     (200 )
Interest expense                     (140 )
Provision for recovery of income taxes                     (6 )
Non-controlling interest share of net earnings   (6 )   -     -     (6 )
Net earnings for the period                     616  
Total assets as at December 31, 2009   56,661     28,121     2,099     86,881  
Amortization of property, plant and equipment   306     246     20     572  
Amortization of intangible assets   471     6     -     477  
Goodwill and intangible assets as at December 31, 2009   34,105     3,605     -     37,710  
Expenditures on property, plant and equipment $ 24   $ 443   $ 43   $ 510  
         
         
  Twelve Month Period 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, income taxes and non-controlling interest   (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 )
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  
Expenditures on property, plant and equipment $ 204   $ 2,194   $ 109   $ 2,507  

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