Opta Minerals Inc.
TSX : OPM

Opta Minerals Inc.

March 07, 2012 07:30 ET

Opta Minerals Inc. Reports Fourth Quarter Results for Fiscal 2011

WATERDOWN, ONTARIO--(Marketwire - March 7, 2012) - Opta Minerals Inc. (TSX:OPM) today announced results for the three and twelve months ended December 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 months ended December
31,
2011
3 months ended December
31, 2010
Increase
(Decrease)
% 12 months ended
December
31, 2011
12 months ended
December
31, 2010
Increase
(Decrease)
%
Revenue $ 22,625 $ 21,376 $ 1,249 5.8 % $ 93,120 $ 80,868 $ 12,252 15.2 %
Gross Profit 4,913 4,873 40 0.8 % 20,746 20,073 673 3.4 %
21.7 % 22.8 % (1.1 %) 22.3 % 24.8 % (2.5 %)
EBITDA(1) 2,362 2,442 (80 ) (3.3 %) 11,483 11,712 (229 ) (2.0 %)
EBIT(2) 1,270 1,418 (148 ) (10.4 %) 7,276 7,650 (374 ) (4.9 %)
Net Earnings 564 438 126 28.8 % 3,650 3,686 (36 ) (1.0 %)
EPS $ 0.03 $ 0.03 $ - $ 0.20 $ 0.21 $ (0.01 )
(1) EBITDA is a non-IFRS measure; refer to Footnotes.
(2) EBIT is a non-IFRS measure; refer to Footnotes.

David Kruse, President and CEO of Opta Minerals, noted, "During the fourth quarter, Opta Minerals experienced positive revenue growth over the comparable period in 2010. Strong earnings in the steel sector were offset by weaker earnings in the industrial minerals sector. We have continued to manage production to demand and, our cost structure. We remain cautiously optimistic with the direction of the economic environment on our business."

Operational Highlights:

  • Revenue in the Mill and Foundry Products and Services segment increased 22.7% over the comparable quarter in 2010 due to the demand for lime blends. Revenue in the Abrasive Products Manufacturing and Distribution segment decreased 24.7% over the comparable quarter in 2010 due to a decrease in demand for metallurgical slags. On a year over year basis, there was an increase of 28.4% and a decrease of 9.8%, respectively.
  • Gross profit has increased slightly quarter-over-quarter and year-over-year. Gross profit as a percentage of revenue has declined slightly quarter-over-quarter and year-over-year as a result of weakness in the industrial minerals sector and product mix.
  • Selling, general and administrative expenses (SGA) decreased to 13.7% of revenue for the fourth quarter of 2011 from 15.7% for the comparable quarter in 2010. Most of the decrease was a result of the cost reduction initiatives implemented by management over the past few years. SGA decreased to 14.2% of revenue for the year from 15.9% in 2010.
  • Net earnings in the fourth quarter increased 28.8% over the comparable quarter in 2010. Most of this increase is the result of an increase in volumes in the Steel segment offset slightly by a decrease in demand for metallurgical slags in the Abrasives segment. Net earnings for the year was similar to 2010. The Company recognized a foreign exchange loss in the amount of $0.5 million before tax in the fourth quarter. There was a foreign exchange loss of $0.1 million for the comparable quarter in 2010.
  • The foreign exchange loss was $0.3 million for the year as compared to a foreign exchange gain of $0.5 million for 2010. This resulted in a net foreign exchange loss of $0.8 million over the prior year.
  • For the three months ended December 31, 2011, cash flow from operating activities before changes in working capital generated $1.7 million versus $2.2 million in the fourth quarter of 2010. The positive cash flow was used to finance payments on inventories and accounts payable of $2.0 million. Cash flow from operating activities before changes in working capital generated $8.0 million in 2011 versus $7.9 million in 2010.
  • During the fourth quarter, the Company purchased its leased land, buildings and certain production equipment at its Virginia facility for $2.5 million. The purchase was financed through a bank term loan facility.
  • Also during the fourth quarter, the Company purchased 100% of the members' interest in Inland RC, L.L.C., a Michigan Limited Liability Company, for $0.6 million in cash plus contingent consideration based on the achievement of certain future earnings targets.
  • The Company's working capital at December 31, 2011 amounts to $14.7 million and total assets were $92.4 million, as compared to $13.7 million and $86.6 million respectively for the same period in 2010.
  • The debt-to-equity ratio at December 31, 2011 was 0.65 to 1.00, versus 0.61 to 1.00 at December 31, 2010.

Opta Minerals President and CEO, David Kruse, plans to host a conference call at 10:00AM Eastern Standard Time on Thursday, March 8th, 2012 to discuss fourth 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 4026047. If you are unable to listen live, the conference call will be archived and can be accessed between March 8th, 2012 and March 15th, 2012, with the toll free dial-in number 1-(888) 203-1112 or 1-(647) 436-0148 followed by pass code 4026047.

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, Saskatchewan, Louisiana, South Carolina, Virginia, Maryland, Indiana, Michigan, New York, Texas, Florida, Ohio, 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 For the twelve
Months Ended Months Ended
December 31 December 31
2011 2010 2011 2010
$ $ $ $
Net Earnings for the Period 564 438 3,650 3,686
Finance Expense 185 546 1,429 2,036
Provision for Income Taxes 521 434 2,197 1,928
Depreciation and Amortization 1,092 1,024 4,207 4,062
EBITDA(1) 2,362 2,442 11,483 11,712
Subtract:
Depreciation and Amortization 1,092 1,024 4,207 4,062
EBIT(2) 1,270 1,418 7,276 7,650

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 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 Balance Sheets
As at December 31, 2011 and 2010 and January 1, 2010
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
January 1,
2011 2010 2010
Assets
Current
Cash and cash equivalents $ 698 $ 495 $ 781
Trade and other receivables 12,515 12,002 10,050
Inventories 21,589 19,259 17,181
Income taxes receivable - - 584
34,802 31,756 28,596
Property, Plant and Equipment 19,848 16,410 16,875
Intangible Assets 27,319 29,255 31,735
Goodwill 6,680 6,019 6,019
Deferred Income Tax Assets 3,793 3,190 2,779
$ 92,442 $ 86,630 $ 86,004
Liabilities
Current
Trade and other payables 7,123 9,126 6,803
Borrowings 11,026 6,659 7,850
Derivative financial instrument 256 - -
Provisions 1,015 1,560 1,741
Other liabilities 444 427 531
Income taxes payable 168 250 -
Preference shares 46 46 44
20,078 18,068 16,969
Borrowings 16,526 16,559 18,912
Derivative Financial Instrument - 892 1,387
Other Liabilities 1,481 1,486 1,813
Deferred Income Tax Liabilities 3,192 3,251 2,509
Deferred Income Tax Liability on Intangible Assets 8,650 8,510 9,213
49,927 48,766 50,803
Equity Attributable to the Shareholders of the Company
Capital Stock
Authorized unlimited number of common shares and preference shares without par value
Issued -
18,061,784 (December 31, 2010 - 18,036,974, January 1, 2010 - 18,023,193) common shares 17,680 17,632 17,612
Contributed Surplus 3,429 2,781 2,301
Accumulated Other Comprehensive Income (2,135 ) (2,440 ) (917 )
Retained Earnings 23,541 19,891 16,205
42,515 37,864 35,201
$ 92,442 $ 86,630 $ 86,004


Opta Minerals Inc.
Consolidated Statements of Income
For the Years Ended December 31, 2011 and 2010
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
2011 2010
Revenue $ 93,120 $ 80,868
Cost of Goods Sold 72,374 60,795
Gross Profit 20,746 20,073
Selling, General and Administrative Expenses 13,205 12,878
Other Expenses (Income) 265 (455 )
Operating Profit 7,276 7,650
Finance expense 1,429 2,036
Profit before Income Tax 5,847 5,614
Income tax expense 2,197 1,928
Profit for the Year Attributable to the Shareholders of the Company $ 3,650 $ 3,686
Earnings per share for the year -
Basic and diluted 0.20 0.21


Opta Minerals Inc.
Consolidated Statements of Comprehensive Income
For the Years Ended December 31, 2011 and 2010
Expressed in Thousands of US Dollars
2011 2010
Profit for the Year Attributable to the Shareholders of the Company $ 3,650 $ 3,686
Other Comprehensive Income
Unrealized loss on translation of foreign operations (98 ) (1,844 )
Unrealized gain on derivative financial instrument 403 321
Comprehensive Income Attributable to the Shareholders of the Company $ 3,955 $ 2,163


Opta Minerals Inc.
Consolidated Statements of Changes in Equity
For the Years Ended December 31, 2011 and 2010
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
Number of Shares - Capital Stock Capital
Stock
Contributed Surplus - Share-based Payments AOCI* -
Cash Flow Hedge
AOCI* - Foreign Currency Translation Reserve Retained Earnings Total Equity
At January 1, 2011 18,036,974 $ 17,632 $ 2,781 $ (596 ) $ (1,844 ) $ 19,891 $ 37,864
Comprehensive Income
Profit for the year - - - - - 3,650 3,650
Unrealized loss on translation of foreign operations - - - - (98 ) - (98 )
Unrealized gain on financial derivative designated as a cash flow hedge - - - 403 - - 403
Total Comprehensive Income - - - 403 (98 ) 3,650 3,955
Transactions with Shareholders
Employee share purchase plan 9,530 20 - - - - 20
Share options exercised 15,280 28 - - - - 28
Share-based payment expense - - 648 - - - 648
Total Transactions with Shareholders 24,810 48 648 - - - 696
At December 31, 2011 18,061,784 17,680 $ 3,429 $ (193 ) $ (1,942 ) $ 23,541 $ 42,515
At January 1, 2010 18,023,193 $ 17,612 $ 2,301 $ (917 ) $ - $ 16,205 $ 35,201
Comprehensive Income
Profit for the year - - - - - 3,686 3,686
Unrealized loss on translation of foreign operations - - - - (1,844 ) - (1,844 )
Unrealized gain on financial derivative designated as a cash flow hedge - - - 321 - - 321
Total Comprehensive Income - - - 321 (1,844 ) 3,686 2,163
Transactions with Shareholders
Employee share purchase plan 13,781 20 - - - - 20
Share-based payment expense - - 480 - - - 480
Total Transactions with Shareholders 13,781 20 480 - - - 500
At December 31, 2010 18,036,974 $ 17,632 $ 2,781 $ (596 ) $ (1,844 ) $ 19,891 $ 37,864
*AOCI - Accumulated Other Comprehensive Income


Opta Minerals Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2011 and 2010
Expressed in Thousands of US Dollars
2011 2010
Cash Provided by (Used in) -
Operating Activities
Profit for the year $ 3,650 $ 3,686
Items not affecting cash:
Depreciation of property, plant and equipment 2,199 2,228
Amortization of intangible assets 2,008 1,834
Share-based payment expense 648 480
Non-cash finance expense (268 ) 46
Deferred income taxes (750 ) (338 )
Recognition of contingent consideration on acquisition 540 -
Loss on disposal of property, plant and equipment 2 -
8,029 7,936
Changes in non-cash working capital
Trade and other receivables (549 ) (2,126 )
Inventories (2,358 ) (2,036 )
Trade and other payables (2,026 ) 2,128
Provisions (545 ) (181 )
Income taxes receivable (91 ) 808
2,460 6,529
Financing Activities
Proceeds from issuance of common shares - net of issuance costs 48 20
Proceeds from borrowings 7,272 -
Repayment of finance lease liability (160 ) -
Repayment of borrowings (2,854 ) (4,473 )
4,306 (4,453 )
Investing Activities
Additions to property, plant and equipment (5,328 ) (1,333 )
Proceeds on disposal of property, plant and equipment 4 -
Additional contingent consideration paid on acquisitions (233 ) (477 )
Additions to intangible assets (990 ) (510 )
(6,547 ) (2,320 )
Foreign Exchange Loss on Cash Held in Foreign Currency (16 ) (42 )
Increase (Decrease) in Cash and Cash Equivalents 203 (286 )
Cash and Cash Equivalents
Beginning of Year 495 781
End of Year $ 698 $ 495
Additional Cash Flows Information:
Interest paid $ 1,730 $ 2,098
Income taxes paid 3,147 1,362


Opta Minerals Inc.
Segmented Information
For the Years Ended December 31, 2011 and 2010
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.

2011
Mill and foundry Products and services Abrasive Products manufacturing and Distribution operations Unallocated Total
External revenue by market
Canada $ 9,416 $ 5,860 $ - $ 15,276
U.S 44,343 19,364 - 63,707
Europe 13,965 3 - 13,968
Other 50 119 - 169
Total revenue from external customers 67,774 25,346 - 93,120
Segment profit before interest expense and income taxes 9,555 (2,087 ) (192 ) 7,276
Finance expense - - - (1,429 )
Income tax expense - - - (2,197 )
Profit for the year - - - 3,650
Total assets as at December 31, 2011 57,257 33,197 1,988 92,442
Depreciation of property, plant and equipment 955 1,117 127 2,199
Amortization of intangible assets 1,827 25 156 2,008
Goodwill and intangible assets as at December 31, 2011 30,097 3,558 344 33,999
Expenditures on property, plant and equipment $ 2,048 $ 3,169 $ 111 $ 5,328


Opta Minerals Inc.
Segmented Information
For the Years Ended December 31, 2011 and 2010
Expressed in Thousands of US Dollars
January 1, 2010
Mill and foundry Products and services Abrasive Products manufacturing and Distribution operations Unallocated Total
Total assets as at January 1, 2010 $ 56,661 $ 27,244 $ 2,099 $ 86,004
Goodwill and intangible assets as at January 1, 2010 34,105 3,605 44 37,754

External revenue by market is attributed to countries based on location of the customer.

Included in the mill and foundry products and services segment is revenue from one customer that individually exceeds 10% of the Company's revenue.

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 profit before interest expense and income taxes 7,146 659 (155 ) 7,650
Finance expense - - - (2,036 )
Income tax expense - - - (1,928 )
Profit for the year - - - 3,686
Total assets as at December 31, 2010 52,737 30,787 3,106 86,630
Depreciation of property, plant and equipment 1,078 1,000 150 2,228
Amortization of intangible assets 1,810 24 - 1,834
Goodwill and intangible assets as at December 31, 2010 31,265 3,583 426 35,274
Expenditures on property, plant and equipment 250 992 91 1,333

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