Opta Minerals Inc.
TSX : OPM
TSX : OPM.WT

Opta Minerals Inc.

November 01, 2006 18:10 ET

Opta Minerals Inc. Reports Record Third Quarter Results for Fiscal 2006

WATERDOWN, ONTARIO--(CCNMatthews - Nov. 1, 2006) - Opta Minerals Inc. (TSX:OPM)(TSX:OPM.WT), a vertically integrated producer, manufacturer, distributor and recycler of silica-free loose abrasives, roofing shingle granules, industrial minerals, specialty sands and related products, today announced record third quarter results for the three months ended September 30, 2006. All figures are in Canadian dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.

Highlights:

- Net Earnings increase of 112% over Q3 2005 results, and a 127% increase in earnings before interest, income taxes, depreciation and amortization ("EBITDA").

- Positive cash flow from operating activities of $3,934,000 versus a use of cash totaling $(3,937,000) during Q3 2005.

- Acquisition of Bimac Corporation during October 2006. This profitable company generated approximately U.S. $7.5 million of revenue in 2005, selling its proprietary tundish and ladle insulators, fluxes and conditioners to the steel industry in Canada and the U.S..

Opta Minerals reported record 2006 third quarter revenue of $18.8 million, bringing year to date revenue to a record $54.5 million or 70% higher than the $32.0 million reported in 2005. Earnings before income taxes, interest and stock compensation expense for the quarter were $2.3 million, bringing year to date earnings before income taxes, interest and stock compensation expense to $6.4 million, a 62% increase as compared to $3.9 million reported in 2005.

"Excluding the impact of foreign exchange, the Company's organic growth rate is 8% over Q3 2005. The strong results generated this quarter are evidence of the momentum and organic growth potential of existing operations and markets. In addition, the acquisition of Magtech in February 2006 has significantly increased the Company's results compared to the prior year." said David Kruse, President and Chief Executive Officer.

Gross profit for the quarter increased 125% from $2.2 million (21% of revenue) for the three months ended September 30, 2005 to $4.9 million (26% of revenue) in 2006. On a year to date basis, gross profit increased 77% from $7.5 million (24% of revenue) for the nine months ended September 30, 2005 to $13.3 million (25% of revenue) in 2006. Had foreign exchange rates remained the same for the nine months ended September 2006 versus 2005, gross profits from heritage businesses would be approximately $358,000 higher.

Net earnings for the third quarter were $1,155,000 or $0.07 per diluted common share, an increase of 112% from $546,000 or $0.03 per diluted common share in 2005. Year to date earnings are $3,236,000 or $0.19 per diluted common share, an increase of 84% from $1,762,000 or $0.11 per diluted common share in 2005. Year to date results for the nine months ended September 30, 2006 include $701,000 in amortization of intangible assets that are primarily the result of the Magtech acquisition.

The Company continues to maintain a strong balance sheet, with working capital of $14.7 million and total assets of $75.6 million. The debt to equity ratio as at September 30, 2006 was 0.58 to 1.00. The Company has cash resources of $3.0 million and has available credit facilities of a further $11.6 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.

Opta Mineral's President and CEO, David Kruse, plans to host a conference call at 10:00 AM Eastern Standard Time on Friday, November 3, 2006, to discuss quarterly 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 (719) 457-2646 or (800) 946-0720 followed by pass code: 4459243. If you are unable to listen live, the conference call will be archived and can be accessed at the following replay numbers between November 3rd and November 9th with the toll free dial-in number (888) 203-1112 or (719) 457-0820 followed by pass code: 4459243.

Opta Minerals is a vertically integrated producer, manufacturer, distributor and recycler of silica-free loose abrasives, roofing shingle granules, industrial minerals, specialty sands and related products for use primarily in the foundry, steel, marine/bridge cleaning and municipal water filtration industries. The Company has experienced solid growth since July 1995, through a combination of internal growth and successfully integrated strategic acquisitions to become one of the dominant regional suppliers of silica-free loose abrasives in a number of select markets on the east coast of North America.

The Company currently has production and distribution facilities in Ontario, Quebec, Louisiana, South Carolina, Virginia, Maryland, Indiana, Ohio, Michigan and New York and one of the broadest product lines in the industry. Recognizing that the fragmentation and lack of consolidation among suppliers in its industry has provided it with a strategic growth opportunity, the Company intends to capitalize on this opportunity to become one of the dominant North American suppliers of silica-free loose abrasives and industrial minerals. In order to achieve this objective, the Company intends to accelerate its revenue and market share growth over the next several years by making a number of additional strategic acquisitions, through geographic expansion and through continued development of new products and services.

FOOTNOTES:

Earnings before income taxes, interest, and stock compensation expense; and earnings before interest, income taxes, depreciation and amortisation ("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 September 30
2006 2005
$ $

Net Earnings for the Period 1,155 546
Interest Expense 449 115
Provision for Income taxes 635 318
Depreciation and Amortisation 825 370
-------------------------
EBITDA(1) 3,064 1,349
Add (subtract):
Depreciation and Amortisation (825) (370)
Stock Compensation Expense 69 22
-------------------------
Earnings before income taxes, interest
and stock compensation expense(2) 2,308 1,001

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) Earnings before income taxes, interest and stock compensation
expense is defined as gross profit less selling general and
administrative expenses, amortization of intangibles, other income
and foreign exchange. The Company believes that earnings before
income taxes, interest and stock compensation expense 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 income taxes, interest and expenses pertaining to
stock option benefits. Earnings before income taxes, interest and
stock compensation expense 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.


Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, those relating to fluctuations in the exchange rate between the U.S. dollar and the Canadian dollar and other currencies, general economic conditions and our ability to execute our growth strategy. Opta will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect Opta's financial results is included in the documents Opta files from time to time with Canadian securities regulatory authorities.



Opta Minerals Inc.
Consolidated Statements of Earnings
For the three months ended September 30, 2006 and 2005
(Expressed in thousands of Canadian dollars, except per share amounts)
(Unaudited)

2006 2005
$ $

Revenue 18,771 10,231

Cost of goods sold 13,825 8,034
---------------------

Gross profit 4,946 2,197

Selling, general and administrative expenses 2,338 1,262
---------------------

Earnings before the following 2,608 935
---------------------

Interest expense on long-term debt 323 -

Interest expense - net 126 115

Amortization of intangible assets 290 11

Stock compensation expense 69 22

Foreign exchange gain 10 (77)
---------------------

Earnings before income taxes 1,790 864

Provision for income taxes 635 318
---------------------

Net earnings for the period 1,155 546
---------------------
---------------------

Earnings per share for the period

Basic and diluted 0.07 0.03



Opta Minerals Inc.
Consolidated Statements of Earnings
For the nine months ended September 30, 2006 and 2005
(Expressed in thousands of Canadian dollars, except per share amounts)
(Unaudited)

2006 2005
$ $

Revenue 54,483 31,967

Cost of goods sold 41,134 24,422
---------------------

Gross profit 13,349 7,545

Selling, general and administrative expenses 6,494 3,709
---------------------

Earnings before the following 6,855 3,836
---------------------

Interest expense on long-term debt 875 -

Interest expense - net 362 347

Amortization of intangible assets 701 43

Stock compensation expense 153 454

Foreign exchange gain (217) (135)
---------------------

Earnings before income taxes 4,981 3,127

Provision for income taxes 1,745 1,365
---------------------

Net earnings for the period 3,236 1,762
---------------------
---------------------

Earnings per share for the period

Basic and diluted 0.19 0.11



Opta Minerals Inc.
Consolidated Balance Sheets
As at September 30, 2006 and December 31, 2005
(Expressed in thousands of Canadian dollars, except per share amounts)
(Unaudited)


September 30, December 31,
2006 2005
$ $
(unaudited)

Assets

Current assets
Cash and cash equivalents 3,001 4,077
Accounts receivable 9,403 6,365
Inventories 14,184 15,238
Prepaid expenses and other current assets 1,827 507
Due from Affiliates 39 29
------------------------------
28,454 26,216

Property, plant and equipment - net 17,379 13,003

Intangible and other assets - net 20,611 613

Goodwill 8,460 7,611

Future income taxes 725 636
------------------------------
75,629 48,079
------------------------------
------------------------------

Liabilities

Current liabilities
Bank indebtedness 4,832 -
Accounts payable and accrued liabilities 5,959 3,924
Current portion of long-term debt 2,893 1,010
Current portion of preference shares 46 77
Income taxes payable 54 10
------------------------------
13,784 5,021

Long-term debt 14,097 7,005

Future income taxes 10,063 657
------------------------------
37,944 12,683
------------------------------

Shareholder's Equity

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

Issued
16,961,563 (December 31, 2005
- 16,952,574) common shares 18,278 18,250

Contributed surplus 1,390 1,237

Retained earnings 20,943 17,707

Currency Translation Adjustment (2,926) (1,798)
------------------------------
37,685 35,396
------------------------------
75,629 48,079
------------------------------
------------------------------



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


For the three month period ended September 30, 2006

Abrasive
Mill and foundry manufacturing St. Bruno de
products and and distribution Guigues quarry
services operations operations Total
$ $ $ $

External
revenue
by market
Canada 3,144 1,967 268 5,379
U.S. 8,548 4,625 2 13,175
Other 208 - 9 217
-----------------------------------------------------------------

Total
revenue
from
external
customers 11,900 6,592 279 18,771
-----------------------------------------------------------------
-----------------------------------------------------------------

Segment
net
earnings
before
interest
expense
and income
taxes 1,380 856 3 2,239
Interest
expense
on
long-term
debt 323
Interest
expense
- net 126
Provision
for
income
taxes 635
---------

Net
earnings 1,155
---------
---------

Total
assets
as at
September
30, 2006 38,019 35,002 2,608 75,629
-----------------------------------------------------------------
-----------------------------------------------------------------

Amortization
of property
plant and
equipment 231 266 38 535
-----------------------------------------------------------------
-----------------------------------------------------------------

Amortization
of
intangible
assets 277 13 - 290
-----------------------------------------------------------------
-----------------------------------------------------------------

Goodwill
and
intangible
assets as
at
September
30, 2006 21,044 8,027 - 29,071
-----------------------------------------------------------------
-----------------------------------------------------------------

Expenditures
on property,
plant and
equipment 200 148 - 348
-----------------------------------------------------------------
-----------------------------------------------------------------



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


For the nine month period ended September 30, 2006

Abrasive
Mill and foundry manufacturing St. Bruno de
products and and distribution Guigues quarry
services operations operations Total
$ $ $ $

External
revenue by
market
Canada 9,482 6,801 956 17,239
U.S. 22,052 14,251 92 36,395
Other 812 23 14 849
-----------------------------------------------------------------

Total
revenue
from
external
customers 32,346 21,075 1,062 54,483
-----------------------------------------------------------------
-----------------------------------------------------------------

Segment
net
earnings
before
interest
expense
and income
taxes 3,835 2,303 80 6,218
Interest
expense
on long
-term debt 875
Interest
expense
- net 362
Provision
for income
taxes 1,745
---------

Net
earnings 3,236
---------
---------

Amortization
of property
plant and
equipment 431 874 111 1,416
-----------------------------------------------------------------
-----------------------------------------------------------------

Amortization
of
intangible
assets 653 48 - 701
-----------------------------------------------------------------
-----------------------------------------------------------------

Expenditures
on property,
plant and
equipment 575 563 20 1,158
-----------------------------------------------------------------
-----------------------------------------------------------------

Expenditures
on goodwill 993 - - 993
-----------------------------------------------------------------
-----------------------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the three months ended September 30, 2005
(Expressed in thousands of Canadian dollars)
(Unaudited)


For the three month period ended September 30, 2005

Abrasive
Mill and foundry manufacturing St. Bruno de
products and and distribution Guigues quarry
services operations operations Total
$ $ $ $

External
revenue
by market
Canada 2,525 2,684 381 5,590
U.S. 270 4,221 80 4,571
Other - 68 2 70
-----------------------------------------------------------------

Total
revenue
from
external
customers 2,795 6,973 463 10,231
-----------------------------------------------------------------
-----------------------------------------------------------------

Segment
net
earnings
before
interest
expense
and income
taxes 115 747 117 979
Interest
expense
- net 115
Provision
for
income
taxes 318
--------

Net
earnings 546
--------
--------

Total
assets
as at
December
31, 2005 1,919 42,998 3,162 48,079
-----------------------------------------------------------------
-----------------------------------------------------------------

Amortization
of property
plant and
equipment 8 298 42 348
-----------------------------------------------------------------
-----------------------------------------------------------------

Amortization
of
intangible
assets - 22 - 22
-----------------------------------------------------------------
-----------------------------------------------------------------

Goodwill
and
intangible
assets as
at
December
31, 2005 - 8,224 - 8,224
-----------------------------------------------------------------
-----------------------------------------------------------------

Expenditures
on property,
plant and
equipment 131 846 - 977
-----------------------------------------------------------------
-----------------------------------------------------------------


Opta Minerals Inc.
Segmented Information
For the nine months ended September 30, 2005
(Expressed in thousands of Canadian dollars)
(Unaudited)


For the nine month period ended September 30, 2005

Abrasive
Mill and foundry manufacturing St. Bruno de
products and and distribution Guigues quarry
services operations operations Total
$ $ $ $

External
revenue
by market
Canada 5,285 11,134 1,201 17,620
U.S. 361 13,626 225 14,212
Other - 133 2 135
-----------------------------------------------------------------

Total
revenue
from
external
customers 5,646 24,893 1,428 31,967
-----------------------------------------------------------------
-----------------------------------------------------------------

Segment
net
earnings
before
interest
expense
and
income
taxes 341 2,964 169 3,474
Interest
expense
- net 347
Provision
for
income
taxes 1,365
----------

Net earnings 1,762
-----------------------------------------------------------------
-----------------------------------------------------------------

Amortization
of property
plant and
equipment 25 873 127 1,025
-----------------------------------------------------------------
-----------------------------------------------------------------

Amortization
of
intangible
assets - 43 - 43
-----------------------------------------------------------------
-----------------------------------------------------------------

Expenditures
on property,
plant and
equipment 217 1,719 88 2,024
-----------------------------------------------------------------
-----------------------------------------------------------------



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