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

Opta Minerals Inc.

August 09, 2005 11:18 ET

Opta Minerals Inc. Reports Second Quarter Results for Fiscal 2005

WATERDOWN, ONTARIO--(CCNMatthews - Aug. 9, 2005) - Opta Minerals Inc. (TSX:OPM)(TSX:OPM.WT), a vertically integrated producer, manufacturer, distributor and recycler of silica-free loose abrasives, industrial minerals, specialty sands and related products, today announced results for the quarter ended June 30, 2005. All figures are in Canadian dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.

Highlights:

- Continued revenue growth of 9.5% for the 12 months ended June 30, 2005.

- Closing the acquisition of certain assets of the abrasive products division of Hillcrest Industries Inc. located in Attica, New York

- Opening of a new distribution facility in Brantford, Ontario to expand sales of value added industrial minerals.

- Successful start-up of the Baltimore and Hardeeville plants, now operating at commercial production levels. On a combined basis these plants generated $1.1 million in revenue during the quarter.

Opta Minerals reported 2005 second quarter revenue of $12.2 million, bringing year to date revenue to $21.7 million, a 2% increase over the first half of 2004. Earnings before income taxes and stock compensation expense for the quarter were $1.9 million, bringing year to date earnings before income taxes and stock compensation expense to $2.7 million, an increase of 2% over the first half of 2004.

"We continue to show great momentum with a revenue increase of 9.5% over the twelve months ended June 30, 2005. With the Baltimore and Hardeeville plants now operating at commercial production levels, and the start-up of the newly acquired Attica facility to be completed by mid August, revenue is expected to expand significantly in the second half of 2005" said David Kruse, President and Chief Executive Officer.

Net earnings for the second quarter were $1,108,000 or $0.07 per diluted common share, bringing year to date earnings to 1,216,000 or $0.08 per diluted common share as compared to $1,647,000 or $0.14 per diluted common share in 2004. Year to date results for the six months ended June 30, 2005 include $432,000 in non deductible expenses relating to stock compensation granted to employees, officers and directors of the Company.

The Company continues to maintain a strong balance sheet, with working capital of $22.6 million and total assets of $50.6 million. The debt to equity ratio as at June 30, 2005 was 0.29 to 1.00. The Company has cash resources of approximately $9.4 million and has secured a credit facility agreement for further financing of up to $12.0 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 August 12, 2005, 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 (800) 310-6649 or (719) 457-2698 followed by pass code: 7239684#. If you are unable to listen live, the conference call will be archived and can be accessed at the following replay numbers between August 12th and August 16th with the toll free dial-in number (888) 203-1112 or (719) 457-0820 followed by pass code: 7239684#.

Opta Minerals is a vertically integrated producer, manufacturer, distributor and recycler of silica-free loose abrasives, 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. These results were achieved while the Company was an operating group of SunOpta and during a period in which SunOpta dedicated the majority of its resources to building its core organic and natural food business.

The Company currently has production and distribution facilities in Ontario, Quebec, Louisiana, South Carolina, Virginia, Maryland 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 while at the same time leveraging this core expertise to expand its breadth of services and product offering in other 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 and stock compensation expense as defined below, 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 publicly traded companies.

This news release contains references to earnings before income taxes and stock compensation expense. Opta defines earnings before income taxes and stock compensation as gross profit less selling general and administrative expenses, interest expense, other income and Foreign exchange. This is a non-GAAP earnings measure which is used by Opta to assess the operating performance of its ongoing business.



For the three month period
ended June 30,
2005 2004
$ $

Earnings before income taxes and stock
compensation expense 1,867 2,148

Stock Compensation Expense 26 -

Provision for Income Taxes 733 816
--------------------------
Net Earnings for the Period on a GAAP basis 1,108 1,332


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 June 30, 2005 and 2004
(Expressed in thousands of Canadian dollars,
except per share amounts)
(Unaudited)

2005 2004
$ $

Revenue 12,242 12,549

Cost of goods sold 9,004 9,024
-----------------

Gross profit 3,238 3,525

Selling, general and administrative expenses 1,221 1,237
-----------------

Earnings before the following 2,017 2,288
-----------------

Interest expense - net 139 152

Stock compensation expense 26 -

Foreign exchange gain 11 (12)
-----------------

Earnings before income taxes 1,841 2,148

Provision for income taxes 733 816
-----------------

Net earnings for the period 1,108 1,332
-----------------
-----------------

Earnings per share for the period
Basic and diluted 0.07 0.11

---------------------------------------------------------------------


Opta Minerals Inc.
Consolidated Statements of Earnings
For the six months ended June 30, 2005 and 2004
(Expressed in thousands of Canadian dollars,
except per share amounts)
(Unaudited)

2005 2004
$ $

Revenue 21,736 21,277

Cost of goods sold 16,388 16,272
-----------------

Gross profit 5,348 5,005

Selling, general and administrative expenses 2,479 2,117
-----------------

Earnings before the following 2,869 2,888
-----------------

Interest expense - net 232 245

Stock compensation expense 432 -

Foreign exchange gain (58) (12)
-----------------

Earnings before income taxes 2,263 2,655

Provision for income taxes 1,047 1,008
-----------------

Net earnings for the period 1,216 1,647
-----------------
-----------------

Earnings per share for the period
Basic and diluted 0.08 0.14


Opta Minerals Inc.
Consolidated Balance Sheets
As at June 30, 2005 and December 31, 2004
(Expressed in thousands of Canadian dollars,
except per share amounts)
(Unaudited)

June 30, December 31,
2005 2004
$ $
---------------------------------------------------------------------
Assets

Current assets
Cash and cash equivalents 9,434 448
Accounts receivable 7,505 5,845
Inventories 11,467 9,073
Prepaid expenses and other current assets 549 1,177
Due from Affiliates 1,129 -
----------------------
30,084 16,543

Property, plant and equipment - net 12,204 11,464

Goodwill and intangible assets - net 8,288 7,841
----------------------
50,576 35,848
----------------------
----------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 4,425 3,850
Due to affiliates 2,618 15,704
Current portion of long-term debt 160 173
Current portion of preference shares 104 109
Income taxes payable 224 -
----------------------
6,878 19,836

Long-term portion of due to affiliates 7,455 -

Long-term debt 10 15

Long-term portion of preference shares 3 28

Future income taxes 498 1,192
----------------------
15,497 21,071
----------------------

Shareholder's Equity

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

Issued
16,950,000 (December 31, 2004 - 100)
common shares 18,248 -

Contributed surplus 812 -

Retained earnings 17,022 15,806

Currency Translation Adjustment (1,003) (1,029)
----------------------
35,079 14,777
----------------------
50,576 35,848
----------------------
----------------------


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

June 30, 2005
-------------------------------

St. Bruno
Manufacturing de
and Guigues
distribution quarry
operations operations Total
$ $ $

External revenue by market
Canada 5,898 527 6,425
U.S. 5,676 89 5,765
Other 52 - 52
-------------------------------

Total revenue from external customers 11,626 616 12,242
-------------------------------
-------------------------------

Segment net earnings (loss) before
interest expense and income taxes 1,890 90 1,980
Interest expense 139
Provision for income taxes 733
-------------------------------

Net earnings 1,108
-------------------------------
-------------------------------

Total assets as at June 30, 2005 47,598 2,978 50,576
-------------------------------
-------------------------------

Amortization 301 45 346
-------------------------------
-------------------------------

Goodwill and intangible assets
as at June 30, 2005 8,288 - 8,288
-------------------------------
-------------------------------

Expenditures on property, plant and
equipment 729 85 814
-------------------------------
-------------------------------


Opta Minerals Inc.
Segmented Information
For the three months ended June 30, 2004
(Expressed in thousands of Canadian dollars)
(Unaudited)

June 30, 2004
-------------------------------

St. Bruno
Manufacturing de
and Guigues
distribution quarry
operations operations Total
$ $ $

External revenue by market
Canada 6,719 589 7,308
U.S. 5,071 92 5,163
Other 78 - 78
-------------------------------

Total revenue from external customers 11,868 681 12,549
-------------------------------
-------------------------------

Segment net earnings before interest
expense and income taxes 2,071 229 2,300
Interest expense 152
Provision for income taxes 816
-------------------------------

Net earnings 1,332
-------------------------------
-------------------------------

Total assets as at June 30, 2004 32,972 3,860 36,832
-------------------------------
-------------------------------

Amortization 229 52 281
-------------------------------
-------------------------------

Goodwill and intangible assets as at
June 30, 2004 8,392 - 8,392
-------------------------------
-------------------------------

Expenditures on property, plant
and equipment 1,163 45 1,208
-------------------------------
-------------------------------


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

June 30, 2005
-------------------------------

St. Bruno
Manufacturing de
and Guigues
distribution quarry
operations operations Total
$ $ $

External revenue by market
Canada 11,210 820 12,030
U.S. 9,496 145 9,641
Other 65 - 65
-------------------------------

Total revenue from external customers 20,771 965 21,736
-------------------------------
-------------------------------

Segment net earnings (loss) before
interest expense and income taxes 2,443 52 2,495
Interest expense 232
Provision for income taxes 1,047
-------------------------------

Net earnings 1,216
-------------------------------
-------------------------------

Amortization 613 85 698
-------------------------------
-------------------------------

Expenditures on property, plant and
Equipment 959 88 1,047
-------------------------------
-------------------------------


Opta Minerals Inc.
Segmented Information
For the six months ended June 30, 2004
(Expressed in thousands of Canadian dollars)
(Unaudited)

June 30, 2004
-------------------------------

St. Bruno
Manufacturing de
and Guigues
distribution quarry
operations operations Total
$ $ $

External revenue by market
Canada 9,584 993 10,577
U.S. 10,361 132 10,493
Other 207 - 207
-------------------------------

Total revenue from external customers 20,152 1,125 21,277
-------------------------------
-------------------------------

Segment net earnings before interest
expense and income taxes 2,634 266 2,900
Interest expense 245
Provision for income taxes 1,008
-------------------------------

Net earnings 1,647
-------------------------------
-------------------------------

Amortization 527 96 624
-------------------------------
-------------------------------

Expenditures on property, plant and
equipment 1,433 63 1,496
-------------------------------
-------------------------------


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