Opta Minerals Inc.
TSX : OPM

Opta Minerals Inc.

August 10, 2011 16:02 ET

Opta Minerals Inc. Reports Second Quarter Results for Fiscal 2011

17% Increase in Revenue and 25% Increase in Net Earnings

WATERDOWN, ONTARIO--(Marketwire - Aug. 10, 2011) - Opta Minerals Inc. (TSX:OPM), today announced results for the three and six months ended June 30, 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 3 months 6 months 6 months
ended June ended June Increase ended June ended June Increase
30, 2011 30, 2010 (Decrease) % 30, 2011 30, 2010 (Decrease) %
Revenue $24,787 $21,140 $3,647 17.3% $46,393 $39,071 $7,322 18.7%
Gross Profit 5,467 5,397 70 1.3% 10,654 10,000 654 6.5%
22.1% 25.5% (3.4% ) 23.0% 25.6% (2.6% )
EBITDA1 3,092 2,683 409 15.2% 6,552 5,407 1,145 21.2%
EBIT2 2,043 1,688 355 21.0% 4,487 3,404 1,083 31.8%
Net Earnings 1,035 831 204 24.5% 2,458 1,709 749 43.8%
EPS $0.06 $0.05 $0.01 $0.14 $0.10 $0.04
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 second quarter, Opta Minerals continued to see year-over-year increases in revenue and earnings. We have continued to increase production and monitor our cost structure. We are cautiously optimistic with the direction of the economic environment on our business."

Operational Highlights:

  • Revenue growth for the quarter in the Mill and Foundry Products and Services segment increased 25.5% quarter-over-quarter due to demand for magnesium based reagent blends and, the Abrasive Products Manufacturing and Distribution segment increased 1.1% quarter-over-quarter due to a slight increase 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 14.3% of revenue for the second quarter of 2011 from 15.7% 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 continued strength of the Canadian dollar against the U.S. dollar which impacted the reported value of corporate costs largely denominated in Canadian dollars.

  • Net earnings in the second quarter increased 24.5% 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 $0.1 million before tax.

  • For the three months ended June 30, 2011, cash flow from operating activities before changes in working capital generated $2.0 million versus $1.3 million in the second quarter of 2010. The strong cash flow was used to finance payments for inventories of $1.4 million and other working capital in the amount of $1.0 million.

  • The Company's working capital at June 30, 2011 amounts to $15.7 million and total assets were $95.1 million, as compared to $12.2 million and $86.0 million respectively for the same period in 2010.

  • The debt-to-equity ratio at June 30, 2011 was 0.60 to 1.00, versus 0.75 to 1.00 at June 30, 2010.

Opta Minerals President and CEO, David Kruse, plans to host a conference call at 11:00AM Eastern Standard Time on Friday, August 12th, 2011 to discuss second 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) 322-1159 or 1-(416) 640-3404; quote confirmation code 2429414. If you are unable to listen live, the conference call will be archived and can be accessed between August 12th, 2011 and August 19th, 2011, with the toll free dial-in number 1-(888) 203-1112 or 1-(647) 436-0148 followed by pass code 2429414.

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 For the six
Months Ended Months Ended
June 30 June 30
2011 2010 2011 2010
$ $ $ $
Net Earnings for the Period 1,035 831 2,458 1,709
Finance Expense 408 444 821 884
Provision for Income Taxes 600 413 1,208 811
Depreciation and Amortization 1,049 995 2,065 2,003
EBITDA1 3,092 2,683 6,552 5,407
Subtract:
Depreciation and Amortization 1,049 995 2,065 2,003
EBIT2 2,043 1,688 4,487 3,404
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 (IFR), 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.
Interim Consolidated Balance Sheets
As at June 30, 2011, December 31, 2010 and June 30, 2010
(Unaudited)
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
June 30, December 31, June 30,
2011 2010 2010
Assets
Current
Cash and cash equivalents $ 2,033 $ 495 $ 1,111
Trade and other receivables 14,369 12,002 12,714
Inventories 22,821 19,259 17,689
39,223 31,756 31,514
Property, Plant and Equipment 16,889 16,410 16,555
Intangible Assets 29,417 29,255 28,685
Goodwill 6,019 6,019 6,019
Deferred Income Tax Assets 3,567 3,190 3,271
$ 95,115 $ 86,630 $ 86,044
Liabilities
Current
Trade and other payables 10,482 9,126 7,552
Borrowings 10,680 6,659 9,066
Provisions 1,076 1,560 1,533
Other liabilities 427 427 531
Income taxes payable 815 250 533
Preference shares 46 46 44
23,526 18,068 19,259
Borrowings 16,202 16,559 17,353
Derivative Financial Instrument 604 892 1,187
Other Liabilities 1,458 1,486 1,813
Deferred Income Tax Liabilities 3,552 3,251 2,507
Deferred Income Tax Liability on Intangible Assets 8,458 8,510 8,568
53,800 48,766 50,687
Equity Attributable to the Shareholders of the Company
Capital Stock
Authorized – unlimited common shares and preference shares without par value
Issued – 18,041,781 (December 31, 2010 – 18,036,974 June 30, 2010 – 18,030,523) common shares 17,642 17,632 17,622
Contributed Surplus 3,051 2,781 2,466
Accumulated Other Comprehensive Income (Loss) (1,727 ) (2,440 ) (2,645 )
Retained Earnings 22,349 19,891 17,914
41,315 37,864 35,357
$ 95,115 $ 86,630 $ 86,044
Opta Minerals Inc.
Interim Consolidated Income Statements
For the three months ended June 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
June 30, June 30,
2011 2010
Revenue $ 24,787 $ 21,140
Cost of Goods Sold 19,320 15,743
Gross Profit 5,467 5,397
Selling, general and administrative expenses 3,554 3,321
Other expenses (income) (130 ) 388
Operating Profit 2,043 1,688
Finance expense 408 444
Profit for the Period Before Income Tax 1,635 1,244
Income tax expense 600 413
Profit for the Period Attributable to the Shareholders of the Company $ 1,035 $ 831
Earnings per share for the period -
Basic and diluted 0.06 0.05
Opta Minerals Inc.
Interim Consolidated Income Statements
For the six months ended June 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
June 30, June 30,
2011 2010
Revenue $ 46,393 $ 39,071
Cost of Goods Sold 35,739 29,071
Gross Profit 10,654 10,000
Selling, general and administrative expenses 6,741 6,181
Other expenses (income) (574 ) 415
Operating Profit 4,487 3,404
Finance expense 821 884
Profit for the Period Before Income Tax 3,666 2,520
Income tax expense 1,208 811
Profit for the Period Attributable to the Shareholders of the Company $ 2,458 $ 1,709
Earnings per share for the period -
Basic and diluted 0.14 0.10
Opta Minerals Inc.
Interim Statement of Cash Flows
For the six months ended June 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
June 30, June 30,
2011 2010
Cash Provided by (Used in) -
Operating Activities
Profit for the period $ 2,458 $ 1,709
Items not affecting cash:
Depreciation of property, plant and equipment 1,061 1,083
Amortization of intangible assets 1,004 920
Share-based payment expense 270 165
Non-cash finance expense (9 ) -
Deferred income taxes (354 ) (981 )
Loss on disposal of property, plant and equipment 4 -
4,434 2,896
Changes in non-cash working capital
Trade and other receivables (2,325 ) (2,815 )
Inventories (3,502 ) (508 )
Trade and other payables 951 1,185
Provisions (484 ) (208 )
Income taxes receivable and payable 531 1,094
(395 ) 1,644
Financing Activities
Proceeds from issuance of common shares – net of issuance costs 10 10
Proceeds from borrowings 4,102 1,137
Repayment of finance lease liability (55 ) -
Repayment of borrowings (1,274 ) (1,616 )
2,783 (469 )
Investing Activities
Proceeds on disposal of property, plant and equipment 2 -
Additions to property, plant and equipment (812 ) (808 )
Additions to intangible assets (66 ) -
(876 ) (808 )
Foreign Exchange Gain (Loss) on Cash Held in Foreign Currency 26 (37 )
Increase (Decrease) in Cash and Cash Equivalents 1,538 330
Cash and Cash Equivalents
Beginning of Period 495 781
End of Period $ 2,033 $ 1,111
Additional Cash Flow Information:
Interest paid $ 861 $ 940
Income taxes paid 1,033 609
Opta Minerals Inc.
Interim Segmented Information
For the three months ended June 30, 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.
Three Months Ended June 30, 2011
Mill and Foundry Products and Services Abrasive Products Manufacturing and Distribution Operations Unallocated Total
External revenue by market
Canada $ 2,496 $ 1,638 $ - $ 4,134
U.S 10,975 5,549 - 16,524
Europe 4,057 - - 4,057
Other 43 29 - 72
Total revenue from external customers 17,571 7,216 - 24,787
Segment operating profit 2,492 (221 ) (228) 2,043
Finance expense (408)
Income tax expense (600)
Profit for the period 1,035
Total assets as at June 30, 2011 57,493 33,654 3,968 95,115
Depreciation of property, plant and equipment 235 283 23 541
Amortization of intangible assets 462 7 39 508
Goodwill and intangible assets as at June 30, 2011 31,438 3,571 427 35,436
Expenditures on property, plant and equipment $ 389 $ 116 $ 6 $ 511
Opta Minerals Inc.
Interim Segmented Information
For the three months ended June 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
Three Months Ended June 30, 2010


Mill and Foundry Products and Services
Abrasive Products
Manufacturing
and Distribution
Operations
Unallocated Total
External revenue by market
Canada $ 2,742 $ 1,630 $ - $ 4,372
U.S 8,312 5,478 - 13,790
Europe 2,930 11 - 2,941
Other 16 21 - 37
Total revenue from external customers 14,000 7,140 - 21,140
Segment operating profit 2,033 364 (709 ) 1,688
Finance expense (444 )
Income tax expense (413 )
Profit for the period 831
Total assets as at June 30, 2010 53,074 31,492 1,478 86,044
Depreciation of property, plant and equipment 279 235 28 542
Amortization of intangible assets 448 6 - 454
Goodwill and intangible assets as at June 30, 2010 31,110 3,594 - 34,704
Expenditures on property, plant and equipment $ 21 $ 186 $ 161 $ 368
Opta Minerals Inc.
Interim Segmented Information
For the six months ended June 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
Six Months Ended June 30, 2011


Mill and Foundry Products and Services
Abrasive Products Manufacturing and Distribution Operations Unallocated Total
External revenue by market
Canada $ 4,316 $ 3,089 $ - $ 7,405
U.S 21,646 9,619 - 31,265
Europe 7,651 - - 7,651
Other 43 29 - 72
Total revenue from external customers 33,656 12,737 - 46,393
Segment operating profit 5,277 (836 ) 46 4,487
Finance expense (821 )
Income tax expense (1,208 )
Profit for the period 2,458
Depreciation of property, plant and equipment 459 549 53 1,061
Amortization of intangible assets 915 13 76 1,004
Expenditures on property, plant and equipment $ 494 $ 258 $ 60 $ 812
Opta Minerals Inc.
Interim Segmented Information
For the six months ended June 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
Six Months Ended June 30, 2010


Mill and Foundry Products and Services
Abrasive Products Manufacturing and Distribution Operations Unallocated Total
External revenue by market
Canada $ 4,557 $ 2,965 $ - $ 7,522
U.S 15,692 10,108 - 25,800
Europe 5,654 11 - 5,665
Other 17 67 - 84
Total revenue from external customers 25,920 13,151 - 39,071
Segment operating profit 3,797 576 (969 ) 3,404
Finance expense (884 )
Income tax expense (811 )
Profit for the period 1,709
Depreciation of property, plant and equipment 575 456 52 1,083
Amortization of intangible assets 908 12 - 920
Expenditures on property, plant and equipment $ 58 $ 489 $ 261 $ 808

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