Opta Minerals Inc.
TSX : OPM

Opta Minerals Inc.

November 09, 2011 16:01 ET

Opta Minerals Inc. Reports Third Quarter Results for Fiscal 2011

WATERDOWN, ONTARIO--(Marketwire - Nov. 9, 2011) - Opta Minerals Inc. (TSX:OPM), today announced results for the three and nine months ended September 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 ended September 30, 2011 3 months ended September 30, 2010 Increase (Decrease) % 9 months ended September 30, 2011 9 months ended September 30, 2010 Increase (Decrease) %
Revenue $ 24,102 $ 20,421 $ 3,682 18.0 % $ 70,495 $ 59,492 $ 11,003 18.5 %
Gross Profit 5,179 5,200 (21 ) (0.4 %) 15,833 15,200 633 4.2 %
21.5 % 25.5 % (4.0 %) 22.5 % 25.5 % (3.0 %)
EBITDA1 2,569 3,863 (1,294 ) (33.5 %) 9,121 9,270 (149 ) (1.6 %)
EBIT2 1,519 2,828 (1,309 ) (46.3 %) 6,006 6,232 (226 ) (3.6 %)
Net Earnings 628 1,539 (911 ) (59.2 %) 3,086 3,248 (162 ) (5.0 %)
EPS $ 0.03 $ 0.08 $ (0.05 ) $ 0.17 $ 0.18 $ (0.01 )
(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 third quarter, Opta Minerals experienced a solid increase in revenue. Earnings in the steel sector were offset by weakness in the industrial minerals sector. 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 31.5% quarter-over-quarter due to demand for magnesium based reagent blends and, the Abrasive Products Manufacturing and Distribution segment decreased 6.1% quarter-over-quarter due to a decrease in demand for metallurgical slags.

  • Gross profit has declined quarter-over-quarter and year-over-year as a result of weakness in the industrial minerals sector and uncertain economic environment.

  • Selling, general and administrative expenses decreased to 14.0% of revenue for the third quarter of 2011 from 16.3% for the comparable quarter in 2010. Most of the decrease was a result of the cost reduction initiatives implemented by management during the past few years offset slightly by the relative 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 third quarter decreased 59.2% over the comparable quarter in 2010. Most of this decrease is the result of an uncertain economic environment, a decrease in demand for metallurgical slags in the Abrasives segment and a foreign exchange loss in the amount of $0.3 million before tax. There was a foreign exchange gain of $1.0 million for the comparable quarter in 2010.

  • For the three months ended September 30, 2011, cash flow from operating activities before changes in working capital generated $1.9 million versus $2.9 million in the third quarter of 2010. The positive cash flow was used to finance payments on accounts payable of $2.3 million and taxes in the amount of $1.2 million. Cash flow from the change in trade and other receivables and inventories amounted to $3.8 million for the quarter.

  • The Company's working capital at September 30, 2011 amounts to $16.7 million and total assets were $91.9 million, as compared to $12.6 million and $90.3 million respectively for the same period in 2010.

  • The debt-to-equity ratio at September 30, 2011 was 0.65 to 1.00, versus 0.65 to 1.00 at September 30, 2010.

Opta Minerals President and CEO, David Kruse, plans to host a conference call at 10:00AM Eastern Standard Time on Monday November 14th, 2011 to discuss third 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 7178344. If you are unable to listen live, the conference call will be archived and can be accessed between November 14th, 2011 and November 21st, 2011, with the toll free dial-in number 1-(888) 203-1112 or 1-(647) 436-0148 followed by pass code 7178344.

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 Months Ended September 30 For the nine Months Ended September 30
2011
$
2010
$
2011
$
2010
$
Net Earnings for the Period 628 1,539 3,086 3,248
Finance Expense 423 606 1,244 1,490
Provision for Income Taxes 468 683 1,676 1,494
Depreciation and Amortization 1,050 1,035 3,115 3,038

EBITDA1

2,569

3,863

9,121

9,270
Subtract:
Depreciation and Amortization 1,050 1,035 3,115 3,038

EBIT2

1,519

2,828

6,006

6,232
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.
Interim Consolidated Balance Sheets
As at September 30, 2011, December 31, 2010 and September 30, 2010
(Unaudited)
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
September 30, December 31, September 30,
2011 2010 2010
Assets
Current
Cash and cash equivalents $ 4,590 $ 495 $ 909
Trade and other receivables 13,036 12,002 13,374
Income taxes recoverable 40 - -
Inventories 20,255 19,259 20,118
37,921 31,756 34,401
Property, Plant and Equipment 16,646 16,410 16,519
Intangible Assets 28,125 29,255 29,602
Goodwill 6,019 6,019 6,496
Deferred Income Tax Assets 3,168 3,190 3,292
$ 91,879 $ 86,630 $ 90,310
Liabilities
Current
Trade and other payables 7,641 9,126 11,109
Borrowings 12,316 6,659 7,524
Provisions 1,023 1,560 1,624
Other liabilities 233 427 531
Income taxes payable - 250 929
Preference shares 45 46 45
21,258 18,068 21,762
Borrowings 14,807 16,559 16,735
Derivative Financial Instrument 467 892 1,095
Other Liabilities 1,624 1,486 1,813
Deferred Income Tax Liabilities 3,524 3,251 2,851
Deferred Income Tax Liability on Intangible Assets 8,193 8,510 8,701
49,873 48,766 52,957
Equity Attributable to the Shareholders of the Company
Capital Stock
Authorized – unlimited common shares and preference shares without par value
Issued – 18,059,299 (December 31, 2010 – 18,036,974 September 30, 2010 – 18,033,519) common shares 17,675 17,632 17,626
Contributed Surplus 3,238 2,781 2,535
Accumulated Other Comprehensive Income (Loss) (1,884 ) (2,440 ) (2,261 )
Retained Earnings 22,977 19,891 19,453
42,006 37,864 37,353
$ 91,879 $ 86,630 $ 90,310
Opta Minerals Inc.
Interim Consolidated Income Statements
For the Three Months Ended September 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
September 30, September 30,
2011 2010
Revenue $ 24,102 $ 20,421
Cost of Goods Sold 18,923 15,221
Gross Profit 5,179 5,200
Selling, general and administrative expenses 3,365 3,336
Other expenses (income) 295 (964 )
Operating Profit 1,519 2,828
Finance expense 423 606
Profit for the Period Before Income Tax 1,096 2,222
Income tax expense 468 683
Profit for the Period Attributable to the Shareholders of the Company $ 628 $ 1,539
Earnings per share for the period -
Basic and diluted 0.03 0.08
Opta Minerals Inc.
Interim Consolidated Income Statements
For the Nine Months Ended September 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
September 30, September 30,
2011 2010
Revenue $ 70,495 $ 59,492
Cost of Goods Sold 54,662 44,292
Gross Profit 15,833 15,200
Selling, general and administrative expenses 10,106 9,517
Other income (279 ) (549 )
Operating Profit 6,006 6,232
Finance expense 1,244 1,490
Profit for the Period Before Income Tax 4,762 4,742
Income tax expense 1,676 1,494
Profit for the Period Attributable to the Shareholders of the Company $ 3,086 $ 3,248
Earnings per share for the period -
Basic and diluted 0.17 0.18
Opta Minerals Inc.
Interim Statement of Cash Flows
For the Nine Months Ended September 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
September 30, September 30,
2011 2010
Cash Provided by (Used in) -
Operating Activities
Profit for the period $ 3,086 $ 3,248
Items not affecting cash:
Depreciation of property, plant and equipment 1,605 1,663
Amortization of intangible assets 1,510 1,375
Share-based payment expense 457 234
Non-cash finance expense (28 ) -
Deferred income taxes (289 ) (756 )
Loss on disposal of property, plant and equipment 2 -
6,343 5,764
Changes in non-cash working capital
Trade and other receivables (981 ) (3,516 )
Inventories (1,069 ) (3,060 )
Trade and other payables (1,346 ) 3,683
Provisions (537 ) (117 )
Income taxes receivable and payable (318 ) 1,492
2,092 4,246
Financing Activities
Proceeds from issuance of common shares – net of issuance costs 43 14
Proceeds from borrowings 5,975 -
Repayment of finance lease liability (84 ) -
Repayment of borrowings (2,242 ) (2,931 )
3,692 (2,917 )
Investing Activities
Proceeds on disposal of property, plant and equipment 4 -
Additions to property, plant and equipment (1,572 ) (1,158 )
Additions to intangible assets (66 ) -
(1,634 ) (1,158 )
Foreign Exchange Loss on Cash Held in Foreign Currency (55 ) (43 )
Increase in Cash and Cash Equivalents 4,095 128
Cash and Cash Equivalents
Beginning of Period 495 781
End of Period $ 4,590 $ 909
Additional Cash Flow Information:
Interest paid $ 1,297 $ 1,531
Income taxes paid 2,271 609
Opta Minerals Inc.
Interim Segmented Information
For the Three Months Ended September 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 September 30, 2011
Mill and Foundry Products and Services Abrasive Products Manufacturing and Distribution Operations Unallocated Total
External revenue by market
Canada $ 2,458 $ 1,485 $ - $ 3,943
U.S. 10,996 5,351 - 16,347
Europe 3,772 - - 3,772
Other 3 37 - 40
Total revenue from external customers 17,229 6,873 - 24,102
Segment operating profit (loss) 2,201 (511 ) (171 ) 1,519
Finance expense (423 )
Income tax expense (468 )
Profit for the period 628
Total assets as at September 30, 2011 54,791 31,361 5,727 91,879
Depreciation of property, plant and equipment 230 273 41 544
Amortization of intangible assets 460 6 40 506
Goodwill and intangible assets as at September 30, 2011 30,214 3,564 366 34,144
Expenditures on property, plant and equipment $ 646 $ 96 $ 18 $ 760
Opta Minerals Inc.
Interim Segmented Information
For the Three Months Ended September 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
Three Months Ended September 30, 2010


Mill and Foundry Products and Services
Abrasive Products Manufacturing and Distribution Operations



Unallocated




Total
External revenue by market
Canada $ 2,763 $ 1,595 $ - $ 4,358
U.S. 7,758 5,652 - 13,410
Europe 2,559 - - 2,559
Other 19 75 - 94
Total revenue from external customers 13,099 7,322 - 20,421
Segment operating profit 2,084 379 365 2,828
Finance expense (606)
Income tax expense (683)
Profit for the period 1,539
Total assets as at September 30, 2010 55,533 33,305 1,472 90,310
Depreciation of property, plant and equipment 273 270 37 580
Amortization of intangible assets 449 6 - 455
Goodwill and intangible assets as at September 30, 2010 32,510 3,588 193 36,291
Expenditures on property, plant and equipment $ 141 $ 165 $ 44 $ 350
Opta Minerals Inc.
Interim Segmented Information
For the Nine Months Ended September 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
Nine Months Ended September 30, 2011


Mill and Foundry Products and Services
Abrasive Products Manufacturing and Distribution Operations



Unallocated




Total
External revenue by market
Canada $ 6,774 $ 4,574 $ - $ 11,348
U.S. 32,642 14,970 - 47,612
Europe 11,423 - - 11,423
Other 46 66 - 112
Total revenue from external customers 50,885 19,610 - 70,495
Segment operating profit (loss) 7,478 (1,347) (125) 6,006
Finance expense (1,244)
Income tax expense (1,676)
Profit for the period 3,086
Depreciation of property, plant and equipment 689 822 94 1,605
Amortization of intangible assets 1,375 19 116 1,510
Expenditures on property, plant and equipment $ 1,140 $ 354 $ 78 $ 1,572
Opta Minerals Inc.
Interim Segmented Information
For the Nine Months Ended September 30, 2011 and 2010
(Unaudited)
Expressed in Thousands of US Dollars
Nine Months Ended September 30, 2010
Mill and Foundry Products and Services Abrasive Products Manufacturing and Distribution Operations Unallocated Total
External revenue by market
Canada $ 7,320 $ 4,560 $ - $ 11,880
U.S. 23,450 15,760 - 39,210
Europe 8,213 11 - 8,224
Other 36 142 - 178
Total revenue from external customers 39,019 20,473 - 59,492
Segment operating profit (loss) 5,881 955 (604) 6,232
Finance expense (1,490)
Income tax expense (1,494)
Profit for the period 3,248
Depreciation of property, plant and equipment 848 726 89 1,663
Amortization of intangible assets 1,357 18 - 1,375
Expenditures on property, plant and equipment $ 199 $ 654 $ 305 $ 1,158

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