Opta Minerals Inc.
TSX : OPM

Opta Minerals Inc.

February 25, 2008 20:03 ET

Opta Minerals Inc. Reports Year End Results for Fiscal 2007

WATERDOWN, ONTARIO--(Marketwire - Feb. 25, 2008) - Opta Minerals Inc. (TSX:OPM), a vertically integrated producer, manufacturer, distributor and recycler of industrial minerals, silica-free loose abrasives, roofing shingle granules, specialty sands and related products, today announced results for the three and twelve months ended December 31, 2007. All figures are reported in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.

Opta Minerals reported record revenues for the year ended December 31, 2007. Revenues in 2007 increased 17.2% to $75.4 million, from $64.3 million in 2006. Gross profit for the year increased by 11.7% to $17.8 million or 23.6% of revenues versus $16.0 million or 24.8% of revenues in 2006. EBITDA for the year increased 2% from $9.7 million in 2006 to $9.9 million for the year ended December 31, 2007. Net earnings for the year decreased 5.5% to $3.3 million or $0.19 per diluted common share from $3.5 million or $0.21 per diluted common share for the twelve months ended December 31, 2006. Results for the year ended December 31, 2007 include approximately $0.2 million of financing costs related to its new credit facilities with the Bank of Nova Scotia and the implementation of an interest rate swap. Results have been positively affected by the inclusion of a full twelve months of results from the Bimac and Rossborough divisions that were acquired in 2006, the acquisition of Newco a.s. ("Newco"), the commencement of commercial production of desulfurization products at the Company's Waterdown Ontario facility, and shipments of products to new U.S. based integrated steel mill customers. Results generated from these activities were partially offset by lower sales volumes into the Canadian abrasive and foundry industries, the higher Canadian dollar, and lower sales volumes of desulfurization products to several of the Company's significant U.S. customers.

Revenues for the three months ended December 31, 2007 were $20.0 million, a 24.6% increase from fourth quarter 2006 revenues of $16.1 million. Excluding the 2007 acquisitions of Newco and the abrasive facility in Laval Quebec, revenues increased by 12.7% . Strong sales of abrasive products in Canada and the U.S. for the quarter combined with sales of magnesium based desulfurization products contributed to this result. Gross profit for the three months ended December 31, 2007 was $4.2 million or 1.5% higher than gross profit of $4.1 million for the three months ended December 31, 2006. Excluding the 2007 acquisitions of Newco and the abrasive facility in Laval Quebec, gross profits decreased by 17.8% . Gross profit from the Company's abrasive operations declined as Canadian results were impacted by the higher Canadian dollar, and U.S. margins decreased as a result of higher raw material and processing costs as compared to 2006. Gross profits within mill and foundry operations declined as volumes for higher margin steel products and services decreased.

Earnings before income taxes and interest ("EBIT") for the three months ended December 31, 2007 were $0.8 million, as compared to $1.5 million for the three months ended December 31, 2006. Along with an increase in selling, general and administratitive costs relating to the higher Canadian dollar, the current quarter's results was also negatively impacted by approximately $0.3 million due to other refinancing costs incurred to establish credit facilities with the Bank of Nova Scotia and the implementation of an interest rate swap.

Net earnings for the three months ended December 31, 2007 were $0.2 million or $0.01 per diluted common share, versus $0.7 million or $0.04 per diluted common share for the three months ended December 31, 2006.

The Company continues to maintain a strong balance sheet, with working capital of $14.6 million and total assets of $98.2 million. The debt to equity ratio as at December 31, 2007 was 0.88 to 1.00. The Company has cash and available credit facilities of a further $14.4 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.

2007 Highlights:

During the year ended December 31, 2007, the Company had the following performance highlights and significant events:

- Net Earnings of $3.3 million a decrease of 5.5% over 2006 results. Earnings before interest, income taxes, depreciation and amortization(1) ("EBITDA") increased 2% from $9.7 million in 2006 to $9.9 million in 2007.

- Acquisition of Newco of Kosice, Slovakia. For fiscal 2006 Newco recorded revenues of approximately U.S. $6.8 million selling its proprietary desulphurization and refractory products. Each product is produced to the specific requirements of the customers that Newco services within the European steel industry. The acquisition expands Opta's business capabilities into Europe and complements existing operations which supply a wide range of desulphurization products in both the United States and Canada from operations in Indiana and Ontario.

- Acquisition of the production assets of an industrial minerals processing facility in Laval, Quebec. Located in a 39,000 square foot facility under lease, these assets are ideally suited to produce abrasive media for blasting purposes, as well as garnet for abrasive, waterjet and water filtration applications.

- The commencement of commercial production of desulphurization products at the Company's Waterdown facility.

- Opta Minerals refinanced its credit facilities with the Bank of Nova Scotia, adding approximately $18 million U.S. in available financing. The new credit facilities agreement includes an operating line of credit in the amount of Cdn $12.5 million; a term loan facility in the amount of Cdn $12.5 million and an acquisition facility in the amount of Cdn $20.0 million. The operating line of credit and term loan facilities have been partially utilized to retire the existing bank debt and for general corporate purposes, while the acquisition facility was drawn upon to complete the acquisition of Newco. These increased facilities will provide Opta Minerals with the resources necessary to continue its strong growth through acquisitions, the building of new facilities in strategic locations and investments in growing markets.

- The Company continued the development and introduction of new products into the marketplace. Bringing new products to market continues to be a very important component of the Company's growth strategy. In 2007 Opta introduced a high quality nickel slag from Greece into the North American market. This is an important new product offering to Opta's customers given the high demand and scarce supply for slag based abrasives in North America. Initial uses of the product by customers has proven that this is an excellent loose abrasive and roofing granule media, and we have successfully been selling the product at our operations in Norfolk, Baltimore, and Hardeeville, with plans to expand to Opta's other locations in the near future.

Opta Mineral's President and CEO, David Kruse, plans to host a conference call at 10:00 AM Eastern Standard Time, on Thursday, February 28(th), 2008, to discuss fourth quarter 2007 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) 322-8032 or (416) 640-3406, quote confirmation code 7847543. If you are unable to listen live, the conference call will be archived and can be accessed at the following replay numbers between February 28th and March 6th, 2008, with the toll free dial-in number 1-(888) 203-1112 or (647) 436-0148 followed by pass code: 7847543.

Opta Minerals is a vertically integrated producer, manufacturer, distributor and recycler of industrial minerals, silica-free loose abrasives, roofing shingle granules, specialty sands and related products for use primarily in the foundry, steel, marine/bridge cleaning and municipal water filtration industries. The Company currently has production and distribution facilities in Ontario, Quebec, Louisiana, South Carolina, Virginia, Maryland, Indiana, Ohio, Michigan, New York and Kosice Slovakia and one of the broadest product lines in the industry.

(1) EBITDA is a non GAAP measure used by management to measure performance. Please see section 9 of this report for a discussion on the calculation of EBITDA.

FOOTNOTES:

Earnings before income taxes an interest ("EBIT"); and earnings before interest, income taxes, depreciation and amortization ("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 twelve Months
Ended December 31
2007 2006
$ $
Net Earnings for the Period 3,348 3,541
Interest Expense 1,648 1,520
Provision for Income taxes 1,462 1,980
Depreciation and Amortization 3,441 2,666
----------------------
EBITDA(1) 9,899 9,707
Add (subtract):
Depreciation and Amortization (3,441) (2,666)
----------------------
Earnings before income taxes and interest(2) 6,458 7,041


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) 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-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.

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 Statements of Earnings
For the three month periods ended December 31, 2007 and 2006
(Expressed in thousands of U.S. dollars, except per share amounts)

2007 2006
$ $
Revenue 20,028 16,072
Cost of goods sold 15,843 11,948
-------------------------
Gross profit 4,185 4,124
Selling, general and administrative expenses 2,620 2,302
-------------------------
Earnings before the following 1,565 1,822
-------------------------
Interest expense - net 495 424
Amortization of intangible assets 446 303
Stock compensation expense 52 35
Other financing costs 280 -
Foreign exchange gain (61) (34)
-------------------------
1212 728
-------------------------
Earnings before income taxes 353 1,094
Provision for income taxes 118 430
-------------------------
Net earnings for the period 235 664
-------------------------
-------------------------

Earnings per share for the period
Basic and diluted 0.01 0.04



Opta Minerals Inc.
Consolidated Statements of Earnings
For the twelve month periods ended December 31, 2007 and 2006
(Expressed in thousands of U.S. dollars, except per share amounts)

2007 2006
$ $
Revenue 75,365 64,313
Cost of goods sold 57,543 48,354
---------------------------
Gross profit 17,822 15,959
Selling, general and administrative expenses 9,635 8,051
---------------------------
Earnings before the following 8,187 7,908
---------------------------
Interest expense - net 1,648 1,520
Amortization of intangible assets 1,381 925
Stock compensation expense 170 170
Other financing costs 417 -
Foreign exchange gain (239) (228)
---------------------------
3,377 2,387
---------------------------
Earnings before income taxes 4,810 5,521
Provision for income taxes 1,462 1,980
---------------------------
Net earnings for the period 3,348 3,541
---------------------------
---------------------------

Earnings per share for the period
Basic and diluted 0.19 0.21



Opta Minerals Inc.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)

December 31, 2007 December 31, 2006
$ $
Assets
Current assets
Cash and cash equivalents 2,336 854
Accounts receivable 10,486 8,111
Inventories 19,219 14,057
Prepaid expenses and other current
assets 1,566 1,492
Income taxes recoverable 148 248
------------------------------------
33,755 24,762

Property, plant and equipment - net 19,531 17,615

Intangible and other assets - net 32,871 20,644

Goodwill 10,606 10,169

Future Income Taxes 1,469 803
------------------------------------
98,232 73,993
------------------------------------
------------------------------------

Liabilities
Current liabilities
Bank indebtedness 5,989 6,752
Accounts payable and accrued liabilities 5,773 4,891
Current portion of long-term debt 7,314 2,496
Current portion of preference shares 47 39
------------------------------------
19,123 14,178

Long-term debt 23,204 12,749

Other long-term liabilities 1,624 2,150

Future income taxes 12,724 10,768
------------------------------------
56,675 39,845
------------------------------------

Shareholder's Equity

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

Issued
17,984,200 (December 31, 2006 -
16,964,539) common shares 17,528 14,082

Contributed surplus 1,364 1,213

Retained earnings 19,184 15,960

Accumulated other comprehensive income 3,481 2,893
------------------------------------
41,557 34,148
------------------------------------
98,232 73,993
------------------------------------
------------------------------------



Opta Minerals Inc.
Consolidated Statements of Cash Flows
For the three month periods ended December 31, 2007 and 2006
(Expressed in thousands of U.S. dollars)

2007 2006
$ $
Cash provided by (used in)

Operating activities
Net earnings for the period 235 664
Items not affecting cash
Amortization of property, plant
and equipment 589 487
Amortization of intangible assets 446 303
Amortization of deferred financing
costs - 18
Other financing costs 254 -
Stock compensation expense 52 35
Future income taxes (277) (77)
Unrealized foreign exchange (gain)
loss on long term debt 356 140
Net loss on disposal of property,
plant and equipment - -
------------------------------------
1,655 1,570

Changes in non-cash working capital
Accounts receivable 759 1,522
Inventories (1,153) (1,162)
Prepaid expenses and other
current assets 245 (37)
Accounts payable and accrued
liabilities (661) (1,487)
Income taxes recoverable (1,094) (604)
------------------------------------
(249) (198)
------------------------------------

Investing activities
Acquisition of property, plant
and equipment (159) (381)
Proceeds on disposal of property,
plant and equipment (9) -
Additional consideration paid
on acquisitions (524) -
Acquisition of other assets - (42)
Acquisition of company (110) (3,790)
------------------------------------
(802) (4,213)
------------------------------------

Financing Activities
Proceeds from issuance of
common shares 19 10
(Decrease) increase in bank indebtedness (638) 2,242
Proceeds from long term debt 85 1,000
Repayment of long term debt (85) (653)
Repayment of due from affiliates - (19)
------------------------------------
(619) 2,580
------------------------------------

Foreign exchange loss on cash held
in foreign currency 7 -
------------------------------------

Increase in cash and cash equivalents
during the period (1,663) (1,831)

Cash and cash equivalents -
Beginning of period 3,999 2,685
------------------------------------

Cash and cash equivalents -
End of period 2,336 854
------------------------------------
------------------------------------

Supplemental cash flow information
Interest paid 472 369
Income taxes paid 1,489 1,352



Opta Minerals Inc.
Consolidated Statements of Cash Flows
For the twelve month periods ended December 31, 2007 and 2006
(Expressed in thousands of U.S. dollars)

2007 2006
$ $
Cash provided by (used in)

Operating activities
Net earnings for the period 3,348 3,541
Items not affecting cash
Amortization of property, plant and
equipment 2,060 1,741
Amortization of intangible assets 1,381 925
Amortization of deferred financing costs - 86
Other financing costs 254 -
Stock compensation expense 170 170
Future income taxes (1,072) 174
Unrealized foreign exchange (gain) loss
on long term debt (9) 52
Net loss on disposal of property, plant
and equipment 7 -
------------------------------------
6,139 6,689

Changes in non-cash working capital
Accounts receivable (599) 540
Inventories (3,347) 1,132
Prepaid expenses and other current
assets 36 64
Accounts payable and accrued liabilities (491) (352)
Income taxes payable 100 (1,029)
------------------------------------
1,838 7,044
Investing activities
Acquisition of property, plant and
equipment (1,834) (1,404)
Proceeds on disposal of property, plant
and equipment 20 -
Additional consideration paid on
acquisitions (555) (52)
Acquisition of other assets - (42)
Acquisition of company (6,314) (16,777)
------------------------------------
(8,683) (18,275)
------------------------------------
Financing Activities
Deferred financing costs - (66)
Proceeds from issuance of common shares 83 35
(Decrease) increase in bank indebtedness (1,853) 6,528
Proceeds from long term debt 23,166 3,542
Repayment of long term debt (13,076) (1,425)
Repayment of due from affiliates - (9)
Purchase and redemption of preference
shares - (26)
------------------------------------
8,320 8,579
------------------------------------
Foreign exchange loss on cash held in
foreign currency 7 -
------------------------------------
Increase (decrease) in cash and cash
equivalents during period 1,482 (2,652)
Cash and cash equivalents - Beginning of
period 854 3,506
------------------------------------
Cash and cash equivalents - End of
period 2,336 854
------------------------------------
------------------------------------

Supplemental cash flow information
Interest paid 1,762 1,185
Income taxes paid 2,466 3,041



Opta Minerals Inc.
Segmented Information
For the three months ended December 31, 2007
(Expressed in thousands of U.S. dollars)

For the three month periods ended December 31, 2007
Mill and Abrasive
foundry manufacturing
products and
and services distribution
$ operations Unallocated Total
$ $ $
External revenue by market
Canada 3,026 1,954 - 4,980
U.S. 9,249 4,055 - 13,304
Europe 1,653 - - 1,653
Other 85 6 - 91
---------------------------------------------------

Total revenue from
external customers 14,013 6,015 - 20,028
---------------------------------------------------
---------------------------------------------------

Segment net earnings
before interest
expense and income taxes 1,201 205 (558) 848

Interest expense on long
term debt 396
Interest expense 99
Provision for income
taxes 118
---------
Net earnings 235
---------------------------------------------------
---------------------------------------------------
Amortization of property
plant and equipment 274 291 24 589
---------------------------------------------------
---------------------------------------------------
Amortization of
intangible assets 435 11 - 446
---------------------------------------------------
---------------------------------------------------
Expenditures on property,
plant and equipment 40 129 (10) 159
---------------------------------------------------
---------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the twelve months ended December 31, 2007
(Expressed in thousands of U.S. dollars)

For the twelve month period ended December 31, 2007
Mill and Abrasive
foundry manufacturing
products and
and services distribution
$ operations Unallocated Total
$ $ $
External revenue by market
Canada 11,595 6,688 - 18,283
U.S. 36,771 16,867 - 53,638
Europe 3,125 - - 3,125
Other 275 44 - 319
---------------------------------------------------
Total revenue from
external customers 51,766 23,599 - 75,365
---------------------------------------------------
---------------------------------------------------

Segment net earnings
before interest
expense and income taxes 5,428 3,139 (2,109) 6,458

Interest expense on long
term debt 1,213
Interest expense 435
Provision for income
taxes 1,462
----------

Net earnings 3,348
----------
----------

Total assets as at
December 31, 2007 63,182 32,384 2,666 98,232
---------------------------------------------------
---------------------------------------------------

Amortization of property
plant and equipment 914 1,106 40 2,060
---------------------------------------------------
---------------------------------------------------

Amortization of
intangible assets 1,334 47 - 1,381
---------------------------------------------------
---------------------------------------------------

Goodwill and intangible
assets as at
December 31, 2007 36,149 7,328 - 43,477
---------------------------------------------------
---------------------------------------------------

Expenditures on property,
plant and equipment 579 1,241 14 1,834
---------------------------------------------------
---------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the three months ended December 31, 2006
(Expressed in thousands of U.S. dollars)

For the three month period ended December 31, 2006
Mill and Abrasive
Foundry Manufacturing
Products and
and Services distribution
$ operations Unallocated Total
$ $ $
External revenue by market
Canada 2,623 1,578 - 4,201
U.S. 8,330 3,429 - 11,759
Europe 27 - - 27
Other 77 8 - 85
---------------------------------------------------
Total revenue from
external customers 11,057 5,015 - 16,072
---------------------------------------------------
---------------------------------------------------

Segment net earnings
before interest
expense and income taxes 1,478 787 (747) 1,518

Interest expense on long
term debt 288
Interest expense 136
Provision for income
taxes 430
--------

Net earnings 664
--------
--------

Amortization of property
plant and equipment 178 308 1 487
---------------------------------------------------
---------------------------------------------------

Amortization of
intangible assets 292 11 - 303
---------------------------------------------------
---------------------------------------------------

Expenditures on property,
plant and equipment 191 149 41 381
---------------------------------------------------
---------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the twelve months ended December 31, 2006
(Expressed in thousands of U.S. dollars)

For the twelve month period ended December 31, 2006
Mill and Abrasive
Foundry Manufacturing
Products and and distribution
Services operations Unallocated Total
$ $ $ $
External revenue by market
Canada 11,013 8,440 - 19,453
U.S. 27,897 16,095 - 43,992
Europe 645 - - 645
Other 186 37 - 223
---------------------------------------------------
Total revenue from
external customers 39,741 24,572 - 64,313
---------------------------------------------------
---------------------------------------------------

Segment net earnings
before interest
expense and income taxes 5,072 4,105 (2,136) 7,041

Interest expense on long
term debt 1,063
Interest expense 457
Provision for income
taxes 1,980
--------

Net earnings 3,541
--------
--------
Total assets as at
December 31, 2006 40,521 32,421 1,051 73,993
---------------------------------------------------
---------------------------------------------------
Amortization of property
plant and equipment 534 1,204 3 1,741
---------------------------------------------------
---------------------------------------------------
Amortization of
intangible assets 871 54 - 925
---------------------------------------------------
---------------------------------------------------
Goodwill and intangible
assets as at
December 31, 2006 23,768 6,921 - 30,689
---------------------------------------------------
---------------------------------------------------
Expenditures on property,
plant and equipment 701 604 99 1,404
---------------------------------------------------
---------------------------------------------------

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