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WATERDOWN, ONTARIO -- (Marketwire) -- 03/06/13 -- Opta Minerals Inc. (TSX: OPM) today announced results for the three and twelve months ended December 31, 2012. All figures are reported in U.S. dollars and are 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 ended ended December 31, December 31, Increase 2012 2011 (Decrease) %Revenue $34,125 $22,625 $11,500 50.8%Gross Profit 6,647 4,913 1,734 35.3% 19.5% 21.7% (2.2%)EBIT(2) 1,548 1,270 278 21.9%Net Earnings 991 564 427 75.7%EPS 0.06 0.03 0.03EBITDA(1) 3,089 2,362 727 30.8% 12 months 12 months ended ended December 31, December 31, Increase 2012 2011 (Decrease) %Revenue $126,651 $93,120 $33,531 36.0%Gross Profit 26,760 20,746 6,014 29.0% 21.1% 22.3% (1.2%)EBIT(2) 9,007 7,276 1,731 23.8%Net Earnings 5,273 3,650 1,623 44.5%EPS 0.29 0.20 0.09EBITDA(1) 14,683 11,483 3,200 27.9%(1) EBITDA is a non-IFRS measure; refer to Footnotes.(2) EBIT is a non-IFRS measure; refer to Footnotes.
David Kruse, President and CEO of Opta Minerals, noted, "During the fourth quarter, Opta Minerals continued to experience revenue growth over the comparable period in 2011. Earnings in the steel sector were marginally offset by results in the industrial minerals sector. During the year, we successfully acquired 100% of the outstanding shares of Babco Industrial Corp. (Babco) and WGI Heavy Minerals, Incorporated (WGI), whose principal products are petroleum coke and garnet, respectively. These acquisitions strengthened our product breadth and geographic footprint consistent with our strategic plan to build the organization through a combination of internal growth and acquisitions. We will continue to focus our efforts on integrating these new businesses, generating cash flow, and paying down debt."
Operational Highlights:
-- Net earnings for the fourth quarter increased 75.7% over the comparable quarter in 2011 and 44.5% on a year over year basis. These increases were primarily attributable to the acquisition and successful integration of Babco in the first quarter, the recognition of deferred income tax assets from previously unrecognized non-capital loss carry forwards in the second and fourth quarters, and revenue growth in the steel segment throughout the year.-- Revenue in the Mill and Foundry Products and Services (Steel) segment increased 28.3% over the comparable quarter in 2011 due largely to the demand for lime blends, metallic magnesium and the acquisition of Babco during the first quarter which added petroleum coke to the product portfolio. Revenue in the Abrasive Products Manufacturing and Distribution (Abrasives) segment increased 87.5% over the comparable quarter in 2011 due to an increase in demand for metallurgical slags and the acquisition of WGI which contributed to garnet sales. For the twelve months ended December 31, the revenue increases represented 33.7% and 39.8%, respectively, for the same segments.-- Gross profit increased quarter over quarter and year over year as a result of revenue growth and acquisitions. Gross profit as a percentage of revenue has declined due to weakness in the abrasives segment related to, competitive pressures, economic conditions and weather related events such as Hurricane Sandy and, product mix due to the addition of WGI later in the year which inherently has lower margins than the base business.-- Selling, general and administrative expenses (SGA) increased to 15.7% of revenue for the fourth quarter of 2012 from 13.7% for the comparable quarter in 2011. The Company expects to reduce SGA during 2013 as synergies are achieved from the continued integration of the WGI acquisition. On a year over year basis, SGA remained at 14.2% of revenue in 2012, the same as 2011. The Company maintained SGA levels year over year despite a significant bad debt in the second quarter from the bankruptcy filing of a large American steel producer and customer in the amount of $0.9 million and one time professional fee costs for acquisitions approximating $0.7 million.-- The foreign exchange gain was $0.2 million for the quarter as compared to a foreign exchange loss of $0.5 million for the same quarter in 2011. The foreign exchange gain was $0.2 million for the year as compared to a foreign exchange loss of $0.3 million for 2011. The results reflect movement between the three currencies we principally do business in; the U.S. dollar, the Canadian dollar and the Euro. The foreign exchange gain for 2012 was primarily due to the recovery of the Euro against the U.S. dollar later in the year. The foreign exchange results are included in other expense (income) in the consolidated statements of income.-- Finance expense increased quarter over quarter and year over year as a result of professional fees and syndication costs associated with new bank borrowings to finance acquisitions.-- For the three months ended December 31, 2012, cash flow from operating activities before changes in working capital generated $0.9 million versus $1.7 million in the fourth quarter of 2011. On a year over year basis, cash flow from continuing operations before changes in working capital generated $8.3 million compared to $8.0 million. The positive cash flow was used to repay debt and finance working capital and capital expenditures.-- On February 10, 2012, the Company acquired Babco for $19.0 million funded by bank term debt. On August 29, 2012, the Company acquired WGI for $15.0 million which was also funded by bank term debt.-- The Company's working capital at December 31, 2012 amounted to $25.0 million and total assets were $142.8 million, as compared to $14.7 million and $92.4 million, respectively, at December 31, 2011.-- The debt to equity ratio at December 31, 2012 was 1.27 to 1.00, versus 0.65 to 1.00 at December 31, 2011. The increased debt to equity ratio results from the acquisitions of Babco and WGI during the first and third quarters, respectively, financed by bank term debt.
