RE: Q2 Report...Another Rock Solid QuarterKey points..
....The Company has elected to change its reporting currency to U.S. dollars as approximately 70% of the Company's revenues are generated from operations based in the United States of America. All figures are therefore reported in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.
....Opta Minerals reported second quarter revenue for fiscal 2007 of $18.4 million, bringing year to date revenue to $34.9 million an 11% increase over the first half of 2006.
...Earnings before interest, income taxes, depreciation and amortisation ("EBITDA") for the quarter were $2.8 million, bringing year to date EBITDA to $5.0 million, a 7% increase over the $4.7 million reported in the first half of 2006.
... the commencement of commercial production of desulfurization products at the Company's Waterdown Ontario facility, and shipment of product to the Company's new integrated steel mill customer in conjunction with a previously announced 2 year order that is expected to generate approximately $8.4 million in revenue over the term of the agreement.
...Gross profit for the three months ended June 30 2007 was $4.4 million, bringing year to date gross profit to $8.5 million a 15% increase over the $7.4 million recorded in the first six months of 2006. Gross profit for the three months ended June 30, 2006 was $4.6 million or 4% higher than the same period in 2007.
....Earnings before income taxes and interest ("EBIT") for the three months ended June 30, 2007 were $2.0 million, bringing year to date EBIT to $3.5 million which is comparable to the results for the first six months ended June 30, 2006. In the second quarter of 2006, the Company converted several U.S. dollar denominated debts into Canadian dollars at a favorable exchange rate resulting in a one time gain on foreign exchange of approximately $0.14 million. For the three months ended June 30, 2006 the Company reported EBIT of $2.6 million or 26% higher than the comparable period in 2007.
....Net earnings for the three months ended June 30, 2007 were $1.2 million or $0.07 per diluted common share, brining year to date net earnings to $1.9 million or $0.11 per diluted common share, which is comparable to the results of first six months ended June 30, 2006.
... For the three months ended June 30, 2006 the Company reported net earnings of $1.4 million or 26% higher than the comparable period in 2007.
....The Company continues to maintain a strong balance sheet, with working capital of $11.4 million and total assets of $77.4 million. The debt to equity ratio as at June 30, 2007 was 0.66 to 1.00.
... The Company has cash and available credit facilities of a further $5.0 million, and is in the process of expanding available facilities by approximately $25.0 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.
Recent events from the quarter:
- Commencement of commercial production at the Company's new facility in Laval Quebec. During the first quarter, the Company acquired 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 plant began commercial production in early May, and the Company expects 2007 revenues from operations to be over $0.6 million with continued strong internal growth in the following years.
- Expansion of the magnesium desulfurization business. In March, the Company announced two significant developments with respect to its magnesium desulfurization business. First, Opta received a two year order with a global integrated steel manufacturer to supply desulfurization products. Production commenced during the second quarter and revenues from this order are expected to exceed U.S. $8.4 million over the term of the agreement. Second, the Company announced an expansion of its Waterdown facility to include the production of magnesium desulfurization products.
- The Company began commercial production and shipment of product to U.S. and Canadian integrated steel mill facilities late in the second quarter. The Company continues to expect annual revenues from this expansion of $3.9 million with strong internal growth in future years.
David Kruse, President and Chief Executive Officer, said "Opta Minerals performed well in light of a number of market related challenges in the second quarter of 2007. Year to date revenues from operations were $34.9 million, and remain 11% higher than the first six months results in 2006, while EBITDA has grown 7% from $4.7 million in the first six months of 2006 to $5.0 million in 2007. A significant portion of this growth pertains to a full six months results being included in consolidated earnings for companies acquired in 2006 being partially offset by revenue weakness in the Company's Canadian abrasive and foundry products markets and lower sales volumes to several of the Company's significant U.S. based desulfurization products customers. We remain committed to a blended approach to Company growth that includes both acquisition and organic sources.
We are now beginning to see results from the expansions of our existing steel and abrasive business during the quarter and expect to realize on this investment during the remainder of 2007".
Given that they are expanding their lending facility to $25 million for accretive acquisitions, and the fact that the parent company..SunOpta...is an aggressive acquirer, we can expect to see more acqusiitions as we progress thru 2007..