WGI Heavy Minerals Announces Continued Sales Growth of 9.3% from Q4 2010 and Reports Loss of $0.07 million for Q1 2011

COEUR D'ALENE, Idaho, June 10, 2011 /CNW/ - WGI Heavy Minerals, Incorporated ("WGI") (TSX: WG) today reported a loss for the quarter ending March 31, 2011 of $0.003 per share ($0.07 million) compared to earnings of $0.005 per share ($0.13 million) for the same quarter in 2010. In order to functionally align and streamline the Company's efforts in Europe, the Company restructured the management of its German subsidiary, Kominex. The restructuring resulted in the removal of the resident Managing Director for Kominex and resulted in non-recurring costs of $0.32 million.

WGI recorded its highest quarterly revenue in the history of the Company, reaching $9.40 million. Corporate revenues have been growing quarter over quarter since Q4 2009, increasing 12.8% from Q1 2010 and 9.3% from Q4 2010. Overall demand in WGI's markets continued to recover from the recessionary trough of 2008-09 with Europe showing more progress than other regions. The revenues in Europe were assisted by a strong currency during the period. Most markets for garnet and other abrasives are strengthening in 2011 from previous year levels; however, growth specifically in the waterjet abrasive products is slower than the blasting abrasive products. Globally, improved demand and tighter supply conditions have stimulated revenue growth for blasting abrasives while waterjet abrasives continue to experience increased competitive pressures from ongoing product oversupply and the pursuit of market share over price among competitors.

In the first quarter of 2011 earnings from operations-before-tax and other charges including restructuring charges increased 39.8% to $0.29 million from $0.21 million in Q1 2010. The improvement is primarily driven by an increase in sales volume compounded by containment of sales, general, and administrative ("SG&A") expenses to an increase of only 2.1%. A charge was taken in the quarter of $0.32 million to cover costs associated with the management restructuring of the Company's European subsidiary, Kominex. Consolidated net loss for the quarter was $0.07 million ($0.003 loss per share) compared to net income of $0.13 million in the first quarter of 2010 (earnings per share of $0.005).

"The Company continues to focus on revenue growth in 2011 and is actively strengthening its sales team through the addition of salespersons in both North America and Europe," said Greg Emerson, President and CEO. "As WGI grows we are restructuring to position ourselves to better serve our customers and facilitate long-term sustained growth."

Highlights

  • Revenues grew by 10.3% in Abrasives and 17.6% in Waterjet parts.
  • The Company has added additional sales force and continues to seek sales talent to foster the Company's revenue growth.
  • The Company participated in meetings with a B.C. First Nations band and anticipates commencement of exploration on its British Columbia placer claims.

Outlook
WGI's garnet and waterjet businesses in 2011 are expected to grow through an increase in market share and new business. Sales are forecasted to increase over 2010 primarily through increased volumes of garnet. Logistics costs and fuel prices remain volatile and along with pricing competition are expected to continue to keep pressure on margins through the year.

2011 will be a year of further operational improvements in addition to the identification of new resources through expanded mineral exploration. WGI will investigate larger regional garnet deposits where the Company can use its expertise to bring new multi-mineral resources into operation. We will be active in expanding our waterjet parts offering to keep current with evolving OEM designs and to enter new market space. The Company will continue its efforts to cross sell both garnet and waterjet parts to customers of either product thereby increasing our value to the customer.

The Company continues to strive to keep SG&A costs in line with revenues while expanding its sales and marketing department. In addition, the Company is in the process of restructuring its European management group. As a percentage of revenues SG&A is expected to decline in 2011 while exploration costs are expected to increase.

Selected Financial Information
The selected quarterly information of operating results and financial position should be read in conjunction with the unaudited consolidated financial statements of WGI for the three-month period ended March 31, 2011, as well as the accompanying notes, (the "Consolidated Financial Statements") which are reported in thousands of U.S. dollars and have been prepared in accordance with International Financial Reporting Standards ("IFRS").


  For the three months ended
Extracted from Unaudited Financial Statements) Mar. 31,2011 Mar. 31,2010 
(in thousands other than earnings per share) $000's          $000's
  (unaudited) (unaudited)
Revenues 9,403 8,337
Earnings before tax and other charges including restructuring 288 204
Earnings/(loss) for the period (73) 129
Basic and fully diluted earnings/(loss) per share (0.003)/(0.003) 0.005/0.005
Earnings before interest, tax and depreciation ("EBITDA") before restructuring charge 478 383
Net cash outflow (306) (620)
 
 
  As at As at
  Mar. 31,2011 Dec. 31,2010
  $ 000's $ 000's
  (unaudited) (audited)
Cash, cash equivalents, securities and short term investments 5,873 6,170
Total assets 23,923 23,569
Long-term financial liabilities and current portion of long-term debt 519 597

About WGI
The principal business of WGI Heavy Minerals, Incorporated is the processing and sale of industrial abrasive minerals and the sourcing, assembly and sale of ultra-high pressure waterjet cutting machine replacement parts and components. The Company, through its subsidiaries, markets and sells abrasive products and services and waterjet replacement parts globally.

This news release contains forward-looking statements concerning the business, operations, and financial performance and condition of WGI Heavy Minerals, Incorporated. A number of the matters discussed and statements made in the press release contain forward-looking statements reflecting current expectations regarding future assets. When used in this press release, the words "believe", "anticipate", "intend", "estimate", "expect", "project", and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. These forward-looking statements are based on current expectations and are naturally subject to risks, uncertainties, and changes in circumstances beyond management's control that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that may cause such differences include but are not limited to: exploration and development risks; risks related to permits and title to property; risks related to foreign countries and regulatory reguirements; operating hazards; foreign currency fluctuations; competition; fluctuations in the market price of mineral commodities and transportation costs; uncertainty as to calculations of mineral deposit estimates; uninsured risks; and dependence upon key management personnel and executives. Actual results may differ materially from those expressed here. You should not place undue reliance on such forward-looking statements. The Company is under no obligation to update or alter such forward-looking statements, whether as a result of new information, future events, otherwise.

Expressed in U.S. dollars unless otherwise stated.


 

SOURCE WGI Heavy Minerals, Incorporated

For further information:

Greg Emerson, Ed Kok
810 Sherman Ave., Coeur d'Alêne, ID 83814 U.S.A.
(208) 666-6000 Fax (208) 666-4000 www.wgiheavyminerals.com

Greg Emerson, President & CEO  Ed Kok, Executive Vice-President, Investor Relations
(208) 770-2202  E-mail greg@wgiheavyminerals.com  (208) 770-2208  E-mail ed@wgiheavyminerals.com

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WGI Heavy Minerals, Incorporated

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