Polaris announces 2015 third quarter results and conference call

VANCOUVER, Nov. 10, 2015 /CNW/ - Polaris Materials Corporation (TSX:PLS) (the "Company" or "Polaris") today reported the financial results for its third quarter ending September 30, 2015. The financial results are in US dollars unless otherwise noted.

HIGHLIGHTS

Three months ended September 30, 2015

  • Third quarter gross profit of $1.6 million was an increase of 116% over the same period in the previous year;
  • Gross profit per ton of $2.13 represented the highest recorded rate for any quarter by the Company and triple the $0.70 gross profit per ton recorded in 2014.
  • The Company recorded its fifth consecutive quarter of positive adjusted EBITDA in the third quarter of $2.0 million ($2.80/ton) compared with $0.7 million ($0.67/ton) last year for the same quarter.

Nine months ended September 30, 2015

  • Gross profit for the nine months ended September 30, 2015 was $3.3 million compared with $0.5 million over the same period in the previous year
  • Adjusted EBITDA for the first nine months of 2015 was $4.1 million compared with $0.1 million over the same period in the previous year

For the three months ended September 30, 2015, the Company had net income attributable to shareholders of $954,000 ($0.01 per share) compared with a net loss attributable to shareholders of $2.1 million ($0.02 loss per share) in the same period in the previous year, an improvement of $3.1 million.   For the nine months ended September 30, 2015, the Company had net income attributable to shareholders of $197,000 ($0.00 per share) compared with a net loss attributable to shareholders of $5.2 million ($0.06 loss per share) in the same period in the previous year, an improvement of $5.4 million.  Sales of aggregates in the third quarter were 730,000 tons with revenue of $10.4 million, 29% and 23%, respectively, below the same quarter in 2014.  For the nine months ended September 30, 2015, sales of aggregates of 2.1 million tons and revenue of $31.2 million were 21% and 11%, respectively, below the same period in the previous year.

Ken Palko, President and CEO, commented:  "We were pleased to report another record gross profit per ton in the quarter which again demonstrates the Company's continuing margin expansion. The strong financial performance this quarter was driven by increased average selling prices and reduced unit costs, together with the benefit of a favourable Canadian dollar exchange rate. The combination of these factors produced our best quarterly financial results to date including adjusted EBITDA of $2.0 million, or $2.80 per ton, compared with $688,000, or $0.67 per ton last year for the same quarter. The sales volume in the third quarter was a reflection of the time required to effect positive changes to product distribution following the disruption reported in the second quarter, and not a reflection of a change in the markets. Sales improved in the third quarter of 2015 when compared to the first two quarters of the year, as the Company's Strategic Alliance Partner introduced a new supply chain management initiative. It is pleasing to report that sales in October 2015 have further increased to meet original budget expectations and that construction activity remains relatively robust in northern California.  We were also pleased to see the House of Representatives pass the Surface Transportation and Reauthorization and Reform Act earlier this month, contributing to a very positive outlook for US construction activity."

Third Quarter 2015 Financial Results Compared to Third Quarter 2014

Aggregate sales for the quarter were 730,000 tons, a 29% decrease when compared with the third quarter of 2014.  Revenue for the three months ended September 30, 2015 decreased by 23% to $10.4 million compared with the revenue of $13.4 million for the three months ended September 30, 2014.  Despite lower than expected volumes, current quarter revenue benefited from an increased proportion of sales delivered to San Francisco, as opposed to those sold ex-quarry, and from selling price increases compared to the third quarter of 2014.  The average selling price during the third quarter of $14.24/ST increased by $1.23/ST over the same period in 2014.  When compared with 2014, price variance for the quarter was a favorable 5% due to price increases.  A favorable sales mix variance of 2% was due to increased sales to customers with delivered pricing.

Cost of goods sold per ton for the current quarter decreased by $0.21 per ton to $12.11 compared to the cost of goods sold per ton for the same period in 2014 of $12.31.  Somewhat higher delivery costs due to increased sales mix to customers that include freight were partially offset by the declining Canadian dollar, as quarry costs are incurred in Canadian dollars and translated into US dollars for reporting purposes.

Gross profit for the third quarter improved significantly over the prior year.  Gross profit was $1.6 million or $2.13/ST in the third quarter or more than triple the $0.70/ST achieved in the third quarter of 2014, which represented the highest quarterly gross profit and gross profit per ton recorded by the Company.  Gross profit improved by $0.8 million or 116% over the prior year comparative of $0.7 million.  The Company continues to focus on margin expansion through pricing and cost control. 

Current quarter selling, general and administrative ("SG&A") expenses of $1.3 million, decreased 39%, compared with $2.1 million during the same quarter in 2014.  The decrease is principally due to lower share-based employee benefits, a non-cash charge.  Total SG&A during the quarter was 12.3% of sales compared to 15.7% of sales during the same quarter in 2014.  Additionally, the Company recorded a foreign exchange gain of $1.1 million on US dollar receivables held by its Canadian subsidiary, Orca Sand & Gravel Limited Partnership.

The Company recorded net income attributable to shareholders of $954,000 ($0.01 per share income) during the three months ended September 30, 2015, compared to a net loss attributable to shareholders of $2.1 million ($0.02 loss per share) during the three months ended September 30, 2014.

Adjusted EBITDA and EBITDA for the third quarter also improved over their year-on-year comparatives (see Non-IFRS Measures for details).  Notably, the Company recorded its fifth consecutive quarter of positive adjusted EBITDA with the third quarter metric at $2.0 million ($2.80/ST), which was an improvement of $1.4 million over the three months ending September 30, 2014.  EBITDA for the third quarter of 2015 was $1.9 million ($2.65/ST), an improvement of $2.9 million over the prior year comparative.

This financial summary should be read in conjunction with the Company's September 30, 2015, Consolidated Interim Financial Statements and the corresponding Management's Discussion and Analysis, both of which are available on the Company's website and at www.sedar.com.

Conference Call and Webcast Details

The Company will host a conference call on Wednesday, November 11th, 2015 at 8:00 am Pacific Time (11:00am Eastern).  Details to access the call live are as follows:

  • Via telephone, toll-free, calling 1-888-390-0546 in North America or 416-764-8688 in Toronto.
  • Via webcast at: http://bit.ly/1KZMFvt

The webcast will be archived for 14 days following the call at the above noted link.  The conference call will also be recorded and available for replay until Wednesday, November 25, 2015.  To access the replay, dial 1-888-390-0541 or 416-764-8677 and use Playback Passcode 915674# to hear the recording.

About Polaris Materials

Polaris Materials Corporation is exclusively focused on the development of quarries and the production of construction aggregates in British Columbia for marine transportation to urban markets on the west coast of North America to meet local supply deficits. In 2007, Polaris began shipping sand and gravel from the Orca Quarry to San Francisco Bay, Vancouver, BC and Hawaii.

This press release contains "forward-looking statements" and "forward-looking information" within the meaning of applicable securities laws.  These statements and information appear in this document and include estimates, forecasts, information and statements as to management's expectations with respect to, among other things, the future financial or operating performance of the Company, increases in sales volumes and selling prices, costs of production, capital and operating expenditures, requirements for additional capital, government regulation of quarrying operations, environmental risks, reclamation expenses, and title disputes.  Often, but not always, forward-looking statements and information can be identified by the use of words such as "may", "will", "should", "plans", "expects", "intends", "anticipates", "believes", "budget", and "scheduled" or the negative thereof or variations thereon or similar terminology.  Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies.  Readers are cautioned that any such forward-looking statements and information are not guarantees and there can be no assurance that such statements and information will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.  Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's continuous disclosure documents which are filed with Canadian regulators on SEDAR (www.sedar.com).  The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements and information whether as a result of new information, future events or otherwise.  All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

Non-IFRS Measures

EBITDA and Adjusted EBITDA

EBITDA, adjusted EBITDA, EBITDA per share and adjusted EBITDA per share ("EBITDA Metrics") are non-IFRS financial measures.  EBITDA and EBITDA per share represent net income, excluding income tax expense, interest expense and amortization and accretion.  Adjusted EBITDA and adjusted EBITDA per share better reflects the underlying business performance of the Company by removing certain non-cash adjustments from its calculation of EBITDA and EBITDA per share.  The Company believes that the EBITDA Metrics trends are valuable indicators of whether its operations are generating sufficient operating cash flow to fund working capital needs and to fund capital expenditures.  The EBITDA Metrics are intended to provide additional information, do not have any standardized meaning prescribed by IFRS and therefore unlikely to be comparable to similar measures presented by other issuers and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.  These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. 

The following table reconciles these non-IFRS measures to the most directly comparable IFRS measure.





Three months ended
September 30,

Nine months ended
September 30,

($000's except per share and per ton amounts)

2015

2014

2015

2014

Net profit (loss) for the period attributed to shareholders of Polaris

954

(2,096)

197

(5,246)

Interest

19

56

54

90

Income tax (recovery)

-

(68)

(40)

(137)

Amortization, depletion and accretion

962

1,170

3,111

3,427

EBITDA

1,935

(938)

3,322

(1,866)


per share

0.02

(0.01)

0.04

(0.02)


per ton

2.65

(0.91)

1.57

(0.70)






Adjustments






Share-based employee benefits

106

866

755

1,196


Property tax provision

-

388

-

388


Other (gains) and losses

-

372

(9)

386

Adjusted EBITDA

2,041

688

4,068

104


per share

0.02

0.01

0.05

0.00


per ton

2.80

0.67

1.92

0.04

Gross Profit per Ton





Three months ended
September 30,

Nine months ended
September 30,


2015

2014

2015

2014

Tons (000's, US Short Tons)

730

1,032

2,116

2,684






($000's)





Sales

10,395

13,429

31,237

35,203

Cost of goods sold

(8,837)

(12,709)

(27,983)

(34,667)

Gross profit

1,558

720

3,254

536






Gross profit per ton

2.13

0.70

1.54

0.20






Polaris Materials Corporation
Consolidated Interim Statements of Income (Loss)
(Unaudited)
(thousands of US dollars, except per share amounts)






Three months ended

 September 30

Nine months ended

 September 30


2015

2014

2015

2014


$

$

$

$






Sales

10,395

13,429

31,237

35,203






Cost of goods sold

(8,837)

(12,709)

(27,983)

(34,667)

Gross profit

1,558

720

3,254

536






Selling, general and administrative expenses

(1,280)

(2,103)

(4,068)

(4,733)

Foreign exchange gain

1,110

196

2,055

43

Property holding costs

(258)

(227)

(737)

(671)

Property tax provision

-

(388)

-

(388)

Other gains and (losses)

-

(372)

9

(386)


(428)

(2,894)

(2,741)

(6,135)

Income (loss) before interest and income taxes

1,130

(2,174)

513

(5,599)






Finance income

14

43

55

73

Finance expenses

(38)

(77)

(113)

(154)


(24)

(34)

(58)

(81)

Income (loss) before income taxes

1,106

(2,208)

455

(5,680)






Income tax recovery

-

68

40

137

Net income (loss) for the period

1,106

(2,140)

495

(5,543)






Net income (loss) attributable to:





Shareholders of the Company

954

(2,096)

197

(5,246)

Non-controlling interest

152

(44)

298

(297)


1,106

(2,140)

495

(5,543)






Net income (loss) per share:





Basic income (loss) per common share

0.01

(0.02)

0.00

(0.06)

Fully diluted income per common share

0.01

-

0.00

-






Weighted average number of common shares outstanding (000's)

87,725

87,479

87,717

82,969






Polaris Materials Corporation
Consolidated Interim Statements of Financial Position
(Unaudited)
(thousands of US dollars)





September 30

 2015

December 31
2014


$

$




Assets






Current assets



Cash and cash equivalents

9,019

14,231

Trade and other receivables

8,138

6,156

Inventories

4,142

2,659

Other current assets

717

432


22,016

23,478

Non-current assets



Financial assets

851

973

Property, plant and equipment

55,585

59,427


78,452

83,878




Liabilities






Current liabilities



Trade and other payables

4,339

3,640

Current tax liabilities

30

16

Current portion of finance leases

394

418

Current portion of property tax provision

379

379


5,142

4,453

Non-current liabilities



Finance leases

954

865

Property tax provision

519

898

Restoration provision

2,848

3,211


9,463

9,427




Equity






Share capital

188,707

188,377

Contributed surplus

24,547

23,828

Accumulated other comprehensive income

(11,544)

(4,846)

Deficit

(127,937)

(128,134)

Equity attributable to shareholders of the Company

73,773

79,225

Non-controlling interest

(4,784)

(4,774)

Total equity

68,989

74,451


78,452

83,878




Polaris Materials Corporation
Consolidated Interim Statements of Cash Flows
(Unaudited)
(thousands of US dollars)





Three months ended

 September 30

Nine months ended

 September 30


2015

2014

2015

2014


$

$

$

$






Cash flows from operating activities





Net income (loss)

1,106

(2,140)

495

(5,543)


Amortization, depletion and accretion

962

1,170

3,111

3,427


Share-based employee benefits

106

866

755

1,196


Unrealized foreign exchange gain

(950)

(275)

(1,883)

(157)


Property tax provision

-

388

-

388


Other losses

(1)

4

(5)

4


1,223

13

2,473

(685)

Changes in non-cash working capital items

(2,284)

(3,458)

(3,475)

(4,528)


(1,061)

(3,445)

(1,002)

(5,213)






Cash flows from financing activities





Proceeds from issue of common shares (net of issue costs)

160

37

294

15,746

Finance lease payments

(122)

(87)

(316)

(237)


38

(50)

(22)

15,509






Cash flows from investing activities





Property, plant and equipment purchases

(830)

(1,405)

(3,064)

(3,840)

Proceeds on disposal of property, plant and equipment

1

-

5

-


(829)

(1,405)

(3,059)

(3,840)






Effect of foreign currency translation on cash

(472)

(1,040)

(1,129)

(1,079)

Increase (decrease) in cash

(2,324)

(5,940)

(5,212)

5,377

Cash and cash equivalents - beginning of period

11,343

20,702

14,231

9,385

Cash and cash equivalents - end of period

9,019

14,762

9,019

14,762

SOURCE Polaris Materials Corporation

For further information: Ken Palko, President and CEO, Polaris Materials Corporation, Tel: (604) 915-5000, info@polarismaterials.com

RELATED LINKS
http://www.polarmin.com

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