Neo Material Technologies reports first quarter 2010 financial results
- Revenues of US$65.1 million
- EBITDA of US$19.0 million
- Net Income of US$12.8 million or US$0.11 per share
- Net cash position of US$55.3 million
TORONTO, May 13 /CNW/ - Neo Material Technologies Inc. (TSX: NEM) (the "Company") today reported its financial results for the three-month period ended March 31, 2010. Unless otherwise specified, all currency amounts are expressed in U.S. dollars.
For the three-month period ended March 31, 2010, revenues increased by 126% to $65.1 million compared to $28.8 million for the three-month period ending March 31, 2009. The significant increase in revenues was driven by increased demand for the Company's specialty materials, particularly evident in the growth of the base business, and new applications supplied by the Magnequench division. The Company also reported net income of $12.8 million, earnings per share ("EPS") of $0.11 (on a basic and fully diluted basis) and operating income plus depreciation and amortization ("EBITDA") of $19.0 million. This compares to a first quarter 2009 net loss of $3.1 million, loss per share of $0.03 (on a basic and fully diluted basis) and EBITDA of negative $1.3 million. Operating income was a record $16.1 million compared to an operating loss of $3.8 million in the corresponding period in 2009. Cash provided by operating activities was $5.7 million.
At March 31, 2010, the Company had cash of $67.1 million and long-term debt remained at nil.
"I am extremely pleased with the Company's growth during a traditionally slow first quarter. Both divisions enjoyed robust demand resulting in a record performance for the quarter," noted Constantine Karayannopoulos, President & CEO. "We expect this healthy demand for our products to continue in the foreseeable future."
Subsequent to quarter-end, the Performance Materials division completed a strategic investment by acquiring a 19.5% stake in Atlantic Metals and Alloys, LLC ("Atlantic"). Atlantic is a privately held, Connecticut based supplier of specialty materials with a track record of growth and profitability. This modest investment will complement the Performance Material division's rare metals business with Atlantic's trading capabilities as well as its ability to source additional indium and rhenium feedstocks for the division. The Company has the option after 24 months to acquire a majority stake in Atlantic at its sole discretion.
Magnequench
$000's (except for -----------------------------------------------------
quantity shipped) Trailing
Q1 Q2 Q3 Q4 Q1 Twelve
2009 2009 2009 2009 2010 Months
-------------------------------------------------------------------------
Quantity Shipped
(tonnes) 505 878 1,268 1,293 1,492 4,931
-------------------------------------------------------------------------
Revenues 13,840 24,411 34,049 32,941 38,092 129,493
-------------------------------------------------------------------------
Operating Income(1) 1,340 9,014 16,255 15,132 16,327 56,728
-------------------------------------------------------------------------
Performance Materials
$000's (except for -----------------------------------------------------
quantity shipped) Q1 Q2 Q3 Q4 Q1 Trailing
2009 2009 2009 2009 2010 Twelve
Restated Restated Restated Months
-------------------------------------------------------------------------
Quantity Shipped
(tonnes) 974 992 1,144 1,954 1,419 5,509
-------------------------------------------------------------------------
Revenues 14,951 18,222 21,678 31,611 30,227 101,738
-------------------------------------------------------------------------
Operating (Loss)
Income(1)(2) (2,092) 170 151 1,279 2,644 4,244
-------------------------------------------------------------------------
Consolidated $000's
(except for ------------------------------------------------------
quantity shipped) Q1 Q2 Q3 Q4 Q1 Trailing
2009 2009 2009 2009 2010 Twelve
Restated Restated Restated Months
-------------------------------------------------------------------------
Inter-segment sales - (879) (1,582) (1,756) (3,228) (7,445)
-------------------------------------------------------------------------
Revenues 28,791 41,754 54,145 62,796 65,091 223,786
-------------------------------------------------------------------------
Operating (Loss)
Income(2) (3,819) 5,308 11,396 11,637 16,105 44,446
-------------------------------------------------------------------------
EBITDA (2) (1,278) 7,844 14,004 14,577 19,001 55,426
-------------------------------------------------------------------------
Note:
(1) Divisional Operating Income (Loss) presented in the tables above
excludes stock-based compensation expense.
(2) Operating Income (Loss) for the quarters ending March 31, 2009, June
30, 2009 and September 30, 2009 has been restated as a result of
adjustments to the currency conversion of items sold from Inventory
and accordingly, the costs of sales and inventory balances have also
been restated. The net effect of the restatements was an increase to
inventory of $1.4 million, $0.3 million and $0.2 million as at March
31, June 30, and September 30, 2009, respectively, and an equivalent
increase to operating income and EBITDA in each of those periods. The
only effect on earnings per share was to reduce the March 31, 2009
loss per share from $0.04 to $0.03.
Teleconference Call
Management will host a teleconference call on May 13, 2010 at 10:00 am (Eastern Time) to discuss these results. Interested parties may access the teleconference by calling (647) 427-7450 (local) or (888) 231-8191 (toll free long distance) or by visiting http://www.newswire.ca/webcast. A recording of the teleconference may be accessed by calling (416) 849-0833 (local) or (800) 642-1687 (toll free long distance), and entering pass code 72706120 followed by the number sign until June 13, 2010 or by visiting http://www.newswire.ca/webcast.
Online Access
The financial statements and the Management's Discussion and Analysis will be posted to SEDAR (www.sedar.com) and available online at www.neomaterials.com on or before May 14, 2010
Notice of Shareholder Meeting
The Company will hold its Annual General and Special Meeting of Shareholders on Thursday, June 17, 2010 at 4:00 pm at The Gallery, TSX Conference Centre, The Exchange Tower, 130 King Street West, Toronto, Ontario.
About Neo Material Technologies
Neo Material Technologies is a producer, processor and developer of neodymium-iron-boron magnetic powders, rare earths and zirconium based engineered materials and applications, and other high value niche metals and their compounds through its Magnequench and Performance Materials business divisions. These innovative products are essential in many of today's high technology products. Magnequench's Neo powders are used to produce bonded magnets, generally used in micro motors, precision motors, sensors and other applications requiring high levels of magnetic strength, flexibility, small size and reduced weight. Rare earth and zirconium applications include catalytic converters, computers, television display panels, optical lenses, mobile phones and electronic chips. Products from the newly acquired Recapture Metals Limited are primarily used in the wireless, LED, flat panel, solar and catalyst industries. The Company is headquartered in Toronto, Canada.
Forward Looking Statements
From time to time, the Company may publish forward-looking statements relating to such matters as expected financial performance, business prospects, technological developments, and development activities and like matters. These statements involve risk and uncertainties, including but not limited to the risk factors previously described. Actual results could differ materially from those projected as a result of these risks and should not be relied upon as a prediction of future events. Neo Material Technologies Inc. undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.
Financial Results follow
NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(All figures in thousands of United States dollars)
March 31 December 31
2010 2009
-------------------------------------------------------------------------
(Unaudited) (Audited)
-------------------------------------------------------------------------
ASSETS
Current
Cash $ 67,062 $ 57,308
Accounts receivable 37,178 36,195
Inventories 62,257 48,914
Future income tax asset 2,126 2,536
Other current assets 9,362 7,886
-------------------------------------------------------------------------
Total current assets 177,985 152,839
-------------------------------------------------------------------------
Property, plant and equipment 43,226 44,755
Patents and other intangible assets 12,410 13,118
Pension benefit asset 3,720 3,780
Goodwill 44,481 44,481
Other long-term assets 7,442 6,849
-------------------------------------------------------------------------
Total assets $ 289,264 $ 265,822
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank advances and other short-term debt $ 11,762 $ 6,977
Accounts payable and other accrued charges 38,909 34,397
-------------------------------------------------------------------------
Total current liabilities 50,671 41,374
-------------------------------------------------------------------------
Future income tax liability 5,796 4,533
Accrued postretirement benefits 488 493
Other long-term liabilities 4,110 4,446
-------------------------------------------------------------------------
Total liabilities 61,065 50,846
-------------------------------------------------------------------------
Non-controlling interest 1,936 1,666
Contingencies and commitments
Subsequent event
Shareholders' equity 226,263 213,310
-------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 289,264 $ 265,822
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes
NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT AND COMPREHENSIVE INCOME
(LOSS)
(Unaudited - all figures in thousands of United States dollars, except
per share information)
Three months ended
March 31
2010 2009
Restated
-------------------------------------------------------------------------
Revenues $ 65,091 $ 28,791
Costs of sales
Costs excluding depreciation and amortization 36,890 22,408
Depreciation and amortization 2,091 1,929
-------------------------------------------------------------------------
Gross profit 26,110 4,454
Expenses
Selling, general and administrative 7,001 6,382
Stock-based compensation 76 180
Depreciation and amortization 805 612
Research and development 2,123 1,099
-------------------------------------------------------------------------
10,005 8,273
-------------------------------------------------------------------------
Operating income (loss) before the undernoted 16,105 (3,819)
Other income (39) (199)
Interest expense, long-term debt - 225
Interest expense, other 224 64
Foreign exchange loss (gain) 143 (126)
-------------------------------------------------------------------------
Income (loss) from operations before taxes,
non-controlling interest and equity income of
affiliate 15,777 (3,783)
Income tax expense (recovery) 3,004 (528)
-------------------------------------------------------------------------
Income (loss) from operations before
non-controlling interest and equity income of
affiliate 12,773 (3,255)
Equity income (loss) of affiliate 338 (206)
Non-controlling interest in (earnings) loss of
subsidiaries (270) 372
-------------------------------------------------------------------------
Net income (loss) for the period $ 12,841 $ (3,089)
-------------------------------------------------------------------------
Change in unrealized loss on derivatives
designated as cash flow hedges, net of tax - -
-------------------------------------------------------------------------
Comprehensive income (loss) for the period $ 12,841 $ (3,089)
-------------------------------------------------------------------------
Net income (loss) per share, basic $ 0.11 $ (0.03)
-------------------------------------------------------------------------
Net income (loss) per share, diluted $ 0.11 $ (0.03)
-------------------------------------------------------------------------
Weighted average number of shares outstanding,
basic 120,075,502 115,212,930
-------------------------------------------------------------------------
Weighted average number of shares outstanding,
diluted 121,755,981 115,212,930
-------------------------------------------------------------------------
See accompanying notes
NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - all figures in thousands of United States dollars)
Three months ended
March 31
2010 2009
Restated
-------------------------------------------------------------------------
Operating Activities
Net income (loss) for the period $ 12,841 $ (3,089)
Add (deduct) items not affecting cash
Depreciation and amortization 2,896 2,541
Stock-based compensation 76 180
Non-controlling interest in earnings (loss) of
subsidiaries 270 (372)
Accretion in carrying value of debt 185 190
Future income tax 1,673 (553)
Equity income (loss) of affiliate (338) 206
Accrued benefit expense 55 11
Loss (gain) on disposal 38 (9)
Net change in non-cash working capital balances
related to operations (12,017) 4,592
-------------------------------------------------------------------------
Cash provided by operating activities 5,679 3,697
-------------------------------------------------------------------------
Investing activities
Acquisition of property, plant and equipment (748) (992)
Proceeds from disposal 51 2,013
Other investments (13) (204)
-------------------------------------------------------------------------
Cash (used in) provided by investing activities (710) 817
-------------------------------------------------------------------------
Financing activities
Increase (decrease) in bank advances and other
short-term debt 4,785 (5,297)
Repurchase of common shares for cancellation - (1,623)
-------------------------------------------------------------------------
Cash provided by (used in) financing activities 4,785 (6,920)
-------------------------------------------------------------------------
Cash provided (used) during the period 9,754 (2,406)
-------------------------------------------------------------------------
Cash beginning of period 57,308 51,507
-------------------------------------------------------------------------
Cash end of period $ 67,062 $ 49,101
-------------------------------------------------------------------------
See accompanying notes
NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(All figures in thousands of United States dollars)
March 31, 2010 December 31, 2009
(Unaudited) (Audited)
Number Amount Number Amount
-------------------------------------------------------------------------
Share Capital
Authorized
Unlimited common
shares
Issued
Common Shares
Balance at beginning
of period 120,075,502 244,879 116,176,614 232,325
Shares issued to
Recapture Metals
Limited
shareholders - - 4,499,996 13,581
Shares issued on
exercise of stock
options - - 1,107,992 2,423
Shares purchased
and cancelled
pursuant to
normal course
issuer bid - - (1,709,100) (1,623)
Fair value
assigned to
repurchase of
common shares - - - (1,827)
-------------------------------------------------------------------------
Balance at end of
period 120,075,502 244,879 120,075,502 244,879
-------------------------------------------------------------------------
Contributed Surplus
Balance at beginning
of period 7,301 5,081
Stock-based
compensation
expense 112 393
Repurchase of
common shares
for cancellation - 1,827
-------------------------------------------------------------------------
Balance at end
of period 7,413 7,301
-------------------------------------------------------------------------
Deficit
Balance at beginning
of period (38,574) (58,258)
Net income for
the period 12,841 19,684
-------------------------------------------------------------------------
Balance at end of period (25,733) (38,574)
-------------------------------------------------------------------------
Shareholders' loan
Balance at beginning
of period (296) (296)
-------------------------------------------------------------------------
Balance at end of period (296) (296)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Shareholders' equity at
end of period 226,263 213,310
-------------------------------------------------------------------------
-------------------------------------------------------------------------
%SEDAR: 00002061E
For further information: Michael Doolan, Chief Financial Officer, (416) 367-8588, ext. 335, Website: www.neomaterials.com, e-mail: [email protected]; Ali Mahdavi, Investor Relations, (416) 962-3300, ext. 225, e-mail: [email protected]
Share this article