Neo Material Technologies reports record second quarter 2010 financial
results
- Revenues of US$79.2 million
- EBITDA of US$22.5 million
- Net Income of US$16.0 million or US$0.13 per share
- Net cash position of US$55.3 million, after Buss & Buss acquisition,
debt reduction and share buyback
TORONTO, Aug. 12 /CNW/ - Neo Material Technologies Inc. (TSX: NEM) (the "Company") today reported its financial results for the three-month and six-month periods ended June 30, 2010. Unless otherwise specified, all currency amounts are expressed in U.S. dollars.
Revenues and earnings continued to increase for the fifth consecutive quarter, with earnings at a record level in the three-month period ended June 30, 2010. Revenues were $79.2 million compared to $65.1 million in the previous quarter, and $41.8 million in the corresponding period in 2009. This improvement in revenues is an indication of the Company's steady improvement from 2009's economic recession and is testament to the integral part that the Company's products play in the global economic recovery. The Company also reported net income of $16.0 million, earnings per share ("EPS") of $0.13 (on a basic and fully diluted basis) and operating income plus depreciation and amortization ("EBITDA") of $22.5 million. This compares to second quarter 2009 net income of $4.8 million, earnings per share of $0.04 (on a basic and fully diluted basis) and EBITDA of $7.8 million. Operating income increased by 270 percent to a record $19.6 million compared to $5.3 million in the corresponding period in 2009. Cash provided by operating activities during the second quarter of 2010 was $10.4 million.
For the six-month period ended June 30, 2010, net income and EBITDA were $28.8 million and $41.5 million, respectively and EPS was $0.24 on a basic and fully diluted basis. This compares to net income, EBITDA and EPS for the six-month period ended June 30, 2009 of $1.7 million, $6.6 million, and $0.01 on a basic and fully diluted basis), respectively. Revenues for the six months ended June 30, 2010 were $144.3 million compared to revenues of $70.5 million in the corresponding period in 2009.
At June 30, 2010, the Company had a cash balance of $66.3 million and long-term debt of $844,000. During the quarter, the Company completed the control acquisition of Buss & Buss Spezialmetalle GmbH, paid down debt and acquired 253,700 common shares under a normal course issuer bid. Also during the quarter, the Company completed a strategic acquisition of a 19.5% stake in Atlantic Metals and Alloys, LLC, a privately held, Connecticut based specialty materials trading company.
"We are very pleased to report yet another record quarter for Neo - a period during which we achieved healthy growth in revenues and earnings," noted Constantine Karayannopoulos, President and CEO. "While we have enjoyed a very strong first half this year, we are also cautiously optimistic for the next few quarters, although we do not expect the rate of growth over 2009 to continue at the same exceptionally strong pace demonstrated in recent quarters. Notwithstanding the recent announcement regarding Chinese rare earth export quotas, our businesses continue to demonstrate strength while we continue to add capabilities to our rare metals platform as we build a stronger, and more diversified, Neo Materials for the future."
Magnequench ------------------------------------------------------
$000's (except for Trailing
quantity shipped) Q2 Q3 Q4 Q1 Q2 Twelve
2009 2009 2009 2010 2010 Months
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Quantity Shipped
(tonnes) 878 1,268 1,293 1,492 1,537 5,590
-------------------------------------------------------------------------
Revenues 24,411 34,049 32,941 38,092 42,301 147,383
-------------------------------------------------------------------------
Operating Income(1) 9,014 16,255 15,132 16,327 16,086 63,800
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Performance
Materials ------------------------------------------------------
$000's (except for Q2 Q3 Trailing
quantity shipped) 2009 2009 Q4 Q1 Q2 Twelve
Restated Restated 2009 2010 2010 Months
-------------------------------------------------------------------------
Quantity Shipped
(tonnes) 992 1,144 1,954 1,419 1,612 6,129
-------------------------------------------------------------------------
Revenues 18,222 21,678 31,611 30,227 43,392 126,908
-------------------------------------------------------------------------
Operating
Income(1)(2) 170 151 1,279 2,644 5,622 9,696
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Consolidated ------------------------------------------------------
$000's (except for Q2 Q3 Trailing
quantity shipped) 2009 2009 Q4 Q1 Q2 Twelve
Restated Restated 2009 2010 2010 Months
-------------------------------------------------------------------------
Inter-segment sales (879) (1,582) (1,756) (3,228) (6,483) (13,049)
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Revenues 41,754 54,145 62,796 65,091 79,210 261,242
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Operating Income(2) 5,308 11,396 11,637 16,105 19,556 58,694
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EBITDA(2) 7,844 14,004 14,577 19,001 22,457 70,039
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Note:
(1) Divisional Operating Income presented in the tables above excludes
stock-based compensation expense.
(2) Operating Income for the quarters ending June 30, 2009, and September
30, 2009 have 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
$0.3 million and $0.2 million as at June 30, and September 30, 2009,
respectively, and an equivalent increase to operating income and
EBITDA in each of those periods.
Teleconference Call
Management will host a teleconference call on August 12, 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 90501962 followed by number sign until September 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 August 13, 2010.
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 rare 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. The Company's rare metals products are primarily used in the wireless, LED, flat panel, turbine, solar and catalyst industries. Neo 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)
June 30 December 31
2010 2009
-------------------------------------------------------------------------
(Unaudited) (Audited)
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ASSETS
Current
Cash $ 66,284 $ 57,308
Accounts receivable 42,791 36,195
Inventories 69,153 48,914
Future income tax asset 1,915 2,536
Other current assets 8,433 7,886
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Total current assets 188,576 152,839
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Property, plant and equipment 46,621 44,755
Patents and other intangible assets 11,703 13,118
Pension benefit asset 3,700 3,780
Goodwill 48,721 44,481
Other long-term assets 9,640 6,849
-------------------------------------------------------------------------
Total assets $ 308,961 $ 265,822
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank advances and other short-term debt $ 10,155 $ 6,977
Accounts payable and other accrued charges 39,901 34,397
Long-term debt due within one year 244 -
-------------------------------------------------------------------------
Total current liabilities 50,300 41,374
-------------------------------------------------------------------------
Long-term debt 600 -
Future income tax liability 7,291 4,533
Accrued postretirement benefits 485 493
Other long-term liabilities 8,850 4,446
-------------------------------------------------------------------------
Total liabilities 67,526 50,846
-------------------------------------------------------------------------
Non-controlling interest 2,438 1,666
Commitments
Shareholders' equity 238,997 213,310
-------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 308,961 $ 265,822
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NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
(All figures in thousands of United States dollars, except per share
information)
Three months ended Six months ended
June 30 June 30
2010 2009 2010 2009
Restated Restated
-------------------------------------------------------------------------
Revenues $ 79,210 $ 41,754 $ 144,301 $ 70,545
Cost of sales
Costs excluding
depreciation and
amortization 46,621 25,283 83,511 47,691
Depreciation and
amortization 2,099 1,948 4,190 3,877
-------------------------------------------------------------------------
Gross profit 30,490 14,523 56,600 18,977
Expenses
Selling, general and
administrative 7,287 6,416 14,288 12,798
Stock-based
compensation (139) 953 (63) 1,133
Depreciation and
amortization 802 588 1,607 1,200
Research and development 2,984 1,258 5,107 2,357
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10,934 9,215 20,939 17,488
-------------------------------------------------------------------------
Operating income before
the undernoted 19,556 5,308 35,661 1,489
Other (income) expense (50) 24 (89) (175)
Interest expense,
long-term debt 7 - 7 -
Interest expense, other 224 202 448 491
Foreign exchange gain (386) (358) (243) (484)
-------------------------------------------------------------------------
Income from operations
before taxes,
non-controlling interest
and equity income of
affiliate 19,761 5,440 35,538 1,657
Income taxes 3,772 661 6,776 133
-------------------------------------------------------------------------
Income from operations
before non-controlling
interest and equity
income of affiliate 15,989 4,779 28,762 1,524
Equity income (loss) of
affiliate 534 (33) 872 (239)
Non-controlling interest
in (earnings) loss of
subsidiaries (502) 47 (772) 419
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Net income for the
period and
comprehensive income $ 16,021 $ 4,793 $ 28,862 $ 1,704
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Net income per share,
basic $ 0.13 $ 0.04 $ 0.24 $ 0.01
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Net income per share,
diluted $ 0.13 $ 0.04 $ 0.24 $ 0.01
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Weighted average number
of shares
outstanding, basic 120,179,584 114,467,514 120,127,830 114,838,163
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Weighted average
number of shares
outstanding, diluted 121,648,526 114,483,219 121,667,554 114,845,128
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NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All figures in thousands of United States dollars)
Three months ended Six months ended
June 30 June 30
2010 2009 2010 2009
Restated Restated
-------------------------------------------------------------------------
Operating Activities
Net income for the
period $ 16,021 $ 4,793 $ 28,862 $ 1,704
Add (deduct) items not
affecting cash
Depreciation and
amortization 2,901 2,536 5,797 5,077
Stock-based
compensation
(recovery)
expense (139) 953 (63) 1,133
Non-controlling
interest in earnings
(loss) of
subsidiaries 502 (47) 772 (419)
Accretion in carrying
value of debt 128 189 313 379
Future income tax 1,706 (826) 3,379 (1,379)
Equity (income) loss
of affiliate (534) 33 (872) 239
Accrued benefit expense 17 23 72 34
Loss on disposal of
fixed assets 41 61 79 52
Net change in non-cash
working capital balances
related to operations (10,203) (2,022) (22,220) 2,570
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Cash provided by
operating activities 10,440 5,693 16,119 9,390
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Investing activities
Acquisition of
property, plant and
equipment (1,369) (1,285) (2,117) (2,277)
Cash paid on acquisition
of Buss & Buss net of
cash acquired (5,235) - (5,235) -
Proceeds from disposal - 19 51 2,032
Other investments (725) - (738) (204)
-------------------------------------------------------------------------
Cash used in investing
activities (7,329) (1,266) (8,039) (449)
-------------------------------------------------------------------------
Financing activities
Repayment of long-term
debt (76) - (76) -
(Decrease) increase in
bank advances and other
short-term debt (2,901) 48 1,884 (5,249)
Repurchase of common
shares for cancellation (1,033) - (1,033) (1,623)
Issue of common shares 121 - 121 -
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Cash (used in) provided
by financing activities (3,889) 48 896 (6,872)
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash - - - -
-------------------------------------------------------------------------
Cash (used) provided
during the period (778) 4,475 8,976 2,069
-------------------------------------------------------------------------
Cash beginning of period 67,062 49,101 57,308 51,507
-------------------------------------------------------------------------
Cash end of period $ 66,284 $ 53,576 $ 66,284 $ 53,576
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NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(All figures in thousands of United States dollars)
June 30, 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 75,733 121 1,107,992 2,423
Shares issued on
acquisition of a
19.5% stake in
Atlantic Metals,
net of issue costs 180,838 688 - -
Shares purchased
for cancellation
pursuant to normal
course issuer bid (253,700) (518) (1,709,100) (1,623)
Fair value assigned
to repurchase of
common shares - - - (1,827)
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Balance at end of
period 120,078,373 245,170 120,075,502 244,879
-------------------------------------------------------------------------
Contributed Surplus
Balance at beginning
of period 7,301 5,081
Stock-based
compensation
expense 149 393
Repurchase of
common shares
for cancellation (421) 1,827
-------------------------------------------------------------------------
Balance at end
of period 7,029 7,301
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Deficit
Balance at beginning
of period (38,574) (58,258)
Net income for
the period 28,862 19,684
Other equity (3,194) -
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Balance at end of period (12,906) (38,574)
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Shareholders' loan
Balance at beginning
of period (296) (296)
-------------------------------------------------------------------------
Balance at end of period (296) (296)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Shareholders' equity at
end of period 238,997 213,310
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%SEDAR: 00002061E
For further information: Michael Doolan, Chief Financial Officer, (416) 367-8588, ext.335; Ali Mahdavi, Investor Relations, (416) 962-3300, ext. 225, e-mail: [email protected], Website: www.neomaterials.com, e-mail: [email protected]
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