Neo Material Technologies reports second quarter 2008 financial results
Tue Aug 12, 4:55 PM
Second Quarter 2008 quarter-over-quarter highlights:
- Revenue increased 36% to a record US$83.5M
- EBITDA increased 8% to US$16.7M
- Net income increased 5% to US$7.9M
- Long-term debt reduced 66% to US$19.9M
- Return on capital employed at 30%
TORONTO, Aug. 12 /CNW/ - Neo Material Technologies Inc. (TSX: NEM.TO) (the "Company") today reported its financial results for the three-month and six-month periods ending June 30, 2008. Unless otherwise specified, all currency amounts are expressed in U.S. dollars.
For the three-month period ended June 30, 2008, the Company reported record revenues of $83.5 million and net income of $7.9 million, or $0.08 and $0.07 per share on a basic and fully diluted basis, respectively. Operating income plus depreciation and amortization ("EBITDA") during the quarter was $16.7 million. This compares to 2007 revenues of $61.5 million, net income of $7.6 million, or $0.10 and $0.09 per share on a basic and fully diluted basis, respectively, and EBITDA of $15.5 million. For the three months ended June 30, 2008 and 2007, the weighted average basic number of common shares outstanding were 101,083,892 and 79,354,030, respectively.
For the six-month period ended June 30, 2008, the Company reported a 34% increase in revenues to $148.9 million and net income of $16.2 million, or $0.16 and $0.15 per share on basic and fully diluted basis, respectively. EBITDA during the first half of the year amounted to $33.2 million. This compares to 2007 six-month revenues of $111.5 million and net income, EBITDA and earnings per share of $14.0 million, $28.4 million and $0.18 and $0.16 per share on a basic and fully diluted basis, respectively. For the six months ended June 30, 2008 and 2007, the weighted average basic number of common shares outstanding were 99,997,457 and 79,255,574, respectively.
At June 30, 2008, the Company had $17.4 million in cash. Long-term debt was $19.9 million at June 30, 2008, compared to $40.1 million at December 31, 2007. The $9.3 million obtained in the recent private placement (issued at CDN$4.21 per common share) combined with the exercise of 1.21 million share purchase warrants and the cash flow for the first six months of 2008 was used to repay $21.2 million of long-term debt. Cash flow for the balance of 2008 and the anticipated exercise of 16.4 million share purchase warrants generating approximately $40.7 million during the third quarter of this year, should allow the Company to retire its debt. As a result, the Company is well positioned with a strong and flexible balance sheet, which will enable it to pursue growth opportunities that will complement its strong organic growth profile.
During the second quarter of 2008, Magnequench shipped a record 1,404MT, a 22% quarter-over-quarter increase. Magnequench sales were positively affected by an acceleration of customer orders prior to the Beijing Olympics. AMR Performance Materials shipped 2,271MT, a small 2% decline compared to the tonnage shipped in the same three-month period in 2007.
Despite the challenging economic environment, the Company continues to see strong demand for its products, in part because of their many environmentally friendly applications. Neo powders assist in decreasing the weight and improving the efficiency of a wide range of small motors. The newest generation of energy efficient light bulbs and flat panel displays utilize its rare earth products. The Company's research and development program has a pipeline of promising applications to fuel future growth and profitability.
Magnequench
$000's (except for quantity shipped)
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Trailing
Q2 Q3 Q4 Q1 Q2 Twelve
2007 2007 2007 2008 2008 Months
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Quantity Shipped
(tonnes) 1,152 1,097 1,183 1,242 1,404 4,926
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Revenues 29,738 31,963 35,571 35,562 40,867 143,963
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Operating Income 11,977 12,566 13,070 10,806 11,422 47,864
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AMR Performance Materials
$000's (except for quantity shipped)
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Trailing
Q2 Q3 Q4 Q1 Q2 Twelve
2007 2007 2007 2008 2008 Months
-------------------------------------------------------------------------
Quantity Shipped
(tonnes) 2,308 1,882 2,315 2,156 2,271 8,624
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Revenues 32,909 34,445 38,046 37,885 48,502 158,878
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Operating Income 3,669 4,094 4,597 4,710 6,040 19,441
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Consolidated
$000's (except for quantity shipped)
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Trailing
Q2 Q3 Q4 Q1 Q2 Twelve
2007 2007 2007 2008 2008 Months
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Inter-segment sales (1,113) (3,314) (7,725) (7,959) (5,917) (24,915)
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Revenues 61,534 63,094 65,892 65,488 83,452 277,926
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Operating Income 13,087 13,324 14,337 13,504 13,790 54,955
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EBITDA(1) 15,481 16,031 17,182 16,418 16,738 66,369
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Note: (1) The Company currently calculates EBITDA as operating income,
plus depreciation and amortization. Formerly, the Company calculated
EBITDA as earnings before interest, taxes, depreciation and amortization.
"Our operational performance remained strong during the quarter while we achieved yet another record volume sales quarter at our Magnequench division," noted Constantine Karayannopoulos, President & CEO. "We achieved strong results in the face of export tax and raw material increases, inflationary cost pressures as well as a strengthening of the Chinese Renminbi. We continue to monitor global indicators, particularly in the United States, however, at this time demand for our materials across all end markets is robust and we are targeting additional new applications to further grow our business."
Based on the current business climate and demand for its products, management continues to have a positive outlook for the remainder of 2008.
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 through its Magnequench and AMR 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 is headquartered in Toronto, Canada and has approximately 1,300 employees in 15 locations, across 10 countries.
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.
Teleconference Call
Management will host a teleconference call on Wednesday, August 13, 2008 at 10:00 a.m. (Eastern Time) to discuss these results. Interested parties may access the teleconference by calling (416) 644-3423 (local) or (800) 591-7539 (toll free long distance) or by visiting http://www.newswire.ca/webcast. A recording of the teleconference may be accessed by calling (416) 640-1917 (local) or (877) 289-8525 (toll free long distance), and entering pass code 21278964 followed by the number sign until September 13, 2008 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 by Wednesday, August 13, 2008.
Financial Results follow
NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(All figures in thousands of United States dollars)
June 30 December 31
2008 2007
(Unaudited)
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ASSETS
Current
Cash $ 17,366 $ 17,160
Accounts receivable 43,731 32,919
Inventories 73,540 68,892
Future income tax asset 975 604
Other current assets 4,946 4,408
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Total current assets 140,558 123,983
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Property, plant and equipment 50,822 50,175
Patents and other intangible assets 17,909 19,776
Pension benefit asset 4,111 4,165
Goodwill 37,620 37,620
Other long-term assets 5,538 4,559
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Total assets $ 256,558 $ 240,278
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank advances and other short-term debt $ 30,321 $ 25,668
Accounts payable and other accrued charges 49,373 47,498
Long-term debt due within one year 17,500 17,500
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Total current liabilities 97,194 90,666
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Long-term debt 2,442 22,594
Future income tax liability 1,082 1,419
Accrued postretirement benefits 624 625
Other long-term liabilities 9,591 9,603
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Total liabilities 110,933 124,907
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Non-controlling interest 8,951 7,494
Contingencies and commitments
Shareholders' equity 136,674 107,877
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Total liabilities and shareholders' equity $ 256,558 $ 240,278
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NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
(Unaudited - all figures in thousands of United States dollars, except
per share information)
Three months ended Six months ended
June 30 June 30
2008 2007 2008 2007
-------------------------------------------------------------------------
Revenues $ 83,452 $ 61,534 $ 148,940 $ 111,510
Costs of sales
Costs excluding
depreciation
and
amortization 56,702 38,068 98,007 68,789
Depreciation
and
amortization 2,141 1,587 4,229 2,957
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Gross profit 24,609 21,879 46,704 39,764
Expenses
Selling,
general and
administrative 9,202 7,174 15,978 12,781
Depreciation and
amortization 807 807 1,633 1,608
Research and
development 810 811 1,799 1,520
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10,819 8,792 19,410 15,909
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Operating income
before the
undernoted 13,790 13,087 27,294 23,855
Other expense
(income) 8 86 (151) (175)
Interest expense,
long-term debt 1,501 2,563 2,961 4,940
Interest expense,
other 751 345 1,146 600
Foreign exchange
loss (gain) 421 (280) 546 (227)
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Income from
operations before
taxes,
non-controlling
interest and
equity income of
affiliate 11,109 10,373 22,792 18,717
Income taxes 2,505 2,830 5,430 4,927
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Income from
operations before
non-controlling
interest and
equity income
of affiliate 8,604 7,543 17,362 13,790
Equity income of
affiliate 227 194 283 402
Non-controlling
interest in
earnings of
subsidiaries (920) (169) (1,457) (194)
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Net income for
the period $ 7,911 $ 7,568 $ 16,188 $ 13,998
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Deficit,
beginning of
period (73,287) (60,541) (81,564) (67,009)
Cumulative impact
of adopting new
accounting
requirements for
financial
instruments - - - 38
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Deficit, end of
period (65,376) (52,973) (65,376) (52,973)
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Net income per
share, basic $ 0.08 $ 0.10 $ 0.16 $ 0.18
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Net income per
share, diluted $ 0.07 $ 0.09 $ 0.15 $ 0.16
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Weighted average
number of shares
outstanding,
basic 101,083,892 79,354,030 99,997,457 79,255,574
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Weighted average
number of share
outstanding,
diluted 109,379,793 93,320,981 108,721,022 93,061,871
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NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - all figures in thousands of United States dollars)
Three months ended Six months ended
June 30 June 30
2008 2007 2008 2007
-------------------------------------------------------------------------
Operating Activities
Net income for the period $ 7,911 $ 7,568 $ 16,188 $ 13,998
Add (deduct) items not
affecting cash
Depreciation and
amortization 2,948 2,394 5,862 4,565
Stock-based
compensation expense 1,313 579 879 968
Non-controlling
interest in earnings
of subsidiaries 920 169 1,457 194
Accretion in carrying
value of debt 874 587 1,404 987
Future income tax (234) (292) (708) (271)
Equity income of
affiliate (227) (194) (283) (402)
Accrued benefit expense 24 56 54 112
Loss on disposal - 9 - 9
Restructuring payment - (20) - (77)
Net change in non-cash
working capital balances
related to operations (5,953) (10,163) (15,287) (20,200)
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Cash provided by (used in)
operating activities 7,576 693 9,566 (117)
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Investing activities
Acquisition of property,
plant and equipment (3,026) (665) (4,642) (1,796)
Other investments - - (693) -
Cash acquired on
consolidation
of variable
interest entity - 308 - 308
Decrease in restricted
cash - 271 - 269
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Cash used in investing
activities (3,026) (86) (5,335) (1,219)
-------------------------------------------------------------------------
Financing activities
Repayment of long-term
debt (16,780) (6,885) (21,155) (10,010)
(Decrease) increase
in bank advances and
other short-term debt (286) 5,926 4,653 9,043
Cash received from
repayment of
shareholder's loan 145 - 145 -
Issue of common shares 12,303 1,806 12,320 2,015
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Cash (used in) provided
by financing activities (4,618) 847 (4,037) 1,048
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash (6) (71) 12 (103)
-------------------------------------------------------------------------
Cash (used) provided
during the period (74) 1,383 206 (391)
-------------------------------------------------------------------------
Cash beginning of period 17,440 7,750 17,160 9,524
-------------------------------------------------------------------------
Cash end of period $ 17,366 $ 9,133 $ 17,366 $ 9,133
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NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited - all figures in thousands of United States dollars)
Three months ended Six months ended
June 30 June 30
2008 2007 2008 2007
-------------------------------------------------------------------------
Net income for the period $ 7,911 $ 7,568 $ 16,188 $ 13,998
Change in unrealized loss
on derivatives designated
as cash flow hedges,
net of tax (122) - (39) -
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Comprehensive income for
the period $ 7,789 $ 7,568 $ 16,149 $ 13,998
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ContactsInformation Contact: Michael Doolan
Chief Financial Officer
(416) 367-8588
ext.335
Website: www.neomaterials.com
e-mail: info@neomaterials.com Ali Mahdavi
Investor Relations
(416) 962-3300
ext. 225
e-mail: am@spinnakercmi.com
20.92 (0.23%)
