WGI Heavy Minerals announces second quarter 2008 results
Tue Jul 29, 7:37 PMCOEUR D'ALENE, ID, July 29 /CNW/ - WGI Heavy Minerals, Incorporated (TSX: WG) today announced results for the second quarter and first half ended June 30, 2008. All dollar amounts are in United States dollars unless otherwise indicated. Results have been filed and may be viewed at www.sedar.com.
Results of Operations
Revenues for the six-month period ended June 30, 2008 increased 1% to $13.6 million, compared with $13.5 million for the same period in 2007 due to higher prices and growth across most product lines, led by 57% revenue growth in other abrasives and 14% revenue growth in waterjet parts. Garnet revenues declined 12%, but still make up the majority of sales at 61% of total sales. Garnet sales volumes declined 28% due to lack of supply due to inclement weather in India and Idaho. Waterjet replacement parts and other abrasives each represent 19% of total sales.
Gross profit margins decreased to 20% in the first six months of 2008 compared with 21% for the same period in 2007 despite the increases in sales prices in garnet and other abrasives. While the gross profit margin increased for most product lines during the second quarter of 2008, they were not enough to offset the problems of the first quarter regarding the extreme cold temperatures and snow in Idaho and at the same time, unseasonable rainfall and flooding in India.
Operating general and administrative expenses increased 15% year-over-year due to increased foreign travel, professional fees, and salaries. WGI incurred non-operating general and administrative expenses in 2008 related to the sale of our Indian operations, specifically legal fees of $0.52 million and special committee fees of $0.16 million. In addition, the Company incurred $0.34 million related directly to the Company's contested annual general meeting of shareholders held in June. These one time costs total $1.02 million. The remaining non-operating general and administrative expenses increased 4% year over year.
The Company posted a net loss of $1.40 million, or $0.06 per share, for the first half of 2008, compared with a net loss of $0.33 million, or $0.01 per share, for the first half of 2007.
"With the exception of our operations related to India and the costs associated with the sale of Transworld Garnet India, all of our other businesses improved over the prior quarter. Kominex improved on its 2008 first quarter profits by $0.06, reporting a profit of $0.21 million for the second quarter of 2008. Emerald Creek made a positive turn around posting a net income of $0.12 million for the second quarter followed by International Waterjet Parts which recorded a net income of $0.06 million," said President and Interim CEO, Greg Emerson. "We are looking forward to continued improvements from all of our operating entities and reduced administrative costs after the close of the sale of our Indian assets in the third quarter of 2008."
Outlook
We are progressing with the sale of Transworld Garnet India (Pvt.) Limited ("TGI"), as disclosed in our press release of June 11, 2008, for a cash consideration of 836 million Rupees, approximately $19.5 million, to V.V. Mineral, of Tamil Nadu, India. WGI's share of the proceeds is approximately $17.3 million consisting of its 74% equity interest and the repayment of debt financing. The exact amount of the proceeds to be received by WGI will depend upon exchange rates of the Rupee to the US dollar at the time of closing which is expected to be in August 2008.
WGI has also signed a three-year distribution agreement with annual renewals with V.V. Mineral covering garnet, ilmenite and other minerals that may be present in the beach sands mined by V.V. Mineral. The distribution agreement provides WGI with an assured minimum supply of 60,000 metric tons annually of garnet, which is a significant increase over current production rates. Garnet grades and quality levels will be consistent with material currently supplied to WGI by TGI. Additional quantities of garnet will be supplied as V.V. Mineral's capacity expands. In addition, WGI will act as a broker for the sale of V.V. Mineral's ilmenite products and will have first opportunity to negotiate contractual arrangements for other minerals with V.V. Mineral once production begins.
The Board of Directors of WGI is currently intending that, following the closing of the sale to V.V. Mineral, the Board will distribute $0.80 per share in cash to the Company's shareholders.
WGI is targeting a modest sales increase for the remaining of 2008. The Company continues to look for additional property and sources of supply to strengthen its worldwide resources.
Management of WGI does not expect to incur further administrative costs related to the sale of TGI after the closing of the sale, anticipated in the third quarter of 2008.
The Company is continuing to make production improvements at its Emerald Creek Garnet facility through some reinvestment in the facility and improved operating methods. ECG has planned new exploration activities for the summer and fall of 2008. The Company is continuing to make production improvements at IWP to support its expanding sales. Sales from Kominex's product lines are expected to grow since capacity for these products has increased due to the installation of new equipment in June.
WGI's waterjet business has a relatively small market share in an expanding global waterjet market. The opportunity is significant. Accordingly, management is currently evaluating several emerging opportunities, including new waterjet technology, lean manufacturing concepts, and potential acquisitions.
Management's Discussion and Analysis
The Company's unaudited consolidated financial statement and the management's discussion and analysis for the six months ended June 30, 2008 are available on the Company's website at www.wgiheavyminerals.com. Additional information related to the Company is also available on the SEDAR website at www.sedar.com.
WGI Heavy Minerals, Inc. is a fully integrated miner, producer, and marketer of industrial-grade minerals and replacement parts for ultra-high waterjet cutting systems. The Company's operations include mining and processing facilities in Idaho, U.S. (Emerald Creek Garnet), Tamil Nadu, India (Bengal Bay Garnet) and Ermsleben, Germany (Kominex) and a manufacturing facility in Washington, U.S. (International Waterjet Parts).
This press 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 requirements; 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, or otherwise.
WGI Heavy Minerals, Incorporated
Financial Information
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June 30, Dec. 31,
Consolidated Balance Sheet 2008 2007
Assets
Cash and Short term deposits 15,195 16,921
Other Current Assets 7,369 7,410
Assets of discontinued operations 1,098 1,182
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Total Current Assets 23,662 25,513
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Property, plant and equipment 5,082 4,389
Goodwill and Intangible Assets 1,919 1,971
Other Assets - -
Non-Current assets of discontinued operations 3,477 3,635
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Total Assets 34,140 35,508
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Liabilities & Equity
Current Liabilities 4,039 3,879
Curremt Liabilities of discontinued operations 821 743
Long-term debt 391 594
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Total Liabilities 5,251 5,216
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Capital stock 53,388 53,388
Stock-based compensation 2,672 2,497
Deficit (27,374) (25,969)
Foreign currency translation account 203 376
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Total Equity 28,889 30,292
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Total Liabilities & Equity 34,140 35,508
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(in thousands, except for per share amounts)
WGI Heavy Minerals, Incorporated
Financial Information
(in thousands, except for per share amounts)
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For the For the
three months ended six months ended
6/30/08 6/30/07 6/30/08 6/30/07
--------------------- ---------------------
Consolidated Statements of
Operations and Deficit
Sales 6,821 7,242 13,598 13,453
Operating Costs 5,052 5,722 10,521 10,279
Depreciation, depletion,
and amortization 208 172 393 330
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Gross Margin 1,561 1,348 2,684 2,844
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Gross Margin % 22.9% 18.6% 19.7% 21.1%
Expenses
Operating G&A 1,052 944 2,151 1,849
Corporate G&A 1,236 549 1,959 850
Interest Income (84) (212) (228) (427)
Interest Expense 22 29 43 67
Stock based compensation 77 120 174 221
Development costs 2 27 7 129
Other Expenses (Income) (35) (25) (50) (12)
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Total 2,270 1,432 4,056 2,677
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Loss from operations before
taxation (709) (84) (1,372) 167
Provision for income taxes 73 108 129 200
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Loss from operations for
the period (782) (192) (1,501) (33)
Loss from discontinued
operations 61 (159) 96 (301)
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Loss for the period (721) (351) (1,405) (334)
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Basic and diluted loss
per common share ($0.03) ($0.01) ($0.06) ($0.01)
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Consolidated Statements For the For the
of Cash Flows three months ended six months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
-------- -------- -------- --------
Cash flows from operating
activities $ (256) $ 862 $ (494) $ 1,403
Cash flows from investing $ (766) $ (684) $ (985) $ (960)
Cash flows from financing $ 391 $ (283) $ (77) $ (138)
Effect of exchange rate
changes on Cash & Cash Eq. $ (118) $ (69) $ (166) $ (12)
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Inc./(Dec.) in Cash and
ST Inv. $ (749) $ (174) $ (1,722) $ 293
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Beginning Cash & ST
Investments $ 15,800 $ 18,787 $ 16,773 $ 18,321
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Ending Cash & ST
Investments $ 15,051 $ 18,613 $ 15,051 $ 18,613
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All figures stated in U.S. dollars unless noted otherwise.
ContactsGloria Marks
CFO
810 Sherman Ave.
Coeur d'Alene
ID
83814
U.S.A.
(208) 770-2204
Fax (208) 667-7380
www.wgiheavyminerals.com
E-Mail gloria@wgiheavyminerals.com Greg Emerson
Interim CEO
(208) 770-2202
E-mail greg@wgiheavyminerals.com Ed Kok
Investor Relations
(208) 770-2208
E-Mail info@wgiheavyminerals.com
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