Neo Material Technologies reports third quarter 2010 financial results
- Revenues of US$91.3 million
- EBITDA of US$22.0 million
- Net Income of US$14.3 million or US$0.12 per share
- Net cash position of US$56.4 million
TORONTO, Nov. 10 /CNW/ - Neo Material Technologies Inc. (TSX: NEM) (the "Company") today reported its financial results for the three-month and nine-month periods ended September 30, 2010. Unless otherwise specified, all currency amounts are expressed in U.S. dollars.
Revenues continued to increase for the sixth consecutive quarter amounting to $91.3 million compared to $79.2 million in the previous quarter, and $54.1 million in the corresponding period in 2009. The Company also reported net income of $14.3 million, operating income plus depreciation and amortization ("EBITDA") of $22.0 million and earnings per share ("EPS") of $0.12 (on a basic and fully diluted basis). This compares to third quarter 2009 net income of $9.3 million, EBITDA of $14.0 million and EPS of $0.08 (on a basic and fully diluted basis). Operating income increased by 68 percent to $19.2 million compared to $11.4 million in the corresponding period in 2009. Cash provided by operating activities during the third quarter of 2010 was $7.1 million.
During the three-month period ended September 30, 2010 the Company incurred a $3.7 million charge associated with stock based compensation. Excluding the impact of stock-based compensation expense), on a non-GAAP basis, net income, EBITDA and EPS, would be $17.6 million, $25.7 million and $0.15 (on a basic and fully diluted basis), respectively.
For the nine-month period ended September 30, 2010, net income, EBITDA and EPS were $43.1 million, $63.5 million, and $0.36 (on a basic and fully diluted basis). This compares to net income, EBITDA and EPS for the nine-month period ended September 30, 2009 of $11.0 million, $20.6 million, and $0.10 and $0.09 on a basic and fully diluted basis, respectively. Revenues for the nine months ended September 30, 2010 were $235.6 million compared to revenues of $124.7 million in the corresponding period in 2009. Excluding the impact of stock-based compensation expense, on a non-GAAP basis, net income, EBITDA and EPS would be $46.3 million, $67.1 million and $0.39 (on a basic and fully diluted basis), respectively.
At September 30, 2010, the Company had a net cash balance of $56.4 million.
"The remarkable performance during the quarter was achieved against the strong headwinds of increasing raw material costs and unprecedented uncertainty in the markets caused by the unexpected, deep reductions in rare earth export quotas from China," noted Constantine Karayannopoulos, President and CEO. "The third quarter was another record quarter for our company and we remain optimistic in the face of continuing uncertainty in the Chinese regulatory environment."
Magnequench
$000's (except for
quantity shipped) ------------------------------------------------------
Trailing
Q3 Q4 Q1 Q2 Q3 Twelve
2009 2009 2010 2010 2010 Months
-------------------------------------------------------------------------
Quantity Shipped
(tonnes) 1,268 1,293 1,492 1,537 1,578 5,900
-------------------------------------------------------------------------
Revenues 34,049 32,941 38,092 42,301 45,007 158,341
-------------------------------------------------------------------------
Operating Income(1) 16,255 15,132 16,327 16,086 15,117 62,662
-------------------------------------------------------------------------
Performance Materials
$000's (except for
quantity shipped) ------------------------------------------------------
Q3 Trailing
2009 Q4 Q1 Q2 Q3 Twelve
Restated 2009 2010 2010 2010 Months
-------------------------------------------------------------------------
Quantity Shipped
(tonnes) 1,144 1,954 1,419 1,612 1,422 6,407
-------------------------------------------------------------------------
Revenues 21,678 31,611 30,227 43,392 49,606 154,836
-------------------------------------------------------------------------
Operating
Income(1)(2) 151 1,279 2,644 5,622 9,784 19,329
-------------------------------------------------------------------------
Consolidated
$000's ------------------------------------------------------
Q3 Trailing
2009 Q4 Q1 Q2 Q3 Twelve
Restated 2009 2010 2010 2010 Months
-------------------------------------------------------------------------
Inter-segment sales (1,582) (1,756) (3,228) (6,483) (3,269) (14,736)
-------------------------------------------------------------------------
Revenues 54,145 62,796 65,091 79,210 91,344 298,441
-------------------------------------------------------------------------
Operating Income(2) 11,396 11,637 16,105 19,556 19,162 66,460
-------------------------------------------------------------------------
EBITDA(2) 14,004 14,577 19,001 22,457 21,994 78,029
-------------------------------------------------------------------------
Net Income 9,299 8,681 12,841 16,021 14,264 51,807
-------------------------------------------------------------------------
EPS (basic) 0.08 0.07 0.11 0.13 0.12 0.43
-------------------------------------------------------------------------
Impact of Stock-based
Compensation(3)
$000's (except
earnings per share) -----------------------------------------------------
Q3 Trailing
2009 Q4 Q1 Q2 Q3 Twelve
Restated 2009 2010 2010 2010 Months
-------------------------------------------------------------------------
Stock-based
Compensation
Expense (Income) 2,984 2,497 76 (139) 3,674 6,108
-------------------------------------------------------------------------
Adjusted Operating
Income 14,380 14,134 16,181 19,417 22,836 72,568
-------------------------------------------------------------------------
Adjusted EBITDA 16,988 17,074 19,077 22,318 25,668 84,137
-------------------------------------------------------------------------
Adjusted Net Income 11,998 10,895 12,878 15,882 17,556 57,211
-------------------------------------------------------------------------
Adjusted EPS (basic) 0.10 0.09 0.11 0.13 0.15 0.48
-------------------------------------------------------------------------
Note:
(1) Divisional Operating Income presented in the tables above excludes
stock-based compensation expense.
(2) Operating Income for the quarter ending 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
restatement was an increase to inventory of $0.2 million as at
September 30, 2009, and an equivalent increase to operating income,
net income and EBITDA (defined as operating income, plus depreciation
and amortization) in that period.
(3) The table above contains non-GAAP financial measures. Management
believes these items are useful supplemental measures of the
Company's operating performance and will assist readers in comparing
operating results from period to period. These measures do not have
any standardized meanings prescribed by Canadian GAAP and may not be
comparable to similar measures presented by other companies. Readers
should be cautioned, however, that these non-GAAP financial measures
should not be considered as alternatives to financial measures
calculated in accordance with Canadian GAAP.
Teleconference Call
Management will host a teleconference call on November 11, 2010 at 9:00 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 21049283No. until December 12, 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 November 11, 2010.
About Neo Material Technologies
Neo Material Technologies Inc. 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. 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)
September 30 December 31
2010 2009
-------------------------------------------------------------------------
(Unaudited) (Audited)
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 67,483 $ 57,308
Accounts receivable 53,464 36,195
Inventories 77,606 48,914
Future income tax asset 1,883 2,536
Other current assets 8,410 7,886
-------------------------------------------------------------------------
Total current assets 208,846 152,839
-------------------------------------------------------------------------
Property, plant and equipment 46,701 44,755
Patents and other intangible assets 10,995 13,118
Pension benefit asset 3,600 3,780
Goodwill 48,721 44,481
Other long-term assets 9,926 6,849
-------------------------------------------------------------------------
Total assets $ 328,789 $ 265,822
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank advances and other short-term debt $ 10,152 $ 6,977
Accounts payable and other accrued charges 48,050 34,397
Long-term debt due within one year 273 -
-------------------------------------------------------------------------
Total current liabilities 58,475 41,374
-------------------------------------------------------------------------
Long-term debt 618 -
Future income tax liability 8,127 4,533
Accrued postretirement benefits 484 493
Other long-term liabilities 8,327 4,446
-------------------------------------------------------------------------
Total liabilities 76,031 50,846
-------------------------------------------------------------------------
Non-controlling interest 3,062 1,666
Shareholders' equity 249,696 213,310
Commitments
Subsequent event
-------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 328,789 $ 265,822
-------------------------------------------------------------------------
-------------------------------------------------------------------------
NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(All figures in thousands of United States dollars, except per share
information)
Three months ended Nine months ended
September 30 September 30
2010 2009 2010 2009
Restated Restated
-------------------------------------------------------------------------
Revenues $ 91,344 $ 54,145 $235,645 $124,690
Cost of sales
Costs excluding
depreciation and
amortization 54,571 30,070 138,082 77,761
Depreciation and
amortization 2,110 2,017 6,300 5,894
-------------------------------------------------------------------------
Gross profit 34,663 22,058 91,263 41,035
Expenses
Selling, general
and administrative 8,414 5,837 22,702 18,635
Stock-based
compensation 3,674 2,984 3,611 4,117
Depreciation and
amortization 722 591 2,329 1,791
Research and
development 2,691 1,250 7,798 3,607
-------------------------------------------------------------------------
15,501 10,662 36,440 28,150
-------------------------------------------------------------------------
Operating income
before the
undernoted 19,162 11,396 54,823 12,885
Other expense (income) 34 (166) (55) (341)
Interest expense,
long-term debt 4 - 11 -
Interest expense, other 33 477 481 968
Foreign exchange gain (325) (611) (568) (1,095)
-------------------------------------------------------------------------
Income from operations
before taxes, non-
controlling interest
and equity income
of affiliate 19,416 11,696 54,954 13,353
Income taxes 4,727 2,666 11,503 2,799
-------------------------------------------------------------------------
Income from operations
before non-controlling
interest and equity
income of affiliate 14,689 9,030 43,451 10,554
Equity income of
affiliate 199 245 1,071 6
Non-controlling
interest in
(earnings) loss
of subsidiaries (624) 24 (1,396) 443
-------------------------------------------------------------------------
Net income for the
period and
comprehensive income $ 14,264 $ 9,299 $ 43,126 $ 11,003
-------------------------------------------------------------------------
Net income per
share, basic $ 0.12 $ 0.08 $ 0.36 $ 0.10
-------------------------------------------------------------------------
Net income per
share, diluted $ 0.12 $ 0.08 $ 0.36 $ 0.09
-------------------------------------------------------------------------
Weighted average
number of shares
outstanding, basic 119,356,047 116,059,610 119,863,493 115,249,786
-------------------------------------------------------------------------
Weighted average
number of share
outstanding,
diluted 120,743,965 117,633,357 121,302,434 115,861,083
-------------------------------------------------------------------------
NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All figures in thousands of United States dollars)
Three months ended Nine months ended
September 30 September 30
2010 2009 2010 2009
Restated Restated
-------------------------------------------------------------------------
Operating Activities
Net income for the period $ 14,264 $ 9,299 $ 43,126 $ 11,003
Add (deduct) items not
affecting cash
Depreciation and
amortization 2,832 2,608 8,629 7,685
Stock-based compensation
expense 3,674 2,984 3,611 4,117
Non-controlling interest in
earnings (losses) of
subsidiaries 624 (24) 1,396 (443)
Accretion in carrying value
of long-term liabilities 119 187 432 566
Future income tax 868 643 4,247 (736)
Equity income of affiliate (199) (245) (1,071) (6)
Accrued benefit expense,
net of cash contributions 99 6 171 40
Loss on disposal 110 9 189 61
Other 92 - 92 -
Net change in other
long-term liabilities (171) - (171) -
Net change in non-cash working
capital balances related
to operations (15,248) (5,881) (37,468) (3,311)
-------------------------------------------------------------------------
Cash provided by
operating activities 7,064 9,586 23,183 18,976
-------------------------------------------------------------------------
Investing activities
Acquisition of property,
plant and equipment (2,316) (617) (4,433) (2,894)
Cash paid on acquisition of
Buss & Buss and Recapture
Metals Ltd, net of
cash acquired - (4,996) (5,235) (4,996)
Redemption of Recapture's
preferred shares - (1,607) - (1,607)
Proceeds from disposal - - 51 2,032
Other investments 12 - (726) (204)
-------------------------------------------------------------------------
Cash used in investing
activities (2,304) (7,220) (10,343) (7,669)
-------------------------------------------------------------------------
Financing activities
Repayment of long-term debt (46) - (122) -
(Decrease) increase in bank
advances and other
short-term debt (3) (6,338) 1,881 (11,587)
Repurchase of common
shares for cancellation (3,554) - (4,587) (1,623)
Issue of common shares 42 2,014 163 2,014
-------------------------------------------------------------------------
Cash used in financing
activities (3,561) (4,324) (2,665) (11,196)
-------------------------------------------------------------------------
Cash provided (used) during
the period 1,199 (1,958) 10,175 111
-------------------------------------------------------------------------
Cash and cash equivalents,
beginning of period 66,284 53,576 57,308 51,507
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 67,483 $ 51,618 $ 67,483 $ 51,618
-------------------------------------------------------------------------
NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(All figures in thousands of United States dollars)
September 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 104,066 168 1,107,992 2,423
Shares issued on
acquisition of
a 19.5% stake in
Atlantic Metals,
net of issue cost 180,838 688 - -
Shares purchased
for cancellation
pursuant to
normal course
issuer bid (1,271,900) (2,596) (1,709,100) (1,623)
Fair value
assigned to
repurchase of
common shares - - - (1,827)
-------------------------------------------------------------------------
Balance at end
of period 119,088,506 243,139 120,075,502 244,879
-------------------------------------------------------------------------
Contributed Surplus
Balance at
beginning of
period 7,301 5,081
Stock-based
compensation
expense 190 393
Exercise of
stock options (5) -
Repurchase of
common shares
for cancellation (1,991) 1,827
-------------------------------------------------------------------------
Balance at end
of period 5,495 7,301
-------------------------------------------------------------------------
Retained Earnings
(Deficit)
Balance at beginning
of period (38,574) (58,258)
Net income for
the period 43,126 19,684
Other equity (3,194) -
-------------------------------------------------------------------------
Balance at end
of period 1,358 (38,574)
-------------------------------------------------------------------------
Shareholders' loan
Balance at beginning
of period (296) (296)
-------------------------------------------------------------------------
Balance at end
of period (296) (296)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Shareholders' equity at
end of period 249,696 213,310
-------------------------------------------------------------------------
-------------------------------------------------------------------------
%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