Opta Minerals Inc. Reports Fourth Quarter and Year End Results for Fiscal 2014

WATERDOWN, ONTARIO--(Marketwired - Mar 3, 2015) - Opta Minerals Inc. (OPM.TO), today announced results for the three and twelve months ended December 31, 2014. All figures are reported in U.S. dollars and are in accordance with International Financial Reporting Standards (IFRS), except where otherwise noted.

	3 months			3 months								12 months			12 months
	ended			ended								ended			ended
	December 31,			December 31,			Increase					December 31,			December 31,			Increase
	2014			2013			(Decrease)			%		2014			2013			(Decrease)			%
				(restated)
Revenue	$	34,189		$	32,821		$	1,368		4.2	%	$	139,856		$	141,435		$	(1,579	)	-1.1	%
Gross Profit		4,234			5,294			(1,060	)	-20.0	%		20,917			23,879			(2,962	)	-12.4	%
		12.4	%		16.1	%		-3.7	%				15.0	%		16.9	%		-1.9	%
EBITDA1		1,342			3,353			(2,011	)	-60.0	%		9,005			12,127			(3,122	)	-25.7	%
EBIT2		(4,109	)		1,400			(5,509	)	-393.5	%		(1,346	)		2,348			(3,694	)	-157.3	%
Income (Loss)		(2,874	)		971			(3,845	)	-396.0	%		(1,882	)		(181	)		(1,701	)	939.8	%
EPS	$	(0.16	)	$	0.05		$	(0.21	)			$	(0.10	)	$	(0.01	)	$	(0.09	)

(1) EBITDA is a non-IFRS measure: refer to Footnotes

(2) EBIT is a non-IFRS measure; refer to Footnotes

David Kruse, President and CEO of Opta Minerals, noted, "We continue to be pleased with results within our Steel and Magnesium group and continue to address the underperformance within our Industrial Minerals group which is experiencing tough economic conditions and fierce competition. To this end we have reorganized a number of functions within Industrial Minerals and Corporate which has led to net headcount reductions of approximately fifteen employees. The reorganization has combined a number of separate departments and is expected to streamline our go to market approach within this segment. Expected savings are estimated at approximately $1.2 million annually. Other initiatives are in process to further address underperforming locations and we continue to also focus on new revenue growth opportunities in both segments. During the quarter we took a number of non-cash impairment charges at a number of locations totalling $4.0 million. Excluding these non cash charges EBIT would be positive on a year to date basis at approximately $2.7 million.

The Company continues to look at strategic alternatives for the business as previously announced."

Operational and Financial Highlights:

• Fourth quarter revenue in the Steel and Magnesium segment increased 19.4% from the comparable quarter in 2013 despite the impacts of a depreciating Canadian dollar and Euro against the U.S. dollar. Revenues in the Steel and Magnesium segment have increased 10.0% over the comparable year. The Steel and Magnesium segment has benefited from new business in the past two quarters and generally higher volumes from existing customers. The Industrial Minerals segment decreased 13.4% over the comparable quarter and 13.3% as compared to the previous year. The decrease is primarily due to economic and competitive activity in the markets we serve.
  
  

• Gross profit and gross margin percentage are below the same quarter of the prior year. Margins are lower in the Steel group due to certain re-pricing that occurred in the fourth quarter of 2013. Industrial Minerals segment margins are being impacted by lower volumes, product mix and competitive pressure.
  
  

• Selling, general and administrative expenses (SGA) as a percent of revenues were 11.5% compared to 11.9% in the prior years fourth quarter. SGA as a percent of revenues were 11.9% compared to 13.5% in the prior year. The Company is targeting 10% SGA as a percent of revenues and expects to achieve this primarily by a growth in revenues with limited increases in SGA. SGA includes certain one time expenses related to the review of strategic options for the Company of approximately $300 during the year. As noted above the Company has focused on SG&A reductions specifically in Industrial Minerals and Corporate and has eliminated a net fifteen in headcount since October 2014 with an annual savings estimated at $1.2 million. Limited savings were realized in the fourth quarter as severance expense offset salary and other compensation expenses.
  
  

• Results include foreign exchange losses of $457 in the current quarter and $1,238 year to date compared to foreign exchange gains of $467 and $1,162 in the prior comparable quarter and year, respectively. The year over year foreign exchange difference of $2.4 million was driven by the strength in the US dollar against both the Canadian dollar and Euro.
  
  

• The Company had annual write-downs of goodwill and intangible assets and property, plant and equipment in the amount of $4.0 million related to the Company's impairment analysis. A majority of these asset write-downs occurred in the Industrial Minerals segment. In 2013 the Industrial Minerals segment wrote down goodwill and intangible assets and property, plant and equipment of $4.3 million.
  
  

• The Company's working capital at December 31, 2014 is $21.8 million and total assets were $117.6 million, as compared to $23.3 million and $130.1 million, respectively, at December 31, 2013. Working capital at December 31, 2014 reflects higher trade and other receivables, offset by lower inventories compared to 2013. This shift generates improved cash flow with more available liquid assets in working capital.
  
  

• The debt to equity ratio at December 31, 2014 was 1.00 to 1.00, compared to 1.17 to 1.00 at December 31, 2013. Ratios are improving as debt continues to fall and the US dollar strengthens.
  
  

Opta Minerals is a vertically integrated provider of custom process solutions and industrial mineral products used primarily in the steel, foundry, loose abrasive cleaning, water-jet cutting and municipal water filtration industries. The Company has production and distribution facilities in Ontario, Quebec, Saskatchewan, Louisiana, South Carolina, Virginia, Maryland, Indiana, Michigan, New York, Texas, Florida, Ohio, Idaho, France, Slovakia and Germany. Opta has one of the broadest product lines in the industry.

FOOTNOTES:

Earnings before income taxes and interest ("EBIT"); and earnings before interest, income taxes, depreciation and amortization ("EBITDA") as defined below, are both non-IFRS earnings measures that do not have standardized measures prescribed by IFRS, and therefore may not be comparable to similar measures presented by other publicly traded companies.

	For the three				For the twelve
	Months Ended				Months Ended
	December 31				December 31
	2014		2013		2014		2013
	$		$		$		$
			(restated)
Loss for the Period	(2,874	)	971		(1,882	)	(181	)
Finance Expense	906		697		3,689		3,665
Income Tax Recovery	(2,141	)	(268	)	(3,153	)	(1,136	)
Depreciation and Amortization	1,503		1,501		6,002		6,110
Goodwill and Intangible Asset Write-downs	870		-		870		3,862
Property, Plant and Equipment Write-downs	2,990		450		3,170		450
Fair Value Adjustments to Contingent Consideration	88		2		309		(643	)
EBITDA1	1,342		3,353		9,005		12,127
Subtract:
Depreciation and Amortization	1,503		1,501		6,002		6,110
Goodwill and Intangible Asset Write-downs	870		-		870		3,862
Property, Plant and Equipment Write-downs	2,990		450		3,170		450
Fair Value Adjustments to Contingent Consideration	88		2		309		(643	)
EBIT2	(4,109	)	1,400		(1,346	)	2,348

Notes

1. The term "EBITDA" refers to earnings before deducting finance expense, income taxes, depreciation and amortization. The Company believes that EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration non-cash asset depreciation and amortization. EBITDA is not a recognized measure under International Finance Reporting Standards (IFRS), and accordingly, investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with IFRS as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. The Company's method of calculating EBITDA may differ from other issuers and accordingly, EBITDA may not be comparable to similar measures presented by other issuers.
   
   

2. The term "EBIT" refers to earnings before income taxes and finance expense. The Company believes that EBIT is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed or taxed. EBIT is a non-IFRS earnings measure that does not have standardized measures prescribed by IFRS, and therefore may not be comparable to similar measures presented by other publicly traded companies.
   
   

Certain statements in this release constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements in this press release include, without limitation, statements relating to: the anticipated benefits of the Company's recent reorganization within Industrial Minerals and Corporate, including with respect to estimated cost savings; intended initiatives to address the Company's underperforming locations and the Company's focus on new revenue growth and growth opportunities, as well as other statements which reflect the current expectations of management of the Company regarding the Company's future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as "may", 'would", "could", "should", "will", "anticipate", "believe", "plan", "expect", "intend", "estimate", "aim", "endeavour", "seek", "predict", "potential" and similar expressions have been used to identify these forward-looking statements. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management of the Company. Forward-looking statements involve significant risks, uncertainties and assumptions. Many factors could cause theCompany's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, without limitation: the impact of general economic conditions; the impact of specific industry conditions; the inability of the Company to successfully integrate acquired businesses or to achieve the anticipated benefits from such acquisitions; the risk of unexpected costs or liabilities relating to acquisitions; currency fluctuations and exchange rate risks;
risks associated with foreign operations; governmental and environmental regulation; competition from other industry participants; cancellations of or the failure to renew purchase orders; production and delivery issues; quality, pricing and availability of raw materials; mining risks; and the other risks identified in the Company's Annual Information Form and other public filings (copies of which may be obtained at www.sedar.com). Should one or more of these risks or
uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by this press release. These factors should be considered carefully and reader should not place undue reliance on the forward-looking statements. Although any forward-looking statements contained in this press release are based upon what management currently believes to be reasonable assumptions, the Company cannot assure readers that actual results, performance or achievements will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. These forward-looking statements are made as of the date of this press release and, other than as required by law, the Company does not intend, and does not assume any obligation, to update or revise these forward- looking statements, whether as a result of new information, future events or otherwise.

Opta Minerals Inc.
Consolidated Balance Sheets As at December 31, 2014 (Unaudited)
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
		December 31,			December 31,
		2014			2013
Assets
Current
	Cash and cash equivalents	$	2,170		$	4,084
	Trade receivables, other receivables and prepayments		20,236			14,676
	Inventories		34,486			39,525
	Income taxes receivable		860			544
			57,752			58,829
Property, Plant and Equipment			21,926			28,030
Intangible Assets			26,827			31,071
Goodwill			9,447			10,659
Deferred Income Tax Assets			1,645			1,471
		$	117,597		$	130,060
Liabilities
Current
	Trade and other payables	$	17,216		$	13,961
	Borrowings		17,492			20,721
	Provisions		772			520
	Other liabilities		492			348
			35,972			35,550
Borrowings			30,103			37,539
Derivative Financial Instruments			285			311
Provisions			447			91
Other Liabilities			242			371
Deferred Income Tax Liabilities			3,040			6,540
			70,089			80,402
Equity Attributable to the Shareholders of the Company
Capital Stock
	Authorized without limit as to number - Preference shares (without par value) Common shares Issued - 18,125,164 common shares (December 31, 2013 - 18,111,247)		17,905			17,882
Contributed Surplus			4,696			4,358
Accumulated Other Comprehensive Loss			(1,491	)		(862	)
Retained Earnings			26,398			28,280
			47,508			49,658
		$	117,597		$	130,060

Opta Minerals Inc.
Consolidated Statements of Loss For the Years Ended December 31, 2014 and 2013 (Unaudited)
Expressed in Thousands of US Dollars (except per share amounts)
		December 31,			December 31,
			2014			2013
Revenue		$	139,856		$	141,435
Cost of Goods Sold			118,939			117,556
Gross Profit			20,917			23,879
Expenses
	Selling, general and administrative		16,676			19,024
	Goodwill and intangible asset write-downs		870			3,862
	Property, plant and equipment write-downs		3,170			450
	Fair value adjustments to contingent consideration		309			(643	)
	Other expenses (income)		1,238			(1,162	)
			22,263			21,531
Income (Loss) Before Finance Expense and Income Taxes			(1,346	)		2,348
Finance expense			3,689			3,665
Loss Before Income Taxes			(5,035	)		(1,317	)
Income tax recovery			(3,153	)		(1,136	)
Loss for the Year Attributable to the Shareholders of the Company		$	(1,882	)	$	(181	)
Loss per share for the year - basic and diluted		$	(0.10	)	$	(0.01	)

Opta Minerals Inc.
Consolidated Statements of Comprehensive (Loss) Income For the Years Ended December 31, 2014 and 2013 (Unaudited)
Expressed in Thousands of US Dollars
		December 31,			December 31,
			2014			2013
Loss for the Year Attributable to the Shareholders of the Company		$	(1,882	)	$	(181	)
Other Comprehensive (Loss) Income, net of income taxes
	Items that may be reclassified subsequently to profit or loss
	Unrealized gain (loss) on translation of foreign operations		(649	)		924
	Unrealized gain on derivative financial instruments designated as cash flow hedges		20			63
	Other comprehensive (loss) income, net of income taxes		(629	)		987
Comprehensive (Loss) Income Attributable to the Shareholders of the Company		$	(2,511	)	$	806

Opta Minerals Inc.
Consolidated Statements of Changes in Equity For the Years Ended December 31, 2014 and 2013 (Unaudited)
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
											AOCI* -
		Number of			Contributed						Foreign
		Shares -			Surplus -			AOCI* -			Currency
		Capital	Capital		Share-based			Cash Flow			Translation			Retained			Total
		Stock	Stock		Payments			Hedge			Reserve			Earnings			Equity
At January 1, 2014		18,111,247	$	17,882	$	4,358		$	(230	)	$	(632	)	$	28,280		$	49,658
Comprehensive (Loss) Income
	Loss for the year	-		-		-			-			-			(1,882	)		(1,882	)
	Unrealized loss on translation of foreign operations	-		-		-			-			(649			-			(649
													)						)
	Unrealized gain on derivative financial instruments designated as cash flow hedges	-		-		-			20			-			-			20
Total Comprehensive (Loss) Income		-		-		-			20			(649	)		(1,882	)		(2,511	)
Transactions with Shareholders
	Employee share purchase plan	13,917		23		-			-			-			-			23
	Share-based payment expense	-		-		338			-			-			-			338
Total Transactions with Shareholders		13,917		23		338			-			-			-			361
At December 31, 2014		18,125,164	$	17,905	$	4,696		$	(210	)	$	(1,281	)	$	26,398		$	47,508
At January 1, 2013		18,084,559	$	17,822	$	3,925		$	(293	)	$	(1,556	)	$	28,461		$	48,359
Comprehensive Income (Loss)
	Loss for the year	-		-		-			-			-			(181	)		(181	)
	Unrealized gain on translation of foreign operations	-		-		-			-			924			-			924
	Unrealized gain on derivative financial instruments designated as cash flow hedges	-		-		-			63			-			-			63
Total Comprehensive Income (Loss)		-		-		-			63			924			(181	)		806
Transactions with Shareholders
	Employee share purchase plan	18,611		45		-			-			-			-			45
	Share options exercised	8,077		15		(15	)		-			-			-			-
	Share-based payment expense	-		-		448			-			-			-			448
Total Transactions with Shareholders		26,688		60		433			-			-			-			493
At December 31, 2013		18,111,247	$	17,882	$	4,358		$	(230	)	$	(632	)	$	28,280		$	49,658

*AOCI - Accumulated Other Comprehensive Income (Loss)

Opta Minerals Inc.
Consolidated Statements of Cash Flows For the Years Ended December 31, 2014 and 2013 (Unaudited)
Expressed in Thousands of US Dollars
			December 31,			December 31,
				2014			2013
Cash Provided by (Used in) -
	Operating Activities
		Loss for the year	$	(1,882	)	$	(181	)
	Items not affecting cash:
		Depreciation of property, plant and equipment		3,784			3,655
		Amortization of intangible assets		2,218			2,455
		Goodwill and intangible asset write-downs		870			3,862
		Property, plant and equipment write-downs		3,170			450
		Share-based payment expense		338			433
		Fair value adjustments to contingent consideration		309			(643	)
		Deferred income taxes		(3,543	)		(2,502	)
		Loss (gain) on disposal of property, plant and equipment		104			(27	)
				5,368			7,502
	Changes in non-cash working capital
		Trade receivables, other receivables and prepayments		(6,008	)		4,816
		Inventories		4,262			(7,834	)
		Trade and other payables		3,863			(135	)
		Provisions		622			136
		Income taxes receivable		(325	)		(889	)
				7,782			3,596
	Financing Activities
		Proceeds from issuance of common shares - net of issuance costs		23			60
		Proceeds from borrowings		-			5,912
		Repayment of borrowings - net of deferred finance charges		(6,759	)		(5,287	)
		Repayment of finance lease liabilities		(330	)		(610	)
				(7,066	)		75
	Investing Activities
		Additions to property, plant and equipment		(2,272	)		(3,079	)
		Proceeds on disposal of property, plant and equipment		133			54
		Additional contingent consideration paid on acquisitions		(260	)		(489	)
		Additions to intangible assets		(86	)		(117	)
				(2,485	)		(3,631	)
Effect of Foreign Exchange (Loss) Gain on Cash and Cash Equivalents				(145	)		78
Net (Decrease) Increase in Cash and Cash Equivalents				(1,914	)		118
Cash and Cash Equivalents
	Beginning of Period			4,084			3,966
	End of Period		$	2,170		$	4,084

Opta Minerals Inc.
Segmented Information For the Years Ended December 31, 2014 and 2013 (Unaudited)
Expressed in Thousands of US Dollars
											2014
	Steel and				Industrial
	Magnesium				Minerals			Corporate			Total
External revenue by market
Canada	$	14,673		$	10,716		$	-		$	25,389
US		53,881			27,282			-			81,163
Europe		12,779			11,438			-			24,217
Other		133			8,954			-			9,087
Total revenue from external customers		81,466			58,390			-			139,856
Segment income (loss) before corporate expenses, goodwill and intangible asset write downs, property, plant and equipment write-downs, fair value adjustments to contingent consideration, finance expense and income taxes		11,565			(2,220	)		-			9,345
Goodwill and intangible asset write-downs		(265	)		(605	)		-			(870	)
Property, plant and equipment write-downs		(410	)		(2,760	)		-			(3,170	)
Fair value adjustments to contingent consideration		(309	)		-			-			(309	)
Corporate expenses		-			-			(6,342	)		(6,342	)
Segment income (loss) before finance expense and income taxes		10,581			(5,585	)		(6,342	)		(1,346	)
Finance expense		-			-			-			(3,689	)
Income tax recovery		-			-			-			3,153
Loss for the year		-			-			-			(1,882	)
Total assets as at December 31, 2014		66,013			47,183			4,401			117,597
Total liabilities as at December 31, 2014		18,298			6,806			44,985			70,089
Depreciation of property, plant and equipment		1,878			1,746			160			3,784
Amortization of intangible assets		2,132			2			84			2,218
Goodwill and intangible assets as at December 31, 2014		36,164			-			110			36,274
Expenditures on property, plant and equipment	$	1,672		$	451		$	149		$	2,272

Opta Minerals Inc.
Segmented Information For the Years Ended December 31, 2014 and 2013 (Unaudited)
Expressed in Thousands of US Dollars
										2013
	Steel and			Industrial
	Magnesium			Minerals			Corporate			Total
External revenue by market
Canada	$	13,380	$	12,564		$	-		$	25,944
US		47,922		33,193			-			81,115
Europe		12,739		13,267			-			26,006
Other		20		8,350			-			8,370
Total revenue from external customers		74,061		67,374			-			141,435
Segment income (loss) before corporate expenses, goodwill and intangible asset write-downs, property, plant and equipment write-downs, fair value adjustments to contingent consideration, finance expense and income taxes		12,849		(1,203	)		-			11,646
Goodwill and intangible asset write-downs		-		(3,862	)		-			(3,862	)
Property, plant and equipment write-downs		-		(450	)		-			(450	)
Fair value adjustments to contingent consideration		643		-			-			643
Corporate expenses		-		-			(5,629	)		(5,629	)
Segment income (loss) before finance expense and income taxes		13,492		(5,515	)		(5,629	)		2,348
Finance expense		-		-			-			(3,665	)
Income tax recovery		-		-			-			1,136
Loss for the year		-		-			-			(181	)
Total assets as at December 31, 2013		64,511		65,549			-			130,060
Total liabilities as at December 31, 2013		14,872		5,769			59,761			80,402
Depreciation of property, plant and equipment		1,569		1,890			196			3,655
Amortization of intangible assets		2,159		138			158			2,455
Goodwill and intangible assets as at December 31, 2013		40,961		651			118			41,730
Expenditures on property, plant and equipment	$	1,648	$	1,158		$	273		$	3,079