COEUR D'ALENE, ID, Aug. 11 /CNW/ - WGI Heavy Minerals, Incorporated ("WGI") (TSX: WG) today announced results for the quarter and six months ended June 30, 2009. All dollar amounts are in U.S. dollars unless otherwise indicated. Results have been filed and may be viewed at www.sedar.com.
WGI is pleased to report net income for the second quarter of $0.28 million, EPS $0.01 and half year results of $0.14 million, EPS $0.01. In addition, WGI has signed an extension to its supply agreement with Transworld Garnet India Pvt. Limited ("TGI") effective August 2009. "We are pleased with the confidence that TGI has placed in WGI's marketing and sales team by extending our partnership to December 31, 2016," said Greg Emerson, President and CEO.
Q2 and First Half 2009 Highlights
- Revenues in the second quarter were $7.02 million, up 15% over first
quarter 2009 revenues of $6.1 million and up 3% over 2008's second
quarter results of $6.82 million. Revenues for the first half were
$13.09 million down 4% from the same period in 2008.
- Gross margins improved 6 points from 22% in the first quarter of 2009
to 28% in the second quarter of 2009. Gross margin improved 6 points
to 28% over 2008's second quarter. Similarly, gross margins improved
6 points to 26% for the first half of 2009.
- General and administrative expenses for the quarter were held to
$1.58 million compared to the same period year over year of $2.08
million, a reduction of 24%. General and administrative expenses for
the first half were $2.96 million and were reduced from the first
half of 2008 by 20%.
- Net income for the quarter was $0.28 million, EPS $0.01 compared to a
net loss of $0.72 million in the second quarter of 2008, EPS $(0.03).
Net income for the first six months of 2009 was $0.14 million, EPS
$0.01 compared to a net loss of $1.4 million for the same period in
2008, EPS $(0.06).
- Cash and cash equivalents decreased for the quarter by $0.68 million
primarily due to working capital increasing by $0.8 million, capital
expenditures of $0.22 million and the repayment of debt of $0.15
million all offset by a positive result from operations of $0.43
million.
Overview
"Despite the poor economic conditions WGI's operations have returned positive results for the second quarter by improving production flows, managing expenses and continued responsiveness to customer needs," said Greg Emerson, President and CEO. "The most dramatic change has been with the Company's mining and processing facilities at Emerald Creek Garnet ("ECG") in Idaho, U.S.A. ECG prepared a value stream map of its processes, redesigned its operations to reduce start up times, eliminated waste and has established a new continuous flow which reduces the number of operators required. These changes have reduced operating costs and increased gross margins. The increased efficiency in mining and processing methods will allow the Company to revisit deposits once thought uneconomical."
Garnet markets appeared mixed in the second quarter with some new requests for the supply of garnet but still lower demand from most customers compared to the same period last year. While the Company is receiving more and more requests for quotes on projects for later in the fall, we continue to work with existing distributors and look for new opportunities to expand our sales in a stagnant market. With pricing under pressure it is even more important these days to stress quality and on time delivery; qualities the Company continues to improve on at its operating units and in partnership with TGI, our garnet supplier in India.
TGI is working with the Company's Indian liaison office and has brought the Srikakulam mine on line giving WGI access to new sources of garnet and ilmenite. During the quarter the Company recognized its first brokered ilmenite sale, the first for the Company since 2004.
"Increased garnet supply now available to WGI will require new customers, which take several months to develop in normal market conditions," stated William Meyerholtz, Vice President of Sales, and Marketing, International. "We must do this in a soft market when people are hesitant to take on new supplies unless they are low cost. We are working with our supply chain to ensure we are doing all we can to reduce costs and pass these savings onto our customers while generating a return for our shareholders. We believe our financial results so far prove that we are succeeding in these goals."
Outlook
Market conditions remain unpredictable going into the third quarter of 2009. Prices are still under pressure. Demand for increased credit and increasing logistics costs are also at the center of discussions by Company management. Over the last several years the Company has been supplying customers with long lead times due to the shortage in supply compared to demand. Those market conditions have now changed. New supplies are entering the market place while demand and prices are softening. This change in business is not limited to any one geographic location or business segment; it is global. Many of our customers are just now showing interest in additional supply of product. We are seeing more activity in the minerals side of the business compared to our after market waterjet parts business.
Modest increases in revenue are planned for the full year of 2009. The Company is committed to managing costs and operating our current business units at a profit and within budget. Management continues to take steps to bring WGI's fixed cost structure into line with revenue from its operations. Modifications to current operating entities to streamline operations are continuing. As a case in point, ECG has increased its operating efficiencies through the adoption of Lean principles. In addition, the Company has hired a contractor to assist ECG in moving forward on significantly reducing its asset retirement obligation at ECG in 2009 which frees operating personnel to concentrate on producing product.
The Company continues to look for additional industrial mineral deposits around the world. In July 2009 the Company hired a full time geologist in North America to work with the existing management team to identify mineral deposits and evaluate those deposits through drilling programs and other means deemed necessary to understand the geological characteristics and economics of those deposits.
Also in July, Karla Wright Hayden has rejoined the Company as CFO. Mrs. Wright Hayden has over twenty-five years experience and has held senior financial and operations positions with Pyrotek, Inc., Tidyman's LLC and Honeywell Electronic Materials. Mrs. Wright Hayden was CFO of the Company in 2006 and 2007 and is well positioned to reassume this role.
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, 2009 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.
About WGI
WGI Heavy Minerals, Inc. is a marketer of industrial grade minerals sourced primarily out of India, producer of industrial-grade garnet out of Idaho and Germany and manufacturer of replacement parts for ultra-high pressure waterjet machine tool systems around the world. The Company's shares are listed on the Toronto Stock Exchange under the symbol WG.
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
(in thousands, except for per share amounts)
Consolidated Balance Sheet June 30, 2009 Dec. 31, 2008
-------------------------------
Assets
Cash and Short term deposits 8,343 28,201
Other Current Assets 9,547 8,250
-------------------------------
Total Current Assets 17,890 36,451
-------------------------------
Property, plant and equipment 3,718 3,758
Goodwill and Intangible Assets 517 543
Other Assets - -
-------------------------------
Total Assets 22,125 40,752
-------------------------------
-------------------------------
Liabilities & Equity
Current Liabilities 4,732 23,618
Long-term debt 466 488
Liabilities of discontinued operations - -
-------------------------------
Total Liabilities 5,198 24,106
-------------------------------
Capital Stock 38,468 38,456
Stock-based compensation 2,249 2,215
Deficit (24,043) (24,186)
Foreign currency translation account 253 161
-------------------------------
Total Equity 16,927 16,646
-------------------------------
Total Liabilities & Equity 22,125 40,752
-------------------------------
-------------------------------
Consolidated Statements of Operations and Deficit
For the three months For the six months
ended ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
---------------------- ----------------------
Sales $ 7,024 $ 6,821 $ 13,090 $ 13,598
Operating Costs 4,887 5,053 9,444 10,521
Depreciation, depletion,
and amortization 156 230 308 438
---------------------- ----------------------
Gross Profit 1,981 1,538 3,338 2,639
---------------------- ----------------------
Gross Margin % 28.2% 22.5% 25.5% 19.4%
Expenses
G&A 1,584 2,082 2,961 3,702
Interest Income (15) (84) (52) (228)
Interest Expense 17 22 38 43
Stock based compensation 25 77 34 174
Development costs 9 2 11 7
Other Expenses (Income) 6 149 52 312
---------------------- ----------------------
1,626 2,248 3,044 4,010
---------------------- ----------------------
Loss before taxes 355 (710) 294 (1,371)
Provision for taxes 71 73 152 129
---------------------- ----------------------
(Loss) from operations
for the year 284 (783) 142 (1,500)
---------------------- ----------------------
Net gain from
discontinued operations - 61 - 96
---------------------- ----------------------
$ 284 $ (722) $ 142 $ (1,404)
---------------------- ----------------------
---------------------- ----------------------
Basic and diluted loss
per common share $ 0.01 $ (0.03) $ 0.01 $ (0.06)
Expressed in U.S. dollars unless otherwise stated
Consolidated Statement of Cash Flows
For the three months For the six months
ended ended
June 30, June 30, June 30, June 30,
$(000's) 2009 2008 2009 2008
---------------------- ----------------------
Cash flows from
operating activities $ (536) $ (115) $ (140) $ (425)
Cash flows from
operating activities of
discontinued operations $ - $ (141) $ - $ (69)
Cash flows from investing $ (96) $ (766) $ (105) $ (985)
Cash flows from financing $ (148) $ 391 $ (466) $ (77)
Payment of cash
distribution $ - - $(19,245) $ -
Effect of exchange rate
changes on Cash & Cash Eq. $ 105 $ (118) $ 98 $ (166)
---------------------- ----------------------
---------------------- ----------------------
Inc./(dec.) in Cash and
ST Inv. $ (675) $ (749) $(19,858) $ (1,722)
---------------------- ----------------------
Beginning Cash & ST
Investments $ 9,018 $ 15,800 $ 28,201 $ 16,773
Ending Cash & ST
Investments $ 8,343 $ 15,051 $ 8,343 $ 15,051
Expressed in U.S. dollars unless otherwise stated.