COEUR D'ALENE, ID, May 14 /CNW/ - WGI Heavy Minerals, Inc. (TSX: WG) today announced results for the first quarter ended March 31, 2007. All dollar amounts are in United States dollars unless otherwise indicated.
The first quarter has been constructive. A summary of key financial
results for the three-month period is as follows:
Highlights
- Revenues increased 21% for the quarter to $6.2 million from
$5.1 million in the same period a year ago.
- Gross margin increased to 27.0% for the quarter from 6.6% in the same
period last year.
- The Company posted a net income for the quarter of $0.02 million.
This has increased from the year ago period's net loss of
$1.2 million.
- Generated cash flow of $0.5 million, or $0.02 per share, from
operating activities.
- At March 31, 2007 the Company had a cash position (including short
term investments) of $18.8 million.
"The Company continues to improve operations and profitability in all facets of our business: We continue to increase sales and improve margins. The current WGI senior management team has now been together for eight months and is generating positive results as they systematically address the Company's needed improvements. Our Indian management is improving operational effectiveness as well. There continues to be much work to be done and it will continue to take time, more time than we or our patient shareholders like. But useful progress is being made and should enhance the Company's value." said Chairman and CEO Covell Brown.
Results of Operations
Revenues for the three-month period ended March 31, 2007 increased 21 percent to $6.2 million, compared with $5.1 million for same period in 2006 due to higher prices and strong growth across most product lines. Garnet grew 13%, other abrasives grew 74%, and waterjet parts rose 22%. Garnet and other abrasives sales volumes increased 13% while increasing prices contributed another 7% to performance. Markets remained buoyant throughout the quarter. The Company's revenues come from the following products: Garnet (68%), Waterjet Replacement Parts (16%), and Other Abrasives (16%).
Gross profit margins increased to 27.0% in the first quarter compared with 6.6% in the first quarter of 2006. The most significant improvement was made in Garnet & Other Abrasives improving to 32.4% gross margin in Q107 from 16.7% in Q106. A third of the improvement is due to lower depreciation and amortization expenses. The remaining improvement is due to efficiencies in the operations.
General and administrative expenses decreased 4% year over year. Development costs increased to $0.3 million from $0.06 million in the year ago period. This increase is due to the ongoing efforts in Andra Pradesh and exploration and development of additional sources of garnet.
The Company posted a net profit of $0.02 million, or $0.0 per share, for Q107, compared with a net loss of $1.2 million, or $0.06 per share, for Q106. The net movement in Cash and Short Term investments was a positive inflow of $0.5 million or $0.02 per share.
Outlook
For 2007, the Company is targeting a modest sales increase. The Company continues to look for additional land to strengthen its reserves in Tamil Nadu, India and to continue to manufacture in Tamil Nadu. Recent results have been encouraging. Should this land and necessary mining leases be obtained on a timely basis, improvements in profitable sales are expected.
The Andhra Pradesh, India project continues to suffer from questionable governmental practices by the State of Andhra Pradesh and the Central Government. Recent High Court decisions have overturned and/or set back some of the State Government's hostile actions relating to the Company's leases and lease applications, providing some hope that the rule of law may prevail in that jurisdiction, thus affording legal protection for the Company's activities and proposed activities. Other cases are pending relative to the Central Government, specifically the Department of Atomic Energy. But there is at yet no certainty of a minimum level playing field in the Indian Mining Industry as experienced by the Company in recent years. It seems that the Company is in the unfortunate position of testing whether it is possible to comply with the laws and regulations governing Canadian listed companies and successfully do mining in India, given the governmental practices prevalent there.
WGI is making strides in its effort to return to profitability at its Emerald Creek Garnet facility through reinvestment in exploration and in the facility and improved procedures.
The Company is also seeing continued improvement in volume and profitability from International Waterjet Parts. Sales volumes in Europe and the Far East continue to grow in all product lines.
We continue to work to increase lease holdings and operating efficiency. Notwithstanding the challenges before us, we are optimistic.
Management's Discussion and Analysis
The Company's unaudited consolidated financial statement and the management's discussion and analysis for the three months ended March 31, 2007 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. Press Release 02-07
WGI Heavy Minerals, Incorporated
Financial Information
(in thousands, except for per share amounts)
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As at As at
Consolidated Balance Sheet March 31, December 31,
2007 2006
Assets
Cash and Short term deposits $ 18,787 $ 18,321
Other Current Assets 8,359 8,136
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Total Current Assets 27,146 26,456
Property, plant and equipment 7,319 7,279
Goodwill and Intangible Assets 2,022 2,049
Other Assets 0 30
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Total Assets $ 36,487 $ 35,814
Liabilities & Equity
Current Liabilities $ 4,813 $ 4,226
Long-term debt 925 1,067
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Total Liabilities 5,738 5,293
Capital stock 53,432 53,432
Stock-based compensation 2,189 2,088
Deficit (24,492) (24,510)
Foreign currency translation account (380) (519)
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Total Equity 30,749 30,491
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Total Liabilities & Equity $ 36,487 $ 35,784
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3 months ended 3 months ended
Consolidated Statements of Operations March 31, March 31,
and Deficit 2007 2006
Sales $ 6,219 $ 5,136
Operating Costs 4,264 4,156
Depreciation, depletion and amortization 275 640
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Gross Margin 1,680 341
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Expenses
G&A 1,296 1,352
Interest Income (224) (198)
Interest Expense 43 52
Stock based compensation 101 130
Development costs 292 62
Other Expenses/(income) 63 23
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Total 1,571 1,421
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Income/(Loss) before taxation 109 (1,080)
Taxes 91 78
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Net Income/(Loss) for the period $ 17 $ (1,158)
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Basic and diluted loss per common share $0.00 $ (0.06)
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3 months ended 3 months ended
March 31, March 31,
Consolidated Statements of Cash Flows 2007 2006
Cash flows from operating activities $ 535 $ (777)
Cash flows from investing activities (276) (488)
Cash flows from financing activities 145 (169)
Effect of exchange reate on cash and
cash equivalents 63 (17)
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Net increase (decrease) in cash &
ST Investments $ 467 $ (1,451)
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Cash $ ST Investments - beginning of period 18,321 22,597
Cash & ST Investments - end of period $ 18,787 $ 21,146
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All figures stated in U.S. dollars unless noted otherwise.