VANCOUVER, May 5, 2016 /PRNewswire/ - Polaris
Materials Corporation (TSX:PLS) (the "Company" or "Polaris") today
reported the financial results for its first quarter ending
March 31, 2016. All currencies are US
dollars unless otherwise noted.
HIGHLIGHTS
- Long Beach has trended ahead
of our initial sales expectations, with the recent completion of
the Oceanwide Plaza foundation pour and ongoing daily deliveries
for several large projects contributing to Q1 sales
- Q1 2016 sales volumes (as noted in our April 13, 2016 press release) were lower
than Q1 2015 levels by 28% while Q1 2016 revenues
declined 24% versus the prior year quarter as a result of
heavy rainfalls and planned maintenance at a customer delivery
point
- Shipments in April 2016
were approximately 382,000 tons, a significant
improvement over March, and are consistent with our expectations
for the full year
- Net loss in Q1 2016 was $2.5
million compared to income of $0.1
million in Q1 2015, driven primarily by the above noted
decline in volumes
- Revenue per ton increased to $15.41 per ton in Q1 2016 from $14.64 per ton in Q1 2015 due to changes in sales
mix and underlying price increases, offset in part by the impact of
reduced fuel surcharges
- An exploratory drilling program for the Black Bear project was
completed in the first quarter of 2016 and results will be
incorporated in a National Instrument 43-101 report expected in mid
2016
Sales of aggregates in the first quarter were 516,000 tons with
revenue of $7.9 million, 28% and 24%,
respectively, below the same quarter in 2015. Cost of goods
sold declined to $8.3 million in Q1
2016 from $9.9 million in the prior
year quarter, attributable primarily to the reduction in volumes,
offset by an increase in costs attributable to changes in sales
mix. In spite of the expected decline in volumes, we reduced
cash used by operations during Q1 2016 to $0.7 million from $1.4
million used in Q1 2015.
Ken Palko, President and CEO,
commented: "In spite of headwinds driven by unusually wet weather
and planned maintenance, we are pleased that we were able to manage
costs and reduce cash utilization during the seasonally slow first
quarter, while continuing to pursue business development activities
that will set us up for success later this year. We are very
pleased with the initial progress we are seeing from our
Long Beach terminal and continue
to be excited about the opportunity to develop Black Bear. We
are rapidly progressing our evaluation work on this exciting
development project and aim to share the findings by mid 2016."
Summary of Quarterly Results
The selected financial information set out below is based on and
derived from the unaudited consolidated financial statements of the
Company. For a more detailed table of quarterly results
please refer to our Q1 2016 MD&A, which can be found on SEDAR
or the Company's website.
|
|
|
|
Three Months
Ended Mar. 31
2016
|
Three Months
Ended Mar. 31
2015
|
|
|
|
Consolidated
financial information
|
|
|
|
|
|
($000's, except per
share amounts)
|
|
|
Revenue
|
7,949
|
10,514
|
Cost of goods
sold
|
8,257
|
9,869
|
Gross profit
(loss)
|
(308)
|
645
|
Selling, general and
administrative expenses
|
1,286
|
1,401
|
Operating income
(loss)
|
(2,718)
|
218
|
Net income (loss)
attributable to shareholders
|
(2,495)
|
90
|
|
per share (basic
and diluted)
|
(0.03)
|
0.00
|
EBITDA
|
(1,455)
|
1,143
|
Adjusted
EBITDA
|
(1,321)
|
1,509
|
Cash flows from (used
in) operating activities
|
(659)
|
(1,372)
|
Cash and cash
equivalents
|
9,752
|
11,301
|
Working
capital
|
17,073
|
17,516
|
Total
assets
|
77,544
|
80,094
|
Total non-current
liabilities
|
4,431
|
4,655
|
|
|
|
Key performance
indicators
|
|
|
|
|
|
Sales of aggregates
(000's tons)
|
516
|
718
|
Production of
aggregates (000's tons)
|
637
|
725
|
Average selling price
($/ton)
|
15.41
|
14.64
|
Cost of goods sold
($/ton)
|
16.00
|
13.75
|
Gross profit (loss)
($/ton)
|
(0.60)
|
0.90
|
Gross margin
(%)
|
(3.8%)
|
6.1%
|
EBITDA
($/ton)
|
(2.80)
|
1.59
|
Adjusted EBITDA
($/ton)
|
(2.56)
|
2.10
|
First quarter 2016, compared to 2015
Sales of aggregates
Aggregate sales for the first quarter of 2016 of 516,000 tons
were a 28% decrease over 2015. Sales volumes in Q1 2016 were
modestly below our expected range of 550,000 to 600,000
tons. Heavy rain in our key markets, as well as scheduled
maintenance at one of our Bay Area delivery points impacted
volumes. On May 3, the largest
aggregate producer in California
reported to shareholders that "California shipments fell more than 10 percent
[in Q1 2016] from the prior year … wet weather negatively impacted
shipments." Sales at Long Beach
were better than expected during the quarter and when combined with
expectations for several large orders early in Q2, necessitated
re-allocating volume from immediate sales to restocking inventory
at the Long Beach
terminal. Total sales volumes in March
2016 were strong at approximately 314,000 tons which is
consistent with our monthly volume expectations for the full
year.
Revenue and pricing
Revenue for the first quarter of 2016 decreased by 24% to
$7.9 million, compared with
$10.5 million in 2015. Despite lower
than expected volumes, revenue benefited from positive sales
mix with a higher proportion of sales delivered to
San Francisco plus the
introduction of sales delivered into Long
Beach, which both include freight charges as opposed to
those sold ex-quarry.
Average selling price ("ASP") during the first quarter of 2016
of $15.41 per ton increased
$0.77 per ton from $14.64 per ton in 2015. Compared with 2015,
price variance was a favorable 1% due to price increases, offset by
an unfavourable variance of 4% due to a reduction in fuel
surcharges. A favorable sales mix variance of 6% was due to
increased sales to customers with delivered pricing, including our
Long Beach terminal.
Cost of goods sold
Cost of goods sold in the first quarter 2016 decreased by 16% to
$8.3 million, compared with
$9.9 million in 2015. Cost of
goods sold per ton in Q1 2016 increased to $16.00 compared to $13.75 in Q1 2015. Lower than expected
volumes reduced overall cost of goods sold, however, fixed costs
applied to lower tonnage, higher delivery costs due to increased
sales mix to customers that include freight, plus the strengthening
of the Canadian dollar as quarry costs are incurred in Canadian
dollars and translated in US dollars for reporting purposes,
contributed to higher costs on a per ton basis.
Gross profit (loss) and gross margin
The gross loss for first quarter of 2016 was $0.3 million or $0.60 loss per ton, compared to a gross profit of
$0.6 million or $0.90 per ton in 2015. As noted above, the
decline is largely due to lower volumes and less favourable foreign
exchange rates.
Selling, general and administrative costs
During the quarter ended March 31,
2016, selling, general and administrative ("SG&A")
expenses were $1.3 million, including
$0.1 million of non-cash stock based
compensation, compared with $1.4
million, including $0.4
million of stock based compensation, during 2015. SG&A
(net) increased versus the prior year quarter primarily due to the
impact of foreign exchange. SG&A during 2016 was 16.2% of sales
compared to 13.3% of sales during 2015. Net of non-cash charges for
stock based compensation, 2016 SG&A represented 15.2% of sales
compared with 9.8% last year. The increase in SG&A (net)
as a percent of sales was similarly a result of foreign exchange
and lower sales volumes during the quarter.
Net income (loss)
The net loss attributable to shareholders during the quarter
ended March 31, 2016 was $2.5 million ($0.03
per share loss) compared to a net profit attributable to
shareholders of $0.09 million
($0.00 per share, net profit) during
the quarter ended March 31,
2015. The results this quarter were principally attributable
to the lower volumes and the significant effect of foreign exchange
losses in the current quarter. These foreign exchange losses
are a function of U.S. dollar receivables held by Orca Quarry,
which has a Canadian dollar functional currency, owing from the
Company's U.S. subsidiary, Eagle Rock Aggregates.
EBITDA and Adjusted EBITDA
Adjusted EBITDA and EBITDA for 2016 also declined over
year-on-year comparatives (see Non-IFRS Measures for
details). Before adjusting for share-based employee
benefits, EBITDA for the first quarter of 2016 of negative
$1.4 million ($2.80 loss per ton) declined $2.6 million over the prior year comparative of
$1.1 million ($1.59 per ton). Similarly, Adjusted EBITDA
of negative $1.3 million
($2.56 loss per ton) declined
$2.8 million over the prior year
comparative of $1.5 million
($2.10 per ton).
Segmented analysis
The Company operates in one segment: the development and
operation of construction aggregate properties and projects located
in the western North America.
Selling price and fuel surcharge indices
|
2016
|
2015
|
2014
|
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Selling Price Index
(Q1 2013=100)
|
107.5
|
109.0
|
111.4
|
110.0
|
112.2
|
108.3
|
107.2
|
106.4
|
Fuel Surcharge Index
(Q1 2013=100)
|
46.4
|
57.6
|
75.6
|
65.3
|
92.3
|
101.4
|
102.3
|
100.2
|
In the first quarter of 2016, the quarter-on-quarter average
delivered selling price decreased by 1.3% as a consequence of the
pass through of lower shipping fuel surcharges from the fourth
quarter of 2015, which reflected the decreasing trend in the world
crude oil price during the period.
Seasonality
The Company's Orca sand and gravel quarry operates year-round,
however, sales demand is seasonal due to the impact of poor weather
conditions, particularly in the first (winter) quarter which have
an impact on production volumes and demand for the Company's
products. As a consequence the Company's financial results for any
individual quarter are not necessarily indicative of results to be
expected for that year. Sales and earnings are typically sensitive
to regional and local weather, market conditions, and, in
particular, to cyclical variations in construction spending.
CONFERENCE CALL AND WEBCAST DETAILS
The Company will host a conference call on Friday, May 6th, 2016 at 8:00 am Pacific Time (11:00am Eastern). Details to access the
call live are as follows:
- Via telephone, toll free, by calling 1-888-390-0546 in
North America or +1-416-764-8688
in Toronto.
- Via webcast at: http://goo.gl/D1Tj93
The webcast will be archived for 14 days following the call at
the above-noted link. The conference call will also be
recorded and available for replay until Friday, May 20, 2016. To access the replay,
dial 1-888-390-0541 or +1-416-764-8677 and use Playback Passcode
859870# to hear the recording.
About Polaris Materials Corporation:
Polaris
Materials Corporation is engaged in the development and
operation of construction aggregate quarries in Canada to supply distribution facilities in
the United States through coastal
shipping. The Company's active construction aggregate interests
consist of its Orca Sand and Gravel Quarry in British Columbia and two associated receiving
terminals in Richmond and
Long Beach, California. The
Company also owns the Black Bear Project located in close proximity
to the Orca Quarry, and a controlling interest in the Eagle Rock
Quarry Project, located on the south coast of Vancouver Island.
For further information, please
contact:
Nicholas Van
Dyk
Vice President, Investor Relations and
Corporate Development
Polaris Materials
Corporation
Tel: (604) 915-5000 Ext.
111
info@polarismaterials.com
Cautionary Note Regarding Forward Looking
Statements
This press release contains "forward-looking
statements" and "forward-looking information" within the meaning of
applicable securities laws. These statements and information appear
in this document and include estimates, forecasts, information and
statements as to management's expectations with respect to, among
other things, the future financial or operating performance of the
Company, including increases in gross margins, increases in sales
volumes (including in the Long
Beach market), shipments and selling prices, costs of
production, capital and operating expenditures, requirements for
additional capital, government regulation of quarrying operations,
environmental risks, reclamation expenses, and title disputes, the
Canadian dollar compared to the US dollar, increases in Californian
construction activity and US infrastructure funding, statements
regarding potential new customers and the development of Black
Bear. Often, but not always, forward-looking statements and
information can be identified by the use of words such as "may",
"will", "should", "plans", "expects", "intends", "anticipates",
"believes", "budget", and "scheduled" or the negative thereof or
variations thereon or similar terminology. Forward-looking
statements and information are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
management, are inherently subject to significant business,
economic and competitive uncertainties and contingencies. Readers
are cautioned that any such forward-looking statements and
information are not guarantees and there can be no assurance that
such statements and information will prove to be accurate and
actual results and future events could differ materially from those
anticipated in such statements. Important factors that could cause
actual results to differ materially from the Company's expectations
are disclosed in the Company's continuous disclosure documents
which are filed with Canadian regulators on SEDAR (www.sedar.com),
including under the heading "Risks and Uncertainties" in the
Company's Annual Report and under the heading "Risk Factors" in the
Company's Annual Information Form. Such factors include, amongst
others, the effects of general economic conditions, changing
foreign exchange rates and actions by government authorities,
uncertainties associated with legal proceedings and negotiations,
industry supply levels, competitive pricing pressures, mineral
resource and reserve estimates and the timing and development of
the Black Bear project. The Company expressly disclaims any
intention or obligation to update or revise any forward-looking
statements and information whether as a result of new information,
future events or otherwise, except as required by applicable law.
All written and oral forward-looking statements and information
attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the foregoing cautionary
statements.
Non-IFRS Measures
EBITDA and Adjusted EBITDA
EBITDA, adjusted EBITDA, EBITDA per share and adjusted EBITDA
per share ("EBITDA Metrics") are non-IFRS financial
measures. EBITDA and EBITDA per share represent net income,
excluding income tax expense, interest expense and amortization and
accretion. Adjusted EBITDA and adjusted EBITDA per share better
reflects the underlying business performance of the Company by
removing certain non-cash adjustments from its calculation of
EBITDA and EBITDA per share. The Company believes that the
EBITDA Metrics trends are valuable indicators of whether its
operations are generating sufficient operating cash flow to fund
working capital needs and to fund capital expenditures. The Company
uses the results depicted by the EBITDA Metrics for these purposes,
an approach utilized by the majority of public companies in the
construction materials sector. The EBITDA Metrics are intended to
provide additional information, do not have any standardized
meaning prescribed by IFRS and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. These measures are not necessarily
indicative of operating profit or cash flow from operations as
determined under IFRS. Other companies may calculate these
measures differently.
The following table reconciles these non-IFRS measures to the
most directly comparable IFRS measure.
|
|
|
|
|
Three months
ended
March 31
|
($000's except per
share and per ton amounts)
|
|
|
2016
|
2015
|
Net income (loss) for
the period attributed to
shareholders of Polaris
|
|
|
(2,495)
|
90
|
Interest
expense
|
|
|
13
|
15
|
Income tax
expense
|
|
|
-
|
(41)
|
Amortization,
depletion and accretion
|
|
|
1,037
|
1,079
|
EBITDA
|
|
|
(1,445)
|
1,143
|
|
per
share
|
|
|
(0.02)
|
0.01
|
|
per
ton
|
|
|
(2.80)
|
1.59
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
Share-based employee
benefits
|
|
|
78
|
371
|
|
Other
losses
|
|
|
46
|
(5)
|
Adjusted
EBITDA
|
|
|
(1,321)
|
1,509
|
|
per
share
|
|
|
(0.01)
|
0.02
|
|
per
ton
|
|
|
(2.56)
|
2.10
|
Polaris Materials Corporation
Consolidated Interim
Statements of Income (Loss)
(Unaudited)
(thousands of US dollars, except per share amounts)
|
|
|
|
|
Three Months
Ended
March
31
|
|
|
|
2016
|
2015
|
|
|
|
$
|
$
|
|
|
|
|
|
Sales
|
|
|
7,949
|
10,514
|
|
|
|
|
|
Cost of goods
sold
|
|
|
(8,257)
|
(9,869)
|
Gross profit
(loss)
|
|
|
(308)
|
645
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
(1,286)
|
(1,401)
|
Foreign exchange gain
(loss)
|
|
|
(989)
|
1,194
|
Property holding
costs
|
|
|
(89)
|
(225)
|
Other
losses
|
|
|
(46)
|
5
|
|
|
|
(2,410)
|
(427)
|
Operating income
(loss)
|
|
|
(2,718)
|
218
|
|
|
|
|
|
Finance
income
|
|
|
8
|
22
|
Finance
expense
|
|
|
(30)
|
(35)
|
|
|
|
(22)
|
(13)
|
Income (loss)
before income taxes
|
|
|
(2,740)
|
205
|
|
|
|
|
|
Income tax
recovery
|
|
|
-
|
41
|
Net income (loss)
for the period
|
|
|
(2,740)
|
246
|
|
|
|
|
|
Net income (loss)
attributable to:
|
|
|
|
|
Shareholders of the
Company
|
|
|
(2,495)
|
90
|
Non-controlling
interest
|
|
|
(245)
|
156
|
|
|
|
(2,740)
|
246
|
|
|
|
|
|
Net income (loss)
per share:
|
|
|
|
|
Basic and diluted
income (loss) per common share
|
|
|
(0.03)
|
0.00
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
88,334
|
87,665
|
Polaris Materials Corporation
Consolidated Interim
Statements of Financial Position
(Unaudited)
(thousands of US dollars)
|
|
|
|
|
|
March 31
2016
|
December 31
2015
|
|
|
$
|
$
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
9,752
|
10,501
|
Trade and other
receivables
|
|
6,603
|
7,072
|
Inventories
|
|
4,836
|
4,563
|
Other current
assets
|
|
374
|
550
|
|
|
21,565
|
22,686
|
Non-current
assets
|
|
|
|
Security
deposits
|
|
875
|
821
|
Property, plant and
equipment
|
|
55,104
|
53,994
|
|
|
77,544
|
77,501
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Trade and other
payables
|
|
3,700
|
4,046
|
Current tax
liabilities
|
|
39
|
72
|
Current portion of
finance leases
|
|
374
|
386
|
Current portion of
property tax payable
|
|
379
|
379
|
|
|
4,492
|
4,883
|
Non-current
liabilities
|
|
|
|
Finance
leases
|
|
764
|
811
|
Property tax
payable
|
|
519
|
519
|
Restoration
provision
|
|
3,148
|
2,938
|
|
|
8,923
|
9,151
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share
capital
|
|
189,248
|
189,248
|
Contributed
surplus
|
|
24,592
|
24,516
|
Accumulated other
comprehensive income
|
|
(10,265)
|
(13,048)
|
Deficit
|
|
(130,138)
|
(127,643)
|
Equity
attributable to shareholders of the Company
|
|
73,437
|
73,073
|
Non-controlling
interest
|
|
(4,816)
|
(4,723)
|
Total
equity
|
|
68,621
|
68,350
|
|
|
77,544
|
77,501
|
Polaris Materials Corporation
Consolidated Interim
Statements of Cash Flows
(Unaudited)
(thousands of US dollars)
|
|
|
|
|
|
|
Three Months
Ended
March 31
|
|
|
|
2016
|
2015
|
|
|
|
$
|
$
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
Net income
(loss)
|
|
|
(2,740)
|
246
|
|
Amortization,
depletion and accretion
|
|
|
1,037
|
1,079
|
|
Share-based employee
benefits
|
|
|
76
|
371
|
|
Unrealized foreign
exchange (gain) loss
|
|
|
953
|
(1,122)
|
|
Other
losses
|
|
|
46
|
-
|
|
|
|
(628)
|
574
|
Changes in non-cash
working capital items
|
|
|
(31)
|
(1,946)
|
|
|
|
(659)
|
(1,372)
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
Finance lease
payments
|
|
|
(104)
|
(96)
|
|
|
|
(104)
|
(96)
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
Property, plant and
equipment purchases
|
|
|
(332)
|
(683)
|
|
|
|
(332)
|
(683)
|
|
|
|
|
|
Effect of foreign
currency translation on cash
|
|
|
346
|
(779)
|
Decrease in
cash
|
|
|
(749)
|
(2,930)
|
Cash and cash
equivalents - beginning of period
|
|
|
10,501
|
14,231
|
Cash and cash
equivalents - end of period
|
|
|
9,752
|
11,301
|
SOURCE Polaris Materials Corporation