Zemex Corporation Announces First Quarter 2001 Earnings Results

Apr 25, 2001, 01:00 ET from Zemex Corporation

    TORONTO, April 25 /PRNewswire/ -- Zemex Corporation (NYSE:   ZMX; TSE) today
 reported first quarter net income of $0.08 per share up from a loss per share
 of $0.21 for the corresponding period of 2000.  Although revenue, year over
 year, declined from $19.7 million in the first quarter of 2000 to
 $16.6 million in 2001, the corporation's gross margin improved from 29.7% to
 31.1%.  The decline in revenue was due to the shedding of marginal business in
 Alumitech, the suspension of operations of Zemex Mica Corporation, and the
 sale of two of our talc conversion facilities during the quarter.
     Over the first quarter of 2001, our feldspar operations continued to
 perform very well. This material serves the sanitaryware and tile industries,
 which in turn serve the housing market.  Our "low iron sand" product,
 developed in the mid 1990's, has shown a good increase over the tonnage sold
 in the first quarter of 2000 and should continue at this elevated rate over
 the full year.
     Our mica operations, which had a record year in 2000, have seen a slow-
 down in the first quarter of 2001.  Our mica primarily serves the plastics and
 sound damping markets, which to a large extent serve the auto industry.  We
 expect that this segment of our business will improve when finished goods
 inventories in the automotive industry are reduced and automotive demand
 improves.  As well, we do expect to see a rapid acceleration in the long-term
 demand for our mica products as the automotive usage of high performance
 plastics escalates to meet the lower weight requirements of the future.
     During March, we sold our specialized talc conversion plant at Natural
 Bridge, New York and our 60% joint venture interest in the Benwood, West
 Virginia talc facility to our partner in the latter, IMI Fabi S.p.A.  The
 remaining talc facility in Van Horn, Texas primarily serves the ceramic
 industry along with some selected plastics markets.
     As we have reviewed in the past, our Alumitech group has suffered a
 significant cost/price squeeze through 2000 and into 2001.  The good news is
 that the downward trend seems to have leveled off and stabilized.  The fact
 that the secondary aluminum industry is operating at reduced levels has caused
 a dual problem; the acquisition of feedstock has become very expensive and the
 feedstock acquired is much leaner in metal content.  These two factors have
 had a major negative impact on the profitability and cash generation from this
 group.  The entire secondary aluminum industry remains defensive today and an
 improvement is not anticipated in the short-term.  On the other hand, our
 Alumitech management has done an excellent job in ensuring that Alumitech is
 as cost efficient as possible in this very difficult environment and has taken
 the necessary steps for its longer-term future.
     The outlook for the next two or three quarters appears to be more of the
 same.  We expect continued firmness with our feldspar operations and our low
 iron sand sales.  Our mica operations seem to have been slightly stronger in
 March and April but, again, improvements are dependent upon the reduction of
 finished goods inventories in the auto industry.  Our Alumitech operations
 continue to suffer the consequences of a very slow secondary aluminum
 industry, although we believe that the downturn has been reached, and our
 business has stabilized.
     The sale of the two talc operations has reduced our debt further and we
 are on target to be close to debt free by year-end.
     We have continued our share repurchase program and over the first quarter
 have purchased 65,400 shares at an average price of $5.60 per share.
     Zemex Corporation is a diversified producer of industrial minerals and
 specialty products and, through its Alumitech division, reprocesses aluminum
 drosses. Zemex currently operates facilities across the United States and
 Canada. Its products are used in a variety of commercial applications and are
 sold throughout the United States, Canada and Europe.
     This press release may contain "Forward-Looking Statements" within the
 meaning of the Private Securities Litigation Reform Act of 1995. These forward
 statements include statements regarding the intent, belief or current
 expectation of the Corporation and members of its senior management team,
 including, without limitation, expectations regarding prospective performance
 and opportunities. Investors are cautioned that any such forward-looking
 statements are not guarantees of future performance and involve risks and
 uncertainties, and that actual results may differ materially from those
 contemplated by the Corporation.
 
 
                               ZEMEX CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                                     (US$)
 
                                                 March 31,       December 31,
                                                   2001              2000
     ASSETS                                      (unaudited)
     Current assets
     Cash                                          $1,403,000     $2,175,000
     Accounts receivable                           15,754,000     12,850,000
     Inventories                                   14,256,000     16,844,000
     Prepaid expenses and other current assets        502,000        530,000
     Income tax receivable                            273,000        120,000
     Future income tax benefits                        21,000         21,000
                                                   32,209,000     32,540,000
     Property, plant and equipment                 57,745,000     65,846,000
     Other assets                                   6,829,000      7,153,000
     Future income tax benefits (non-current)       8,040,000      8,040,000
 
     TOTAL ASSETS                                $104,823,000   $113,579,000
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
     Current liabilities
     Bank indebtedness                            $13,645,000    $17,145,000
     Accounts payable                               3,668,000      5,618,000
     Accrued liabilities                            3,272,000      4,412,000
     Current portion of long term debt                473,000        534,000
                                                   21,058,000     27,709,000
     Long term debt                                   146,000        261,000
     Other non-current liabilities                  2,201,000        683,000
     Future income tax obligations                  1,576,000      1,656,000
                                                   24,981,000     30,309,000
     Non-controlling interest                               -      3,367,000
     Shareholders' equity
     Common stock                                  56,922,000     57,212,000
     Retained earnings                             26,640,000     25,958,000
     Note receivable from shareholder              (1,259,000)    (1,259,000)
     Cumulative translation adjustment             (2,461,000)    (2,008,000)
                                                   79,842,000     79,903,000
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $104,823,000   $113,579,000
 
     Prepared in accordance with Canadian GAAP
 
 
                               ZEMEX CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                      FOR THE THREE MONTHS ENDED MARCH 31
                                     (US$)
 
                                                     2001           2000
                                                          (unaudited)
     NET SALES                                    $16,563,000    $19,669,000
     COSTS AND EXPENSES
     Cost of goods sold                            11,406,000     13,825,000
     Selling, general and administrative            2,763,000      2,739,000
     Depreciation, depletion and amortization       1,619,000      1,966,000
                                                   15,788,000     18,530,000
     OPERATING INCOME                                 775,000      1,139,000
     Interest income                                   50,000         44,000
     Interest expense                                (269,000)    (1,110,000)
     Other income (expense), net                      303,000     (3,125,000)
                                                       84,000     (4,191,000)
     INCOME (LOSS) BEFORE PROVISION FOR (RECOVERY OF)
       INCOME TAXES AND NON-CONTROLLING INTEREST      859,000     (3,052,000)
 
     Provision for (recovery of) income taxes         167,000     (1,350,000)
 
     Non-controlling interest in subsidiary earnings   10,000         71,000
 
     INCOME (LOSS) FROM CONTINUING OPERATIONS         682,000     (1,773,000)
 
     INCOME FROM DISCONTINUED OPERATIONS                    -        911,000
 
     NET INCOME (LOSS)                               $682,000      $(862,000)
 
     NET INCOME (LOSS) PER SHARE
        BASIC
         Continuing operations                          $0.08        $(0.21)
         Discontinued operations                           $-          $0.11
                                                        $0.08        $(0.10)
        DILUTED
         Continuing operations                          $0.08        $(0.21)
         Discontinued operations                           $-          $0.11
                                                        $0.08        $(0.10)
     WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
        BASIC                                       8,411,055      8,516,328
        DILUTED                                     8,446,199      8,516,328
 
     Prepared in accordance with Canadian GAAP
 
 
                               ZEMEX CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                      FOR THE THREE MONTHS ENDED MARCH 31
                                     (US$)
 
                                                      2001           2000
                                                          (unaudited)
     CASH FLOWS FROM OPERATING ACTIVITIES
       Net income (loss)                             $682,000      $(862,000)
       Adjustments to reconcile net income (loss)
        to net cash flows from operating
        activities
         Depreciation, depletion and amortization   1,619,000      2,347,000
         Amortization of and written-off of
          deferred financing costs                          -      1,759,000
         Decrease in future income tax obligations    (80,000)        (6,000)
         Non-controlling interest in subsidiary
          earnings                                     10,000         71,000
         Gain on sale of assets                      (301,000)      (120,000)
         Increase in other assets                     (42,000)      (321,000)
         Increase in other non-current liabilities     17,000         33,000
         Changes in non-cash working capital
          items                                    (1,904,000)    (1,948,000)
 
     Net cash provided by operating activities          1,000        953,000
 
     CASH FLOWS FROM INVESTING ACTIVITIES
        Additions to property, plant and equipment   (308,000)    (2,051,000)
        Proceeds from sale of assets                3,632,000         78,000
        Proceeds from sale of securities                    -      4,215,000
 
     Net cash provided by investing activities      3,324,000      2,242,000
 
     CASH FLOWS FROM FINANCING ACTIVITIES
        Net (decrease) increase in bank
         indebtedness                              (3,500,000)    49,450,000
        Net decrease in long term debt               (164,000)   (50,128,000)
        Issuance of common stock                       80,000        241,000
        Purchase of common stock                     (370,000)             -
 
     Net cash used in financing activities         (3,954,000)      (437,000)
 
     EFFECT OF EXCHANGE RATE CHANGES ON CASH         (143,000)        (8,000)
 
     NET (DECREASE) INCREASE IN CASH                 (772,000)     2,750,000
 
     CASH AT BEGINNING OF PERIOD                    2,175,000      1,592,000
 
     CASH AT END OF PERIOD                         $1,403,000     $4,342,000
 
     Prepared in accordance with Canadian GAAP
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X56147272
 
 

SOURCE Zemex Corporation
    TORONTO, April 25 /PRNewswire/ -- Zemex Corporation (NYSE:   ZMX; TSE) today
 reported first quarter net income of $0.08 per share up from a loss per share
 of $0.21 for the corresponding period of 2000.  Although revenue, year over
 year, declined from $19.7 million in the first quarter of 2000 to
 $16.6 million in 2001, the corporation's gross margin improved from 29.7% to
 31.1%.  The decline in revenue was due to the shedding of marginal business in
 Alumitech, the suspension of operations of Zemex Mica Corporation, and the
 sale of two of our talc conversion facilities during the quarter.
     Over the first quarter of 2001, our feldspar operations continued to
 perform very well. This material serves the sanitaryware and tile industries,
 which in turn serve the housing market.  Our "low iron sand" product,
 developed in the mid 1990's, has shown a good increase over the tonnage sold
 in the first quarter of 2000 and should continue at this elevated rate over
 the full year.
     Our mica operations, which had a record year in 2000, have seen a slow-
 down in the first quarter of 2001.  Our mica primarily serves the plastics and
 sound damping markets, which to a large extent serve the auto industry.  We
 expect that this segment of our business will improve when finished goods
 inventories in the automotive industry are reduced and automotive demand
 improves.  As well, we do expect to see a rapid acceleration in the long-term
 demand for our mica products as the automotive usage of high performance
 plastics escalates to meet the lower weight requirements of the future.
     During March, we sold our specialized talc conversion plant at Natural
 Bridge, New York and our 60% joint venture interest in the Benwood, West
 Virginia talc facility to our partner in the latter, IMI Fabi S.p.A.  The
 remaining talc facility in Van Horn, Texas primarily serves the ceramic
 industry along with some selected plastics markets.
     As we have reviewed in the past, our Alumitech group has suffered a
 significant cost/price squeeze through 2000 and into 2001.  The good news is
 that the downward trend seems to have leveled off and stabilized.  The fact
 that the secondary aluminum industry is operating at reduced levels has caused
 a dual problem; the acquisition of feedstock has become very expensive and the
 feedstock acquired is much leaner in metal content.  These two factors have
 had a major negative impact on the profitability and cash generation from this
 group.  The entire secondary aluminum industry remains defensive today and an
 improvement is not anticipated in the short-term.  On the other hand, our
 Alumitech management has done an excellent job in ensuring that Alumitech is
 as cost efficient as possible in this very difficult environment and has taken
 the necessary steps for its longer-term future.
     The outlook for the next two or three quarters appears to be more of the
 same.  We expect continued firmness with our feldspar operations and our low
 iron sand sales.  Our mica operations seem to have been slightly stronger in
 March and April but, again, improvements are dependent upon the reduction of
 finished goods inventories in the auto industry.  Our Alumitech operations
 continue to suffer the consequences of a very slow secondary aluminum
 industry, although we believe that the downturn has been reached, and our
 business has stabilized.
     The sale of the two talc operations has reduced our debt further and we
 are on target to be close to debt free by year-end.
     We have continued our share repurchase program and over the first quarter
 have purchased 65,400 shares at an average price of $5.60 per share.
     Zemex Corporation is a diversified producer of industrial minerals and
 specialty products and, through its Alumitech division, reprocesses aluminum
 drosses. Zemex currently operates facilities across the United States and
 Canada. Its products are used in a variety of commercial applications and are
 sold throughout the United States, Canada and Europe.
     This press release may contain "Forward-Looking Statements" within the
 meaning of the Private Securities Litigation Reform Act of 1995. These forward
 statements include statements regarding the intent, belief or current
 expectation of the Corporation and members of its senior management team,
 including, without limitation, expectations regarding prospective performance
 and opportunities. Investors are cautioned that any such forward-looking
 statements are not guarantees of future performance and involve risks and
 uncertainties, and that actual results may differ materially from those
 contemplated by the Corporation.
 
 
                               ZEMEX CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                                     (US$)
 
                                                 March 31,       December 31,
                                                   2001              2000
     ASSETS                                      (unaudited)
     Current assets
     Cash                                          $1,403,000     $2,175,000
     Accounts receivable                           15,754,000     12,850,000
     Inventories                                   14,256,000     16,844,000
     Prepaid expenses and other current assets        502,000        530,000
     Income tax receivable                            273,000        120,000
     Future income tax benefits                        21,000         21,000
                                                   32,209,000     32,540,000
     Property, plant and equipment                 57,745,000     65,846,000
     Other assets                                   6,829,000      7,153,000
     Future income tax benefits (non-current)       8,040,000      8,040,000
 
     TOTAL ASSETS                                $104,823,000   $113,579,000
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
     Current liabilities
     Bank indebtedness                            $13,645,000    $17,145,000
     Accounts payable                               3,668,000      5,618,000
     Accrued liabilities                            3,272,000      4,412,000
     Current portion of long term debt                473,000        534,000
                                                   21,058,000     27,709,000
     Long term debt                                   146,000        261,000
     Other non-current liabilities                  2,201,000        683,000
     Future income tax obligations                  1,576,000      1,656,000
                                                   24,981,000     30,309,000
     Non-controlling interest                               -      3,367,000
     Shareholders' equity
     Common stock                                  56,922,000     57,212,000
     Retained earnings                             26,640,000     25,958,000
     Note receivable from shareholder              (1,259,000)    (1,259,000)
     Cumulative translation adjustment             (2,461,000)    (2,008,000)
                                                   79,842,000     79,903,000
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $104,823,000   $113,579,000
 
     Prepared in accordance with Canadian GAAP
 
 
                               ZEMEX CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                      FOR THE THREE MONTHS ENDED MARCH 31
                                     (US$)
 
                                                     2001           2000
                                                          (unaudited)
     NET SALES                                    $16,563,000    $19,669,000
     COSTS AND EXPENSES
     Cost of goods sold                            11,406,000     13,825,000
     Selling, general and administrative            2,763,000      2,739,000
     Depreciation, depletion and amortization       1,619,000      1,966,000
                                                   15,788,000     18,530,000
     OPERATING INCOME                                 775,000      1,139,000
     Interest income                                   50,000         44,000
     Interest expense                                (269,000)    (1,110,000)
     Other income (expense), net                      303,000     (3,125,000)
                                                       84,000     (4,191,000)
     INCOME (LOSS) BEFORE PROVISION FOR (RECOVERY OF)
       INCOME TAXES AND NON-CONTROLLING INTEREST      859,000     (3,052,000)
 
     Provision for (recovery of) income taxes         167,000     (1,350,000)
 
     Non-controlling interest in subsidiary earnings   10,000         71,000
 
     INCOME (LOSS) FROM CONTINUING OPERATIONS         682,000     (1,773,000)
 
     INCOME FROM DISCONTINUED OPERATIONS                    -        911,000
 
     NET INCOME (LOSS)                               $682,000      $(862,000)
 
     NET INCOME (LOSS) PER SHARE
        BASIC
         Continuing operations                          $0.08        $(0.21)
         Discontinued operations                           $-          $0.11
                                                        $0.08        $(0.10)
        DILUTED
         Continuing operations                          $0.08        $(0.21)
         Discontinued operations                           $-          $0.11
                                                        $0.08        $(0.10)
     WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
        BASIC                                       8,411,055      8,516,328
        DILUTED                                     8,446,199      8,516,328
 
     Prepared in accordance with Canadian GAAP
 
 
                               ZEMEX CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                      FOR THE THREE MONTHS ENDED MARCH 31
                                     (US$)
 
                                                      2001           2000
                                                          (unaudited)
     CASH FLOWS FROM OPERATING ACTIVITIES
       Net income (loss)                             $682,000      $(862,000)
       Adjustments to reconcile net income (loss)
        to net cash flows from operating
        activities
         Depreciation, depletion and amortization   1,619,000      2,347,000
         Amortization of and written-off of
          deferred financing costs                          -      1,759,000
         Decrease in future income tax obligations    (80,000)        (6,000)
         Non-controlling interest in subsidiary
          earnings                                     10,000         71,000
         Gain on sale of assets                      (301,000)      (120,000)
         Increase in other assets                     (42,000)      (321,000)
         Increase in other non-current liabilities     17,000         33,000
         Changes in non-cash working capital
          items                                    (1,904,000)    (1,948,000)
 
     Net cash provided by operating activities          1,000        953,000
 
     CASH FLOWS FROM INVESTING ACTIVITIES
        Additions to property, plant and equipment   (308,000)    (2,051,000)
        Proceeds from sale of assets                3,632,000         78,000
        Proceeds from sale of securities                    -      4,215,000
 
     Net cash provided by investing activities      3,324,000      2,242,000
 
     CASH FLOWS FROM FINANCING ACTIVITIES
        Net (decrease) increase in bank
         indebtedness                              (3,500,000)    49,450,000
        Net decrease in long term debt               (164,000)   (50,128,000)
        Issuance of common stock                       80,000        241,000
        Purchase of common stock                     (370,000)             -
 
     Net cash used in financing activities         (3,954,000)      (437,000)
 
     EFFECT OF EXCHANGE RATE CHANGES ON CASH         (143,000)        (8,000)
 
     NET (DECREASE) INCREASE IN CASH                 (772,000)     2,750,000
 
     CASH AT BEGINNING OF PERIOD                    2,175,000      1,592,000
 
     CASH AT END OF PERIOD                         $1,403,000     $4,342,000
 
     Prepared in accordance with Canadian GAAP
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X56147272
 
 SOURCE  Zemex Corporation