Polaris Materials Announces Annual Business Update, 2016 Outlook And Executive Appointment
January 21, 2016
VANCOUVER, BC - Polaris Materials Corporation ("Polaris" or the "Company") (TSX:PLS) reports that shipments from its Orca Quarry for the twelve months ended December 31, 2015 were 3.02 million tons, a decrease of approximately 12.5% versus 2014, reflecting the impact of previously reported supply disruptions in Q2 and Q3 2015. Shipments in Q4 2015 were robust at 803,000 tons, an increase of 10% over Q4 2014 despite the cancellation of two shipments in December driven primarily by adverse weather conditions.
- Strong Financial Position and Robust Balance Sheet: Year-end cash balance of CAD$14.5 million (US$10.5 million), and no long term debt1; Polaris generated positive cash flow in Q4 2015.
- Continued Gross Margin Improvement through healthy market prices, ongoing cost control initiatives and the benefit of continuing weakness in the Canadian dollar and oil prices.
- Low energy prices improve competitive positioning of Orca products versus local suppliers and reduce quarry and terminal operating costs
- Weak Canadian dollar benefits gross margins as sales are almost entirely in U.S. dollars while quarry cash operating costs are primarily in Canadian dollars.
- Favourable Local Market Conditions should provide insulation from global economic turmoil with 5% growth in U.S. cement consumption2 and 6% growth in U.S. construction starts3 forecast for 2016. In addition, US$307 billion of new U.S. infrastructure funding was signed into law in December 2015, including over US$200 billion in Federal Aid Highway Program spending.
- Differentiated product: The Orca Quarry provides a uniquely high quality aggregate product, and the Company continues to focus on opportunities where Polaris' products provide measurable value to the end user. This strategy has positioned the Company to compete effectively against local aggregate suppliers on a number of major high specification projects.
Management currently anticipates that volumes into the San Francisco market will be similar to 2015. Polaris is in advanced discussions with a number of potential customers in Los Angeles, San Francisco and other markets outside of California which could drive incremental volumes at attractive margins. The Company will provide further updates as and when appropriate.
Polaris expects to achieve continued strong gross margins in 2016 as it works with customers to realize the unique value proposition of its products, as well as through operating cost savings and the impact of the weak Canadian dollar. The Company will continue to focus on improving visibility on sales expectations with its key San Francisco Bay area customers. This is expected to provide for increased reliability of shipping schedules and quarry production, and allow for optimal positioning of the Company's products for inclusion in high specification, high value projects.
The Company has recently secured tenure over a hard rock deposit located in close proximity to the Orca Quarry, referred to as the Black Bear Project. Black Bear represents a bolt-on opportunity that will provide the Company with increased flexibility in product mix while utilizing existing infrastructure for crushing and ship loading. Polaris expects to advance permitting of Black Bear during 2016 and has implemented a preliminary work plan with minimal funding requirements that will allow the company to evaluate the project in co-operation with its First Nations partners and local stakeholders.
Appointment of Vice President, Investor Relations and Corporate Development:
Polaris is pleased to announce the appointment of Nicholas Van Dyk as Vice President, Investor Relations and Corporate Development. Mr. Van Dyk has over 10 years' experience in capital markets and corporate finance, and has been closely associated with Polaris for many years. Prior to joining Polaris, Mr. Van Dyk founded Revelation Financial Inc., an independent financial and strategic advisory firm, and previously worked in the investment banking division of a Canadian chartered bank. Mr. Van Dyk holds the Chartered Financial Analyst® designation and is a member of the CFA Institute. He previously earned a Bachelor of Business Administration and a BSc (Computing and Computer Electronics) from Wilfrid Laurier University where he graduated with distinction.
Ken Palko, President and CEO commented: "We are very excited about 2016. The expected sales from Long Beach to supply large scale projects in Los Angeles, and the advancement of our Black Bear deposit, will both be highlights for our company in the coming year. Our end-user focused strategy will continue to help the company and its customers realize the value of Orca's high quality materials and positions us well to capitalize on growth in a healthy California market. We maintain a strong balance sheet with over US$10 million in cash and no long-term debt aside from equipment financing leases." He continued: "We are very pleased to welcome Nicholas to the management team of Polaris. His education and experience in financial markets, combined with familiarity with our company, brings a tremendous skill set to our group as we communicate our achievements to investors and consider further avenues for growth."
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
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, 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.
1 Excluding equipment financing leases.
2 Portland Cement Association, November 2015: http://www.cement.org/newsroom/2015/11/30/2015-finishes-with-growth-for-u.s.-cement-industry
3 Dodge Data & Analytics, October 2015: http://construction.com/about-us/press/New-Construction-Starts-in-2016-to-Grow-6-percent.asp