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[September 2002]
Zemex Announces Second Quarter Earnings
Zemex Corporation (Toronto, Canada) announced net income of $0.02 per share for the second quarter of 2002, compared to $0.07 in the second quarter of 2001. The decline was due to the shortfall of low iron sand sold in Q2 2002 compared to Q2 2001. This material is sold to a major US corporation under a 'take or pay' contract, which stipulates a minimum annual tonnage. Zemex does not recognise revenues on a quarterly basis on undelivered product under this contract. However, the final adjustment will be made by the year-end and the final year-end revenue is expected to be on budget for this product line.
The other factor was that in the 2001 period, the Corporation recognised other income of $300,000 as a result of a settlement of a business interruption insurance claim relating to the previously sold metal powders operation.
Revenue increased from $14.5 million in Q2 2001 to $18.1 million in Q2 2002 due to organic growth and the acquisition of the attapulgite (white fibrous clay mineral) operation.
Operating earnings for Q2 2002 were $664,000 versus $754,000 for Q2 2001, in spite of the significant shortfall in low iron sand sales. During the second quarter, Zemex generated cash flow from operations of $3.5 million as compared to $900,000 for the same period in 2001.
Zemex President Richard Lister said: "Zemex Industrial Minerals had a good second quarter while Alumitech continued with the same difficulties experienced over the past year. From an operating point of view, the mica, feldspar and clay tonnages produced and sold were all higher than in the same quarter of 2001. The only disappointments were the talc sales, and the low iron sand which was off by greater than 50%. We believe the talc levels will rebound in the next few quarters".
ENDS