WGI Heavy Minerals Announces Sales Growth of 18.2% Year over Year
14 March 2011
WGI Heavy Minerals, Incorporated has reported the highest full-year revenue in its history in 2010, reaching $34.01 million. This total surpassed the $28.78 million posted in 2009 by 18.2%. These results continue the Company’s record of continuous year over year revenue growth for the last five years. Most markets for garnet and other abrasives strengthened in 2010 from previous year levels, but still suffered from sluggish growth in many parts of the world.
In 2010, the Abrasives segment achieved an income from operations-before-tax of $1.35 million. This is an increase over the $1.27 million income from operations-before-tax in 2009. The improvement is primarily driven by an increase in sales volume compounded by containment of selling, general and administrative costs. Sales of Emerald Creek Garnet improved 25.3% while Bengal Bay Garnet sales outpaced last year by 20.4%. Sales volume growth anchored the increase, gaining 30.1% year over year as markets continued their slow recovery. WGI also identified and sold to new customers. Net income for the segment was $0.99 million compared to an income of $0.95 million in 2009.
The Waterjet segment achieved a net income of $0.05 million in 2010. This is compared to a loss of $0.06 million in 2009. The result was due to increased sales as this segment is seeing slow but sustained growth. The revenue increase was offset by additional expenses associated with moving the Company’s waterjet operations from Ephrata, Washington to Coeur d’Alêne, Idaho. The move consolidates the Company’s administrative costs and will allow it to better manage its operations. The Company has taken this opportunity to strengthen its engineering capabilities as well as utilize excess manufacturing capacity available in the marketplace.
Pricing pressure remains strong as customers look for low prices in an oversupplied waterjet garnet market. Gross margins of 24.8% are down over 2009 when the Company reported gross margins of 27.3%. The decrease is due to pricing pressures and increased freight costs. Margins for the fourth quarter are relatively in line with the same quarter in 2009, at 23.9% for 2010, which is down slightly from 24.3% in 2009.
WGI expects to grow its garnet and waterjet businesses in 2011 through increase in market share and new business. Sales are expected to increase more than 10 percent over 2010 primarily through increased volumes of garnet and abrasives. Logistic costs, as well as pricing competition, are expected to continue to push margins below 2010 levels. How the current unrest in the Middle East will affectits business is unknown. The region is an important part of its business and should the current unrest cause disruption in commerce in 2011 our sales would be adversely affected.
2011will be a year of further operational improvements in addition to the identification of new resources through expanded mineral exploration. The Company will look to partner or invest with other companies to develop smaller metal and mineral deposits not attractive to the larger mining companies. WGI will investigate larger regional garnet/ilmenite deposits where the Company can use its expertise to bring new multi mineral resources into operation. Marketing efforts will continue to expand as the Company competes in garnet and ilmenite markets that are currently over supplied. Waterjet part product offerings will be expanded through continued engineering efforts to expand our product portfolio. The Company will continue to cross sell garnet and waterjet parts to existing customers thereby increasing our value to the customer.
The Company continues to strive to keep selling, general and administrative costs in line with revenues. As a percentage of revenues SG&A is expected to decline in 2011 while exploration costs are expected to increase significantly. EPS is expected to remain in line with 2010.
The principal business of WGI Heavy Minerals, Incorporated is the processing and sale of industrial abrasive minerals and the sourcing, assembly and sale of ultra-high pressure waterjet cutting machine replacement parts and components. The Company, through its subsidiaries, markets and sells abrasive products and services and waterjet replacement parts globally.