Polaris Materials Corp. reported financial results for its second quarter ending June 30, 2016. Aggregate sales for the current quarter were 946,000 tons, a 42 percent increase over sales of 668,000 tons in the second quarter of 2015. Shipments of the company's products increased compared to the prior year due to both increased delivered shipments into San Francisco and ex-quarry sales.
- First full quarter of operations at the Long Beach terminal with the successful delivery of aggregates for several large concrete foundation pours.
- During the second quarter the company revised the payment terms with its major customer, which will accelerate cash collection compared with the prior year, however, this change temporarily increased quarter-end accounts receivable. In early July, the company received a payment of $6.0 million to bring the account in agreement with the revised payment terms.
- Work continued on the Black Bear preliminary resource report, with the report targeted for completion in the next several months.
- Adjusted EBITDA for the second quarter reflected the higher sales volumes in the quarter, offset by changes in sales mix and costs related to the start-up of the Long Beach terminal.
The company said these results were robust and consistent with the company's expectations for the full year. Construction activity both in California and throughout the United States continues to show healthy levels of activity with a significant backlog of projects, particularly in Los Angeles, now progressing toward the start of construction.
Ongoing discussions at multiple levels in the construction industry supply-chain have demonstrated the value added to major projects through the use of high performance concrete aggregates from Orca. We expect a positive pricing environment, as well as ongoing cost reduction programs, to contribute to healthy margins through the remainder of 2016.
The second quarter was the first full quarter of operations at the Long Beach terminal. High volumes of material were successfully delivered in a demanding schedule for Oceanwide Plaza's foundation concrete pours.
This type of scheduling and coordination is typically demanded by contractors participating in large, high specification, projects on which the company intends to focus its marketing efforts.
"We are well positioned to supply these projects as they are favorable applications for our high performance concrete aggregate and proven high volume delivery capability," the company stated.
Subsequent to the release of its Q2 2016 operating results on July 15, 2016, the company determined that permitting and financing delays have resulted in the deferral of several significant planned projects in the Los Angeles market into late Q4 or early 2017.
"We continue to have a robust project pipeline for our high-performance concrete aggregates but the delays mean that the majority of sales for these projects will now occur in 2017," the company stated. "As a result, we are revising our full-year sales outlook for the Long Beach terminal to between 175,000 and 250,000 tons, and our overall sales outlook to 3.0 to 3.2 million tons. The shift in these projects will fit well with our 2017 activity in the high-end market of Los Angeles, and help offset the usual seasonal slowdown typical of Q1 in San Francisco."
Ken Palko, president and CEO, commented: "Sales volumes and revenues in Q2 2016 are our highest since 2014. Notwithstanding certain project delays in Long Beach, we continue to have a robust pipeline of major projects that we believe we are well positioned to secure over the next six to twelve months. Our Long Beach terminal will continue to ramp-up over the balance of the year and we expect unit costs to improve as we continue to increase throughput at the facility. In addition to building our volume through further sales, we will be working to advance discussions with our First Nations partners as well as complete the initial resource estimate for the Black Bear project, and look forward to sharing the results."