April 18, 2017
POLARIS ANNOUNCES Q1 2017 SALES VOLUMES AND PROVIDES BUSINESS UPDATE
VANCOUVER, British Columbia – Polaris Materials Corporation (TSX:PLS) (the “Company”, “Polaris” or “we”) today reported preliminary sales volumes for the quarter ended March 31, 2017 and provided a business update.
Q1 2017 SALES VOLUMES
Sales volumes in Q1 2017 were 561,000 tons, an increase of 9% over Q1 2016. Q1 sales volumes included 47,000 tons from our Long Beach terminal. Volumes in the quarter were higher at every point of sale aside from ex-quarry, which declined due to the previously disclosed completion of a major ex-quarry supply contract. Excluding the impact of ex-quarry sales, our volumes increased approximately 25% in the quarter.
While activity improved from Q1 2016, heavy rains in California meant that the pace of business was modestly lower than our initial expectation for the quarter. Rainfall in most counties was 150-200% higher than long-term average levels, reaching over 100 inches of rain in some areas. Our current expectation is that construction activity will accelerate through the summer, and we continue to expect full year sales volumes consistent with our previous guidance. In Long Beach, we commenced deliveries to customers supplying the LA Rams stadium in early April, and expect to begin supplying material for the Silver Lake Water Treatment Facility project in the next few weeks. These two projects account for approximately 400,000 tons of demand for our high quality concrete aggregate products, most of which will come in 2017.
We are pleased to note that the State of California recently passed a US$52 billion, 10-year infrastructure spending bill, called the Road Repair and Accountability Act of 2017. This act authorizes $5.2 billion in annual spending in order to address needed repairs to local and state highways, bridges, transit and trade corridors, as well as transportation research and other items. The funding represents a more than 30% increase in state infrastructure spending and should have a significant, long-term benefit to state-wide aggregate demand for infrastructure projects. As with all government infrastructure spending programs, these funds will take some time to move from funding approval to project activity, so we would not expect to see RRAA-funded projects in our customers’ pipelines until later in 2017 or into 2018.
Current sales expectations for Q2 2017 are in the range of 600,000 to 800,000 tons, consistent with our full year expectations and current outlook for a strong second half of the year. We also expect to complete our first sale of fine sand in the second quarter, and we are pleased to note that the quarry has begun screening and placing material on the surge tunnel in preparation for the first shipload. We continue to pursue a number of opportunities which could provide upside over current expectations and will provide more detail on these opportunities as and when appropriate. Operating cost reductions at our quarry and in our logistics operations, as well as price improvements in a number of markets, are expected to contribute to significant improvements in unit margins versus 2016. Notably, the end of the previously mentioned ex-quarry contract means that our results for 2017 will reflect significant increases in headline prices and costs per ton, and continue to believe that focusing on our margins and EBITDA is the best way to evaluate our financial performance.
Ken Palko, President and CEO, commented: “Q1 2017 was much more active overall than the same quarter in 2016 at most of our points of sale. We increased volumes overall for the quarter in spite of the end of the Hanson contract and extremely heavy rainfall in California. We expect activity to accelerate, particularly in the second half of the year, as our customers work to catch up on projects that were delayed by weather in Q1. Our team at the Orca Quarry has done a great job in advancing the stockpiling system capital project and we look forward to making our first sales of fine sand in Q2.”
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 (including in the Long Beach market), 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.