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Article Excerpt
TORONTO, June 5 /PRNewswire-FirstCall/ -- ABER DIAMOND CORPORATION (TSE-ABZ, NASDAQ-ABER) announces its first quarter results for the period ended April 30, 2007.
Commenting on Aber's first quarter results, Chairman and Chief Executive Officer Robert Gannicott stated,"Operationally this has been one of our strongest quarters. The Winter Road re-supply delivered the largest number of loads in its 25 year history. Diamond production set a new first quarter high despite a seasonally cold winter with recovered grades being 12% above ore reserve levels. Consolidated operating margins also improved over the prior year. Harry Winston has continued its solid growth in sales as it delivers on its planned store openings around the world to serve the growing population of wealthy consumers."
Thomas O'Neill, President of Aber and Chief Executive Officer of Harry Winston added, "In the First Quarter 2008 we continue our solid results with a double digit increase in sales supported by strengthening gross margins. Another new salon opened in Tokyo, Japan, while we relocated our store in Osaka to the prestigious Shinsaibashi area and expanded our store in Taipei, Taiwan. We now have 14 Harry Winston locations throughout the world. We continue to execute our growth strategy through new product and innovative marketing approaches together with expanding our retail store network in prime locations around the world. We plan to open four additional stores before the end of the year."
Chief Financial Officer, Alice Murphy commented that "Strong segment sales growth of 19% and 17% for mining and retail operations respectively increased consolidated quarterly earnings from operations compared to the prior year. Net earnings for the quarter were, however, negatively impacted by the non-cash, mark-to-market adjustment on future income taxes, resulting from the 6% strengthening of the Canadian dollar against the US dollar during the quarter. This $13.6 million mark-to-market charge to earnings compares to a future income tax recovery of $10.4 million included in our prior year's results."
First Quarter Highlights Financial Highlights ------------------------------------------------------------------------- Three Three Twelve months months months ended ended ended April 30, April 30, January 31, 2007 2006 2007 ------------------------------------------------------------------------- Sales ($ millions) 141 119 559 ------------------------------------------------------------------------- Earnings from operations ($ millions) 36 28 147 ------------------------------------------------------------------------- Net Earnings ($ millions) 3 24 104 ------------------------------------------------------------------------- Earnings per share ($) 0.06 0.41 1.79 ------------------------------------------------------------------------- Cash Earnings per share ($)(1) 0.57 0.62 3.18 ------------------------------------------------------------------------- (1) Cash earnings per share is not a recognized measure under Canadian GAAP and does not have a standardized meaning prescribed by Canadian GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. Cash earnings per share is earnings before non-cash income tax expense, non-cash foreign exchange gains (loss), and depreciation and amortization on a per share basis. See "Non-GAAP Performance Measures" in the Company's Management's Discussion and Analysis for the three months ended April 30, 2007, for a reconciliation of earnings to cash earnings. Production Highlights (Aber's 40% share of Diavik Mine production) ------------------------------------------------------------------------- Three Three Twelve months months months ended ended ended March 31, March 31, December 31, 2007 2006 2006 ------------------------------------------------------------------------- Diamond recovered (000s carats) 1,034 715 3,931 ------------------------------------------------------------------------- Grade (carats/tonne) 4.97 3.62 4.21 ------------------------------------------------------------------------- Operating costs, cash ($ millions) 25.1 21.6 97.2 ------------------------------------------------------------------------- Operating costs per carat, cash ($) 24 30 25 ------------------------------------------------------------------------- Returning Value to Shareholders
Aber is pleased to declare an eligible quarterly dividend payment of US$0.25 per share. Shareholders of record at the close of business on June 29, 2007, will be entitled to receive payment of this dividend on July 13, 2007.
Annual Meeting of Shareholders
Aber will hold its Annual Meeting of Shareholders today at 10 AM EST at the Toronto Board of Trade located at 1 First Canadian Place, Toronto, Ontario. Interested parties unable to attend may listen to a broadcast of the meeting and a review of Aber's first quarter results on the internet at http://www.aber.ca/
Information in this news release that is not current or historical factual information may constitute forward-looking information or statements within the meaning of applicable securities laws. Implicit in this information, particularly in respect of statements as to future operating results and economic performance of Aber, and resources and reserves at the Diavik Mine, are assumptions regarding projected revenue and expense, diamond prices and mining costs. These assumptions, although considered reasonable by Aber at the time of preparation, may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including risks relating to general economic conditions and mining operations, and could differ materially from what is currently expected. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About Aber
Aber Diamond Corporation is a specialist diamond company focusing on the mining and retail segments of the diamond industry. The Company supplies rough diamonds to the global market through its 40% ownership in the Diavik Diamond Mine and owns one of the world's premier retailers of diamond jewelry, Harry Winston.
Highlights (All figures are in United States dollars unless otherwise indicated)
Aber's net earnings for the quarter were $3.3 million with earnings per share of $0.06 (cash earnings per share of $0.57(1)) as compared to net earnings of $23.9 million and earnings per share of $0.41 (cash earnings per share of $0.62(1)) for the corresponding quarter of the prior year. Net earnings for the current quarter were negatively impacted by the foreign exchange adjustment of $13.6 million, not deductible for Canadian tax purposes, applied to the provision for future income taxes payable, which is attributable to the 6% strengthening of the Canadian dollar against the US dollar during the quarter.
Operationally, this has been one of the strongest quarters in the Company's history. Consolidated sales for the quarter increased by 19% to $141.4 million compared to $119.3 million for the prior year and consolidated gross margin for the quarter increased to 50% from 46% for the prior year.
Sales from the mining segment increased by 19% compared to the comparable quarter of the prior year. Earnings from mining operations totalled $37.1 million compared to $25.8 million for the comparable quarter of the prior year.
Sales from the retail segment were 17% higher than the comparable quarter of the prior year. The loss from retail operations of $1.1 million, as compared to earnings from operations of $2.4 million for the comparable quarter of the prior year, was principally impacted by certain acquisition-related costs of $2.3 million specifically attributable to the Harry Winston purchase.
Aber's share of diamonds recovered from the Diavik Mine was 1.0 million carats for the three months ended March 31, 2007, compared to 0.7 million carats for the comparable period of the prior year.
The Company has declared a quarterly dividend of $0.25 per share to be paid on July 13, 2007 to shareholders of record on June 29, 2007.
----------------- (1) Cash earnings per share is not a recognized measure under Canadian GAAP and does not have a standardized meaning prescribed by Canadian GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. Cash earnings per share is earnings before non-cash income tax expense, non-cash foreign exchange gain (loss), and depreciation and amortization on a per share basis. See "Non-Canadian GAAP Performance Measures" in the Company's management's discussion and analysis for the three months ended April 30, 2007, for a reconciliation of earnings to cash earnings. Management's Discussion and Analysis ------------------------------------ (all figures are in United States dollars unless otherwise indicated) Prepared as of June 5, 2007
The following is management's discussion and analysis ("MD&A") of the results of operations for Aber Diamond Corporation ("Aber", or the "Company") for the three months ended April 30, 2007, and its financial position as at April 30, 2007. This MD&A is based on the Company's consolidated financial statements prepared in accordance with generally accepted accounting principles in Canada ("Canadian GAAP") and should be read in conjunction with the unaudited consolidated financial statements and notes thereto for the three months ended April 30, 2007 and the audited consolidated financial statements of Aber and notes thereto for the year ended January 31, 2007. Unless otherwise specified, all financial information is presented in United States dollars. Unless otherwise indicated, all references to "first quarter" refer to the three months ended April 30, 2007.
The following MD&A makes reference to certain non-GAAP measures such as cash earnings and cash earnings per share to assist in assessing the Company's financial performance. Non-GAAP measures do not have any standard meaning prescribed by Canadian GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. See "Non-GAAP Performance Measures".
Certain comparative figures have been reclassified to the current year's presentation.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
Certain information included in this MD&A may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding projected capital expenditure requirements, estimated production from the Diavik Mine in 2007, plans, timelines and targets for construction, mining, development, production and exploration activities at the Diavik Mine, future mining and processing at the Diavik Mine, the Diavik Mine's water licence renewal, the number and timing of expected rough diamond sales, projected sales growth and new store openings at Harry Winston, expected gross margin and expense trends in the retail segment, expected diamond prices and expectations concerning the diamond industry.
Forward-looking information is based on certain factors and assumptions regarding, among other things, mining, production, construction and exploration activities at the Diavik Mine, world economic conditions, the level of worldwide diamond production, the receipt of necessary regulatory permits, the expected sales mix at Harry Winston, expected salon openings and potential improvements in sourcing and purchasing polished diamonds. Specifically, in making statements concerning Aber's projected share of the Diavik Mine capital expenditure requirements, Aber has used a Canadian/US dollar exchange rate of $0.88, and has assumed that construction will continue on schedule with respect to the A-418 dike and with respect to current underground mining construction initiatives. In making statements regarding estimated production at the Diavik Mine, future mining activity and mine plans and future rough diamond sales, Aber has assumed that mining operations and exploration activities will proceed in the ordinary course according to schedule and that the Diavik Mine's water...
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