TORONTO, ONTARIO--(Marketwired - May 12, 2015) - BIOX Corporation (BIOX) (TSX:BX), a renewable energy company, today announced its fiscal 2015 second quarter (Q2 2015) financial results for the three-month and six-month periods ended March 31, 2015.
Highlights
- Production of methyl esters was 13.9 million litres for the three-month period ended March 31, 2015 (Q2 2015) compared to 16.2 million litres in Q2 2014
- Sales were $16,067,000 in Q2 2015 compared to $15,707,000 in Q2 2014
- Operating loss was $2,199,000 in Q2 2015 compared to operating loss of $7,690,000 in Q2 2014
- Operating loss prior to non-cash items(1) was $1,172,000 in Q2 2015 compared to operating loss prior to non-cash items of $1,475,000 in Q2 2014
- Net loss was $2,002,000 in Q2 2015 compared to net loss of $22,976,000, including the recognition of a $15.2 million asset impairment charge and $4.9 million in expansion and development charges, in Q2 2014
- Loss per share was $0.04 in Q2 2015 compared to net loss per share of $0.50 in Q2 2014
Commenting on operating results for the second quarter, Executive Vice President & CFO Chris Clinning said: "Lack of clarity on the biodiesel tax incentive for 2015 along with the continued delay in the finalization of the 2014 and issuance of the 2015 Renewable Volume Obligation as part of the RFS2 continue to negatively impact our industry and our results. We have recently seen some strengthening in biodiesel margins and anticipate the EPA finalizing the Renewable Volume Obligations for 2014, 2015, and 2016 later this year in accordance with their recent announcement."
Financial Highlights
Sales were $16.1 million and $43.5 million for the three-month and six-month periods ended March 31, 2015, respectively, compared with $15.7 million and $33.0 million for the corresponding periods last year. The increase in sales for the six-month period was primarily due to the recognition of approximately US$6.5 million of revenue related to the retroactive reinstatement of the biodiesel tax incentive on December 19, 2014.
Direct expenses were $16.2 million and $36.7 million for the three-month and six-month periods ended March 31, 2015, respectively, compared with $15.8 million and $32.1 million for the corresponding periods last year. The increase in the six-month period was primarily due to a 47% increase in litres of biodiesel sold during the three-month period ended December 31, 2014 compared with the corresponding period last year, partially offset by lower feedstock costs.
General and administrative expenses were $1.0 million and $2.2 million for the three-month and six-month periods ended March 31, 2015, respectively, compared with $1.4 million and $2.9 million in the corresponding periods last year. The decrease in general and administrative expenses in 2015 compared to 2014 is due to cost cutting initiatives implemented throughout 2014.
Operating loss was $2.2 million for the three-month period ended March 31, 2015, compared with operating loss of $7.7 million in Q2 2014. Operating income for the six-month period ended March 31, 2015 was $2.5 million compared with an operating loss of $9.4 million for the corresponding period in 2014.
Operating loss prior to non-cash items was $1.2 million for the three-month period ended March 31, 2015, compared to operating loss prior to non-cash items of $1.5 million in Q2 2014. Operating income prior to non-cash items was $4.5 million for the six-month period ended March 31, 2015 compared with an operating loss prior to non-cash items of $2.0 million for the corresponding period in 2014.
The decreased operating loss, and operating loss prior to non-cash items, for the three-month period ended March 31, 2015 compared with Q2 2014 were primarily due to the recognition of $4.9 million in expansion planning and development charges in Q2 2014. There were no expansion planning and development charges in the three-month and six-month periods ended March 31, 2015. The increased operating income, and operating income prior to non-cash items for the six-month period ended March 31, 2015 compared with the corresponding period in 2014 was due to the expansion planning and development charges discussed above plus the recognition of approximately US$6.5 million of revenue during the three-month period ended December 31, 2014 related to the retroactive reinstatement of the biodiesel tax incentive on December 19, 2014.
Net loss was $2.0 million or ($0.04) per share for the three-month period ended March 31, 2015 compared with net loss of $23.0 million or ($0.50) per share in Q2 2014. Net income for the six-month period ended March 31, 2015 was $2.3 million or $0.05 per share compared with a net loss of $24.9 million or ($0.54) per share in for the corresponding period in 2014. The improvement in net income for the three-month and six month periods ended March 31, 2015 compared with the corresponding periods in 2014 are due to the factors discussed above under operating income and operating income prior to non-cash items, as well as the recognition of a $15.2 million asset impairment charge during the three-month period ended March 31, 2014.
As at March 31, 2015, BIOX's available cash position amounted to $10.0 million, which consisted of cash and cash equivalents and short-term investments, compared with $7.2 million at September 30, 2014. Working capital as of March 31, 2015 was $12.1 million compared with $8.4 million at September 30, 2014. The Company believes that its future cash flow from operations combined with its current financial resources should be sufficient to enable BIOX to meet its ongoing requirements for capital expenditures and working capital requirements.
As at March 31, 2015 and May 12, 2015, the Company had 45,710,967 common shares outstanding, as well as outstanding stock options to purchase up to 2,130,000 common shares.
Outlook
The value of biodiesel and Biomass-based Diesel Renewable Identification Numbers (RINs) continue to be negatively impacted due to the delay in finalizing the 2014 and 2015 Renewable Volume Obligation (RVO). On November 21, 2014, the U.S. Environmental Protection Agency (EPA) announced that it would not complete the final rule for 2014 until sometime in 2015. 2015 RINs traded at approximately $0.84 (or $1.26 per U.S. gallon) as of May 11th, 2015. The final announcement of the RVO levels for 2014 and 2015 will be an important signal for the sustainability of the biodiesel industry in the U.S. On April 10, 2015, the EPA announced that it had reached a consent decree in a lawsuit with petroleum groups that legally binds the agency to meet a deadline of June 1, 2015 for proposing 2014 and 2015 RFS2 volumes and finalizing these volumes by November 30, 2015. The EPA also announced that it intends to propose 2016 RFS2 volumes and 2017 RFS2 Biomass-based diesel volumes by June 1, 2015, and to finalize those volumes by November 30, 2015.
On December 3, 2014, the U.S. House of Representatives voted overwhelmingly to pass a package of tax incentives retroactively for 2014, including the $1.00 per U.S. gallon biodiesel tax incentive which was subsequently passed by the U.S. Senate on December 16, 2014 and signed into law by the President of the United States on December 19, 2014. The reinstatement of the biodiesel tax incentive allows us to collect approximately US$6.5 million in refundable tax credits from our customers and the U.S. Internal Revenue Service related to sales to our customers during calendar 2014. The U.S. biodiesel tax incentive expired for the fourth time on December 31, 2014 and the industry is awaiting clarity on the incentive for 2015. Uncertainty surrounding the renewal of the biodiesel tax incentive could cause continued short term confusion in the market and pricing volatility.
While BIOX has historically sold the majority of its product into the U.S. market, the implementation of the Canadian regulations as described in BIOX's management's discussion and analysis for the three-month period ended March 31, 2015 significantly increase the accessible market for its product in Canada. Furthermore, the implementation of a renewable diesel mandate in Ontario on April 1, 2014, provides BIOX with market certainty in its local region, which supports the significant capital investment that it made in the Hamilton facility. Once fully implemented, the regulation requires the use of an estimated 240 million litres of bio-based diesel per annum on an average GHG adjusted volume basis.
BIOX's inter-terminal pipeline and supply agreement with Shell is an example of how the Company can directly service primary suppliers with a secure supply of biodiesel under the new Canadian and Ontario regulations by the most efficient possible logistics. The supply of biodiesel under this agreement has the potential to become a significant portion of BIOX's Hamilton production given the implementation of the Ontario mandate and as the Canadian Renewable Fuel Content Regulations extend eastward into Québec and the Atlantic provinces.
BIOX continues to pursue growth strategies that would expand its business through increasing the volume of biodiesel it produces, controls and distributes in strategic locations throughout North America.
1) Note: Non-IFRS Measures. Operating income prior to non-cash items is defined as operating income or loss less production facility depreciation and amortization, and less depreciation and amortization of furniture, equipment and intangibles and share-based compensation. Management uses this measurement to monitor the operating cash flow of BIOX's business and believes this information is useful supplemental information to a reader of financial statements. This measurement may not be comparable to similar measures presented by other issuers. Investors are cautioned that operating income (loss) prior to non-cash items should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of BIOX's performance.
Reconciliation of Non-IRFS Measures
The following table presents a reconciliation of operating income (loss) prior to non-cash items to net income (loss) for the three-months and six-months ended March 31, 2015 and 2014:
| (in thousands) | Three months ended March |
Six months ended March |
|||||||
| 2015 | 2014 | 2015 | 2014 | ||||||
| $ | $ | $ | $ | ||||||
| Operating income (loss) before non-cash items | (1,172 | ) | (1,475 | ) | 4,546 | (1,983 | ) | ||
| Deduct: | Production facility depreciation and amortization | (956 | ) | (1,149 | ) | (1,912 | ) | (2,263 | ) |
| Depreciation and amortization of equipment and intangible assets | (54 | ) | (93 | ) | (114 | ) | (179 | ) | |
| Share-based compensation | (17 | ) | (115 | ) | (40 | ) | (163 | ) | |
| Provision for unutilized tank storage | - | (4,858 | ) | - | (4,858 | ) | |||
| Operating income (loss) | (2,199 | ) | (7,690 | ) | 2,480 | (9,446 | ) | ||
| Other income and expenses | 197 | (15,286 | ) | (170 | ) | (15,429 | ) | ||
| Net income (loss) | (2,002 | ) | (22,976 | ) | 2,310 | (24,875 | ) | ||
About BIOX Corporation
BIOX is a renewable energy company that owns and operates a 67 million litre per year continuous flow biodiesel production facility in Hamilton, Ontario. BIOX has an innovative, proprietary and patented production process that is capable of producing the highest quality, renewable, clean burning and biodegradable biodiesel fuel utilizing a variety of feedstocks - from pure seed oils to animal fats to recovered vegetable oils with no change to the production process. BIOX's high quality biodiesel fuel meets North American (ASTM D-6751) quality standards.
Forward-looking Statements
Certain statements in this press release constitute "forward-looking" statements that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, objectives or achievements of BIOX, or industry results, to be materially different from any future results, performance, objectives or achievements expressed or implied by such forward-looking statements. Such statements relate to, among other things, BIOX's long-term expectations for the biodiesel market in light of current market conditions, the effect of The Ontario Greener Diesel mandate and the Canadian Renewable Fuel Content Regulation on BIOX, and the significance of sales under the supply agreement with Shell. These statements reflect BIOX's current views regarding future events and operating performance, are based on information currently available to BIOX, and speak only as of the date of this press release. These forward-looking statements involve a number of risks, uncertainties and assumptions and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such performance or results will be achieved. Those assumptions and risks include, but are not limited to, the fact that BIOX's results of operations and business outlook are highly dependent on a mix of legislation and producer payment programs and tax credits and upon commodity prices, which are subject to significant volatility and uncertainty. Many factors could cause the actual results, performance or achievements of BIOX to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including factors described in this press release and those discussed in BIOX's publicly available disclosure documents, as filed by BIOX on SEDAR (www.sedar.com) except as updated herein. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described in this press release as intended, planned, anticipated, believed, estimated or expected. Unless required by applicable securities law, BIOX does not intend and does not assume any obligation to update these forward-looking statements. To the extent any forward-looking statements herein constitute financial outlook, they were approved by management as of the date hereof and have been included to provide an understanding with respect to BIOX's financial performance and are subject to the same risks and assumptions referred to herein. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur and readers are cautioned that any financial outlook information contained in this news release should not be used for purposes other than for which it is disclosed herein.
| BIOX Corporation | |||||||||
| Condensed consolidated interim statements of comprehensive (loss) income | |||||||||
| Three and six month periods ended March 31, 2015 and 2014 | |||||||||
| (Unaudited) | |||||||||
| (Expressed in thousands of Canadian dollars, except share and per share amounts) | |||||||||
| Three months ended | Six months ended | ||||||||
| March 31, | March 31, | ||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||
| $ | $ | $ | $ | ||||||
| Revenue | 16,067 | 15,707 | 43,475 | 32,976 | |||||
| Cost of sales | |||||||||
| Direct expenses | 16,210 | 15,828 | 36,748 | 32,066 | |||||
| Production facility depreciation and amortization | 956 | 1,149 | 1,912 | 2,263 | |||||
| 17,166 | 16,977 | 38,660 | 34,329 | ||||||
| Gross margin | (1,099 | ) | (1,270 | ) | 4,815 | (1,353 | ) | ||
| Operating expenses | |||||||||
| General and administrative | 1,029 | 1,354 | 2,181 | 2,893 | |||||
| Depreciation and amortization of equipment and intangible assets | 54 | 93 | 114 | 179 | |||||
| Share-based compensation | 17 | 115 | 40 | 163 | |||||
| Expansion planning and development | - | 4,858 | - | 4,858 | |||||
| 1,100 | 6,420 | 2,335 | 8,093 | ||||||
| Operating (loss) income | (2,199 | ) | (7,690 | ) | 2,480 | (9,446 | ) | ||
| Other expenses | |||||||||
| Impairment of non-current assets | - | 15,197 | - | 15,197 | |||||
| Financing cost | 315 | 275 | 634 | 595 | |||||
| Foreign exchange gain | (498 | ) | (152 | ) | (441 | ) | (303 | ) | |
| (183 | ) | 15,320 | 193 | 15,489 | |||||
| Net (loss) income before interest income and income taxes | (2,016 | ) | (23,010 | ) | 2,287 | (24,935 | ) | ||
| Interest income | 14 | 34 | 23 | 60 | |||||
| Net (loss) income for the period | (2,002 | ) | (22,976 | ) | 2,310 | (24,875 | ) | ||
| Other comprehensive loss | |||||||||
| Foreign currency translation loss | (96 | ) | (26 | ) | (184 | ) | (63 | ) | |
| Comprehensive (loss) income | (2,098 | ) | (23,002 | ) | 2,126 | (24,938 | ) | ||
| (Loss) earnings per common share | |||||||||
| Basic | (0.04 | ) | (0.50 | ) | 0.05 | (0.54 | ) | ||
| Diluted | (0.04 | ) | (0.50 | ) | 0.05 | (0.54 | ) | ||
| Weighted average number of common shares outstanding | |||||||||
| Basic | 45,710,967 | 45,724,826 | 45,710,967 | 45,724,826 | |||||
| Diluted | 45,710,967 | 45,724,826 | 45,809,685 | 45,724,826 | |||||
| BIOX Corporation |
| Condensed consolidated interim statements of changes in equity Six month periods ended March 31, 2015 and 2014 |
| (Unaudited) |
| (Expressed in thousands of Canadian dollars, except share and per share amounts) |
| Common share capital | Warrant reserve | |||||||||||||||
| Accumulated | ||||||||||||||||
| Share | other | |||||||||||||||
| purchase | Equity | comprehensive | Total | |||||||||||||
| Shares | Amount | warrants | Amount | reserve | loss | Deficit | equity | |||||||||
| # | $ | # | $ | $ | $ | $ | $ | |||||||||
| Balance, September 30, 2013 | 45,748,691 | 167,787 | 1,982,143 | 3,151 | 2,926 | (91 | ) | (110,813 | ) | 62,960 | ||||||
| Share-based compensation | - | - | - | - | 163 | - | - | 163 | ||||||||
| Share cancellation | (34,524 | ) | (13 | ) | - | - | - | - | - | (13 | ) | |||||
| Repurchased shares to be cancelled | - | (1 | ) | - | - | - | - | - | (1 | ) | ||||||
| Net loss | - | - | - | - | - | - | (24,875 | ) | (24,875 | ) | ||||||
| Foreign currency translation loss | - | - | - | - | - | (63 | ) | - | (63 | ) | ||||||
| Balance, March 31, 2014 | 45,714,167 | 167,773 | 1,982,143 | 3,151 | 3,089 | (154 | ) | (135,688 | ) | 38,171 | ||||||
| Balance, September 30, 2014 | 45,710,967 | 167,773 | 1,982,143 | 3,151 | 2,965 | (252 | ) | (137,313 | ) | 36,324 | ||||||
| Share-based compensation | - | - | - | - | 40 | - | - | 40 | ||||||||
| Expiry of share purchase warrants | - | - | (1,982,143 | ) | (3,151 | ) | - | - | 3,151 | - | ||||||
| Expiry of share purchase options | - | - | - | - | (641 | ) | - | 641 | - | |||||||
| Net income | - | - | - | - | - | - | 2,310 | 2,310 | ||||||||
| Foreign currency translation loss | - | - | - | - | - | (184 | ) | - | (184 | ) | ||||||
| Balance, March 31, 2015 | 45,710,967 | 167,773 | - | - | 2,364 | (436 | ) | (131,211 | ) | 38,490 | ||||||
| BIOX Corporation | |||||
| Condensed consolidated interim statements of financial position As at March 31, 2015 and September 30, 2014 | |||||
| (Unaudited) | |||||
| (Expressed in thousands of Canadian dollars) | |||||
| March 31, | September 30, | ||||
| 2015 | 2014 | ||||
| $ | $ | ||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | 9,992 | 7,212 | |||
| Accounts receivable | 8,030 | 2,621 | |||
| Prepaid expenses | 290 | 665 | |||
| Inventory | 3,094 | 7,078 | |||
| 21,406 | 17,576 | ||||
| Restricted cash | 720 | 1,309 | |||
| Property, plant and equipment | 27,798 | 29,458 | |||
| Intangible assets | 462 | 515 | |||
| Deferred income tax assets | 14,509 | 14,381 | |||
| 64,895 | 63,239 | ||||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and other liabilities | 5,532 | 6,028 | |||
| Current portion of long-term debt | 1,500 | 1,125 | |||
| Current portion of finance leases | 29 | 29 | |||
| Current portion of provisions | 2,273 | 2,010 | |||
| 9,334 | 9,192 | ||||
| Finance leases | 14 | 28 | |||
| Long-term debt | 9,354 | 9,727 | |||
| Provisions | 7,703 | 7,968 | |||
| 26,405 | 26,915 | ||||
| Equity | |||||
| Common share capital | 167,773 | 167,773 | |||
| Warrants reserve | - | 3,151 | |||
| Equity reserve | 2,364 | 2,965 | |||
| Accumulated other comprehensive loss | (436 | ) | (252 | ) | |
| Deficit | (131,211 | ) | (137,313 | ) | |
| 38,490 | 36,324 | ||||
| 64,895 | 63,239 | ||||
| BIOX Corporation | ||||||
| Condensed consolidated interim statements of cash flows Six month periods ended March 31, 2015 and 2014 | ||||||
| (Unaudited) | ||||||
| (Expressed in thousands of Canadian dollars, except share and per share amounts) | ||||||
| Six months ended | ||||||
| March 31, | ||||||
| 2015 | 2014 | |||||
| $ | $ | |||||
| Operating activities | ||||||
| Net income (loss) | 2,310 | (24,875 | ) | |||
| Add (less) items not involving cash | ||||||
| Production facility depreciation and amortization | 1,912 | 2,263 | ||||
| Depreciation and amortization of equipment and intangible assets | 114 | 179 | ||||
| Financing costs | 323 | 356 | ||||
| Provision for unutilized tank storage | (178 | ) | 4,330 | |||
| Impairment of non-current assets | - | 15,197 | ||||
| Unrealized foreign exchange gain | (1,667 | ) | (197 | ) | ||
| Share-based compensation | 40 | 163 | ||||
| Accretion of asset retirement obligation | 176 | 161 | ||||
| 3,030 | (2,423 | ) | ||||
| Net change in non-cash working capital balances | ||||||
| related to operations | (1,695 | ) | (2,566 | ) | ||
| 1,335 | (4,989 | ) | ||||
| Investing activity | ||||||
| Purchase of property, plant and equipment | (291 | ) | (1,027 | ) | ||
| Disposals of property, plant and equipment | - | 12 | ||||
| Decrease in restricted cash | 589 | 274 | ||||
| Share repurchase | - | (14 | ) | |||
| 298 | (755 | ) | ||||
| Financing activities | ||||||
| Payments on finance leases | (14 | ) | (23 | ) | ||
| Increase in finance leases | - | 28 | ||||
| Repayment of debt financing | - | (750 | ) | |||
| Interest paid | (321 | ) | (354 | ) | ||
| (335 | ) | (1,099 | ) | |||
| Effect of exchange rate changes on cash held in foreign currency | 1,482 | 133 | ||||
| Net increase (decrease) in cash and cash equivalents during the period | 2,780 | (6,710 | ) | |||
| Cash and cash equivalents, beginning of period | 7,212 | 15,909 | ||||
| Cash and cash equivalents, end of period | 9,992 | 9,199 | ||||
Contact Information:
Chris Clinning
Executive Vice President & CFO
905-521-8205 ext. 253
cclinning@bioxcorp.com