BIOREM Technologies Inc.
TSX VENTURE : BRM

BIOREM Technologies Inc.

May 11, 2006 14:00 ET

Biorem Reports First Quarter Results

GUELPH, ONTARIO--(CCNMatthews - May 11, 2006) -

NOT FOR U.S. DISTRIBUTION

Biorem Inc. (TSX VENTURE:BRM) announced today its results for the first quarter ended March 31, 2006, which are summarized in the following table:



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First quarter ended March 31,
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Information in table is in thousands
except per share data 2006 2005
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REVENUE $ 3,262 $ 1,675
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Gross Profit 861 673
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EBITDA (1) (179) 217
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NET EARNINGS (200) 91
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BASIC EARNINGS PER SHARE (0.02) 0.01
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DILUTED EARNINGS PER SHARE (0.02) 0.01
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WEIGHTED AVERAGE COMMON SHARES 10,183 10,055
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Consolidated Revenue in Q1 was $3,262,000, which is up $1,587,000 or 95% over the prior year. First quarter revenue of BIOREM Environmental Inc. (the U.S. Operating Company), which commenced operations on July 1, 2005, was $507,000 and revenue of BIOREM Technologies Inc. (the Canadian Operating Company), was $2,755,000 up 64% from prior year. The sales order backlog at December 31, 2006 was $9,400,000 compared to 4,900,000 in the prior year, which led to the improved revenue in the first quarter.

Commenting on the first quarter revenue Brian Herner, President & CEO said, "Revenue for the past twelve months has exceeded $12 million, which is reflective of record $15.5 million in new bookings that were obtained during 2005. The sales cycle of municipal contracting is very unpredictable so I am pleased that our order backlog remains strong as we move through the current fiscal year. The net loss in the quarter of $200,000 is due to the lower margins on large field erected projects that include a high proportion of flow-through sub-contracting elements. The increased operating expenses are consistent with our planned investment in sales and engineering personnel that we need to accelerate market penetration in each of our addressable markets. We are building an exceptional team at BIOREM and I am pleased with the contributions that are already being made by the fifteen employees who have joined us since January 1, 2005."

New orders in the quarter were $700,000 and the order backlog is $7,000,000, which is approximately the same as the prior year. Two thirds of this sales order backlog is scheduled for completion by December 31, 2006. This quarter's new sales bookings include $300,000 from the Region of Peel, Ontario for the supply of a modular odour control system for the composting facility at the Caledon Sanitary Landfill site. The installation at the Caledon site is scheduled for the summer of 2006.

Gross profit in the quarter of $861,000 is up $188,000 or 28% compared to last year. The increase in gross profit is less than the increase in revenue due to a lower gross margin. The gross margin this quarter of 26.4% is down from 40.2% last year due to a change in mix of projects. The mix of projects in the first quarter of 2006 includes two large municipal projects that were sold at less than targeted margin due to the large amount of sub-contracted flow through costs. On average gross margins on the sales orders to be completed during the balance of this year are expected to recover from the first quarter gross margin rate to levels obtained in prior periods.

Total operating expenses of $1,040,000 are up $584,000 or 128% compared to the prior year. The increase in operating expenses includes $70,000 of variable selling expenses associated with the increase in revenue, $207,000 of operating expenses associated with BIOREM Environmental Inc., $99,000 reduction in investment tax credits for research and development, $57,000 attributable to foreign exchange and $151,000 of expenses associated with stock option benefits, increases in staff and international travel.

BIOREM® manufactures BIOSORBENS™ biofilter media and is a leading supplier of biofilters for air pollution control in municipal and industrial applications, including the recently acquired BIOCUBE® modular units. With over 400 installed systems and over a decade of experience, the Company's biofilters are the technology of choice for odor control at Wastewater Treatment Plants across North America. www.biorem.biz

(1.) EBITDA is a non-GAAP earnings measure, therefore, it does not have any standardized meaning prescribed by Canadian generally accepted accounting principles and may not be similar to measures presented by other companies. EBITDA represents earnings before interest, income taxes, depreciation and amortization. This measure is important to management since it is used by potential lenders to evaluate the ongoing cash generating capability of the Company and thus the amounts those lenders are willing to lend to the Company.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved of the contents of this release.

Forward-Looking Statements

This press release contains forward-looking statements based on current expectations. These forward-looking statements contain various risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Risks and uncertainties about the Company's business are more fully discussed in the disclosure materials, financial statements and MD&A filed with the securities regulatory authorities in Canada on www.sedar.com

The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • BIOREM Technologies Inc.
    Greg Flanagan
    Chief Financial Officer
    (519) 767-9100 x275
    gflanagan@biorem.biz
    or
    Investor Contact:
    Genoa Management Limited
    Amir Nayeri or John Sadler
    1-866-430-6247
    info@genoa.ca