BIOREM Technologies Inc.
TSX VENTURE : BRM

BIOREM Technologies Inc.

November 14, 2006 09:16 ET

BIOREM Reports Third Quarter Results

GUELPH, ONTARIO--(CCNMatthews - Nov. 14, 2006) - Biorem Inc. (TSX VENTURE:BRM) announced today its results for the third quarter and the nine month period ended September 30, 2006, which are summarized in the following table:



Information in table is Three-Month Period Nine-Month Period
in thousands $ Ended Sept. 30 Ended Sept. 30
except per share data 2006 2005 2006 2005
-----------------------------------------------------------------------
Revenue $ 2,763 $3,159 $ 8,795 $7,365
-----------------------------------------------------------------------
Gross Profit 1,087 1,361 2,614 3,078
-----------------------------------------------------------------------
EBITDA(1) (178) 220 (968) 746
-----------------------------------------------------------------------
Net (Loss) Earnings (320) 12 (1,115) 252
-----------------------------------------------------------------------
Basic (Loss) Earnings per Share (0.03) 0.00 (0.11) 0.02
-----------------------------------------------------------------------
Diluted (Loss) Earnings per Share (0.03) 0.00 (0.11) 0.02
-----------------------------------------------------------------------
Weighted Average Common Shares 10,581 10,143 10,378 10,114
-----------------------------------------------------------------------


The consolidated revenue of BIOREM Inc in the third quarter was $2,763,000, which is down $396,000 or 12 percent over the prior year. Revenue on a year to date basis is $8,795,000, which is up $1,430,000 or 19 percent over prior year.

Commenting on the third quarter revenue Brian Herner, President & CEO said, "Revenue in the third quarter was down due to lower sales bookings that were recorded in the first quarter. With the investments that we have made since last year in expanding our sales infrastructure, BIOREM continues to make progress in rebuilding our order book. We expect that 33 percent of the backlog reported at the end of the third quarter will be added to revenue before the end of the current year."

BIOREM believes that its business growth trend is best measured by bookings and order backlog. New orders valued at $3,600,000 were received in the quarter representing an increase of $1,400,000 or 64 percent from the same period last year. The order backlog was $8,500,000 at the end of the period, which represents an increase of $900,000 or 12 percent from the end of previous quarter but down from the backlog of $9,500,000 reported at the end of the third quarter of last year.

Operating expenses in the third quarter increased 11 percent over prior year and include $200,000 in one time non-recurring severance cost related to re-organizational expenses in the sales and marketing team. Excluding the one time re-organizational expenses, operating expenses were down 6.7 percent over the same period last year. Excluding the re-organization expenses, EBITDA was $22,000 in the third quarter compared to $220,000 for the same period last year. A net loss of $320,000 was recorded in the quarter compared to breakeven results last year. The loss in the three-month period is attributable to the non-recurring re-organization expenses combined with lower gross profit on reduced revenue as compared to the same period last year. Gross margins for the third quarter at 39 percent have recovered significantly from the level of 26 percent in the first half of the year, but remain 4 percentage points down from the 43 percent in the prior year.

"Our gross margins recovered significantly in the third quarter as the lower margins associated with large sub-contracts completed in the first half of the year were absorbed along with unfavorable exchange rates on older contracts," added Mr. Herner. We expect the ratio of operating expenses as a percentage of revenue to improve as we begin to see sales order booking productivity increase from the new regional sales managers that we hired during the year and increased incremental revenue from new products as a result of the technology investments that we have made."

At the annual Water Environment Federation Technology Conference in Dallas, TX in October, BIOREM introduced a new, low density, proprietary filter media for biotrickling filter applications designated as POPCORN LWE™ and newly engineered biological treatment systems incorporating the new media. The Synergistic Air Management program introduced by BIOREM will provide Total Odor Management at sewage works under all operating conditions.

The new modular system, designated Synergy M-1, incorporates a biotrickling filter followed by a biofilter in one compact package. The Synergy M-1 system uses the advanced POPCORN LWE™ in the biotrickling filter and the established, technology leading BIOSORBENS™ in the biofilter. The unique features of this combination provide Hydrogen Sulphide removal at any level in the biotrickling filter, polished for residual odor removal with the biofilter.

These technical and commercial breakthroughs are expected to double the municipal market sales opportunity for BIOREM. While biofilters provide excellent and superior odour removal, their application is restricted to air discharges with low to medium hydrogen sulphide levels. Due to urban sprawl, sewage collection systems are being extended in length. This leads to higher buildup of hydrogen sulphide gas in the collection system that is expelled at the treatment works. BIOREM's MYTILUS® biotrickling filter combined with its industry leading BASYS™ biofilter, now provides both removal of high level hydrogen sulphide as well as total odour.

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 500 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
    Email: gflanagan@biorem.biz
    Website: www.biorem.biz
    or
    Genoa Management Limited
    Amir Nayeri
    Investor Contact
    1-866-430-6247
    or
    Genoa Management Limited
    John Sadler
    Investor Contact
    1-866-430-6247
    Email: info@genoa.ca