TORONTO, ONTARIO--(Marketwired - Aug. 12, 2015) - BIOX Corporation (BIOX) (TSX:BX), a renewable energy company, today announced its fiscal 2015 third quarter (Q3 2015) financial results for the three-month and nine-month periods ended June 30, 2015.
Highlights
- Production of methyl esters was 14.9 million litres for the three-month period ended June 30, 2015 (Q3 2015) compared to 13.8 million litres in Q3 2014
- Sales were $13,509,000 in Q3 2015 compared to $16,847,000 in Q3 2014
- Operating loss was $381,000 in Q3 2015 compared to operating loss of $2,973,000 in Q3 2014
- Operating loss prior to non-cash items(1) was $1,526,000 in Q3 2015 compared to operating loss prior to non-cash items of $1,863,000 in Q3 2014
- Net loss was $1,006,000 in Q3 2015 compared to net loss of $3,250,000 in Q3 2014
- Loss per share was $0.02 in Q3 2015 compared to net loss per share of $0.08 in Q3 2014
- EPA proposes increased Biomass-based diesel Renewable Volume Obligation through 2017
- Revenue and net income upside related to the potential retroactive reinstatement of the biodiesel tax incentive is approximately US $3,000,000 at June 30, 2015
- Sublease of a portion of leased tanks at IMTT effective June 1, 2015 through to December 20, 2017 resulted in a $2,184,000 reversal of tank lease provision
Commenting on operating results for the third quarter, CEO Chris Clinning said: "Our Q3 2015 results improved significantly, especially given that the ecoEnergy for Biofuels incentive ended on March 31, 2015, having generated $1.1 million in profitability in Q3 2014. Stronger market conditions and the sublease of a portion of our leased tanks at IMTT in New York Harbor, combined to appreciably decrease our operating and net loss for the quarter. The EPA's announcement of a proposed increase in the Biomass-based diesel mandate through 2017 is a positive step for the industry and a significant improvement over the previous proposal. We continue to enhance the performance of our Hamilton facility through process optimization and cost reduction initiatives as we look forward to increases in volume obligations in both Ontario and the U.S."
Financial Highlights
Sales were $13.5 million and $57.0 million for the three-month and nine-month periods ended June 30, 2015, respectively, compared with $16.8 million and $49.8 million for the corresponding periods last year. The decrease in sales for the three-month period ended June 30, 2015 was primarily due to a 12% decrease in biodiesel revenue per litre, and a 6% decrease in biodiesel litres sold, compared with the corresponding period in 2014. The increase in sales for the nine-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 $13.7 million and $50.5 million for the three-month and nine-month periods ended June 30, 2015, respectively, compared with $17.6 million and $49.6 million for the corresponding periods last year. The decrease in direct expenses for the three-month period was primarily due to a 6% decrease in litres of biodiesel sold and lower feedstock costs per litre sold.
General and administrative expenses were $1.3 million and $3.5 million, respectively, including $0.4 million in non-recurring charges related to Management restructuring, for the three-month and nine-month periods ended June 30, 2015, compared with $1.1 million and $4.0 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 $0.4 million for the three-month period ended June 30, 2015, compared with operating loss of $3.0 million in Q3 2014. Operating income for the nine-month period ended June 30, 2015 was $2.1 million compared with an operating loss of $12.4 million for the corresponding period in 2014. The decreased operating loss for the three-month period ended June 30, 2015 compared with Q3 2014 was primarily due to the $2.2 million decrease to the tank lease provision during the three-month period ended June 30, 2015 as a result of the sublease of a portion of our leased tanks at IMTT in New York Harbor. The increased operating income for the nine-month period ended June 30, 2015 compared with the corresponding period in 2014 was primarily due to the $2.2 million decrease to the tank lease provision and 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.
Operating loss prior to non-cash items was $1.5 million for the three-month period ended June 30, 2015, compared to operating loss prior to non-cash items of $1.9 million in Q3 2014. Operating income prior to non-cash items was $3.0 million for the nine-month period ended June 30, 2015 compared with an operating loss prior to non-cash items of $3.8 million for the corresponding period in 2014. The increased operating income prior to non-cash items for the nine-month period ended June 30, 2015 compared with the corresponding period in 2014 was primarily due to 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 $1.0 million or ($0.02) per share for the three-month period ended June 30, 2015 compared with net loss of $3.3 million or ($0.08) per share in Q3 2014. Net income for the nine-month period ended June 30, 2015 was $1.3 million or $0.03 per share compared with a net loss of $28.1 million or ($0.62) per share in for the corresponding period in 2014. The improvement in net income for the three-month and nine month periods ended June 30, 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 nine-month period ended June 30, 2014.
As at June 30, 2015, BIOX's available cash position amounted to $10.6 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 June 30, 2015 was $10.0 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 June 30, 2015 and August 12, 2015, the Company had 45,710,967 common shares outstanding, as well as outstanding stock options to purchase up to 1,905,000 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) and uncertainty related to the expiration of the U.S. biodiesel tax incentive on December 31, 2014. On May 29, 2015, the EPA announced its revised RVO proposal, and the proposal is expected to be ratified in November, 2015. Biomass-based diesel 2015 RINs traded at approximately $0.68 (or $1.02 per U.S. gallon) as of August 11th, 2015. The final announcement of the RVO levels for 2014, 2015, 2016 and 2017 will be an important signal for the sustainability of the biodiesel industry in the U.S.
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 allowed 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. As in prior years, retroactive reinstatement of the U.S. biodiesel tax incentive would allow us to recognize additional revenue and profitability related to sales to our customers during calendar 2015. At June 30, 2015, the value that could be recognized upon retroactive reinstatement of the U.S. tax incentive for 2015 was approximately US$3.0 million, although there are no assurances that the incentive will be renewed retroactively for 2015 in a manner consistent with prior years or at all.
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 June, 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 nine-months ended June 30, 2015 and 2014:
| (in thousands) | Three months ended June 30 |
Nine months ended June 30 |
|||||||
| 2015 | 2014 | 2015 | 2014 | ||||||
| $ | $ | $ | $ | ||||||
| Operating (loss) income before non-cash items | (1,526 | ) | (1,863 | ) | 3,020 | (3,846 | ) | ||
| Deduct: | Production facility depreciation and amortization | (961 | ) | (829 | ) | (2,873 | ) | (3,092 | ) |
| Depreciation and amortization of equipment and intangible assets | (58 | ) | (92 | ) | (172 | ) | (272 | ) | |
| Share-based compensation | (20 | ) | (48 | ) | (60 | ) | (211 | ) | |
| Provision for unutilized tank storage | 2,184 | (141 | ) | 2,184 | (4,998 | ) | |||
| Operating (loss) income | (381 | ) | (2,973 | ) | 2,099 | (12,419 | ) | ||
| Other expenses | (625 | ) | (277 | ) | (795 | ) | (15,706 | ) | |
| Net (loss) income | (1,006 | ) | (3,250 | ) | 1,304 | (28,125 | ) | ||
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 potential retroactive reinstatement of the U.S. biodiesel tax incentive for 2015, 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 nine month periods ended June 30, 2015 and 2014 | |||||||||
| (Unaudited) | |||||||||
| (Expressed in thousands of Canadian dollars, except share and per share amounts) | |||||||||
| Three months ended | Nine months ended | ||||||||
| June 30, | June 30, | ||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||
| $ | $ | $ | $ | ||||||
| Revenue | 13,509 | 16,847 | 56,984 | 49,823 | |||||
| Cost of sales | |||||||||
| Direct expenses | 13,719 | 17,570 | 50,467 | 49,635 | |||||
| Production facility depreciation and amortization | 961 | 829 | 2,873 | 3,092 | |||||
| 14,680 | 18,399 | 53,340 | 52,727 | ||||||
| Gross margin | (1,171 | ) | (1,552 | ) | 3,644 | (2,904 | ) | ||
| Operating expenses | |||||||||
| General and administrative | 1,316 | 1,140 | 3,497 | 4,034 | |||||
| Depreciation and amortization of equipment and intangible assets | 58 | 92 | 172 | 272 | |||||
| Share-based compensation | 20 | 48 | 60 | 211 | |||||
| Expansion planning and development | (2,184 | ) | 141 | (2,184 | ) | 4,998 | |||
| (790 | ) | 1,421 | 1,545 | 9,515 | |||||
| Operating (loss) income | (381 | ) | (2,973 | ) | 2,099 | (12,419 | ) | ||
| Other expenses | |||||||||
| Impairment of non-current assets | - | - | - | 15,197 | |||||
| Financing cost | 310 | 328 | 945 | 923 | |||||
| Write-down of capital assets | 33 | - | 33 | - | |||||
| Foreign exchange loss (gain) | 288 | (29 | ) | (154 | ) | (331 | ) | ||
| 631 | 299 | 824 | 15,789 | ||||||
| Net (loss) income before interest income and income taxes | (1,012 | ) | (3,272 | ) | 1,275 | (28,208 | ) | ||
| Interest income | 6 | 22 | 29 | 83 | |||||
| Net (loss) income for the period | (1,006 | ) | (3,250 | ) | 1,304 | (28,125 | ) | ||
| Other comprehensive loss | |||||||||
| Foreign currency translation (loss) gain | (76 | ) | 72 | (261 | ) | 9 | |||
| Comprehensive (loss) income | (1,082 | ) | (3,178 | ) | 1,043 | (28,116 | ) | ||
| (Loss) earnings per common share | |||||||||
| Basic | (0.02 | ) | (0.08 | ) | 0.03 | (0.62 | ) | ||
| Diluted | (0.02 | ) | (0.08 | ) | 0.03 | (0.62 | ) | ||
| Weighted average number of common shares outstanding | |||||||||
| Basic | 45,710,967 | 45,720,221 | 45,710,967 | 45,720,221 | |||||
| Diluted | 45,710,967 | 45,720,221 | 46,255,914 | 45,720,221 | |||||
| BIOX Corporation |
| Condensed consolidated interim statements of changes in equity |
| Nine month periods ended June 30, 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 | - | - | - | - | 211 | - | - | 211 | |||||||
| Share cancellation | (37,724 | ) | (14 | ) | - | - | - | - | - | (14 | ) | ||||
| Net loss | - | - | - | - | - | - | (28,125 | ) | (28,125 | ) | |||||
| Foreign currency translation gain | - | - | - | - | - | 9 | - | 9 | |||||||
| Balance, June 30, 2014 | 45,710,967 | 167,773 | 1,982,143 | 3,151 | 3,137 | (82 | ) | (138,938 | ) | 35,041 | |||||
| Balance, September 30, 2014 | 45,710,967 | 167,773 | 1,982,143 | 3,151 | 2,965 | (252 | ) | (137,313 | ) | 36,324 | |||||
| Share-based compensation | - | - | - | - | 60 | - | - | 60 | |||||||
| Expiry of share purchase warrants | - | - | (1,982,143) | (3,151 | ) | - | - | 3,151 | - | ||||||
| Expiry of share purchase options | - | - | - | - | (641 | ) | - | 641 | - | ||||||
| Forfeiture of share purchase options | - | - | - | - | (88 | ) | - | 88 | - | ||||||
| Net income | - | - | - | - | - | - | 1,304 | 1,304 | |||||||
| Foreign currency translation loss | - | - | - | - | - | (261 | ) | - | (261 | ) | |||||
| Balance, June 30, 2015 | 45,710,967 | 167,773 | - | - | 2,296 | (513 | ) | (132,129 | ) | 37,427 | |||||
| BIOX Corporation | |||||
| Condensed consolidated interim statements of financial position | |||||
| As at June 30, 2015 and September 30, 2014 | |||||
| (Unaudited) | |||||
| (Expressed in thousands of Canadian dollars) | |||||
| June 30, | September 30, | ||||
| 2015 | 2014 | ||||
| $ | $ | ||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | 10,573 | 7,212 | |||
| Accounts receivable | 3,162 | 2,621 | |||
| Prepaid expenses | 648 | 665 | |||
| Inventory | 4,390 | 7,078 | |||
| 18,773 | 17,576 | ||||
| Restricted cash | 480 | 1,309 | |||
| Property, plant and equipment | 27,035 | 29,458 | |||
| Intangible assets | 435 | 515 | |||
| Deferred income tax assets | 14,493 | 14,381 | |||
| 61,216 | 63,239 | ||||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and other liabilities | 5,901 | 6,028 | |||
| Current portion of long-term debt | 1,500 | 1,125 | |||
| Current portion of finance leases | 26 | 29 | |||
| Current portion of provisions | 1,357 | 2,010 | |||
| 8,784 | 9,192 | ||||
| Finance leases | 9 | 28 | |||
| Long-term debt | 8,980 | 9,727 | |||
| Provisions | 6,016 | 7,968 | |||
| 23,789 | 26,915 | ||||
| Equity | |||||
| Common share capital | 167,773 | 167,773 | |||
| Warrants reserve | - | 3,151 | |||
| Equity reserve | 2,296 | 2,965 | |||
| Accumulated other comprehensive loss | (513 | ) | (252 | ) | |
| Deficit | (132,129 | ) | (137,313 | ) | |
| 37,427 | 36,324 | ||||
| 61,216 | 63,239 | ||||
| BIOX Corporation | ||||||
| Condensed consolidated interim statements of cash flows | ||||||
| Nine month periods ended June 30, 2015 and 2014 | ||||||
| (Unaudited) | ||||||
| (Expressed in thousands of Canadian dollars, except share and per share amounts) | ||||||
| Nine months ended | ||||||
| June 30, | ||||||
| 2015 | 2014 | |||||
| $ | $ | |||||
| Operating activities | ||||||
| Net income | 1,304 | (28,125 | ) | |||
| Add (less) items not involving cash | ||||||
| Production facility depreciation and amortization | 2,873 | 3,092 | ||||
| Depreciation and amortization of equipment and intangible assets | 172 | 272 | ||||
| Financing costs | 479 | 554 | ||||
| Provision for unutilized tank storage | (2,869 | ) | 3,796 | |||
| Impairment of non-current assets | - | 15,197 | ||||
| Unrealized foreign exchange gain | (630 | ) | (122 | ) | ||
| Share-based compensation | 60 | 211 | ||||
| Accretion of asset retirement obligation | 264 | 241 | ||||
| Write-down of capital assets | 33 | - | ||||
| Deferred income tax asset | (112 | ) | (32 | ) | ||
| 1,574 | (4,916 | ) | ||||
| Net change in non-cash working capital balances related to operations | 1,943 | 2,209 | ||||
| 3,517 | (2,707 | ) | ||||
| Investing activity | ||||||
| Purchase of property, plant and equipment | (482 | ) | (1,669 | ) | ||
| Disposals of property, plant and equipment | - | 12 | ||||
| Decrease in restricted cash | 829 | 491 | ||||
| Share repurchase | - | (14 | ) | |||
| 347 | (1,180 | ) | ||||
| Financing activities | ||||||
| Payments on finance leases | (22 | ) | (26 | ) | ||
| Repayment of debt financing | (375 | ) | (1,125 | ) | ||
| Interest paid | (476 | ) | (526 | ) | ||
| (873 | ) | (1,677 | ) | |||
| Effect of exchange rate changes on cash held in foreign currency | 370 | 131 | ||||
| Net increase (decrease) in cash and cash equivalents during the period | 3,361 | (5,433 | ) | |||
| Cash and cash equivalents, beginning of period | 7,212 | 15,909 | ||||
| Cash and cash equivalents, end of period | 10,573 | 10,476 | ||||
Contact Information:
Chris Clinning
CEO
905-521-8205 ext. 253
cclinning@bioxcorp.com