Organic Resource Management Inc.
TSX VENTURE : ORI

Organic Resource Management Inc.

May 12, 2011 16:30 ET

ORMI Reports Fiscal 2011 Third Quarter Results

TORONTO, ONTARIO--(Marketwire - May 12, 2011) -Organic Resource Management Inc. (TSX VENTURE:ORI) ("ORMI" or "the Company"), today announced its financial results for the three and nine month periods ended March 31, 2011.

Q3 2011 Highlights:
  • Total revenues of $3,354,000, down 3% from $3,452,000 for Q3 2010.
  • Gross margin of $1,116,000, down 21% from $1,415,000 for Q3 2010.
  • Net loss of $323,000 compared to net income of $166,000 for Q3 2010.
  • EBITDA of $39,000, down from $529,000 for Q3 2010.
  • Cash flows used in operations of $21,000 compared to cash flows from operations of $465,000 for Q3 2010.

"The third quarter was particularly difficult for the Company," said Charles Buehler, Chairman and Chief Executive Officer of ORMI. "A number of unexpected events such as: lower revenues resulting primarily from service reductions by two major accounts; a large retail chain customer going into creditor protection; higher operating costs as a result of rising fuel costs; unusually high building and truck repairs and maintenance costs; and the unbudgeted payment of consulting fees relating to the evaluation of strategic alternatives to maximize shareholder value. These unanticipated expenses coincided with year over year spending increases on initiatives in: R&D related to AD feedstock development; enhancement of feedstock processing and waste water treatment capacities; and SG&A expenditures necessary to pursue the significant growth opportunities available to the Company. The combined result was a greater than anticipated impact on gross margins and net income for the quarter."

"We are reviewing and trimming costs where possible without limiting our growth opportunities," continued Mr. Buehler, "and we are continuing to aggressively source new business, including the installation of in-store ORRS mills (our patented Organic Residuals Recovery Systems). We expect to start seeing a return on these initiatives in the fourth quarter."

Three months ended March 31, 2011:

Total revenues were $3,354,000 for the quarter, a decrease of $98,000 or 3% from $3,452,000 for the same period last year. The gross margin was $1,116,000, a decrease of $299,000 or 21% from the gross margin of $1,415,000 for the same period last year. Gross margin as a percentage of revenue was 33% compared to 41% for the same period last year. The decrease in gross margin was mainly due to new R&D initiatives, higher truck and building repairs and maintenance, increased fuel costs and higher plant labour costs relating to the ramp up of feedstock and wastewater processing capabilities.

Total operating expense was $1,491,000 for the quarter, an increase of $239,000 or 19% from $1,252,000 for the same period last year. This overall increase was largely due to the addition of three senior management positions since March of last year, consulting fees relating to the exploration of strategic alternatives to maximize shareholder value including a potential sale of the Company, an increase in the allowance for doubtful accounts because a significant customer filed for creditor protection, and higher amortization costs.

The net loss for the quarter was $323,000 compared to net income of $166,000 for the same period last year, a decrease of $489,000. EBITDA was $39,000 for the quarter, a decrease of $490,000 from $529,000 for the same period last year. Cash flows used in operations were $21,000, a decrease of $486,000 from cash flows from operations of $465,000 for the same period last year. The loss per share for the quarter was $0.07 compared to income per share of $0.04 for the same period last year.

Nine months ended March 31, 2011:

Total revenues were $10,447,000 for the period, an increase of $213,000 or 2% from $10,234,000 for the same period last year. The gross margin was $3,971,000, an increase of $133,000 or 3% from the gross margin of $4,104,000 for the same period last year. Gross margin as a percentage of revenue was 38%, down from 40% for the same period last year. Total operating expense was $4,148,000 for the period, an increase of $567,000 or 16% from $3,581,000 for the same period last year.

The net loss was $125,000 for the period, a decrease of $658,000 from $533,000 for the same period last year. EBITDA was $973,000 for the quarter, a decrease of $505,000 or 34% from $1,478,000 for the same period last year. Cash flows from operations were $804,000, a decrease of $499,000 or 38% from $1,303,000 for the same period last year. The loss per share for the period was $0.03, down from an income per share of $0.12 for the same period last year.

The comparative financial statements for the three and nine months ending March 31, 2011 along with other information may be obtained through the Company's website at www.ormi.com, or on SEDAR at www.sedar.com.

This press release is available on the Company's official on-line investor relations site for investor commentary, feedback and questions. Investors are asked to visit the investor relations section of the Company's website at www.ormi.com/ir/index.php. Alternatively, investors are asked to e-mail all questions and correspondence to info@ormi.com where they can also request addition to the Company's investor e-mail list to receive all future press releases and updates directly.

About Organic Resource Management Inc.

Organic Resource Management is Canada's largest provider of vacuum truck services for the collection, processing and recycling of food-related organic residuals. ORMI services in excess of 8,000 industrial, commercial and institutional food industry customer locations across Canada. Further information about ORMI may be obtained at the Company's web site at www.ormi.com.

Non-GAAP Measures

The Company reports its financial results in accordance with GAAP. However, this press release contains references to certain non-GAAP financial measures such as "EBITDA" and "Cash Flows from Operations". Non-GAAP financial measures are used by management to evaluate the performance of the Company. Non-GAAP financial measures do not have any meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other reporting issuers. Investors are cautioned that non-GAAP measures, such as those presented herein, should not be construed as an alternative to net income determined in accordance with GAAP as indicators of the Company's performance or to cash flows from operating activities as a measure of liquidity and cash flow.

EBITDA means earnings before income taxes, interest, share based compensation, amortization, the gain on sale of non-core assets, the write-down of property, plant and equipment, the write-down of intangible assets and goodwill, foreign exchange gains and dividends on preferred shares. Cash Flows from Operations means cash flows from operating activities before changes in non-cash operating assets and liabilities.

Forward-Looking Statements

Certain information contained in this press release may be forward-looking and therefore subject to unknown risks or uncertainties. The actual results, performance or achievements of Organic Resource Management Inc. may differ materially from the results, performance or achievements of the Company expressed or implied by such forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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