Warnex Inc.
TSX : WNX

Warnex Inc.

May 12, 2009 17:01 ET

Warnex Reports First Quarter 2009 Results

Record quarterly revenues of $7.6 million and net earnings of $1.1 million

LAVAL, QUEBEC--(Marketwire - May 12, 2009) - Warnex Inc. (TSX:WNX) today announced its financial results for the first quarter ended March 31, 2009.

Operating Highlights

- Record quarterly revenues of $7.6 million

- Net earnings of $1.1 million compared to a net loss of $0.3 million for the same quarter last year

- EBITDA of $2.0 million

- Cash and cash equivalents totalling $3.1 million

- Launched a new test in the field of personalized medicine: K-ras mutation analysis for patients with colorectal cancer

- Successfully passed a Health Canada inspection of Warnex's analytical facilities in Laval and Blainville

"This quarter, Warnex achieved an all-time quarterly record of $7.6 million in revenues and continued to generate profits and cash flow," said Mark Busgang, President and CEO of Warnex. "This exceptional quarter is the result of some very profitable projects in our Bioanalytical division which began in the last quarter of 2008 and completed during the first quarter of 2009. Going forward, we will continue to focus on improving efficiency and productivity in our operations, delivering earnings and cash flow, and evaluating new business opportunities and potential acquisitions to increase critical mass."

Financial Results

Consolidated revenue for the three-month period ended March 31, 2009, increased by 23% to $7.6 million compared to $6.1 million during the same period last year.

Net earnings for the quarter amounted to $1.1 million or $0.02 per share compared to a net loss of $0.3 million or $0.01 per share for the same quarter in 2008.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter amounted to $2.0 million versus $0.5 million for the same quarter last year.

Gross margins for the three-month period ended March 31, 2009, amounted to $3.1 million or 41% of sales compared to $1.6 million or 26% of sales for the same quarter last year. The increase of $1.5 million in gross margin is mainly explained by the execution of high margin projects in the Bioanalytical division which began in the last quarter of 2008 and were completed during the first quarter of 2009, as well as a lower amortization expense compared to last year.

Selling and administrative expenses for the three-month period ended March 31, 2009, remained similar to last year at $1.5 million. In proportion of revenue, administrative and selling expenses were lower than last year at 20% in 2009 (2008 - 25%).

Financial expenses decreased by $53,086, from $364,025 in the first quarter of 2008 to $310,939 in the first quarter of 2009, mainly due to less interest following repayments made on the long term debt and debentures.

As of March 31, 2009, the Company had $3.1 million in cash and working capital of $3.0 million.

About Warnex

Warnex (www.warnex.ca) is a life sciences company devoted to protecting public health by providing laboratory services to the pharmaceutical and healthcare sectors. Warnex's analytical services division provides pharmaceutical and biotechnology companies with a variety of quality control services, including chemistry, chromatography, microbiology, method development and validation, and stability studies. Warnex's bioanalytical services division specializes in bioequivalence and bioavailability studies for clinical trials. Warnex's medical laboratories division focuses on genetic and biochemical testing for the healthcare industry and has extensive expertise in genetic testing for human identification, molecular diagnostics, and pharmacogenetics.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this news release are forward-looking and are subject to numerous risks and uncertainties, known and unknown. For information identifying known risks and uncertainties, relating to financial resources, government regulations, laboratory facilities, suppliers, employees, key customers and business partners, foreign currency risk, credit risk, liquidity risk, volatility of share price, and other important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the heading Risks and Uncertainties in Warnex's most recent Management's Discussion and Analysis, which can be found at www.sedar.com. Consequently, actual results may differ materially from the anticipated results expressed in these forward-looking statements.



Interim Consolidated Balance Sheets
(Unaudited)

March 31 December 31
2009 2008
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Assets
Current
Cash and cash equivalents $3,121,847 $2,433,488
Accounts receivable 4,205,357 3,967,918
Work-in-progress 279,833 1,356,149
Inventory 87,446 121,701
Investment tax credits receivable 186,249 186,249
Prepaid expenses 393,213 306,238
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8,273,945 8,371,743

Future income taxes 750,000 750,000
Property, plant and equipment 8,062,921 8,309,317
Intangible assets 323,669 243,291
Goodwill 937,695 937,695
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$18,348,230 $18,612,046
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Liabilities
Current
Accounts payable $3,739,626 $3,860,615
Deferred revenue 301,765 1,358,586
Current portion of long-term debt 1,184,790 1,267,184
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5,226,181 6,486,385

Long-term debt 1,571,568 1,872,557
Liability component of debentures 7,147,466 6,952,881
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13,945,215 15,311,823
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Shareholders' equity
Capital stock 40,551,049 40,551,049
Equity component of debentures 312,288 312,288
Contributed surplus 2,445,078 2,445,043
Deficit (38,905,400) (40,008,157)
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4,403,015 3,300,223
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$18,348,230 $18,612,046
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Interim Consolidated Statements of Contributed Surplus
(Unaudited)

For the three months ended March 31 2009 2008
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Balance, beginning of period $2,445,043 $1,210,708
Stock-based compensation 35 21,541
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Balance, end of period $2,445,078 $1,232,249
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Interim Consolidated Statements of Deficit
(Unaudited)

For the three months ended March 31 2009 2008
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Balance, beginning of period $(40,008,157) $(42,381,214)
Net earnings (loss) 1,102,757 (286,322)
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Balance, end of period $(38,905,400) $(42,667,536)
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Consolidated Statements of Accumulated Other Comprehensive Income
(Unaudited)

For the three months ended March 31 2009 2008
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Accumulated Other Comprehensive Income $- $-
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Interim Consolidated Statements of Earnings and Comprehensive Income
(Unaudited)

For the three months ended March 31 2009 2008
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Revenue $7,557,655 $6,141,566
Cost of goods sold 4,490,123 4,550,501
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Gross margin 3,067,532 1,591,065
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Operating expenses
Selling, general and administrative 1,481,504 1,513,362
Finance charges 310,939 364,025
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1,792,443 1,877,387
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Earnings (loss) before under noted item
and income taxes 1,275,089 (286,322)
Unrealized foreign exchange loss on debentures (172,332) -
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Earnings (loss) before income taxes 1,102,757 (286,322)
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Income taxes 300,000 -
Recovery of income taxes due to utilization
of prior years'losses (300,000) -
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- -
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Net earnings (loss) and comprehensive income $1,102,757 $(286,322)
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Basic net earnings (loss) per share $0.02 $(0.01)
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Fully diluted net earnings (loss) per share $0.01 $(0.01)
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Weighted average number of shares outstanding 64,317,191 51,973,875
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Weighted average number of fully diluted
shares outstanding 88,876,998 68,282,350
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Interim Consolidated Statements of Cash Flows
(Unaudited)

For the three months ended March 31 2009 2008
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Operations
Net earnings (loss) $1,102,757 $(286,322)
Items not affecting cash:
Amortization of property, plant and equipment 382,243 373,146
Amortization of intangible assets 15,108 14,741
Accretion of interest 22,253 108,781
Loss on disposal of property, plant and
equipment - 1,054
Unrealized foreign exchange loss on debentures 172,332 -
Foreign currency fluctuation (31,141) (72,055)
Compensation cost for stock options 35 21,541
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1,663,587 160,886
Net change in non-cash working capital items (403,682) 1,056,263
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Net cash provided by operations 1,259,905 1,217,149
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Investing activities
Acquisition of property, plant and equipment (135,847) (158,930)
Acquisition of intangible assets (95,486) -
Proceeds on disposal of property, plant and
equipment - 1,725
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Net cash used in investing activities (231,333) (157,205)
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Financing activities
Repayment of long-term debt (383,383) (303,938)
Repayment of liability component of debentures - (17,901)
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Net cash used in financing activities (383,383) (321,839)
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Foreign exchange gain on cash held in foreign
currencies 43,170 7,943
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Increase in cash and cash equivalents 688,359 746,048
Cash and cash equivalents, beginning of period 2,433,488 1,016,951
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Cash and cash equivalents, end of period $3,121,847 $1,762,999
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