BIOX announces 2012 second quarter results and construction of second facility in New York Harbor

- New 100 million litre per annum nameplate facility to be located in New York Harbor, New Jersey -

TSX symbol: BX

TORONTO, May 9, 2012 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company that designs, builds, owns and operates biodiesel production facilities, today announced its fiscal 2012 second quarter (Q2 2012) financial results for the three-month period ended March 31, 2012.

Highlights

• Finalizing definitive agreements with International-Matex Tank Terminals (IMTT) to secure the site and related infrastructure to construct a 100 million litre per annum nameplate biodiesel production facility within the IMTT terminal in Bayonne, New Jersey
• Production of methyl esters was 14.9 million litres in both Q2 2012 and Q2 2011
• Sales were $13,706,000 in Q2 2012, compared to $22,862,000 in Q2 2011
• Operating loss was $1,019,000 in Q2 2012 compared to $1,248,000 in Q2 2011
• Operating income prior to non-cash items⁽¹⁾ was $153,000 in Q2 2012 compared to an operating loss of $173,000 in Q2 2011
• Operating income prior to non-cash items⁽¹⁾ of $1,966,000 in Q2 2012 for BIOX's operating segment (BIOX Canada Limited and BIOX USA Limited) compared to $1,727,000 in Q2 2011
• Net loss was $1,276,000 in Q2 2012 compared to $1,839,000 in Q2 2011
• Loss per share was $0.03 in Q2 2012 compared to $0.04 in Q2 2011

"Today's announcement of our second facility demonstrates the scalability of our business model. With the U.S. and Canadian mandates in place, we believe long-term demand exists for quality product from reliable suppliers," said Kevin Norton, CEO of BIOX Corporation. "While the broader biodiesel market will experience growing pains from time to time, as evidenced by the recent uncertainty surrounding the renewal of the U.S. biodiesel tax incentive and the RIN integrity issues, the industry is in a much stronger position today with the mandates in place and being enforced. We believe these issues are short term in nature and that pricing and volumes within the broader sector will improve through the course of 2012. For these reasons, we made a decision in Q2 to sell product and inventory the majority of the RINs associated with that product for sale at a later date. While this decision impacted our results in Q2, we believe it places us in a stronger position to earn optimal value from those RINs we generated."

Financial Highlights

Sales were $13.7 million and $42.6 million, respectively, for the three-month and six-month periods ended March 31, 2012, compared with $22.9 million and $49.9 million for the corresponding periods last year.  BIOX sold 13.1 million and 29.9 million litres of biodiesel, respectively, for the three-month and six-month periods compared with 17.2 million and 38.1 million for the corresponding periods in 2011. The 40 per cent decrease in sales revenue for Q2 was primarily due to the 24 per cent decrease in litres of biodiesel sold in addition to lower revenue per litre sold. The lower revenue per litre sold is the result of the sale of RINless biodiesel during the quarter at lower prices compared with prior period's sales of biodiesel with RINs attached. Under the RFS2 regulations, RINs may be separated from the physical biodiesel and once separated they can be sold as a separate commodity or held in inventory for sale at a later date. Our wholly-owned subsidiary, BIOX USA Limited, is registered with the EPA as an accredited renewable fuels importer and RIN generator, and can hold separated RINs inventory in accordance with the regulations of the U.S. Environmental Protection Agency (EPA). During Q2, 11.2 million litres of RINless biodiesel were sold by BIOX USA Limited, while 1.9 million litres were sold with RINs attached.

Direct expenses were $11.6 million and $35.1 million for the three-month and six-month periods ended March 31, 2012, compared with $21.0 million and $42.8 million for the corresponding periods in 2011. The decrease in direct expenses was primarily the result of lower cost per litre sold on sales of RINless biodiesel. There were no sales of RINless biodiesel in the three-month or six-month periods in 2011.        

General and administrative (G&A) expenses were $1.5 million and $3.1 million for the three-month and six-month periods ended March 31, 2012, compared with $2.0 million and $3.7 million for the same periods last year. G&A costs for the three-month and six-month periods in 2011 included $0.4 million in non-recurring costs related to the CEO transition.

Operating loss was $1.0 million for the three-month period ended March 31, 2012, compared with $1.2 million in the corresponding period last year. Operating income was $1.4 million for the six-month period ended March 31, 2012, compared with $1.1 million for the corresponding periods in 2011.

Operating income prior to non-cash items⁽¹⁾ was $0.2 million for the three-month period ended March 31, 2012, compared with an operating loss of $0.2 million in the corresponding period last year. Operating income prior to non-cash items⁽¹⁾  was $3.7 million for the six-month period ended March 31, 2012, compared with $3.2 million for the corresponding period last year.

Combined operating income prior to non-cash items⁽¹⁾ for BIOX's wholly-owned operating subsidiaries (BIOX Canada Limited and BIOX USA Limited) was $2.0 million and $7.1 million for the three-month and six-month periods ended March 31, 2012, compared with $1.7 million and $6.7 million for the corresponding periods last year.

Net loss and comprehensive loss was $1.3 million or $0.03 per common share for the three-month period ended March 31, 2012, compared with $1.8 million or $0.04 per common share for the corresponding period last year. Net income and comprehensive income was $0.6 million or $0.01 per common share for the six-month period ended March 31, 2012, compared with $0.1 million or $0.00 per common share for the corresponding period in 2011.

As at March 31, 2012, BIOX's cash balance amounted to $29.9 million, compared with $27.9 million on September 30, 2011. BIOX's working capital balance at March 31, 2012, was $38.0 million compared with $38.8 million at September 30, 2011.

As at March 31, 2012, BIOX had 45,748,691 common shares outstanding, as well as options to purchase up to 1,700,000 common shares, and share purchase warrants to acquire up to 1,982,143 common shares.

Outlook

Expansion Plans

BIOX is finalizing the definitive agreements with IMTT to secure the site and related infrastructure to construct a 100 million litre per annum nameplate production capacity facility within the IMTT terminal in Bayonne, New Jersey at New York Harbor. The agreements include a long term land lease agreement for the plant as well as long term leases on the existing storage tanks at IMTT that are required to support the facility.

This site, which is located within a major petroleum distribution hub, is consistent with BIOX's strategy to locate its facilities adjacent to large scale petroleum storage and diesel distribution infrastructure and users of petroleum diesel and blenders of biodiesel in order to minimize transportation costs to them.

The estimated cost of the 100 million litre facility is $60 million which includes the core process area, infrastructure, utilities, engineering and indirect cost. IMTT will provide the primary storage assets for feedstock and all finished goods under a long term lease agreement.

BIOX is proceeding with the detailed planning phase of the project, including commencement of the permitting process. BIOX's current estimate for the date of completion of the facility for commissioning is December 2013.

BIOX believes that its future cash flow from operations combined with its current financial resources and debt financing should be sufficient to enable it to construct and commission the second BIOX facility. As part of its expansion plans, BIOX is actively pursuing additional potential locations for future facilities, which involves consideration of a number of criteria including availability of infrastructure and service providers, potential strategic partnerships, logistics and other market factors.

U.S. Renewable Fuels Standard

Effective July 1, 2010, the expanded RFS2 specifically provides for a renewable component in U.S. diesel fuel. RFS2 requires the use of 1 billion gallons of biomass-based diesel in 2012, an increase of 25% from 0.8 billion U.S. gallons in 2011. From 2012 through 2022, a minimum of 1 billion U.S. gallons must be used domestically each year, and the Administrator of the EPA has the authority to increase the minimum volume requirement. The EPA has recommended that the minimum volume of biomass-based diesel increase to 1.28 billion U.S. gallons in 2013.

BIOX's wholly-owned subsidiaries are registered under RFS2 which provides BIOX with access to the U.S. renewable fuels market, including the ability to generate Renewable Identification Numbers (RINs). RINs are required by obligated parties in the U.S., which includes all refiners and importers of transportation fuel, to show compliance with RFS2. 1.5 RINs are issued per U.S. gallon of biomass-based diesel sold in the U.S.

The increased demand for biodiesel as a result of RFS2 in the U.S. has had a positive impact on pricing. This impact is reflected by the rise in value of RINs since July 2010. 2012 RINs traded at approximately $1.42 as of May 8, 2012.

U.S. biodiesel tax incentive

The U.S. biodiesel tax incentive expired on December 31, 2011. Management believes that any reinstatement of the biodiesel tax incentive will be delayed until the fall of 2012 and that it is possible the program will not be reinstated at all. In management's view the incentive was critical to the formation of the industry prior to the implementation of the mandate in order to generate sufficient supply to fulfill the minimum volume requirements. Management believes that with the mandate now in place and working, RFS2 establishes clear minimum volume levels that the obligated parties are required to meet. As such, the industry is in a much stronger position than it was in 2010; however uncertainty surrounding the renewal of the biodiesel tax incentive could cause short term pricing volatility. BIOX intends to monitor the situation closely over the coming months as the impact of the expiry of the incentive on the value of RINs and the production utilization in the U.S. becomes clearer.

Canadian Renewable Fuel Content Regulations

In August 2010, the Canadian federal government enacted regulations that require an average renewable fuel content to be blended into gasoline, diesel fuel and heating oil. The compliance period for the 5% renewable content requirement in gasoline is December 15, 2010 to December 31, 2012. The compliance period for the 2% renewable fuel content requirement in diesel fuel and heating oil is July 1, 2011 to December 31, 2012. BIOX's biodiesel qualifies as renewable content and can therefore be used to comply with the program obligations. These minimum volume requirements bring the Canadian biodiesel blending mandates more closely in line with the U.S. market and its expanded RFS2 regulation, and provide clarity for Canadian diesel refineries and importers that BIOX believes will ultimately drive new demand for biodiesel in Canada. While BIOX continues to be the largest producer of biodiesel in Canada, it currently sells nearly all of its product into the U.S. market. The implementation of these Canadian regulations significantly increases the accessible market for BIOX's product in Canada. By extension, it also supports the Company's expansion plans for the construction of the second facility to service the North American market.

Notice of Conference Call

BIOX will hold a conference call today, May 9, 2012, at 9:00 a.m. ET hosted by Mr. Kevin Norton, Chief Executive Officer, and Mr. Chris Clinning, Executive Vice President and Chief Financial Officer, to discuss BIOX's financial results and corporate developments. To access the conference call by telephone, dial [phone] or [phone]. To access the telephone replay, dial [phone] or [phone] and enter reservation number 77722937. A live audio webcast of the call will be available at www.bioxcorp.com. The webcast will be archived for 90 days.

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 amortization of furniture, equipment and intangibles. 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-month and six-month periods ended March 31, 2012 and 2011:

(in thousands)			Three months ended March						Six months ended March
			2012			2011			2012			2011
			$			$			$			$
Operating (loss)income before non-cash items			153			(173)			3,657			3,162
Deduct:	Production facility depreciation and amortization		(883)			(813)			(1,738)			(1,623)
	Depreciation and amortization of furniture, equipment and intangible assets		(96)			(99)			(198)			(198)
	Stock-based compensation		(193)			(163)			(287)			(262)
Operating (loss)income			(1,019)			(1,248)			1,434			(1,079)
Other (expenses) and income			(257)			(591)			(819)			(977)
Net (loss)income			(1,276)			(1,839)			615			101

About BIOX Corporation
BIOX is a renewable energy company that designs, builds, owns and operates biodiesel production facilities. BIOX currently owns and operates a biodiesel production facility in Hamilton, Ontario, Canada with a nameplate capacity of 67 million litres per year. 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. BIOX is Canada's largest biodiesel producer and is focused on building, owning and operating a network of commercial scale biodiesel production facilities in jurisdictions where clearly defined renewable fuel standards policies exist.

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. 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.

Financial results included below:

 

BIOX Corporation
Condensed consolidated statements of comprehensive (loss) income
three and six month periods ended March 31, 2012 and 2011
(Unaudited)
(Expressed in thousands of Canadian dollars, except share and per share amounts)
							Three months ended						Six months ended
							March 31,						March 31,
							2012			2011			2012			2011
							$			$			$			$
Revenue							13,706			22,862			42,638			49,851
Cost of sales
					Direct expenses		11,550			20,958			35,149			42,798
					Production facility depreciation and amortization		883			813			1,738			1,623
							12,433			21,771			36,887			44,421
Gross margin							1,273			1,091			5,751			5,430
Operating expenses
					General and administrative		1,495			2,005			3,068			3,685
					Depreciation and amortization of furniture, equipment and intangible assets		96			99			198			198
					Share-based compensation		193			163			287			262
					Expansion planning and development		508			72			764			206
							2,292			2,339			4,317			4,351
Operating (loss) income							(1,019)			(1,248)			1,434			1,079
Other expenses
					Financing cost		259			228			614			460
					Loss on foreign exchange		69			405			341			600
							328			633			955			1,060
Interest income							71			42			136			82
Net (loss) income and comprehensive (loss) income for the period							(1,276)			(1,839)			615			101
(Loss) earnings per common share
					Basic		(0.03)			(0.04)			0.01			0.00
					Diluted		(0.03)			(0.04)			0.01			0.00
Weighted average number of common shares outstanding
					Basic		45,748,691			45,748,691			45,748,691			45,748,691
					Diluted		45,837,153			45,748,691			45,837,153			45,748,691

 

BIOX Corporation
Condensed consolidated statements of changes in equity
six month periods ended March 31, 2012 and 2011
(Unaudited)
(Expressed in thousands of Canadian dollars, except share and per share amounts)
						Attributable to owners of the parent
						Common share capital						Equity				Total
						Shares		Amount		Warrants		reserve		Deficit		equity
						#		$		$		$		$		$
Balance, October 1, 2010						45,748,691		167,787		3,151		1,196		(102,552)		69,582
Vesting of stock options						-		-		-		262		-		262
Net income for the period						-		-		-		-		101		101
Balance, March 31, 2011						45,748,691		167,787		3,151		1,458		(102,451)		69,945
Balance, October 1, 2011						45,748,691		167,787		3,151		1,991		(93,685)		79,244
Vesting of stock options						-		-		-		287		-		287
Net income for the period						-		-		-		-		615		615
Balance, March 31, 2012						45,748,691		167,787		3,151		2,278		(93,070)		80,146

 

BIOX Corporation
Condensed consolidated statements of financial position
as at March 31, 2012 and September 30, 2011
(Unaudited)
(Expressed in thousands of Canadian dollars)
								March 31,			September 30,
								2012			2011
								$			$
Assets
Current assets
	Cash							29,853			27,887
	Accounts receivable							6,305			9,535
	Prepaid expenses							686			953
	Inventory							14,798			13,539
								51,642			51,914
Property, plant and equipment, net								45,211			44,129
Intangible assets, net								1,110			1,176
Deferred income tax assets								9,352			9,354
								107,315			106,573
Liabilities
Current liabilities
	Accounts payable and other liabilities							7,084			6,959
	Demand loan							4,957			4,957
	Current portion of long-term debt							1,500			1,125
	Current portion of finance leases							69			63
								13,610			13,104
Finance lease								31			75
Long-term debt								10,680			11,429
Provisions								2,848			2,721
								27,169			27,329
Equity
Common share capital								167,787			167,787
Warrants								3,151			3,151
Equity reserve								2,278			1,991
Deficit								(93,070)			(93,685)
								80,146			79,244
								107,315			106,573

 

BIOX Corporation
Condensed consolidated statements of cash flows
six month periods ended March 31, 2012 and 2011
(Unaudited)
(Expressed in thousands of Canadian dollars, except share and per share amounts)
							Six months ended
										March 31,
							2012			2011
							$			$
Operating activities
	Net income for the period						615			101
	Add items not involving cash
		Depreciation and amortization of property,  plant and equipment and intangible assets					1,936			1,821
		Net interest expense and  other financing charges					365			347
		Unrealized foreign exchange loss					10			91
		Share-based compensation					287			262
		Accretion of asset retirement obligation					127			103
							3,340			2,725
	Net change in non-cash working capital balances related to operations						1,465			1,391
							4,805			4,116
Investing activity
	Purchase of property, plant and equipment						(2,052)			(899)
Financing activities
	Payments on finance leases						(30)			(31)
	Repayment of debt financing						(375)			(690)
	Interest paid						(372)			(326)
							(777)			(1,047)
Effect of exchange rate changes on cash  held in foreign currency							(10)			(91)
Net increase in cash during the period							1,966			2,079
Cash, beginning of period							27,887			21,470
Cash, end of period							29,853			23,549
Supplemental cash flow information
	Restricted cash						-			1,173

 

 

 

 

BIOX Corporation
Chris Clinning
Executive Vice President & CFO
Phone: [phone]
E-mail: [email protected]

Investor Relations
Ross Marshall
TMX Equicom
Phone: [phone] ext. 238
E-mail: [email protected]