BIOX announces 2013 second quarter results

TSX symbol: BX

TORONTO, May 9, 2013 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company that owns and operates Canada's largest biodiesel production facility, today announced its fiscal 2013 second quarter (Q2 2013) financial results for the three-month and six-month periods ended March 31, 2013.

Highlights

• Production of methyl esters was 10.6 million litres in Q2 2013, due to the temporary suspension of production that commenced in October 2012 with production subsequently resuming on February 2, 2013, compared to 14.9 million litres in the second quarter of 2012 (Q2 2012)
• Retroactive reinstatement of the U.S. biodiesel tax incentive and alternative fuel credit results in recognition of US$7.8 million of revenue related to sales to our customers in calendar 2012
• Sales were $21,478,000 in Q2 2013, compared to $13,706,000 in Q2 2012
• Operating income was $5,808,000 in Q2 2013 compared to an operating loss of $1,019,000 in Q2 2012
• Operating income prior to non-cash items⁽¹⁾ was $7,037,000 in Q2 2013 compared to an operating income prior to non-cash items of $153,000 in Q2 2012
• Operating income prior to non-cash items of $8,575,000 in Q2 2013 for BIOX's operating segment (BIOX Canada Limited and BIOX USA Limited) compared to an operating income prior to non-cash items of $1,966,000 in Q2 2012
• Net income was $5,402,000 in Q2 2013 compared to net loss of $1,276,000 in Q2 2012
• Earnings per share was $0.12 in Q2 2013 compared with a loss per share of $0.03 Q2 2012
• Joint development project established with Shell Canada Limited to construct a supply chain to send biodiesel to Shell Canada by an inter-terminal pipeline from BIOX, assisting Shell Canada in achieving its renewable fuels targets
• Ontario government announced it will undertake a formal consultation for the creation of a renewable diesel mandate, based on fuel percentage and carbon intensity, for all diesel sold in Ontario

"The rebound in the North American biodiesel market is encouraging as the spread between the value we earn from biodiesel and the cost of feedstock has improved considerably. This improvement is due in part to the 28 percent increase in the minimum volume mandate in the U.S. in tandem with an increase in RIN values, as well as, the reinstatement of the U.S. biodiesel tax credit," said Kevin Norton, Chief Executive Officer of BIOX. "In addition to these improvements in the broader market, we have also made significant progress of our own with the completion of a supply agreement with Shell Canada Limited and the commissioning of the glycerin refinement project."

Financial Highlights

Sales were $21.5 million and $31.0 million for the three-month and six-month periods ended March 31, 2013, respectively, compared with $13.7 million and $42.6 million for the corresponding periods last year. BIOX sold 10.5 million and 15.3 million litres of biodiesel for the three-month and six-month periods ended March 31, 2013, respectively, compared with 13.1 million and 29.9 million litres for the corresponding periods in 2012. Sales increased in Q2 2013 primarily due to the retroactive reinstatement of the U.S. biodiesel tax incentive and alternative fuel credit, which allows us to collect approximately US$7.8 million related to sales to our customers in calendar 2012, despite BIOX operating for only two months during the quarter after resuming production after the temporary suspension from October 25, 2012, though early February 2013.

Direct expenses were $12.6 million and $23.1 million for the three-month and six-month periods ended March 31, 2013, respectively, compared with $11.6 million and $35.1 million for the corresponding periods in 2012. The decrease for the current six month period was primarily the result of lower sales volume due to the temporary suspension of production at the Hamilton facility.

General and administrative (G&A) expenses were $1.3 million and $2.8 million for the three-month and six-month periods ended March 31, 2013, respectively, compared with $1.5 million and $3.1 million for the same periods last year.

Operating income was $5.8 million and $1.0 million for the three-month and six-month periods ended March 31, 2013, respectively, compared with operating loss of $1.0 million and operating income of $1.4 million in the corresponding periods last year.

Operating income prior to non-cash items⁽¹⁾ was $7.0 million and $3.3 million for the three-month and six-month periods ended March 31, 2013, respectively, compared with $0.2 million  and $3.7 million in the corresponding periods last year. The increase for the three-month period ended March 31, 2013, was primarily due to the reinstatement of the U.S. biodiesel tax incentive and alternative fuel credit which allows us to collect approximately US$7.8 million in refundable tax credits from the U.S. Internal Revenue Service related to sales to customers during calendar 2012.

Combined operating income prior to non-cash items⁽¹⁾ for BIOX's wholly-owned operating subsidiaries (BIOX Canada Limited and BIOX USA Limited) was $8.6 million and $7.4 million for the three-month and six-month periods ended March 31, 2013, respectively, compared with $2.0 million and $7.1 million for the corresponding periods last year. The increase is due primarily to the US$7.8 million in refundable tax credits mentioned above.

Net income was $5.4 million or $0.12 per common share and $0.3 million or $0.01 per common share for the three-month and six-month periods ended March 31, 2013, respectively, compared with a net loss of $1.3 million or a loss of $0.03 per common share and net income of $0.7 million or $0.02 per common share for the corresponding periods last year.

As at March 31, 2013, BIOX's cash balance amounted to $3.6 million, compared with $7.5 million on September 30, 2012. BIOX's working capital balance at March 31, 2013, was $19.7 million compared with $13.3 million at September 30, 2012. BIOX believes that its future cash flow from operations combined with its current financial resources are sufficient to enable BIOX to meet its ongoing working capital requirements.

As at March 31, 2013, BIOX had 45,748,691 common shares outstanding, as well as options to purchase up to 2,225,000 common shares, and share purchase warrants to acquire up to 1,982,143 common shares.

Outlook

The North American biodiesel market has rebounded during the first four months of calendar 2013 from the lows it reached in late 2012. Management believes this rebound is due to the 28 percent increase in the expanded Renewable Fuel Standard (RFS2) minimum use requirement, the increase in RIN values, the reinstatement of the U.S. biodiesel tax credit and the start of a new compliance period for refiners and importers. 2013 RINs traded at approximately $0.95 (or $1.43 per U.S. gallon) on May 8, 2013, compared to approximately $0.56 (or $0.84 per U.S. gallon) in early December 2012.

The regulatory structure for a growing biodiesel market across North America remains in place. The 28 percent increase, to 1.28 billion U.S. gallons for 2013 from 1.0 billion U.S. gallons in 2012, under RFS2 and the full implementation of the biodiesel portion of the Canadian Renewable Fuel Content Regulations are important steps toward the evolution of a sustainable biodiesel industry in North America.

In Canada, the Canadian Renewable Fuel Content Regulations require 5% renewable content in gasoline and 2% renewable content in diesel. This month, the Ontario Government also announced its intention to repeal the existing biodiesel tax credit and undertake a formal consultation for the creation of a renewable diesel mandate, based on fuel percentage and carbon intensity, for all diesel sold in Ontario as part of its 2013 budget measures.

The minimum volume requirements in Canada, and the proposed minimum volume requirement in Ontario, provide greater market certainty for BIOX in its domestic and local markets and management believes it 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 and the supply agreement with Shell Canada Limited significantly increases the accessible market for BIOX's product in Ontario.

Management continues to believe the weakness the biodiesel sector endured during 2012 was short-term in nature and reflects the maturing of a relatively nascent biodiesel market. Management remains confident that the definitive regulatory structures now in place in both Canada and the United States are an important step in the evolution of a sustainable biodiesel industry in North America. The Company intends to expand its business through increasing the volume of biodiesel it produces, controls and distributes in strategic locations.

Notice of Conference Call

BIOX will hold a conference call today, May 9, 2013, 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 64609574. 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 prior to non-cash items to net income (loss) for the three-month periods ended March 31, 2013 and 2012:

(in thousands)		Three months ended March				Six months ended March
		2013	2012			2013	2012
		$	$			$	$
Operating income before non-cash items		7,037	153			3,291	3,657
Deduct:	Production facility depreciation and amortization	(1,044)	(883)			(1,955)	(1,738)
	Depreciation and amortization of equipment and intangible assets	(94)	(96)			(190)	(198)
	Share-based compensation	(91)	(193)			(172)	(287)
Operating income (loss)		5,808	(1,019)			974	1,434
Other income and expenses		(406)	(257)			(717)	(731)
Net income (loss)		5,402	(1,276)			257	703

About BIOX Corporation
BIOX is a renewable energy company that owns and operates Canada's largest biodiesel production facility, 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.

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, the impact of the extension of the biodiesel tax incentive in 2013 and BIOX's long-term expectations for the biodiesel market in light of current market conditions. 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.

BIOX Corporation
Condensed consolidated interim statements of comprehensive income (loss)
Three and six month periods ended March 31, 2013 and 2012
(Unaudited)
(Expressed in thousands of Canadian dollars, except share and per share amounts)
				Three months ended			Six months ended
					March 31,			March 31,
				2013	2012		2013	2012
				$	$		$	$
Revenue				21,478	13,706		30,953	42,638
Cost of sales
	Direct expenses			12,641	11,550		23,092	35,149
	Production facility depreciation and amortization			1,044	883		1,955	1,738
				13,685	12,433		25,047	36,887
Gross margin				7,793	1,273		5,906	5,751
Operating expenses
	General and administrative			1,334	1,495		2,845	3,068
	Depreciation and amortization of equipment and intangible assets			94	96		190	198
	Share-based compensation			91	193		172	287
	Expansion planning and development			466	508		1,725	764
				1,985	2,292		4,932	4,317
Operating income (loss)				5,808	(1,019)		974	1,434
Other expenses
	Financing cost			315	259		655	614
	Foreign exchange loss			99	69		100	253
				414	328		755	867
Net income (loss) before interest income and income taxes				5,394	(1,347)		219	567
Income tax expense				-	-		(18)	-
Interest income				8	71		56	136
Net income (loss) for the period				5,402	(1,276)		257	703
Other comprehensive income (loss)
	Foreign currency translation gain (loss)			141	-		(138)	(88)
Comprehensive income (loss)				5,543	(1,276)		119	615
Earnings (loss) per common share
	Basic			0.12	(0.03)		0.01	0.02
	Diluted			0.12	(0.03)		0.01	0.02
Weighted average number of common shares outstanding
	Basic			45,748,691	45,748,691		45,748,691	45,748,691
	Diluted			45,748,691	45,837,153		45,748,691	45,837,153

 

BIOX Corporation
Condensed consolidated interim statements of changes in equity
Six month periods ended March 31, 2013 and 2012
(Unaudited)
(Expressed in thousands of Canadian dollars, except share and per share amounts)
				Common share capital
				Shares		Amount		Warrants  reserve		Equity  reserve		Accumulated  other  comprehensive  income (loss)		Deficit		Total  equity
				#		$		$		$		$		$		$
Balance, September 30, 2011				45,748,691		167,787		3,151		1,991		206		(93,891)		79,244
Share-based compensation				-		-		-		287		-		-		287
Net income				-		-		-		-		-		703		703
Foreign currency translation loss				-		-		-		-		(88)		-		(88)
Balance, March 31, 2012				45,748,691		167,787		3,151		2,278		118		(93,188)		80,146
Balance, September 30, 2012				45,748,691		167,787		3,151		2,559		20		(107,972)		65,545
Share-based compensation				-		-		-		172		-		-		172
Net income				-		-		-		-		-		257		257
Foreign currency translation loss				-		-		-		-		(138)		-		(138)
Balance, March 31, 2013				45,748,691		167,787		3,151		2,731		(118)		(107,715)		65,836

 

BIOX Corporation
Condensed consolidated interim statements of financial position
As at March 31, 2013 and September 30, 2012
(Unaudited)
(Expressed in thousands of Canadian dollars)
				March 31,		September 30,
				2013		2012
				$		$
Assets
Current assets
	Cash and cash equivalents			3,595		7,543
	Accounts receivable			13,092		2,472
	Prepaid expenses			367		2,785
	Inventory			10,164		15,317
				27,218		28,117
Restricted cash				3,374		6,942
Property, plant and equipment				47,011		47,678
Intangible assets				978		1,044
Deferred income tax assets				9,524		9,499
				88,105		93,280
Liabilities
Current liabilities
	Accounts payable and other liabilities			6,005		7,970
	Demand loan			-		5,282
	Current portion of long-term debt			1,500		1,500
	Current portion of finance leases			53		69
				7,558		14,821
Finance leases				-		7
Long-term debt				11,597		9,932
Provisions				3,114		2,975
				22,269		27,735
Equity
Common share capital				167,787		167,787
Warrants reserve				3,151		3,151
Equity reserve				2,731		2,559
Accumulated other comprehensive (loss) income				(118)		20
Deficit				(107,715)		(107,972)
				65,836		65,545
				88,105		93,280

 

BIOX Corporation
Condensed consolidated interim statements of cash flows
Six month periods ended March 31, 2013 and 2012
(Unaudited)
(Expressed in thousands of Canadian dollars, except share and per share amounts)
				Six months ended
						March 31,
				2013		2012
				$		$
Operating activities
	Net income			257		703
	Add (less) items not involving cash
		Production facility depreciation and amortization		1,955		1,738
		Depreciation and amortization of equipment and intangible assets		190		198
		Financing costs		437		365
		Income taxes paid		18		-
		Unrealized foreign exchange (gain) loss		(186)		(78)
		Share-based compensation		172		287
		Accretion of asset retirement obligation		139		127
				2,982		3,340
	Net change in non-cash working capital balances
		related to operations		(3,184)		1,465
				(202)		4,805
Investing activity
	Purchase of property, plant and equipment			(3,284)		(2,052)
	Decrease in restricted cash			3,568		-
				284		(2,052)
Financing activities
	Payments on finance leases			(23)		(30)
	Proceeds from debt financing			2,415		-
	Repayment of debt financing			(750)		(375)
	Repayment of demand loan			(5,282)		-
	Financing charges			(2)		-
	Interest paid			(436)		(372)
				(4,078)		(777)
Effect of exchange rate changes on cash held in foreign currency				48		(10)
Net (decrease) increase in cash and cash equivalents during the period				(3,948)		1,966
Cash and cash equivalents, beginning of period				7,543		27,887
Cash and cash equivalents, end of period				3,595		29,853

 

SOURCE: BIOX Corporation

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]