BIOX announces 2014 first quarter results

TSX symbol: BX

TORONTO, Feb. 12, 2014 /CNW/ - BIOX Corporation (BIOX) (TSX: BX) today announced its fiscal 2014 first quarter (Q1 2014) financial results for the three-month period ended December 31, 2013.

Highlights

• Production of methyl esters was 15.2 million litres in Q1 2014 compared to 3.3 million litres in the first quarter of 2013 (Q1 2013), the lower production in Q1 2013 reflects the temporary shutdown of the Hamilton facility on October 25, 2012
• Sales were $17.3 million in Q1 2014, compared to $9.5 million in Q1 2013
• Operating loss was $1.8 million in Q1 2014 compared to an operating loss of $4.8 million in Q1 2013
• Operating loss prior to non-cash items⁽¹⁾ was $0.5 million in Q1 2014 compared to $3.7 million in Q1 2013
• Operating income prior to non-cash items was $0.8 million in Q1 2014 for BIOX's operating segment (BIOX Canada Limited and BIOX USA Limited) compared to an operating loss prior to non-cash items of $1.2 million in Q1 2013
• Net loss was $1.9 million Q1 2014 compared to $5.1 million in Q1 2013
• Loss per share was $0.04 in Q1 2014 compared to $0.11 Q1 2013
• The public consultation period for the proposed Ontario Greener Diesel Mandate closed on December 16, 2013

"The fundamentals of the Canadian biodiesel market are becoming a key component of our addressable market. The inter-terminal pipeline together with the supply agreement with Shell Canada Limited and the proposed 2 percent greener diesel mandate in Ontario provide a greater level of market certainty than the U.S. market," said Kevin Norton, Chief Executive Officer of BIOX. "With the proposed Ontario mandate expected to take effect April 1, 2014 and our established supply agreement with Shell we are in a strong position to take advantage of growing demand in our local market."

Financial Highlights

Sales were $17.3 million for the three-month period ended December 31, 2013, compared with $9.5 million for the corresponding period last year. The 82 percent increase in sales was primarily the result of the 175 percent increase in litres of biodiesel sold due to the temporary shutdown of the Hamilton facility during the same period last year, partially offset by lower sales of separated RINs during the quarter.

Direct expenses were $16.2 million for the three-month period ended December 31, 2013, compared with $10.5 million for the corresponding period last year. The increase in direct expenses was primarily the result of higher sales volume in Q1 2014 due to the temporary shutdown of the Hamilton facility during the same period last year.

General and administrative expenses were $1.5 million for both the three-month periods ended December 31, 2013 and December 31, 2012.

Operating loss was $1.8 million for the three-month period ended December 31, 2013, compared with $4.8 million for the same period last year. The decrease in operating loss was primarily due to the temporary shutdown of the Hamilton facility during the same period last year.

Operating loss prior to non-cash items⁽¹⁾ was $0.5 million for the three-month period ended December 31, 2013, compared with $3.7 million for the same period last year.

Combined operating income prior to non-cash items⁽¹⁾ for BIOX's operating segment (BIOX Canada Limited and BIOX USA Limited) was $0.8 million for the three-month period ended December 31, 2013, compared with a combined operating loss prior to non-cash items of $1.2 million for the corresponding period last year. This increase was primarily due to the temporary shutdown of the Hamilton facility during the same period last year.

Net loss for the three-month period ended December 31, 2013, was $1.9 million or $0.04 per common share compared with a net loss of $5.1 million or $0.11 per common share in the corresponding period in 2012.

As at December 31, 2013, BIOX's cash balance amounted to $10.9 million, compared with $15.9 million on September 30, 2013. BIOX's working capital balance at December 31, 2013, was $16.0 million compared with $17.5 million at September 30, 2013. 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 December 31, 2013, BIOX had 45,728,791 common shares outstanding, as well as options to purchase up to 2,775,000 common shares, and share purchase warrants to acquire up to 1,982,143 common shares.

Outlook

The draft 2014 Renewable Volume Obligation proposal released by the U.S. Environmental Protection Agency (EPA) in November 2013 negatively impacted the value of biodiesel and Biomass-based diesel RINs through the end of calendar 2013. 2013 RIN values averaged approximately $0.28 through the month of December. This drop in RIN values was compounded by the expiry of the U.S. biodiesel tax incentive on December 31, 2013. Uncertainty surrounding the renewal of the biodiesel tax incentive could cause continued short term confusion in the market and pricing volatility.

The draft Renewable Volume Obligation proposal maintains the current volume requirement of biomass-based diesel at 1.28 billion U.S. gallons for 2014 and 2015. At this level the 2014 and 2015 volume requirements would actually fall below the 1.8 billion U.S. gallons that the U.S. Biomass-based diesel industry produced in 2013. The proposal has completed a 60-day review period that included public hearings. The EPA has indicated that it will take them a considerable amount of time to review and finalize the proposal. Based on that feedback, BIOX believes the proposal may not be finalized until mid 2014. 2014 RINs traded at approximately $0.60 (or $0.90 per U.S. gallon) as of February 11, 2014.

However, management believes that market conditions are improving in Canada. The full implementation of the biodiesel portion of the Canadian Renewable Fuel Content Regulations, and the Ontario biodiesel mandate proposed to commence in April 2014, are important elements of BIOX's addressable markets. While BIOX has historically sold the majority of its product into the U.S. market, the implementation of these Canadian regulations significantly increases the accessible market for its product in Canada. The implementation of a renewable diesel mandate in Ontario will provide BIOX with market certainty in its local region which supports the significant capital investment that it made in the Hamilton facility

BIOX's inter-terminal pipeline and supply agreement with Shell is an example of how the Company can service primary suppliers with a secure supply of biodiesel under the new Canadian and Ontario regulations. Management believes that, in time, the supply of biodiesel under this agreement has the potential to become a significant portion of BIOX's Hamilton production given the proposed implementation of an 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.

Notice of Conference Call

BIOX will hold a conference call today, February 13, 2014, 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 53674500. 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, and stock-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 prior to non-cash items to net loss for the three-month periods ended December 31, 2013 and 2012:

(in thousands)				Three months ended December
				2013	2012
				$	$
Operating loss before non-cash items				(508)	(3,745)
Deduct:	Production facility depreciation and amortization			(1,114)	(912)
	Depreciation and amortization of equipment and intangible assets			(86)	(96)
	Share-based compensation			(48)	(81)
Operating loss				(1,756)	(4,834)
Other income and expenses				(143)	(311)
Net loss				(1,899)	(5,145)

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 implementation of an Ontario biodiesel mandate and its effect on BIOX, the significance of sales under the supply agreement with Shell, and the ability of BIOX to realize on its cost savings programs. 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.

Financial results included below:

BIOX Corporation
Condensed consolidated interim statements of comprehensive loss
Three month periods ended December 31, 2013 and 2012
(Unaudited)
(Expressed in thousands of Canadian dollars, except share and per share amounts)
				2013		2012
				$		$
Revenue				17,269		9,475
Cost of sales
	Direct expenses			16,238		10,451
	Production facility depreciation and amortization			1,114		912
				17,352		11,363
Gross margin				(83)		(1,888)
Operating expenses
	General and administrative			1,539		1,510
	Depreciation and amortization of equipment and intangible assets			86		96
	Share-based compensation			48		81
	Expansion planning and development			-		1,259
				1,673		2,946
Operating loss				(1,756)		(4,834)
Other expenses
	Financing cost			320		340
	Foreign exchange (gain) loss			(151)		1
				169		341
Net loss before interest income and income taxes				(1,925)		(5,175)
Income tax expense				-		(18)
Interest income				26		48
Net loss for the period				(1,899)		(5,145)
Other comprehensive loss
	Foreign currency translation loss			(37)		(279)
Comprehensive loss				(1,936)		(5,424)
Loss per common share
	Basic			(0.04)		(0.11)
	Diluted			(0.04)		(0.11)
Weighted average number of common shares outstanding
	Basic			45,735,195		45,748,691
	Diluted			45,845,195		45,748,691

 

BIOX Corporation
Condensed consolidated interim statements of changes in equity
Three month periods ended December 31, 2013 and 2012
(Unaudited)
(Expressed in thousands of Canadian dollars, except share and per share amounts)
												Accumulated
				Common share capital								other
								Warrants		Equity		comprehensive				Total
				Shares		Amount		reserve		reserve		income (loss)		Deficit		equity
				#		$		$		$		$		$		$
Balance, September 30, 2012				45,748,691		167,787		3,151		2,559		20		(107,972)		65,545
Share-based compensation				-		-		-		81		-		-		81
Net loss				-		-		-		-		-		(5,145)		(5,145)
Foreign currency translation loss				-		-		-		-		(279)		-		(279)
Balance, December 31, 2012				45,748,691		167,787		3,151		2,640		(259)		(113,117)		60,202
Balance, September 30, 2013				45,748,691		167,787		3,151		2,926		(91)		(110,813)		62,960
Share-based compensation				-		-		-		48		-		-		48
Share cancellation				(19,900)		(7)		-		-		-		-		(7)
Repurchased shares
	to be cancelled			-		(4)		-		-		-		-		(4)
Net loss				-		-		-		-		-		(1,899)		(1,899)
Foreign currency translation loss				-		-		-		-		(37)		-		(37)
Balance, December 31, 2013				45,728,791		167,776		3,151		2,974		(128)		(112,712)		61,061

 

BIOX Corporation
Condensed consolidated interim statements of financial position
As at December 31, 2013 and September 30, 2013
(Unaudited)
(Expressed in thousands of Canadian dollars)
				December 31,		September 30,
				2013		2013
				$		$
Assets
Current assets
	Cash and cash equivalents			10,880		15,909
	Accounts receivable			6,453		5,839
	Prepaid expenses			760		839
	Inventory			5,317		5,143
				23,410		27,730
Restricted cash				1,800		1,800
Property, plant and equipment				46,186		46,930
Intangible assets				879		912
Deferred income tax assets				10,306		10,276
				82,581		87,648
Liabilities
Current liabilities
	Accounts payable and other liabilities			3,685		6,300
	Current portion of long-term debt			1,500		1,500
	Current portion of finance leases			25		31
	Current portion of provisions			2,186		2,434
				7,396		10,265
Finance leases				29		34
Long-term debt				10,475		10,849
Provisions				3,620		3,540
				21,520		24,688
Equity
Common share capital				167,776		167,787
Warrants reserve				3,151		3,151
Equity reserve				2,974		2,926
Accumulated other comprehensive loss				(128)		(91)
Deficit				(112,712)		(110,813)
				61,061		62,960
				82,581		87,648

 

 

BIOX Corporation
Condensed consolidated interim statements of cash flows
Three month periods ended December 31, 2013 and 2012
(Unaudited)
(Expressed in thousands of Canadian dollars, except share and per share amounts)
				2013		2012
				$		$
Operating activities
	Net loss			(1,899)		(5,145)
	Add items not involving cash
		Production facility depreciation and amortization		1,114		912
		Depreciation and amortization of equipment and intangible assets		86		96
		Financing costs		182		223
		Provision for unutilized tank storage		(248)		-
		Income taxes paid		-		18
		Unrealized foreign exchange gain		(222)		(265)
		Share-based compensation		48		81
		Accretion of asset retirement obligation		80		70
				(859)		(4,010)
	Net change in non-cash working capital balances
		related to operations		(2,948)		3,287
				(3,807)		(723)
Investing activities
	Purchase of property, plant and equipment			(828)		(2,741)
	Decrease in restricted cash			-		4,142
	Share repurchase			(11)		-
				(839)		1,401
Financing activities
	Payments on finance leases			(12)		(12)
	Proceeds from debt financing			-		2,415
	Repayment of debt financing			(375)		(375)
	Repayment of demand loan			-		(1,825)
	Financing charges			-		(2)
	Interest paid			(181)		(222)
				(568)		(21)
Effect of exchange rate changes on cash held in foreign currency				185		(14)
Net (decrease) increase in cash and cash equivalents during the period				(5,029)		643
Cash and cash equivalents, beginning of period				15,909		7,543
Cash and cash equivalents, end of period				10,880		8,186

 

 

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]