BIOX announces fourth quarter financial results

TSX symbol: BX

TORONTO, Dec. 12, 2013 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), today announced its fiscal 2013 fourth quarter (Q4 2013) and year-end financial results for the three-month and twelve-month periods ended September 30, 2013.

Highlights

• Production of methyl esters was 15.5 million litres in Q4 2013 compared to 13.1 million litres in Q4 2012
• Sales were $25.0 million in Q4 2013 compared to $16.8 million in Q4 2012
• Operating loss was $1.4 million in Q4 2013 compared to an operating loss of $10.9 million in Q4 2012
• Operating income prior to non-cash items⁽¹⁾ was $1.6 million in Q4 2013 compared to an operating loss prior to non-cash items of $9.7 million in Q4 2012
• Operating income prior to non-cash items of $2.6 million in Q4 2013, resulting in $12.1 million for the full twelve-month period, for BIOX's operating segment (BIOX Canada Limited and BIOX USA Limited) compared to an operating loss of $6.3 million in Q4 2012
• Net loss was $1.0 million in Q4 2013 compared to a net loss of $11.6 million in Q4 2012
• Net loss per share was $0.02 in Q4 2013 compared to a net loss per share of $0.25 in Q4 2012
• Completed the inter-terminal pipeline to Shell Canada Limited (Shell) terminal and commenced product distribution under the supply agreement on schedule
• Subsequent to quarter end, the Province of Ontario published the regulations for a diesel mandate, which is currently under public review, that would require fuel suppliers to blend an average of 2% greener diesel in their overall diesel and home heating oil pool

"The Hamilton facility continues to produce well within our target range. The investments we have made in our operations, such as the inter-terminal pipeline which connects us with Shell and the glycerin refinement system, as well as the efficiencies we are implementing to our cost base have improved our ability to capture the maximum value for our product," said Kevin Norton, Chief Executive Officer of BIOX. "These changes have resulted in a significant improvement in our 2013 financial results compared to last year. However, the recent market dynamics in the U.S. have depressed values in the biodiesel market subsequent to the end of the period. At the same time, the dynamics in the Canadian market are improving with beneficial regulatory changes underway in Canada, particularly in Ontario, which we believe will provide us with greater market certainty in our local market."

Financial Highlights

Sales were $25.0 million and $75.2 million, respectively, for the three-month and twelve-month periods ended September 30, 2013, compared with $16.8 million and $69.5 million for the corresponding periods in 2012. The increase was due to the higher average revenue per litre of biodiesel sold during the quarter and year, $1.44 and $1.43, respectively, compared to the average revenue in the same periods in 2012, $1.34 and $1.29, respectively. This increase in the twelve-month period was partially offset by a 9% decrease in volume of biodiesel sold due to the temporary shutdown of the Hamilton facility from October 25, 2012 through to the beginning of February, 2013.

Direct expenses were $22.3 million and $62.3 million, respectively, for the three-month and twelve-month periods ended September 30, 2013, compared with $22.9 million and $68.3 million for the corresponding periods in 2012.  The changes in direct expenses include a write down of $5.8 million in Q4 2012 of separated Renewable Identification Numbers (RINs) to net realizable value.  The write down was not significant in 2013.

General and administrative expenses were $1.2 million and $5.3 million, respectively, for the three-month and twelve-month periods ended September 30, 2013, compared with $1.4 million and $5.9 million for the corresponding periods in 2012.

Operating loss was $1.4 million and $2.2 million, respectively, for the three-month and twelve-month periods ended September 30, 2013, compared with an operating loss of $10.9 million and $12.2 million for the corresponding periods in 2012. The change was primarily due to the higher prices and higher gross margins achieved in 2013; partially offset by the $1.8 million and $2.8 million accrual for unutilized tanks provision, respectively, for the three-month and twelve-month periods ended September 30, 2013.  The Company was also able to collect approximately US$7.8 million in refundable tax credits due to the reinstatement of the biodiesel tax incentive and alternative fuel credit during 2013 related to sales to customers in calendar 2012.

Operating income prior to non-cash items was $1.6 million and $5.4 million, respectively, for the three-month and twelve-month periods ended September 30, 2013, compared with operating loss prior to non-cash items of $9.7 million and $7.7 million for the corresponding periods in 2012.

Combined operating income prior to non-cash items for BIOX's wholly-owned subsidiaries, BIOX Canada Limited and BIOX USA Limited, was $2.6 million for the three-month period ended September 30, 2013, compared with combined operating loss prior to non-cash items of $6.3 million for the same period last year. Combined operating income prior to non-cash items for BIOX's wholly-owned subsidiaries was $12.1 million for the twelve-month period ended September 30, 2013, compared with $0.5 million for the same period last year.

Net loss was $1.0 million or $0.02 per share and net loss was $2.8 million or $0.06 per share, respectively, for the three-month and twelve-month periods ended September 30, 2013, compared with a net loss of $11.6 million or $0.25 per share and $14.1 million or $0.31 per share for the corresponding periods in 2012. The changes were the result of higher gross margins achieved in fiscal 2013.

BIOX has initiated a series of programs to improve its operational efficiencies and reduce cost. These changes will predominately impact direct expenses as well as certain general and administrative expenses. As part of these changes BIOX has streamlined its senior management team from five to four positions with the elimination of the role of Vice President, Projects. The total impact of these changes would generate a $7 to $10 million improvement to the bottom line on an annual basis once fully implemented under the current biodiesel and feedstock pricing environment. As an example of these programs, in September and October 2013 BIOX increased its available rail fleet to 65 cars from 25 cars. Increasing its rail fleet will reduce transportation costs by an estimated $1.7 million in fiscal 2014.

As at September 30, 2013, BIOX's cash position amounted to $15.9 million compared with $7.5 million on September 30, 2012. Working capital as of September 30, 2013 was $17.5 million. BIOX believes that its future cash flow from operations combined with its current financial resources is sufficient to enable BIOX to meet its ongoing working capital requirements.

As at December 11, 2013, the Company had 45,728,791 common shares outstanding, as well as outstanding stock options to purchase 2,225,000 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 has adversely impacted the improvements observed in the North American biodiesel market during the earlier portion of calendar 2013. The 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 1.7 billion U.S. gallons that the U.S. Biomass-based diesel industry is on track to produce in 2013. As a result of this proposal, 2013 RINs have traded down, at approximately $0.30 (or $0.45 per U.S. gallon) as of December 11, 2013.

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 to the Company's future markets. While BIOX currently sells 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 with Shell was completed in August 2013 and sales under this agreement commenced prior to the end of that month. Under the supply agreement, BIOX is supplying Shell Canada with a secure, stable supply of biodiesel through the inter-terminal pipeline between the two facilities. 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, December 12, 2013, at 9:00 a.m. EST 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 19591296. 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 (loss) prior to non-cash items is defined as operating income or loss less production facility depreciation and amortization, and less amortization of furniture, equipment, intangibles and share-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-IFRS Measures

The following table presents a reconciliation of operating income (loss) prior to non-cash items to net income (loss) for the three months and twelve months ended September 30, 2013 and 2012:

(in thousands)		Three months ended September 30			Year ended September 30
		2013	2012		2013		2012
Operating income (loss) before non-cash items		$1,609	$(9,723)		$5,362		$(7,651)
Production facility depreciation and amortization		$(1,035)	$(911)		$(4,037)		$(3,549)
Amortization of furniture, equipment and intangibles		$(88)	$(92)		$(370)		$(379)
Share-based compensation		$(99)	$(133)		$(367)		$(594)
Provision for unutilized tank storage		$(1,777)	-		$(2,810)		-
Operating loss		$(1,390)	$(10,859)		$(2,222)		$(12,173)
Deferred income tax recovery		$795	$145		$777		$145
Other income (expenses)		$(419)	$(888)		$(1,396)		$(2,079)
Net loss		$(1,014)	$(11,602)		$(2,841)		$(14,107)

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.

 

BIOX Corporation
Consolidated statements of comprehensive loss
three and twelve month periods ended September 30
(Expressed in thousands of Canadian dollars, except share and per share amounts)
						Three months ended				Twelve months ended
						September 30,				September 30,
				2013		2012		2013		2012
				$		$		$		$
Revenue				25,037		16,780		75,246		69,537
Cost of sales
	Direct expenses			22,259		22,867		62,301		68,270
	Production facility depreciation and amortization			1,035		911		4,037		3,549
				23,294		23,778		66,338		71,819
Gross margin				1,743		(6,998)		8,908		(2,282)
Operating expenses
	General and administrative	1,169				1,392		5,306		5,905
	Depreciation and amortization of equipment and intangible assets			88		92		370		379
	Share-based compensation			99		133		367		594
	Expansion planning and development			1,777		2,244		5,087		3,013
				3,133		3,861		11,130		9,891
Operating loss				(1,390)		(10,859)		(2,222)		(12,173)
Other expenses
	Financing cost			285		282		1,232		1,190
	Write off of prepaid expenses			-		257		-		257
	Write off of property, plant and equipment			-		164		-		164
	Foreign exchange loss			155		188		248		672
				440		891		1,480		2,283
Net loss before interest income and income taxes				(1,830)		(11,750)		(3,702)		(14,456)
Deferred income tax recovery				795		145		777		145
Interest income				21		3		84		204
Net loss for the year				(1,014)		(11,602)		(2,841)		(14,107)
Other comprehensive loss
	Foreign currency translation loss			(21)		(32)		(111)		(186)
Comprehensive loss				(1,035)		(11,634)		(2,952)		(14,293)
Loss per common share
	Basic			0.02		0.25		0.06		0.31
	Diluted			0.02		0.25		0.06		0.31
Weighted average number of common shares outstanding
	Basic			45,748,691		45,748,691		45,748,691		45,748,691
	Diluted			45,846,768		45,748,691		45,846,768		45,748,691

BIOX Corporation
Consolidated statements of changes in equity
years ended September 30
(Expressed in thousands of Canadian dollars)
												Accumulated
												other
				Common share capital				Warrants		Equity		comprehensive				Total
				Shares		Amount		reserve		reserve		income (loss)		Deficit		equity
				#		$		$		$				$		$
Balance, October 1, 2011				45,748,691		167,787		3,151		1,991		206		(93,891)		79,244
Share-based compensation				-		-		-		594		-		-		594
Expiration of vested options				-		-		-		(26)		-		26		-
Net loss				-		-		-		-		-		(14,107)		(14,107)
Foreign currency translation loss				-		-		-		-		(186)		-		(186)
Balance, September 30, 2012				45,748,691		167,787		3,151		2,559		20		(107,972)		65,545
Balance, October 1, 2012				45,748,691		167,787		3,151		2,559		20		(107,972)		65,545
Share-based compensation				-		-		-		367		-		-		367
Net loss				-		-		-		-		-		(2,841)		(2,841)
Foreign currency translation loss				-		-		-		-		(111)		-		(111)
Balance, September 30, 2013				45,748,691		167,787		3,151		2,926		(91)		(110,813)		62,960

 

BIOX Corporation
Consolidated statements of financial position
as at September 30
(Expressed in thousands of Canadian dollars)
				2013		2012
				$		$
Assets
Current assets
	Cash and cash equivalents			15,909		7,543
	Accounts receivable			5,839		2,472
	Prepaid expenses			839		2,785
	Inventory			5,143		15,317
				27,730		28,117
Restricted cash				1,800		6,942
Property, plant and equipment				46,930		47,678
Intangible assets				912		1,044
Deferred income tax assets				10,276		9,499
				87,648		93,280
Liabilities
Current liabilities
	Accounts payable and other liabilities			6,300		7,970
	Demand loan			-		5,282
	Current portion of long-term debt			1,500		1,500
	Current portion of finance leases			31		69
	Current portion of provisions			2,434		-
				10,265		14,821
Finance leases				34		7
Long-term debt				10,849		9,932
Provisions				3,540		2,975
				24,688		27,735
Equity
Common share capital				167,787		167,787
Warrants reserve				3,151		3,151
Equity reserve				2,926		2,559
Accumulated other comprehensive (loss) income				(91)		20
Deficit				(110,813)		(107,972)
				62,960		65,545
				87,648		93,280

 

BIOX Corporation
Consolidated statements of cash flows
years ended September 30
(Expressed in thousands of Canadian dollars)
				2013		2012
				$		$
Operating activities
	Net loss			(2,841)		(14,107)
	Add items not involving cash
		Production facility depreciation and amortization		4,037		3,549
		Depreciation and amortization of equipment and intangible assets		370		379
		Financing costs		845		760
		Provision for unutilized tank storage		2,434		-
		Income taxes paid		18		-
		Unrealized foreign exchange gain		(166)		(135)
		Share-based compensation		367		594
		Accretion of asset retirement obligation		279		254
		Write off of property, plant and equipment		-		164
		Write off of site specific costs		-		223
		Deferred income tax asset		(777)		(145)
				4,566		(8,464)
	Net change in non-cash working capital balances
		related to operations		8,542		2,784
				13,108		(5,680)
Investing activities
	Purchase of property, plant and equipment			(4,720)		(6,053)
	Decrease (increase) in restricted cash			5,142		(6,942)
				422		(12,995)
Financing activities
	Payments on finance leases			(45)		(53)
	Proceeds from debt financing			2,415		-
	Repayment of debt financing			(1,500)		(1,125)
	(Repayment of) proceeds from demand loan			(5,282)		325
	Interest paid			(807)		(765)
				(5,219)		(1,618)
Effect of exchange rate changes on cash held in foreign currency				55		(51)
Net increase (decrease) in cash and cash equivalents during the year				8,366		(20,344)
Cash and cash equivalents, beginning of year				7,543		27,887
Cash and cash equivalents, end of year				15,909		7,543
Supplemental information
	Income taxes received			-		23
	Restricted Cash			1,800		6,942

 

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]