BIOX announces fourth quarter results

TSX symbol: BX

TORONTO, Dec. 12, 2014 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company, today announced its fiscal 2014 fourth quarter (Q4 2014) and year-end financial results for the three-month and twelve-month periods ended September 30, 2014.

Highlights

• Production of methyl esters was 15.5 million litres for the three-month periods ended September 30, 2014 (Q4 2014), unchanged from the same period last year (Q4 2013)
• Sales were $17,724,000 in Q4 2014 compared to $25,037,000 in Q4 2013
• Operating loss was $2,245,000 in Q4 2014 compared to $1,390,000 in Q4 2013
• Operating loss prior to non-cash items⁽¹⁾ was $1,132,000 in Q4 2014 compared to operating income prior to non-cash items of $1,609,000 in Q4 2013
• Net income was $1,433,000 in Q4 2014 compared to net loss of $1,014,000 in Q4 2013
• Income per share was $0.04 in Q4 2014 compared to net loss per share of $0.02 in Q4 2013

"Our production facility in Hamilton continues to operate well within our target range and we are seeing growing demand for biodiesel in the Ontario market," said Kevin Norton, Chief Executive Officer of BIOX. "Unfortunately, the renewable fuels market in the U.S. offers less clarity. The delay in the final Renewable Volume Obligation for 2014 continues to negatively impact product pricing and RIN values. While the House of Representative recently approved a tax bill that includes a retroactive reinstatement of the U.S. biodiesel tax incentive, the bill still requires Senate and Presidential approvals. Until these structural issues are addressed the margins earned by producers will continue to be negatively impacted. The cost savings measures we deployed earlier this year and the greater emphasis we have placed on the Canadian market are meant to help ensure the sustainability of the business while we await greater clarity on the outlook within the U.S. market."

Financial Highlights

Sales were $17.7 million and $67.5 million, respectively, for the three-month and twelve-month periods ended September 30, 2014, compared with $25.0 million and $75.2 million for the corresponding periods in 2013. The change was due to lower revenue per litre of biodiesel sold due to market conditions in both the three-month and full year periods compared to the corresponding periods in 2013 as well as from the reinstatement of the biodiesel tax incentive and alternative fuel credit which allowed the company to recognize approximately $7.8 million in refundable tax credits in Q2 2013.

Direct expenses were $17.8 million and $67.4 million, respectively, for the three-month and twelve-month periods ended September 30, 2014, compared with $22.3 million and $62.3 million for the corresponding periods in 2013.  The decrease in the three-month period was due to lower direct costs per litre primarily due to a decrease in feedstock costs. The increase in the twelve-month period was the result of higher sales volumes for fiscal 2014 compared to fiscal 2013.

General and administrative expenses were $1.1 million and $5.1 million, respectively, for the three-month and twelve-month periods ended September 30, 2014, compared with $1.2 million and $5.3 million for the corresponding periods in 2013.

Operating loss was $2.2 million and $14.7 million, respectively, for the three-month and twelve-month periods ended September 30, 2014, compared with $1.4 million and $2.2 million for the corresponding periods in 2013. The increased losses for the three-month and full year periods in 2014 were primarily due to the expiry in December 2013 of the US$1.00 per US gallon U.S. biodiesel tax incentive that was in effect in calendar 2013, which resulted in a stronger biodiesel pricing environment during the 2013 periods.

Operating loss prior to non-cash items was $1.1 million and $5.0 million, respectively, for the three-month and twelve-month periods ended September 30, 2014, compared to operating income prior to non-cash items of $1.6 million and $5.4 million in the corresponding periods last year.

Net income was $1.4 million or $0.04 per share and net loss was $26.7 million or $0.58 per share, respectively, for the three-month and twelve-month periods ended September 30, 2014, compared with net loss of $1.0 million or $0.02 per share and $2.8 million or $0.06 per share for the corresponding periods in 2013. The increase in net income for the three-month period was the result of an increase of $4.1 million in the tax asset compared with an increase of $0.8 million in the corresponding period in 2013. The increase in net loss for fiscal 2014 was primarily due to significantly lower gross margins achieved in fiscal 2014 as well as an impairment charge in Q2 2014 on non-current assets based on a decrease in the recoverable amount for these assets due to weakness in the biodiesel market that reduced the Company's expectations for discounted future cash flows for operations.   

As at September 30, 2014, BIOX's available cash position amounted to $7.2 million, which consisted of cash and cash equivalents and short-term investments, compared with $15.9 million at September 30, 2013. Working capital as of September 30, 2014, was $8.4 million. The Company believes that its future cash flow from operations combined with its current financial resources should be sufficient to enable BIOX to meet its ongoing requirements for capital expenditures and working capital requirements.

As at September 30, 2014 and December 12, 2014, the Company had 45,710,967 common shares outstanding, as well as outstanding stock options to purchase 2,555,000 common shares and share purchase warrants to acquire up to 1,982,143 common shares.

Outlook

The value of biodiesel and Biomass-based Diesel Renewable Identification Numbers or "(RINs)" continue to be negatively impacted due to the delay in finalizing the 2014 and 2015 Renewable Volume Obligation (RVO). On November 21, 2014, the U.S. Environmental Protection Agency (EPA) announced that it would not complete the final rule for 2014 until sometime in 2015.  2014 RINs traded at approximately $0.625 (or $0.9375 per U.S. gallon) as of December 11^th, 2014. The final announcement of the RVO levels for 2014 and 2015 will be an important signal for the sustainability of the biodiesel industry in the U.S.

At the same time, the industry is awaiting clarity on the U.S. biodiesel tax incentive which provides parties that blend biodiesel with petroleum diesel with a U.S. $1.00 refundable tax credit for each U.S. gallon of biodiesel blended in the U.S. The incentive expired for the third time on December 31, 2013.  On December 3, 2014, the U.S. House of Representatives voted overwhelmingly to pass a package of tax incentives retroactively for 2014, including the $1 per U.S. gallon biodiesel tax incentive.  The bill requires U.S. Senate and Presidential approval prior to becoming law. Management believes that any reinstatement of the biodiesel tax incentive could be delayed until the end of the year or early in 2015 and that it is possible the program will not be reinstated at all.  Uncertainty surrounding the renewal of the biodiesel tax incentive could cause continued short term confusion in the market and pricing volatility.

While BIOX has historically sold the majority of its product into the U.S. market, the implementation of the Canadian regulations significantly increase the accessible market for its product in Canada. Furthermore, the implementation of a renewable diesel mandate in Ontario on April 1, 2014, provides BIOX with market certainty in its local region, which supports the significant capital investment that it made in the Hamilton facility. Once fully implemented, the regulation requires the use of an estimated 240 million litres of bio-based diesel per annum on an average GHG adjusted volume basis.

BIOX's inter-terminal pipeline and supply agreement with Shell is an example of how the Company can directly service primary suppliers with a secure supply of biodiesel under the new Canadian and Ontario regulations by the most efficient possible logistics. The supply of biodiesel under this agreement has the potential to become a significant portion of BIOX's Hamilton production given the implementation of the 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 on Monday, December 15, 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 46968385.

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 depreciation and 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 (loss) income prior to non-cash items to net income (loss) for the three-months and years ended September 30, 2014 and 2013:

(in thousands)		Three months ended September 30		Year ended September 30
		2014	2013	2014	2013
		$	$	$	$
Operating (loss) income before non-cash items		(1,132)	1,609	(4,979)	5,362
Deduct:	Production facility depreciation and amortization	(1,040)	(1,035)	(4,132)	(4,037)
	Depreciation and amortization of equipment and intangible assets	(52)	(88)	(323)	(370)
	Share-based compensation	(21)	(99)	(231)	(367)
	Provision for unutilized tank storage	--	(1,777)	(4,999)	(2,810)
Operating loss		(2,245)	(1,390)	(14,664)	(2,222)
Deferred income tax recovery		4,105	795	4,105	777
Impairment of non-current assets		--	--	(15,197)	--
Other income and expenses		(427)	(419)	(936)	(1,396)
Net income (loss)		1,433	(1,014)	(26,692)	(2,841)

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 income (loss) three and twelve month periods ended September 30 (Expressed in thousands of Canadian dollars, except share and per share amounts)
				Three months ended September 30,				Twelve months ended September 30,
				2014		2013		2014		2013
				$		$		$		$
Revenue				17,724		25,037		67,547		75,246
Cost of sales
	Direct expenses			17,791		22,259		67,426		62,301
	Production facility depreciation and amortization			1,040		1,035		4,132		4,037
				18,831		23,294		71,558		66,338
Gross margin				(1,107)		1,743		(4,011)		8,908
Operating expenses
	General and administrative			1,065		1,169		5,100		5,306
	Depreciation and amortization of equipment and intangible assets			52		88		323		370
	Share-based compensation			21		99		231		367
	Expansion planning and development			-		1,777		4,999		5,087
				1,138		3,133		10,653		11,130
Operating loss				(2,245)		(1,390)		(14,664)		(2,222)
Other expenses
	Impairment of non-current assets			-		-		15,197		-
	Financing cost			317		285		1,240		1,232
	Foreign exchange (gain) loss			127		155		(204)		248
				444		440		16,233		1,480
Net loss before interest income and income taxes				(2,689)		(1,830)		(30,897)		(3,702)
Deferred income tax recovery				4,105		795		4,105		777
Interest income				17		21		100		84
Net income (loss) for the year				1,433		(1,014)		(26,692)		(2,841)
Other comprehensive loss
	Foreign currency translation loss			(170)		(21)		(161)		(111)
Comprehensive income (loss)				1,263		(1,035)		(26,853)		(2,952)
Income (loss) per common share
	Basic			0.04		(0.02)		(0.58)		(0.06)
	Diluted			0.04		(0.02)		(0.58)		(0.06)
Weighted average number of common shares outstanding
	Basic			45,710,967		45,748,691		45,717,889		45,748,691
	Diluted			46,083,208		45,748,691		45,717,889		45,748,691

BIOX Corporation Consolidated statements of changes in equity years ended September 30 (Expressed in thousands of Canadian dollars)
				Common share capital				Warrants		Equity		Accumulated other comprehensive				Total
				Shares		Amount		reserve		reserve		income (loss)		Deficit		equity
				#		$		$		$		$		$		$
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
Balance, October 1, 2013				45,748,691		167,787		3,151		2,926		(91)		(110,813)		62,960
Share-based compensation				-		-		-		231		-		-		231
Forfeiture of options				-		-		-		(192)		-		192		-
Share cancellation				(37,724)		(14)		-		-		-		-		(14)
Net loss				-		-		-		-		-		(26,692)		(26,692)
Foreign currency translation loss				-		-		-		-		(161)		-		(161)
Balance, September 30, 2014				45,710,967		167,773		3,151		2,965		(252)		(137,313)		36,324

BIOX Corporation Consolidated statements of financial position as at September 30 (Expressed in thousands of Canadian dollars)
				2014		2013
				$		$
Assets
Current assets
	Cash and cash equivalents			7,212		15,909
	Accounts receivable			2,621		5,839
	Prepaid expenses			665		839
	Inventory			7,078		5,143
				17,576		27,730
Restricted cash				1,309		1,800
Property, plant and equipment				29,458		46,930
Intangible assets				515		912
Deferred income tax assets				14,381		10,276
				63,239		87,648
Liabilities
Current liabilities
	Accounts payable and other liabilities			6,028		6,300
	Current portion of long-term debt			1,125		1,500
	Current portion of finance leases			29		31
	Current portion of provisions			2,010		2,434
				9,192		10,265
Finance leases				28		34
Long-term debt				9,727		10,849
Provisions				7,968		3,540
				26,915		24,688
Equity
Common share capital				167,773		167,787
Warrants reserve				3,151		3,151
Equity reserve				2,965		2,926
Accumulated other comprehensive loss				(252)		(91)
Deficit				(137,313)		(110,813)
				36,324		62,960
				63,239		87,648

BIOX Corporation
Consolidated statements of cash flows
years ended September 30
(Expressed in thousands of Canadian dollars)
				2014		2013
				$		$
Operating activities
	Net loss			(26,692)		(2,841)
	Add items not involving cash
		Production facility depreciation and amortization		4,132		4,037
		Depreciation and amortization of equipment and intangible assets		323		370
		Financing costs		722		845
		Provision for unutilized tank storage		3,682		2,434
		Impairment of non-current assets		15,197		-
		Income taxes paid		-		18
		Unrealized foreign exchange gain		(356)		(166)
		Share-based compensation		231		367
		Accretion of asset retirement obligation		322		279
		Deferred income tax asset		(4,105)		(777)
				(6,544)		4,566
	Net change in non-cash working capital balances
		related to operations		1,553		8,542
				(4,991)		13,108
Investing activities
	Purchase of property, plant and equipment			(2,151)		(4,720)
	Decrease in restricted cash			491		5,142
	Share repurchase			(14)		-
				(1,674)		422
Financing activities
	Payments on finance leases			(34)		(45)
	Proceeds from debt financing			-		2,415
	Repayment of debt financing			(1,500)		(1,500)
	Repayment of demand loan			-		(5,282)
	Interest paid			(693)		(807)
				(2,227)		(5,219)
Effect of exchange rate changes on cash held in foreign currency				195		55
Net (decrease) increase in cash and cash equivalents during the year				(8,697)		8,366
Cash and cash equivalents, beginning of year				15,909		7,543
Cash and cash equivalents, end of year				7,212		15,909
Supplemental information
	Restricted Cash			1,309		1,800

SOURCE: BIOX Corporation

BIOX Corporation, Chris Clinning, Executive Vice President & CFO, Phone: [phone] ext. 253, E-mail: [email protected]; Investor Relations, Ross Marshall, TMX Equicom, Phone: [phone] ext. 238, E-mail: [email protected]