BIOX announces third quarter results

TSX symbol: BX

TORONTO, Aug. 12, 2014 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company, today announced its fiscal 2014 third quarter (Q3 2014) financial results for the three-month and nine-month periods ended June 30, 2014.

Highlights

• Production of methyl esters was 13.8 million litres in Q3 2014 compared to 14.7 million litres in the third quarter of fiscal 2013 (Q3 2013)
• Sales were $16,847,000 in Q3 2014 compared to $19,256,000 in Q3 2013
• Operating loss was $2,973,000 in Q3 2014 compared to $1,806,000 in Q3 2013
• Operating loss prior to non-cash items⁽¹⁾ was $1,863,000 in Q3 2014 compared to operating income prior to non-cash items of $463,000 in Q3 2013
• Operating loss prior to non-cash items of $909,000 in Q3 2014 for BIOX's operating segment (BIOX Canada Limited and BIOX USA Limited) compared to operating income prior to non-cash items of $2,130,000 in Q3 2013
• Net loss was $3,250,000 in Q3 2014 compared to $2,084,000 in Q3 2013
• Loss per share was $0.08 in Q3 2014 compared to $0.05 in Q3 2013

"Our Hamilton facility continues to operate effectively. However, until the EPA finalizes the U.S. minimum renewable volume obligations for 2014 and 2015 and a resolution on the U.S. biodiesel tax credit is determined, we anticipate that market dynamics will remain challenging with the value of biodiesel and RINs providing only a narrow margin range for producers," said Kevin Norton, Chief Executive Officer of BIOX. "Closer to home, our relationship with Shell Canada Ltd. is proving beneficial as an efficient method to gain access to the growing demand for biodiesel in the Ontario market. With the official guidelines for the Ontario Renewable Diesel mandate expected to be released by the MOE in September 2014, we expect this market to grow. We continue to pursue additional relationships that would integrate our production and our sales and marketing with greater scale to maximize these assets."

Financial Highlights

Sales were $16.8 million and $49.8 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with $19.3 million and $50.2 million for the corresponding periods in 2013. The 13% difference in sales for the three-month period ended June 30, 2014, was primarily the result of the reinstatement of the $1.00 per US gallon U.S. biodiesel tax incentive in January 2013, which resulted in a stronger pricing environment in calendar 2013 compared with calendar 2014.

Direct expenses were $17.6 million and $49.6 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with $16.9 million and $40.0 million for the corresponding periods in 2013.  The increase in direct expenses for the three-month and nine-month periods ended June 30, 2014 was primarily due to a higher volume of biodiesel sold during the period due to the temporary shutdown of the Hamilton facility from October 25, 2012, through February 1, 2013.

General and administrative expenses were $1.1 million and $4.0 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with $1.3 million and $4.1 million for the corresponding periods in 2013.

Operating loss was $3.0 million and $12.4 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with $1.8 million and $0.8 million for the corresponding periods in 2013.

Operating loss prior to non-cash items was $1.9 million and $3.8 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared to operating income prior to non-cash items of $0.5 million and $3.8 million in the corresponding periods last year. The increased losses for the three- and nine-month 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 three-month and nine-month periods ended June 30, 2014.

Combined operating loss prior to non-cash items for BIOX's wholly-owned subsidiaries, BIOX Canada Limited and BIOX USA Limited, was $0.9 million and $0.4 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with operating income prior to non-cash items of $2.1 million and $9.5 million for the corresponding periods in 2013.

Net loss was $3.3 million or $0.08 per share and $28.1 million or $0.62 per share, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with $2.1 million or $0.05 per share and $1.8 million or $0.04 per share for the corresponding periods in 2013.

As at June 30, 2014, BIOX's available cash position amounted to $10.5 million, which consisted of cash and cash equivalents and short-term investments, compared with $15.9 million on September 30, 2013. Working capital as of June 30, 2014, was $10.4 million. The Company believes that its future cash flow from operations combined with its current financial resources and debt financing should be sufficient to enable BIOX to meet its ongoing requirements for capital expenditures and working capital requirements.

As at June 30, 2014, the Company had 45,710,967 common shares outstanding, as well as outstanding stock options to purchase 2,775,000 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 D4 (RINs) continue to be negatively impacted as the industry awaits the announcement on the 2014 and 2015 Renewable Volume Obligation (RVO) from the U.S. Environmental Protection Agency. 2014 RINs traded at approximately $0.56 (or $0.84 per U.S. gallon) as of August 11, 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. The EPA has stated that it will release the 2014 RVO during the summer of 2014.

The proposed RVO 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.

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 today, August 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 77997631. 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 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 income (loss) prior to non-cash items to net income (loss) for the three-month and nine-month periods ended June 30, 2014 and 2013:

(in thousands)						Three months ended June 30					Nine months ended June 30
						2014		2013			2014		2013
						$		$			$		$
Operating income (loss) before non-cash items						(1,863)		463			(3,846)		3,754
Deduct:	Production facility depreciation and amortization					(829)		(1,047)			(3,092)		(3,002)
	Depreciation and amortization of equipment and intangible assets					(92)		(92)			(272)		(282)
	Share-based compensation					(48)		(97)			(211)		(269)
	Provision for unutilized tank storage					(141)		(1,033)			(4,998)		(1,033)
Operating loss						(2,973)		(1,806)			(12,419)		(832)
Other income and expenses						(277)		(278)			(15,706)		(995)
Net loss						(3,250)		(2,084)			(28,125)		(1,827)

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 and nine month periods ended June 30, 2014 and 2013 (Unaudited) (Expressed in thousands of Canadian dollars, except share and per share amounts)
					Three months ended				Nine months ended
					June 30,				June 30,
					2014		2013		2014		2013
					$		$		$		$
Revenue					16,847		19,256		49,823		50,209
Cost of sales
	Direct expenses				17,570		16,949		49,635		40,041
	Production facility depreciation and amortization				829		1,047		3,092		3,002
					18,399		17,996		52,727		43,043
Gross margin					(1,552)		1,260		(2,904)		7,166
Operating expenses
	General and administrative				1,140		1,294		4,034		4,138
	Depreciation and amortization of equipment and intangible assets				92		92		272		282
	Share-based compensation				48		97		211		269
	Expansion planning and development				141		1,583		4,998		3,309
					1,421		3,066		9,515		7,998
Operating loss					(2,973)		(1,806)		(12,419)		(832)
Other expenses
	Impairment of non-current assets				-		-		15,197		-
	Financing cost				328		292		923		947
	Foreign exchange (gain) loss				(29)		(7)		(331)		93
					299		285		15,789		1,040
Net loss before interest income and income taxes					(3,272)		(2,091)		(28,208)		(1,872)
Income tax expense					-		-		-		(18)
Interest income					22		7		83		63
Net loss for the period					(3,250)		(2,084)		(28,125)		(1,827)
Other comprehensive loss
	Foreign currency translation gain (loss)				72		48		9		(90)
Comprehensive loss					(3,178)		(2,036)		(28,116)		(1,917)
Loss per common share
	Basic				(0.08)		(0.05)		(0.62)		(0.04)
	Diluted				(0.08)		(0.05)		(0.61)		(0.04)
Weighted average number of common shares outstanding
	Basic				45,720,221		45,748,691		45,720,221		45,748,691
	Diluted				46,192,191		45,956,548		46,192,191		45,956,548

BIOX Corporation Condensed consolidated interim statements of changes in equity Nine month periods ended June 30, 2014 and 2013 (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				-		-		-		269		-		-			269
Net loss				-		-		-		-		-		(1,827)			(1,827)
Foreign currency translation loss				-		-		-		-		(90)		-			(90)
Balance, June 30, 2013				45,748,691		167,787		3,151		2,828		(70)		(109,799)			63,897
Balance, September 30, 2013				45,748,691		167,787		3,151		2,926		(91)		(110,813)			62,960
Share-based compensation				-		-		-		211		-		-			211
Share cancellation				(37,724)		(14)		-		-		-		-			(14)
Net loss				-		-		-		-		-		(28,125)			(28,125)
Foreign currency translation loss				-		-		-		-		9		-			9
Balance, June 30, 2014				45,710,967		167,773		3,151		3,137		(82)		(138,938)			35,041

BIOX Corporation Condensed consolidated interim statements of financial position As at June 30, 2014 and September 30, 2013 (Unaudited) (Expressed in thousands of Canadian dollars)
																	June 30,		September 30,
																	2014		2013
																	$		$
Assets
Current assets
	Cash and cash equivalents																10,476		15,909
	Accounts receivable																3,054		5,839
	Prepaid expenses																596		839
	Inventory																6,275		5,143
																	20,401		27,730
Restricted cash																	1,309		1,800
Property, plant and equipment																	30,337		46,930
Intangible assets																	534		912
Deferred income tax assets																	10,309		10,276
																	62,890		87,648
Liabilities
Current liabilities
	Accounts payable and other liabilities																6,547		6,300
	Current portion of long-term debt																1,500		1,500
	Current portion of finance leases																27		31
	Current portion of provisions																1,915		2,434
																	9,989		10,265
Finance leases																	38		34
Long-term debt																	9,726		10,849
Provisions																	8,096		3,540
																	27,849		24,688
Equity
Common share capital																	167,773		167,787
Warrants reserve																	3,151		3,151
Equity reserve																	3,137		2,926
Accumulated other comprehensive loss																	(82)		(91)
Deficit																	(138,938)		(110,813)
																	35,041		62,960
																	62,890		87,648

BIOX Corporation Condensed consolidated interim statements of cash flows Nine month periods ended June 30, 2014 and 2013 (Unaudited) (Expressed in thousands of Canadian dollars, except share and per share amounts)
								Nine months ended
								June 30,
								2014				2013
								$				$
Operating activities
	Net loss							(28,125)				(1,827)
	Add (less) items not involving cash
		Production facility depreciation and amortization						3,092				3,002
		Depreciation and amortization of equipment and intangible assets						272				282
		Financing costs						554				605
		Provision for unutilized tank storage						3,796				1,033
		Impairment of non-current assets						15,197				-
		Income taxes paid						-				18
		Unrealized foreign exchange gain						(122)				(458)
		Share-based compensation						211				269
		Accretion of asset retirement obligation						241				209
		Deferred income tax asset						(32)				(52)
								(4,916)				3,081
	Net change in non-cash working capital balances
		related to operations						2,209				6,612
								(2,707)				9,693
Investing activity
	Purchase of property, plant and equipment							(1,669)				(3,984)
	Disposals of property, plant and equipment							12				-
	Decrease in restricted cash							491				4,742
	Share repurchase							(14)				-
								(1,180)				758
Financing activities
	Payments on finance leases							(26)				(33)
	Proceeds from debt financing							-				2,415
	Repayment of debt financing							(1,125)				(1,125)
	Repayment of demand loan							-				(5,282)
	Financing charges							-				(2)
	Interest paid							(526)				(568)
								(1,677)				(4,595)
Effect of exchange rate changes on cash held in foreign currency								131				369
Net (decrease) increase in cash and cash equivalents during the period								(5,433)				6,225
Cash and cash equivalents, beginning of period								15,909				7,543
Cash and cash equivalents, end of period								10,476				13,768

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]