ORMI Reports Fiscal 2010 Year End and Fourth Quarter Results

TORONTO, Oct. 14 /CNW/ - Organic Resource Management Inc. ("ORMI" or "the Company"), today announced its financial results for the three and twelve-month periods ended June 30, 2010.

Fiscal 2010 Highlights:

• Increased total core business revenues by $1,411,000 or 11% over last year on a comparative basis.  Core business excludes the 2009 revenues related to the previously divested non-core assets included in last year's results. Total revenues of $13,720,000 in 2010 were up 2% from $13,494,000 last year when non-core revenues were included.
• Increased total gross margin to $5,607,000 or 41% of revenue for the year, up 16% from $4,850,000 or 36% of revenue for last year.
• Increased comparative net income by $590,000 to $677,000 or 678% over last year, excluding the gain on sale of non-core assets and related one-time costs included in 2009 results. Last year included a $1,708,000 one-time gain on the sale of non-core assets; as a result net income for 2010 of $677,000 was down 55% from $1,517,000 last year.
• Increased EBITDA to $2,025,000, up 50% from $1,353,000 last year.
• Increased cash flows from operations to $1,859,000 for the year, up 69% from $1,097,000 last year.

Q4 2010 Highlights:

• Increased total revenues to $3,486,000, up 6% from $3,281,000 for Q4 2009.
• Increased gross margin to $1,503,000, up 15% from $1,306,000 for Q4 2009.
• Increased net income to $144,000, up 414% from $28,000 for Q4 2009.
• Increased EBITDA to $547,000, up 39% from $393,000 for Q4 2009.
• Increased cash flows from operations to $556,000, up 57% from $355,000 for Q4 2009.

"2010 was a year of important accomplishments for ORMI, led by a significant improvement in operating results on virtually every front," said Charles Buehler, Chairman and Chief Executive Officer of ORMI. "2010 was the first full year that ORMI was completely focused on providing its core services of collecting, processing and recycling food-related organic residuals.  By the end of the year, 80% of the processed residuals we collected were used as Anaerobic Digester feedstock to generate renewable energy," continued Mr. Buehler. "At present, two of our five partner anaerobic digesters are running at full capacity and we expect the other three to be operational by Q3 2011.  When this occurs, it will mark the first time in our Company's history that we will experience an excess of residuals processing capacity. This will create an opportunity for us to expand our customer base - a situation that is eagerly awaited by our expanded sales department." 

"In July 2010, we purchased a property in Woodstock, Ontario," continued Mr. Buehler.  "We will develop this into our first combined liquid and solid food waste to renewable energy transfer station.  In addition to allowing us to provide more efficient service to our existing and new customers in southwestern Ontario, this transfer station will also allow us to receive solid food waste such as third-party-collected industrial, commercial and institutional source-separated "green-bin" organics. We believe that the Woodstock transfer station represents a unique organics recycling model that can potentially be replicated in other regions of North America."

"We have shown ORMI's resilience to economic downturn and we are more confident than ever that our corporate strategy is positioning ORMI to play a major role in the emerging food waste to renewable energy industry.  We are also confident that this will result in improved growth and shareholder value in the years to come." 

Fiscal 2010 Financial Results

Total revenues were $13,720,000 for the year ended June 30, 2010, an increase of $226,000 or 2% from $13,494,000 for the year ended June 30, 2009.  On a comparative basis adjusting for the sale of non-core assets in October 2008, total revenues were $1,411,000 or 11% higher than last year.

Total gross margin was $5,607,000 for the year ended June 30, 2010, an increase of $757,000 or 16% from $4,850,000 for the year ended June 30, 2009.  As a percentage of revenue, gross margin was 41% for the current year, up from 36% last year.  The improvement in gross margin was mainly due to the lower cost of recycling residuals at ADs as compared to composting facilities, lower truck operating costs and the impact of the sale of non-core assets which replaced lower margin non-core business with more profitable higher margin core business.  Fiscal 2009 results were also negatively impacted by approximately $150,000 in one-time costs related to the sale of non-core assets.

Total operating expense was $4,978,000 for the year ended June 30, 2010, an increase of $1,849,000 or 59% from $3,129,000 for the year ended June 30, 2009.  Last year's total operating expense includes a $1,708,000 gain on the sale of non-core assets in October 2008 and approximately $128,000 in related one-time costs.  Adjusting for these items, total operating expense was $269,000 or 6% higher in fiscal 2010 than in fiscal 2009 on a comparative basis.  This increase was mainly due to the senior management additions announced in Q4, as well as higher insurance and investor relations costs.  An income tax recovery of $48,000 was recorded in fiscal 2010 compared to a $204,000 provision for income taxes in fiscal 2009.

The net income was $677,000 for the year ended June 30, 2010, a decrease of $840,000 or 55% from $1,517,000 for the year ended June 30, 2009.  The decrease was due to the above noted items included in fiscal 2009 net income - the $1,708,000 gain on the sale of non-core assets less the $278,000 in related one-time costs.  Excluding these items, on a comparative basis net income increased by $590,000 or 678%, from $87,000 last year. 

EBITDA was $2,025,000 for the year ended June 30, 2010, an increase of $672,000 or 50% from $1,353,000 for the year ended June 30, 2009.

Cash flows from operating activities were $1,279,000 for the year ended June 30, 2010, an increase of $164,000 or 15% from $1,115,000 for the year ended June 30, 2009.  This increase was mainly due to a significant improvement in cash flows from operations of $762,000 or 69%, from $1,097,000 in fiscal 2009 to $1,859,000 in fiscal 2010, largely offset by the combined effect of an increase in accounts receivable and a decrease in accounts payable.

Q4 Financial Results

Total revenues were $3,486,000 for the quarter, an increase of $205,000 or 6% from $3,281,000 for the same period last year. Total gross margin was $1,503,000, an increase of $197,000 or 15% from total gross margin of $1,306,000 for the same period last year. Gross margin as a percentage of revenue was 43%, compared to 40% for the same period last year. The improvement in gross margin was mainly due to the lower cost of recycling residuals at ADs as compared to composting facilities.

Total operating expense was $1,396,000 for the quarter, an increase of $111,000 or 9% from $1,285,000 for the same period last year.  This increase was due to higher amortization costs and higher salaries following the addition of two senior management positions in the prior quarter.  An income tax recovery of $37,000 was also recognized in the current quarter compared to a recovery of $7,000 in the same period last year.

Net income was $144,000 for the quarter, an increase of $116,000 or 414% from a net income of $28,000 for the same period last year. 

EBITDA was $547,000 for the quarter, an increase of $154,000 or 39% from $393,000 for the same period last year.

Cash flows from operating activities were $286,000 for the quarter, a decrease of $32,000 or 10% from $318,000 for the same period last year.  This decrease was mainly due to a reduction in accounts payable which more than offset the increase in cash flows from operations. Cash flows from operations were $556,000, an increase of $201,000 or 57% from $355,000 for the same period last year.

Annual General and Special Meeting

The Company will be holding its annual general and special meeting on December 7, 2010, at 4:00 pm at the office of McMillan LLP, Suite 4400, BCE Place, Bay Wellington Tower, 181 Bay Street, Toronto, Ontario.

The comparative financial statements for the three and twelve months ending June 30, 2010 along with other information may be obtained through the Company's website at www.ormi.com, or on SEDAR at www.sedar.com.

This press release is available on the Company's official on-line investor relations site for investor commentary, feedback and questions.  Investors are asked to visit the investor relations section of the Company's website at www.ormi.com/ir/index.php. Alternatively, investors are asked to e-mail all questions and correspondence to [email protected] where they can also request addition to the Company's investor e-mail list to receive all future press releases and updates directly. 

About Organic Resource Management Inc.

Organic Resource Management is Canada's largest provider of vacuum truck services for the collection, processing and recycling of food-related organic residuals. ORMI services in excess of 6,500 regularly scheduled commercial, industrial, institutional and residential customers across Canada. Further information about ORMI may be obtained at the Company's web site at www.ormi.com.  

Non-GAAP Measures

The Company reports its financial results in accordance with GAAP. However, this press release contains references to certain non-GAAP financial measures such as "EBITDA" and "Cash Flows from Operations".  Non-GAAP financial measures are used by management to evaluate the performance of the Company.  Non-GAAP financial measures do not have any meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other reporting issuers.  Investors are cautioned that non-GAAP measures, such as those presented herein, should not be construed as an alternative to net income determined in accordance with GAAP as indicators of the Company's performance or to cash flows from operating activities as a measure of liquidity and cash flow.

EBITDA means earnings before income taxes, interest, share based compensation, amortization, the gain on sale of non-core assets, the write-down of property, plant and equipment, the write-down of intangible assets and goodwill, foreign exchange gains and dividends on preferred shares.  Cash Flows from Operations means cash flows from operating activities before changes in non-cash operating assets and liabilities.

Forward Looking Statements

Certain information contained in this press release may be forward-looking and therefore subject to unknown risks or uncertainties. The actual results, performance or achievements of Organic Resource Management Inc. may differ materially from the results, performance or achievements of the Company expressed or implied by such forward-looking statements.

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