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Press release from CNW Group

BIOX announces third quarter results

Monday, August 09, 2010

BIOX announces third quarter results07:00 EDT Monday, August 09, 2010TSX symbol: BXTORONTO, Aug. 9 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company that designs, builds, owns and operates biodiesel production facilities, today announced its 2010 third quarter financial results (Q3 2010) for the period ended June 30, 2010.Highlights << - Production of methyl esters was 14.4 million litres in Q3 2010 compared to 12.1 million litres in the third quarter of 2009 (Q3 2009) - Sales were $6,581,000 in Q3 2010, compared to $10,837,000 in Q3 2009, as a result of the expiry of the U.S. federal excise tax incentive and the delayed sale of product into the fourth quarter of fiscal 2010 related to the expanded U.S. Renewable Fuel Standard (RFS2) that commenced on July 1, 2010 - Operating loss was $5,604,000 in Q3 2010 compared to $1,167,000 in Q3 2009 - Operating loss prior to non-cash items(1) was $4,546,000 in Q3 2010 compared to $189,000 in Q3 2009 - Net loss was $6,024,000 in Q3 2010 compared to $1,547,000 in Q3 2009 - Loss per share was $0.13 in Q3 2010 compared to $0.07 in Q3 2009 - On July 1, 2010 the expanded U.S. RFS2 commenced on schedule establishing a minimum volume requirement of 800 million U.S. gallons of Biomass-based diesel for 2011, for which BIOX is registered and eligible to supply. - BIOX received notification from Natural Resources Canada (NRCan) that its application under the ecoENERGY for Biofuels program for a second 67 million litre nameplate capacity facility in Hamilton has progressed to a full merit-based assessment based on its advanced state of readiness. >> "The longer term market dynamics for renewable fuels is becoming increasingly clear with the implementation of RFS2 in the U.S. Over the coming months we expect to see the fundamentals for biodiesel demand gain traction now that traditional refiners and importers are obligated to actively participate in the biodiesel market in order to meet the requirement to blend 1.145 billion U.S. gallons in 2010 and 2011. As a registered renewable producer and importer, BIOX is in an excellent position to capitalize on these improving fundamentals. Our Hamilton facility continues to successfully produce within our target range. For the first time since we initiated production we are storing increased levels of product as inventory to optimize the price we receive given the impact of the expiry of the U.S. federal excise tax incentive and the recent implementation of RFS2. We have secured sales contracts for our remaining Q3 2010 inventory and we intend to continue to monitor the market and be opportunistic in our sales approach as the mandates take effect, utilizing storage and/or selling product as it benefits us," said Tim Haig, President and CEO of BIOX Corporation.Financial HighlightsSales were $6.6 million and $33.0 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared to $10.8 million and $32.8 million for the corresponding periods in 2009. The change in sales is primary a result of the impact of the expiry of the U.S federal excise tax incentive and the delayed sale of product into the fourth quarter of fiscal 2010 to capitalize upon BIOX USA Limited's registration in early July as a Renewable Fuel Importer and Renewable Identification Number (RIN) generator. During the quarter, BIOX sold biodiesel that included $1.6 million of contingent revenue that cannot be recognized unless and until the U.S. biodiesel tax incentive is reinstated retroactively.Direct expenses were $9.4 million and $32.6 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared with $9.9 million and $30.6 million for the corresponding periods in 2009. Direct expenses include a $1.4 million write down of finished goods inventory to market value, calculated excluding the U.S. $1 per U.S. gallon related to the biodiesel tax incentive that has not been reinstated.General and administrative expenses were $1.7 million and $4.4 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared to $1.1 million and $3.7 million for the corresponding periods in 2009. The change is primarily due to additional administrative costs and professional fees as a result of BIOX becoming a public company on March 1, 2010.Operating loss was $5.6 million and $7.2 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared with $1.2 million and $4.8 million for the corresponding periods in 2009. The change in operating loss is primarily the result lower sales during the three-month period ended June 30, 2010 as described above, due to the impact of the expiry of the U.S. federal excise tax incentive and the delayed sale of product into the fourth quarter of fiscal 2010 to capitalize upon BIOX USA Limited's registration in early July as a Renewable Fuel Importer and Renewable Identification Number (RIN) generator.Operating loss prior to non-cash items(1) was $4.5 million and $4.0 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared with $0.2 million and $1.6 million for the corresponding periods in 2009.Operating loss prior to non-cash items for BIOX Canada Limited (BIOX Canada) was $3.1 million and $0.4 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared with operating income prior to non-cash items of $0.9 million and $1.6 million for the corresponding periods in 2009.Net loss and comprehensive loss was $6.0 million or $0.13 per fully diluted share and $13.0 million or $0.40 per share, respectively, for the three-month and nine-month periods ended June 30, 2010 compared with $1.5 million or $0.07 per share and $6.3 million or $0.29 per share for the corresponding periods in 2009.As at June 30, 2010, BIOX's available cash position amounted to $31.6 million, which consisted of cash and cash equivalents and short-term investments, compared with $0.2 million on September 30, 2009.As at August 6, 2010, BIOX had 45,748,690 common shares outstanding, as well as options to purchase 525,000 common shares, and share purchase warrants to acquire up to 1,982,143 common shares.OutlookU.S. Renewable Fuels StandardThe U.S. Environmental Protection Agency (EPA) implemented the expanded RFS2 as of July 1, 2010. RFS2 requires the use of 500 million U.S. gallons of Biomass-based diesel in 2009, increasing to 1 billion U.S. gallons in 2012. From 2012 through 2022, a minimum of 1 billion U.S. gallons annually must be used domestically, and the Administrator of the EPA has the authority to increase the minimum volume requirement. In June 2010, the EPA proposed 2011 overall volumes and standards, including a minimum 1.35 billion U.S. gallons of advanced Biofuels which results in a minimum 800 million U.S. gallons of Biomass-based diesel in U.S. diesel fuel. BIOX believes that the implementation of the expanded RFS2 will have a positive impact on the demand for biodiesel in the U.S.In early July 2010, BIOX's wholly owned subsidiaries completed registrations with the EPA as a Foreign Renewable Fuel Producer (BIOX Canada Limited), and as a Renewable Fuel Importer and RIN Generator (BIOX USA Limited). Registration under RFS2 provides BIOX with access to the U.S. renewable fuels market, including the ability to generate biodiesel RINs which are required for obligated parties in the U.S., which includes all refiners and importers of transportation fuel, to show compliance with RFS2.With the implementation of RFS2, the value of RIN's has increased significantly. BIOX intends to be opportunistic in its sales approach in the near term and sell its biodiesel when prices warrant, and will otherwise store biodiesel for sale at a future date anticipating higher values as a result of the implementation of RFS2 and/or the reinstatement of the biodiesel tax incentive.U.S. Federal Excise Tax IncentiveThe U.S. federal excise tax incentive, referred to as the biodiesel tax incentive, expired on December 31, 2009. Despite delays, legislators continue to indicate that their goal is to pass legislation that would include the biodiesel tax incentive. BIOX believes that any reinstatement of the biodiesel tax incentive will be delayed until the fall of 2010 and that it is possible the program will not be reinstated at all.Expansion PlansBIOX has submitted two applications to NRCan for the inclusion of additional 67 million litre nameplate capacity production facilities in the ecoENERGY for Biofuels program. The applications outline BIOX's plans for new production facilities in Hamilton, Ontario and Montreal, Quebec. On June 17, 2010, BIOX received notice from NRCan that the Hamilton application for the ecoENERGY program had successfully demonstrated an advanced state of readiness, and that the application would undergo a full merit-based assessment against all program criteria. NRCan has indicated that it is aiming to make final program decisions based on highest ranked projects, by fuel type, subject to funding availability and volume targets, in the summer of 2010. BIOX has not received notification regarding the status of other ecoENERGY application for Montreal.Due to the delay in the final program decisions regarding ecoENERGY and the uncertainty of biodiesel incentives in the U.S., BIOX has deferred significant commitments on its plant 2 expansion. Significant capital commitments will not be made until clarification is received regarding the ecoENERGY program and improved margins are realized in BIOX's current base business as a result of the implementation of RFS2 and/or the reinstatement of the biodiesel tax incentive. This deferral will delay the completion date of a second BIOX facility. The extent of the delay will be a function of the timing of NRCan's decision with respect to the inclusion of a second BIOX plant in the ecoENERGY program, and improved market conditions for the sale of biodiesel.Notice of Conference CallBIOX will hold a conference call today, August 9, 2010, at 9:00 a.m. ET hosted by Mr. Tim Haig, President and Chief Executive Officer and Mr. Chris Clinning, Chief Financial Officer to discuss the Company's financial results and corporate developments. To access the conference call by telephone, dial (647) 427-7450 or (888) 231-8191. To access the telephone replay, dial (416) 849-0833 or (800) 642-1687 and enter reservation number 91992453. 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-GAAP 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 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 operating income (loss) determined in accordance with Canadian generally accepted accounting principles as an indicator of BIOX's performance. For a reconciliation of operating income (loss) prior to non-cash items to operating income (loss) determined in accordance with GAAP, refer to BIOX's Management's Discussion and Analysis for Q3 2010 filed on SEDAR at www.sedar.com.About BIOX CorporationBIOX is a renewable energy company that designs, builds, owns and operates biodiesel production facilities. BIOX currently owns and operates a biodiesel production facility in Hamilton, Ontario, Canada with a nameplate capacity of 67 million litres per year. 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 both North American (ASTM D-6751) and European (EN 14214) quality standards. BIOX is Canada's largest biodiesel producer and is focused on building, owning and operating a network of commercial scale biodiesel production facilities in jurisdictions where clearly defined renewable fuel standards policies exist.Forward-looking StatementsCertain 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. 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, including inclusion of BIOX's second production plant in the ecoENERGY for Biofuels Program and resolution of the uncertainty surrounding the U.S biodiesel tax incentive; 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). 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. << BIOX Corporation Consolidated statements of operations and comprehensive loss (All dollar amounts are expressed in thousands, except share and per share amounts) (unaudited) Three months ended Nine months ended June 30 June 30 ----------------------- ----------------------- 2010 2009 2010 2009 ------------------------------------------------------------------------- $ $ $ $ Sales 6,581 10,837 32,989 32,750 ------------------------------------------------------------------------- Cost of sales Direct expenses 9,426 9,900 32,590 30,644 Production facility depreciation and amortization 985 956 2,934 2,856 ------------------------------------------------------------------------- 10,411 10,856 35,524 33,500 ------------------------------------------------------------------------- Gross margin (3,830) (19) (2,535) (750) ------------------------------------------------------------------------- Operating expenses General and administrative 1,701 1,126 4,435 3,702 Amortization of furniture, equipment and intangible assets 73 22 219 348 ------------------------------------------------------------------------- 1,774 1,148 4,654 4,050 ------------------------------------------------------------------------- Operating loss 5,604 1,167 7,189 4,800 ------------------------------------------------------------------------- Other expenses Stock-based compensation 60 72 80 647 Interest and fees on loans 160 204 511 821 Financing and accretion 13 10 48 151 Expansion planning and development 100 - 466 - Disposal of property, plant and equipment 103 - 145 - Loss (gain) on foreign exchange 26 96 175 (160) Valuation of warrants - - 3,861 - Costs related to the qualifying transaction 6 - 634 - ------------------------------------------------------------------------- 468 382 5,920 1,459 ------------------------------------------------------------------------- Net loss before interest income 6,072 1,549 13,109 6,259 Interest income (48) (2) (64) (9) ------------------------------------------------------------------------- Net loss and comprehensive loss for the period 6,024 1,547 13,045 6,250 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted loss per common share 0.13 0.07 0.40 0.29 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of common shares 45,748,690 21,747,066 32,461,400 21,747,066 ------------------------------------------------------------------------- ------------------------------------------------------------------------- BIOX Corporation Consolidated statements of deficit (All dollar amounts are expressed in thousands) (unaudited) Three months ended Nine months ended June 30 June 30 ----------------------- ----------------------- 2010 2009 2010 2009 ------------------------------------------------------------------------- $ $ $ $ Deficit, beginning of period 82,358 74,395 75,337 69,692 Net loss for the period 6,024 1,547 13,045 6,250 ------------------------------------------------------------------------- Deficit, end of period 88,382 75,942 88,382 75,942 ------------------------------------------------------------------------- ------------------------------------------------------------------------- BIOX Corporation Consolidated balance sheets (All dollar amounts are expressed in thousands) (unaudited) At At June 30 September 30 2010 2009 ------------------------------------------------------------------------- $ $ Assets Current Cash and cash equivalents 31,632 202 Accounts receivable 4,267 9,094 Prepaid expenses and sundry assets 1,124 556 Inventory 6,971 3,729 ------------------------------------------------------------------------- 43,994 13,581 Restricted cash 1,173 1,173 Property, plant and equipment, net 58,211 58,728 Intangible assets, net 1,341 1,440 ------------------------------------------------------------------------- 104,719 74,922 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current Accounts payable and accrued liabilities 6,653 10,452 Demand loan 980 1,545 Current portion of long-term debt 1,380 1,380 ------------------------------------------------------------------------- 9,013 13,377 Long-term debt 10,001 11,059 Asset retirement obligation 2,012 1,872 ------------------------------------------------------------------------- 21,026 26,308 ------------------------------------------------------------------------- Shareholders' equity Capital stock 167,787 122,668 Warrants 3,152 - Contributed surplus 1,136 1,283 Deficit (88,382) (75,337) ------------------------------------------------------------------------- 83,693 48,614 ------------------------------------------------------------------------- 104,719 74,922 ------------------------------------------------------------------------- ------------------------------------------------------------------------- BIOX Corporation Consolidated statements of cash flows (All dollar amounts are expressed in thousands) (unaudited) Three months ended Nine months ended June 30 June 30 ----------------------- ----------------------- 2010 2009 2010 2009 ------------------------------------------------------------------------- $ $ $ $ Cash provided by (used in): Operating activities Net loss for the period (6,024) (1,547) (13,045) (6,250) Add items not involving cash Amortization of property, plant and equipment and intangible assets 1,058 978 3,153 3,204 Amortization of deferred financing charges 10 10 31 73 Debenture accretion - - - 78 Stock-based compensation 60 72 80 647 Accretion of asset retirement obligation 47 43 140 128 Interest on debt financing 52 56 52 56 Valuation of warrants - - 3,861 - Non-cash disposal of property, plant and equipment 103 - 145 - ------------------------------------------------------------------------- (4,694) (388) (5,583) (2,064) Net change in non-cash working capital balances related to operations (3,459) (71) (1,803) 259 ------------------------------------------------------------------------- (8,153) (459) (7,386) (1,805) ------------------------------------------------------------------------- Investing activities Purchase of property, plant and equipment, net (2,376) (800) (3,766) (1,846) Increase in restricted cash - (1,173) - (1,173) ------------------------------------------------------------------------- (2,376) (1,973) (3,766) (3,019) ------------------------------------------------------------------------- Financing activities Proceeds from debt financing - - 1,380 13,800 Repayment of secured debentures - - - (13,600) Repayment of debt financing (345) (345) (2,415) (690) Proceeds from (repayment on) demand loan 10 2,590 (565) 2,590 Financing charges - - - (411) Proceeds from issuance of common shares - - 46,700 6 Share issuance costs - - (2,518) - ------------------------------------------------------------------------- (335) 2,245 42,582 1,695 ------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents during the period (10,864) (187) 31,430 (3,129) Cash and cash equivalents, beginning of period 42,496 475 202 3,417 ------------------------------------------------------------------------- Cash and cash equivalents, end of period 31,632 288 31,632 288 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplemental cash flow information Interest paid 180 196 607 725 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> For further information: BIOX Corporation: Chris Clinning, Chief Financial Officer, Phone: (905) 337-4970, E-mail: cclinning@bioxcorp.com; Investor Relations: Ross Marshall, The Equicom Group Inc., Phone: (416) 815-0700 ext. 238, E-mail: rmarshall@equicomgroup.com