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Press release from CNW Group

BIOX announces third quarter results

Thursday, August 04, 2011

BIOX announces third quarter results07:00 EDT Thursday, August 04, 2011TSX symbol: BXTORONTO, Aug. 4, 2011 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company that designs, builds, owns and operates biodiesel production facilities, today announced its fiscal 2011 third quarter (Q3 2011) financial results for the three-month period ended June 30, 2011.HighlightsProduction of methyl esters was 15.2 million litres in Q3 2011 compared to 14.4 million litres in Q3 2010Sales were $24,490,000 in Q3 2011 compared to $6,581,000 in Q3 2010Operating loss was $431,000 in Q3 2011 compared to $5,604,000 in Q3 2010Operating income prior to non-cash items(1) was $675,000 in Q3 2011 compared to an operating loss prior to non-cash items of $4,546,000 in Q3 2010Net loss was $2,473,000 in Q3 2011 compared to $6,024,000 in Q3 2010Loss per share was $0.05 in Q3 2011 compared to $0.13 in Q3 2010Identified the site for a second proposed production facility to be located in the U.S. and completed primary site due diligence and site planningAnnounced planned upgrades to the Hamilton facility to capture the full value and margin contribution of glycerin, a by-product of biodiesel production, subsequent to the end of the periodSecured a new term debt facility from Farm Credit Canada to replace the existing facility and fund the glycerin refinement upgrades, subsequent to the end of the periodThe Government of Canada implemented a 2% average minimum volume of renewable fuel requirement for diesel and heating oil effective July 1, 2011The U.S. Environmental Protection Agency recommended an increase to the minimum volume of Biomass-based diesel from the current level of 0.8 billion U.S. gallons in 2011 to 1 billion U.S. gallons in 2012 and 1.3 billion U.S. gallons in 2013"The value of our biodiesel is increasing as evidenced by our Q3 sales. Biodiesel prices are responding to demand from U.S. refineries and importers that are obligated to meet the minimum blending mandate," said Kevin Norton, Chief Executive Officer (Acting) of BIOX Corporation. "And the underlying fundamentals of the North America biodiesel market continue to improve. The relevant U.S. authority has recommended increasing the current minimum volume of Biomass-based diesel by 63 percent by 2013. Canada has joined the U.S. in establishing a mandated renewable fuels market for diesel. These positive developments support our planned expansion. As such, we have identified the site of our next proposed facility, which is located in the U.S., and we are working to finalize commercial terms for the land lease and required infrastructure."Financial HighlightsSales were $24.5 million and $74.3 million, respectively, for the three-month and nine-month periods ended June 30, 2011, compared with $6.6 million and $33.0 million for the corresponding periods in 2010. The increase was primarily the result of a produce and store strategy the Company implemented during the third quarter of fiscal 2010, the sale of 2.6 million litres of biodiesel acquired from third parties during the third quarter of 2011, and higher revenue per litre of biodiesel sold.Direct expenses were $22.0 million and $64.8 million, respectively, for the three-month and nine-month periods ended June 30, 2011, compared with $9.4 million and $32.6 million for the corresponding periods in 2010.  The increase in direct expenses in 2011 was due to higher sales volumes and higher cost per litre sold as a result of changes in commodity prices, primarily the price of feedstock.General and administrative expenses were $1.8 million and $5.6 million, respectively, for the three-month and nine-month periods ended June 30, 2011, compared with $1.7 million and $4.4 million for the corresponding periods in 2010. The increase in the nine-month period is due in part to $0.4 million of non-recurring costs related to the CEO transition during the second quarter of 2011 and the administrative costs and professional fees as a result of BIOX becoming a public company on March 1, 2010.Operating income (loss) was $(0.4) million and $0.6 million, respectively, for the three-month and nine-month periods ended June 30, 2011, compared with $(5.6) million and $(7.2) million for the corresponding periods in 2010. The increase in operating income during the three and nine-month periods in 2011 was primarily due to higher sales which were partially offset by increased direct cost of sales per litre.Operating income (loss) prior to non-cash itemswas $0.7 million and $3.9 million, respectively, for the three-month and nine-month periods ended June 30, 2011, compared with $(4.5) million and $(4.0) million for the corresponding periods in 2010.Combined operating income (loss) prior to non-cash items for BIOX's wholly-owned subsidiaries, BIOX Canada Limited and BIOX USA Limited, was $2.2 million and $8.8 million, respectively, for the three-month and nine-month periods ended June 30, 2011, compared with $(3.1) million and $(0.3) million for the corresponding periods in 2010.Net loss and comprehensive loss was $2.5 million or $0.05 per share and $2.7 million or $0.06 per share, respectively, for the three-month and nine-month periods ended June 30, 2011, compared with $6.0 million or $0.13 per share and $13.0 million or $0.40 per share for the corresponding periods in 2010. The change in the three-month period was primarily due to higher sales, which were partially offset by increased direct cost of sales per litre and a $1.7 million one-time write-off of costs related to the second proposed Hamilton site, including costs related to the ecoENERGY for Biofuels program application.As at June 30, 2011, BIOX's available cash position amounted to $26.6 million, which consisted of cash and cash equivalents and short-term investments, compared with $21.5 million on September 30, 2010. Working capital as of June 30, 2011, was $32.8 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, including the construction and commissioning of a second minimum 67 million litre per annum nameplate capacity production facility as detailed in the Expansion Plans section below (subject to certain assumptions which are detailed in the Company's management's discussion and analysis for the three and nine months ended June 30, 2011).As at June 30, 2011, the Company had 45,748,691 common shares outstanding, as well as outstanding stock options to purchase 1,150,000 common shares and share purchase warrants to acquire up to 1,982,143 common shares.OutlookU.S. Renewable Fuels StandardEffective July 1, 2010, the expanded Renewable Fuels Standard ("RFS2") specifically provides for a renewable component in U.S. diesel fuel. RFS2 required the use of 500 million gallons of Biomass-based diesel in 2009, increasing to 1 billion gallons in 2012. From 2012 through 2022, a minimum of 1 billion U.S. gallons must be used domestically each year, and the Administrator of the U.S. Environmental Protection Agency ("EPA") has the authority to increase the minimum volume requirement. The EPA has recommended that the minimum volume of Biomass-based diesel be increased to 1.3 billion U.S. gallons in 2013, with the 2012 and 2013 minimum volumes to be confirmed in November, 2011.BIOX's wholly-owned subsidiaries are registered 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 Renewable Identification Numbers ("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. 1.5 RINs are issued per U.S. gallon of Biomass-based diesel sold in the U.S.Expansion PlansThe increased demand for biodiesel as a result of RFS2 in the U.S. has had a positive impact on pricing. This impact is reflected by the rise in value of RINs, the RFS2 compliance mechanism, to $1.39 as of August 2, 2011. The mandated biodiesel minimum volume requirement in the U.S., including the potential for that minimum volume to increase, is an important step in the evolution of a sustainable biodiesel industry.As such, BIOX is proceeding with its expansion plans. The Company has identified the site for a second proposed BIOX production facility to be located in the U.S. BIOX has completed primary site due diligence and site planning and has concluded that the site is suitable for a BIOX production facility. The Company has also executed a non-binding memorandum of understanding with the owner of the site and is working on finalizing commercial terms for the land lease, long term tank rentals, terminal services and other infrastructure requirements.ecoENERGYIn March 2011, Natural Resources Canada ("NRCan") informed BIOX that partial incentive funding was available from the ecoENERGY for Biofuels program for the second proposed Hamilton facility. In June 2011, the Company informed NRCan that given the program delays it is not possible for BIOX to meet the program's September 30, 2012 construction completion deadline. The Company has determined that the specific site in Hamilton, Ontario is no longer the ideal location for a second BIOX facility and therefore all costs related to the proposed Hamilton site, including costs related to the ecoENERGY for Biofuels program application, have been written off as described in the net loss section of the Financial Highlights above.Canadian Renewable Fuel Content RegulationsIn August 2010, the Canadian federal government enacted regulations that require an average renewable fuel content to be blended into gasoline, diesel fuel and heating oil.  The compliance period for the 5% renewable content requirement in gasoline is December 15, 2010 to December 31, 2012. The compliance period for the 2% renewable fuel content requirement in diesel fuel and heating oil is July 1, 2011 to December 31, 2012. BIOX's biodiesel qualifies as renewable content and can therefore be used to comply with the 2% renewable requirement for diesel and heating oil.Notice of Conference CallBIOX will hold a conference call today, August 4, 2011, at 9:00 a.m. ET hosted by Mr. Kevin Norton, Chief Executive Officer (Acting) and Mr. Chris Clinning, Chief Financial Officer, to discuss BIOX'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 86744380. 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 net income (loss) determined in accordance with Canadian generally accepted accounting principles as an indicator of BIOX's performance.Reconciliation of Non-GAAP MeasuresThe following table presents a reconciliation of operating income (loss) prior to non-cash items to net income (loss) for the three months and nine months ended June 30, 2011 and 2010:(in thousands) Three months endedJune 30Nine months endedJune 30       20112010  20112010Operating income (loss) before non-cash items$675$(4,546)$3,904$(4,036)     Production facility depreciation and amortization$(1,024)$(985)$(3,071)$(2,934)     Amortization of furniture, equipment and intangibles$(82)$(73)$(249)$(219)     Operating income (loss)$(431)$(5,604)$584$(7,189)     Other income and expenses$(2,042)$(420)$(3,261)$(5,856)     Net income (loss)$(2,473)$(6,024)$(2,677)$(13,045)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 North American (ASTM D-6751) 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 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. Financial tables attached:BIOX Corporation       Consolidated statements of operations and comprehensive loss  (Unaudited)       (All dollar amounts are expressed in thousands, except share and per share amounts)          Three months ended     Nine months ended         June 30     June 30      2011  2010 2011  2010      $   $   $   $             Sales 24,490  6,581 74,341  32,989            Cost of sales        Direct expenses22,003  9,426 64,802  32,590 Production facility         depreciation and amortization1,024  985 3,071  2,934     23,027  10,411 67,873  35,524            Gross margin1,463  (3,830) 6,468  (2,535)            Operating expenses        General and administrative1,812  1,701 5,635  4,435 Amortization of furniture,         equipment and intangibles82  73 249  219     1,894  1,774 5,884  4,654            Operating (loss) income(431) (5,604) 584  (7,189)            Other expenses        Stock-based compensation116  60 261  80 Interest and fees on loans155  160 484  511 Financing10  13 31  48 Expansion planning and          development1,698  100 1,904  466 Disposal of property, plant and equipment-  103 -  145 Loss on foreign exchange120  26 720  175 Valuation of warrants-  - -  3,861 Costs related to the qualifying transaction-  6 -  634     2,099  468 3,400  5,920            Net loss before interest income2,530  6,072 2,816  13,109Interest income(57) (48) (139) (64)Net loss and comprehensive loss        for the period2,473  6,024 2,677  13,045            Basic and diluted loss per common share0.05  0.13 0.06  0.40            Weighted average number of        common shares  45,748,691    45,748,691   45,748,691    32,461,400 BIOX Corporation       Consolidated statements of deficit      (Unaudited)       (All dollar amounts are expressed in thousands)              Three months ended     Nine months ended         June 30     June 30      2011  2010 2011  2010      $   $   $   $             Deficit, beginning of period91,547  82,358 91,343  75,337Net loss for the period2,473  6,024 2,677  13,045Deficit, end of period94,020  88,382 94,020  88,382 BIOX Corporation   Consolidated balance sheets   (Unaudited)   (All dollar amounts are expressed in thousands)         At   At       June 30,   September 30,      2011  2010      $   $         Assets    Current assets    Cash and cash equivalents26,595  21,470 Accounts receivable6,585  3,475 Prepaid expenses and sundry assets1,092  984 Inventory10,398  13,752     44,670  39,681        Restricted cash1,173  1,173Property, plant and equipment, net 54,053  57,758Intangible assets, net1,209  1,308     101,105  99,920        Liabilities    Current liabilities    Accounts payable and accrued liabilities6,295  6,024 Demand loan4,180  - Current portion of long-term debt1,380  1,380     11,855  7,404        Long-term debt8,662  9,666Asset retirement obligation2,213  2,059     22,730  19,129        Shareholders' equity   Capital stock167,787  167,787Warrants3,151  3,151Contributed surplus1,457  1,196Deficit (94,020) (91,343)     78,375  80,791     101,105  99,920 BIOX Corporation       Consolidated statements of cash flows       (Unaudited)       (All dollar amounts are expressed in thousands)               Three months ended     Nine months ended         June 30,     June 30,      2011  2010 2011  2010      $   $   $   $             Operating activities        Net loss for the period(2,473) (6,024) (2,677) (13,045) Add items not involving cash         Amortization of property, plant and          equipment and intangible assets1,106  1,058 3,320  3,153  Amortization of deferred financing charges10  10 31  31  Unrealized foreign exchange loss340  - 340  -  Stock-based compensation116  60 260  80  Accretion of asset retirement obligation52  47 154  140  Interest on debt financing-  52 -  52  Valuation of warrants-  - -  3,861  Write off of site specific costs1,700  - 1,700  -  Non-cash disposal of property,          plant and equipment-  103 -  145     851  (4,694) 3,128  (5,583)              Net change in non-cash working capital          balances related to operations(834) (4,932) 558  (3,974)     17  (9,626) 3,686  (9,557)            Investing activity        Purchase of property, plant and equipment, net(466) (903) (1,366) (1,595)     (466) (903) (1,366) (1,595)            Financing activities        Proceeds from debt financing-  - -  1,380 Repayment of debt financing (345) (345) (1,035) (2,415) Proceeds from (repayment of) demand          loan4,180  10 4,180  (565) Proceeds from issuance of common shares -  - -  46,700 Share issuance costs-  - -  (2,518)     3,835  (335) 3,145  42,582            Effect of exchange rate on cash held in        foreign currency(340) - (340) -            Net increase in cash and cash equivalents         during the period3,046  (10,864) 5,125  31,430Cash and cash equivalents, beginning of period23,549  42,496 21,470  202Cash and cash equivalents, end of period26,595  31,632 26,595  31,632            Supplemental cash flow information        Interest paid158  180 484  607     For further information: BIOX Corporation Chris Clinning Chief Financial Officer Phone: (905) 337-4970 E-mail: cclinning@bioxcorp.com Investor Relations Ross Marshall TMX Equicom Phone: (416) 815-0700 ext. 238 E-mail: rmarshall@equicomgroup.com