The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from Marketwire

Viridis Energy Inc. Reports First Quarter 2012 Financial Results

Friday, June 01, 2012

Viridis Energy Inc. Reports First Quarter 2012 Financial Results14:03 EDT Friday, June 01, 2012VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 1, 2012) - Viridis Energy Inc. ("Viridis" or the "Company") (TSX VENTURE:VRD) (OTCQX:VRDSF), a "Cleantech" manufacturer and distributor of alternative energy providing waste biomass fuel to global residential and industrial markets, today reported financial results for its first quarter ended March 31, 2012. During the quarter, Viridis increased its production capacity by over 150 percent through its acquisition of the largest wood pellet manufacturing plant in Atlantic Canada. On February 6, 2012, Viridis acquired the assets of Enligna Canada, a 110,000 ton capacity plant in Nova Scotia, and renamed this facility Scotia Atlantic Biomass Company Limited ("Scotia Atlantic"). Viridis expects to resume production during the second quarter of this year. To accomplish the acquisition in light of the short time to closing, the Company, through its Subsidiary, obtained a $2.4 million short-term bridge loan. During the first quarter of 2012, Viridis generated revenue of $2.4 million. Sales of the home heating business in North America were slow due to the abnormally warm winter. In comparison, Viridis generated revenue of $2.7 million during the same period of 2011, and $3.5 million during the fourth quarter of 2011. The domestic home heating business, which is generally higher margin business, represented 26% of total revenue, down from 52% during the same period last year. Also impacting the year-to-year comparison is a shift in contract arrangements with certain customers in which the cost of freight, usually borne by the Company and recovered in the sales price, was paid directly by the customer, distorting the year-to-year sales comparison. As the Company further diversifies its revenue base with commercial energy generators and other industrial users, it expects to continue to see a reduction in the seasonal revenue fluctuations. The Company also anticipates sequential revenue growth acceleration as its recently acquired manufacturing capacity in Nova Scotia begins production in preparation for the fall/winter season.The Company reported a comprehensive net loss of $(1.2) million or $(0.03) per basic share for the first quarter 2012 compared to a comprehensive net loss of $(714,000) or $(0.02) per basic share for the comparable 2011 period and a comprehensive net loss of $(989,000) or $(0.03) per basic share for the prior fourth quarter 2011. The increased loss during the current first quarter reflects financing costs and other start-up costs associated with Scotia Atlantic, offset by 24 percent decrease in operating expenses.The Company's gross profit during first quarter 2012 of $151,000 or 6.2 percent of total revenue, compared to $113,000 or 3.2 percent during the fourth quarter of 2011. The increase in gross margin from the prior quarter reflects the shift in contract arrangements with certain customers to a Freight on Board (FOB) mill price. The Company's gross profit during the first quarter of 2011 was $613,000 or 23 percent of revenue. The Company is working on securing long term fibre source contracts that will ensure a sufficient supply and stabilize pricing. The current quarter was also adversely impacted by the inclusion of costs associated with the production staff of recently acquired Scotia Atlantic, which is scheduled to begin production late in the second quarter 2012. Operating expenses during first quarter 2012 totaled $969,000, a decrease of approximately $217,000 or 24 percent from the prior year's first quarter and a decrease of $35,000 or 3 percent from the fourth quarter of 2011. Viridis management has been closely managing its operational costs and succeeded in reducing aggregate compensation costs and associated employee benefits, in addition to achieving lower freight costs through bulk shipping, a more efficient on-site bagging at the destination. Viridis expects to achieve further costs efficiencies as it achieves economies of scale with its increased production capacity to accommodate growing industrial demand, especially overseas.Interest expense (inclusive of bank charges) for the first quarter was approximately $337,000, which compares to interest expense of approximately $118,000 during first quarter 2011 and interest expense of $238,000 during the prior fourth quarter 2011. The increase in interest expense in the current quarter was primarily due to the bridge loan needed to complete the acquisition of Scotia Atlantic Biomass assets. At March 31, 2012, the Company had accounts receivable of approximately $966,000, representing a DSO of 36 days, well within manageable levels, inventory of $729,000 and total assets of $17.4 million, an increase of approximately $2.0 million from the beginning of the quarter. The increase in assets is primarily due the inclusion of acquired assets of Scotia Atlantic. At the end of the first quarter 2012, Viridis had current liabilities of $8.2 million, an increase of $3.1 million from year-end 2011 primarily reflecting the bridge loan of $2.4 million required to complete the acquisition of Scotia Atlantic. Long term debt was unchanged at $3.8 million and shareholder equity ended the quarter at $5.3 million, a decrease of approximately $1.2 million from year-end 2011.The number of common shares at March 31, 2012 and March 31, 2011 were 41.3 million and 30.3 million, respectively. The year-over-year increase in the shares outstanding was due to the private placements conducted by the Company during the second and third quarters of 2011. As of March 31, 2011, Viridis had approximately 17.8 million warrants, of which 5.5 million expired on May 20, 2012, and 1.1 million options. The exercise of all warrants and options outstanding as of the date of this announcement would generate approximately $7.2 million of additional capital to the Company. "We have been working on many fronts to position Viridis' role in the growing alternative energy industry. As commercial demands mounts, especially overseas, industrial users will seek long term off-take commitments to ensure sufficient supply of wood pellets. While this development improves long-term planning, it also requires initiative to elevate production capacity and secure raw material sources to participate in the growth," commented Christopher Robertson, Viridis' chief executive officer. "Excluding acquisition costs, we have already begun investment in restoring Scotia Atlantic Biomass to operating condition. We have also begun staffing the facility, which we expect will initially have a team of 24. We are on schedule to start operations late in the second quarter and plan to be in full scale production by year-end."Mr. Robertson added, "Viridis' position in the industry has afforded it access to wood pellet demand, worldwide. As we develop our production capacity to effectively address the demand for a renewable energy source, we recognize an immediate opportunity to augment our revenue through wholesale dealing. This activity serves to solidify our position as a 'go to' source for wood pellets, further develops our relationships with existing and new customers, and, importantly, augments our P&L with high margin revenue. We look forward to nurturing this business as we work to expand our production capacity in strategic locations, worldwide." About Viridis Energy Inc. Viridis Energy Inc. (TSX VENTURE:VRD) is a publicly traded, "Cleantech" alternative energy company specializing in wood biomass. Headquartered in Vancouver, B.C., Viridis Energy operates Cypress Pacific Marketing, Okanagan Pellet Company and Scotia Atlantic Biomass, thus providing the company with vertical integration for distribution and manufacturing as well as coast to coast national presence. For more information on Viridis Energy Inc. please refer to the company website at www.viridisenergy.ca.Forward-looking StatementsCertain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company's future operations. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management's current views and are based on certain expectations, estimates and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a continued downturn in general economic conditions in North America and internationally, (2) the inherent uncertainties associated with the demand for biofuels, (3) the risk that the Company does not execute its business plan, (4) inability to finance operations and growth (5) inability to finance the start-up operations in Nova Scotia in a timely manner (6) inability to retain key management and employees, (7) an increase in the number of competitors with larger resources, and (8) other factors beyond the Company's control. These forward-looking statements are made as of the date of this news release and the Company intends to update such forward looking information in the Company's MD&A in the event that actual results differ materially from such forward-looking statements contained herein. Additional information about these and other assumptions, risks and uncertainties are set out in the "Risks and Uncertainties" section in the Company's MD&A filed with Canadian security regulators.Financial Statements FollowViridis Energy Inc.Consolidated Statements of Financial Position(Canadian dollars)March 31, 2012December 31, 2011ASSETSCurrentCash and cash equivalents$514,482$598,696Accounts receivable966,4521,190,370Inventory729,052597,003Prepaid expenses485,404247,972Due from related parties240,780190,6862,936,1702,824,727Property, plant and equipment8,646,3216,427,739Option to acquire property250,000550,000Intangible assets3,482,0003,482,000Goodwill2,059,9902,059,990Total Assets$17,374,481$15,344,456LIABILITIES and SHAREHOLDERS' EQUITY (DEFICIT)Bank line of credit$2,995,862$3,057,021Accounts payable and accrued liabilities2,226,2211,399,033Deferred income-71,470Short term loan payable2,443,382-Current portion of loans payable539,616547,5078,205,0815,075,031Loans payable3,846,9563,747,72612,052,0378,822,757Shareholders' equity (deficit)Share capital$18,559,325$18,559,325Contributed surplus2,381,4492,381,449Deficit(15,618,330)(14,419,075)Total5,322,4446,521,699Total Liabilities and Shareholders' Equity/(Deficit)$17,374,481$15,344,456Viridis Energy Inc. Consolidated Statements of Operations and Comprehensive Loss (Canadian dollars)Three Months Ended March 31,20122011(Unaudited)Sales$2,436,941$2,669,607Cost of sales2,286,1432,056,670Gross profit150,665612,937Operating expenses:Selling and marketing49,20885,606Freight-out91,549186,872General and Administrative827,877913,230Total Operating Expenses968,6341,185,708Loss before other items(817,969)(572,771)Other items:Foreign exchange loss(3,513)(23,145)Disposal of property plant and equipment--Finance expense(337,373)(117,809)Accretion expense(40,564)-Total other items(381,286)(140,954) Comprehensive income (loss) $ (1,199,255) $ (713,725)Income (loss) per share:Basic and diluted$(0.03)$(0.02)Weighted average number of common shares outstandingBasic and diluted41,277,91130,279,398FOR FURTHER INFORMATION PLEASE CONTACT: Yvonne L. ZappullaGrannus Financial Advisors, Inc.Managing Director212-681-4108yvonne@grannusfinancial.comORMichele RebiereViridis Energy IncChief Financial Officer905-847-5226investorinfo@viridisenergy.caNeither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.