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Press release from CNW Group

BIOX announces fourth quarter financial results

Thursday, December 06, 2012

BIOX announces fourth quarter financial results07:00 EST Thursday, December 06, 2012TSX symbol: BX TORONTO, Dec. 6, 2012 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company that designs, builds, owns and operates biodiesel production facilities, today announced its fiscal 2012 fourth quarter (Q4 2012) and year end financial results for the three-month and twelve-month periods ended September 30, 2012.HighlightsProduction of methyl esters was 13.1 million litres in Q4 2012 compared to 15.9 million litres in Q4 2011Sales were $16.8 million in Q4 2012 compared to $23.0 million in Q4 2011Operating loss was $10.9 million in Q4 2012 compared to an operating income of $1.6 million in Q4 2011Operating loss prior to non-cash items(1) was $9.7 million in Q4 2012 compared to an operating income prior to non-cash items of $2.8 million in Q4 2011Net loss was $11.4 million in Q4 2012 compared to a net income of $10.9 million in Q4 2011Net loss per share was $0.25 in Q4 2012 compared to a net income per share of $0.24 in Q4 2011The U.S. Environmental Protection Agency confirmed an increase to the minimum volume of Biomass-based diesel from the current level of 1.0 billion U.S. gallons in 2012 to 1.28 billion U.S. gallons in 2013"The value of biodiesel weakened significantly during the course of 2012 and our results reflect this fact. However, the commitment of the U.S. and Canadian policymakers to a biodiesel market that is mandated to grow remains in place," said Kevin Norton, Chief Executive Officer of BIOX Corp. "Within this growing market, our proprietary production process enables us to convert lower value feedstock, such as recycled vegetable grease and animal fats, into biodiesel at high yields, compared to conventional biodiesel technologies that use higher value soybean oil. This technological advantage places us in a strong position relative to the competition as the market conditions return to a rational balance between supply and demand."OutlookThe North American biodiesel market weakened throughout 2012. The value of biodiesel has been impacted by the expiration of the U.S. biodiesel tax incentive, overproduction relative to the 2012 minimum volume requirement for biomass-based diesel of 1.0 billion U.S. gallons, and thin trading in the separated Renewable Identification Numbers (RINs) market. 2012 RINs traded at approximately $0.56 (or $0.84 per U.S. gallon) on December 5, 2012 compared to an average of approximately $1.50 (or $2.25 per U.S. gallon) in January 2012.This weakness in the market has impacted BIOX's financial results and the construction timeline for its second facility in New York Harbor. As a result of market conditions, BIOX temporarily suspended production of biodiesel at its Hamilton facility in October 2012. The Company has also deferred procurement of certain long-lead time, capital intensive components and reduced its project planning team related to the construction of the New York Harbor facility. Management is monitoring the biodiesel market, including production volumes as well as trading liquidity and pricing, to determine the appropriate time to resume production at the Hamilton facility. The Company will update the market with an estimated commission date of the second facility in a timely manner.The regulatory structure for a growing biodiesel market across North America remains in place. A 28% increase in the 2013 minimum volume of biomass-based diesel under the expanded Renewable Fuels Standard (RFS2) has been confirmed. The first compliance period under the Canadian regulations, which require 5% renewable content in gasoline and 2% renewable content in diesel, ends December 31, 2012. With the completion of the U.S. election cycle, greater certainty is expected on the U.S. biodiesel tax incentive, through either its retroactive reinstatement, renewal, or confirmation of its expiry.Management continues to believe the current weakness in the biodiesel market is short-term in nature and reflects the maturing of a relatively nascent biodiesel market. Management remains confident that with the regulatory structure in place these issues will be resolved in the coming months.Financial HighlightsSales were $16.8 million and $69.5 million, respectively, for the three-month and twelve-month periods ended September 30, 2012, compared with $23.0 million and $97.3 million for the corresponding periods in 2011. This change was due to a combined decrease in sales volume and revenue per litre of biodiesel sold. The decrease in sales in fiscal 2012 compared with 2011 was primarily the result of the produce and store strategy BIOX implemented during Q3 of fiscal 2010, which increased the availability of inventory for sale at higher values in Q1 of fiscal 2011. The decrease in the price of biodiesel sold in 2012 was primarily the result of changes in market conditions and supply/demand imbalances in the biodiesel industry. Average price per litre of biodiesel sold during fiscal 2012 was $1.29, a decrease of 9% compared with $1.41 for the 2011 fiscal year.Direct expenses were $22.9 million and $68.3 million, respectively, for the three-month and twelve-month periods ended September 30, 2012, compared with $17.7 million and $82.5 million for the corresponding periods in 2011.  The changes in direct expenses include write downs of $5.8 million in Q4 2012 and $7.4 million in total for fiscal 2012 on separated RINs to net realizable value. There were no write downs to inventory in the respective periods last year. The decrease in direct expenses for fiscal 2012 was the result of lower sales volumes as well as the lower cost per litre sold on sales of RINless biodiesel compared to the prior year.General and administrative expenses were $1.4 million and $5.9 million, respectively, for the three-month and twelve-month periods ended September 30, 2012, compared with $2.4 million and $7.8 million for the corresponding periods in 2011. The changes in the three-month and twelve-month periods were primarily due to $0.9 million and $1.0 million in costs, respectively, related to one-time items in 2011.Operating loss was $10.9 million and $12.2 million, respectively, for the three-month and twelve-month periods ended September 30, 2012, compared with operating income of $1.6 million and $0.6 million for the corresponding periods in 2011. The increase in operating loss in 2012 was primarily due to significantly lower gross margins discussed above. BIOX also incurred a write down of $0.9 million on costs related to its New York Harbor project during the three-month period ended September 30, 2012 that had previously been capitalized. These costs were written off due to the increased uncertainly regarding the net realizable value of the assets.Operating loss prior to non-cash itemswas $9.7 million and $7.7 million, respectively, for the three-month and twelve-month periods ended September 30, 2012, compared with operating income prior to non-cash items of $2.8 million and $5.0 million for the corresponding periods in 2011.Combined operating loss prior to non-cash items for BIOX's wholly-owned subsidiaries, BIOX Canada Limited and BIOX USA Limited, was $6.3 million for the three-month period ended September 30, 2012 compared with combined operating income prior to non-cash items of $5.1 million for the same period last year. Combined operating income prior to non-cash items for BIOX's wholly-owned subsidiaries was $0.5 million for the twelve-month period ended September 30, 2012, compared with $14.0 million for the same period last year.Net loss was $11.4 million or $0.25 per share and $14.1 million or $0.31 per share, respectively, for the three-month and twelve-month periods ended September 30, 2012, compared with net income of $10.9 million or $0.24 per share and $8.7 million or $0.19 per share for the corresponding periods in 2011. The change in net loss was primarily the result of the impact of significantly lower gross margins achieved in 2012 compared with 2011.As at September 30, 2012, BIOX's cash and restricted cash position amounted to $14.5 million, comprised of $7.5 million in available cash and $6.9 million in restricted cash, compared with an available cash position of $27.9 million on September 30, 2011. Working capital as of September 30, 2012 was $13.3 million. BIOX believes that its future cash flow from operations combined with its current financial resources are sufficient to enable BIOX to meet its ongoing working capital requirements.As at December 5, 2012, the Company had 45,748,691 common shares outstanding, as well as outstanding stock options to purchase 1,700,000 common shares and share purchase warrants to acquire up to 1,982,143 common shares.Notice of Conference CallBIOX will hold a conference call today, December 6, 2012, at 9:00 a.m. EST 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 (647) 427-7450 or (888) 231-8191. To access the telephone replay, dial (416) 849-0833 or (855) 859-2056 and enter reservation number 74963018. 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 (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, intangibles and share-based compensation. 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-IFRS MeasuresThe following table presents a reconciliation of operating income (loss) prior to non-cash items to net income (loss) for the three months and twelve months ended September 30, 2012 and 2011:(in thousands) Three months endedSeptember 30Year endedSeptember 30       20122011  20122011     Operating income (loss) before non-cash items$(9,723)$2,833$(7,651)$5,041     Production facility depreciation and amortization$(911)$(827)$(3,549)$(3,267)     Amortization of furniture, equipment and intangibles$(92)$(97)$(379)$(393)     Share-based compensation$(133)$(299)$(594)$(795)     Operating income (loss)$(10,859)$1,610$(12,173)$586     Deferred income tax recovery$145$9,354$145$9,354     Other income (expenses)$(734)$(21)$(2,079)$(1,279)     Net income (loss)$(11,448)$10,943$(14,107)$8,661About BIOX Corporation BIOX 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. Such statements relate to, among other things, the resumption of biodiesel production at BIOX's Hamilton facility, the commissioning of the New York Harbor facility and BIOX's long-term expectations for the biodiesel market in light of current market conditions. 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. BIOX CorporationConsolidated statements of comprehensive (loss) income           Three and twelve month periods ended September 30          (Expressed in thousands of Canadian dollars, except share and per share amounts)                Three months ended Twelve months ended        September 30,   September 30,    2012 2011 2012 2011     $  $  $  $           Revenue16,780 22,989 69,537 97,330           Cost of sales        Direct expenses22,867 17,682 68,270 82,484 Production facility depreciation and amortization911 827 3,549 3,267    23,778 18,509 71,819 85,751           Gross margin(6,998) 4,480 (2,282) 11,579           Operating expenses        General and administrative1,392 2,411 5,905 7,838 Depreciation and amortization of equipment and intangible assets92 97 379 393 Share-based compensation133 299 594 795 Expansion planning and development2,244 63 3,013 1,967    3,861 2,870 9,891 10,993           Operating (loss) income(10,859) 1,610 (12,173) 586           Other expenses        Financing cost282 235 1,190 913 Write off of prepaid expenses257 - 257 - Write off of property, plant and equipment164 - 164 - Loss on debt extinguishment- 304 - 304 Foreign exchange loss34 (481) 672 238    737 58 2,283 1,455           Net loss before interest income and income taxes(11,596) 1,552 (14,456) (869)Deferred income tax recovery145 9,354 145 9,354Interest income3 37 204 176           Net (loss) income for the year(11,448) 10,943 (14,107) 8,661           Other comprehensive (loss) income        Foreign currency translation (loss) gain(186) 206 (186) 206           Comprehensive (loss) income(11,634) 11,149 (14,293) 8,867           (Loss) earnings per common share        Basic and diluted(0.25) 0.24 (0.31) 0.19           Weighted average number of common shares outstanding        Basic and diluted  45,748,691   45,748,691   45,748,691   45,748,691 BIOX Corporation             Consolidated statements of changes in equity            Years ended September 30, 2012 and 2011            (Expressed in thousands of Canadian dollars, except share and per share amounts)                                 Accumulated                 other             Common share capital  Warrants  Equity  comprehensive    Total     Shares  Amount  reserve  reserve  income (loss)  Deficit  equity     #  $  $  $    $  $                 Balance, October 1, 2010 45,748,691 167,787 3,151 1,196 - (102,552) 69,582Share-based compensation- - - 795 - - 795Net income- - - - - 8,661 8,661Foreign currency translation gain- - - - 206 - 206Balance, September 30, 2011 45,748,691 167,787 3,151 1,991 206 (93,891) 79,244                 Balance, October 1, 2011 45,748,691 167,787 3,151 1,991 206 (93,891) 79,244Share-based compensation- - - 637 - - 637Expiration of vested options- - - (69) - 26 (43)Net loss- - - - - (14,107) (14,107)Foreign currency translation loss- - - - (186) - (186)Balance, September 30, 2012 45,748,691  167,787 3,151 2,559 20 (107,972) 65,545 BIOX CorporationConsolidated statements of financial position        As at September 30, 2012 and 2011        (Expressed in thousands of Canadian dollars)                2012 2011       $  $         Assets     Current assets      Cash and cash equivalents  7,543 27,887 Accounts receivable  2,472 9,535 Prepaid expenses  2,785 953 Inventory  15,317 13,539      28,117 51,914         Restricted cash  6,942 -Property, plant and equipment  47,678 44,129Intangible assets  1,044 1,176Deferred income tax assets  9,499 9,354      93,280 106,573         Liabilities      Current liabilities      Accounts payable and other liabilities  7,970 6,959 Demand loan  5,282 4,957 Current portion of long-term debt  1,500 1,125 Current portion of finance leases  69 63      14,821 13,104         Finance leases  7 75Long-term debt  9,932 11,429Provisions  2,975 2,721      27,735 27,329         Equity     Common share capital  167,787 167,787Warrants reserve  3,151 3,151Equity reserve  2,559 1,991Accumulated other comprehensive income  20 206Deficit  (107,972) (93,891)      65,545 79,244      93,280 106,573 BIOX CorporationConsolidated statements of cash flows     Years ended September 30, 2012 and 2011    (Expressed in thousands of Canadian dollars, except share and per share amounts)        2012 2011     $  $        Operating activities    Net (loss) income(14,107) 8,661 Add items not involving cash     Production facility depreciation and amortization3,549 3,267  Depreciation and amortization of equipment and intangible assets379 393  Financing costs760 689  Interest income(204) -  Loss on extinguishment of debt- 304  Unrealized foreign exchange loss (gain)(135) 132  Share-based compensation 594 795  Accretion of asset retirement obligation254 206  Write off of property, plant and equipment164 -  Write off of site specific costs223 1,700  Deferred income tax asset(145) (9,354)    (8,668) 6,793        Net change in non-cash working capital balances      related to operations2,784 (4,859)    (5,884) 1,934       Investing activity    Purchase of property, plant and equipment(6,053) (2,174) (Increase) decrease in restricted cash(6,942) 1,173 Interest income204 -    (12,791) (1,001)       Financing activities    Payments on finance leases(53) (62) Proceeds from debt financing-  12,585 Repayment of debt financing(1,125) (11,385) Proceeds from demand loan325 4,957 Financing charges- (32) Interest paid(765) (653)    (1,618) 5,410       Effect of exchange rate changes on cash held in foreign currency(51) 74       Net (decrease) increase in cash and cash equivalents during the year(20,344) 6,417Cash and cash equivalents, beginning of year27,887 21,470Cash and cash equivalents, end of year7,543 27,887       Supplemental information     Income taxes received23 - Restricted cash6,942 -  SOURCE: BIOX CorporationFor further information: BIOX Corporation Chris Clinning Executive Vice President & CFO Phone: (905) 337-4970 E-mail: cclinning@bioxcorp.comInvestor Relations Ross Marshall TMX Equicom Phone: (416) 815-0700 ext. 238 E-mail: rmarshall@tmxequicom.com