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Press release from CNW Group

BIOX announces 2013 first quarter results

Wednesday, February 13, 2013

BIOX announces 2013 first quarter results07:00 EST Wednesday, February 13, 2013TSX symbol: BXTORONTO, Feb. 13, 2013 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company that owns and operates Canada's largest biodiesel production facility, today announced its fiscal 2013 first quarter (Q1 2013) financial results for the three-month period ended December 31, 2012.HighlightsProduction of methyl esters was 3.3 million litres in Q1 2013, due to the temporary suspension of production that commenced in October 2012 with production subsequently resuming in February 2013, compared to 13.4 million litres in the first quarter of 2012 (Q1 2012)Sales were $9,475,000 in Q1 2013, compared to $28,932,000 in Q1 2012Operating loss was $4,834,000 in Q1 2013 compared to an operating income of $2,453,000 in Q1 2012Operating loss prior to non-cash items(1) was $3,745,000 in Q1 2013 compared to an operating income prior to non-cash items of $3,503,000 in Q1 2012Operating loss prior to non-cash items of $1,156,000 in Q1 2013 for BIOX's operating segment (BIOX Canada Limited and BIOX USA Limited) compared to an operating income prior to non-cash items of $5,106,000 in Q1 2012Net loss was $5,145,000 in Q1 2013 compared to net income of $1,979,000 in Q1 2012Loss per share was $0.11 in Q1 2013 compared to earnings per share of $0.04 in Q1 2012"Production resumed at our Hamilton facility on February 1, 2013 and we are already operating at our targeted production capacity," said Kevin Norton, Chief Executive Officer of BIOX. "With the 28 percent increase to the mandate in the U.S. market for 2013 and the full implementation of the Canadian content requirement, the addressable market for our product is larger than it's ever been. In addition, the U.S. Environmental Protection Agency recently released a draft plan to improve integrity in the RIN (Renewable Identification Numbers) market by establishing a new voluntary RIN quality assurance program. We believe this program will improve the trading liquidity in the RIN market. The increased mandate and improvements to the regulatory structure provide us with confidence that we are transitioning to a sustainable North American biodiesel market."Financial HighlightsSales were $9.5 million for the three-month period ended December 31, 2012, compared with $28.9 million for the corresponding period last year. The decrease in sales was primarily the result of a decrease in litres of biodiesel sold, due to the temporary shutdown of our Hamilton facility, offset by the increase in separated RIN revenue compared with the corresponding period in 2011.Direct expenses were $10.5 million for the three-month period ended December 31, 2012, compared with $23.6 million for the corresponding period last year. The decrease in direct expenses was primarily the result of lower sales volume due to the temporary shutdown of the Hamilton facility.General and administrative expenses were $1.5 million for the three-month period ended December 31, 2012, compared with $1.6 million for the same period last year.Operating loss was $4.8 million for the three-month period ended December 31, 2012, compared with operating income of $2.5 million for the same period last year. As a result of market conditions, on December 24, 2012, BIOX exercised an option to terminate the land lease agreement with International-Matex Tank Terminals (IMTT) to construct a 100 million litre per annum biodiesel production facility in New York Harbor. Based on the decision to exercise the option, IMTT returned, in full, the US$4.1 million letter of credit related to the proposed tank modifications. BIOX has also been reimbursed US$1.4 million of the US$2.1 million upfront payment it made to IMTT. The net difference of US$0.7 million was expensed as a termination charge recorded in the three-month period ended December 31, 2012.Operating loss prior to non-cash items(1) was $3.7 million for the three-month period ended December 31, 2012, compared with operating income of $3.5 million for the same period last year.  The increase in operating loss prior to non-cash items was primarily due to the temporary shutdown of the Hamilton facility.Combined operating loss prior to non-cash items(1) for BIOX's operating segment (BIOX Canada Limited and BIOX USA Limited) was $1.2 million for the three-month period ended December 31, 2012, compared with a combined operating income prior to non-cash items of $5.1 million for the corresponding period last year. This loss was primarily due to the temporary shutdown of the Hamilton facility.Net loss for the three-month period ended December 31, 2012, was $5.1 million or $0.11 per common share compared with a net income of $2.0 million or $0.04 per common share in the corresponding period in 2011.As at December 31, 2012, BIOX's cash balance amounted to $8.2 million, compared with $7.5 million on September 30, 2012. BIOX's working capital balance at December 31, 2012, was $14.2 million compared with $13.3 million at September 30, 2012. 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.Subsequent to the end of the period, the retroactive reinstatement of the U.S. federal tax incentive which had ended on December 31, 2011, allows BIOX to collect approximately US$7.7 million related to sales to customers during calendar 2012.BIOX also took receipt of the US$1.4 million reimbursement from its US$2.1 million upfront payment it made to IMTT referenced above, subsequent to the end of the period.As at December 31, 2012, BIOX had 45,748,691 common shares outstanding, as well as options to purchase up to 1,700,000 common shares, and share purchase warrants to acquire up to 1,982,143 common shares.OutlookThe North American biodiesel market weakened throughout 2012. The expiration of the U.S. biodiesel tax incentive, which led to pricing uncertainty, and overproduction relative to the RFS2 minimum 1.0 billion U.S. gallon biomass-based requirement, resulted in significantly lower values and margins for biodiesel during calendar 2012 compared to the second half of 2011. 2013 RINs traded at approximately $0.57 (or $0.86 per U.S. gallon) on February 12, 2013 compared to an average of approximately $1.50 (or $2.25 per U.S. gallon) in January 2012.In January 2013, the U.S. EPA proposed a structured process for buyers of RINs to verify their validity. Under the proposal, RINs would be verified through a new voluntary quality assurance program. Quality Assurance Plans (QAPs) would provide a recognized means for independent third parties to audit the production of renewable fuel and verify that RINs have been validly generated. For RINs that have been verified according to an approved QAP, the proposed program would provide protection against liability for civil violations resulting from the transfer or use of invalidly generated RINs under certain conditions. The rule would also specify both the conditions under which invalid RINs must be replaced with valid RINs, and by whom. The proposed rule allows verification of RINs to begin this year.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. As a result, the minimum volume for 2013 is 1.28 billion U.S. gallons. In Canada, the Canadian Renewable Fuel Content Regulations require 5% renewable content in gasoline and 2% renewable content in diesel. These minimum volume requirements in Canada bring the Canadian mandate more closely in line with the U.S. market and its expanded RFS2 regulation, and we believe will ultimately drive new demand for biodiesel in Canada. While BIOX continues to be the largest producer of biodiesel in Canada, it currently sells nearly all of its product into the U.S. market. The implementation of these Canadian regulations significantly increases the accessible market for BIOX's product in Canada.Management continues to believe the weakness in the 2012 biodiesel market was short-term in nature and reflects the maturing of a relatively nascent biodiesel market. Management remains confident that the definitive regulatory structures now in place in both Canada and the United States are an important step in the evolution of a sustainable biodiesel industry in North America.Notice of Conference CallBIOX will hold a conference call today, February 13, 2013, at 9:00 a.m. ET 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 94629079. 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 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 IFRS as an indicator of BIOX's performance.Reconciliation of Non-IRFS MeasuresThe following table presents a reconciliation of operating income prior to non-cash items to net loss for the three-month periods ended December 31, 2012 and 2011:(in thousands) Three months ended December      2012 2011    $ $Operating income (loss) before non-cash items (3,745) 3,503Deduct:Production facility depreciation and amortization (912) (855) Depreciation and amortization of furniture, equipment and intangible assets (96) (102) Stock-based compensation   (81) (93)Operating (loss) income (4,834) 2,453Other income and expenses (311) (474)Net (loss) income (5,145) 1,979About BIOX CorporationBIOX is a renewable energy company that owns and operates Canada's largest biodiesel production facility, 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 impact of the extension of the biodiesel tax incentive in 2013 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. Financial results included below:BIOX Corporation   Condensed consolidated interim statements of comprehensive (loss) incomeThree month periods ended December 31, 2012 and 2011  (Unaudited)   (Expressed in thousands of Canadian dollars, except share and per share amounts)         2012 2011        $  $          Revenue9,475 28,932          Cost of sales    Direct expenses10,451 23,587 Production facility depreciation and amortization912 855       11,363 24,442          Gross margin(1,888) 4,490    Operating expenses    General and administrative1,510 1,586 Depreciation and amortization of equipment and intangible assets96 102 Share-based compensation81 93 Expansion planning and development1,259 256       2,946 2,037    Operating (loss) income(4,834) 2,453    Other expenses    Financing cost340 355 Foreign exchange loss1 184 341 539    Net (loss) income before interest income and income taxes(5,175) 1,914Income tax expense(18) -Interest income48 65Net (loss) income for the period(5,145) 1,979Other comprehensive loss    Foreign currency translation loss(279) (88)Comprehensive (loss) income(5,424) 1,891    (Loss) earnings per common share    Basic(0.11) 0.04 Diluted(0.11) 0.04    Weighted average number of common shares outstanding    Basic  45,748,691   45,748,691 Diluted  45,748,691   45,790,770                    BIOX Corporation             Condensed consolidated interim statements of changes in equity        Three month periods ended December 31, 2012 and 2011        (Unaudited)             (Expressed in thousands of Canadian dollars, except share and per share amounts)                Common share capital                       Accumulated                  other              Warrants   Equity   comprehensive     Total      Shares   Amount   reserve   reserve   income (loss)   Deficit   equity      #   $   $   $   $   $   $                  Balance, September 30, 2011 45,748,691   167,787 3,151 1,991 206 (93,891) 79,244Share-based compensation- - - 93 - - 93Net income- - - - - 1,979 1,979Foreign currency translation loss- - - - (88) - (88)Balance, December 31, 2011 45,748,691   167,787 3,151 2,084 118 (91,912) 81,228                 Balance, September 30, 2012 45,748,691   167,787 3,151 2,559 20  (107,972) 65,545Share-based compensation- - - 81 - - 81Net loss- - - - - (5,145) (5,145)Foreign currency translation loss- - - - (279) - (279)Balance, December 31, 2012 45,748,691    167,787  3,151  2,640  (259)  (113,117) 60,202                       BIOX Corporation   Condensed consolidated interim statements of financial position    As at December 31, 2012 and September 30, 2012   (Unaudited)   (Expressed in thousands of Canadian dollars)        December 31,   September 30,     2012  2012     $   $        Assets   Current assets    Cash and cash equivalents8,186 7,543 Accounts receivable3,334 2,472 Prepaid expenses449 2,785 Inventory8,964 15,317    20,933 28,117       Restricted cash2,800 6,942Property, plant and equipment47,741 47,678Intangible assets1,011 1,044Deferred income tax assets9,509 9,499    81,994 93,280       Liabilities   Current liabilities    Accounts payable and other liabilities1,754 7,970 Demand loan3,457 5,282 Current portion of long-term debt1,500 1,500 Current portion of finance leases65 69    6,776 14,821       Finance leases- 7Long-term debt11,971 9,932Provisions3,045 2,975    21,792 27,735       Equity   Common share capital167,787 167,787Warrants reserve3,151 3,151Equity reserve2,640 2,559Accumulated other comprehensive (loss) income(259) 20Deficit(113,117) (107,972)    60,202 65,545    81,994 93,280            BIOX Corporation   Condensed consolidated interim statements of cash flows  Three month periods ended December 31, 2012 and 2011  (Unaudited)   (Expressed in thousands of Canadian dollars, except share and per share amounts)      2012  2011     $   $        Operating activities    Net (loss) income(5,145) 1,979 Add items not involving cash     Production facility depreciation and amortization912 855  Depreciation and amortization of equipment and intangible assets96 102  Financing costs223 189  Income taxes paid18 -  Interest income(48) (65)  Unrealized foreign exchange gain(265) (232)  Share-based compensation81 93  Accretion of asset retirement obligation70 64    (4,058) 2,985          Net change in non-cash working capital balances related to operations3,287 4,488    (771) 7,473       Investing activity    Purchase of property, plant and equipment(2,741) (1,005) Decrease in restricted cash4,142 - Interest income48 65    1,449 (940)       Financing activities    Payments on finance leases(12) (16) Proceeds from debt financing 2,415 - Repayment of debt financing(375) - Repayment of demand loan(1,825) (1,097) Financing charges(2) - Interest paid(222) (188)    (21) (1,301)       Effect of exchange rate changes on cash held in foreign currency(14) 144       Net increase in cash and cash equivalents during the period643 5,376Cash and cash equivalents, beginning of period7,543 27,887Cash and cash equivalents, end of period8,186 33,263        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