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Press release from TheNewswire.ca

Viridis Energy Inc. Reports Third Quarter 2012 Financial Results; Company Reports Significant Improvement in Gross Margins

Tuesday, November 20, 2012

Viridis Energy Inc. Reports Third Quarter 2012 Financial Results; Company Reports Significant Improvement in Gross Margins15:30 EST Tuesday, November 20, 2012(via Thenewswire.ca) Vancouver, BC - November 20, 2012 - Viridis Energy Inc. ("Viridis" or the "Company") (TSXV: VRD), a "Cleantech" manufacturer and distributor of alternative energy providing waste biomass fuel to global residential and industrial markets, today reported financial results for its third quarter ended September 30, 2012. Viridis generated revenue for the third quarter 2012 of $2.2 million compared to $2.4 million in the previous quarter and $3.3 million during the same quarter of 2011. The year-to-year comparison was impacted by the change in sales terms as it related to freight 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. For the nine month period ended September 30, 2012, revenues were $7.1 million compared to $8.9 million for the same period in 2011. As a percentage of revenue, freight represented 40% in 2012 compared to 65% in 2011. The Company reported a gross profit of approximately $367,000 for the third quarter of 2012 compared to a negative gross profit for the same period in 2011 and gross profit of $186,000 in second quarter of this year. The Company generated gross margin of 17% in the third quarter of 2012, which is a significant increase over last quarter's gross margin of 7.7%. In 2012, the gross margin has increased sequentially each quarter and this trend is likely to continue into the fourth quarter, as revenue mix shifts towards the higher margin residential market during the home heating season. Operating expenses for the three month period ended September 30, 2012 were approximately $849,000, which includes $189,000 of general and administrative ("G&A") costs attributed to the Scotia Atlantic Biomass Company Limited ("Scotia") acquired by Viridis during the first quarter 2012. Excluding G&A costs associated with the acquired Scotia facility, operating costs decreased approximately 45% or $660,000 from the prior year's third quarter as a result of intensive cost management and a focus on operational efficiencies. The Company reported a comprehensive loss of approximately $598,000 or $(0.01) per basic share for the third quarter of 2012, compared to a loss of $(1.4) million or $(0.04) per basic share during the same period in 2011 and a loss of $972,000 or $(0.02) per share in second quarter of 2012. The decreased loss during the third quarter reflects lower G&A, lower financing costs and improved margins. It is important to note that while the Company has been carrying the costs associated with the Scotia facility, the plant is not expected to generate revenue until second quarter 2013. "We continue to improve the financial health of our Company as we position it for growth in 2013. Excluding the incremental costs associated with readying the Scotia plant for production, our efficiency efforts have resulted in a reduction in costs of approximately $1.5 million or 36% from the prior year nine month period. In fact, our current operations excluding Scotia reflect a third quarter 2012 EBITDA of approximately $140,000 short of breakeven," said Christopher Robertson, chief executive officer and director of Viridis Energy. At September 30, 2012, the Company had cash and cash equivalents of $392,000 and accounts receivable of approximately $678,000, representing a DSO of approximately 28 days. The Company currently has no long term debt as its 6% Convertible Notes and all accrued interest was converted into Viridis common stock by its holder. The Company shareholder equity totaled $8.2 million at quarter end. The UK Department of Energy & Climate Change's ("DECC") revised Renewables Obligation ("RO") plan to incent utilities to deploy and use renewable energy, including wood pellets, will come into effect in April 2013. The plan places mandatory requirements on licensed UK electricity suppliers and imposes stiff penalties for failure to achieve specified levels of energy from renewable sources through 2020. "The DECC decision will have a very favorable impact on the Canadian wood pellet industry," says Michele Rebiere, Viridis's chief financial officer who is also on the board of the Wood Pellet Association of Canada. "In preparation for the April 2013 effective date, we are actively working on long-term offtake agreements with UK utilities that qualify for the subsidy." Christopher Robertson added, "We plan to have our Scotia Atlantic Biomass pellet plant in full operation to address the increased demand for wood pellets when the RO plan takes effect in early 2013. The revenue contribution generated from our Scotia plant, coupled with improved results from our existing plant, is expected to position Viridis Energy for profitability in 2013. Our efforts in fine tuning our operations, diversifying into the commercial market, securing raw material sources, and expanding our production capacity have enabled Viridis to establish itself as a leading source of wood pellets, worldwide. We have confidence the fruits of our efforts will materialize in the upcoming year." ---------------------------------------------------------------- |Investor Contact: |Company Contact: | |Yvonne L. Zappulla |Michele Rebiere | |Managing Director |Chief Financial Officer | |Grannus Financial Advisors, Inc.|Viridis Energy Inc | |212-681-4108 |905-847-5226 | |Yvonne@GrannusFinancial.com |investorinfo@viridisenergy.ca| ---------------------------------------------------------------- About Viridis Energy Inc. Viridis Energy Inc. (TSXV: VRD) is a publicly traded, "Cleantech" alternative energy company specializing in the agricultural and wood waste biomass. Located in Vancouver, B.C., Viridis Energy operates Cypress Pacific Marketing Inc., Okanagan Pellet Company Inc. and Scotia Atlantic Biomass Company, 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 Statements Certain of the statements made in this news release may contain forward-looking statements within the meaning of the United States Securities Exchange Act of 1934 and forward-looking information within the meaning of applicable Canadian securities law. Forward-looking statements and forward-looking information include, but are not limited to, statements or information with respect to anticipated future revenue growth and gross margin increases, the expected timing for achieving profitability, anticipated future production levels, projected production capabilities of the recently acquired manufacturing capacity in Nova Scotia, and the anticipated impact of the DECC's RO plan on the Canadian wood pellet industry and the Company's position as a result. 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 the Company's 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) a change in the European mandate for renewable energy, (3) a revision to the UK's DECC renewable obligation, (4) a sharp increase in ocean freight costs, (5) the inherent uncertainties associated with the demand for biofuels, (6) the risk that the Company does not execute its business plan, (7) inability to finance operations and growth (8) inability to finance the start-up operations in Nova Scotia in a timely manner (9) inability to retain key management and employees, (10) an increase in the number of competitors with larger resources, and (11) other factors beyond the Company's control. These forward-looking statements are made as of the date of this news release and the Company does not intend to update such forward looking information unless required to do so by applicable laws. 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 securities regulators. Neither 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. ### ??? Financial Statements Follow ??? VIRIDIS ENERGY INC. CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (Expressed in Canadian Dollars) (Unaudited) ------------------------------------------------------------------------------------- | |  |  |  |  |  |  |    | | | | | | | | | September | | | | | | | | |30,     | | | | | | | | |      | | | | | | | | | December | | | | | | | | |31, | |-----------------------------------------------------------------------------------| | |  |  |  |  |  |  |2012 |  |2011 | |-----------------------------------------------------------------------------------| |ASSETS |(Unaudited) |  |  | | |  | | | | |      | | | |-----------------------------------------------------------------------------------| |Current |  |  |  | |Assets: | | | | |-----------------------------------------------------------------------------------| | |    Cash and |391,506 |  |598,696 | | |cash equivalents | | $ | | | |          | | | | | |          | | | | | |          | | | | | |          | | | | | |          | | | | | |          | | | | | |          | | | | | |          | | | | | |        $   | | | | | |  $  $ | | | | |-----------------------------------------------------------------------------------| | |    Accounts receivable |        |  |1,190,370 | | | |      | | | | | |    | | | | | |677,844 | | | |-----------------------------------------------------------------------------------| | |    Inventory |635,355 |  |597,003 | |-----------------------------------------------------------------------------------| | |    Prepaid expenses |485,799 |  |247,972 | |-----------------------------------------------------------------------------------| | |    Due from related parties |241,512 |  |190,686 | |-----------------------------------------------------------------------------------| | |        |  |  |  |  |2,432,016 |  |2,824,727 | | |Total | | | | | | |    | | |Current | | | | | | | | | |Assets | | | | | | | | |-----------------------------------------------------------------------------------| | |  |  |  |  |  |  |  |  | |-----------------------------------------------------------------------------------| | |   Property, plant and equipment |8,322,939 |  |6,427,739 | | | |  | | | | | |    | | | |-----------------------------------------------------------------------------------| | |   Deposit on property |250,000 |  |550,000 | |-----------------------------------------------------------------------------------| | |   Intangible assets |3,482,000 |  |3,482,000 | | | |    | | | | | |      | | | |-----------------------------------------------------------------------------------| | |   Goodwill |2,059,990 |  |2,059,990 | | | |    | | | | | |        | | | |-----------------------------------------------------------------------------------| | |      |  |  |  | $$ |16,546,945 |$ |15,344,456 | | |  | | | | | | |    | | | Total | | | | | | |        | | |Assets | | | | | | |    | | | | | | | | | | 14,704,026 | |-----------------------------------------------------------------------------------| |  |  |  |  | |-----------------------------------------------------------------------------------| |LIABILITIES |  |  |  | |& | | | | |STOCKHOLDERS' | | | | |EQUITY | | | | |-----------------------------------------------------------------------------------| |Current |  |  |  | |Liabilities: | | | | |-----------------------------------------------------------------------------------| | |    Bank line of credit |3,017,102 |  |3,057,021 | |-----------------------------------------------------------------------------------| | |    Accounts payable and accrued liabilities |2,677,381 |  |  | | | | | |1,399,033 | | | | | |      | |-----------------------------------------------------------------------------------| | |    Deferred income |60,626   |  |71,470   | | | |      | |    | |-----------------------------------------------------------------------------------| | |    Short term loan payable |2,555,425 |  |- | |-----------------------------------------------------------------------------------| | |    Current portion of loans payable |25,615 |  |547,507 | |-----------------------------------------------------------------------------------| |  |8,336,146 |  |5,075,031 | |  | | | | |  | | | | |  | | | | |  | | | | |Total | | | | |Current | | | | |Liabilities | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |  | | | | |-----------------------------------------------------------------------------------| |  |  |  |  | |-----------------------------------------------------------------------------------| |Long-term |  |  |  | |Liabilities: | | | | |-----------------------------------------------------------------------------------| |  |- |  |3,747,726 | |  | | | | |Loan | | | | |payables | | | | |-----------------------------------------------------------------------------------| | |      |  |  |  |  |8,336,149 |  |8,822,757 | | |  | | | | | | |  | | | Total | | | | | | |    | | |Liabilities| | | | | | | | |-----------------------------------------------------------------------------------| |  |  |  |  | |-----------------------------------------------------------------------------------| |Shareholders' |  |  |  | |Equity | | | | |(deficit) | | | | |-----------------------------------------------------------------------------------| | |    Share capital |22,537,578 |  |18,559,325 | |-----------------------------------------------------------------------------------| | |    Contributed surplus |2,861,376 |  |2,381,449 | | | |  | | | | | |    | | | |-----------------------------------------------------------------------------------| | |    Deficit |(17,188,158)|  |(14,419,075)| |-----------------------------------------------------------------------------------| | |        Total Shareholders? Equity |8,210,796 |  |6,521,699 | |-----------------------------------------------------------------------------------| | |TOTAL LIABILITIES AND SHAREHOLDERS? EQUITY |$       |$ |15,344,456 | | | |      | |  | | | | 16,546,945 | |      | | | | | |14,704,026 | ------------------------------------------------------------------------------------- VIRIDIS ENERGY INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS (Expressed in Canadian Dollars) (Unaudited) ------------------------------------------------------------------------------------- |  |  |Three Months Ended |  |Nine Months Ended | | | |September 30, | |September 30, | |-----------------------------------------------------------------------------------| |  |  |2012 |  |2011 |  |2012 |  |2011 | |-----------------------------------------------------------------------------------| |  |  |  |  |  |  |  |  |  | |-----------------------------------------------------------------------------------| |Sales | $|  2,26,358 | $ |  |$ |7,068,766 | $ |8,854,189 | | | | | |3,314,530 | | | | | |-----------------------------------------------------------------------------------| |Cost of Sales |  |1,858,914 |  |3,357,432 |  |  |  |7,918,659 | | | | | | | | 6,364,555 | | | |-----------------------------------------------------------------------------------| |Gross profit |  |  367,444 |  |  |  |704,211 |  |935,530 | | | | | | (42,902) | | | | | |-----------------------------------------------------------------------------------| |  |  |  |  |  |  |  |  |  | |-----------------------------------------------------------------------------------| |Operating |  |  |  |  |  |  |  |  | |expenses: | | | | | | | | | |-----------------------------------------------------------------------------------| |  |  |  |  |  |  |  |  |  | |-----------------------------------------------------------------------------------| |  Selling |  |20,914 |  |31,135 |  |117,481 |  |168,789 | |and | | | | | | | | | |marketing | | | | | | | | | |-----------------------------------------------------------------------------------| |  Freight-out |  |3,811 |  |232,017 |  |126,026 |  |619,793 | |-----------------------------------------------------------------------------------| |  General |  |823,830 |  |943,954 |  |2,490,099 |  |2,783,128 | |and | | | | | | | | | |administrative| | | | | | | | | |-----------------------------------------------------------------------------------| |    Total |  | 848,555 |  |    |  | 2,733,606 |  |3,571,710 | |operating | | | | 1,207,106 | | | | | |expenses | | | | | | | | | |-----------------------------------------------------------------------------------| |Loss before |  |  |  |    |  |  |  | (2,636,180)| |other | |(481,111) | |(1,250,008)| |(2,029,395)| | | |items | | | | | | | | | |-----------------------------------------------------------------------------------| |  |  |  |  |  |  |  |  |  | |-----------------------------------------------------------------------------------| |Other items: |  |  |  |  |  |  |  |  | |-----------------------------------------------------------------------------------| |  Foreign |  |          |  |          |  |        |  |          | |exchange | |          | |          | |      | |          | |gain | |          | |          | |    | |          | |(loss) | |(2,344) | |(6,454) | |(8,394) | |(25,244) | |-----------------------------------------------------------------------------------| |  Disposal |  |-     |  |- |  |- |  |        | |of | | | | | | | |(29,028) | |plant, | | | | | | | | | |property | | | | | | | | | |        | | | | | | | | | |   and | | | | | | | | | |equipment | | | | | | | | | |-----------------------------------------------------------------------------------| |  Finance |  |(114,262) |  |(140,218) |  |(644,626) |  |(409,738) | |expense | | | | | | | | | |-----------------------------------------------------------------------------------| |  Accretion |  |  - |  |        - |  |    |  |      | |expense | | | | | | (86,668) | |      - | |-----------------------------------------------------------------------------------| |  |  |(116,606) |  |  |  |  |  |(464,010) | | | | | |(146,672) | | (739,688) | | | |-----------------------------------------------------------------------------------| |Income |  |(597,717) |  |(1,396,680)|  |(2,769,083)|  |(3,100,190) | |(loss) | | | | | | | | | |before | | | | | | | | | |income | | | | | | | | | |taxes | | | | | | | | | |recovery | | | | | | | | | |-----------------------------------------------------------------------------------| |Income taxes |  |- |  |- |  |- |  |- | |recovery | | | | | | | | | |(expense) | | | | | | | | | |-----------------------------------------------------------------------------------| |Comprehensive |$ |(597,717) |$ |(1,396,680)|$ |(2,769,083)|$ |(3,100,190) | |income(loss) | | | | | | | | | |-----------------------------------------------------------------------------------| |  |  |  |  |  |  |  |  |  | |-----------------------------------------------------------------------------------| |Net income |  |    |$  |      | $|      |$  |      | |(loss) |$ | (0.01)  | |(0.04) | |(0.06) | | ( 0.09) | |per | | | | | | | | | |share   | | | | | | | | | |          | | | | | | | | | |Basic and | | | | | | | | | |diluted | | | | | | | | | |-----------------------------------------------------------------------------------| |  |  | 56,746,095|  | 38,330,093|  |46,512,610 |  | 33,017,756 | |Weighted | | | | | | | | | |average | | | | | | | | | |number of | | | | | | | | | |common | | | | | | | | | |shares | | | | | | | | | |outstanding | | | | | | | | | |  | | | | | | | | | |      | | | | | | | | | | Basic and | | | | | | | | | |diluted | | | | | | | | | |  | | | | | | | | | |-----------------------------------------------------------------------------------| |  |  |  |  |  |  |  |  |  | |-----------------------------------------------------------------------------------| |  |  |  |  |  |  |  |  |  | |-----------------------------------------------------------------------------------| |  |  |  |  |  |  |  |  |  | ------------------------------------------------------------------------------------- --------------- | | | | | | | | --------------- Copyright (c) 2012 Thenewswire.ca - 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