Xebec Announces 2012 Third Quarter Financial Results

Q3 Revenues Up 25% with Improved Operational Efficiency

MONTREAL, Nov. 12, 2012 /CNW Telbec/ - Xebec Adsorption Inc. (TSX: XBC) ("Xebec"), a provider of biogas upgrading, natural gas, field gas and hydrogen purification solutions for the clean energy and crude-derived fuels displacement markets, announced today its 2012 third quarter operating results.

Third Quarter Highlights Include:

  • Delivery of the Company's third biogas plant completed for Canada's Fortis BC
  • Orders for two high pressure natural gas dehydration and purification units
  • Revenue of $3.7 million in the third quarter compared to $2.9 million for the same period in 2011, a 25% increase in the period.
  • Revenue for the first nine months in 2012 at $9.4 million, compared to $11.5 million for the same period in 2011, an 18% decrease.
  • Total order backlog stood at $11.8 million, compared to $7.1 million as of November 11, 2011.

"We are pleased to report to shareholders a 25% increase in our revenues during our third fiscal quarter of 2012 and an overall increase in our operational performance," stated Mr. Kurt Sorschak, Chief Executive Officer of Xebec. "While there was a decrease in total revenue over the first nine months of 2012, much of the shortfall can be attributed to the working capital deficiency we faced in the first part of the year. During this third quarter we remained diligent in our effort to optimize overall efficiency in our operations. As a result, new levels of cost reduction have been achieved.   These cost control measures are proving to be very positive and as a result, we anticipate a return to operational profitability within the next few quarters.  As an example, the competitive landscape within our industry is changing and thus, we have begun to leverage our supply chain out of China in order to increase long term margins and profitability for various lines of products.  At the same time, we remain focused on growth and are preparing the expansion of our Associated Gas Treatment (AGX) line of products where we believe a tremendous opportunity is slowly materializing.  Our technology is highly competitive and can help Customers in the oil and gas industry clean associated gases.  Our AGX products can eliminate the need to flare or burn associated gases that cause harmful greenhouse gases and emissions.  As a result, customers can now turn waste gas into a valuable clean energy resource as a replacement for diesel, propane or heating oil. We are now assessing potential synergies with a handful of possible strategic partners. While these initiatives are still in the preliminary stages, we do see opportunities materializing within the next few months."

Financial Highlights:

 
  Three months ended
September 30,
% of
Change
Nine months ended
September 30,
% of
Change
  2012 2011   2012 2011  
(In dollars) (unaudited) (unaudited)   (unaudited) (unaudited)  
Revenues 3,690,855 2,945,291 25.3% 9,425,901 11,504,851 -18.1%
Gross margin 1,120,336 1,199,790 -6.6% 1,967,849 4,103,696 -52.0%
Gross margin as a percentage of revenues 30.4% 40.7%   20.9% 35.7%  
EBITDA*  (525,207) 2,296,942   3,257,538 1,736,911  
Net income (loss) (620,868) 1,797,636   2,031,052 539,261  
Net income (loss) per share - basic  ($/share)  (0.02) 0.04   0.05 0.01  
Net income (loss) per share - diluted ($/share)  (0.02) 0.04   0.04 0.01  
Weighted average number of shares 39,363,867 39,363,867   39,363,867 39,363,867  
As at:       September 30,
2012
 December 31,
2011 
 
Total assets       9,949,180 10,283,088  
Total Long term Liabilities       1,336,337 1,346,660  
Equity       1,876,572 (307,121)  
As at:       November 5,
2012
 November 11,
2011
 
Back log       11,841,636 7,085,556  
* EBITDA is a non-IFRS financial measure and the Company defines it as earnings from operations excluding financial charges, taxes, foreign exchange loss (gain) and amortization.


Financial Results

Revenues

Xebec posted revenues of $3.7 million for the third quarter of 2012, a 25.3% increase compared to $2.9 million in the third quarter of 2011. For the nine-month period ended September 30, 2012, the total revenues amounted to $9.4 million, an 18.1% decrease compared to $11.5 million for the same period last year. This decrease is attributed to non-recurring license revenue of $1.5 million in 2011 and working capital deficiencies that impacted the Company for the first three months of 2012.

Order Backlog

As of November 12, 2012, total order backlog stood at $11.8 million, compared to $7.1 million as of November 11, 2011.

Gross Margin

Xebec's gross margin for the third quarter of 2012 amounted to $1.1 million, compared to $1.2 million for the same 2011 period. For the nine-month period ended September 30, 2012, the total gross margin amounted to $2.0 million, compared to $4.1 million for the same period last year.  Despite increasing margins from product sales, the non recurring engineering contracts and license revenues prior to the IP transaction of March 22, 2012 inflated the margins positively.

EBITDA and Net Loss

The EBITDA for the third quarter of 2012 amounted to $(0.5) million compared to $2.3 million in the third quarter of 2011. For the nine-month period ended September 30, 2012, the EBITDA amounted to $3.3 million, compared to $1.7 million for the same period last year. The improved EBITDA is the result of our continuous efforts to improve gross margin and control costs and the gain resulting from the IP transaction of March 22, 2012.

The net loss for the third quarter of 2012 totaled $(0.6) million, or $0.02 per share, compared to a net income of $1.7 million, or $0.04 per share for the same 2011 period. For the nine-month period ended September 30, 2012, net income was $2.0 million or $0.05 per share, compared to $0.5 million or $0.01 per share for the same period last year, reflecting primarily a $3.1 million increase in gain on disposition of assets and a $0.05 million decrease in selling and administrative costs and $0.4 million decrease in research and development.

Selling and administrative expenses were $1.6 million in the third quarter of 2012 compared to $1.2 million for the same period last year. For the nine-month period ended September 30, 2012, selling and administrative were $4.4 million, compared to $4.9 million for the same period last year. The decrease in expenses is the results of the company's restructuring and the implementation of cost control measures.

As of September 30, 2012, the Company's cash on hand before restricted cash totaled $1.5 million, compared to $(0.1) million as at September 30, 2011 and $0.4 million as at December 31, 2011.

Xebec 2012 third quarter Financial Statements and Management's Discussion and Analysis include further information on the Company.

2012 Third Quarter Financial Statements and Management's Discussion and Analysis

The complete financial statements, notes to financial statements and Management's Discussion and Analysis for the three-month and nine-month periods ended September 30, 2012, are available on the Company's Website at www.xebecinc.com or on the SEDAR Website at www.sedar.com.

About Xebec Adsorption Inc.

Xebec Adsorption Inc. is a global provider of clean energy solutions to corporations and governments looking to reduce their carbon footprints. With more than 1,300 customers worldwide, Xebec designs, engineers and manufactures innovative products that transform raw gases into marketable sources of clean energy mainly used as transportation fuel. Xebec's strategy is focused on establishing leadership positions in markets where demand for biogas upgrading, natural gas dehydration, liquefaction and hydrogen purification is growing. Headquartered in Montreal (QC), Xebec is a global company with two manufacturing facilities in Montreal and Shanghai, as well as a sales and distribution network in North America and Asia. Xebec trades on the TSX under the symbol XBC. For additional information on the company and its products and services, please visit the Xebec web site at www.xebecinc.com.

Caution Concerning Forward-Looking Statements

Certain statements in this press release may constitute "forward-looking" statements within the meaning of applicable securities laws. This forward looking information includes, but is not limited to, the expectations and/or claims of management of Xebec with respect to information regarding the business, operations and financial condition of Xebec. Forward-looking information contained in this press release involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Xebec or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. This list is not exhaustive of the factors that may affect forward-looking information contained in this press release. When used in this press release, such statements use such words as "anticipate", "believe", "plan", "estimate", "expect", "intend", "may", "will" and other similar terminology. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this presentation. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements. 

 

SOURCE: XEBEC ADSORPTION INC.

For further information:

Kurt Sorschak
President and CEO
450-979-8701
ksorschak@xebecinc.com

Eric Favreau
Chief  Financial Officer
450-979-8706
efavreau@xebecinc.com