PyroGenesis Announces 2013 Results: Year over Year Revenues Increase 73%, Gross Margins exceed 45%
MONTREAL, April 30, 2014 /CNW Telbec/ - PyroGenesis Canada Inc. (http://pyrogenesis.com) (TSXV: PYR), a TSX Venture 50® company, a world leader in the design, development, manufacturing and commercialization of advanced plasma processes, today announced its financial and operational results for the fourth quarter and the fiscal year ended December 31, 2013.
2013 was a year during which PyroGenesis:
- Increased revenues by 73% to $5,756,009;
- Increased gross margins (before amortization of intangible assets) to over 45%;
- Decreased loss from operations by 41%;
- Decreased EBITDA loss by 45% to $2,012,912;
- At December 31st 2013, backlog exceeded 2013 Revenues by 40%.
PyroGenesis' recent entree into new high-margin market niches is translating into significant orders for its plasma processes and engineering services as evidenced by the level of new business activity. These results validate management's strategic decision to "de-risk" the Company by introducing its plasma processes into new high-margin markets. Combined with cost reduction / rationalization plans undertaken in 2012 management is confident that PyroGenesis is well positioned for future growth.
Revenue for fiscal 2013 totaled $5,756,009 ($3,323,236: 2012), this 73% increase in revenues reflects increased business volumes associated with the execution of a $5.6 million reorder from Newport News Shipbuilding for a plasma waste destruction system to be installed on the CVN-79, the next US Navy Ford-class aircraft carrier, on which progress is evaluated at 65% complete as December 31, 2013, as well as other projects in progress.
Revenue for the fourth quarter of fiscal 2013 (hereafter "2013-Q4") was $1,878,793 ($1,221,501: 2012-Q4).
2014 revenues are projected to increase significantly based on a strong backlog ($8MM) at the end of 2013 combined with the pipeline of future projects identified and under discussion.
Cost of Sales and Services
Cost of Sales and Services before amortization of intangible assets for fiscal 2013 was $3,133,812, ($3,444,560: 2012), a decrease of 9%. Cost of Sales and Services before amortization for 2013-Q4 was $887,307, ($839,927: 2012), an increase of 6%.
Gross margins continued to post impressive year over year gains on both a quarter over quarter and annual basis. The Company posted gross margins for fiscal 2013 before amortization of intangible assets of $2,622,197 (45.6% of revenue), versus negative $121,324 (negative 3.7% of revenue) for fiscal 2012. For 2013-Q4, the Company posted gross margins of $991,486 (52.8% of revenue), versus $381,574 (31.2% of revenue) for the same period in 2012. The improved level of gross margins in 2013 was achieved through controlled project management, tight control over technical resources employed on projects, favorable pricing on equipment purchases and increased business volumes.
Management is confident that with an increased focus on operations and project execution, PyroGenesis will continue to post above average gross margins on its projects notwithstanding the natural fluctuations that may occur from quarter to quarter.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") for fiscal 2013 were $4,051,354 ($3,832,087: 2012), a 6% increase. SG&A for 2013-Q3 were $1,029,572 (2012: $738,185), a 39% increase.
Included in SG&A is the cost of share-based payments (a non-cash item) of $606,888 in fiscal 2013 ($952,055 in 2012).
2013 SG&A expenses incorporate the expansion of the Company's sales force with two seasoned business development professionals, increased proposal efforts and the strengthening of the management team.
Loss from operations for fiscal 2013 decreased 41% to $3,409,333, over a loss of $5,819,275 reported during fiscal 2012. For 2013-Q4, loss from operations decreased 33% to $561,696 over a loss of $840,167 reported during the same period in fiscal year 2012. During 2012 and 2013, PyroGenesis took significant steps to restructure and strengthen management, reduce fixed operating expenses, and increase revenues while improving overall gross margins on projects. The effects of these measures started to have an impact on operations towards the end of 2012 and continued throughout 2013.
Total Comprehensive Loss
The Corporation has achieved a 31% decrease in comprehensive loss for fiscal 2013 over fiscal 2012. The 2013-Q4 Comprehensive loss increased by 36% over 2012-Q4. In 2013-Q4, the Corporation recognized a non-recurring impairment loss of $581,638 on the sale of its 50% ownership interest in a joint operation.
The strong decrease in the fiscal 2013 Comprehensive loss is due to a 73% increase in revenues, and an improvement in gross margins before amortization of intangible assets to $2,622,197 (45.6% GM) as compared to a negative margin of $121,324 (negative 3.7% GM) in fiscal 2012, for a net margin improvement of $2,743,521.
EBITDA (earnings from operations before depreciation and amortization and special non-cash charges) for 2013 was negative $2,012,912, a decrease of 45% over the negative EBITDA of $3,684,320 reported during fiscal 2012. During 2013-Q4, EBITDA was negative $635,344, as compared to a negative EBITDA of $3,684,320 in 2012-Q4.
At December 31, 2013, PyroGenesis had cash on hand of $1,182,835 and negative working capital of $1,373,763 (negative $1,436,384 at December 31, 2012).
Of note, the Company has no bank debt, nor any debt owing to unrelated parties.
On April 22, 2014, the Company announced that it has entered into an agreement with an agent to undertake a private placement at a price of $0.60 per unit for gross proceeds of approximately $3,000,000.
New Audit Committee member
Effective April 30, 2014, Mr. Robert Radin has accepted to become a member of the Audit Committee of the Company. Mr. Radin has been a Board member since 2012.
2013 has been a watershed year for PyroGenesis as the full effect of the rationalization programs instituted in 2012 were realized as the largest business development push in the history of the company took hold. As a result, gross margins of 45% exceeded targeted goals and sales increased year over year by over 73% to 5.7MM; more to the point, backlog as of Dec 31, 2013, which is mostly expected to be accounted for as 2014 revenues, already exceeds 2013 Revenues by more than 40%. Management fully expects to have at least 100% growth in revenues year over year for the next three years while maintaining competitive gross margins.
The Company continues to implement measures to strengthen and focus its business development department, which includes, amongst other measures, hiring strategically focused professionals and realigning the company's business development efforts.
Previously mentioned efforts to refocus the Company's strategic objectives with the intent of leveraging off Company strengths have proven highly effective. Under the direction of the board of directors, this strategy has significantly "de-risked" your Company's business by becoming less dependent on environmental sales to the US Military as PyroGenesis has successfully increased sales of its proprietary plasma processes into the high-margin niche market segments in the oil and gas as well as the mining and metallurgical industries; the latter of which includes the recently announced success within the 3D printing industry wherein PyroGenesis has a proven, and commercially available, technology platform which can produce the most spherical Titanium powders highly sought after in 3D printing.
The company has further de-risked its business model by starting to incorporate recurring revenue features within the sales agreement. Management has targeted 2016 as the year in which the Company will be profitable from recurring revenues alone.
In conclusion, management is confident that the strategic plan adopted by the Board which has given effect to the realignment and de-risking of the Company's business, has proved a success and management expects that this success will continue and be improved upon into the foreseeable future.
About PyroGenesis Canada Inc.
PyroGenesis Canada, a TSX Venture 50® company, is the world leader in the design, development, manufacturing and commercialization of advanced plasma processes. We provide engineering and manufacturing expertise, cutting-edge contract research, as well as turnkey process equipment packages to the defense, metallurgical, mining, advanced materials, oil & gas, and environmental industries. With a team of experienced PyroClassTM engineers, scientists and technicians working out of our Montreal office and our 3,800 m2 demonstration facility, PyroGenesis maintains its competitive advantage by remaining at the forefront of technology development and commercialization. Our core competencies allow PyroGenesis to lead the way in providing innovative plasma torches, plasma waste processes, high-temperature metallurgical processes, and engineering services to the global marketplace. Our operations are ISO 9001:2008 certified, and have been since 1997. PyroGenesis is a publicly-traded Canadian company on the TSX Venture Exchange (Ticker Symbol PYR.V). For more information, please visit www.pyrogenesis.com
This press release contains certain forward-looking statements, including, without limitation, statements containing the words "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", "in the process" and other similar expressions which constitute "forward-looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, our expectations regarding the acceptance of our products by the market, our strategy to develop new products and enhance the capabilities of existing products, our strategy with respect to research and development, the impact of competitive products and pricing, new product development, and uncertainties related to the regulatory approval process. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks and uncertainties and other risks detailed from time-to-time in the Company's ongoing filings with the securities regulatory authorities, which filings can be found at www.sedar.com. Actual results, events, and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws.
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SOURCE PyroGenesis Canada Inc.For further information:
PyroGenesis Canada Inc.
P. Peter Pascali
Chief Executive Officer