BIOX Announces 2017 First Quarter Results

TSX symbol: BX

TORONTO, Feb. 13, 2017 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company that owns and operates biodiesel production facilities, today announced its 2017 first quarter financial results for the three-month (Q1 2017) period ended December 31, 2016.

Highlights

  • Completed commissioning of the 90 million U.S. gallon (USG) biodiesel production facility in Houston, Texas, through its 50% ownership interest in the World Energy BIOX Biofuels LLC (WEBB) joint venture, subsequent to the end of the quarter
  • Upgrades to the 13.2 million USG Sombra facility are on schedule for commissioning in calendar Q3 2017
  • Production of methylesters at the Hamilton facility was 16.2 million litres in Q1 2017, compared to 16.3 million litres in the same period in fiscal 2016
  • The retroactive reinstatement of $6,895,000 of U.S. biodiesel tax incentive as well as the $4,413,000 of sales of third party product, both in fiscal Q1 2016, both or in part, have had a significant impact on the following:
    • Sales were $19,525,000 in Q1 2017, compared to $25,743,000 in the same period in fiscal 2016
    • Operating (loss) income prior to non-cash items1 was $(526,000) in Q1 2017, compared to $5,358,000 in the same period in fiscal 2016
    • Net (loss) income was $(3,200,000) in Q1 2017, compared to $4,381,000 in the same period in fiscal 2016
    • Net (loss) income per basic share was $(0.07) in Q1 2017, compared to $0.10 in the same period in fiscal 2016

      "We significantly expanded our owned production capacity with the successful completion of commissioning at the Houston facility in January of this year," said Alan Rickard, Chief Executive Officer of BIOX. "The Houston facility is operating well and production levels have met our expectations. Given its scale, we expect Houston's production will drive significant improvements in our bottom-line results. In Ontario, our Hamilton and Sombra facilities are ideally positioned to capture market share with the mandated increases to the blend rate and the greenhouse gas reduction thresholds from the Ontario Greener Diesel program for 2017. The upgrades to our Sombra facility remain on schedule and we expect commissioning later in mid-2017 – in time to capture a portion of the blending season in Ontario."   

      Financial Highlights
      Sales were $19.5 million for the three-month period ended December 31, 2016 (Q1 2017), compared to $25.7 million for the corresponding period in fiscal 2016. The change is primarily related to the recognition in fiscal Q1 2016 of US$6.7 million of refundable tax credits from customers and the U.S. Internal Revenue Service related to the retroactive reinstatement of the U.S. biodiesel tax incentive as well as $4.4 million of sales of third party product in fiscal Q1 2016, offset by additional quantities of product sold in Q1 2017 as well as an increase in sales price.  Although it is management's intention to take advantage of future opportunities to control and distribute third party product on an ongoing basis, BIOX is focused on generating value through the production it controls and is not expecting to see similar results in upcoming years related to the sale of third party product as it saw in fiscal 2016. 

      BIOX sold 15.8 million litres in Q1 2017, compared to 19.7 million litres in the corresponding period in fiscal 2016. Included in the Q1 2017 sales are 0.1 million litres of third-party production compared to 5.5 million litres in Q1 2016. 

      Direct expenses were $18.4 million for Q1 2017, compared to $18.9 million for the corresponding period in fiscal 2016. The change is primarily the result of the reduction in purchases of third-party product, partially offset by an increase in the average price of feedstock over the prior year period.

      General and administrative expenses were $1.6 million for Q1 2017, compared to $1.5 million for the corresponding period in fiscal 2016. G&A expenses were impacted by an increase in professional fees partially offset by the one-time management restructuring cost of $0.4 million recorded in Q1 2016. Management expects the G&A run-rate to be in the range of $0.4 million to $0.5 million per month in fiscal 2017 as the Company has added incremental administrative scale to support the ongoing production at the Houston facility followed by the planned start-up and production at the Sombra facility in mid-2017.

      Operating (loss) income was $(1.4) million for Q1 2017, compared to $4.4 million for the corresponding period in fiscal 2016. The change is primarily a result of the collection of US$6.7 million in refundable tax credits, referenced above, related to the reinstatement of the U.S. biodiesel tax incentive in Q1 2016.    

      Operating (loss) income prior to non-cash items1 was $(0.5) million for Q1 2017, compared to $5.4 million for the corresponding period in fiscal 2016. The change is related to the retroactive reinstatement of the U.S. biodiesel tax incentive referenced above.

      Net (loss) income was $(3.2) million for Q1 2017, compared to $4.4 million for the corresponding period in fiscal 2016. Net (loss) income per basic share was $(0.07) for Q1 2017, compared to $0.10 for the corresponding period in fiscal 2016. These changes are also related to the retroactive reinstatement of the U.S. biodiesel tax incentive referenced above.

      As at December 31, 2016, BIOX's available cash position and working capital was $1.0 million and negative $8.9 million, respectively, compared with $3.5 million and negative $6.1 million on September 30, 2016. The negative working capital balance is a result of the short-term nature of the financing obtained from insiders related to the acquisition of BIOX's 50% ownership interest in WEBB. The change in working capital is primarily due to a $1.1 million draw on BIOX's demand loan with a Canadian Chartered Bank.   

      As at December 31, 2016, BIOX had 46,098,043 common shares outstanding, as well as outstanding options to purchase up to 1,735,000 common shares of BIOX and outstanding warrants to purchase up to 4,400,000 common shares of BIOX.

      Outlook
      In June 2016, BIOX acquired, or participated in the acquisition of, two biodiesel production facilities expanding its capacity from 67 million litres to 287.5 million litres of owned capacity (458 million litres gross capacity including the joint venture). 

      These two acquisitions demonstrate BIOX's ability to execute on its growth strategies through increasing the volume of biodiesel it produces, controls and distributes in strategic locations throughout North America.

      In the near term, BIOX's primary focus is the operation and marketing of product from its Hamilton facility and WEBB's Houston facility as well as the start-up of the Sombra facility. BIOX continues to invest in upgrades to the Sombra facility that will improve the facility's efficiency and enable the use of a broader range of feedstock, specifically lower carbon intensity feedstocks, such as animal fats and recycled cooking oils. The Company expects the facility to be in production by the third quarter of calendar 2017 to capture a portion of the 2017 blend season in Ontario.

      Management believes the Ontario market will play an increasingly important role in BIOX's distribution network. The implementation of the Greener Diesel program in Ontario mandates increasing blend rates and a move toward lower carbon intensity fuels in 2017. The greenhouse gas (GHG) reduction aspects of the Ontario Greener Diesel mandate are an important differentiator for BIOX. Bio-based diesel produced by BIOX at the Hamilton facility has the lowest carbon intensity in the province, reducing GHG emissions by more than 100% when compared to petroleum diesel. The Sombra facility, once upgraded to handle lower carbon intensity feedstocks, will produce at a comparable GHG emission efficiency to the bio-diesel produced by BIOX at its Hamilton facility.

      In November 2015, the U.S. Environmental Protection Agency published its Renewable Volume Obligation (RVO) for Biomass-based diesel, which included a minimum volume requirement for biomass-based diesel of 2.0 billion USG in 2017, an increase from 1.9 billion USG for 2016. The RVO is recognized at the primary driver of demand for biodiesel in the U.S. market. Management believes the clarity around the volume obligations will create stable and consistent demand from obligated parties.

      With assets in the U.S. and Ontario located in close proximity to blending infrastructure, pipelines and transport access, management believes BIOX is in a strong positon to serve obligated parties in these two growing biodiesel markets.

      Notice of Conference Call
      BIOX will hold a conference call tomorrow morning, February 14, 2017, at 9:00 a.m. ET hosted by Mr. Alan Rickard, Chief Executive Officer to discuss the Company'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 68486620. A live audio webcast of the call will be available at www.bioxcorp.com. The webcast will be archived for 90 days.

      Reconciliation of Non-IRFS Measures
      The following table presents a reconciliation of operating income prior to non-cash items to net income for the three-month period ended December 31, 2016 and 2015:











      Three months ended

      (in thousands)




      December 31





      2016

      2015





      $

      $

      Operating (loss) income before non-cash items



      (526)

      5,358

      Deduct:

      Production facility depreciation and amortization



      (721)

      (786)


      Depreciation and amortization of equipment and intangible assets



      (52)

      (56)


      Share-based compensation



      (61)

      (112)

      Operating (loss) income before non-cash items



      (1,360)

      4,404

      Deferred income tax expense



      (334)

      -

      Other income and expenses



      (1,506)

      (23)

      Net (loss) income




      (3,200)

      4,381

       

      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 depreciation and amortization of equipment and 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 (loss) income determined in accordance with IFRS as an indicator of BIOX's performance.

       

      About BIOX Corporation
      BIOX is a renewable energy company that, owns and operates 287.5 million litres of nameplate biodiesel production capacity at plants located in Houston, Texas and two facilities in southern Ontario. 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.

      Forward-looking Statements
      Certain 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, BIOX's long-term expectations for the biodiesel market in light of current market conditions, the timeline for the Sombra facility commencing production, the capacity of and anticipated upgrades to the Sombra facility and timing thereof, BIOX's G&A run rate for fiscal 2017, the growing of the biodiesel market in the U.S. and Ontario, and the ability of BIOX to benefit from regulatory initiatives in the U.S. and Ontario. 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. To the extent any forward-looking statements herein constitute financial outlook, they were approved by management as of the date hereof and have been included to provide an understanding with respect to BIOX's financial performance and are subject to the same risks and assumptions referred to herein. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur and readers are cautioned that any financial outlook information contained in this news release should not be used for purposes other than for which it is disclosed herein.


      BIOXCorporation

      Condensed consolidated interim statements of comprehensive (loss) income

      Three month periods ended December 31, 2016 and 2015

      (Unaudited)

      (Expressed in thousands of Canadian dollars, except share and per share amounts)


      2016


      2015


      $


      $





      Revenue

      19,525


      25,743





      Cost of sales





      Direct expenses

      18,418


      18,909


      Production facility depreciation and amortization

      721


      786


      19,139


      19,695





      Gross margin

      386


      6,048





      Operating expenses





      General and administrative

      1,633


      1,476


      Depreciation and amortization of equipment and intangible assets

      52


      56


      Share-based compensation

      61


      112


      1,746


      1,644





      Operating (loss) income

      (1,360)


      4,404





      Other expenses





      Financing cost

      920


      238


      Loss on investment in joint venture

      562


      -


      Gain on revaluation of asset retirement obligation

      -


      (329)


      Foreign exchange loss

      24


      124


      1,506


      33





      Net (loss) income before interest income and income taxes

      (2,866)


      4,371

      Income tax expense

      (334)


      -

      Interest income

      -


      10

      Net (loss) income for the period

      (3,200)


      4,381

      Other comprehensive (loss) income





      Foreign currency translation (loss) gain

      (78)


      35

      Comprehensive (loss) income

      (3,278)


      4,416





      (Loss) income per common share





      Basic

      (0.07)


      0.10


      Diluted

      (0.07)


      0.09





      Weighted average number of common





      shares outstanding





      Basic

      46,098,043


      46,026,950


      Diluted

      46,098,043


      46,532,877

       

       

      BIOXCorporation

      Condensed consolidated interim statements of changes in equity

      Three month periods ended December 31, 2016 and 2015

      (Unaudited)

      (Expressed in thousands of Canadian dollars, except share and per share amounts)


       Common share capital 


       Warrant reserve 




       Accumulated 










       Share 






       other 










       purchase 




       Equity 


       comprehensive 




       Total 


       Shares 


       Amount 


       warrants 


       Amount 


       reserve 


       loss 


       Deficit 


       equity 


       # 


      $


       # 


      $


      $


      $


      $


      $

















      Balance, September 30, 2015

      46,025,124


      168,130


      -


      -


      1,968


      (659)


      (136,474)


      32,965

      Share-based compensation

      -


      -


      -


      -


      113


      -


      -


      113

      Share purchase

      7,000


      4


      -


      -


      (2)


      -


      -


      2

      Net loss

      -


      -


      -


      -


      -


      -


      4,381


      4,381

      Foreign currency translation loss

      -


      -


      -


      -


      -


      35


      -


      35

      Balance, December 31, 2015

      46,032,124


      168,134


      -


      -


      2,079


      (624)


      (132,093)


      37,496

















      Balance, September 30, 2016

      46,098,043


      168,176


      4,400,000


      989


      2,446


      (617)


      (139,883)


      31,111

      Share-based compensation

      -


      -


      -


      -


      61


      -


      -


      61

      Net loss

      -


      -


      -


      -


      -


      -


      (3,200)


      (3,200)

      Foreign currency translation gain

      -


      -


      -


      -


      -


      (78)


      -


      (78)

      Balance, December 31, 2016

      46,098,043


      168,176


      4,400,000


      989


      2,507


      (695)


      (143,083)


      27,894

       

       

      BIOXCorporation

      Condensed consolidated interim statements of financial position

      As at December 31, 2016 and September 30, 2016

      (Unaudited)

      (Expressed in thousands of Canadian dollars)


      December 31,


      September 30,


      2016


      2016


      $


      $

      Assets




      Current assets





      Cash and cash equivalents

      1,038


      3,529


      Restricted cash

      1,174


      1,174


      Accounts receivable

      5,289


      2,882


      Prepaid expenses

      871


      808


      Inventory

      3,194


      3,841


      11,566


      12,234





      Investment in joint venture

      12,766


      12,984

      Property, plant and equipment

      29,860


      30,091

      Intangible assets 

      279


      304

      Deferred income tax assets

      9,913


      10,247


      64,384


      65,860





      Liabilities




      Current liabilities





      Accounts payable and other liabilities

      7,562


      7,108


      Demand loan

      1,100


      -


      Short-term debt

      8,788


      8,330


      Current portion of long-term debt

      1,500


      1,500


      Current portion of finance leases

      3


      6


      Current portion of provisions

      1,466


      1,432


      20,419


      18,376





      Long-term debt

      6,734


      7,107

      Secured promissory notes

      5,933


      5,570

      Provisions

      3,404


      3,696


      36,490


      34,749





      Equity




      Common share capital

      168,176


      168,176

      Warrant reserve 

      989


      989

      Equity reserve

      2,507


      2,446

      Accumulated other comprehensive loss

      (695)


      (617)

      Deficit

      (143,083)


      (139,883)


      27,894


      31,111


      64,384


      65,860

       

       

      BIOXCorporation

      Condensed consolidated interim statements of cash flows

      Three month periods ended December 31, 2016 and 2015

      (Unaudited)

      (Expressed in thousands of Canadian dollars, except share and per share amounts)


      2016

      2015


      $

      $




      Operating activities




      Net (loss) income

      (3,200)

      4,381


      Add items not involving cash





      Production facility depreciation and amortization

      721

      786



      Depreciation and amortization of equipment and intangible assets

      52

      56



      Financing costs

      945

      144



      Share-based compensation

      61

      112



      Gain on revaluation of provisions

      -

      (329)



      Accretion of provisions

      67

      89



      Loss on investment in joint venture

      565

      -



      Deferred income tax expense

      334

      -




      (455)

      5,239







      Net change in non-cash working capital balances





      related to operations

      (1,406)

      (7,822)




      (1,861)

      (2,583)






      Investing activities




      Purchase of property, plant and equipment

      (600)

      (192)


      Investment in joint venture

      (42)

      -


      Decrease in restricted cash

      -

      260




      (642)

      68






      Financing activities




      Payments on tank lease provision

      (370)

      (375)


      Payments on finance leases

      (3)

      (11)


      Repayment of debt financing

      (375)

      (375)


      Proceeds from demand loan

      1,100

      2,000


      Issuance of common shares

      -

      2


      Interest paid

      (343)

      (140)




      9

      1,101






      Effect of exchange rate changes on:




      Cash held in foreign currency

      3

      305






      Net decrease in cash and cash equivalents during the period

      (2,491)

      (1,109)

      Cash and cash equivalents, beginning of period

      3,529

      7,709

      Cash and cash equivalents, end of period

      1,038

      6,600

       

      SOURCE BIOX Corporation

      For further information: Alan Rickard, CEO, BIOX Corporation, 905-521-8205 ext. 253, arickard@bioxcorp.com


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