BIOX announces second quarter results

TSX symbol: BX

TORONTO, May 14 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company that designs, builds, owns and operates biodiesel production facilities, today announced its 2010 second quarter financial results (Q2 2010) for the three-month period ended March 31, 2010.

Highlights

    
    -   Production of methyl esters was 15.6 million litres in Q2 2010
        compared to 13.2 million litres in the second quarter of 2009 (Q2
        2009)
    -   Sales were $14,844,000 in Q2 2010 compared to $9,363,000 in Q2 2009
    -   Operating loss was $822,000 in Q2 2010 compared to $1,250,000 in Q2
        2009
    -   Operating income prior to non-cash items(1) was $229,000 in Q2 2010
        compared to a loss of $92,000 in Q2 2009
    -   Net loss in Q2 2010 was $5,950,000, including $3,861,000 of non-
        recurring non-cash warrant valuation charges and non-recurring costs
        of $627,000 related to the amalgamation, compared with a net loss of
        $1,547,000 in Q2 2009
    -   Loss per share was $0.20 in Q2 2010 compared to $0.07 in Q2 2009
    -   BIOX submitted two applications to Natural Resources Canada for the
        inclusion of additional 67 million litre nameplate capacity
        production facilities in the ecoENERGY for Biofuels program. Natural
        Resources Canada has provided notice that both applications have been
        deemed complete and that both applications will undergo a
        comprehensive review
    -   BIOX completed the amalgamation of BIOX Corporation with JJR IV
        Acquisition Inc. (JJR) on March 1, 2010, which resulted in the
        reverse take-over of JJR, a private placement raising gross proceeds
        of $46.7 million and the listing of BIOX's common shares on the TSX
        under the symbol BX.
    -   The U.S. Environmental Protection Agency issued the final rule to
        implement the expanded Renewable Fuels Standards (RFS2) commencing
        July 1, 2010.
    -   Subsequent to the end of the quarter, the April 10, 2010 edition of
        the Canada Gazette Part I published by the Government of Canada
        outlined the procedure for implementation of the renewable fuel
        content into gasoline, diesel fuel and heating oil. The final
        regulations are expected to be published prior to September 2010, in
        Canada Gazette Part II, with the commencement of the 2% renewable
        diesel requirement implemented by 2011 or earlier, subject to a
        technical feasibility review.
    

"We have significantly strengthened our balance sheet with the private placement related to the JJR transaction and this has provided us with sufficient capital to construct our second 67 million litre nameplate biodiesel production facility," said Tim Haig, President and CEO of BIOX Corporation. "With the submission of two applications to the ecoENERGY program we are continuing our preparations on schedule for the second plant. We believe that the underlying fundamentals of the biodiesel market continue to improve with the commencement of RFS2 in the U.S. and the implementation of Bill C-33 in Canada, which together clearly signal the commitment of regulators to the renewable fuels market."

Financial Highlights

Sales were $14.8 million and $26.4 million, respectively, for the three-month and six-month periods ended March 31, 2010 compared to $9.4 million and $21.9 million for the corresponding periods in 2009. The increase was primarily due to higher sales volumes and higher revenue per litre sold in 2010.

Direct expenses were $13.1 million and $23.2 million, respectively, for the three-month and six-month periods ended March 31, 2010 compared with $8.1 million and $20.7 million for the corresponding periods in 2009. The increase in direct expenses in 2010 was due to higher sales volumes and to higher cost per litre sold due to changes in commodity prices in 2010, primarily the price of feedstock.

General and administrative expenses were $1.5 million and $2.7 million, respectively, for the three-month and six-month periods ended March 31, 2010 compared to $1.3 million and $2.6 million for the corresponding periods in 2009.

Operating loss was $0.8 million and $1.6 million, respectively, for the three-month and six-month periods ended March 31, 2010 compared with $1.3 million and $3.6 million for the corresponding periods in 2009. The decrease in operating loss was primarily due to significantly higher gross margins achieved in 2010 compared with 2009.

Operating income prior to non-cash items(1) was $0.2 million and $0.5 million, respectively, for the three-month and six-month periods ended March 31, 2010 compared with an operating loss prior to non-cash items of $0.1 million and $1.4 million for the corresponding periods in 2009.

Operating income prior to non-cash items for BIOX Canada Limited (BIOX Canada), BIOX's wholly-owned subsidiary which owns and operates BIOX's Hamilton plant, was $1.5 million and $2.7 million, respectively, for the three-month and six-month periods ended March 31, 2010 compared with $1.1 million and $0.7 million for the corresponding periods in 2009. BIOX Canada's operating income was $0.5 million and $0.8 million, respectively, for the three-month and six-month periods ended March 31, 2010 compared with breakeven and an operating loss of $1.2 million for the corresponding periods in 2009.

Net loss and comprehensive loss was $5.9 million or $0.20 per share and $7.0 or $0.27 per share million, respectively, for the three-month and six-month periods ended March 31, 2010 compared with $1.5 million or $0.07 per share and $4.7 million or $0.22 per share for the corresponding periods in 2009. The change in net loss was impacted by the combined $4.5 million of non-recurring costs related to the warrant valuation and the amalgamation, partially offset by improved operating results.

As at March 31, 2010, BIOX's available cash position amounted to $42.5 million, which consisted of cash and cash equivalents and short-term investments, compared with $0.2 million on September 30, 2009. The increase in BIOX's cash position reflects the net proceeds of the $46.7 million private placement in March, 2010.

As at May 14, 2010, BIOX had 45,748,690 common shares outstanding, as well as options to purchase 525,000 common shares, share purchase warrants to acquire up to 1,339,286 common shares and special warrants to acquire up to 642,857 share purchase warrants (which entitle the warrant holders to acquire an equal number of BIOX common shares).

Outlook

Expansion Plans

BIOX has submitted two applications as part of the ecoENERGY for Biofuels program to Natural Resources Canada for the inclusion of additional 67 million litre nameplate capacity production facilities in the ecoENERGY for Biofuels program. The applications outline BIOX's plans for new production facilities in Hamilton, Ontario and Montreal, Quebec. BIOX has received notice from Natural Resources Canada that both applications have been deemed complete and that both applications will undergo a comprehensive review. Natural Resources Canada has indicated that it is aiming to make final program decisions based on highest ranked projects by fuel type, in the summer of 2010. BIOX estimates the completion date for construction and commissioning of a second 67 million litre nameplate capacity facility within the fourth quarter of calendar 2011, which is consistent with its previous estimate of 20 months post availability of funding. This timeframe may be extended due to delays in the Natural Resources Canada final program decisions.

Regulatory Update

On February 3, 2010, the U.S. Environmental Protection Agency (EPA) issued the final rule to implement the expanded Renewable Fuels Standard (RFS2) commencing July 1, 2010. The legislation expands the Renewable Fuels Standard and for the first time specifically provides for a renewable component in U.S. diesel fuel. RFS2 requires the use of 500 million gallons of Biomass-based diesel in 2009, increasing to 1 billion gallons in 2012. From 2012 through 2022, a minimum of 1 billion U.S. gallons must be used domestically, and the Administrator of the EPA has the authority to increase the minimum volume requirement.

The U.S. federal excise tax incentive, referred to as the blender program, expired on December 31, 2009. Separate legislation to reinstate the program has passed both the U.S. House of Representatives and the U.S. Senate. However due to differences the two bills must be reconciled prior to approval. Legislators have stated that the goal is to have the legislation passed by the end of May 2010. As a result of the uncertainty as to whether and when the biodiesel tax incentive proposal will be reinstated and whether or not the biodiesel tax incentive, if reinstated, would apply retroactively, our customers have recently required changes to the way BIOX and other biodiesel producers price biodiesel. Although BIOX continues to sell its biodiesel at a premium to the NYMEX Heating Oil rack rate, collection of the receivable and recognition of the revenue for the U.S. $1 per USG portion related to the biodiesel tax incentive is contingent on the biodiesel tax incentive being reinstated on a retroactive basis, and the retroactive credit being realized by BIOX's customers. Based on the progress that the proposed legislation has made to date, and based on statements by U.S. legislators, BIOX believes that the biodiesel tax incentive will be passed into law in the near term, and that it will be retroactive to January 1, 2010. However, if the passage of the bill is further delayed or abandoned, or if the bill is passed without retroactive effect, BIOX's total sales and margins will be significantly and adversely impacted in the near term.

With the publication of the Canada Gazette Part I, on April 10, 2010, the Government of Canada announced that it was moving forward with proposed regulations that would require an average renewable fuel content to be blended into gasoline, diesel fuel and heating oil commencing in part as early as September 2010. Assuming no substantive changes to the regulations as published through the 60 day public comment period which ends June 9, 2010, the final regulations will be published in the Canada Gazette Part II with the start of the 5% renewable gasoline requirements commencing September 1, 2010. Part I outlines the commencement of the 2% renewable diesel requirement will be implemented by 2011 or earlier, subject to technical feasibility through an amendment to the regulations.

1) Note: Non-GAAP Measures. Operating income (loss) 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 operating income (loss) determined in accordance with Canadian generally accepted accounting principles as an indicator of BIOX's performance.

The following table presents a reconciliation of operating income prior to non-cash items to operating income is as follows:

    
    (in thousands)                 Three months ended       Six months ended
                                        March 31                March 31
                                    2010        2009        2010        2009
    -------------------------------------------------------------------------
                                       $           $           $           $

    Operating income (loss)
     before non-cash items           229         (92)        508      (1,406)
    Deduct: Production facility
             depreciation and
             amortization           (987)     (1,033)     (1,949)     (1,900)
            Amortization of
             furniture,
             equipment and
             intangibles             (64)       (125)       (145)       (326)
    -------------------------------------------------------------------------
    Operating income (loss)         (822)     (1,250)     (1,586)     (3,632)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Notice of Conference Call

BIOX will hold a conference call today, May 14, 2010, at 9:00 a.m. ET hosted by Mr. Tim Haig, President and Chief Executive Officer, and Mr. Chris Clinning, Chief Financial 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 (800) 642-1687 and enter reservation number 74823863. A live audio webcast of the call will be available at www.bioxcorp.com. The webcast will be archived for 90 days.

About BIOX Corporation

BIOX is a renewable energy company that designs, builds, owns and operates biodiesel production facilities. BIOX currently owns and operates a biodiesel production facility in Hamilton, Ontario, Canada 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 both North American (ASTM D-6751) and European (EN 14214) 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 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. 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, including inclusion in the ecoENERGY for Biofuels Program and resolution of the uncertainty surrounding the U.S blender program; 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). 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.

    
    BIOX Corporation
    Consolidated statements of operations and comprehensive loss
    (All dollar amounts are expressed in thousands, except share and per
    share amounts)
    (unaudited)
                                  Three months ended        Six months ended
                                        March 31                March 31
                                 --------------------    --------------------
                                    2010        2009        2010        2009
    -------------------------------------------------------------------------
                                       $           $           $           $

    Sales                         14,844       9,363      26,409      21,913
    -------------------------------------------------------------------------

    Cost of sales
      Direct expenses             13,094       8,121      23,164      20,744
      Production facility
       depreciation and
       amortization                  987       1,033       1,949       1,900
    -------------------------------------------------------------------------
                                  14,081       9,154      25,113      22,644
    -------------------------------------------------------------------------

    Gross margin                     763         209       1,296        (731)
    -------------------------------------------------------------------------

    Operating expenses
      General and administrative   1,521       1,334       2,737       2,575
      Amortization of furniture,
       equipment and intangibles      64         125         145         326
    -------------------------------------------------------------------------
                                   1,585       1,459       2,882       2,901
    -------------------------------------------------------------------------

    Operating loss                   822       1,250       1,586       3,632
    -------------------------------------------------------------------------

    Other expenses
      Stock-based compensation        20         128          20         575
      Interest and fees on loans     169         222         350         616
      Financing and accretion         25          10          36         141
      Expansion planning and
       development                   366           -         366           -
      Disposal of property,
       plant and equipment             -           -          42           -
      Loss (gain) on foreign
       exchange                       70         (62)        149        (254)
      Valuation of warrants        3,861           -       3,861           -
      Costs related to the
       qualifying transaction        627           -         627           -
    -------------------------------------------------------------------------
                                   5,138         298       5,451       1,078
    -------------------------------------------------------------------------

    Net loss before interest
     income                        5,960       1,548       7,037       4,710
    Interest income                  (10)         (1)        (16)         (7)
    -------------------------------------------------------------------------
    Net loss and comprehensive
     loss for the period           5,950       1,547       7,021       4,703
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss per
     common share                   0.20        0.07        0.27        0.22
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number
     of common shares         30,238,357  21,747,066  25,946,056  21,747,066
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BIOX Corporation
    Consolidated statements of deficit
    (All dollar amounts are expressed in thousands)
    (unaudited)
                                  Three months ended        Six months ended
                                        March 31                March 31
                                 --------------------    --------------------
                                    2010        2009        2010        2009
    -------------------------------------------------------------------------
                                       $           $           $           $

    Deficit, beginning of period  76,408      72,848      75,337      69,692
    Net loss for the period        5,950       1,547       7,021       4,703
    -------------------------------------------------------------------------
    Deficit, end of period        82,358      74,395      82,358      74,395
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BIOX Corporation
    Consolidated balance sheets
    (All dollar amounts are expressed in thousands)
    (unaudited)
                                                         At          At
                                                      March 31  September 30
                                                        2010        2009
    -------------------------------------------------------------------------
                                                             $             $

    Assets
    Current
      Cash and cash equivalents                         42,496           202
      Accounts receivable                                3,866         9,094
      Prepaid expenses and sundry assets                   203           556
      Inventory                                          2,286         3,729
    -------------------------------------------------------------------------
                                                        48,851        13,581

    Restricted cash                                      1,173         1,173
    Property, plant and equipment, net                  57,699        58,728
    Intangible assets, net                               1,374         1,440
    -------------------------------------------------------------------------
                                                       109,097        74,922
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current
      Accounts payable and accrued liabilities           4,736        10,452
      Demand loan                                          970         1,545
      Current portion of long-term debt                  1,380         1,380
    -------------------------------------------------------------------------
                                                         7,086        13,377

    Long-term debt                                      10,389        11,059
    Asset retirement obligation                          1,965         1,872
    -------------------------------------------------------------------------
                                                        19,440        26,308
    -------------------------------------------------------------------------

    Shareholders' equity
    Capital stock                                      167,787       122,668
    Warrants                                             3,152             -
    Contributed surplus                                  1,076         1,283
    Deficit                                            (82,358)      (75,337)
    -------------------------------------------------------------------------
                                                        89,657        48,614
    -------------------------------------------------------------------------
                                                       109,097        74,922
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BIOX Corporation
    Consolidated statements of cash flows
    (All dollar amounts are expressed in thousands)
    (unaudited)
                                  Three months ended        Six months ended
                                        March 31                March 31
                                 --------------------    --------------------
                                    2010        2009        2010        2009
    -------------------------------------------------------------------------
                                       $           $           $           $

    Cash provided by (used in):

    Operating activities
      Net loss for the period     (5,950)     (1,547)     (7,021)     (4,703)
      Add items not involving
       cash
        Amortization of property,
         plant and equipment
         and intangible assets     1,051       1,158       2,094       2,226
        Amortization of deferred
         financing charges            10          10          21          63
        Debenture accretion            -           -           -          78
        Stock-based compensation      20         128          20         575
        Accretion of asset
         retirement obligation        47          43          93          85
        Interest on debt
         financing                    53          63          53          63
        Valuation of warrants      3,861           -       3,861           -
        Non-cash disposal of
         property, plant and
         equipment                     -           -          42           -
    -------------------------------------------------------------------------
                                    (908)       (145)       (837)     (1,613)
        Net change in non-cash
         working capital balances
         related to operations        83        (724)      1,604         268
    -------------------------------------------------------------------------
                                    (825)       (869)        767      (1,345)
    -------------------------------------------------------------------------

    Investing activities
      Purchase of property,
       plant and equipment, net     (671)       (345)     (1,390)     (1,046)
    -------------------------------------------------------------------------
                                    (671)       (345)     (1,390)     (1,046)
    -------------------------------------------------------------------------

    Financing activities
      Proceeds from debt
       financing                   1,380           -       1,380      13,800
      Repayment of secured
       debentures                      -           -           -     (13,600)
      Repayment of debt
       financing                  (1,725)       (345)     (2,070)       (345)
      Repayment on demand loan      (600)          -        (575)          -
      Financing charges                -         (39)          -        (412)
      Proceeds from issuance of
       common shares              46,700           2      46,700           6
      Share issuance costs        (2,518)          -      (2,518)          -
    -------------------------------------------------------------------------
                                  43,237        (382)     42,917        (551)
    -------------------------------------------------------------------------

    Net increase (decrease) in
     cash and cash equivalents
     during the period            41,741      (1,596)     42,294      (2,942)
    Cash and cash equivalents,
     beginning of period             755       2,071         202       3,417
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                42,496         475      42,496         475
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow
     information
      Interest paid                  195         183         375         529
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCE BIOX Corporation

For further information: For further information: BIOX Corporation, Chris Clinning, Chief Financial Officer, Phone: (905) 337-4970, E-mail: cclinning@bioxcorp.com; Investor Relations, Ross Marshall, The Equicom Group Inc., Phone: (416) 815-0700 ext. 238, E-mail: rmarshall@equicomgroup.com


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