BIOX announces third quarter results

TSX symbol: BX

TORONTO, Aug. 9 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company that designs, builds, owns and operates biodiesel production facilities, today announced its 2010 third quarter financial results (Q3 2010) for the period ended June 30, 2010.

Highlights

    
    -   Production of methyl esters was 14.4 million litres in Q3 2010
        compared to 12.1 million litres in the third quarter of 2009 (Q3
        2009)
    -   Sales were $6,581,000 in Q3 2010, compared to $10,837,000 in Q3 2009,
        as a result of the expiry of the U.S. federal excise tax incentive
        and the delayed sale of product into the fourth quarter of fiscal
        2010 related to the expanded U.S. Renewable Fuel Standard (RFS2) that
        commenced on July 1, 2010
    -   Operating loss was $5,604,000 in Q3 2010 compared to $1,167,000 in Q3
        2009
    -   Operating loss prior to non-cash items(1) was $4,546,000 in Q3 2010
        compared to $189,000 in Q3 2009
    -   Net loss was $6,024,000 in Q3 2010 compared to $1,547,000 in Q3 2009
    -   Loss per share was $0.13 in Q3 2010 compared to $0.07 in Q3 2009
    -   On July 1, 2010 the expanded U.S. RFS2 commenced on schedule
        establishing a minimum volume requirement of 800 million U.S. gallons
        of Biomass-based diesel for 2011, for which BIOX is registered and
        eligible to supply.
    -   BIOX received notification from Natural Resources Canada (NRCan) that
        its application under the ecoENERGY for Biofuels program for a second
        67 million litre nameplate capacity facility in Hamilton has
        progressed to a full merit-based assessment based on its advanced
        state of readiness.
    

"The longer term market dynamics for renewable fuels is becoming increasingly clear with the implementation of RFS2 in the U.S. Over the coming months we expect to see the fundamentals for biodiesel demand gain traction now that traditional refiners and importers are obligated to actively participate in the biodiesel market in order to meet the requirement to blend 1.145 billion U.S. gallons in 2010 and 2011. As a registered renewable producer and importer, BIOX is in an excellent position to capitalize on these improving fundamentals. Our Hamilton facility continues to successfully produce within our target range. For the first time since we initiated production we are storing increased levels of product as inventory to optimize the price we receive given the impact of the expiry of the U.S. federal excise tax incentive and the recent implementation of RFS2. We have secured sales contracts for our remaining Q3 2010 inventory and we intend to continue to monitor the market and be opportunistic in our sales approach as the mandates take effect, utilizing storage and/or selling product as it benefits us," said Tim Haig, President and CEO of BIOX Corporation.

Financial Highlights

Sales were $6.6 million and $33.0 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared to $10.8 million and $32.8 million for the corresponding periods in 2009. The change in sales is primary a result of the impact of the expiry of the U.S federal excise tax incentive and the delayed sale of product into the fourth quarter of fiscal 2010 to capitalize upon BIOX USA Limited's registration in early July as a Renewable Fuel Importer and Renewable Identification Number (RIN) generator. During the quarter, BIOX sold biodiesel that included $1.6 million of contingent revenue that cannot be recognized unless and until the U.S. biodiesel tax incentive is reinstated retroactively.

Direct expenses were $9.4 million and $32.6 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared with $9.9 million and $30.6 million for the corresponding periods in 2009. Direct expenses include a $1.4 million write down of finished goods inventory to market value, calculated excluding the U.S. $1 per U.S. gallon related to the biodiesel tax incentive that has not been reinstated.

General and administrative expenses were $1.7 million and $4.4 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared to $1.1 million and $3.7 million for the corresponding periods in 2009. The change is primarily due to additional administrative costs and professional fees as a result of BIOX becoming a public company on March 1, 2010.

Operating loss was $5.6 million and $7.2 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared with $1.2 million and $4.8 million for the corresponding periods in 2009. The change in operating loss is primarily the result lower sales during the three-month period ended June 30, 2010 as described above, due to the impact of the expiry of the U.S. federal excise tax incentive and the delayed sale of product into the fourth quarter of fiscal 2010 to capitalize upon BIOX USA Limited's registration in early July as a Renewable Fuel Importer and Renewable Identification Number (RIN) generator.

Operating loss prior to non-cash items(1) was $4.5 million and $4.0 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared with $0.2 million and $1.6 million for the corresponding periods in 2009.

Operating loss prior to non-cash items for BIOX Canada Limited (BIOX Canada) was $3.1 million and $0.4 million, respectively, for the three-month and nine-month periods ended June 30, 2010 compared with operating income prior to non-cash items of $0.9 million and $1.6 million for the corresponding periods in 2009.

Net loss and comprehensive loss was $6.0 million or $0.13 per fully diluted share and $13.0 million or $0.40 per share, respectively, for the three-month and nine-month periods ended June 30, 2010 compared with $1.5 million or $0.07 per share and $6.3 million or $0.29 per share for the corresponding periods in 2009.

As at June 30, 2010, BIOX's available cash position amounted to $31.6 million, which consisted of cash and cash equivalents and short-term investments, compared with $0.2 million on September 30, 2009.

As at August 6, 2010, BIOX had 45,748,690 common shares outstanding, as well as options to purchase 525,000 common shares, and share purchase warrants to acquire up to 1,982,143 common shares.

Outlook

U.S. Renewable Fuels Standard

The U.S. Environmental Protection Agency (EPA) implemented the expanded RFS2 as of July 1, 2010. RFS2 requires the use of 500 million U.S. gallons of Biomass-based diesel in 2009, increasing to 1 billion U.S. gallons in 2012. From 2012 through 2022, a minimum of 1 billion U.S. gallons annually must be used domestically, and the Administrator of the EPA has the authority to increase the minimum volume requirement. In June 2010, the EPA proposed 2011 overall volumes and standards, including a minimum 1.35 billion U.S. gallons of advanced Biofuels which results in a minimum 800 million U.S. gallons of Biomass-based diesel in U.S. diesel fuel. BIOX believes that the implementation of the expanded RFS2 will have a positive impact on the demand for biodiesel in the U.S.

In early July 2010, BIOX's wholly owned subsidiaries completed registrations with the EPA as a Foreign Renewable Fuel Producer (BIOX Canada Limited), and as a Renewable Fuel Importer and RIN Generator (BIOX USA Limited). Registration under RFS2 provides BIOX with access to the U.S. renewable fuels market, including the ability to generate biodiesel RINs which are required for obligated parties in the U.S., which includes all refiners and importers of transportation fuel, to show compliance with RFS2.

With the implementation of RFS2, the value of RIN's has increased significantly. BIOX intends to be opportunistic in its sales approach in the near term and sell its biodiesel when prices warrant, and will otherwise store biodiesel for sale at a future date anticipating higher values as a result of the implementation of RFS2 and/or the reinstatement of the biodiesel tax incentive.

U.S. Federal Excise Tax Incentive

The U.S. federal excise tax incentive, referred to as the biodiesel tax incentive, expired on December 31, 2009. Despite delays, legislators continue to indicate that their goal is to pass legislation that would include the biodiesel tax incentive. BIOX believes that any reinstatement of the biodiesel tax incentive will be delayed until the fall of 2010 and that it is possible the program will not be reinstated at all.

Expansion Plans

BIOX has submitted two applications to NRCan 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. On June 17, 2010, BIOX received notice from NRCan that the Hamilton application for the ecoENERGY program had successfully demonstrated an advanced state of readiness, and that the application would undergo a full merit-based assessment against all program criteria. NRCan has indicated that it is aiming to make final program decisions based on highest ranked projects, by fuel type, subject to funding availability and volume targets, in the summer of 2010. BIOX has not received notification regarding the status of other ecoENERGY application for Montreal.

Due to the delay in the final program decisions regarding ecoENERGY and the uncertainty of biodiesel incentives in the U.S., BIOX has deferred significant commitments on its plant 2 expansion. Significant capital commitments will not be made until clarification is received regarding the ecoENERGY program and improved margins are realized in BIOX's current base business as a result of the implementation of RFS2 and/or the reinstatement of the biodiesel tax incentive. This deferral will delay the completion date of a second BIOX facility. The extent of the delay will be a function of the timing of NRCan's decision with respect to the inclusion of a second BIOX plant in the ecoENERGY program, and improved market conditions for the sale of biodiesel.

Notice of Conference Call

BIOX will hold a conference call today, August 9, 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 91992453. A live audio webcast of the call will be available at www.bioxcorp.com. The webcast will be archived for 90 days.

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. For a reconciliation of operating income (loss) prior to non-cash items to operating income (loss) determined in accordance with GAAP, refer to BIOX's Management's Discussion and Analysis for Q3 2010 filed on SEDAR at www.sedar.com.

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 of BIOX's second production plant in the ecoENERGY for Biofuels Program and resolution of the uncertainty surrounding the U.S biodiesel tax incentive; 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       Nine months ended
                                             June 30                 June 30
                              ----------------------- -----------------------
                                    2010        2009        2010        2009
    -------------------------------------------------------------------------
                                       $           $           $           $

    Sales                          6,581      10,837      32,989      32,750
    -------------------------------------------------------------------------

    Cost of sales
      Direct expenses              9,426       9,900      32,590      30,644
      Production facility
       depreciation and
       amortization                  985         956       2,934       2,856
    -------------------------------------------------------------------------
                                  10,411      10,856      35,524      33,500
    -------------------------------------------------------------------------

    Gross margin                  (3,830)        (19)     (2,535)       (750)
    -------------------------------------------------------------------------

    Operating expenses
      General and administrative   1,701       1,126       4,435       3,702
      Amortization of furniture,
       equipment and intangible
       assets                         73          22         219         348
    -------------------------------------------------------------------------
                                   1,774       1,148       4,654       4,050
    -------------------------------------------------------------------------

    Operating loss                 5,604       1,167       7,189       4,800
    -------------------------------------------------------------------------

    Other expenses
      Stock-based compensation        60          72          80         647
      Interest and fees on loans     160         204         511         821
      Financing and accretion         13          10          48         151
      Expansion planning and
       development                   100           -         466           -
      Disposal of property, plant
       and equipment                 103           -         145           -
      Loss (gain) on foreign
       exchange                       26          96         175        (160)
      Valuation of warrants            -           -       3,861           -
      Costs related to the
       qualifying transaction          6           -         634           -
    -------------------------------------------------------------------------
                                     468         382       5,920       1,459
    -------------------------------------------------------------------------

    Net loss before interest
     income                        6,072       1,549      13,109       6,259
    Interest income                  (48)         (2)        (64)         (9)
    -------------------------------------------------------------------------
    Net loss and comprehensive
     loss for the period           6,024       1,547      13,045       6,250
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss per
     common share                   0.13        0.07        0.40        0.29
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number
     of common shares         45,748,690  21,747,066  32,461,400  21,747,066
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BIOX Corporation
    Consolidated statements of deficit
    (All dollar amounts are expressed in thousands)
    (unaudited)

                                  Three months ended       Nine months ended
                                             June 30                 June 30
                              ----------------------- -----------------------
                                    2010        2009        2010        2009
    -------------------------------------------------------------------------
                                       $           $           $           $

    Deficit, beginning of
     period                       82,358      74,395      75,337      69,692
    Net loss for the period        6,024       1,547      13,045       6,250
    -------------------------------------------------------------------------
    Deficit, end of period        88,382      75,942      88,382      75,942
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BIOX Corporation
    Consolidated balance sheets
    (All dollar amounts are expressed in thousands)
    (unaudited)

                                                              At          At
                                                         June 30 September 30
                                                            2010        2009
    -------------------------------------------------------------------------
                                                               $           $

    Assets
    Current
      Cash and cash equivalents                           31,632         202
      Accounts receivable                                  4,267       9,094
      Prepaid expenses and sundry assets                   1,124         556
      Inventory                                            6,971       3,729
    -------------------------------------------------------------------------
                                                          43,994      13,581

    Restricted cash                                        1,173       1,173
    Property, plant and equipment, net                    58,211      58,728
    Intangible assets, net                                 1,341       1,440
    -------------------------------------------------------------------------
                                                         104,719      74,922
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current
      Accounts payable and accrued liabilities             6,653      10,452
      Demand loan                                            980       1,545
      Current portion of long-term debt                    1,380       1,380
    -------------------------------------------------------------------------
                                                           9,013      13,377

    Long-term debt                                        10,001      11,059
    Asset retirement obligation                            2,012       1,872
    -------------------------------------------------------------------------
                                                          21,026      26,308
    -------------------------------------------------------------------------

    Shareholders' equity
    Capital stock                                        167,787     122,668
    Warrants                                               3,152           -
    Contributed surplus                                    1,136       1,283
    Deficit                                              (88,382)    (75,337)
    -------------------------------------------------------------------------
                                                          83,693      48,614
    -------------------------------------------------------------------------
                                                         104,719      74,922
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BIOX Corporation
    Consolidated statements of cash flows
    (All dollar amounts are expressed in thousands)
    (unaudited)

                                  Three months ended       Nine months ended
                                             June 30                 June 30
                              ----------------------- -----------------------
                                    2010        2009        2010        2009
    -------------------------------------------------------------------------
                                       $           $           $           $

    Cash provided by (used in):

    Operating activities
      Net loss for the period     (6,024)     (1,547)    (13,045)     (6,250)
      Add items not involving
       cash
        Amortization of
         property, plant and
         equipment and
         intangible assets         1,058         978       3,153       3,204
        Amortization of
         deferred financing
         charges                      10          10          31          73
        Debenture accretion            -           -           -          78
        Stock-based compensation      60          72          80         647
        Accretion of asset
         retirement obligation        47          43         140         128
        Interest on debt
         financing                    52          56          52          56
        Valuation of warrants          -           -       3,861           -
        Non-cash disposal of
         property, plant and
         equipment                   103           -         145           -
    -------------------------------------------------------------------------
                                  (4,694)       (388)     (5,583)     (2,064)
        Net change in non-cash
         working capital
         balances related to
         operations               (3,459)        (71)     (1,803)        259
    -------------------------------------------------------------------------
                                  (8,153)       (459)     (7,386)     (1,805)
    -------------------------------------------------------------------------

    Investing activities
      Purchase of property,
       plant and equipment,
       net                        (2,376)       (800)     (3,766)     (1,846)
      Increase in restricted
       cash                            -      (1,173)          -      (1,173)
    -------------------------------------------------------------------------
                                  (2,376)     (1,973)     (3,766)     (3,019)
    -------------------------------------------------------------------------

    Financing activities
      Proceeds from debt
       financing                       -           -       1,380      13,800
      Repayment of secured
       debentures                      -           -           -     (13,600)
      Repayment of debt
       financing                    (345)       (345)     (2,415)       (690)
      Proceeds from
       (repayment on) demand
       loan                           10       2,590        (565)      2,590
      Financing charges                -           -           -        (411)
      Proceeds from issuance
       of common shares                -           -      46,700           6
      Share issuance costs             -           -      (2,518)          -
    -------------------------------------------------------------------------
                                    (335)      2,245      42,582       1,695
    -------------------------------------------------------------------------

    Net (decrease) increase
     in cash and cash
     equivalents during the
     period                      (10,864)       (187)     31,430      (3,129)
    Cash and cash equivalents,
     beginning of period          42,496         475         202       3,417
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                31,632         288      31,632         288
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow
     information
      Interest paid                  180         196         607         725
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

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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