TORONTO, Aug. 5, 2015 /CNW/ - Ceres Global Ag Corp. (TSX: CRP) ("Ceres"
or the "Corporation") today announced its financial and operational
results for the three months ended June 30, 2015.
Three Months Ended
June 30, 2015
Three Months Ended
June 30, 2014
Gross profit (loss)
Income (loss) from operations
Net income (loss)
Earnings (loss) per share basic and fully diluted
EBITDA (loss) 1
Gross profits for the quarter ended June 30, 2015 were $1.9 million
compared to $1.2 million for the same quarter for the fiscal year ended
2014 due to increased net trading margins;
Revenues of $59.3 million in the first quarter of 2015 versus $51.5
million for the same period in 2014.
General and administrative expenses declined $0.9 million from $3.4
million in the first quarter of 2014 to $2.5 million for the first
quarter of 2015;
Ceres entered into an agreement to sell its Electric Steel grain
facility in Minneapolis, Minnesota, to the University of Minnesota for
gross proceeds of US$1,450,000. The transaction is subject to final
approval by the University's Board of Regents;
Recognized a non-cash expense, which totalled $0.8 million during the
quarter for the revaluation of the derivative warrant liability
relating to the warrants conditionally issued in connection with the
rights offering in December 2014;
Continued to expand grain operations at Northgate, Ceres' new
commodities logistics centre. During the quarter ended June 30, 2015,
Ceres handled 0.6 million bushels of grain compared to 1.7 million
bushels for the quarter ended March 31, 2015. There was no comparative
period for the prior year. The decline quarter over quarter was due to
normal seasonal road restrictions and producers beginning field work;
Through July 31, 2015, the Corporation has loaded 186 railcars of grain
Announced an agreement with a subsidiary of Parkland Fuel Corporation
(TSX: PKI) for transloading propane at Northgate. Going forward, the
Company anticipates Northgate could facilitate the transloading and
shipment of additional payloads such as fertilizers or oil-based
Through July 31, 2015, the Corporation has loaded 190 railcars of
propane at Northgate.
"Northgate's build-out progressed on time and on budget during our first
quarter," said Ceres chief executive officer Patrick Bracken. "While we
are still in the building phase, we are not waiting to take advantage
of the value and strategic location of Northgate as evidenced by the
increased diversity of first quarter activity, which included grain and
propane handling. We expect this business to grow throughout fiscal
year 2016 by further leveraging the logistical advantages of Northgate
with additional oilfield products and agricultural inputs."
Ceres is principally involved in an agricultural commodity-based
business, in which changes in selling prices generally move in relation
to changes in purchase prices. Therefore, increases or decreases in
prices of the agricultural commodities that the business deals in will
have a relatively equal impact on sales and cost of sales and a minimal
impact on gross profit. Accordingly, management believes it is more
important to focus on changes in gross profit than it is to focus on
changes in revenue.
Gross profit for the first quarter of the current year increased $0.7
million to $1.9 million compared to $1.2 million for the first quarter
of prior year. The increase was driven by a higher net trading margin
of $1.8 million. The increase in net trading margin was offset by an
increase in facility operating expenses of $0.7 million.
For the quarter ended June 30, 2015, general and administrative expenses
totalled $2.5 million, which represents a decrease of $0.9 million. The
reduction is due to incurring expenses relating to the build-out of
Northgate that included consulting, engineering and outside services in
prior year quarter, which were not incurred during the quarter ended
June 30, 2015. A decline in such expenses was offset by an increase in
the expense relating to the revaluation of provision for future
payments due to Front Street Capital, which totalled $165 thousand for
the quarter ended June 30, 2015.
For the quarter ended June 30, 2015, the Corporaiton incurred a non-cash
expense of $836,000 relating to the revaluation of its derivative
warrant liability. In connection with the rights offering in December
2014, the Corporation issued warrants, which are subject to shareholder
approval at the annual general meeting. In the event of a change of
control of the Corporation, the holders of the warrants may elect, in
lieu of exercising the warrants for cash, a cashless exercise. If a
warrant holder exercises this option, there will be variability in the
number of shares issued per warrant.
In accordance with IFRS, a contract to issue a variable number of shares
fails to meet the definition of equity and must instead be classified
as a derivative liability and measured at fair value with changes in
the fair value recognized in the statement of operations and
comprehensive loss at each period end. If the warrants are approved at
the annual general meeting as described above, the warrants will
ultimately be converted to the Corporation's equity (common shares)
when the warrants are exercised, or will be extinguished upon the
expiration of the outstanding warrants, and will not result in the
outlay of any cash by the Corporation.
Consolidated EBITDA for the quarter ended June 30, 2015 was $57,000
compared to an EBITDA loss of $1.8 million for the same quarter a year
Consolidated net loss was $1.7 million for the quarter ended June 30,
2015 compared to a net loss of $2.1 million for the prior year.
The Corporation's sources of liquidity as at June 30, 2015 are cash and
cash equivalents and available funds under its revolving credit
facility. Available cash and unused credit facilities for the quarter
ended June 30, 2015 was $80.3 million versus $100.5 million for the
quarter ended March 31, 2015.
Management believes that cash flow from operations will be adequate to
fund operating expenditures, maintenance capital, interest, and any
income tax obligations. Growth capital expenditures in the next 12
months will be funded by cash on hand and borrowing against the credit
facility. Any additional debt incurred will be serviced by the
anticipated increases in cash flow and will only be borrowed within the
Corporation's debt covenant limits.
During the quarter ended June 30, 2015, Ceres expanded its operations by
opening a grain merchandising office in southeastern Ontario, which
management expects will play a significant role in extending the
Corporation's trading and merchandising reach into Ontario and the
eastern Canadian markets, while enhancing the utilization of its Port
Colborne, Ontario, facility. During the quarter ended June 30, 2015 and
subsequent to quarter end, the Corporation has been entering into cash
grain purchase and sales contracts in anticipation of the upcoming
eastern Ontario harvest.
Ceres has expanded its existing hard wheat trading portfolio with the
addition of key personnel, which has allowed the Corporation to expand
its geographic procurement and merchandising reach throughout North
America. Such efforts were beneficial in the quarter ended June 30,
2015, as Ceres' enhanced geographic reach allowed the Corporation to
trade the increased premium levels profitably through procurement in
key U.S. regions that Ceres ordinarily would not have had access.
Statistics Canada has reported slightly less seeded acres of cereal
grain compared to prior year; however, there is no indication as to
crop yields or anticipated cereal crop production. The seeded acres and
crops tributary to our Northgate, Saskatchewan, terminal appear to be
relatively favorable while crops further west and northwest have been
challenged by a lack of moisture. Early crop production indications out
of Manitoba suggest a very strong wheat crop, while areas in western
Saskatchewan suggest weaker production than prior years, leaving
Northgate central to both growing regions.
These early crop reports, coupled with our first crop year present in
western Canada and with our commitment to enhancing our grain
merchandising and trade flow capabilities as noted above, leads
management to expect that these factors will contribute positively to
the Corporation's net earnings through the rest of fiscal 2016.
Furthermore, management expects to trade and handle more company-owned
bushel volume in fiscal year 2016 than in fiscal 2015 with the
intention that increased handling will lead to greater net trading
margins and gross profits.
Concurrent with its grain operations at Northgate, the Corporation
entered into an agreement with Elbow River Marketing Ltd. (ERM), a
wholly owned subsidiary of Parkland Fuel Corporation, to transload
liquefied petroleum gas (LPG) at Northgate. Under this agreement, the
Corporation unloads propane from inbound trucks loading it into
railcars for shipment into the U.S. market via the BNSF from Northgate,
Saskatchewan. This provides a direct link and an added access point for
propane to enter the US market. Through July 31, 2015, the Corporation
has loaded 186 railcars.
Management expects this business to grow throughout fiscal year 2016, as
it is renegotiating and extending is current transloading agreement
with ERM while exploring opportunities to build out and further develop
its current LPG transloading business with additional tenant customers.
In addition, the Corporation is pursuing opportunities that further
leverage the international port advantages of Northgate with other
oilfield products and agricultural inputs.
Conference Call Details
The Corporation will hold a conference call to discuss first quarter
fiscal 2016 results on Wednesday, August 5, 2015 at 5:00 p.m. ET.
Patrick Bracken, President and CEO, and Mark Kucala, CFO, will co-chair
the conference call.
All interested parties can join the conference call by dialing
1-888-231-8191 or 647-427-7450, conference ID: 93807291. Please dial
in 15 minutes prior to the call to secure a line. The conference call
will be archived for replay until Wednesday, August 19, 2015 at
midnight, ET. To access the archived conference call, please dial
1-855-859-2056 and enter the encore code 93807291.
A live audio webcast of the conference call will be available at www.newswire.ca. Please connect at least 15 minutes prior to the conference call to
ensure adequate time for any software download that may be required to
join the webcast. An archived replay of the webcast will be available
for 365 days.
Non-IFRS Financial Measures
1EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization)
is not a standardized financial measure prescribed by IFRS; however, is
one metric that is used by management to determine the Corporation's
ability to service its debt and finance capital. EBITDA excludes gains
and losses on property, plant and equipment and assets held for sale,
as these items are considered to be non-reoccurring in nature.
In calculating EBITDA, Ceres excludes its share of the net income (loss)
from investments in associates and the gain (loss) on sale or
impairment of property, plant and equipment. Ceres may calculate EBITDA
differently than other companies; therefore, Ceres' EBITDA may not be
comparable to similar measures presented by other issuers.
Investors are cautioned that EBITDA should not be construed as
alternatives to net income or loss, or to other standardized financial
measures determined in accordance with IFRS, and are not intended to
represent cash flows or results of operations in accordance with IFRS.
About Ceres Global Ag Corp. (ceresglobalagcorp.com)
Ceres Global Ag Corp. is a Toronto-based company focused on two primary
businesses: a Grain Storage, Handling and Merchandising unit, anchored
by its 100% ownership of Riverland Ag Corp., and a Commodity Logistics
unit, containing its 25% interest in Stewart Southern Railway Inc. and
its development of the Northgate, SK Commodity Logistics Centre.
Riverland Ag Corp. is a collection of nine (9) grain storage and
handling assets in Minnesota, New York, and Ontario having aggregate
storage capacity of approximately 47 million bushels as at March 31,
2015. Riverland Ag also manages two (2) facilities in Wyoming on behalf
of its customer-owner. Stewart Southern Railway Inc. is a short-line
railway with a range of 130 kilometres that operates in South-eastern
Saskatchewan. The Northgate Commodities Logistics Centre is a
state-of-the art grain, oil and oilfield supplies transloading site
being developed in conjunction with Riverland Ag and several potential
energy company partners, connected to BNSF Railway.
Cautionary Notice: This news release contains "forward-looking information" within the
meaning of applicable Canadian securities legislation and United States
securities laws. Forward-looking information may include, but is not
limited to, statements regarding future operations and results,
anticipated business prospects and financial performance of Ceres and
its subsidiaries, including the plans, costs, timing and capital for
the development of the Northgate Commodities Logistics Centre,
expectations or projections about the future, strategies and goals for
growth, expected and future cash flows, costs, planned capital
expenditures, regulatory change, general economic political and market
conditions anticipated capital projects, construction and completion
dates, operating and financial results, critical accounting estimates,
the expected financial and operational consequences of future
commitments. Generally, forward-looking information can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate",
"believes", "may have implications" or variations of such words and
phrases or statements that certain actions, events or results "may",
"could", "would", "might", or "will be taken", "occur", or "be
achieved". Forward-looking information is based on the opinions and
estimates of management at the date the information is made, and is
based on a number of assumptions and subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking information. Key assumptions upon which such
forward-looking information is based are listed in the "Forward-Looking
Information" section of the interim MD&A for the year and quarter ended
March 31, 2015. Many such assumptions are based on factors and events
that are not within the control of Ceres and there is no assurance they
will prove to be correct. Factors that could cause actual results to
vary materially from results anticipated by such forward-looking
information include, among others, risks related to weather, politics
and governments, changes in environmental and other laws and
regulations, competitive factors in agricultural, food processing and
feed sectors, construction and completion of capital projects, labour,
equipment and material costs, access to capital markets, interest and
currency exchange rates, technological developments, global and local
economic conditions, the ability of Ceres to successfully implement
strategic initiatives and whether such strategic initiatives will yield
the expected benefits, the ability of Ceres to successfully defend the
claim by The Scoular Company, the operating performance of the
Corporation's assets, the availability and price of commodities and
regulatory environment, processes and decisions. Although Ceres has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those described in
forward-looking information, there may be other factors that cause
actions, events or results that are not anticipated, estimated or
intended. There can be no assurance that forward-looking information
will prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information. Ceres
undertakes no obligation to update forward-looking information if
circumstances or management's estimates or opinions should change,
except as required by applicable securities laws. The reader is
cautioned not to place undue reliance on forward-looking information.
SOURCE Ceres Global Ag Corp.
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