PyroGenesis announces 4th quarter and 2012 yearend results; more than $7.5M in orders; new patent; cash on hand at yearend over $2M

MONTREAL, May 1, 2013 /CNW Telbec/ - PyroGenesis Canada Inc.  ("PyroGenesis" or the "Company") (TSXV: PYR), an environmental solutions company that designs, develops and manufactures plasma waste-to-energy systems and plasma torch products, today announced its financial and operational results for the fourth quarter and the fiscal year ended December 31, 2012.

Highlights

2012 was a year during which PyroGenesis:

• Received a $5.5 million reorder for one of its plasma waste destruction system;
• Signed a $2.2 million plasma torch contract;
• Repaid all third party debt;
• Obtained a Patent for its Ultra Compact Waste Treatment System ideal for small ships and isolated communities;
• Was awarded a follow-on contract from a multinational mining and metallurgical company;
• Closed a second public offering for aggregate gross proceeds of $3,539,644 on March 29, 2012;
• Shipped its plasma-based Ozone Depleting Substance Destruction System to Recyclage ÉcoSolutions Inc.'s facility.

The development by PyroGenesis of new market niches is translating into orders for its torches and engineering services, as evidenced by the level of new business activity, which validates management's belief that PyroGenesis is now more cost competitive, given the efforts undertaken in 2012 and that it is well positioned for future growth.

Financial Summary

Liquidity

At December 31, 2012, PyroGenesis had cash on hand of $2,195,571 and negative working capital of $1,436,384 (negative $1,374,877 at December 31, 2011).

In January 2012, PyroGenesis repaid in full its investment tax credit demand facility and in March 2012, PyroGenesis paid off its Venture Capital loan ($1,000,000 convertible debenture from Fier Croissance Durable).

Revenue

Revenues for fiscal 2012 totaled $3,323,236 ($4,610,358: 2011), this decrease in revenues reflects the "gap period" PyroGenesis has been faced with, due to delays in securing a first reorder of one of its plasma waste treatment system from its established client base. Furthermore, in 2012, the Company completed its contract with the US Air Force and signed several other contracts. In late November 2012, PyroGenesis announced that it had been awarded a $5.5 million reorder from Newport News Shipbuilding for a plasma waste destruction system to be installed on the CVN-79, the next US Navy Ford-class aircraft carrier. To date, PyroGenesis has received a first payment of $2.1 million on this contract.

Revenues for the fourth quarter of fiscal 2012 (hereafter "2012-Q4") were $1,221,501 ($1,326,420: 2011-Q4). It is anticipated that revenues will increase in the coming quarters reflecting increased project progress, particularly on the reorder from Newport News Shipbuilding.

Cost of Sales

Cost of Sales before government grants and R&D tax credits for fiscal 2012, was $5,232,070, ($6,721,108: 2011). This decrease is mainly due to cost containment measures put in place and announced by the Company in May 2012, which were meant to lower its breakeven point and increase its competitiveness. These measures included bringing salary and sub-contracting costs in line with the volume of work on hand.

During 2012-Q4, Cost of Sales and Services before government grants and R&D tax credits were $1,436,401 ($1,483,358: 2011-Q4). Manufacturing overhead increased in 2012-Q4 over 2011-Q4 due to increased losses on foreign exchange on project costs, as well as increased repairs and maintenance costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (before Stock based compensation expense) for fiscal 2012 were $2,880,032 ($3,799,774: 2011). The single largest reduction in costs was in professional fees, which had been abnormally high due to the Company's going public transaction.

The costs associated with stock based compensation (a non-cash item on which options vest over a four year period) commenced in 2011-Q3 pursuant to the grant of stock options in accordance with the Company's stock option plan. In 2012, the Stock based compensation of $952,055 represents the expense for a full year, whereas the cost reported in 2011 reflects the cost for two quarters.

Selling, general and administrative expenses (before Stock based compensation) for 2012-Q4 were $654,840 ($721,804: 2011-Q4). Increases in salary costs, office and general and advertising costs, were offset by recovery on professional fees as well as lower travel, insurance and amortization of machinery and equipment.

Net Loss

Total comprehensive loss for fiscal 2012 was $5,809,135 ($7,028,816: 2011 which included a one-time initial public listing cost of $694,877).

2012 has been defined by the management as a gap period between the announcements in 2011 of the acceptance of its first orders by the US Navy and the US Air Force, and a reorder of one of the Company's plasma waste destruction systems. Despite, the longer than anticipated "gap period" and decreased revenues over 2011, the Company has restructured and strengthened its key management group, decreased its fixed operating costs, improved gross margin on execution of projects, and improved its operational and financial reporting ability. Furthermore, this restructuring was done with the intent of rationalizing labor and reducing expenses thereby reducing its break-even point.

Loss from operations for fiscal 2012 was $5,819,275 ($6,385,903: 2011). Loss from operations for 2012 before non-cash items (stock based compensation: $952,055; amortization of licenses and machinery and equipment: $1,656,024) was $3,201,056. Loss from operations for 2012-Q4, was $840,167 ($873,569: 2011). Before including the non-cash items, loss from operations for 2012-Q4 is $337,247.

About PyroGenesis Canada Inc.

PyroGenesis Canada is an environmental solutions company that designs, develops and manufactures plasma waste-to-energy systems and plasma torch products. PyroGenesis' proprietary plasma technologies utilize the intense energy of plasma to gasify and vitrify virtually any type of waste without producing hazardous by-products. PyroGenesis' patented gasification and vitrification technology is different from incineration because it produces a clean synthetic gas from waste, which can be used for power generation. PyroGenesis' technology can also turn waste into a glassy rock that can be utilized as construction material. PyroGenesis has marquee defense industry and civilian customers that are using its technology in marine and land-based applications. For more information, please visit www.pyrogenesis.com

This press release contains certain forward-looking statements, including, without limitation, statements containing the words "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", "in the process" and other similar expressions which constitute "forward-looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, our expectations regarding the acceptance of our products by the market, our strategy to develop new products and enhance the capabilities of existing products, our strategy with respect to research and development, the impact of competitive products and pricing, new product development, and uncertainties related to the regulatory approval process. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks and uncertainties and other risks detailed from time-to-time in the Company's ongoing filings with the securities regulatory authorities, which filings can be found at www.sedar.com. Actual results, events, and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: PyroGenesis Canada Inc.

PyroGenesis Canada Inc.
P. Peter Pascali
Chief Executive Officer
Phone: [phone]
E-mail: [email protected]