MONTREAL, May 30, 2013 /CNW Telbec/ - PyroGenesis Canada Inc. ("PyroGenesis" or the "Company") (TSXV: PYR), today announced its financial and operational results for the first quarter of fiscal 2013, ending March 31, 2013, as well as the grant of options to one of its Directors.
First Quarter Highlights:
In Q1-2013 PyroGenesis has:
- Increased revenues by over 41% to $1,141,143;
- Decreased its Cost of Sales and Services by over 50% to $568,862;
- Increased gross margin (before amortization of licenses) to over 50% to $572,281; and
- Lowered SG&A expenses as a percentage of revenues.
- Signed a master service agreement with a multinational petroleum company pursuant to which PyroGenesis will be providing engineering services to look at optimizing and addressing waste issues related to the clients processes.
Over the last 18 months, management has undertaken some important restructuring measures to focus and increase the effectiveness of its finance, operations and business development departments. The results have been particularly positive on operations, where the Company has benefitted from better utilization of resources and cost containments, on-time delivery, meeting key project milestones, and improved reporting with respect to project progress and issues. Management expects further increases in revenues in the coming quarters as the restructuring measure pertaining to the business development department start to show results.
Financial Summary for three months ended March 31, 2013
Revenues for 2013-Q1 were $1,141,143, a 41.2% increase over revenues of $807,943, reported during the same period in fiscal 2012. This increase in revenue in 2013 reflects the end of the "gap period" the Company has been faced with while securing its first reorder from its established client base. In late November 2012, the Company announced that it had secured 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 air craft carrier, which is to be delivered and recognized into income over the next two years. To date the Company has received the initial funds of $2.1 million of the $5.5 million, and the balance is to be released over the next 18 months. Revenues in 2013-Q1 are positively impacted by the commencement of work and recognition of the revenues on this new major contract, as well as other projects in progress or completed in the quarter.
Cost of Sales
Cost of Sales and Services before amortization of licenses for 2013-Q1 was $568,862, a decrease of 51.1% over the costs of 2012-Q1 of $1,163,848. Starting in the second half of 2012, management has implemented more stringent and effective project management methods on the execution of its projects. As a results, in-house labor costs recorded on projects have decreased by 47%.
Building on the improvement in gross margin on projects that started in 2012-Q4, the 2013-Q1 shows an extra-ordinarily improvement over most of 2012. Gross margin before amortization of licenses was $572,281 (50.1% on revenues) for 2013-Q1, versus negative $355,905 (negative 44.1%) for 2012-Q1. The high level of gross margin in 2013-Q1 was achieved through controlled project management, tight control over technical resources employed on projects, and favorable pricing on equipment purchases.
Management is confident that, as a result of the increased focus on operations and project execution, PyroGenesis will continue to experience healthy gross margins. These margins will naturally fluctuate quarter to quarter depending on the types of projects under execution and the completion stage of said projects.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses for 2013-Q1 (before Share based payment expense) were $936,096, a 13% increase over the $830,611, reported in 2012-Q1. Management is confident that additional cost reductions will be achieved through a closer management of expenses and better management of information from its recently implemented ERP system as well as through its realigned management structure.
Loss from operations for 2013-Q1 before non-cash items (share based payments: $145,840; amortization of licenses and property and equipment: $397,602) was $410,697. During 2012, Management took several key steps to restructure and strengthen the Company's management, reduce fixed operating expenses, increase the focus on increasing revenues and improving the gross margins on projects. This has translated in improved results towards the end of 2012 and continuing in the first quarter of 2013; a trend which management expects will continue into the coming quarters.
Total Comprehensive Loss
Total comprehensive loss for 2013-Q1 was $954,139 compared to a loss of $1,868,163 in fiscal 2012, for a decrease of 48.9%. This decrease is due a combination of positive factors and directions including a 41.2% increase in revenues (net $333,200), an improvement of the gross margin before amortization of licenses from negative $355,905 in 2012-Q1 to $572,281 for 2013-Q1, for a net improvement of $928,186. The dramatic improvement in gross margin is a positive sign that Management's restructuring to allow greater concentration on operations is bringing positive results.
At March 31, 2013, PyroGenesis had cash on hand of $563,659 with nil bank indebtedness, and a negative working capital of $2,670,616.
Furthermore, the Company's board of directors has granted by way of resolution, 100,000 stock options to acquire an aggregate of 100,000 common shares of the Company (the "Options") to one of its director. The Option's exercise price was set at $0.22 per share and the Options will vest as follows: 50% percent as of the date of grant, 25 percent at the first anniversary of the date of grant. These Options are exercisable for a period of five years and are subject to the provisions of PyroGenesis' stock option plan and in full compliance with TSX Venture Exchange policies.
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.
For further information:
PyroGenesis Canada Inc.
P. Peter Pascali
Chief Executive Officer