Synthesis Energy Systems, Inc. (SES) (NASDAQ:SYMX), the global
leader in economic and sustainable high performance clean energy
gasification technology, today reported financial results for its
fiscal 2017 second quarter ended December 31, 2016.
“During the second quarter of our fiscal year
2017, we have been focused on near term orders and their associated
revenue, now closer than ever, and we are in the midst of forming
financially impactful business platforms, all of which have been
made possible by the successful multi-year commercialization of our
technology,” said DeLome Fair, SES President and CEO. “Projects on
nearly every continent are seeking us out, and I am extremely
excited about the progress we are making through our technology
projects and platforms outside of China. These inquiries are from
countries and regions around the world eager for an economic
alternative to expensive natural gas that is also environmentally
responsible. SES Gasification Technology delivers a cleaner use of
coal – a greener solution – that is proven on over 50 coals,
biomass and wastes, including feedstocks from the US, Europe, China
and Australia.”
Ms. Fair continued: “Today, from our most
advanced project bidding activities to early stage commercial
discussions, SES is working a project pipeline with current
prospective opportunities that could exceed $20 billion dollars in
total project facilities cost. Our nearest-term activities include
the South American project that continues to move forward, and
multiple new potential projects – in India, the Caribbean, and
Southeast Asia. We believe that total installed cost of these
projects could exceed $2 billion beginning this year and extending
across the next three to five years.
“Based on our success with the approach on the
Australian Future Energy platform, we are continuing to develop
business platforms in regions of the world with abundant low-cost
lignite coal and coal wastes and limited access to affordable
natural gas. We intend to move into Eastern Europe with a similar
type of platform structure in the near future. Additionally, we
believe there will be future opportunities for platforms in other
similar regions, such as India,” added Ms. Fair. “We intend to
utilize the same platform concept in China where we have spent the
majority of our efforts over the past ten years. We are working
diligently on completing one or more self-funding China platforms
with strong Chinese investment partners who are interested in
taking our China assets, partnerships and future project
opportunities that we have developed to the next stage, which will
allow our Chinese operations to run relatively autonomously from
SES. Once successful, our goal is to participate in China’s energy
growth through co-ownership of the project investment platform and
technology license orders.”
Recent Corporate Highlights
SES Assets:
Callide Mine: In October 2016, Batchfire
Resources Pty Ltd., in which SES holds an approximately 11%
ownership position, completed its acquisition of the Callide
thermal coal mine located in Central Queensland, Australia, from
Anglo American plc. The Callide Mine is a mature and significantly
sized coal producer with substantial recoverable thermal coal
reserves, according to Batchfire. The mine continued its operations
uninterrupted on a “walk-out, walk-in” basis, and reports from the
early operation of the mine since the acquisition are showing a
smooth transition. Our ownership position in Batchfire is the
result of our successful platform development activities in
Australia.
Yima Joint Ventures Methanol Plant: The Yima
plant returned to operations in November 2016, with good operation
reports since the restart. Yima JV management continues its efforts
to consolidate the JV structure, in order to finalize the permits
and move forward with the plant’s official operations phase. SES is
pursuing options to monetize this asset.
ZZ Joint Venture Project: In October 2016 SES
completed the restructuring of its commercial proof-of-concept SGT
demonstration plant and feedstock testing facility with Shandong
Weijiao Group Xuecheng Energy Co., Ltd.
Technology Licensing and
Equipment:
China Joint Venture: Tianwo-SES Clean Energy
Technologies Co., Ltd. (Tianwo-SES), SES’s China Joint Venture with
Suzhou THVOW Technology Co., Ltd. – SES continues to work with its
Tianwo-SES JV partner to improve its operations. Tianwo-SES is
actively pursuing multiple projects across China, including a
large-scale national level project to produce substitute natural
gas.
Corporate News:
Chris Raczkowski, an accomplished leader and
engineer whose career focus on clean energy technologies includes
17 years of professional experience and living in China and
Southeast Asia, joined the team as President – Asia, as announced
in December 2016. Mr. Raczkowski’s 25-year career includes energy
project development in China, Vietnam, Thailand and Malaysia, and
he served as Vice President Engineering for SES during the
development and construction of the SES Gasification Technology
demonstration plant in Shandong Province, China.
Fiscal Second Quarter 2017 Financial
Results (Unaudited)
The Company reported revenues of $5,000 for the
Current Quarter. During the Comparable Quarter total revenues
were $53,000, which resulted from engineering feasibility studies
and coal testing services for a customer.
The Company reported $2,000 costs of sales
during the Current Quarter. In the Comparable Quarter cost of
sales totaled $35,000, which related to the costs incurred for coal
testing and engineering studies for a customer.
The Company's operating loss from continuing
operations for the Current Quarter was $2.9 million versus an
operating loss of $3.1 million for the Comparable Quarter. The
decrease in operating loss was primarily due to less stock-based
expense in the Current Quarter.
The Company reported a gain from discontinued
operations related to our ZZ Joint Venture of $2.3 million for the
Current Quarter compared with a total loss of $1.0 million for the
Comparable Quarter. The Current Quarter gain of $2.3 million
was primarily the result of the deconsolidation of the ZZ Joint
Venture in the Current Quarter.
The net loss attributable to stockholders for
the second quarter of fiscal 2017 was approximately $0.6 million
during the Current Quarter versus a loss of $3.9 million for the
Comparable Quarter.
As of December 31, 2016, the Company had cash
and cash equivalents of $9.3 million and working capital of $8.2
million.
Conference Call Information
SES President and CEO DeLome Fair and CAO Scott
Davis will report on financial results and provide a business
update beginning at 4:15 p.m. ET on February 13.
To access the live conference call webcast,
please log on to http://dpregister.com/10100487, or the Investor
Center of the corporate website:
http://ir.synthesisenergy.com/index.cfm. Alternatively, interested
parties may participate in SES’s conference call by phoning (877)
508-9602 (U.S.) or (412) 317-5113 (Int’l). Callers should request
the “Synthesis Energy Systems, Inc. call.”
An archived version of the SES conference call
webcast will be available, beginning approximately one hour after
its completion, through March 13, 2017. Interested parties can
access the telephonic replay on the Investor Center of the
company’s website, or by phoning (877) 344-7529 (U.S.) or (412)
317-0088 (Int’l). The PIN access code for both the live call and
replay is: 10100487.
About Synthesis Energy Systems,
Inc.
Synthesis Energy Systems (SES) is a
Houston-based technology company focused on bringing clean
high-value energy to developing countries from low-cost and
low-grade coal, biomass and municipal solid waste through its
proprietary gasification technology based upon U-Gas®, licensed
from the Gas Technology Institute. The SES Gasification Technology
(SGT) can produce clean, low-cost syngas for power generation,
industrial fuels, chemicals, fertilizers, and transportation fuels,
replacing expensive natural gas based energy. SGT can also produce
high-purity hydrogen for cleaner transportation fuels. SGT enables
Growth With Blue Skies, and greater fuel flexibility for both
large-scale and efficient small- to medium-scale operations close
to fuel sources. Fuel sources include low-rank, low-cost high ash,
high moisture coals, which are significantly cheaper than higher
grade coals, many coal waste products, biomass, and municipal solid
waste feedstocks. For more information, please visit:
www.synthesisenergy.com.
Forward-Looking Statements
This press release includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements other than statements of
historical fact are forward-looking statements. Forward-looking
statements are subject to certain risks, trends and uncertainties
that could cause actual results to differ materially from those
projected. Among those risks, trends and uncertainties are the
ability of our project with Yima to produce earnings and pay
dividends; our ability to develop and expand business of the TSEC
joint venture in the joint venture territory; our ability to
successfully partner our technology business; our ability to
develop our power business unit and marketing arrangement with GE
and our other business verticals, including DRI steel, through our
marketing arrangement with Midrex Technologies, and renewables; our
ability to successfully develop the SES licensing business; the
ability of the ZZ Joint Venture to retire existing facilities and
equipment and build another SGT facility; the ability of Batchfire
management to successfully grow and develop Callide operations; the
economic conditions of countries where we are operating; events or
circumstances which result in an impairment of our assets; our
ability to reduce operating costs; our ability to make
distributions and repatriate earnings from our Chinese operations;
our ability to successfully commercialize our technology at a
larger scale and higher pressures; commodity prices, including in
particular natural gas, crude oil, methanol and power, the
availability and terms of financing; our ability to obtain the
necessary approvals and permits for future projects, our ability to
raise additional capital, if any, our ability to estimate the
sufficiency of existing capital resources; the sufficiency of
internal controls and procedures; and our results of operations in
countries outside of the U.S., where we are continuing to pursue
and develop projects. Although SES believes that in making such
forward-looking statements our expectations are based upon
reasonable assumptions, such statements may be influenced by
factors that could cause actual outcomes and results to be
materially different from those projected by us. SES cannot assure
you that the assumptions upon which these statements are based will
prove to have been correct.
Contact:
MDC GroupInvestor Relations: David Castaneda Arsen Mugurdumov
414.351.9758 IR@synthesisenergy.com
Media Relations: Susan Roush
805.624.7624 PR@synthesisenergy.com
TABLES FOLLOW
SYNTHESIS ENERGY SYSTEMS,
INC.Consolidated Statements of
Operations(In thousands, except per share
amounts)(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
Technology licensing
and related services |
$ |
5 |
|
|
$ |
53 |
|
|
$ |
5 |
|
|
$ |
300 |
|
Total
revenue |
|
5 |
|
|
|
53 |
|
|
|
5 |
|
|
|
300 |
|
|
|
|
|
|
|
|
|
Costs and
Expenses: |
|
|
|
|
|
|
|
Costs of sales and
plant operating |
|
2 |
|
|
|
35 |
|
|
|
2 |
|
|
|
212 |
|
General and
administrative expenses |
|
2,436 |
|
|
|
1,883 |
|
|
|
4,768 |
|
|
|
3,848 |
|
Stock-based
expense |
|
476 |
|
|
|
1,160 |
|
|
|
733 |
|
|
|
2,291 |
|
Depreciation and
amortization |
|
9 |
|
|
|
51 |
|
|
|
48 |
|
|
|
108 |
|
|
|
|
|
|
|
|
|
Total costs and
expenses |
|
2,923 |
|
|
|
3,129 |
|
|
|
5,551 |
|
|
|
6,459 |
|
|
|
|
|
|
|
|
|
Operating loss |
|
(2,918 |
) |
|
|
(3,076 |
) |
|
|
(5,546 |
) |
|
|
(6,159 |
) |
|
|
|
|
|
|
|
|
Non-operating (income)
expense: |
|
|
|
|
|
|
|
Foreign currency
losses, net |
|
114 |
|
|
|
63 |
|
|
|
140 |
|
|
|
182 |
|
Interest income |
|
(3 |
) |
|
|
(6 |
) |
|
|
(8 |
) |
|
|
(16 |
) |
|
|
|
|
|
|
|
|
Loss from continuing
operations |
|
(3,029 |
) |
|
|
(3,133 |
) |
|
|
(5,678 |
) |
|
|
(6,325 |
) |
Income/(loss) from
discontinued operations |
|
2,318 |
|
|
|
(951 |
) |
|
|
1,929 |
|
|
|
(2,535 |
) |
|
|
|
|
|
|
|
|
Net Loss |
|
(711 |
) |
|
|
(4,084 |
) |
|
|
(3,749 |
) |
|
|
(8,860 |
) |
Less: net loss
attributable to noncontrolling interests |
|
(142 |
) |
|
|
(158 |
) |
|
|
(233 |
) |
|
|
(352 |
) |
|
|
|
|
|
|
|
|
Net loss attributable
to SES stockholders |
$ |
(569 |
) |
|
$ |
(3,926 |
) |
|
$ |
(3,516 |
) |
|
$ |
(8,508 |
) |
|
|
|
|
|
|
|
|
Net income/(loss)
attributable to SES stockholders: |
|
|
|
|
|
|
|
From continuing
operations |
|
(2,887 |
) |
|
|
(2,977 |
) |
|
|
(5,454 |
) |
|
|
(5,980 |
) |
From discontinued
operations |
|
2,318 |
|
|
|
(949 |
) |
|
|
1,938 |
|
|
|
(2,528 |
) |
|
|
|
|
|
|
|
|
Net loss attributable
to SES stockholders |
$ |
(569 |
) |
|
$ |
(3,926 |
) |
|
$ |
(3,516 |
) |
|
$ |
(8,508 |
) |
|
|
|
|
|
|
|
|
Net income/(loss) per
share (Basic and diluted): |
|
|
|
|
|
|
|
From continuing
operations |
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
(0.06 |
) |
|
|
(0.07 |
) |
From discontinued
operations |
|
0.02 |
|
|
|
(0.01 |
) |
|
|
0.02 |
|
|
|
(0.03 |
) |
|
|
|
|
|
|
|
|
Net loss attributable
to SES stockholders |
$ |
(0.01 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.10 |
) |
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
Basic and diluted |
|
87,044 |
|
|
|
86,891 |
|
|
|
87,016 |
|
|
|
86,619 |
|
|
|
|
|
|
|
|
|
SYNTHESIS ENERGY SYSTEMS,
INC.Consolidated Balance
Sheets(In thousands, except per share
amount) |
|
|
|
|
|
December 31,2016 |
|
June 30,2016 |
ASSETS |
(Unaudited) |
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
9,276 |
|
|
$ |
13,807 |
|
Accounts
receivable, net |
|
27 |
|
|
|
27 |
|
Prepaid
expenses and other currents assets |
|
827 |
|
|
|
828 |
|
Inventory |
|
41 |
|
|
|
43 |
|
Assets of
discontinued operations |
|
— |
|
|
|
12,662 |
|
|
|
|
|
Total
current assets |
|
10,171 |
|
|
|
27,367 |
|
|
|
|
|
Property,
plant and equipment, net |
|
33 |
|
|
|
54 |
|
Intangible asset, net |
|
911 |
|
|
|
898 |
|
Investment in joint ventures |
|
26,200 |
|
|
|
26,201 |
|
Other
long-term assets |
|
41 |
|
|
|
661 |
|
|
|
|
|
Total
assets |
$ |
37,356 |
|
|
$ |
55,181 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accrued
expenses and accounts payable |
$ |
1,990 |
|
|
$ |
1,655 |
|
Liabilities of discontinued operations |
|
— |
|
|
|
13,337 |
|
|
|
|
|
Total
current liabilities |
|
1,990 |
|
|
|
14,992 |
|
|
|
|
|
Commitment and
contingencies |
|
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
|
|
|
Preferred
stock, $0.01 par value- 20,000 shares authorized – no shares
issued and outstanding |
|
— |
|
|
|
— |
|
Common
stock, $0.01 par value: 200,000 shares authorized: 87,064 and
86,984 shares issued and outstanding, respectively |
|
870 |
|
|
|
870 |
|
Additional paid-in capital |
|
261,984 |
|
|
|
261,225 |
|
Accumulated deficit |
|
(230,454 |
) |
|
|
(226,938 |
) |
Accumulated other comprehensive income |
|
4,086 |
|
|
|
6,586 |
|
Total
shareholder’s equity |
|
36,486 |
|
|
|
41,743 |
|
Noncontrolling interests in subsidiaries |
|
(1,120 |
) |
|
|
(1,554 |
) |
|
|
|
|
Total
equity |
|
35,366 |
|
|
|
40,189 |
|
|
|
|
|
Total liabilities and equity |
$ |
37,356 |
|
|
$ |
55,181 |
|
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