BURLINGTON, ON, May 3, 2017 /CNW/ - EcoSynthetix Inc. (TSX:
ECO) ("EcoSynthetix" or the "Company"), a renewable
chemicals company that produces a portfolio of commercially proven
bio-based products, today announced its financial and operational
results for the three months ended March 31,
2017. Financial references are in U.S. dollars unless
otherwise indicated.
Q1 2017 Highlights
- Advanced each of the ongoing late-stage trials for DuraBind
with 10+ prospects in its wood composite pipeline
- Recorded net sales of $3.6
million in Q1 2017, up 22% compared to the same period in
2016
- Reduced adjusted EBITDA loss by 30% to $1.5 million in Q1 2017, compared to the same
period in 2016
- Maintained a strong balance sheet with cash and term deposits
of $51.2 million as at March 31, 2017
- Subsequent to the end of the quarter, won a new commercial
account for EcoSphere® in a packaging application from Stora Enso,
a leading provider of renewable solutions in packaging,
biomaterials, wood and paper
"Our No-Added-Formaldehyde product, DuraBind biopolymers,
continues to attract a great deal of commercial interest from
manufacturers looking to reduce or eliminate the level of
formaldehyde-based binders in their wood composite products," said
Jeff MacDonald, CEO of EcoSynthetix.
"While we have made continuous and consistent shipments to our
first wood composite customer for more than seven months, we are
also broadening our engagement at individual accounts where
industrial trials are being conducted on multiple lines. Our number
one priority is to successfully close the prospects that are well
underway in the industrial trial process and continue building
momentum in the market."
Financial Summary
Net Sales
Net sales were $3.6 million for
the three months ended March 31, 2017
(Q1 2017), compared to $3.0 million
for the same period in 2016. The 22% increase was primarily
due to higher sales volumes of $0.4
million, or 14%, and an increase in average selling price
which positively impacted sales by $0.2
million, or 8%. The increase in sales volumes during the
period was principally due to new commercial accounts. The increase
in average selling price was primarily due to favorable pricing
dynamics.
Gross Profit
Gross profit was $0.8 million for
Q1 2017, compared to $0.5 million in
the same period in 2016. Gross profit as a percentage of sales was
22.2% for Q1 2017, compared to 16.1% in the same period in 2016.
Gross profit as a percentage of sales adjusted for
manufacturing depreciation was 27.1% for Q1 2017, compared to 22.8%
for the same period in 2016. The improvement in gross profit was
primarily due to higher average selling prices and an increase in
sales volume.
Selling, General and Administrative
(Excludes
share-based compensation, depreciation, provision for termination
benefits and foreign exchange gains and losses)
Selling, general and administrative expenses (SG&A) were
$1.2 million for Q1 2017, compared to
$1.6 million for the same period in
2016. The 23% decrease was primarily due to lower people related
costs and lower discretionary spending.
Research and Development
(Excludes share-based compensation, depreciation, provision for
termination benefits and foreign exchange gains and losses)
Research and development (R&D) costs were $1.3 million for Q1 2017, compared to
$1.1 million for the same period in
2016. The increase was primarily due to lower government grants
recognized in the current quarter compared to the same period last
year.
Foreign Exchange Gain
Foreign exchange gain was nominal for Q1 2017, compared to
$0.2 million for the same period in
2016. The change was primarily due to the translation of cash
balances denominated in Canadian dollars and exchange rate
fluctuations between the Canadian dollar versus U.S. dollar.
Adjusted EBITDA
Adjusted EBITDA loss was $1.5
million for Q1 2017, compared to a loss of $2.1 million for the same period in 2016. The 30%
improvement was due to higher gross profit and lower operating
expenses in Q1 2017.
Net Loss
Net loss was $1.9 million, or
$0.03 per common share, for Q1 2017
compared to a net loss of $2.4
million, or $0.04 per common
share, for the same period in 2016. The improvement was principally
due to $0.3 million of higher gross
profit and $0.2 million of lower
operating expenses, compared to the same period in 2016.
Liquidity
Cash on hand and term deposits were $51.2
million as at March 31, 2017,
compared to $53.6 million as at
December 31, 2016. Cash on hand at
March 31, 2017, excluding the term
deposit, was $36.1 million.
Notice of Conference Call
EcoSynthetix will host a conference call on Thursday, May 4, 2017 at 8:30 AM ET to discuss its financial
results. Jeff MacDonald, CEO,
and Robert Haire, CFO, will co-chair
the call. All interested parties can join the call by dialling
(647) 427-7450 or (888) 231-8191. Please dial in 15 minutes prior
to the call to secure a line. A live audio webcast of the
conference call will also be available at www.ecosynthetix.com. The
presentation will be accompanied by slides, which will be available
via the webcast link and the Company's website. 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.
1Non-IFRS Financial Measures
This press release makes reference to certain non-IFRS measures.
These non-IFRS measures are not recognized measures under IFRS, do
not have a standardized meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other companies. Rather, these measures are provided as
additional information to complement those IFRS measures by
providing a further understanding of results of operations of
EcoSynthetix from management's perspective. Accordingly, they
should not be considered in isolation nor as a substitute for
analysis of the financial information of EcoSynthetix reported
under IFRS. The Company uses non-IFRS measures such as Adjusted
EBITDA to provide investors with a supplemental measure of
operating performance and thus highlight trends in its core
business that may not otherwise be apparent when relying solely on
IFRS financial measures. Management also believes that securities
analysts, investors and other interested parties frequently use
non-IFRS measures in the evaluation of issuers. Management also
uses non-IFRS measures in order to facilitate operating performance
comparisons from period to period, prepare annual operating budgets
and assess the Company's ability to meet its capital expenditure
and working capital requirements.
Adjusted EBITDA is not a measure recognized under IFRS and does
not have a standardized meaning prescribed by IFRS. See "IFRS and
Non-IFRS Measures." The Company presents Adjusted EBITDA because
the Company believes it facilitates investors' use of operating
performance comparisons from period to period and company to
company by backing out potential differences caused by variations
in capital structures (affecting relative interest expense), the
book amortization of intangibles (affecting relative amortization
expense) and the age and book value of property and equipment
(affecting relative depreciation expense). The Company also
presents Adjusted EBITDA because it believes it is frequently used
by securities analysts, investors and other interested parties as a
measure of financial performance. Adjusted EBITDA as presented
herein are not recognized measures under IFRS and should not be
considered as an alternative to operating income or net income as
measures of operating results or an alternative to cash flows as
measures of liquidity. Adjusted EBITDA is defined as consolidated
net income (loss) before net interest expense, income taxes,
depreciation, amortization, other non-cash expenses and charges
deducted in determining consolidated net income (loss).
The following table reconciles net loss to Adjusted EBITDA loss
for the three months ended March 31,
2017 and March 31, 2016:
|
Three months
ended
March 31, 2017
|
Three months
ended
March 31, 2016
|
Net Loss
|
(1,903,638)
|
(2,369,222)
|
Depreciation
|
267,046
|
292,258
|
Share-based
Compensation
|
314,021
|
142,000
|
Interest
Income
|
(132,166)
|
(139,236)
|
Adjusted EBITDA
Loss
|
(1,454,737)
|
(2,074,200)
|
About EcoSynthetix Inc. (www.ecosynthetix.com)
EcoSynthetix offers a range of sustainable engineered
biopolymers that allow customers to reduce their use of harmful
materials, such as formaldehyde and styrene-based chemicals. The
Company's flagship products, DuraBind™ and EcoSphere®, are used to
manufacture wood composites, paper and packaging, and enable
performance improvements, economic benefits and sustainability. The
Company is publicly traded on the Toronto Stock Exchange
(T:ECO).
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 the Company, or industry
results, to be materially different from any future results,
performance, objectives or achievements expressed or implied by
such forward looking statements. The forward-looking statements in
this Press Release include, but are not limited to, statements
regarding the Company's expected product pipeline, plans to expand
the Company's business into new markets, the Company's ability to
achieve organizational efficiencies, and other statements regarding
the Company's plans and expectations in 2017. These statements
reflect our current views regarding future events and operating
performance and are based on information currently available to us,
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 Company's ability to successfully allocate capital as
needed and to develop new products, as well as the fact that our
results of operations and business outlook are subject to
significant risk, volatility and uncertainty. Many factors could
cause our actual results, performance or achievements to be
materially different from any future results, performance or
achievements that may be expressed or implied by such
forward-looking statements, including the factors identified in the
"Risk Factors" section of the Company's Annual Information Form
dated March 30, 2017. 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, we do not intend and do not assume any obligation to update
these forward-looking statements.
EcoSynthetix
Inc.
|
|
|
Interim
Consolidated Balance Sheets
|
|
|
(Unaudited)
|
|
|
|
|
|
(expressed in US
dollars)
|
|
|
|
|
|
|
March 31,
2017
|
December 31,
2016
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
Cash
|
36,057,340
|
38,517,278
|
Term
deposit
|
15,107,828
|
-
|
Accounts
receivable
|
1,848,360
|
2,199,289
|
Inventory
|
3,329,615
|
3,216,016
|
Government grants
receivable
|
162,377
|
168,562
|
Prepaid
expenses
|
142,321
|
165,352
|
|
56,647,841
|
44,266,497
|
|
|
|
Non-current
assets
|
|
|
Term
deposit
|
-
|
15,043,557
|
Property, plant and
equipment
|
7,826,353
|
7,933,584
|
Total
assets
|
64,474,194
|
67,243,638
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current
liabilities
|
|
|
Trade payables and
accrued liabilities
|
2,152,077
|
3,070,203
|
Accrued termination
benefits
|
118,055
|
415,888
|
Total
liabilities
|
2,270,132
|
3,486,091
|
|
|
|
Shareholders'
Equity
|
|
|
Common
shares
|
493,613,481
|
493,359,612
|
Contributed
surplus
|
8,836,291
|
8,740,007
|
Accumulated
deficit
|
(440,245,710)
|
(438,342,072)
|
Total
shareholders' equity
|
62,204,062
|
63,757,547
|
|
|
|
Total liabilities
and shareholders' equity
|
64,474,194
|
67,243,638
|
EcoSynthetix
Inc.
|
|
|
Interim
Consolidated Statements of Operations and Comprehensive
Loss
|
|
|
For the three
months ended March 31, 2017 and March 31, 2016
|
|
|
(Unaudited)
|
|
|
|
|
|
(expressed in US
dollars)
|
|
|
|
|
|
|
2017
|
2016
|
|
|
|
Net
sales
|
3,602,129
|
2,964,470
|
|
|
|
Cost of
sales
|
2,802,169
|
2,486,147
|
|
|
|
Gross profit on
sales
|
799,960
|
478,323
|
|
|
|
Expenses
|
|
|
Selling, general and
administrative
|
1,489,666
|
1,562,241
|
Research and
development
|
1,346,098
|
1,224,851
|
Provision for
termination benefits
|
-
|
199,689
|
|
|
|
|
2,835,764
|
2,986,781
|
|
|
|
Loss from
operations
|
(2,035,804)
|
(2,508,458)
|
|
|
|
Interest
income
|
132,166
|
139,236
|
|
|
|
Net loss and
comprehensive loss
|
(1,903,638)
|
(2,369,222)
|
|
|
|
Basic and diluted
loss per common share
|
(0.03)
|
(0.04)
|
|
|
|
Weighted average
number of common shares outstanding
|
59,515,232
|
59,275,758
|
EcoSynthetix
Inc.
|
|
|
Interim
Consolidated Statements of Cash Flows
|
|
|
For the three
months ended March 31, 2017 and March 31, 2016
|
|
|
(Unaudited)
|
|
|
|
|
|
(expressed in US
dollars)
|
|
|
2017
|
2016
|
Cash provided by
(used in)
|
|
|
|
|
|
Operating
activities
|
|
|
Net loss and
comprehensive loss
|
(1,903,638)
|
(2,369,222)
|
Items not affecting
cash
|
|
|
|
Depreciation
|
267,046
|
292,258
|
|
Share-based
compensation
|
314,021
|
142,000
|
|
Unrealized foreign
exchange gain
|
(8,839)
|
(161,686)
|
|
Other
|
(108,237)
|
(111,151)
|
Changes in non-cash
working capital
|
|
|
|
Accounts
receivable
|
378,352
|
(322,833)
|
|
Inventory
|
(102,291)
|
368,255
|
|
Government grants
receivable
|
(59,521)
|
(133,505)
|
|
Prepaid
expenses
|
23,031
|
(57,576)
|
|
Trade payables and
accrued liabilities
|
(918,126)
|
484,382
|
|
Accrued termination
benefits
|
(297,833)
|
108,215
|
|
(2,416,035)
|
(1,760,863)
|
|
|
|
Investing
activities
|
|
|
Purchase of property,
plant and equipment
|
(171,123)
|
(277,156)
|
Purchase of term
deposit
|
-
|
(15,000,000)
|
|
(171,123)
|
(15,277,156)
|
|
|
|
Financing
activity
|
|
|
Exercise of common
share options
|
8,709
|
-
|
Proceeds from
government grants
|
65,706
|
295,831
|
|
74,415
|
295,831
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
52,805
|
213,733
|
|
|
|
Decrease in cash
during the period
|
(2,459,938)
|
(16,528,455)
|
|
|
|
Cash - Beginning
of period
|
38,517,278
|
60,717,658
|
|
|
|
Cash - End of
period
|
36,057,340
|
44,189,203
|
SOURCE EcoSynthetix Inc.