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.
Financial Results:
(in CAD) |
Three Months Ended
June 30, 2015 |
Three Months Ended
June 30, 2014 |
Revenue |
$59.3 million |
$51.5 million |
Gross profit (loss) |
$1.9 million |
$1.2 million |
Income (loss) from operations |
($0.6 million) |
($2.2 million) |
Net income (loss) |
($1.7 million) |
($2.1 million) |
Earnings (loss) per share basic and fully
diluted |
($0.06) |
($0.15) |
EBITDA (loss) 1 |
$57,000 |
($1.8 million) |
Highlights:
- 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 at Northgate;
- 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 materials.
- 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."
Financial Highlights:
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 ago.
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.
Outlook
Grain Division
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.
Logistics Division
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.