TORONTO, Feb. 10, 2016 /CNW/ - Ceres Global Ag Corp.
(TSX: CRP) ("Ceres" or the "Corporation") today announced its
financial and operational results for the three- and nine-month
periods ended December 31, 2015.
All amounts are in Canadian currency unless otherwise
noted.
"Declining wheat prices and the unprecedented influx of new
supply from foreign markets due to the strength of the US dollar
significantly impacted our Q3 gross profit and margins," said Mr.
Patrick Bracken, CEO of Ceres Global
Ag. "Despite these challenging market conditions, we achieved a
number of key milestones relating to the buildout of our Northgate
project. Chief among them was the Phase 1 completion of our
high-speed elevator, the commissioning of three storage bins with
960,000 bushels of storage capacity and the signing of a
partnership agreement with Koch Fertilizer to store and handle
fertilizer products at Northgate. This progress provides
clear evidence that we are executing on our strategy of building a
world-class logistics hub at Northgate."
Financial and Operational Highlights for Q3 FY2016
- Generated revenue of $82.3
million, up 18% from Q3 FY 2015.
- Incurred a gross loss of $10.4
million, largely due to durum wheat losses of $11.7 million.
- Excluding the durum wheat loss, generated a trading margin of
$0.73 per bushel for all other cereal
and oilseed commodities.
- Incurred a net loss of $13.4
million compared to net income of $2.3 million for Q3 FY2015.
- Completed Phase 1 construction of the high-speed elevator at
the Northgate Commodity Logistics Centre (Northgate) on time and
budget. The construction included the commissioning of the three
steel storage bins totaling 960,000 bushels of storage capacity,
two truck unloading pits and a rail loadout system.
- Loaded two 100-plus rail car shuttle trains out of
Northgate.
- Loaded 312 railcars of grain and/or oilseed destined for the
U.S. and Latin American markets out of Northgate.
- Loaded 163 railcars of propane on behalf of a third-party
customer at Northgate.
- Handled 10.8 million total bushels at the Corporation's 9 grain
facilities, up 13%.
- Entered into an agreement with Koch Fertilizer Canada, ULC
("Koch") to store and handle dry fertilizer products at
Northgate.
- Renewed a USD $120 million
revolving credit facility with Macquarie Bank through December 18, 2016.
FY 2016 Q3 Financial Results
In $CDN millions
except per share
|
Q3 FY
2016
|
Q3
FY2015
|
FY2016
YTD
|
FY2015
YTD
|
Revenue
|
$82.3
|
$69.7
|
$236.8
|
$138.3
|
Gross profit
(loss)
|
$(10.4)
|
$5.4
|
$(7.0)
|
$11.9
|
EBITDA
1
|
$(11,929)
|
$3,845
|
$(10,620)
|
$5,205
|
Income (loss) from
operations
|
$(13.1)
|
$3.3
|
$(14.8)
|
$3.5
|
Net income
(loss)
|
$(13.4)
|
$2.3
|
$(15.0)
|
$2.1
|
Earnings (loss) per
share basic and fully diluted
|
$(0.50)
|
$0.13
|
$(0.56)
|
$0.14
|
Revenue in Q3 2016 totaled $82.3
million, up 18% from $69.7
million for Q3 2015. The revenue growth in Q3 was largely
due to a 2.1 million, or 34%, increase in the number of bushels
sold. Revenue on a nine-month basis for FY2016 was
$236.8 million, up from $138.3 million for FY2015, and also driven by an
increase in the number of bushels sold.
It is important to understand that Ceres is principally involved
in an agricultural commodity-based business in which changes to
selling prices generally move in relation to changes to purchase
prices. Therefore, increases or decreases in prices of the
agricultural commodities that Ceres deals with will have a
relatively equal impact on sales and cost of sales.
Accordingly, management believes it is more important to focus on
changes in gross profit and the number of bushels handled than it
is to focus on changes in revenue on dollars.
Ceres incurred a gross loss of $10.4
million in Q3 2016, down from a gross profit of $5.4 million for Q3 2015. The gross loss
was largely due to wheat trading losses of $11.7 million incurred during the quarter.
While all cereal grains have experienced price declines over the
past crop year, which put pressure on Ceres' margins, the gross
loss was largely attributable to the negative impact that durum
wheat price declines had on the value of the Company's existing
grain inventory at quarter end. Ceres incurred a gross loss
of $7.0 million for the nine-month
period of FY2016, down from a gross profit of $11.9 million for the comparable period of
FY2015.
Operating and depreciation expenses for Q3 2016 totaled
$5.4 million, up from $4.5 million for Q3 2015. The growth was
due to increased activities at Northgate and the impact of the
declining value of the Canadian dollar as the majority of Ceres'
operating expenses are translated from US currency. Ceres
owns and operates nine facilities, of which seven are located
US. Operating and depreciation expenses for the nine-month
period of FY2016 totaled $15.2
million, up from $12.3 million
for FY2015.
General and administrative expenses for Q3 2016 totaled
$2.7 million, up from $2.1 million for Q3 2015. The expense increase
was largely due to the impact the declining value of the Canadian
dollar had on operations as the majority of Ceres' expenses are
translated from US currency. The expense increase was also
attributable to increased staffing levels, particularly due to
overall grain trading and origination at Northgate. General
and administrative expenses totaled $7.8
million for the nine-month period of FY 2016 and
$8.4 million for the comparable
period in FY2015. The year-over-year decline in expenses for
the nine-month period was attributable to non-capitalized
third-party service costs incurred for the build-out of Northgate
in FY2015.
Ceres incurred a net loss of $13.4
million for Q3 2016. This compares to net income of
$2.3 million for Q3 2015. Net
loss for the nine-month period of FY2016 was $15.0 million, down from net income of
$2.1 million for FY2015. The declines
were due to factors already discussed, including the durum wheat
loss of $11.7 million.
As at December 31, 2015, Ceres had
working capital of $86.5 million and
access to unused credit facilities totaling $97.8 million. These compare to working
capital of $76.3 million and access
to unused credit facilities of $45.6
million at the end of September
30, 2015. In Q3, Ceres renewed and amended its USD
$120 million credit facility with
Macquarie through December 18,
2016.
Ceres' working capital and cash totals were impacted by
investments totaling $31.2 million
made towards the acquisition of property, plant and equipment,
primarily for the build-up of Northgate. The investment total
was partially offset by the proceeds of $1.9
million from the sale of the Electric Steel facility located
in Minnesota.
Ceres 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
"We are bullish about our prospects as we head
into the 2016 crop year given our recent progress," said Mr.
Bracken. "Within our Grain Division, the ongoing buildout of
Northgate, the increased utilization of the terminal assets in our
network and our customer focus will keep our business on the right
track in a challenging commodity environment. We see many
opportunities for continued growth as we enter the new planting
season that will provide significant momentum for our core grain
business."
Mr. Bracken added, "We are experiencing similar momentum in the
Logistics side of our business given our strategic agreements with
Koch Fertilizer, Elbow River Marketing and BNSF Railway. Beginning
in the spring of 2016 we will start construction of a fertilizer
facility at Northgate which is scheduled to be completed in the
spring of 2017. Through our agreement with Koch, we will receive
shipments of 80 car trains of phosphate fertilizer to Northgate
that we will unload and warehouse in our state-of-the-art storage
terminal. This will make it easier for grain suppliers to backhaul
the fertilizer to points of origination after unloading their grain
supply. We believe that this arrangement will improve
transportation economics and strengthen Northgate's ability to
attract grain suppliers.
"We also expect to capitalize on growing demand for liquefied
petroleum gas by continuing to unload it from inbound trucks into
railcars for shipment into the US from Northgate. Our
experience to date provides a roadmap for us to expand into other
oilfield and agricultural input products."
Ceres also announced that it will change its fiscal year
reporting period from April 1 to March
31 to July 1 to June 30,
effective with the start of FY 2017. The change is designed
to make Ceres' reporting of its financial results consistent with
industry norms and the traditional crop season. Effective
with the start of Fiscal Year 2017, July 1,
2016, Ceres will also begin reporting its results in US
dollars.
Conference Call Details
Ceres will hold a conference
call to discuss its third quarter 2016 financial and operational
results on Thursday, February 11,
2016 at 10:00 a.m. ET.
Patrick Bracken, Ceres' President
and CEO, and Mark Kucala, Ceres'
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:
20541628. Please dial in 15 minutes prior to the call to
secure a line. The conference call will be archived for replay
until Thursday, February 25, 2016 at
midnight, ET. To access the archived conference call, please dial
1-855-859-2056 and enter the encore code 20541628.
A live audio webcast of the conference call will be available
at:
http://event.on24.com/r.htm?e=1116726&s=1&k=AEA504B194BCFAB6D181B510FD1073F1
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 90 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)
Headquartered in Minneapolis, Ceres Global Ag Corp. is focused
on two primary businesses: a Grain Storage, Handling and
Merchandising unit; and a Commodity Logistics unit.
Ceres' Grain Storage unit is a collection of nine grain storage
and handling assets in Minnesota,
New York, Saskatchewan and Ontario having aggregate storage capacity of
approximately 43 million bushels as at December 31, 2015.
Ceres' Commodity Logistics unit is focused on the development of
a Commodity Logistics Centre in Northgate, SK. The Northgate
Commodities Logistics Centre is a state-of-the-art grain,
agriculture services and oilfield supplies transloading site, which
is being developed in conjunction with several potential energy
company partners and connected to BNSF Railway.
Ceres also has a 25% interest in Stewart Southern Railway Inc.,
a short-line railway with a range of 130 kilometres that operates
in South-eastern Saskatchewan.
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.