TORONTO, May 11, 2016 /CNW/ - Ceres Global Ag Corp. (TSX:
CRP) ("Ceres" or the "Corporation") today announced its financial
and operational results for the three- and 12-month periods ended
March 31, 2016. All amounts are
in Canadian currency unless otherwise noted.
"Our Q4 results were marked by modest gains to each of our key
financial and operating metrics, including gross profit, net
income, number of bushels handled and number of rail cars
transloaded," said Mr. Patrick
Bracken, CEO of Ceres Global Ag. "This progress is
encouraging, and suggests that our strategy of combining grain
handling, storage and trading activities with a world-class
logistics hub is gaining traction. With the buildout of the grain
facility at our Northgate Commodities Logistics Hub now complete,
we expect our recent momentum to continue as we head towards the
start of the planting season."
Financial and Operational Highlights for Q4 FY2016 compared
to Q4 FY2015
- Generated revenue of $119.4
million, up 119%.
- Gross profit was $3.9 million
compared to a gross loss of $208
thousand.
- Net income was $1.2 million, up
from a net loss of $3.5 million.
- Earnings per share were $0.04, up
from a loss per share of $0.13.
- Completed the buildout of the grain handling and shipping
facility at the Corporation's flagship Northgate Commodities
Logistics Hub.
- Loaded 774 railcars, up 87%, of grains and/or oilseeds out of
Northgate, for markets in the U.S., Latin
America and Asia.
- Renewed and extended the Corporation's agreement with Elbow
River Marketing to unload liquefied petroleum gas.
- Loaded 153 railcars of propane on behalf of a third-party
customer at Northgate.
- Began construction of the fertilizer storage warehouse in
support of the agreement signed with Koch Fertilizer Canada, ULC to
handle and store fertilizer at Northgate. The availability of
fertilizer products at Northgate will make it possible for grain
suppliers to improve their transportation costs by back-hauling
agriculture inputs to points of origination.
Highlights subsequent to Quarter End
- Announced that it will put three grain storage elevators
located in Buffalo (Lakeport),
New York, Minneapolis (Calumet) and Duluth (Lakeport), Minnesota out of service as part of a
strategic initiative designed to reduce operating costs and better
align operations with the Corporation's long-term plans and focus.
The grain elevator closures will take effect with the start of 2016
crop season in July. Ceres expects that the closures will result in
an annual reduction of operating expenses of US$2 to $2.5 million. Ceres' Duluth storage facility, which has a capacity
of 12.2 million bushels, will remain open and be the primary focus
of operations in the area.
Review of FY 2016 Q4 Financial Results
In $CDN
millions
except per share
|
Q4 FY
2016
|
Q4
FY2015
|
FY2016
YTD
|
FY2015
YTD
|
Revenue
|
$119.4
|
$54.5
|
$356.2
|
$192.8
|
Gross profit
(loss)
|
$3.9
|
$(0.2)
|
$(3.1)
|
$11.7
|
EBITDA
1
|
$2.6
|
$(1.5)
|
$(8.0)
|
$3.7
|
Income (loss)
from
operations
|
$1.3
|
$(2.4)
|
$(13.5)
|
$1.0
|
Net income
(loss)
|
$1.2
|
$(3.5)
|
$(13.9)
|
$(1.4)
|
Earnings (loss)
per
share basic and fully
diluted
|
$0.04
|
$(0.13)
|
$(0.51)
|
$(0.08)
|
Revenue in Q4 2016 totaled $119.4
million, up 119% from $54.5
million for Q3 2015 despite lower grain prices. The revenue
growth in Q4 was largely due to an increase in the number of
bushels sold by 8.1 million, or 109%, over the comparative period.
Revenue on a 12-month basis for FY2016 was $356.2 million, up from $192.8 million for FY2015, and also driven by an
increase in the number of bushels sold.
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 in dollars.
Ceres generated gross profits of $3.9
million in Q4 2016, up from a gross loss of $208 thousand in the comparative period. The
year-over-year turnaround was largely due to a $2.6 million, or 100%, increase in net trading
margins stemming from higher carry income, increased inventory
quantities and increased track-trading activities. On a 12-month
basis, Ceres incurred a gross loss of $3.1
million in FY2016 compared to gross profits of $11.7 million for FY2015. The gross profit
decline was largely due to durum wheat loss of $11.7 million incurred in Q3 2016. As
disclosed previously, durum wheat prices experienced considerable
declines over the past crop year, impacting the value of the
Corporation's existing grain inventory at the end of Q3 or
December 31, 2015. Durum wheat
prices and Ceres' durum wheat inventory value have since
stabilized.
Operating and depreciation expenses for Q4 2016 totaled
$5.4 million, up from $4.3 million for Q4 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 U.S. currency. Ceres
owns and operates nine facilities, of which seven are located in
the U.S. Operating and depreciation expenses for the 12-month
period of FY2016 totaled $20.5
million, up from $16.6 million
for FY2015.
General and administrative expenses for Q4 2016 totaled
$2.6 million, up from $2.2 million for Q4 2015. The 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 U.S. 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 $10.4
million for the 12-month period of FY 2016 and $10.7 million for the comparable period in
FY2015. The year-over-year decline in expenses for the
12-month period was attributable to non-capitalized third-party
service costs incurred for the build-out of Northgate in
FY2015.
Net income for Q4 2016 $1.2
million or earnings per share of $0.04. These compare to a net loss of
$3.5 million or a loss per share of
$0.14 for comparative period.
Net loss for the 12-month period of FY2016 was $13.9 million or a loss per share of $0.51. In the 12-month period of FY2015, Ceres
incurred a net loss of $1.4 million
or an earnings per share loss of $0.08. The declines were due to factors already
discussed, including the durum wheat loss of $11.7 million and costs incurred towards the
buildout of Northgate.
Key Operating Metrics
In addition to its financial
results, Ceres uses a number of key metrics to determine the
success of its operations. These metrics are summarized below.
|
Q4 FY
2016
|
Q4
FY2015
|
FY2016
YTD
|
FY2015
YTD
|
Total bushels
handled
|
9.39
million
|
7.37
million
|
37.03
million
|
37.91
million
|
Net trading margin
per
bushel
|
$0.63
|
$0.51
|
$0.23
|
$1.11
|
Gross profit (loss)
per
bushel
|
$0.18
|
$(0.03)
|
$(0.16)
|
$0.31
|
Railcars of grains
loaded
at Northgate
|
774
|
413
|
1445
|
416
|
Railcars of propane
gas
trans-loaded at
Northgate
|
153
|
Nil
|
609
|
Nil
|
Working Capital and Liquidity
As at March 31, 2016, Ceres had working capital of
$80.6 million and access to unused
credit facilities totaling $77.8
million. These compare to working capital of $86.5 million and access to unused credit
facilities of $97.8 million at the
end of December 31, 2015.
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 very encouraged by our prospects as we
head into the planting season," said Mr. Bracken. "Initial
forecasts for this year's planting, weather and harvest conditions
are promising and suggest strong crop output across many grains
that could result in higher demand for our grain handling and
storage services."
Mr. Bracken, added, "With the buildout of the Northgate grain
facility now completed, our primary focus in the near term will be
to increase its utilization. The closure of three of oldest grain
elevators should also result in improved efficiencies at all of the
terminals in our network and higher margins, particularly within
our Grain division.
"Over the longer term, we continue to explore opportunities
where we can add commodities for trans-loading at Northgate in
addition to propane gas and phosphate fertilizer currently
available or scheduled. The addition will strengthen Northgate's
ability to attract grain suppliers given the advantage it provides
to them of backhauling agriculture inputs to points of origination
after unloading their grain supply. Given Northgate's
strategic location, we believe that other commodity producers will
want to take advantage of its strong transportation economics and
close proximity to large markets."
Change in reporting periods
As previously announced,
Ceres 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. As a result of these changes, Ceres FY2016
results will include five quarters. Effective with the start
of FY 2017, July 1, 2016, Ceres will
also begin reporting its results in U.S. dollars.
Conference Call Details
Ceres will hold a conference
call to discuss its fourth quarter 2016 financial and operational
results on Thursday, May 12, 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 in Ceres' Q4 financial and operational
results can join the conference call by dialing 1-888-231-8191 or
647-427-7450, conference ID: 93035206. Please dial in
15 minutes prior to the call to secure a line. The conference call
will be archived for replay until Thursday,
May 28, 2016 at midnight, ET. To access the archived
conference call, please dial 1-855-859-2056 and enter the encore
code 93035206.
A live audio webcast of the conference call will be available
at:
http://event.on24.com/r.htm?e=1174182&s=1&k=81B1C70D4D4BDF17CC23B79EE123EDDD
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 operates in two business units, one of which is a grain
storage, handling, and merchandising unit anchored by a collection
of nine (9) grain storage and handling assets in Minnesota, New
York, Saskatchewan and
Ontario having aggregate storage
capacity of approximately 43 million bushels as at March 31, 2016.
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.
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
Corporation, 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.