News Column

BIOX announces third quarter results

August 12, 2014

TSX symbol: BX

TORONTO, Aug. 12, 2014 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company, today announced its fiscal 2014 third quarter (Q3 2014) financial results for the three-month and nine-month periods ended June 30, 2014.

Highlights

• Production of methyl esters was 13.8 million litres in Q3 2014 compared to 14.7 million litres in the third quarter of fiscal 2013 (Q3 2013) • Sales were $16,847,000 in Q3 2014 compared to $19,256,000 in Q3 2013 • Operating loss was $2,973,000 in Q3 2014 compared to $1,806,000 in Q3 2013 • Operating loss prior to non-cash items(1) was $1,863,000 in Q3 2014 compared to operating income prior to non-cash items of $463,000 in Q3 2013 • Operating loss prior to non-cash items of $909,000 in Q3 2014 for BIOX's operating segment (BIOX Canada Limited and BIOX USA Limited) compared to operating income prior to non-cash items of $2,130,000 in Q3 2013 • Net loss was $3,250,000 in Q3 2014 compared to $2,084,000 in Q3 2013 • Loss per share was $0.08 in Q3 2014 compared to $0.05 in Q3 2013



"Our Hamilton facility continues to operate effectively. However, until the EPA finalizes the U.S. minimum renewable volume obligations for 2014 and 2015 and a resolution on the U.S. biodiesel tax credit is determined, we anticipate that market dynamics will remain challenging with the value of biodiesel and RINs providing only a narrow margin range for producers," said Kevin Norton, Chief Executive Officer of BIOX. "Closer to home, our relationship with Shell Canada Ltd. is proving beneficial as an efficient method to gain access to the growing demand for biodiesel in the Ontario market. With the official guidelines for the Ontario Renewable Diesel mandate expected to be released by the MOE in September 2014, we expect this market to grow. We continue to pursue additional relationships that would integrate our production and our sales and marketing with greater scale to maximize these assets."

Financial Highlights

Sales were $16.8 million and $49.8 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with $19.3 million and $50.2 million for the corresponding periods in 2013. The 13% difference in sales for the three-month period ended June 30, 2014, was primarily the result of the reinstatement of the $1.00 per US gallon U.S. biodiesel tax incentive in January 2013, which resulted in a stronger pricing environment in calendar 2013 compared with calendar 2014.

Direct expenses were $17.6 million and $49.6 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with $16.9 million and $40.0 million for the corresponding periods in 2013.  The increase in direct expenses for the three-month and nine-month periods ended June 30, 2014 was primarily due to a higher volume of biodiesel sold during the period due to the temporary shutdown of the Hamilton facility from October 25, 2012, through February 1, 2013.

General and administrative expenses were $1.1 million and $4.0 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with $1.3 million and $4.1 million for the corresponding periods in 2013.

Operating loss was $3.0 million and $12.4 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with $1.8 million and $0.8 million for the corresponding periods in 2013.

Operating loss prior to non-cash itemswas $1.9 million and $3.8 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared to operating income prior to non-cash items of $0.5 million and $3.8 million in the corresponding periods last year. The increased losses for the three- and nine-month periods in 2014 were primarily due to the expiry in December 2013 of the US$1.00 per US gallon U.S. biodiesel tax incentive that was in effect in calendar 2013, which resulted in a stronger biodiesel pricing environment during the three-month and nine-month periods ended June 30, 2014.

Combined operating loss prior to non-cash items for BIOX's wholly-owned subsidiaries, BIOX Canada Limited and BIOX USA Limited, was $0.9 million and $0.4 million, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with operating income prior to non-cash items of $2.1 million and $9.5 million for the corresponding periods in 2013.

Net loss was $3.3 million or $0.08 per share and $28.1 million or $0.62 per share, respectively, for the three-month and nine-month periods ended June 30, 2014, compared with $2.1 million or $0.05 per share and $1.8 million or $0.04 per share for the corresponding periods in 2013.

As at June 30, 2014, BIOX's available cash position amounted to $10.5 million, which consisted of cash and cash equivalents and short-term investments, compared with $15.9 million on September 30, 2013. Working capital as of June 30, 2014, was $10.4 million. The Company believes that its future cash flow from operations combined with its current financial resources and debt financing should be sufficient to enable BIOX to meet its ongoing requirements for capital expenditures and working capital requirements.

As at June 30, 2014, the Company had 45,710,967 common shares outstanding, as well as outstanding stock options to purchase 2,775,000 common shares and share purchase warrants to acquire up to 1,982,143 common shares.

Outlook

The value of biodiesel and Biomass-based Diesel Renewable Identification Numbers or D4 (RINs) continue to be negatively impacted as the industry awaits the announcement on the 2014 and 2015 Renewable Volume Obligation (RVO) from the U.S. Environmental Protection Agency. 2014 RINs traded at approximately $0.56 (or $0.84 per U.S. gallon) as of August 11, 2014. The final announcement of the RVO levels for 2014 and 2015 will be an important signal for the sustainability of the biodiesel industry in the U.S. The EPA has stated that it will release the 2014 RVO during the summer of 2014.

The proposed RVO maintains the current volume requirement of Biomass-based diesel at 1.28 billion U.S. gallons for 2014 and 2015. At this level the 2014 and 2015 volume requirements would actually fall below the 1.8 billion U.S. gallons that the U.S. Biomass-based diesel industry produced in 2013.

While BIOX has historically sold the majority of its product into the U.S. market, the implementation of the Canadian regulations significantly increase the accessible market for its product in Canada. Furthermore, the implementation of a renewable diesel mandate in Ontario on April 1, 2014, provides BIOX with market certainty in its local region, which supports the significant capital investment that it made in the Hamilton facility. Once fully implemented, the regulation requires the use of an estimated 240 million litres of bio-based diesel per annum on an average GHG adjusted volume basis.

BIOX's inter-terminal pipeline and supply agreement with Shell is an example of how the Company can directly service primary suppliers with a secure supply of biodiesel under the new Canadian and Ontario regulations by the most efficient possible logistics. The supply of biodiesel under this agreement has the potential to become a significant portion of BIOX'sHamilton production given the implementation of the Ontario mandate and as the Canadian Renewable Fuel Content Regulations extend eastward into QuÉbec and the Atlantic provinces.

BIOX continues to pursue growth strategies that would expand its business through increasing the volume of biodiesel it produces, controls and distributes in strategic locations throughout North America.

Notice of Conference Call

BIOX will hold a conference call today, August 13, 2014, at 9:00 a.m. ET hosted by Mr. Kevin Norton, Chief Executive Officer, and Mr. Chris Clinning, Executive Vice President and Chief Financial Officer, to discuss BIOX's financial results and corporate developments. To access the conference call by telephone, dial (647) 427-7450 or (888) 231-8191. To access the telephone replay, dial (416) 849-0833 or (855) 859-2056 and enter reservation number 77997631. A live audio webcast of the call will be available at www.bioxcorp.com. The webcast will be archived for 90 days.

1) Note: Non-IFRS Measures.  Operating income prior to non-cash items is defined as operating income or loss less production facility depreciation and amortization, and less depreciation and amortization of furniture, equipment and intangibles. Management uses this measurement to monitor the operating cash flow of BIOX's business and believes this information is useful supplemental information to a reader of financial statements. This measurement may not be comparable to similar measures presented by other issuers.  Investors are cautioned that operating income (loss) prior to non-cash items should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of BIOX's performance.

Reconciliation of Non-IRFS Measures

The following table presents a reconciliation of operating income (loss) prior to non-cash items to net income (loss) for the three-month and nine-month periods ended June 30, 2014 and 2013:

(in thousands)       Three months

ended June 30
  Nine months

ended June 30
        2014  2013     2014  2013
              $        $         $        $
Operating income (loss) before non-cash items     (1,863)  463   (3,846)  3,754
             
Deduct: Production facility depreciation

and amortization
    (829)  (1,047)   (3,092)  (3,002)
  Depreciation and amortization of

equipment and intangible assets
    (92)  (92)   (272)  (282)
  Share-based compensation     (48)  (97)   (211)  (269)
  Provision for unutilized tank storage     (141)  (1,033)   (4,998)  (1,033)
Operating loss     (2,973)  (1,806)   (12,419)  (832)
Other income and expenses     (277)  (278)   (15,706)  (995)
Net loss     (3,250)  (2,084)   (28,125)  (1,827)



About BIOX Corporation

BIOX is a renewable energy company that owns and operates a 67 million litre per year continuous flow biodiesel production facility in Hamilton, Ontario. BIOX has an innovative, proprietary and patented production process that is capable of producing the highest quality, renewable, clean burning and biodegradable biodiesel fuel utilizing a variety of feedstocks - from pure seed oils to animal fats to recovered vegetable oils with no change to the production process. BIOX's high quality biodiesel fuel meets North American (ASTM D-6751) quality standards.

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 BIOX, or industry results, to be materially different from any future results, performance, objectives or achievements expressed or implied by such forward-looking statements. Such statements relate to, among other things, BIOX's long-term expectations for the biodiesel market in light of current market conditions, the implementation of an Ontario biodiesel mandate and its effect on BIOX, the significance of sales under the supply agreement with Shell, and the ability of BIOX to realize on its cost savings programs. These statements reflect BIOX's current views regarding future events and operating performance, are based on information currently available to BIOX, 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 fact that BIOX's results of operations and business outlook are highly dependent on a mix of legislation and producer payment programs and tax credits and upon commodity prices, which are subject to significant volatility and uncertainty. Many factors could cause the actual results, performance or achievements of BIOX to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including factors described in this press release and those discussed in BIOX's publicly available disclosure documents, as filed by BIOX on SEDAR (www.sedar.com) except as updated herein. 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, BIOX does not intend and does not assume any obligation to update these forward-looking statements.To the extent any forward-looking statements herein constitute financial outlook, they were approved by management as of the date hereof and have been included to provide an understanding with respect to BIOX's financial performance and are subject to the same risks and assumptions referred to herein. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur and readers are cautioned that any financial outlook information contained in this news release should not be used for purposes other than for which it is disclosed herein.

Financial results included below:



BIOX Corporation

Condensed consolidated interim statements of comprehensive loss

Three and nine month periods ended June 30, 2014 and 2013

(Unaudited)

(Expressed in thousands of Canadian dollars, except share and per share amounts)
    Three months ended Nine months ended
    June 30, June 30,
    2014   2013  2014   2013
     $    $     $    $ 
                 
Revenue   16,847   19,256   49,823   50,209
                  
Cost of sales                 
  Direct expenses    17,570   16,949   49,635   40,041
  Production facility depreciation and amortization    829   1,047   3,092   3,002
    18,399   17,996   52,727   43,043
                 
Gross margin    (1,552)   1,260   (2,904)   7,166
                 
Operating expenses                 
  General and administrative    1,140   1,294   4,034   4,138
  Depreciation and amortization of equipment and intangible assets    92   92   272   282
  Share-based compensation    48   97   211   269
  Expansion planning and development    141   1,583   4,998   3,309
    1,421   3,066   9,515   7,998
                   
Operating loss    (2,973)   (1,806)  (12,419)   (832)
                 
Other expenses                 
  Impairment of non-current assets    -   -   15,197   -
  Financing cost    328   292   923   947
  Foreign exchange (gain) loss    (29)   (7)   (331)   93
    299   285   15,789   1,040
                 
Net loss before interest income and income taxes    (3,272)   (2,091)   (28,208)   (1,872)
Income tax expense    -   -   -   (18)
Interest income    22   7   83   63
Net loss for the period    (3,250)   (2,084)   (28,125)   (1,827)
Other comprehensive loss                 
  Foreign currency translation gain (loss)    72   48   9   (90)
Comprehensive loss   (3,178)   (2,036)   (28,116)   (1,917)
                  
Loss per common share                
  Basic    (0.08)   (0.05)   (0.62)   (0.04)
  Diluted    (0.08)   (0.05)   (0.61)   (0.04)
                 
Weighted average number of common shares outstanding                
  Basic    45,720,221   45,748,691   45,720,221   45,748,691
  Diluted    46,192,191   45,956,548   46,192,191   45,956,548
            


                  
BIOX Corporation

Condensed consolidated interim statements of changes in equity

Nine month periods ended June 30, 2014 and 2013

(Unaudited)

(Expressed in thousands of Canadian dollars, except share and per share amounts)
             Accumulated     
     Common share capital      other     
         Warrants  Equity comprehensive     Total
     Shares  Amount  reserve  reserve  income (loss)  Deficit   equity
      #    $    $    $    $    $      $
                                
Balance, September 30, 2012    45,748,691     167,787   3,151   2,559   20    (107,972)     65,545
Share-based compensation     -   -   -   269   -   -     269
Net loss     -   -   -   -   -   (1,827)     (1,827)
Foreign currency translation loss     -   -   -   -   (90)   -     (90)
Balance, June 30, 2013    45,748,691     167,787   3,151   2,828   (70)    (109,799)     63,897
                                
Balance, September 30, 2013   45,748,691     167,787   3,151   2,926   (91)    (110,813)    62,960
Share-based compensation    -   -   -   211   -   -    211
Share cancellation    (37,724)   (14)   -   -   -   -    (14)
Net loss    -   -   -   -   -   (28,125)    (28,125)
Foreign currency translation loss    -   -   -   -   9   -    9
Balance, June 30, 2014   45,710,967     167,773   3,151   3,137   (82)    (138,938)    35,041
                  


                   
BIOX Corporation

Condensed consolidated interim statements of financial position

As at June 30, 2014 and September 30, 2013

(Unaudited)

(Expressed in thousands of Canadian dollars) 
                 June 30,    September 30,
                2014   2013
                 $    $
                     
Assets                    
Current assets                     
  Cash and cash equivalents                10,476   15,909
  Accounts receivable                3,054   5,839
  Prepaid expenses                596   839
  Inventory                6,275   5,143
                20,401   27,730
                     
Restricted cash                1,309   1,800
Property, plant and equipment                30,337   46,930
Intangible assets                534   912
Deferred income tax assets                10,309   10,276
                62,890   87,648
                     
Liabilities                    
Current liabilities                     
  Accounts payable and other liabilities                6,547   6,300
  Current portion of long-term debt                1,500   1,500
  Current portion of finance leases                27   31
  Current portion of provisions                1,915   2,434
                9,989   10,265
                     
Finance leases                38   34
Long-term debt                9,726   10,849
Provisions                8,096   3,540
                27,849   24,688
                     
Equity                    
Common share capital                167,773   167,787
Warrants reserve                3,151   3,151
Equity reserve                3,137   2,926
Accumulated other comprehensive loss                (82)   (91)
Deficit                (138,938)   (110,813)
                35,041   62,960
                62,890   87,648
                   


           
BIOX Corporation

Condensed consolidated interim statements of cash flows

Nine month periods ended June 30, 2014 and 2013

(Unaudited)

(Expressed in thousands of Canadian dollars, except share and per share amounts)
      Nine months ended
       June 30,
      2014     2013
       $      $ 
             
Operating activities            
  Net loss      (28,125)     (1,827)
  Add (less) items not involving cash             
   Production facility depreciation and amortization      3,092     3,002
   Depreciation and amortization of equipment and intangible assets      272     282
   Financing costs      554     605
   Provision for unutilized tank storage      3,796      1,033
   Impairment of non-current assets      15,197     -
   Income taxes paid      -     18
   Unrealized foreign exchange gain      (122)      (458)
   Share-based compensation      211      269
   Accretion of asset retirement obligation      241     209
   Deferred income tax asset      (32)     (52)
      (4,916)      3,081
              
  Net change in non-cash working capital balances              
   related to operations      2,209      6,612
      (2,707)      9,693
              
Investing activity             
  Purchase of property, plant and equipment      (1,669)     (3,984)
  Disposals of property, plant and equipment      12     -
  Decrease in restricted cash      491     4,742
  Share repurchase      (14)      -
      (1,180)      758
                    
Financing activities            
  Payments on finance leases      (26)      (33)
  Proceeds from debt financing      -     2,415
  Repayment of debt financing      (1,125)     (1,125)
  Repayment of demand loan      -     (5,282)
  Financing charges      -      (2)
  Interest paid      (526)      (568)
      (1,677)      (4,595)
                 
Effect of exchange rate changes on cash held in foreign currency      131     369
             
Net (decrease) increase in cash and cash equivalents during the period      (5,433)      6,225
Cash and cash equivalents, beginning of period      15,909      7,543
Cash and cash equivalents, end of period     10,476      13,768
           
           


SOURCE BIOX Corporation


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