Second Quarter Highlights
During the second quarter of 2014, PyroGenesis has:
• Increased Revenues by 46% to
PyroGenesis' strategic entree into new high-margin market niches is translating into significant orders for its plasma processes and engineering services as evidenced by the level of new business activity and historic backlog of signed contracts. These results validate management's strategic decision to reposition the Company by introducing its plasma processes into new high-margin markets and embarking on the largest business development push in the Company's history.
|Three months ended ||%||Six months ended ||%|
|Gross margin before amortization of intangible assets||1,124,834||544,689||1,448,118||1,055,249|
|Gross margin before amortization of intangible assets %||57.4%||40.6%||52.4%||42.5%|
|Gross margin %||39.6%||14.6%||27.1%||14.4%|
|Loss from operations||(418,219)||(976,894)||-57%||(1,582,982)||(1,931,033)||-18%|
|Basic and diluted loss per share||$||(0.01)||$||(0.02)||$||(0.02)||$||(0.03)|
|EBIDTA (loss) (1)||59,762||(490,604)||112%||(621,531)||(951,926)||35% (2)|
|Adjusted EBITDA (loss) (1)||$||138,262||$||(340,819)||141%||$||(493,031)||$||(656,301)||25% (2)|
|Shareholders' equity (deficiency)||$||3,027,302||$||(4,610,014)|
(1) EBITDA and Adjusted EBITDA are non-IFRS financial measures. The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA less share-based payments.
(2) Reductions in the EBITA and Adjusted EBITA between the periods are disclosed as positive changes as the EBITDA result improved during the periods.
Revenues for 2014-Q2 were
2014 and 2015 revenues are projected to increase significantly based on a strong backlog (
Cost of Sales and Services
Cost of Sales and Services before amortization of intangible assets for 2014-Q12 was
Building on the improvements in gross margins (before amortization of intangible assets) started in late 2012, 2014-Q2 posted exceptionally strong gross margins of 57.4% (40.6%: 2013-Q2), which exceeded the Company's business plan for the period. Revenues and gross margins were both positively impacted in the quarter by an early termination of a contract. The Company is targeting gross margins more consistent with those it has realized in 2013 and 2014 Q1 of approximately 40%.
The strong level of gross margins in 2014-Q2 was achieved through controlled project management, tight control over technical resources employed on projects, and favorable pricing on equipment purchases.
Management is confident that with an increased focus on operations and project execution, PyroGenesis will continue to post strong gross margins on its projects notwithstanding the natural fluctuations that may occur from quarter to quarter.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") increased 7% to
Loss from operations and Comprehensive loss for 2014-Q2 both decreased 57% to
The 57% decrease in the comprehensive loss in 2014-Q2 versus the comparable 2013 period, is primarily due to a 46% increase in revenues, a 16.8% basis points increase in gross margin to 57%, offset in part by a 7% increase in SG&A. The company continues to maintain strong control over its spending while increasing resources allocated to business development, proposals, investor relations and research and development.
EBITDA (earnings from operations before interest, taxes, depreciation and amortization) for 2014-Q2 was
Adjusted EBITDA (adjusted for share-based payments) for 2014-Q2 was
Of note, the Company has no bank debt, nor any debt owing to unrelated parties.
2014 continues to prove itself to be the "tipping point year" for
PyroGenesis as the full effects of the Company's strategic plan to
position itself in new high margin niche markets are being realized.
6 month Revenues-to-date, although only 11% higher than the same period
last year, are supported by a record backlog of signed contracts which
are already more than 300% of 2013 revenues (which already were a 175%
increase over 2012 revenues) and which are all expected to be completed
over the next 18 months. Despite recent delays associated with certain
project commencements, management still expects to post strong year
over year revenues while maintaining its historic strong gross margins.
This progress has largely been due to the Company's successful
repositioning itself in answer to the fiscal crisis confronting its
largest client at the time; the US military. Under the direction of the
Board, the Company has successfully transitioned from being a company
predominately supplying waste management plasma processes to the US
military to one that is supplying plasma processes to not only the
military but also to the Oil and Gas as well as the Mining &
Metallurgical and 3D Printing industries. In each case the Company has
targeted high margin niche businesses with the potential for
significant repeat orders. PyroGenesis' recent success within the 3D
printing industry wherein the Company announced that they had signed a
The Company continues to implement measures to strengthen and focus its
business development department, which includes, amongst other
measures, hiring additional strategically focused professionals. The
professionals focusing exclusively on business development has
increased from 1.5 employees 18 months ago to 7 today.
The Company continues to de-risk its business model by starting to
require recurring revenue features within sales agreements. Management
has targeted 2016-2017 as the time frame in which the Company will be
profitable from recurring revenues alone.
In conclusion, Management is confident that the strategic plan adopted
by the Board which has given effect to the repositioning of the
Company's business, has proven to be a success and Management expects
that this success will continue and be improved upon into the
This press release contains certain forward-looking statements, including, without limitation, statements containing the words "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", "in the process" and other similar expressions which constitute "forward-looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, our expectations regarding the acceptance of our products by the market, our strategy to develop new products and enhance the capabilities of existing products, our strategy with respect to research and development, the impact of competitive products and pricing, new product development, and uncertainties related to the regulatory approval process. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks and uncertainties and other risks detailed from time-to-time in the Company's ongoing filings with the securities regulatory authorities, which filings can be found at www.sedar.com. Actual results, events, and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws.