EcoSynthetix Reports 2013 First Quarter Results

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EcoSynthetix Reports 2013 First Quarter Results

May 7, 2013

TORONTO, May 7, 2013 /CNW/ – EcoSynthetix Inc. ("EcoSynthetix" or the "Company"), a renewable chemicals company that produces a family of commercially proven bio-based products, today announced its financial results for the three months endedMarch 31, 2013. Financial references are in U.S. dollars unless otherwise indicated.

First Quarter 2013 Highlights

  • Net sales grew 54% to $6.1 million for the three months ended March 31, 2013 (Q1 2013) compared to the three months ended March 31, 2012 (Q1 2012)
  • Won three new customers during the quarter
  • Six of the top 20 global paper and paperboard manufacturers are commercial with the Company's EcoSphere® biolatex®binders
  • Signed a five-year industrial partnership with Waterloo Institute for Nanotechnology at the University of Waterloo to collaborate on new applications for EcoSynthetix' EcoSphere® technology
  • Received separate certifications in accordance with the International Organization for Standardization (ISO) – ISO 9001:2008 for Quality Management Systems and ISO 14001:2004 for Environmental Management Systems

"We are growing sales both within our existing customer base and through new customer wins, including three new paper and paperboard customers this year," said John van Leeuwen, Chief Executive Officer of EcoSynthetix. "While coated paper and paperboard will remain a primary market in the near term, we continue to invest in product development. The cost and performance benefits our bio-based materials bring as an alternative to petroleum-based binders are just as relevant to the building products and adhesive markets as the paper and paperboard market. Our teams are hard at work on creating new and innovative applications of EcoSphere and EcoStix that will open new markets and revenue opportunities."

Financial Summary

Net Sales

Net sales increased 54% to $6.1 million in Q1 2013, compared to $4.0 million in Q1 2012. The increase was primarily due to higher sales volume. From a geographic perspective, sales volume increased $1.1 million in North America, $0.5 million in EMEA, $0.4 million in Latin America and $0.1 million in Asia Pacific. EcoSynthetix has won 11 new customers since Q1 2012, including three new customers in Q1 2013. Collectively these new customers accounted for 66% of the $2.1 million increase in net sales. Existing customers accounted for 34% of the sales increase in the quarter, representing a 19% increase in sales to those existing customers compared to the same period last year.  

Gross Profit

Gross profit was $1.1 million in Q1 2013, or 17.3% of sales, compared to $0.8 million, or 19.1% of sales, in Q1 2012. The change in gross profit during Q1 2013 was principally due to higher sales volume and lower manufacturing production costs partly offset by higher corn starch costs.

Gross profit adjusted for manufacturing depreciation as a percentage of sales was 22.3% in Q1 2013 compared to 24.4% in Q1 2012. The change was primarily due to higher corn starch costs partly offset by lower manufacturing production costs.

Selling, General and Administrative 
(Excludes share-based compensation, depreciation and amortization and foreign exchange loss or gain)

Selling, general and administrative (SG&A) costs were $3.0 million for Q1 2013 compared to $2.4 million in Q1 2012. The change was principally due to increased headcount as part of the Company's strategy to expand its sales and marketing efforts.

Research and Development

Research and development (R&D) expenses were $1.3 million in Q1 2013 compared to $1.1 million in Q1 2012. R&D is a key focus of EcoSynthetix to enhance its bio-based material product portfolio and expand into new applications and markets. The increase in R&D expenses reflects the Company's ongoing investment in product development and innovation for itsEcoSphere® biolatex® binders, as well as EcoMer and EcoStix.

Adjusted EBITDA1

Adjusted EBITDA for the quarter was ($2.9) million, compared to ($2.6) million in Q1 2012. The change in adjusted EBITDA is due to higher operating expenses partly offset by higher gross profit.

Net Loss

Net loss in Q1 2013 was $3.5 million, or $0.06 per common share, compared to $2.9 million, or $0.05 per share, for Q1 2012. The change in net loss is principally due to an increase in operating expenses partially offset by higher sales volumes resulting in increased gross profit.


Working capital was $97.3 million at March 31, 2013 compared to working capital of $100.2 million at December 31, 2012.  The decrease in working capital was principally due to cash utilized in operating activities.

Notice of Conference Call

EcoSynthetix will host a conference call on Wednesday, May 8, 2013, at 8:30 AM ET to discuss its financial results.  John van Leeuwen, CEO, and Robert Haire, CFO, will co-chair the call. All interested parties can join the call by dialling (647) 427-7450 or (888) 231-8191. Please dial in 15 minutes prior to the call to secure a line. A live audio webcast of the conference call will also be available at The presentation will be accompanied by slides, which will be available via the webcast link. 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.

1Non-IFRS Financial Measures

This press release makes reference to certain non-IFRS measures. These non-IFRS measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing a further understanding of results of operations of EcoSynthetix from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the financial information ofEcoSynthetix reported under IFRS. The Company uses non-IFRS measures such as Adjusted EBITDA to provide investors with a supplemental measure of operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess the Company's ability to meet its capital expenditure and working capital requirements.

Adjusted EBITDA is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. The Company presents Adjusted EBITDA because the Company believes it facilitates investors' use of operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structures (affecting relative interest expense), the book amortization of intangibles (affecting relative amortization expense) and the age and book value of property and equipment (affecting relative depreciation expense). The Company also presents Adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance. Adjusted EBITDA as presented herein is not a recognized measure under IFRS and should not be considered as an alternative to operating income or net income as a measure of operating results or an alternative to cash flows as a measure of liquidity. Adjusted EBITDA is defined as consolidated net income (loss) before interest, income taxes, depreciation, amortization, other non-cash expenses and charges which include the movement in the unrealized gains and losses on the Company's redeemable preferred shares and warrants classified as financial liabilities prior to the initial public offering and share based compensation expense.

The following table reconciles net loss to Adjusted EBITDA for Q1 2013 and Q1 2012:


Three months ended


March 31, 2013

March 31, 2012

Net loss



Depreciation and amortization



Share-based compensation



Interest Income



Adjusted EBITDA (1)




About EcoSynthetix Inc. (
EcoSynthetix Inc. is a renewable chemicals company specializing in bio-based products that can be used as inputs in industrial manufacturing for a wide range of consumer products. The Company's products offer a reduced carbon footprint and are marketed primarily on the basis of lower cost, stable pricing and equal or superior performance. EcoSynthetix's lead product,EcoSphere® biolatex® binders, is used commercially by a number of the global top 20 manufacturers in the coated paper and paperboard industry.

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 the Company, or industry results, to be materially different from any future results, performance, objectives or achievements expressed or implied by such forward looking statements. These statements reflect our current views regarding future events and operating performance and are based on information currently available to us, 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 our results of operations and business outlook are subject to significant risk, volatility and uncertainty. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking statements, including the factors identified in the "Risk Factors" section of the Company's Annual Information Form dated March 28, 2013. 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, we do not intend and do not assume any obligation to update these forward looking statements. 


EcoSynthetix Inc. 




Consolidated Balance Sheets




(Expressed in U.S. dollars), unaudited









As at

 March 31,



As at 
December 31,









Current assets








   Accounts receivable 








   Government grants receivable




   Prepaid expenses




Total current assets








Non-current assets




Intangible assets




Property, plant and equipment 




Total Assets




















Current liabilities




   Accounts payable and accrued liabilities 




   Deferred government grant




Total liabilities








Shareholder's Equity




Common shares 




Contributed surplus




Accumulated deficit




Total shareholder's equity 








Total shareholders' equity and liabilities
















EcoSynthetix Inc. 
Consolidated Statements of Operations and Loss




(Expressed in U.S. dollars, unless otherwise noted), unaudited













 Three months ended March 31,









Net sales




Cost of sales




Gross profit on sales












   Selling, general and administrative




   Research and development




Total operating expenses




Loss from operations












Interest income




Net loss and comprehensive loss












Basic and diluted loss per common share 




Weighted average number of common shares outstanding
















EcoSynthetix Inc. 




Consolidated Statements of Cash Flows




(Expressed in U.S. dollars), unaudited





 Three months ended March 31,





Cash provided by (used in)








Operating activities




Net loss and comprehensive loss




Items not affecting cash




   Depreciation and amortization 




   Share based compensation 




Changes in non-cash working capital




   Accounts receivable








   Government grants receivable




   Prepaid expenses




   Accounts payable and accrued liabilities




   Deferred government grant 











Investing activities




Cash used for purchase of intangible assets, property,
plant and equipment












Financing activities




Exercise of common share options




Cash provided by financing activities








Change in cash during the period 








Cash – Beginning of period




Cash – End of period 







EcoSynthetix Inc.
John van Leeuwen
Chief Executive Officer
Phone: (289) 288-5010

Investor Relations
Ross Marshall
TMX Equicom
Phone: (416) 815-0700 (Ext.238)