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Second Quarter 2014 Highlights
-
Net sales of
$4.5 million for the three months endedJune 30, 2014 , (Q2 2014) compared to$5.5 million for the three months endedJune 30, 2013 (Q2 2013) -
Introduced
EcoSphere 2330, a new grade of biolatex, at PaperCon 2014, the seminal paper and paperboard event inNorth America -
Appointed
Jeff MacDonald as Chief Operating Officer with responsibilities for business development, sales, operations and product development activities.
"We continue to increase our substitution rates within our North American customer base and we are experiencing a recovery in margins from last year's historic lows due to improved raw material prices. However, continued softness in butadiene prices impacted top line sales in the period," said
Financial Summary
Net Sales
Net sales for the three months ended
Net sales for the year-to-date (YTD) period were
Gross Profit
Gross profit was
Gross profit as a percentage of sales, adjusted for manufacturing depreciation, was 27.7% and 26.6% for Q2 2014 and YTD, respectively, compared with 19.6% and 21.1% in the same periods last year. The increase in gross profit during both periods was principally due to lower raw material input costs and decreased manufacturing production costs partially offset by lower sales volume.
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
Research and Development
(excludes share-based compensation, depreciation and amortization and foreign exchange loss or gain)
Research and development (R&D) costs were
Adjusted EBITDA1
Adjusted EBITDA was
Net Loss
Net loss in Q2 2014 was
Liquidity
Working capital was
Notice of Conference Call
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
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 and other non-cash expenses deducted in determining 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 Q2 2014 and Q2 2013:
Three months ended | ||||
June 30, 2014 | June 30, 2013 | |||
Net loss | (3,741,862) | (3,634,692) | ||
Depreciation and amortization | 433,645 | 365,697 | ||
Share-based compensation | 120,000 | 285,876 | ||
Interest Income | (86,144) | (93,856) | ||
Adjusted EBITDA (1) | (3,274,361) | (3,076,975) |
About
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
EcoSynthetix Inc. | |||
Interim Consolidated Balance Sheets | |||
(Unaudited) | |||
(expressed in US dollars) | |||
June 30, 2014 |
December 31, 2013 |
||
$ | $ | ||
Assets | |||
Current assets | |||
Cash | 73,863,213 | 80,506,957 | |
Accounts receivable | 3,400,536 | 3,691,791 | |
Inventory | 5,921,087 | 6,470,410 | |
Government grants receivable | 444,891 | 261,648 | |
Prepaid expenses | 497,290 | 276,856 | |
84,127,017 | 91,207,662 | ||
Non-current assets | |||
Intangible assets | 88,346 | 124,009 | |
Property, plant and equipment | 12,377,907 | 12,775,188 | |
Total assets | 96,593,270 | 104,106,859 | |
Liabilities | |||
Current liabilities | |||
Accounts payable and accrued liabilities | 3,529,200 | 3,947,385 | |
Total liabilities | 3,529,200 | 3,947,385 | |
Shareholders' Equity | |||
Common shares | 492,329,752 | 492,600,022 | |
Contributed surplus | 7,900,831 | 7,661,849 | |
Accumulated deficit | (407,166,513) | (400,102,397) | |
Total shareholders' equity | 93,064,070 | 100,159,474 | |
Total liabilities and shareholders' equity | 96,593,270 | 104,106,859 |
EcoSynthetix Inc. | |||||||
Interim Consolidated Statements of Operations and Comprehensive Loss | |||||||
(Unaudited) | |||||||
For the three and six months ended June 30, 2014 and June 30, 2013 | |||||||
(expressed in US dollars) | |||||||
Three months ended June 30, | Six months ended June 30, | ||||||
2014 $ |
2013 $ |
2014 $ |
2013 $ |
||||
Net sales | 4,542,648 | 5,533,678 | 9,536,712 | 11,654,156 | |||
Cost of sales | 3,589,969 | 4,713,196 | 7,601,044 | 9,777,548 | |||
Gross profit on sales | 952,679 | 820,482 | 1,935,668 | 1,876,608 | |||
Expenses | |||||||
Selling, general and administrative | 3,470,689 | 3,319,599 | 6,314,772 | 6,725,061 | |||
Research and development | 1,309,996 | 1,229,431 | 2,854,257 | 2,498,953 | |||
4,780,685 | 4,549,030 | 9,169,029 | 9,224,014 | ||||
Loss from operations | (3,828,006) | (3,728,548) | (7,233,361) | (7,347,406) | |||
Interest income | 86,144 | 93,856 | 169,245 | 179,228 | |||
Net loss and comprehensive loss | (3,741,862) | (3,634,692) | (7,064,116) | (7,168,178) | |||
Basic and diluted loss per common share | (0.07) | (0.07) | (0.12) | (0.13) | |||
Weighted average number of common shares outstanding | 56,655,530 | 55,709,678 | 56,754,446 | 55,904,023 |
EcoSynthetix Inc. | ||||||||
Interim Consolidated Statements of Cash Flows | ||||||||
(Unaudited) | ||||||||
For the three and six months ended June 30, 2014 and June 30, 2013 | ||||||||
(expressed in US dollars) | Three months ended June 30, | Six months ended June 30, | ||||||
2014 $ |
2013 $ |
2014 $ |
2013 $ |
|||||
Cash provided by (used in) | ||||||||
Operating activities | ||||||||
Net loss | (3,741,862) | (3,634,692) | (7,064,116) | (7,168,178) | ||||
Items not affecting cash | ||||||||
Depreciation and amortization | 433,645 | 365,697 | 863,564 | 747,604 | ||||
Share-based compensation | 120,000 | 285,876 | 255,000 | 616,979 | ||||
Changes in non-cash working capital | ||||||||
Accounts receivable | 133,701 | 108,476 | 291,255 | (271,173) | ||||
Inventory | 319,578 | 283,494 | 390,399 | (716,568) | ||||
Government grants receivable | (100,869) | 3,979 | (183,243) | 7,598 | ||||
Prepaid expenses | (226,043) | (167,350) | (220,434) | (234,542) | ||||
Accounts payable and accrued liabilities | 156,045 | (1,668,447) | (418,188) | (119,904) | ||||
Deferred government assistance | – | (40,972) | – | (144,002) | ||||
(2,905,805) | (4,463,939) | (6,085,763) | (7,282,186) | |||||
Investing activities | ||||||||
Cash used for purchase of intangible assets and property, plant and equipment | (41,495) | (775,745) | (271,693) | (1,242,935) | ||||
Financing activities | ||||||||
Exercise of common share options | – | 7,818 | 27,930 | 242,697 | ||||
Exercise of warrants | – | – | 160,058 | – | ||||
Repurchase of common shares | (402,398) | – | (474,276) | – | ||||
Cash provided by financing activities | (402,398) | 7,818 | (286,288) | 242,697 | ||||
Change in cash during the period | (3,349,698) | (5,231,866) | (6,643,744) | (8,282,424) | ||||
Cash – Beginning of period | 77,212,911 | 90,209,738 | 80,506,957 | 93,260,296 | ||||
Cash – End of period | 73,863,213 | 84,977,872 | 73,863,213 | 84,977,872 |
SOURCE
EcoSynthetix Inc.
Steve Snyder
Director, Marketing Communications
Phone: (289) 245-4017
E-mail: ssnyder@ecosynthetix.com
Investor Relations
Ross Marshall
TMX Equicom
Phone: (416) 815-0700 (Ext.238)
E-mail: rmarshall@tmxequicom.com