MONTREAL, Nov. 28, 2014 /CNW Telbec/ - PyroGenesis
Canada Inc. (http://pyrogenesis.com) (TSXV: PYR), a TSX Venture
50® company, a world leader in the design, development,
manufacturing and commercialization of advanced plasma processes,
today announced its financial and operational results for the third
quarter ("2014-Q3"), and nine months, of fiscal 2014, ending
September 30, 2014.
Third Quarter Highlights
During the third quarter of 2014, PyroGenesis has:
- Backlog of $16.4MM or more than
280% of 2013 annual revenues;
- Gross Margin of 40.5% continue to exceed targets;
- Strong progress achieved on a $12.5MM contract to design and manufacture first
of 10 plasma-based powder production systems for 3D printing
industry;
- Continues to successfully reposition the Company by supplying
plasma processes to an expanded client base which includes Oil and
Gas, Mining and Metallurgical, and 3D Printing industries.
PyroGenesis' strategic entree into new high-margin market niches
is translating into significant orders for its plasma processes and
engineering services as evidenced by the level of new business
activity and historic backlog. These results validate management's
strategic decision to reposition the Company by introducing its
plasma processes into new high-margin markets and embarking on the
largest business development push in the Company's
history.
Financial
Highlights
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Three months ended
Sept 30,
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%
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Nine months ended
Sept 30,
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%
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2014
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2013
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Change
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2014
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2013
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Change
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Revenue
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$
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1,215,261
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$
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1,394,255
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-13%
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$
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3,980,220
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$
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3,877,216
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3%
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Gross margin before
amortization of intangible assets
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492,401
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575,462
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1,940,519
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1,630,711
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Gross margin before
amortization of intangible assets %
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40.5%
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41.3%
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48.8%
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42.1%
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Gross
margin
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143,133
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226,194
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892,714
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582,906
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Gross margin
%
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11.8%
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16.2%
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22.4%
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15.0%
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Loss from
operations
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(995,742)
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(916,604)
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9%
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(2,578,724)
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(2,847,637)
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-9%
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Comprehensive
loss
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$
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(995,695)
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$
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(915,156)
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9%
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$
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(2,577,576)
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$
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(2,844,768)
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-9%
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Basic and diluted
loss per share
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$
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(0.01)
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$
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(0.01)
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$
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(0.04)
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$
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(0.05)
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EBIDTA (loss)
(1)
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(531,629)
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$
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(275,859)
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93%
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$
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(1,024,660)
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$
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(932,160)
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10%
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Adjusted EBITDA
(loss) (1)
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$
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(531,629)
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$
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(275,859)
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93%
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$
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(1,024,660)
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$
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(932,160)
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10%
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Sept
30,
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Dec 31.
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2014
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2013
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Total
assets
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$
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6,133,657
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$
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7,170,872
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Total
Liabilities
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$
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4,048,930
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$
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11,780,886
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Shareholders' equity
(deficiency)
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$
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2,084,727
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$
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(4,610,014)
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(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.
Revenues
Revenues for 2014-Q3 were $1,215,261, a decrease of 13% over revenues of
$1,394,255 reported during the same
period in fiscal 2013. On a year-to-date basis, revenues for fiscal
year 2014 increased by 3% to $3,980,220 (9 months 2013: $3,877,216). Revenues in 2014-Q3 are
positively impacted by progress achieved on (i) the plasma system
being built for the US Navy, (ii) phase 1 of a tactical mobile
plasma system for destruction of chemical warfare agents, (iii) on
R&D projects using novel plasma based technologies in the oil
and gas industrial sector, and (iii) work on the recently signed
contract to manufacture ten plasma based powder production systems
for 3D printing.
2014 and 2015 revenues are projected to increase significantly
based on a strong backlog ($16.4MM)
of signed contracts combined with a significant pipeline of future
projects identified and under discussion.
Cost of Sales and Services
Cost of Sales and Services before amortization of intangible
assets for 2014-Q3 was $722,860
($818,793: 2013-Q3), a decrease of
12%. On a YTD basis, cost of sales before amortization of licenses
decreased by 9% to $2,039,701 as
compared to $2,246,505 for the same
period the prior year.
Building on the improvements in gross margins (before
amortization of intangible assets) started in late 2012, 2014-Q3
strong gross margins of 40.5% (41.3%: 2013-Q3), exceeded the
Company's business plan for the period. On a YTD basis, gross
margins (before amortization of intangible assets) increased by
19.0% to $1,940,519 as compared to
$1,630,711 for the same period the
prior year. 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 margin in 2014-Q3 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 $1,082,803
($1,013,214: 2013-Q3) for 2014-Q3
primarily reflecting management's strategic decision to increase
investment in business development; YTD SG&A increased 3%
over that posted for the same period in 2013 (2014 Q3: $3,109,362; 2013 Q3: $3,021,782).
Net Loss
Loss from operations and Comprehensive loss for 2014-Q3 both
increased 9% to $995,742 and
$995,695 respectively, as compared to
a Loss from Operations and a Comprehensive Loss of $916,604 and $915,156 reported for the same period during
2013-Q3. On a YTD basis, Loss from operations and Comprehensive
loss decreased by 9%.
The 9% increase in the comprehensive loss in 2014-Q3 versus the
comparable 2013 period, is primarily due to a 3% decrease in
revenues, a 7% increase in SG&A, offset in part by a 79%
reduction in financing charges due to the $6,000,000 conversion of debt to equity
May 2014. 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
EBITDA (earnings from operations before interest, taxes,
depreciation and amortization) for 2014-Q3 was negative
$581,629, as compared to the negative
EBITDA of $425,642 reported during
2013-Q3. On a YTD basis, EBITDA for fiscal 2014 was negative
$1,203,160, a 13% improvement over
the negative EBITDA of $1,377,568
reported during the same period in fiscal 2013.
Adjusted EBITDA (EBITDA adjusted for share-based payments) for
2014-Q3 was negative $531,629 an
increase of 93% over the negative Adjusted EBITDA of $275,859 reported during 2013-Q3. On a YTD
basis, Adjusted EBITDA for fiscal 2014 was negative $1,024,660, a 10% increase over the negative
Adjusted EBITDA of $932,160 reported
during the same period in fiscal 2013.
Balance Sheet and Liquidity
At September 30, 2014, PyroGenesis
had cash on hand of $78,003 and
negative working capital of $191,679
(negative $1,373,763 at December 31, 2013). As disclosed in the
Subsequent Events section, on November 26th,
2014, the Company closed a private placement of $1,500,000, which significantly strengthens its
working capital position.
Of note, the Company has no bank debt, nor any debt owing to
unrelated parties.
Subsequent events
During October 2014, the Company
announced that Pope & Company and Pollitt & Co. Inc.
commenced research coverage on PyroGenesis Canada.
On October 28, 2014, the Company
announced that it had passed initial inspection and had received
the second payment in regards to the sale and delivery of the first
of ten powder production systems for 3D printing.
On November 18, 2014, the Company
announced that it was awarded an additional study under a Master
Service Agreement with a global oil and gas company for
$788,300. This contract
involves the adaption of an existing plant at the Company's
facility which will be used to test and further demonstrate the
economics of the Company's proprietary technology. It is
expected that this project will be completed in the second half of
2015.
On November 26, 2014, The Company
announced the closing of a private placement of CAD$1,500,000 of units of PyroGenesis (the
"Units") at $0.35 per Unit
(the "Issue Price"), each Unit consisting of one (1) common
share (each, a "Common Share") and one-half (1/2) of one Common
Share purchase warrant (each whole Common Share purchase warrant, a
"Warrant") of PyroGenesis (the "Private Placement"). Each Warrant
entitles its holder to acquire an additional Common Share (each, a
"Warrant Share") at an exercise price of $0.55 per Warrant Share for a period of 24 months
following the closing of the Private Placement.
The Common Shares constituted qualifying shares for the purposes
of the Quebec Stock Savings Plan II.
The Company intends to use the net proceeds from the Private
Placement for general corporate purposes and working capital.
Outlook
Although Q3 results are not in line with what one may have
expected given recent press releases, we are happy to report that
this was due to certain revenues, which were expected to be posted
in Q3, will be accounted for in Q4 2014 and Q1 2015, and is not due
to any deterioration in company prospects or backlog. Results
were further exasperated by delays in the signing of two key
contracts from Q3 to Q4 2014. These revenues would have contributed
a minimum of $400K to profitability
in the quarter for a loss of approximately $595K as compared to that posted of $995K (vs. loss posted same quarter 2013 of
$916K). Notwithstanding this,
PyroGenesis still posted 3% gains in revenues and a 10% improvement
in profitability for year over year nine months
comparison.
Notwithstanding the above, 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. Management believes that
based on the contracts in hand PyroGenesis will be profitable in
2015.
As noted, 9 month Revenues-to-date, 3% higher than the same
period last year, are supported by a record backlog of signed
contracts which are already more than 280% of 2013 revenues (which
already were a 175% increase over 2012 revenues) and which are all
expected to be completed over the next 15 months. Despite recent
delays associated with certain project commencements, management
still expects to post strong year over year results 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 $12.5 MM contract to provide 10 plasma based
systems to produce the smallest, and most uniform spherical
Titanium powders to the industry, is just one of the many successes
of this repositioning strategy. The Company expects many more
of such contracts to be signed over the near term.
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 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.
About PyroGenesis Canada Inc.
PyroGenesis Canada, a TSX Venture 50® company, is the world
leader in the design, development, manufacturing and
commercialization of advanced plasma processes. We provide
engineering and manufacturing expertise, cutting-edge contract
research, as well as turnkey process equipment packages to the
defense, metallurgical, mining, advanced materials (including 3D
printing), oil & gas, and environmental industries. With a team
of experienced PyroClassTM engineers, scientists and
technicians working out of our Montreal office and our
3,800 m2 production facility, PyroGenesis maintains its
competitive advantage by remaining at the forefront of technology
development and commercialization. Our core competencies allow
PyroGenesis to lead the way in providing innovative plasma torches,
plasma waste processes, high-temperature metallurgical processes,
and engineering services to the global marketplace. Our operations
are ISO 9001:2008 certified, and have been since 1997. PyroGenesis
is a publicly-traded Canadian company on the TSX Venture Exchange
(Ticker Symbol PYR.V). For more information, please
visit www.pyrogenesis.com
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.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE PyroGenesis Canada Inc.