XBC Xebec Adsorption Inc

Record Backlog, Improved Gross Margins and Significant Reductions in Losses MONTREAL, Aug. 2, 2012 /CNW Telbec/ - Xebec Adsorption Inc. ("Xebec"), a provider of biogas upgrading, natural gas and hydrogen purification solutions for the clean energy market, announced today its 2012 second quarter financial results. Key Highlights from Q2 -- Net income of $2.7 million or $0.07/share for the six-month period in 2012 compared to a loss of $1.2 million or 0.03/share for the same period in 2011. -- Net loss reduced by 50% to $(0.5) million or $0.01/share for the three-month period in 2012 compared to a loss of $(1.0) million or $0.03/share for the same period last year. -- EBITDA is now at $3.8 million for the six-month period ended June 30, 2012 compared to $(0.6) million for the same period in 2011. -- Current Contracted Backlog now at $13.1M compared to $11.4M for the same period in 2011. "We are pleased to report that our second quarter performance was in line with management expectations and we continue to move our business forward towards achieving long term sustainable growth and profitability," said Kurt Sorschak, President and CEO of Xebec. "We were able to record over $4.2 million in revenues this quarter having achieved reasonable working capital levels from our Air Products transaction earlier this year. While still behind last year's pace, revenues were higher compared to our first quarter results when working capital was still a major issue. Although we began the quarter operating at less than full capacity, by the end of the quarter we were able to ramp up our engineering & production teams, and as of June have been operating at full capacity.  As we move into the second half of 2012, we see both our pipeline of opportunity for business from new and existing customers continue to increase across all of our product segments.  In addition, we are seeing opportunities for our leading technologies in yet untapped markets and industries.  Particularly, we identified the associated gas area of particular interest since we already have certain product offerings for this segment. While we continued to focus on revenue growth during the quarter, we remained diligent in our effort to bring better overall efficiency into our operations. As a result, new levels of cost reduction were achieved in both manufacturing and SG&A which allowed us to increase margins across all product lines. As our business continues to transition from a turnaround into a growth company, we will remain diligent in maintaining responsible cost levels that will aid us in reaching our long term goal of profitable growth," concluded Mr. Sorschak. Financial Highlights: Three months ended % of Six months ended % of June 30, Change June 30, Change 2012 2011 2012 2011 (In (unaudited) (unaudited) (unaudited) (unaudited) dollars) Revenues 4,205,388 4,508,029 -6.7% 5,735,046 8,559,560 -33.0% Gross margin 1,126,979 889,848 26.6% 847,513 2,903,906 -70.8% Gross margin as a percentage of revenues 26.8% 19.7% 14.8% 33.9% EBITDA* (384,215) (693,894) 3,782,745 (560,031) Net income (loss) (514,198) (1,031,835) 2,651,920 (1,258,375) Basic and diluted earnings per share (0.01) (0.03) 0.07 (0.03) Weighted average number of shares 39,363,867 39,363,867 39,363,867 39,363,867 June 30, December 2012 31, As at: 2011 Total assets 10,003,835 10,283,088 Total Long term Liabilities 1,365,173 1,346,660 Equity 2,424,972 (307,121) August 2, August 11, As at: 2012 2011 Back log 13,108,787 11,433,342 * EBITDA is a non-IFRS financial measure and the Company defines it as earnings from operations excluding financial charges, taxes, foreign exchange loss (gain) and amortization.   Other Recent Highlights -- Xebec received its second purchase order for a BGX kinetic landfill gas separation system from China's Golden Green Environmental Engineering & Technical Co. Ltd. (Golden Green). The system will be installed in early 2013 at a landfill in Anshan City. The upgraded landfill gas will be compressed and used as renewable fuel in the transportation sector. -- Xebec announced it has signed a co-operative marketing & teaming agreement with Primoris Services Corporation ("Primoris") to jointly promote and sell a novel proprietary process solution for the associated gas, shale gas and upstream off-gases markets. This process incorporates intellectual property from both Organizations and will be marketed to customers that are involved in exploration and production (E&P), which operate stranded wells or gas processing operations. -- Xebec received a purchase order valued at CAD $2.05M for a H-3200 fast-cycle Pressure Swing Adsorption (PSA) hydrogen purification unit from Deok-Yang Company Ltd., the leading hydrogen supplier in South Korea -- Xebec announced its ability to increase its N2, O2 removal capability, and has validated the performance of high nitrogen and oxygen removal of up to 15% nitrogen in the feed biogas. A significant enhancement over incumbent technologies. -- Xebec received its first order for a BGX advanced kinetic landfill gas separation system, which will be installed in early 2013 at a landfill in northern China's Liaoning province. The Company has entered into an exclusive agreement with Golden Green for the potential delivery of 14 additional upgrading systems over the next 48 months. The value of these medium sized upgrading systems will be in the range of $1.7 million to $5.5 million each, depending on the landfill gas flow rates and gas composition, which should result in revenues of approximately $45 million over the next four years. Financial Results Revenues Xebec posted revenues of $4.2 million for the second quarter of 2012, a 6.7% decrease compared to $4.5 million in the second quarter of 2011. Revenues for the six-month period were $5.7 million a decreased of 33% compared to $8.6 million in 2011 for the same period. This decrease is mainly due to the licensing agreement reached with Nuvera in 2011 ($1.5 million) and the working capital deficiency that lasted until the end of the first quarter and hindered deliveries. Order Backlog As of August 2, 2012, total order backlog stood at $13.1 million, compared to $11.4 million as at August 11, 2011, a 14.9% increase. Gross Margin Xebec's gross margin for the second quarter of 2012 as a percentage of gross revenue increased by 7.1 points over the same period last year. The gross margin amounted to $1.1 million compared to $0.9 million for the same period in 2011. For the six-month period ended June 30, 2012, the total gross margin amounted to $0.8 million, compared to $2.9 million for the same period last year. The decrease in gross margin is mainly explained by the decrease of sale by 33.0% that included non-recurring licensing revenue of $1,5M at 100% gross margin. EBITDA and Net income The EBITDA for the second quarter of 2012 amounted to $(0.4) million compared to $(0.7) million in the second quarter of 2011. The improved EBITDA is explained by improved margins and continuous cost reductions. The net loss for the second quarter of 2012 totaled $(0.5) million, or $(0.01) per share, compared to a net loss of $(1.0) million, or $(0.03) per share for the same 2011 period, reflecting primarily an increase in gross margin of $0.2 million combined with a decrease in selling and administrative of $0.2 million due to cost reduction measures. Net income for the six-month period ended June 30, 2012 was $2.7 million, or $0.07 per share, compared to net loss of $1.3 million, or $(0.03) per share, for the same period in 2011, reflecting primarily a $5.4 million gain on the sale of the IP portfolio to Air Products and costs reduction of $0.9 million for selling and administrative expense related to lower professional fees and payroll. However, it was reduced by $2.0 million less in gross margins and an increase in financial expenses of $0.6 million explained by the loss on the revaluation of the Technology Partnerships Canada program. Selling and administrative expenses were $1.6 million in the second quarter of 2012, compared to $1.8 million for the same period last year. For the six-month period ended June 30, 2012, the selling and administrative expenses were $2.8 million, compared to $3.7 million for the same period last year resulting in our continuous efforts to reduce our overhead costs. As of June 30, 2012, the Company had $2.0 million of cash on hand and $1.2 million of long-term debt outstanding, of which $0.3 million is due within one year. 2012 Second Quarter Financial Statements and Management's Discussion and Analysis The complete financial statements, notes to financial statements and Management's Discussion and Analysis for the three and six month periods ended June 30, 2012, are available on the Company's Website at www.xebecinc.com or on the SEDAR Website at www.sedar.com. About Xebec Adsorption Inc. Xebec Adsorption Inc. is a global provider of clean energy solutions to corporations and governments looking to reduce their carbon footprints. With more than 1,300 customers worldwide, Xebec designs, engineers and manufactures innovative products that transform raw gases into marketable sources of clean energy mainly used as transportation fuel. Xebec's strategy is focused on establishing leadership positions in markets where demand for biogas upgrading, natural gas dehydration, liquefaction and hydrogen purification is growing. Headquartered in Montreal (QC), Xebec is a global company with two manufacturing facilities in Montreal and Shanghai, as well as a sales and distribution network in North America and Asia. Xebec trades on the TSX under the symbol XBC. For additional information on the company and its products and services, please visit the Xebec web site at www.xebecinc.com. Caution Concerning Forward-Looking Statements Certain statements in this press release may constitute "forward-looking" statements within the meaning of applicable securities laws. This forward looking information includes, but is not limited to, the expectations and/or claims of management of Xebec with respect to information regarding the business, operations and financial condition of Xebec. Forward-looking information contained in this press release involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Xebec or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. This list is not exhaustive of the factors that may affect forward-looking information contained in this press release. When used in this press release, such statements use such words as "anticipate", "believe", "plan", "estimate", "expect", "intend", "may", "will" and other similar terminology. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this presentation. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements. XEBEC ADSORPTION INC. CONTACT: Kurt SorschakPresident and CEO450-979-8701ksorschak@xebecinc.comEric FavreauChief Financial Officer450-979-8706efavreau@xebecinc.com

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