BURLINGTON, ON, May 4, 2021 /CNW/ - EcoSynthetix Inc. (TSX: ECO)
("EcoSynthetix" or the "Company"), a renewable
chemicals company that produces a portfolio of commercially proven
bio-based products, today announced its financial and operational
results for the three months (Q1 2021) ended March 31, 2021. Financial references are in U.S.
dollars unless otherwise indicated.
Highlights
(Comparison periods in each case are the
three months ended March 31,
2020)
- Recorded net sales of $3.7
million, down 13%, in Q1 2021, primarily due to lower
volumes of 11% which was consistent with the year-over-year
declines highlighted for the period by industry reports in coated
paper demand
- Two product innovation awards won by strategic partners in wood
composites and personal care, including the SWISS KRONO Group's
BE.YOND particle board product named as a "20 PLUS 20 Annual
Outstanding Furniture Accessories" at the recent Interzum Guangzhou
2021, subsequent to the end of the quarter
- Generated positive cash flow from operations of $0.4 million in Q1 2021, a decline of
$0.2 million compared to the prior
period
- Recorded Adjusted EBITDA loss of $0.3
million in Q1 2021, an increase in loss of $0.1 million, compared to the prior period
- Purchased and cancelled 57,600 common shares for total
consideration of $0.2 million under
the normal course issuer bid during 2021
- Maintained a strong balance sheet with cash of $41.9 million as at March
31, 2021
"We made important progress across each of our three market
verticals during the first quarter that advanced our commercial
strategies for EcoSphere®, DuraBind™ and personal care
ingredients," said Jeff MacDonald,
CEO of EcoSynthetix. "Our most important growth driver remains our
commercial activity in the wood composites market. We have made a
series of important steps in our commercialization strategy with
both our most significant commercial account, SWISS KRONO, and our
key strategic prospect. In each case, these manufacturers recognize
the value that a bio-based resin can offer to retailers and end
users. Our DuraBind resin is a sustainable and healthier
alternative to petrochemical resins. It offers benefits to both
manufacturers, in reducing their carbon footprint, as well as end
users. Our highest priority is delivering meaningful growth through
market penetration of the wood composites and personal care
markets. Demand in the paper market improved in the quarter
compared to the depths experienced last May and the weakness
through the end of 2020. As a result, our sales volumes and pricing
improved from the second half of 2020. Our strong balance sheet and
positive cash flow from operations put us in a great position to
deliver on this strategy."
Financial Summary
Net Sales
Net sales were $3.7 million for Q1
2021 compared to $4.2 million for the
same period in 2020. The 13% decrease was due to lower sales
volumes which reduced sales $0.4
million, or 11%, and a lower average selling price which
reduced sales by $0.1 million, or
2%.
Gross Profit
Gross profit was $0.8 million for
Q1 2021, compared to $1.1 million for
the same period in 2020. The 32% decrease was due to lower sales
volume, lower average selling price and higher manufacturing
costs.
Gross profit as a percentage of sales was 20.5% for Q1 2021,
compared to 26.0% in the same period in 2020. Gross profit as a
percentage of sales adjusted for manufacturing depreciation was
26.0% for Q1 2021, compared to 29.8% for the same period in 2020.
The decreases were primarily due to a lower average selling price
and higher manufacturing costs.
Selling, General and Administrative
Selling, General and Administrative ("SG&A") expenses
were $1.2 million for Q1 2021,
compared $1.4 million in the same
period in 2020. The 13% decrease was primarily due to payments
received under the Canadian Emergency Wage Subsidy program (CEWS)
of $0.1 million and lower
discretionary spend in the 2021 period.
Research and Development
Research and Development ("R&D") expenses were $0.3 million for Q1 2021, compared to
$0.4 million for the same period in
2020. R&D expense as a percentage of sales was 9% for Q1 2021
which was comparable to the same period in 2020. The Company's
R&D efforts continue to focus on further enhancing value for
its existing products and expanding addressable opportunities.
Adjusted EBITDA1
Adjusted EBITDA loss was $0.3
million for Q1 2021, compared to $0.2
million in the same period in 2020. The increased loss was
primarily due to lower gross profit partially offset by lower
operating expenses.
Net Loss
Net loss was $0.7 million, or
$0.01 per common share, for Q1 2021,
compared to $0.4 million, or
$0.01 net loss per common share, in
the same period in 2020. The change was primarily due to a higher
loss from operations and lower interest income in the 2021
period.
Liquidity
Cash on hand was $41.9 million as
at March 31, 2021, compared to
$42.0 of cash on hand and short-term
investments as at December 31, 2020.
The Company purchased and cancelled 57,600 common shares for
consideration of $0.2 million under
the normal course issuer bid in Q1 2021.
Notice of Conference Call
EcoSynthetix will host a conference call Wednesday, May 5, 2021 at 8:30 AM ET to discuss its financial results.
Jeff MacDonald, 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 with the conference identification of
3849877. 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 www.ecosynthetix.com. The presentation will be
accompanied by slides, which will be available via the webcast link
and the Company's website. 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 of EcoSynthetix 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. See "IFRS and
Non-IFRS Measures." 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 are not recognized measures under IFRS and should not be
considered as an alternative to operating income or net income as
measures of operating results or an alternative to cash flows as
measures of liquidity. Adjusted EBITDA is defined as consolidated
net income (loss) before net interest expense, income taxes,
depreciation, amortization, other non-cash expenses and charges
deducted in determining consolidated net income (loss).
The following table reconciles net loss to Adjusted EBITDA loss
for the three months ended March 31,
2021 and March 31, 2020:
(Unaudited)
|
Three months
ended
March 31, 2021
|
Three months
ended
March 31, 2020
|
Net
Loss
|
(749,884)
|
(447,255)
|
Depreciation
|
360,126
|
313,877
|
Share-based
Compensation
|
119,477
|
144,252
|
Interest
Income
|
(25,941)
|
(201,113)
|
Adjusted EBITDA
loss
|
(296,222)
|
(190,239)
|
About EcoSynthetix Inc. (www.ecosynthetix.com)
EcoSynthetix offers a range of sustainable engineered
biopolymers that allow customers to reduce their use of harmful
materials, such as formaldehyde and styrene-based chemicals. The
Company's flagship products, DuraBind™ and EcoSphere®, are used to
manufacture wood composites, paper and packaging, and enable
performance improvements, economic benefits and sustainability. The
Company is publicly traded on the Toronto Stock Exchange
(T:ECO).
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. The forward-looking statements in
this Press Release include, but are not limited to, statements
regarding the Company's plans to execute its commercial strategy,
convert late-stage industrial trial prospects into customers and
expand the number of lines and the volumes at existing customers,
and other statements regarding the Company's plans and expectations
in 2021. 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 Company's ability to
successfully allocate capital as needed and to develop new
products, as well as 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 2,
2021. 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.
|
|
|
Interim
Consolidated Balance Sheets
|
|
|
(expressed in US
dollars)
|
|
|
|
|
|
|
|
|
|
March 31,
2021
|
December 31,
2020
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
Cash
|
41,915,025
|
16,637,161
|
Short-term
investments
|
-
|
25,344,575
|
Accounts
receivable
|
1,833,907
|
1,794,594
|
Inventory
|
2,579,994
|
2,134,389
|
Government grants
receivable
|
125,091
|
122,218
|
Prepaid
expenses
|
42,110
|
69,633
|
|
46,496,127
|
46,102,570
|
|
|
|
Non-current
assets
|
|
|
Property, plant and
equipment
|
5,375,426
|
5,620,805
|
Total
assets
|
51,871,553
|
51,723,375
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current
liabilities
|
|
|
Trade accounts
payables and accrued liabilities
|
2,160,909
|
1,179,097
|
|
|
|
Non-current
liabilities
|
|
|
Lease
liability
|
1,022,091
|
1,072,287
|
Total
liabilities
|
3,183,000
|
2,251,384
|
Shareholders'
Equity
|
|
|
Common
shares
|
490,313,256
|
490,259,923
|
Contributed
surplus
|
10,296,447
|
10,383,334
|
Accumulated
deficit
|
(451,921,150)
|
(451,171,266)
|
Total
shareholders' equity
|
48,688,553
|
49,471,991
|
|
|
|
Total liabilities
and shareholders' equity
|
51,871,553
|
51,723,375
|
EcoSynthetix
Inc.
|
|
|
Interim
Consolidated Statements of Operations and Comprehensive
Loss
|
For the three
months ended March 31, 2021 and 2020
|
|
|
(expressed in US
dollars)
|
|
|
|
|
|
|
|
Three months
ended March 31,
|
|
2021
|
2020
|
|
|
|
Net
sales
|
3,673,447
|
4,224,416
|
|
|
|
Cost of
sales
|
2,921,358
|
3,124,202
|
|
|
|
Gross profit on
sales
|
752,089
|
1,100,214
|
|
|
|
Expenses
|
|
|
Selling, general and
administrative
|
1,198,989
|
1,372,487
|
Research and
development
|
328,925
|
376,095
|
|
1,527,914
|
1,748,582
|
|
|
|
Loss from
operations
|
(775,825)
|
(648,368)
|
|
|
|
Net interest
income
|
25,941
|
201,113
|
Net loss and
comprehensive loss
|
(749,884)
|
(447,255)
|
|
|
|
Basic and diluted
loss per common share
|
(0.01)
|
(0.01)
|
Weighted average
number of common shares outstanding
|
57,247,344
|
57,926,217
|
EcoSynthetix
Inc.
|
|
|
Interim
Consolidated Statements of Cash Flows
|
|
|
For the three
months ended March 31, 2021 and 2020
|
|
|
(expressed in US
dollars)
|
|
|
|
|
|
|
|
|
Three months
ended March 31,
|
|
2021
|
2020
|
Cash provided by
(used in)
|
|
|
|
|
|
Operating
activities
|
|
|
Net loss and
comprehensive loss
|
(749,884)
|
(447,255)
|
Items not affecting
cash
|
|
|
Depreciation
|
360,126
|
313,877
|
Share-based
compensation
|
119,477
|
144,252
|
Other
|
3,894
|
78,720
|
Changes in non-cash
working capital
|
|
|
Accounts
receivable
|
(194,324)
|
(462,229)
|
Inventory
|
(473,721)
|
(370,926)
|
Government grants
receivable
|
(2,873)
|
81,749
|
Prepaid expenses
|
27,523
|
38,801
|
Trade accounts payables and
accrued liabilities
|
933,182
|
649,215
|
Interest on
short-term investments
|
|
|
Interest received on short-term investments
|
358,740
|
760,545
|
Accrued interest on short-term investments
|
(14,165)
|
(202,792)
|
|
367,975
|
583,957
|
|
|
|
Investing
activities
|
|
|
Purchase of property,
plant and equipment
|
(44,557)
|
(88,955)
|
Receipts on mature
short-term investments
|
25,000,000
|
35,000,000
|
Purchase of
short-term investments
|
-
|
(35,000,000)
|
|
24,955,443
|
(88,955)
|
|
|
|
Financing
activities
|
|
|
Payments made on
lease liability
|
(59,237)
|
(47,579)
|
Common shares
repurchased
|
(189,995)
|
(476,567)
|
Exercise of common
share options
|
191,975
|
45,530
|
|
(57,257)
|
(478,616)
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
11,703
|
(188,504)
|
|
|
|
Change in cash
during the period
|
25,277,864
|
(172,118)
|
|
|
|
Cash - Beginning
of period
|
16,637,161
|
7,975,713
|
|
|
|
Cash - End of
period
|
41,915,025
|
7,803,595
|
SOURCE EcoSynthetix Inc.