BURLINGTON, ON, Nov. 3, 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 (Q3 2021)
and nine months (YTD 2021) ended September
30, 2021. Financial references are in U.S. dollars unless
otherwise indicated.
Highlights
(Comparison periods in each case are the
three months ended September 30,
2020)
- Recorded net sales of $4.7
million, up 57%, in Q3 2021, due to higher volumes of 34%
and higher average selling price of 23%
- Gross profit of $1.1 million, up
149%, in Q3 2021, enabled by the diversification of revenue
mix
- Recorded Adjusted EBITDA loss of $0.1
million in Q3 2021, an improvement of $0.1 million, or 49%, compared to the prior
period
- Purchased and cancelled 90,800 common shares in Q3 2021, and
200,400 in YTD 2021, under the normal course issuer bid for total
consideration of $0.4 million and
$0.8 million respectively
- Maintained a strong balance sheet with cash of $40.8 million as at September 30, 2021
"Our diversification strategy is working. We continued to see
strong momentum in sales volumes, pricing and improved mix which
drove topline growth in the quarter despite continued challenges in
the graphic paper market," said Jeff
MacDonald, CEO of EcoSynthetix. "We made further, meaningful
progress at our key strategic wood composites accounts and see an
opportunity to continue to grow volumes both within these first
commercial facilities, as well as to expand into other operations
within our customers' broader networks. The profile of our
bio-based wood composites binder offers both value and performance
while also reducing the carbon footprint of a manufacturer's supply
chain. As consumers, retailers and manufacturers pursue more
sustainable and healthier alternatives to petroleum-based binders,
DuraBind™ is a clear alternative with strong, well-known
reference accounts. Testament to this is further recognition for
our customer Swiss Krono's BE.YOND particleboard, which was
recognized with an award last month from the Association of German
Interior Architects for its contribution to healthy living
spaces."
Financial Summary
Net Sales
Net sales were $4.7 million and
$13.3 million for Q3 2021 and YTD
2021, respectively, compared to $3.0
million and $10.3 million in
the corresponding periods in 2020. The increase in the quarter was
due to higher sales volumes which increased sales $1.0 million, or 34%, enabled by the continued
diversification of the Company's revenue mix from increased sales
of DuraBind™ and a rebound in paper volume, as well as a
higher average selling price which increased sales by $0.7 million, or 23%. The 29% increase in the YTD
period was due to higher sales volumes which increased sales
$1.8 million, or 17%, and a higher
average selling price which increased sales by $1.2 million, or 12%. Subsequent to the quarter,
a paper account exited coated paper production and closed a line
that uses EcoSphere®. The annualized impact on sales volumes
is expected to be approximately $1.4
million on a go forward basis.
Gross Profit
Gross profit was $1.1 million and
$3.0 million for Q3 2021 and YTD
2021, respectively, compared to $0.4
million and $2.1 million in
the corresponding periods in 2020. The increase in both periods was
primarily due to higher sales volumes and a higher average selling
price partly offset by higher manufacturing costs.
Gross profit as a percentage of sales was 23.5% and 22.3% for Q3
2021 and YTD 2021, respectively, compared to 14.8% and 20.0% in the
corresponding periods in 2020. Gross profit as a percentage of
sales adjusted for manufacturing depreciation was 27.8% and 26.7%
for Q3 2021 and YTD 2021, respectively, compared to 21.7% and 25.6%
for the corresponding periods in 2020. The increases in gross
profit as a percentage of sales adjusted for manufacturing
depreciation were primarily due to a higher average selling price
partly offset by higher manufacturing costs.
Selling, General and Administrative
Selling, general and administrative expenses (SG&A) were
$1.4 million and $3.9 million for Q3 2021 and YTD 2021,
respectively, compared to $0.9
million and $3.1 million for
the corresponding periods in 2020. The increase in SG&A in the
quarterly period was primarily due to lower payments received under
the Canadian Emergency Wage Subsidy program (CEWS) of $0.1 million, an increase in share based
compensation of $0.1 million and an
increase in provision for variable based compensation of
$0.2 million. The increase in
SG&A in the YTD period was primarily due to a provision for
variable based compensation of $0.4
million as well as the drivers previously mentioned in the
quarterly period.
Research and Development
Research and development (R&D) costs were $0.5 million and $1.4
million for Q3 2021 and YTD 2021, respectively, compared to
$0.3 million and $1.1 million for the corresponding periods in
2020. R&D expense as a percentage of sales was 10% for Q3 2021
and YTD 2021, respectively, compared to 11% in both of the
corresponding periods 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 $0.1
million and $0.6 million for
Q3 2021 and YTD 2021, respectively, compared to $0.2 million and $0.7
million in the corresponding periods in 2020. Adjusted
EBITDA loss during both periods remained largely comparable to the
prior year as a higher net loss was partially offset by lower
interest income and higher share based compensation. The lower
interest income is due to lower interest rates on cash and
short-term investments for the three and nine months ended
September 30, 2021.
Net Loss
Net loss was $0.8 million, or
$0.01 per common share, and
$2.2 million, or $0.04 per common share, for Q3 2021 and YTD 2021,
respectively, compared to $0.6
million, or $0.01 per common
share, and $1.7 million, or
$0.03 per common share, for the
corresponding periods in 2020. The increases in both periods were
primarily due to lower interest income due to lower interest rates
on cash and short-term investments referenced above.
Liquidity
Cash on hand was $40.8 million as
at September 30, 2021, compared to
$42.0 of cash on hand and short-term
investments as at December 31, 2020.
The Company purchased and cancelled 90,800 common shares for
consideration of $0.4 million under
the normal course issuer bid in Q3 2021 and 200,400 common shares
for consideration of $0.8 million in
YTD 2021.
Notice of Conference Call
EcoSynthetix will host a conference call Thursday, November 4, 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 (416)
764-8659 or (888) 664-6392 with the conference identification of
18016865. 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 and nine months ended September 30, 2021 and September 30, 2020:
(Unaudited)
|
Three months
ended
September 30, 2021
|
Three months
ended
September 30, 2020
|
Nine months
ended
September 30, 2021
|
Nine months
ended
September 30, 2020
|
Net
Loss
|
(763,892)
|
(640,690)
|
(2,242,873)
|
(1,696,190)
|
Depreciation
|
357,902
|
365,426
|
1,056,445
|
1,048,406
|
Share-based
Compensation
|
300,300
|
193,150
|
647,262
|
506,428
|
Interest
Income
|
(10,317)
|
(145,811)
|
(51,927)
|
(519,275)
|
Adjusted EBITDA
loss
|
(116,007)
|
(227,925)
|
(591,093)
|
(660,631)
|
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,
deliver meaningful growth across all three product categories,
convert high-value strategic prospects into 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)
|
|
|
|
|
|
|
|
|
|
September 30,
2021
|
December 31,
2020
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
Cash
|
40,751,262
|
16,637,161
|
Short-term
investments
|
-
|
25,344,575
|
Accounts
receivable
|
2,096,939
|
1,794,594
|
Inventory
|
2,559,239
|
2,134,389
|
Government grants
receivable
|
22,483
|
122,218
|
Prepaid
expenses
|
132,092
|
69,633
|
|
45,562,015
|
46,102,570
|
|
|
|
Non-current
assets
|
|
|
Property, plant and
equipment
|
4,945,007
|
5,620,805
|
Total
assets
|
50,507,022
|
51,723,375
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current
liabilities
|
|
|
Trade accounts
payables and accrued liabilities
|
2,437,766
|
1,179,097
|
|
|
|
Non-current
liabilities
|
|
|
Lease
liability
|
885,530
|
1,072,287
|
Total
liabilities
|
3,323,296
|
2,251,384
|
Shareholders'
Equity
|
|
|
Common
shares
|
490,030,002
|
490,259,923
|
Contributed
surplus
|
10,567,863
|
10,383,334
|
Accumulated
deficit
|
(453,414,139)
|
(451,171,266)
|
Total
shareholders' equity
|
47,183,726
|
49,471,991
|
|
|
|
Total liabilities
and shareholders' equity
|
50,507,022
|
51,723,375
|
EcoSynthetix
Inc.
|
Interim
Consolidated Statements of Operations and Comprehensive
Loss
|
For the three and
nine months ended September 30, 2021 and 2020
|
(expressed in US
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended September 30,
|
|
Nine months
ended September 30,
|
|
2021
|
2020
|
|
2021
|
2020
|
|
|
|
|
|
|
Net
sales
|
4,705,917
|
2,991,591
|
|
13,276,471
|
10,318,888
|
|
|
|
|
|
|
Cost of
sales
|
3,602,241
|
2,548,305
|
|
10,318,220
|
8,259,846
|
|
|
|
|
|
|
Gross profit on
sales
|
1,103,676
|
443,286
|
|
2,958,251
|
2,059,042
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
Selling, general and
administrative
|
1,394,430
|
898,253
|
|
3,888,241
|
3,128,994
|
Research and
development
|
483,455
|
331,534
|
|
1,364,810
|
1,145,513
|
|
1,877,885
|
1,229,787
|
|
5,253,051
|
4,274,507
|
|
|
|
|
|
|
Loss from
operations
|
(774,209)
|
(786,501)
|
|
(2,294,800)
|
(2,215,465)
|
|
|
|
|
|
|
Net interest
income
|
10,317
|
145,811
|
|
51,927
|
519,275
|
|
|
|
|
|
|
Net loss and
comprehensive loss
|
(763,892)
|
(640,690)
|
|
(2,242,873)
|
(1,696,190)
|
|
|
|
|
|
|
Basic and diluted
loss per common share
|
(0.01)
|
(0.01)
|
|
(0.04)
|
(0.03)
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
57,277,143
|
56,924,245
|
|
57,251,786
|
57,321,899
|
EcoSynthetix
Inc.
|
Interim
Consolidated Statements of Cash Flows
|
For the three and
nine months ended September 30, 2021 and 2020
|
(expressed in US
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended September 30,
|
|
Nine months
ended September 30,
|
|
2021
|
2020
|
|
2021
|
2020
|
Cash provided by
(used in)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Net loss and
comprehensive loss
|
(763,892)
|
(640,690)
|
|
(2,242,873)
|
(1,696,190)
|
Items not affecting
cash
|
|
|
|
|
|
Depreciation
|
357,902
|
365,426
|
|
1,056,445
|
1,048,406
|
Share-based
compensation
|
300,300
|
193,150
|
|
647,262
|
506,428
|
Other
|
13,675
|
37,552
|
|
80,529
|
(105,936)
|
Changes in non-cash
working capital
|
|
|
|
|
|
Accounts
receivable
|
(250,459)
|
251,581
|
|
(457,356)
|
850,040
|
Inventory
|
45,548
|
(164,791)
|
|
(498,296)
|
(118,811)
|
Government grants
receivable
|
31,447
|
93
|
|
99,735
|
74,728
|
Prepaid
expenses
|
(27,273)
|
(14,920)
|
|
(62,459)
|
(34,402)
|
Trade accounts
payables and accrued liabilities
|
344,174
|
156,498
|
|
1,217,589
|
(148,165)
|
Interest on
short-term investments
|
|
|
|
|
|
Interest received on
short-term investments
|
-
|
108,493
|
|
358,740
|
869,038
|
Accrued interest on
short-term investments
|
-
|
(159,041)
|
|
(14,165)
|
(556,298)
|
|
51,422
|
133,351
|
|
185,151
|
688,838
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Purchase of property,
plant and equipment
|
(107,154)
|
(92,465)
|
|
(345,502)
|
(206,325)
|
Receipts of
government grants related to property, plant and
equipment
|
67,418
|
-
|
|
67,418
|
-
|
Receipts on mature
short-term investments
|
-
|
10,000,000
|
|
25,000,000
|
45,000,000
|
Purchase of
short-term investments
|
-
|
(10,000,000)
|
|
-
|
(45,000,000)
|
|
(39,736)
|
(92,465)
|
|
24,721,916
|
(206,325)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Payments made on
lease liability
|
(63,443)
|
(50,728)
|
|
(185,638)
|
(143,795)
|
Common shares
repurchased
|
(400,105)
|
(181,625)
|
|
(797,998)
|
(1,646,058)
|
Exercise of common
share options
|
40,262
|
45,764
|
|
260,355
|
91,294
|
|
(423,286)
|
(186,589)
|
|
(723,281)
|
(1,698,559)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(40,727)
|
(7,817)
|
|
(69,685)
|
73,901
|
|
|
|
|
|
|
Change in cash
during the period
|
(452,327)
|
(153,520)
|
|
24,114,101
|
(1,142,145)
|
|
|
|
|
|
|
Cash - Beginning
of period
|
41,203,589
|
6,987,088
|
|
16,637,161
|
7,975,713
|
|
|
|
|
|
|
Cash - End of
period
|
40,751,262
|
6,833,568
|
|
40,751,262
|
6,833,568
|
SOURCE EcoSynthetix Inc.