Xebec Announces 2014 Third Quarter Operating Results Reports Operational Profit

Xebec Announces 2014 Third Quarter Operating Results
Reports Operational Profit
MONTREAL (QC), October 27, 2014 Xebec Adsorption Inc. (TSXV: XBC‐V) ("Xebec"), a provider of biogas upgrading, natural gas, field gas and hydrogen purification and filtration solutions for the clean energy and crude‐derived fuels displacement markets, announced today its 2014 third quarter operating results.  Revenues of $4.4 million for the third quarter of 2014 compared to $1.9 million for the same quarter in 2013, a 124.2% increase compared to the same period in 2013.  Significant improvement of operating margin which stood at 37.5%, a 42.0% increase compared to the same period in 2013.  Net income of $0.4 million or $0.01/share for the third quarter in 2014 compared to a net income of $0.5 million or $0.01/share for the same period in 2013.  Operating profit of $393,425. Financial Highlights: Three months ended
September 30,
2013
2014
% of
Change
% of
Change
(In dollars)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
4,325,242
1,929,497
124.2%
10,473,509
8,499,037
23.2%
Gross margin
1,622,060
509,536
218.3%
3,253,647
1,337,252
143.3%
Gross margin as a percentage of revenues
31.1%
15.7%
EBITDA*
462,057
37.5%
557,951
(950,497)
(642,942)
Net income (loss)
26.4%
369,893
491,173
(1,243,343)
(971,650)
Net income (loss) per share - basic ($/share)
0.01
0.01
(0.03)
(0.03)
Net income (loss) per share - diluted ($/share)
0.01
0.01
(0.03)
(0.03)
39,363,867
39,363,867
39,363,867
39,363,867
Weighted average number of shares
As at:
September 30, December 31,
2014
2013
Total assets
Total Long term Liabilities
Equity
7,792,179
9,749,397
668,464
1,026,078
565,875
1,958,988
October 27, November 11,
2014
2013
As at:
Back log
6,008,163
* 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.
Nine months ended
September 30,
2013
2014
5,939,255
Financial Results Revenues Xebec posted revenues of $4.4 million for the third quarter of 2014, a 124.2% increase compared to $1.9 million for the third quarter of 2013. The increase is explained by a general growth of various product lines. During the third quarter of 2014, Xebec made significant progress on a biogas plant contract explaining the increase for the Gas purification segment. Revenues were $10.5 million for the nine‐month period ended September 30, 2014, compared to $8.5 million for the corresponding period. This increase of $2.0 million is partly due to the $0.8 million increase in sales in the Associated gas segment due to the completion of a project during 2014. Furthermore, natural gas dryers and compressed gas filtration product lines showed a significant increase in revenue for the nine‐month period ended September 30, 2014 compared to the corresponding period last year. Order Backlog As of October 27, 2014, total order backlog stood at $6.0 million, compared to $5.9 million as at November 11, 2013. The increase of the backlog is related to the growth in orders for natural gas dryers. Gross Margin Xebec’s gross margin for the third quarter of 2014 amounted to $1.7 million compared to $0.4 million for the same period in 2013. The improvement versus the same period last year is mostly explained by the improvement in gross margins in revenues associated of the Gas purification product line and the reversal of a provision of $200,000 created in 2013. For the nine‐month period ended September 30, 2014, the total gross margin amounted to $3.3 million, compared to $1.3 million for the same period in 2013. Natural gas dryer margins were improved due to a higher volume of sales which reduced the burden per unit and also reflect the effect of the cost reduction plan introduced during 2013 for this segment. Margins for the gas purification segment were affected positively with the reversal of the $200,000 provision mentioned above, combined with the profitability of new on‐going orders. The revenue increase also contributed to improved gross margin since fixed cost are absorbed by a higher volume of sales. EBITDA and Net Income (loss) The EBITDA for the third quarter of 2014 amounted to $0.5 million compared to $0.5 million in the third quarter of 2013. By excluding the $1.3 million non‐recurring gain on disposal of assets from the EBITDA for Q3‐2013, the improvement for the comparative period is $0.8 million. For the nine‐month period ended September 30, 2014, the EBITDA amounted to $(0.9) million compared to $(0.7) million for the same period in 2013. The lower EBITDA number in 2014 is explained by the fact that in 2013 a $1.9 million non‐recurring gain on disposal of asset was recorded. Net income for the third quarter of 2014 totaled $0.4 million, or $0.01 per share, compared to a net income of $0.5 million, or $0.01 per share for the same period in 2013. Despite the fact that the margins improved by $1.1 million on increased revenue for the third quarter of 2014, net income remains the same due to the fact that the third quarter of 2013 included a $1.3 million non‐recurring gain on disposal of assets. Other factors include the increase of $0.2 million in selling and administrative expenses, mainly associated to the opening of the US subsidiary, combined with an increase of $0.3 million in foreign exchange gain in the third quarter of 2014. Net loss for the nine‐month period ended September 30, 2014 amounted to $1.2 million, or $0.03 per share, compared to a net loss of $1.0 million or $0.03 per share, for the same period in 2013. The increase in net loss compared to 2013 is explained by the fact that for the corresponding period in 2013, a $1.9 million non‐recurring gain on disposal of assets was included. Selling and administrative expenses were $1.4 million in the third quarter of 2014, compared to $1.2 million for the same period last year. For the nine‐month period ended September 30, 2014, the selling and administrative expenses were $4.4 million, compared to $4.1 million for the same period last year. These increases are mainly related to the new USA subsidiary expenses . As of September 30, 2014, the Company had $0.8 million of cash on hand, $0.1 million of bank loan and $0.8 million of long‐term debt outstanding, of which $0.4 million is due within one year. Chief Financial Officer transition Xebec also announced today that it has appointed Mr Alnoor Mandjee, (CPA, CA) to the position of Chief Financial Officer, effective November 3, 2014. "We are pleased to welcome Alnoor Mandjee to Xebec. Alnoor has industry relevant experience combined with a proven track record as a results‐oriented executive. I would also like to thank Eric Favreau for his valuable contributions and dedicated service during his tenure with Xebec. We wish Eric the very best in his new endeavors" said Kurt Sorschack, President and Chief Executive Officer of Xebec. Cancellation of US Grant of Options and issuance of options pursuant to the Xebec ‘s Stock Option Plan In accordance with TSXV Policy 5.3, Xebec’s shareholders approved the U.S. Grant of Options by Resolution passed by a majority of the votes at the last General Shareholders’ Meeting held on June 11, 2014. Xebec’s Board and Xebec USA’s executives, Messrs. Parag Jhonsa and Gary Blizzard, have come to the conclusion that it is advisable to rescind and void the US Grant of Option. Therefore the U.S. Grant of Options of June 11, 2014 and the Option agreements entered into between Xebec and Messrs. Jhonsa and Blizzard were terminated. In consideration of the cancellation of the U.S. Grant of Options, the Corporation has agreed to issue options to each of Gary Blizzard and Parag Jhonsa in accordance with the Corporation’s stock option plan. On September 22, 2014, 1,000,000 stock options were issued to both of Gary Blizzard and Parag Jhonsa at a strike price of 0.12$ per option, the whole in accordance with the provisions of the Xebec Stock Option Plan. 2014 Third 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‐month and nine‐month period ended September 30, 2014, 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 TSXV under the symbol XBC‐V. Since February 25th 2014, Xebec has opened a sales office in Houston, Texas (USA), in order to cover sales opportunities in the United States. 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. For more information, please contact: Kurt Sorschak President and CEO 450‐979‐8701 [email protected]