Xebec Announces 2012 First Quarter Operating Results
Reports Net Income of $3.2M and Higher Backlog
MONTREAL, May 11, 2012 /CNW Telbec/ - Xebec Adsorption Inc. (TSX: XBC) ("Xebec"), a provider of biogas upgrading, natural gas and hydrogen purification solutions for the clean energy market, announced today its 2012 first quarter financial results.
Key Highlights from Q1
• Net income of $3.2 million or $0.08/share for the three month period in 2012 compared to a loss of $0.20 million or $0.00/share for the same period in 2011.
• Gain on disposition of assets of $5.4 million in relation to the sale of patents and a research center to Air Products.
• Positive buy-out settlement agreement with Industry Canada.
"We are pleased to report to shareholders that we have begun the next phase of our turnaround effort which includes $3.2M of positive net income for the first quarter of 2012," said Kurt Sorschak, President and CEO of Xebec.
"Our first quarter was dramatically impacted by our inability to maintain adequate working capital to fulfill order demand for our products. This lasted until the end of the first quarter. The transaction with Air Products announced last month was a watershed event and resulted in a significant cash infusion for Xebec, strengthening our balance sheet and addressing our working capital requirements for the balance of this year. As a result we expect good revenue growth during the balance of this year as our backlog currently sits at record levels and our pipeline of new customers and opportunities with existing clients continues to expand.
In addition, we are happy to report that we reached a settlement agreement with Industry Canada with regards to our royalties through lump sum payments over the next four years. This agreement is extremely positive for our shareholders and lowers the amount of royalty payments that we would have been required to make on future sales," continued Mr. Sorschak.
"Energy security, energy diversity, the cost of energy, green house gas mandates, renewable energy standards, investment in renewables, regulation and many other global macro factors are driving the need for our industry leading biogas, natural gas and hydrogen purification systems. Having now established a platform to capitalize on this opportunity, we will strive to build a stable growing company. Today our balance sheet is strong, our working capital needs have been addressed, our backlog is at record levels, our customer base continues to grow and demand for our proprietary industry leading products has never been greater. With this in mind and as we take advantage of opportunities presented within our market, Xebec will stay focused on growth, responsible cost containment and sustained profitability in order to build long term value for our shareholders," concluded Mr. Sorschak.
* 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 announced is 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 announced that it has entered into an exclusive distribution agreement with a Chinese environmental engineering firm, and has been awarded a contract to supply a landfill gas upgrading plant for a landfill project located in Northern China.
• Xebec announced it has sold to Air Products its parts of its intellectual property ("IP") portfolio, including the patents and patent applications relating to its gas separation technology but maintained ownership over key proprietary design around its line of industry leading products. In this transaction, Xebec has also transferred ownership of its research & development facilities in Burnaby and Surrey, as well as other equipment located in British Columbia. Pursuant to this transaction, Xebec has received aggregate gross proceeds of CAD$8,600,000. The transaction is also subject to payments for the achievement of certain conditions to be met within the next 24 months. Xebec has also entered into a license agreement with Air Products, including a two year exclusivity period allowing Xebec to continue to sell its systems, predominantly in the biogas, natural gas, hydrogen and associated gas purification markets. Through this transaction, Xebec was able to stabilize the Company financially, retain key intellection technology surrounding product design while validating the value of the underlying IP.
• Xebec announced that it has been awarded a $2.2 million contract to supply a biogas upgrading plant for a waste to energy project located in South Korea.
• Xebec announced that it has received an order for a M-3200 Pressure Swing Adsorption ("PSA") system to upgrade natural gas at a chemical plant to be constructed in Valayat, Gujarat State, India. The total value of the contract is approximately $2.3 million.
Financial Results
Revenues
Xebec posted revenues of $1.5 million for the first quarter of 2012, a 62.2% decrease compared to $4.1 million in the first quarter of 2011. This decrease is mainly due to the licensing agreement reached with Nuvera in 2011 and the working capital deficiency that lasted until the end of the first quarter and hindered deliveries.
Order Backlog
As of May 10, 2012, total order backlog stood at $11.2 million, compared to $10.7 million as at June 13, 2011.
Gross Margin
Xebec's gross margin for the first quarter of 2012 amounted to $(0.3) million compared to $2.0 million for the same 2011 period resulting mainly from the non recurring license revenue of $1.5 million that carried no cost of sale and a slight decrease in margin from product sales due to poor efficiency linked to the working capital deficiencies. Furthermore, the low level of sales did not fully absorb the fixed costs included in the cost of sale.
EBITDA and Net income
The EBITDA for the first quarter of 2012 amounted to $4.2 million compared to $0.1 million in the first quarter of 2011. The improved EBITDA is the result of our gain on disposition of assets.
The net income for the first quarter of 2012 totaled $3.2 million, or $0.08 per share, compared to a net loss of $(0.2) million, or nil per share for the same 2011 period, reflecting a $5.6 million gain on disposition of assets, a $0.7 million decrease in selling and administrative costs and a $0.3 million decrease in research and development.
Selling and administrative expenses were $1.2 million in the first quarter of 2012, compared to $1.9 million for the same period last year resulting in our continuous efforts to reduce our overhead costs.
As of March 31, 2012, the Company had $5.5 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 First 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 period ended March 31, 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.
