BioteQ Releases Results for Q1 2013
BioteQ Environmental Technologies Inc. (TSX:BQE), a leader in industrial waste water treatment, releases its financial and operating results for the first quarter ended March 31, 2013. Further information on the first quarter results can be obtained from the Company's Unaudited Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis ("MD&A").
BioteQ will hold a conference call on May 14, 2013 at 11:00 AM EDT to discuss results for Q1 2013. Participants can dial in at 416-695-7806 or 888-789-9572; participant pass code 3207139. European callers can dial in at 800-4222-8835; participant pass code 3207139.
Due to recent changes in Generally Accepted Accounting Standards ("GAAP") effective Q1 2013, the results of the Company's joint ventures will be accounted for as equity investments in BioteQ's current and future financial statements. In prior years, the results of the Company's joint ventures were accounted for through proportionate consolidation. Going forward, the revenue and operating costs associated with the Company's proportionate share of activities in joint ventures will be netted and disclosed as a single line item on the Consolidated Statements of Operations and the Company's share of assets, liabilities and equity in each joint venture will be presented as a net investment on the Consolidated Statement of Financial Position. The change in accounting standard will not impact overall, consolidated profitability or cash flow in past or future periods. However this change will, given the mandated accounting treatment, result in the Company showing lower revenues than has historically been the case.
To ensure clarity and comparability with historic results, certain statements in this news release and in the MD&A are characterized as BioteQ's "proportional" share, which means the effective portion of results that BioteQ would have reported if each of its joint ventures had been reported in accordance with past accounting standards. For further details, please see "Non-GAAP Measures" in the Company's Q1 2013 MD&A.
Q1 2013 Financial and Operations results
BioteQ's results for Q1 2013 were in line with the company's expectations:
Financial
-- Proportional revenue for Q1 2013 was $1.94 million compared to $2.16
million in Q1 2012. The slight decline in revenue compared to the prior
year was due to the fact that the sale of a mobile water treatment plant
for approximately $1 million was recognized in Q1 in 2012. During Q1
2013, this sale was largely offset by increased copper recovery at the
Dexing plant, increased revenue for services provided to Kinross at a
gold mine site, and increased laboratory and pilot testing activities.
-- Proportional gross margins for Q1 2013, which include BioteQ's share of
joint venture activities, were $552,000 compared to $756,000 in Q1 2012.
Lower overall margins were, in part, driven by lower operating margins
at the Dexing site. We expect that operating margins at Dexing will
return to normal levels during Q2 and Q3.
-- Revenue as reported under the GAAP equity method was $796,000 in Q1 2013
compared to $1.38 million in Q1 2012.
-- Gross margins for the quarter as reported under GAAP were $188,000 in Q1
2013 compared to $420,000 in 2012. Lower margins were the result of a
change in the sales mix from a higher margin plant sale in Q1 2012 to
lab and pilot testing activities in the relevant period that generated
relatively lower gross margins.
-- Net loss for the quarter was $1.0 million in Q1 2013 compared to a loss
of $989,000 in Q1 2012.
-- Comprehensive net loss for Q1 2013 was $866,000 compared to 1.1 million
in Q1 2012.
-- Adjusted EBITDA for the quarter was ($755,000), similar to adjusted
EBITDA of ($749,000) in Q1 2012.
-- Total cash and short term investments, including BioteQ's share of cash
held in joint ventures, was $6.1 million compared to $7.5 million at the
end of 2012. The decline in cash was largely due to working capital
requirements during the quarter.
Operational
-- The Bisbee, Arizona operation recovered approximately 140,000 pounds of
copper and treated 290,000 cubic metres of water during the first
quarter. In Q1 2012, the plant recovered 160,000 pounds of copper and
treated 310,000 cubic metres of water. The operation is expected to
recover approximately 600,000 pounds of copper during the year.
-- The Dexing, China operation recovered approximately 511,000 pounds of
copper and treated 2.2 million cubic metres of water during the first
quarter. In Q1 2012, the plant recovered 373,000 pounds of copper and
treated 1.5 million cubic metres of water. The operation is expected to
recover approximately 1.8 million pounds of copper during the year.
-- BioteQ is currently in the process of constructing and commissioning two
plants at the Dexing mine site in China with its joint venture partner,
Jiangxi Copper Company ("JCC"):
-- A nickel/cobalt recovery ion exchange plant is in the final stages
of technical modifications and is expected to begin commissioning in
the second half of Q2 2013. Commissioning should be completed in
early Q3 2013. We expect the plant will ramp up to full commercial
production during that quarter.
-- Progress on the construction of a second copper recovery plant at
the site, announced in late 2012, has experienced minor delays with
site preparation work due to weather conditions at the site. Site
preparation work has now been completed and design and procurement
activities continue to progress. The new plant is expected to be
completed and to start up in Q4 2013.
Collectively these two plants are expected to add modestly to revenue in
2013 but are expected to contribute approximately an additional $1.5-2.0
million in BioteQ's proportional recurring revenues in 2014.
-- During Q1 2013, we successfully completed commissioning and initial
field piloting of a mobile Sulf-IX(TM) pilot plant that was jointly
funded by Newalta and BioteQ. This unit provides on-site field testing
for sulphate removal from waste water.
Subsequent to Q1 2013, BioteQ announced the sale of its ownership share
of the mobile Sulf-IX(TM) pilot plant to Newalta for approximately
$500,000 Cdn. Under the terms of the agreement, BioteQ will continue to
retain full ownership of its Sulf-IX(TM) intellectual property. However,
sale of this test unit will ensure that planning and execution for
deployment of the unit will be more efficient and that the new
arrangement will more effectively leverage the strengths of both Newalta
and BioteQ on future test campaigns. For financial reporting purposes,
the sale of this unit to Newalta will be accounted for as a disposal of
a fixed asset.
-- During the quarter, BioteQ continued to advance a number of testing and
pilot opportunities and devoted significant efforts to further
developing our sales pipeline.
-- Litigation with Aditya Birla Minerals ("Birla") remains in progress.
Both parties have now submitted initial discovery to the court. We have
reviewed all materials and have requested additional materials be
provided by Birla. We expect that in May the court will determine the
next steps in the litigation process. At present we expect the dispute
will proceed to conclusion in 2013. BioteQ continues to believe that
Birla's claims are without merit. BioteQ intends to continue to
vigorously defend its position and to pursue its claim for damages.
Outlook
Earlier in 2013 BioteQ provided a financial and operational outlook for
2013. Our 2013 targets were stated as follows:
-- Proportional Revenue: BioteQ is targeting to grow revenue in 2013, on a
proportionate revenue basis, by 25% over 2012 to approximately $11.8
million (between $5.5 and $6.5 million on a GAAP equity accounting
basis). Proportional Revenue growth is expected to be generated from:
the completion of plants currently under construction at the Dexing
site; large scale piloting campaigns with customers in North and South
America; plant sales; and engineering and technical development
projects.
-- Adjusted EBITDA: BioteQ is targeting to improve its adjusted EBITDA by
approximately 50% to less than ($1) million from ($1.9) million in 2012.
The projected improvement in adjusted EBITDA is expected to come from
additional margin generated from increased sales revenues and from
continued improvements in the efficiency of our operating and
engineering activities.
While BioteQ's adjusted EBITDA loss was approximately $755,000 in Q1 2013, the Company anticipates stronger bottom line performance over the coming three quarters as the Raglan plant commences operations and as BioteQ recognizes additional revenues from field piloting and laboratory contracts, and from other sales opportunities.
BioteQ remains optimistic with regard to prospects for 2013 and beyond. As a result, 2013 targets for Proportional Revenue growth and adjusted EBITDA remain unchanged.
It should be noted however that a significant portion of BioteQ's Proportional Revenues and profitability remain tied to copper prices. In recent months, the price of copper has fallen and been quite volatile. At the beginning of the year, copper prices were approximately USD $3.65/pound on the London Metals Exchange (LME). Currently, they are approximately USD $3.30/pound on the LME. A sustained decline in copper prices could have a material impact on Proportional Revenue and adjusted EBITDA forecast for the year.
BioteQ Corporate Profile
BioteQ is an innovative clean technology leader in global industrial water treatment, serving the mining and energy markets. The company's proven technologies have been applied at sites around the world to recover dissolved metals and remove sulphate, producing clean water and eliminating residual waste. BioteQ is headquartered in Vancouver, Canada and trades on the TSX under the symbol BQE. Please visit our website at www.bioteq.ca for additional information.
