Viridis Energy Inc. ("Viridis" or the "Company") (TSX VENTURE:VRD)
(OTCQX:VRDSF), a "Cleantech" manufacturer and distributor of alternative energy
providing waste biomass fuel to global residential and industrial markets, today
reported financial results for its first quarter ended March 31, 2012. During
the quarter, Viridis increased its production capacity by over 150 percent
through its acquisition of the largest wood pellet manufacturing plant in
Atlantic Canada. On February 6, 2012, Viridis acquired the assets of Enligna
Canada, a 110,000 ton capacity plant in Nova Scotia, and renamed this facility
Scotia Atlantic Biomass Company Limited ("Scotia Atlantic"). Viridis expects to
resume production during the second quarter of this year. To accomplish the
acquisition in light of the short time to closing, the Company, through its
Subsidiary, obtained a $2.4 million short-term bridge loan.
During the first quarter of 2012, Viridis generated revenue of $2.4 million.
Sales of the home heating business in North America were slow due to the
abnormally warm winter. In comparison, Viridis generated revenue of $2.7 million
during the same period of 2011, and $3.5 million during the fourth quarter of
2011. The domestic home heating business, which is generally higher margin
business, represented 26% of total revenue, down from 52% during the same period
last year. Also impacting the year-to-year comparison is a shift in contract
arrangements with certain customers in which the cost of freight, usually borne
by the Company and recovered in the sales price, was paid directly by the
customer, distorting the year-to-year sales comparison. As the Company further
diversifies its revenue base with commercial energy generators and other
industrial users, it expects to continue to see a reduction in the seasonal
revenue fluctuations. The Company also anticipates sequential revenue growth
acceleration as its recently acquired manufacturing capacity in Nova Scotia
begins production in preparation for the fall/winter season.
The Company reported a comprehensive net loss of $(1.2) million or $(0.03) per
basic share for the first quarter 2012 compared to a comprehensive net loss of
$(714,000) or $(0.02) per basic share for the comparable 2011 period and a
comprehensive net loss of $(989,000) or $(0.03) per basic share for the prior
fourth quarter 2011. The increased loss during the current first quarter
reflects financing costs and other start-up costs associated with Scotia
Atlantic, offset by 24 percent decrease in operating expenses.
The Company's gross profit during first quarter 2012 of $151,000 or 6.2 percent
of total revenue, compared to $113,000 or 3.2 percent during the fourth quarter
of 2011. The increase in gross margin from the prior quarter reflects the shift
in contract arrangements with certain customers to a Freight on Board (FOB) mill
price. The Company's gross profit during the first quarter of 2011 was $613,000
or 23 percent of revenue. The Company is working on securing long term fibre
source contracts that will ensure a sufficient supply and stabilize pricing. The
current quarter was also adversely impacted by the inclusion of costs associated
with the production staff of recently acquired Scotia Atlantic, which is
scheduled to begin production late in the second quarter 2012.
Operating expenses during first quarter 2012 totaled $969,000, a decrease of
approximately $217,000 or 24 percent from the prior year's first quarter and a
decrease of $35,000 or 3 percent from the fourth quarter of 2011. Viridis
management has been closely managing its operational costs and succeeded in
reducing aggregate compensation costs and associated employee benefits, in
addition to achieving lower freight costs through bulk shipping, a more
efficient on-site bagging at the destination. Viridis expects to achieve further
costs efficiencies as it achieves economies of scale with its increased
production capacity to accommodate growing industrial demand, especially
overseas.
Interest expense (inclusive of bank charges) for the first quarter was
approximately $337,000, which compares to interest expense of approximately
$118,000 during first quarter 2011 and interest expense of $238,000 during the
prior fourth quarter 2011. The increase in interest expense in the current
quarter was primarily due to the bridge loan needed to complete the acquisition
of Scotia Atlantic Biomass assets.
At March 31, 2012, the Company had accounts receivable of approximately
$966,000, representing a DSO of 36 days, well within manageable levels,
inventory of $729,000 and total assets of $17.4 million, an increase of
approximately $2.0 million from the beginning of the quarter. The increase in
assets is primarily due the inclusion of acquired assets of Scotia Atlantic. At
the end of the first quarter 2012, Viridis had current liabilities of $8.2
million, an increase of $3.1 million from year-end 2011 primarily reflecting the
bridge loan of $2.4 million required to complete the acquisition of Scotia
Atlantic. Long term debt was unchanged at $3.8 million and shareholder equity
ended the quarter at $5.3 million, a decrease of approximately $1.2 million from
year-end 2011.
The number of common shares at March 31, 2012 and March 31, 2011 were 41.3
million and 30.3 million, respectively. The year-over-year increase in the
shares outstanding was due to the private placements conducted by the Company
during the second and third quarters of 2011. As of March 31, 2011, Viridis had
approximately 17.8 million warrants, of which 5.5 million expired on May 20,
2012, and 1.1 million options. The exercise of all warrants and options
outstanding as of the date of this announcement would generate approximately
$7.2 million of additional capital to the Company.
"We have been working on many fronts to position Viridis' role in the growing
alternative energy industry. As commercial demands mounts, especially overseas,
industrial users will seek long term off-take commitments to ensure sufficient
supply of wood pellets. While this development improves long-term planning, it
also requires initiative to elevate production capacity and secure raw material
sources to participate in the growth," commented Christopher Robertson, Viridis'
chief executive officer. "Excluding acquisition costs, we have already begun
investment in restoring Scotia Atlantic Biomass to operating condition. We have
also begun staffing the facility, which we expect will initially have a team of
24. We are on schedule to start operations late in the second quarter and plan
to be in full scale production by year-end."
Mr. Robertson added, "Viridis' position in the industry has afforded it access
to wood pellet demand, worldwide. As we develop our production capacity to
effectively address the demand for a renewable energy source, we recognize an
immediate opportunity to augment our revenue through wholesale dealing. This
activity serves to solidify our position as a 'go to' source for wood pellets,
further develops our relationships with existing and new customers, and,
importantly, augments our P&L with high margin revenue. We look forward to
nurturing this business as we work to expand our production capacity in
strategic locations, worldwide."
About Viridis Energy Inc.
Viridis Energy Inc. (TSX VENTURE:VRD) is a publicly traded, "Cleantech"
alternative energy company specializing in wood biomass. Headquartered in
Vancouver, B.C., Viridis Energy operates Cypress Pacific Marketing, Okanagan
Pellet Company and Scotia Atlantic Biomass, thus providing the company with
vertical integration for distribution and manufacturing as well as coast to
coast national presence. For more information on Viridis Energy Inc. please
refer to the company website at www.viridisenergy.ca.
Forward-looking Statements
Certain statements in this release are forward-looking statements, which reflect
the expectations of management regarding the Company's future operations.
Forward-looking statements consist of statements that are not purely historical,
including any statements regarding beliefs, plans, expectations or intentions
regarding the future. Such statements are subject to risks and uncertainties
that may cause actual results, performance or developments to differ materially
from those contained in the statements. No assurance can be given that any of
the events anticipated by the forward-looking statements will occur or, if they
do occur, what benefits the Company will obtain from them. These forward-looking
statements reflect management's current views and are based on certain
expectations, estimates and assumptions which may prove to be incorrect. A
number of risks and uncertainties could cause our actual results to differ
materially from those expressed or implied by the forward-looking statements,
including: (1) a continued downturn in general economic conditions in North
America and internationally, (2) the inherent uncertainties associated with the
demand for biofuels, (3) the risk that the Company does not execute its business
plan, (4) inability to finance operations and growth (5) inability to finance
the start-up operations in Nova Scotia in a timely manner (6) inability to
retain key management and employees, (7) an increase in the number of
competitors with larger resources, and (8) other factors beyond the Company's
control. These forward-looking statements are made as of the date of this news
release and the Company intends to update such forward looking information in
the Company's MD&A in the event that actual results differ materially from such
forward-looking statements contained herein. Additional information about these
and other assumptions, risks and uncertainties are set out in the "Risks and
Uncertainties" section in the Company's MD&A filed with Canadian security
regulators.
Financial Statements Follow
Viridis Energy Inc.
Consolidated Statements of Financial Position
(Canadian dollars)
----------------------------------------------------------------------------
March 31, 2012 December 31, 2011
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ASSETS
Current
Cash and cash equivalents $ 514,482 $ 598,696
Accounts receivable 966,452 1,190,370
Inventory 729,052 597,003
Prepaid expenses 485,404 247,972
Due from related parties 240,780 190,686
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2,936,170 2,824,727
Property, plant and equipment 8,646,321 6,427,739
Option to acquire property 250,000 550,000
Intangible assets 3,482,000 3,482,000
Goodwill 2,059,990 2,059,990
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Total Assets $ 17,374,481 $ 15,344,456
----------------------------------------------------------------------------
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LIABILITIES and SHAREHOLDERS' EQUITY (DEFICIT)
Bank line of credit $ 2,995,862 $ 3,057,021
Accounts payable and accrued
liabilities 2,226,221 1,399,033
Deferred income - 71,470
Short term loan payable 2,443,382 -
Current portion of loans payable 539,616 547,507
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8,205,081 5,075,031
Loans payable 3,846,956 3,747,726
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12,052,037 8,822,757
Shareholders' equity (deficit)
Share capital $ 18,559,325 $ 18,559,325
Contributed surplus 2,381,449 2,381,449
Deficit (15,618,330) (14,419,075)
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Total 5,322,444 6,521,699
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Total Liabilities and Shareholders'
Equity/(Deficit) $ 17,374,481 $ 15,344,456
----------------------------------------------------------------------------
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Viridis Energy Inc.
Consolidated Statements of Operations and Comprehensive Loss
(Canadian dollars)
Three Months Ended March 31,
2012 2011
--------------------------------------
(Unaudited)
Sales $ 2,436,941 $ 2,669,607
Cost of sales 2,286,143 2,056,670
---------------- ----------------
Gross profit 150,665 612,937
Operating expenses:
Selling and marketing 49,208 85,606
Freight-out 91,549 186,872
General and Administrative 827,877 913,230
---------------- ----------------
Total Operating Expenses 968,634 1,185,708
---------------- ----------------
Loss before other items (817,969) (572,771)
---------------- ----------------
Other items:
Foreign exchange loss (3,513) (23,145)
Disposal of property plant and
equipment - -
Finance expense (337,373) (117,809)
Accretion expense (40,564) -
---------------- ----------------
Total other items (381,286) (140,954)
---------------- ----------------
Comprehensive income (loss) $ (1,199,255) $ (713,725)
---------------- ----------------
---------------- ----------------
Income (loss) per share:
Basic and diluted $ (0.03) $ (0.02)
Weighted average number of common
shares outstanding
Basic and diluted 41,277,911 30,279,398
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