Mr. Kurt Sorschak reports
XEBEC ANNOUNCES 2015 FOURTH QUARTER AND YEAR-END FINANCIAL RESULTS
Xebec Adsorption Inc. has released its fourth quarter 2015 operating results.
- Revenues of $4.0-million in the fourth quarter 2015 compared with $3.9-million for the same period in 2014, a 2.7-per-cent increase in the period;
- Negative earnings from operations excluding financial charges, taxes, foreign exchange loss (gain) and amortization of $100,000 in the fourth quarter compared with a positive EBITDA of $600,000 for the same period in 2014;
revenues of $11.3-million in fiscal 2015 compared with $14.4-million for the same period in 2014, a 21-per-cent decrease for the year;
- Net loss of $3.2-million or eights cents per share in fiscal 2015 compared with a net loss of $800,000 or two cents per share for the same period in 2014; in 2015, this includes impairment charge on goodwill and other intangibles for $700,000.
FINANCIAL HIGHLIGHTS
(in millions of dollars)
Three months Three months Twelve months Twelve months
ended ended ended ended
Dec. 31, 2015 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2014
Revenues $4.0 $3.9 $11.3 $14.4
Gross margin 1.5 1.6 2.8 4.9
Gross margin as a percentage of revenues 36.3% 41.5% 24.7% 34.0%
EBITDA* (0.1) 0.6 (2.0) (0.4)
Net income (loss) (1.0) 0.4 (3.2) (0.8)
Net income (loss) per share --
basic ($/share) (0.02) 0.01 (0.08) (0.02)
Net income (loss) per share --
diluted ($/share) (0.02) 0.01 (0.08) (0.02)
* EBITDA is a non-international financial reporting standard financial measure,
and the company defines it as earnings from operations excluding financial charges,
taxes, foreign exchange loss (gain) and amortization.
Financial results
Revenues
Xebec posted revenues of $4.0-million for the fourth quarter of 2015, a 2.7-per-cent increase compared with $3.9-million in the fourth quarter of 2014. The increase is explained by higher sales in the natural gas dryer segment, gas purification segment and air dryer segment by, respectively, $200,000, $100,000 and $100,000, offset by decreased sales in the engineering services segment in 2015.
For the 12-month period ended Dec. 31, 2015, total revenues amounted to $11.3-million compared with $14.4-million for the corresponding period in 2014. This decrease of $3.1-million is mainly due to lower sales in the natural gas dryer segment, gas purification segment and associated gas segment by, respectively, ($800,000), ($1.4-million) and ($900,000).
Order backlog
As of April 28, 2016, total order backlog stood at $6.6-million, compared with $6.1-million as at April 29, 2015. Increase in the backlog is explained by more orders in the compressed gas filtration segment.
Gross profit margin
The gross profit margin percentage for the fourth quarter of 2015 stood at 36.3 per cent, down by 5.2 per cent compared with 41.5 per cent for the fourth quarter of 2014. Excluding a reversal of a provision of $300,000 in the fourth quarter 2014, the gross profit margin percentage is up by 3.5 per cent.
For the 12-month period ended Dec. 31, 2015, the operating profit margin as a percentage to revenue stood at 24.7 per cent, down by 9.3 per cent compared with the same period last year. Margins were mainly affected by the completion of a biogas project with a weak gross margin in second quarter 2015 and overall lower sales, which had a negative impact on the absorption of fixed production costs.
EBITDA and net income
The negative EBITDA for the fourth quarter of 2015 amounted to ($100,000) compared with a positive EBITDA of $600,000 in the fourth quarter of 2014. This reduction of the EBITDA is mainly attributable to the decrease of $100,000 in gross margin, and an increase of provision for contingencies by $400,000.
For the 12-month period ended Dec. 31, 2015, negative EBITDA amounted to ($2.0-million) compared with ($400,000) for the same period in 2014. This variance versus prior year is explained by the following items:
- Overall weaker sales combined with a lower gross margin percentage, resulting in a significant drop in gross margin of ($2.1-million);
-
Higher research and development costs and provisions of ($100,000) and ($400,000), respectively; they were only partly offset by lower selling and administrative costs (excluding provisions) of $700,000;
- Foreign exchange gain of $300,000.
Net loss for the fourth quarter of 2015 totalled ($1.0-million), or (two cents) per share, compared with a net income of $400,000, or one cent per share, for the same period in 2014. This loss is mainly attributable to the following:
- A lower overall gross margin ($100,000);
-
An increase of the provision for contingencies of ($400,000);
-
Impairment charge for the company's goodwill and customer relations intangibles ($700,000).
Net loss for the 12-month period ended Dec. 31, 2015, amounted to ($3.2-million), or (eight cents) per share, compared with a net loss of ($800,000) or (two cents) per share, for the same period in 2014. This higher loss is attributable to the following:
-
Lower overall gross margin percentage, 24.7 per cent in 2015 compared with 34 per cent in 2014; in value, the gross margin decreased by $2.1-million;
- Higher research and development cost of $100,000;
- An increase of provisions of $400,000;
- An impairment charge related to intangibles of $700,000;
-
These charges were partly offset by lower selling and administrative costs (excluding provisions), of $700,000 and higher foreign exchange gain of $300,000.
Selling and administrative expenses for the fourth quarter of 2015 increased by $500,000 or 43.6 per cent to $1.6-million. This increase is mainly explained by additional provision for contingencies of $400,000.
For the 12-month period ended Dec. 31, 2015, the selling and administrative expenses decreased by $300,000 or 5.9 per cent to $5.2-million. The decrease is attributable to the implementation of cost control measures such as reduction of salaries, travel and IT cost for $700,000, partly offset by additional provision of $400,000 for contingencies.
As of Dec. 31, 2015, the company had $2.7-million of cash on hand, $400,000 of bank loan and $4.3-million of debt outstanding, of which $200,000 is due within one year.
Xebec's year-end 2015 financial statements and management's discussion and analysis include further information on the company.
Fourth quarter 2015 financial statements and management's discussion and analysis
The complete audited financial statements, notes to financial statements, and management's discussion and analysis for the fiscal year ended Dec. 31, 2015, are available on the company's website and on the SEDAR website.
We seek Safe Harbor.
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