Mr. Robert Day reports
CERES GLOBAL AG REPORTS FINANCIAL RESULTS FOR FY2019
Ceres Global Ag Corp. has released its financial and operating results for the quarter and year ended June 30, 2019. All amounts are in U.S. currency unless otherwise noted.
Chief executive officer commentary
"Income from operations improved in the fourth quarter and on an annual basis while overall net income was negatively impacted by three large non-recurring events over the year," said Robert Day, president and chief executive officer of Ceres. "The core grain business, the Nature's Organic Grist business, and our energy and industrial products supply chain services operations performed very well, despite challenges stemming from preharvest volatility. In addition, the acquisition of Delmar Commodities Ltd. in August, 2019, marks a very significant step in our overall growth plan.
"While income from operations continues to improve on a quarterly and annual basis, the corporation is most excited about the progress made around growth-based initiatives and the impact we expect they will have going forward. The formation of the Gateway Energy Terminal joint venture with Steel Reef Infrastructure Corp., the acquisition of Delmar and the company's addition of talent at the executive level have positioned Ceres for a positive start to fiscal year 2020. We are confident we can maintain the positive trajectory of improved financial results while also continuing to make significant progress towards achieving our strategic growth objectives."
SUMMARY FINANCIAL AND OPERATIONAL RESULTS
(in thousands of U.S. dollars except per share)
Three months ended Three months ended 12 months ended 12 months ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Revenue $134,741 $92,089 $438,396 $411,122
Gross profit $2,967 $1,925 $14,320 $11,670
Income from operations ($141) ($971) $1,289 ($223)
Net income (loss) ($1,858) $1,829 ($16,871) ($556)
Earnings (loss) per basic share ($0.07) $0.07 ($0.60) ($0.02)
Earnings (loss) per diluted share ($0.06) $0.07 ($0.58) ($0.02)
EBITDA (1) $1,370 $209 ($4,061) $4,369
Adjusted net income (2) ($1,811) ($1,277) ($5,716) ($1,438)
Financial and operational highlights for the quarter and year ended June 30, 2019:
Income from operations increased $1.5-million compared with the previous year.
Gross margins from the grain division increased by $5.0-million, due to the presence of Nature's Organic Grist (NOG), as well as increased gross margins from core product lines.
Grain storage and handling revenue decreased by nearly $4-million, due to a decrease in barley volumes and the sale of the Savage elevator to Savage Riverport LLC.
Non-grain storage and handling revenue increased by over $1-million, due to increased volumes from natural gas liquids (NGL), fertilizer and industrial products.
Overall operating and SG&A (selling, general and administrative) costs decreased by nearly $1.0-million, due mainly to the sale of the Savage elevator to Savage Riverport.
Interest costs increased by $1.4-million, due to higher average inventory in fiscal 2019 versus fiscal 2018, as well as increased outstanding term debt year over year.
The corporation increased its term debt from $20-million to $35-million to finance business opportunities, and increased its revolving credit facility from $67.5-million to $80-million to support anticipated increases in volumes.
Significant progress was made on growth-based initiatives during fiscal 2019: acquisition of NOG, formation of the joint venture with Steel Reef and due diligence activities that resulted in the acquisition of Delmar Commodities Ltd. on Aug. 16, 2019.
Income from operations for the quarter ended June 30, 2019, increased $800,000 compared with the same quarter in the previous year. The increase was due to increases in gross margins from the presence of NOG, core grain product lines and non-grain storage and handling, and a decrease in grain storage and handling revenue. Meanwhile, lower operating and SG&A costs were offset by higher interest costs from carrying more inventories.
Three non-recurring events driving the net loss of $16.9-million were the $8.2-million expense taken in fiscal year 2019 related to the settlement of the Scoular lawsuit, $4.0-million amortization of intangible assets and writedown of portfolio investments of $1.9-million.
Mr. Day continued: "While the environment continues to be challenging for our industry, Ceres's growth plan continues to gain traction, and we expect financial results to continue along their current positive trend. Meanwhile, we continue to review potential growth opportunities, and we plan to add more complementary businesses and assets to our network in fiscal year 2020.
"The formation of Gateway Energy Terminal and the acquisition of Delmar provide very different and exciting opportunities for the corporation to increase top-line revenue during fiscal year 2020 and beyond."
Conference call details
Ceres will hold a conference call to discuss its fourth quarter and annual 2019 financial and operational results on Sept. 18, 2019, at 10 a.m. ET. Mr. Day, and Kyle Egbert, Ceres's chief financial officer, will co-chair the conference call.
All interested parties can join the conference call by dialling 1-888-231-8191 or 647-427-7450, conference ID 3644719. Please dial in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until Oct. 2, 2019, at 12 a.m. ET. To access the archived conference call, please dial 1-855-859-2056, and enter the encore code 3644719.
A live audio webcast of the conference call will be available.
Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available for 90 days.
Non-international financial reporting standard measures
(1) EBITDA (earnings before interest, taxes, depreciation and amortization) is not a standardized financial measure prescribed by IFRS; however, it is a metric that is used by management to determine the corporation's ability to service its debt and finance capital.
In calculating EBITDA, Ceres excludes gains and losses on property, plant and equipment, assets held for sale, and gains and losses on equity investments as these items are considered to be non-reoccurring in nature. Ceres may calculate EBITDA differently from other companies; therefore, Ceres's EBITDA may not be comparable with similar measures presented by other issuers.
(2) Adjusted net income is not a standardized financial measure prescribed by IFRS; however, it is a metric that is used by management to determine the corporation's profitability excluding non-reoccurring events.
In calculating adjusted net income, Ceres excludes gain (loss) on sale or impairment of property, plant and equipment, income (loss) from investments in associates, revaluation of warrants, gain (loss) on equity investments, legal expense related to continuing litigation, and one-time writedowns. Ceres may calculate adjusted net income differently from other companies; therefore, Ceres's adjusted net income may not be comparable with similar measures presented by other issuers.
Investors are cautioned that EBITDA and adjusted net income should not be construed as alternatives to net income or loss, or to other standardized financial measures determined in accordance with IFRS, and are not intended to represent cash flows or results of operations in accordance with IFRS.
About Ceres Global Ag Corp.
Through its network of commodity logistics centres and its team of industry experts, Ceres procures and supplies North American agricultural commodities and value-added products, and provides reliable supply chain logistics services for industrial product, fertilizer and energy product customers worldwide.
Ceres is headquartered in Minneapolis, Minn., and together with its affiliated companies, operates 13 locations across Saskatchewan, Manitoba, Ontario and Minnesota. These facilities have an aggregate grain and oilseed storage capacity of approximately 30.8 million bushels.
Ceres also has a 50-per-cent interest in Savage Riverport, a joint venture with Consolidated Grain and Barge Co., a 50-per-cent interest in interest in Gateway Energy Terminal, a joint venture with Steel Reef Infrastructure, a 25-per-cent interest in Stewart Southern Railway Inc., a short-line railway, located in southeast Saskatchewan with a range of 130 kilometres, and a 17-per-cent interest in Canterra Seed Holdings Ltd., a Canada-based seed development company.
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