Mr. P. Peter Pascali reports
PYROGENESIS ANNOUNCES Q1 2022 RESULTS: REVENUES $4.2MM; GROSS MARGIN 25%; CURRENT BACKLOG OF SIGNED AND/OR AWARDED CONTRACTS $41.2MM
PyroGenesis Canada Inc. has released its financial and operational results for the first quarter ended March 31, 2022.
"We are happy to be announcing our Q1 2022 financial results. We have posted quarterly revenues of $4.2-million," said P. Peter Pascali, chief executive officer and chair of PyroGenesis. "Our backlog remains very large, above $41-million, and despite gross reported revenue being impacted this quarter slightly by accounting procedures related to international logistical and shipping challenges, our factories continue to produce at a rapid rate, both against the backlog and in anticipation for new business throughout the year.
"Perhaps even more exciting, our new business development efforts have grown dramatically, with a pipeline of pitched projects within the aluminum business line alone now over several hundred million dollars.
"Two thousand twenty-two continues to build on the foundation set by the previous two years. With the successful execution and delivery of the backlog of signed contracts, the benefit of the biogas upgrading projects from Pyro Green-Gas and exploding interest across seemingly every aspect of the aluminum industry, 2022 is scaling up to be another great year for the company.
"The board and I see continued production and sales success in the months ahead. As our iron ore pelletization torches enter into on-site client install and testing, 3-D powder qualification with the global aerospace company moves to the finish line, and some of our potential aluminum projects in negotiations reach a signing point, we expect the backlog to race past the $50-million mark and beyond," concluded Mr. Pascali.
Q1 2022 results reflect the following highlights:
Revenues of $4,206,762;
Gross margin profit of $1,051,723 or 25 per cent of revenue;
Cash, cash equivalents and publicly traded shares at March 31, 2022, of $18.5-million;
Backlog of signed and/or awarded contracts of $41.2-million;
Milestone new market entry sales, including for the destruction of polyfluoroalkyl substances.
With 2021 having achieved many important accomplishments and milestones, 2022 has begun by maintaining the accelerated business momentum of the previous two years.
Despite the continuing challenges of the global marketplace due to COVID, plus new challenges resulting from conflict in Ukraine, as well as energy supply shortages in Europe and China impacting both the cost and output of aluminum and steel, opportunities for PyroGenesis continue to expand across the board. Led by unprecedented awareness of the company's capabilities across the aluminum industry after the successful commissioning of its Drosrite metal recovery systems at a leading Middle Eastern primary aluminum producer, along with the discovery, pursuit and active engagement of new market prospects both upstream and downstream from the company's Drosrite systems, and major new developments within primary, secondary (recycled) and tertiary (manufacturers' in-house casting facilities), aluminum producers are engaging the company in a variety of discussions and negotiations regarding metal recovery, furnace retrofitting and comprehensive fuel-switching initiatives. These factors, bolstered by the quickening global push toward fossil fuel reduction at both industry and government levels that further showcase the PyroGenesis advantage, allow management to expect that tailwinds into an already strong pipeline will continue throughout 2022 and beyond.
PyroGenesis recorded revenue of $4,206,762 in the first quarter of 2022, representing a decrease of 33 per cent compared with $6,264,503 recorded in the first quarter of 2021.
Revenues recorded in the first quarter of 2022 were generated from:
Drosrite-related sales of $900,079 (Q1 2021: $2,740,725);
- Purevap-related sales of $441,605 (Q1 2021: $625,086);
- Torch-related sales of $1,041,709 (Q1 2021: $195,221);
- Development and support related to systems supplied to the U.S. Navy of $745,260 (Q1 2021: $2,586,021);
Biogas upgrading and pollution controls of $990,045 (Q1 2021: nil);
- Other sales and services of $88,064 (2021: $117,450).
Research and development costs
The company incurred $482,432 of R&D costs, net of government grants, on internal projects in Q1 2022, an increase of 69 per cent as compared with $286,307 in Q1 2021. The increase in Q1 2022 is primarily related to an increase in employee compensation, materials and equipment, and other expenses, and a decrease in investment tax credits and government grants recognized.
In addition to internally financed R&D projects, the company also incurred R&D expenditures during the execution of client-financed projects. These expenses are eligible for scientific research and experimental development (SR&ED) tax credits. SR&ED tax credits on client-financed projects are applied against cost of sales and services.
Comprehensive (loss) income
The comprehensive loss for Q1 2022 of $4,069,119 compared with an income of $3,712,903 in Q1 2021 represents a decrease of 210 per cent year over year. The decrease in income of $7,782,022 in the comprehensive loss in Q1 2022 is primarily attributable to the factors described above, which have been summarized as follows:
A decrease in product- and service-related revenue of $2,057,741 arising in Q1 2022;
- A decrease in cost of sales and services of $966,454, primarily due to a decrease in direct materials and manufacturing overhead and other, and an increase in employee compensation, subcontracting, foreign exchange charge on materials, investment tax credits and amortization of intangible assets;
- An increase in SG&A expenses of $1,139,643 arising in Q1 2022 primarily due to an increase in employee compensation, professional fees, office and general, travel, depreciation in property and equipment, depreciation ROU assets, government grants, other expenses, and share-based expenses;
- An increase in R&D expenses of $196,126 primarily due to an increase in subcontracting, material and equipment, and other expenses;
- An increase in financial expenses of $130,813 in Q1 2022 primarily due to interest on lease liabilities, interest accretion on balance due on business combination and other interest expenses;
- A decrease in fair value adjustment of strategic investments of $4,588,780 in Q1 2022.
(earnings before interest, taxes, depreciation and amortization)
The EBITDA in Q1 2022 was a $3,300,693 loss compared with an EBITDA gain of $3,950,881 for Q1 2021, representing a decrease of 184 per cent year over year. The $7,251,574 decrease in the EBITDA loss in Q1 2022 compared with Q1 2021 is due to the decrease in comprehensive loss of $7,782,023, an increase in depreciation on property and equipment of $66,673, an increase in depreciation ROU assets of $64,430, an increase in amortization of intangible assets of $211,979, an increase in financial expenses of $130,812, and an increase in income taxes of $56,553.
Adjusted EBITDA loss in Q1 2022 was $1,631,063 compared with an adjusted EBITDA gain of $4,873,221 for Q1 2021. The decrease of $6,504,284 in the adjusted EBITDA loss in Q1 2022 is attributable to a decrease in EBITDA loss of $7,251,574 and an increase of $747,289 in share-based payments.
The modified EBITDA loss in Q1 2022 was $2,807,818 compared with a modified EBITDA loss of $761,501 for Q1 2021, representing a decrease of 269 per cent. The increase of $2,046,319 in the modified EBITDA loss in Q1 2022 is attributable to the decrease in the adjusted EBITDA of $6,504,284 and a decrease in the change of fair value of strategic investments of $4,457,967.
About PyroGenesis Canada Inc.
PyroGenesis, a high-technology company, is a leader in the design, development, manufacture and commercialization of advanced plasma processes and sustainable solutions, which reduce greenhouse gases (GHG) and are economically attractive alternatives to conventional dirty processes. PyroGenesis has created proprietary, patented and advanced plasma technologies that are being vetted and adopted by multiple multibillion-dollar industry leaders in four massive markets: iron ore pelletization, aluminum, waste management and additive manufacturing. With a team of experienced engineers, scientists and technicians working out of its Montreal office and its 3,800-square-metre and 2,940-square-metre manufacturing facilities, PyroGenesis maintains its competitive advantage by remaining at the forefront of technology development and commercialization. The operations are ISO 9001:2015 and AS9100D certified, having been ISO certified since 1997.
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