RE:RE:Re/Second quarter results .
BURLINGTON, ON, Aug. 3, 2018 /CNW/ -EcoSynthetix Inc. (TSX: ECO) ("EcoSynthetix" or the "Company"), a renewable chemicals company that produces a portfolio of commercially proven bio-based products, today announced its financial and operational results for the three months (Q2 2018) and six months (YTD 2018) ended June 30, 2018. Financial references are in U.S. dollars unless otherwise indicated. Q2 2018 Highlights -- Recorded net sales of $5.8 million in Q2 2018, up 22% compared to the same period in 2017 -- Reduced adjusted EBITDA loss by 63% to $0.5 million in Q2 2018, compared to the same period in 2017 -- Purchased and cancelled 489,900 common shares for total consideration of $0.65 million under the normal course issuer bid -- Maintained a strong balance sheet with cash and term deposits of $46.7 million as at June 30, 2018 "It was a strong quarter as we continue to grow net sales into both the wood composites and paper and paperboard markets. The topline results and our disciplined cost management delivered a 63% improvement in our adjusted EBITDA. We have consistently improved our bottom line while our R&D efforts remain focused on enhancing value for our existing product lines and expanding addressable opportunities. We are well positioned to achieve our commitment of profitability in the near term," said Jeff MacDonald, CEO of EcoSynthetix. "Delivering growth from DuraBind(TM) in the wood composites market remains our number one priority. Our key targets within the wood composites market are highly engaged and we continue to make progress with our commercialization activities. At the same time, the recent pricing dynamics within the paper and paperboard markets are driving growth within our existing customers and attracting new interest in our EcoSphere(R) binder." Financial Summary Net Sales Net sales were $5.8 million and $11.2 million for Q2 2018 and YTD 2018, respectively, compared to $4.8 million and $8.4 million in the corresponding periods in 2017. The 22% increase in the quarter was primarily due to higher sales volume of $0.8 million, or 17%, and higher average selling prices which improved sales $0.2 million, or 5%. The 34% increase in the YTD period was primarily due to higher sales volumes of $2.2 million, or 26%, and an increase in average selling price which positively impacted sales by $0.7 million, or 8%. Gross Profit Gross profit was $1.2 million and $2.2 million for Q2 2018 and YTD 2018, respectively, compared to $1.0 million and $1.8 million in the corresponding periods in 2017. The 14% increase in the quarter and the 22% increase in the YTD period were primarily due to higher average selling prices and higher sales volumes, partly offset by increases in manufacturing costs. Gross profit as a percentage of sales was 20.5% and 19.9% for Q2 2018 and YTD 2018, respectively, compared to 21.8% and 22.0% in the corresponding periods in 2017. Gross profit as a percentage of sales adjusted for manufacturing depreciation was 23.9% and 23.6% for Q2 2018 and YTD 2018, respectively, compared to 25.8% and 26.6% for the corresponding periods in 2017. The change in the quarter was primarily due to higher manufacturing costs, partly offset by an increase in average selling prices. The change in the YTD period was also primarily due to higher manufacturing costs, as well as higher freight costs, partly offset by an increase in average selling prices. Selling, General and Administrative (Excludes share-based compensation, depreciation, provision for termination benefits, and foreign exchange gains and losses) Selling, general and administrative expenses (SG&A) were essentially unchanged at $1.3 million and $2.6 million for Q2 2018 and YTD 2018, respectively, compared to the corresponding periods in 2017. Lower salaries & benefits and lower discretionary spending were offset by foreign exchange pressure resulting from the strengthening of the Canadian dollar relative to the U.S. dollar during both periods. Research and Development (Excludes share-based compensation, depreciation, provision for termination benefits, and foreign exchange gains and losses) Research and development (R&D) costs were $0.4 million and $1.1 million for Q2 2018 and YTD 2018, respectively, compared to $1.1 million and $2.4 million for the corresponding periods in 2017. The changes were primarily due to lower mill trial related costs, people related expenses and lower third-party development costs. Adjusted EBITDA(1) Adjusted EBITDA loss was $0.5 million and $1.4 million for Q2 2018 and YTD 2018, respectively, compared to a loss of $1.3 million and $2.7 million for the corresponding periods in 2017. The 63% and 51% improvements for the respective periods were primarily due to lower operating expenses and increased gross profit. Net Loss Net loss was $0.7 million, or $0.01 per common share, and $1.9 million, or $0.03 per common share, for Q2 2018 and YTD 2018, respectively, compared to $1.7 million, or $0.03 per common share, and $3.6 million, or $0.06 per common share, for the corresponding periods in 2017. The improvements were principally due to lower operating expenses, as well as higher gross profit compared to the same periods in 2017. Liquidity Cash on hand and term deposits were $46.7 million as at June 30, 2018, compared to $49.3 million as at December 31, 2017. Cash on hand at June 30, 2018, excluding the $30.3 million in term deposits, was $16.4 million. The Company believes that ongoing operations, working capital and associated cash flow in addition to its cash resources provide sufficient liquidity to support ongoing business operations for the foreseeable future. Notice of Conference Call EcoSynthetix will host a conference call Tuesday, August 7, 2018, at 8:30 AM ET to discuss its financial results. Jeff MacDonald, CEO, and Robert Haire, CFO, will co-chair the call. All interested parties can join the call by dialling (647) 427-7450 or (888) 231-8191. Please dial in 15 minutes prior to the call to secure a line. A live audio webcast of the conference call will also be available at www.ecosynthetix.com. The presentation will be accompanied by slides, which will be available via the webcast link and the Company's website. 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.