Cymat Reports Q4 and 2013 Year-End Results

Listing:  TSX
Symbol:  CYM

TORONTO, July 26, 2013 /CNW/ - Cymat Technologies Ltd., a materials technology company focused on the military, automotive and architectural industries, announced its results for the quarter and the year ending April 30, 2013.

Fourth Quarter and Fiscal 2013 - Key Financial Metrics

• For fiscal 2013 there was a fourth quarter net income of $1.6 million and a net income of $443,000 for the year.  For fiscal 2012 there was a fourth quarter net loss of $3.0 million and a net loss of $4.8 million for the year.
  
  
• Revenue totalled $132,000 for the fourth quarter (2012 - $484,000) and $926,000 for fiscal 2013 (2012 - $2,795,000).
  
  
• Plant operating costs totalled $259,000 for the fourth quarter (2012 - $843,000) and $1.2 million for fiscal 2013 (2012 - $3.6 million).
  
  
• SG&A expenses totalled $285,000 for the fourth quarter (2012 - $408,000) and $1.1 million for fiscal 2013 (2012 - $2.2 million).
  
  
• In the fourth quarter of 2013, the Company reached a settlement with Industry Canada regarding its obligation under the Technology Partnerships Canada ("TPC") Program resulting in a one-time gain in the amount of $2.0 million.

Revenue

Revenue for the final quarter of 2013 was $132,000, a decrease of $352,000 from $484,000 for the same quarter of 2012.  The quarterly revenue for 2012 included $293,000 from the large Mallorca architectural project.

Annual revenue for fiscal 2013 was approximately $926,000, a decrease of $1,869,000 over revenue for the prior year of $2,795,000. The year-over-year decline resulted from the decline in revenue from large architectural projects (Mallorca and Tbilisi) by $2,078,000 in aggregate. This decrease was partially offset an increase of $190,000 in small "transactional" Alusion^TM sales and a modest increase in SmartMetal^TM sales.

Expenses

Plant operating expenses for the quarter ended April 30, 2013 were approximately $259,000, a decrease of $584,000 from the same expenses of $843,000 for the quarter ended April 30, 2012.  Plant operating expenses for fiscal 2013 were $1.2 million as compared to $3.6 million for fiscal 2012. Decreased direct plant operating expenses were in keeping with the decline in revenue.  Plant operating expenses also include depreciation and amortization expense which was $91,000 for fiscal 2013 as compared to $1.5 million for 2012, with the reduction primarily due to lack of technology rights amortization in 2013.

Selling, general and administration ("SG&A") expenses for the fourth quarter of 2013 totalled $285,000, a decrease of $123,000 from SG&A of $408,000 for the last quarter of 2012. This improvement was largely the result of lower employee salary and benefit expenses, including stock-based compensation expense, resulting from reduced head count.

SG&A expenses for fiscal 2013 totalled $1.1 million compared to $2.2 for 2012. This improvement was largely the result of lower employee salary and benefits, including lower stock-based compensation expenses by $752,000, resulting from reduced staff levels.

Gain on Settlement of Debt

A gain on settlement of debt in the amount of $2.0 million was recorded by Cymat in the fourth quarter of fiscal 2013. The gain was the result of a Debt Settlement Agreement reached with Industry Canada regarding the repayable government contributions under the TPC agreement originally signed in March 1997.

At the time of the signing of the Debt Settlement Agreement, an aggregate of $6,366,350 - in the form of a 3.45% royalty on the sale of aluminum foam - remained to be paid under the former TPC Agreement.  This obligation under the former TPC Agreement was reflected on the Company's books as a $2.2 million liability.  The carrying value of this financial liability was determined by estimating the net present value of the future royalty payments based on future revenues generated from the sale of SAF.

Under the Settlement Agreement, Industry Canada agreed to accept payments in the aggregate amount of $175,000 in settlement of Cymat's entire obligation.

Net Income (Loss)

The A net income of $1.6 million was recorded for the fourth quarter of 2013, compared to a net loss of $3.0 million for the fourth quarter of 2012.  Excluding the gain on settlement of debt, last year's impairment loss and non-cash interest amounts would produce a loss of $393,000 for the fourth quarter of 2013 and a loss of $770,000 for the fourth quarter of 2012.

The net income for the fourth quarter of fiscal 2013 includes the non-cash items of depreciation and amortization of $30,000 (2012 - $394,000) and a share-based compensation expense of $21,000 (2012 - $101,000).

A net income of $443,000 was recorded for fiscal 2013, compared to a net loss of $4.8 million for fiscal 2012.  Excluding the gain on settlement of debt, the impairment loss and non-cash interest amounts would produce a loss of $1,382,000 for 2013 and a loss of $3,072,000 for 2012.

The net income for fiscal 2013 includes the non-cash items of depreciation and amortization of $119,000 (2012 - $1,570,000) and a recovery of share-based compensation expense of $199,000 (2012 - expense of $553,000).

TSX Delisting

Further to the Cymat press release dated March 27, 2013, the Company has been advised that the Toronto Stock Exchange (the "TSX') has decided to delist Cymat's Common Shares (Symbol: CYM) effective at the close of markets on August 26, 2013.  The Company has initiated the listing process with the TSX Venture Exchange.  The TSX has indicated that they will offer flexibility in the timing of their delisting to accommodate the requirements for establishing a listing with the TSX Venture Exchange. Accordingly, the transition to the TSX Venture Exchange is anticipated to be seamless in terms of providing an uninterrupted market for the trading of Cymat's Common Shares.

Outlook

The Company has continuing expectations for the inclusion of Alusion^TM in significant architectural projects. As reported previously, there has been some slippage in the expected timing of material delivery for such projects in Europe, owing to uncertainties and austerity measures impacting the European economy.  However, the Company expects architectural sales to continue to provide the bulk of Cymat revenue, assisted by the building of its distributorship with the Latin American Division of Hunter Douglas and sales from its US-based distributor.

SmartMetal™ continues to be evaluated by several OEMs and their suppliers in various military vehicle platforms for next generation and retrofit vehicles. Management expects to complete the final stage of pre-production testing regarding a vehicle protection kit to be employed by and international OEM in the first half of fiscal 2014.  Also, despite uncertainties regarding the US military budget, there continues to be interest in SmartMetal^TM displayed by certain OEMs based in the United States.  Sales in this market generally have long timelines, require deep relationships and require the ability to engineer customized solutions. The Company is continuing its efforts in the engagement of external agents to assist in the development of international military markets for SmartMetal^TM.

On the automotive front, dialogue continues in the investigation of the efficacy of SmartMetal™ applications for automotive design, particularly the possibility of incorporating SmartMetal^TM, as produced from Cymat's flat panel line, into the design for automotive crash-boxes.  Management believes that SmartMetal^TM has the potential to resolve the conflicting requirements within automotive design for increased vehicle crashworthiness while at the same time reducing vehicle weight.

Installation of Alusion^TM panels have recommenced at the 9/11 Memorial site in New York City and management expects that the delivery of the final batch of panels will occur in the first part of fiscal 2014, providing the Company with a significant source of cash flow.

About Cymat:

Cymat develops innovative materials for industry. The company has worldwide rights, through patents and licenses, for producing Stabilized Aluminum Foam. The ultra-light metallic foam is manufactured by bubbling gas through molten alloyed aluminum containing a dispersion of fine ceramic particles and can be produced as either Near-net Shapes or Flat Panels. The result is a revolutionary material with a wide array of features including very low density, mechanical energy absorption, thermal and acoustic insulation, is recyclable, time and temperature insensitive and has a relatively low cost of production. Cymat is collaborating with a number of partners spanning the automotive, architectural and blast mitigation industries. For further information, visit the Web site www.cymat.com.

The foregoing press release contains forward-looking statements relating to the development of markets, development programs, future revenues and improvements in technology, which are subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current expectations include the availability of funding, existing and future relationships with suppliers and manufacturers, the results of research and development activities, risks of technological breakthroughs that make Cymat stabilized aluminum foam less attractive, risks relating to the breadth, scope and enforceability of intellectual property rights, general industry and market conditions, availability of qualified personnel, and reliance on co-development partners. For additional information with respect to these and other factors, see the reports filed by Cymat Technologies Ltd. with the Ontario Securities Commission. Cymat Technologies Ltd. disclaims any intention or obligation to update or revise any forward-looking statements.

SOURCE: Cymat Technologies Ltd.