GLG Life Tech Corporation Reports 2020 Annual & Fourth Quarter Financial Results
GLG Life Tech Corporation (TSX:GLG) reported financial results for the year ended December 31, 2020, showcasing a 51% increase in annual revenue to $15.3 million, driven by international sales of stevia and monk fruit. Although the fourth-quarter revenue dipped slightly to $2.8 million, gross profit margins improved significantly, rising to 31% from 6% year-over-year. The company reported a net loss of $6.4 million in Q4 but achieved a net income of $16.5 million for the year, marking a turnaround from a loss of $19.3 million in 2019. Notably, significant debt reduction occurred following the sale of an idle production facility.
- Revenue increased by 51% to $15.3 million for the full year 2020 compared to 2019.
- Net income for 2020 was $16.5 million, a $35.8 million increase from a loss of $19.3 million in 2019.
- Gross profit margin improved to 31% in Q4 2020 from 6% in Q4 2019.
- Reduction in SG&A expenses by 77% in Q4 2020 compared to the same period in 2019.
- Q4 revenue decreased by 5% to $2.8 million from $2.9 million in Q4 2019.
- Net loss attributable to shareholders was $6.4 million in Q4 2020, despite an overall profitable year.
VANCOUVER, BC / ACCESSWIRE / March 31, 2021 / GLG Life Tech Corporation (TSX:GLG) ("GLG" or the "Company"), a global leader in the agricultural and commercial development of high-quality zero-calorie natural sweeteners, announces financial results for the three and twelve months ended December 31, 2020. The complete set of financial statements and management discussion and analysis are available on SEDAR and on the Company's website at www.glglifetech.com.
FINANCIAL SUMMARY
The Company reported revenues of
The Company reported revenues of
The Company continues to closely manage its SG&A expenses, resulting in reduced G&A expenses in both the fourth quarter and full year 2020 relative to the same periods in 2019.
For the three months ended December 31, 2020, the Company had a net loss attributable to the Company's shareholders of
For the year ended December 31, 2020, the Company had net income attributable to the Company's shareholders of
CORPORATE DEVELOPMENTS
Sale of Idle Production Facility and Reduction of Debt
On August 10, 2020, the Company announced the sale of one of its two idle facilities, along with substantial reduction of the Company's debt.
After extensive negotiations stretching over multiple years, the Company has concluded the sale of its idle "Runhao" facility, located in Qingdao, China. Specifically, the Company sold the buildings and land use rights to the buyer, while retaining the assets, liabilities, and obligations of the Company's subsidiary entity that previously held the buildings and land use rights. The Company had not used the facility for several years and its sale will not have any impact on the Company's ongoing operations.
The deal involved not only the Company (as seller) and the buyer, but also the Company's primary bank debtholder, China Cinda Assets Management Corporation Anhui Branch ("Cinda"). Under the terms of the deal, from the sale proceeds of RMB 222 million (approximately CAD 42.5 million), Cinda received just over RMB 102 million, and as a result of this payment, Cinda further agreed to waive an additional approximately RMB 90 million in amounts owed to Cinda.
Thus, the Company reduced its overall liability to Cinda from RMB 570 million (as at March 31, 2020) to RMB 387 million (as at July 31, 2020), which is a reduction of RMB 193 million (approximately CAD 37 million) or a
Pursuant to the sale and the Chinese government's conditions for approval for the deal, the Company is required to use the remaining proceeds from the sale to satisfy the Company's tax obligation for Runhao, settle debts owed to certain third parties tied to the construction of Runhao, repay debts to a related party that has been instrumental in facilitating the Company's overall restructuring efforts, and pay settlement fees for the transaction. The deal was concluded in late July and the disposition of Runhao is recorded as effective within the third quarter of 2020.
This substantial reduction in debt significantly improves the Company's balance sheet. Further, pursuant to a prior agreement with Cinda announced on September 9, 2019, this debt reduction positions the Company for further waivers of amounts owed to Cinda as future payments are made to Cinda. The Company continues to work closely with Cinda regarding its obligations and its plans to resolve those obligations through payments, waivers, and potentially a partial conversion of debt to equity in the Company's main Chinese subsidiary, Anhui Runhai Biotechnology Joint Stock Company.
Subsidiary Share Repurchase
Following the sale of the Runhao subsidiary, on July 31, 2020, the Company repurchased
Changes to Executive Team
Mr. Finnsson, the Company's CFO since March of 2019, tendered his resignation, for personal reasons, effective June 30, 2020. Management thanks Mr. Finnsson for his service. The Company has appointed Mr. Edward Wang, the Company's current Controller, as Acting Chief Financial Officer.
Additionally, the Company previously announced that its President, Paul Block, and the Company agreed that Mr. Block would step down as President with an effective date of June 25, 2020. Mr. Block remained a Director of the Company but opted to not run for re-election at the Company's upcoming Annual General and Special Meeting.
Dr. Luke Zhang, Chairman and CEO, in addition to his focus on overseeing the Company's Chinese subsidiaries and efforts to restructure the Company's debt, is continuing to manage the Company's North American team to increase sales, manage costs, and improve the Company's financial performance. "I would like to thank Paul for his years of service on our Board of Directors and for his contributions to our management team over the last eighteen months. I wish Paul well in his future endeavors," said Dr. Zhang.
Issuance and Revocation of Management Cease Trade Order
Due to a previously announced delay in filing of the Company's 2019 year-end financial statements and related documents, such delay arising from the impact of COVID-19 on the Company's ability to timely complete the filing, on May 15, 2020, the Company announced that it had applied for and been issued a Management Cease Trade Order ("MCTO") by the relevant securities commissions. Shortly after completing the filing, the MCTO was revoked on June 8, 2020.
Company Outlook
One of the most critical items that management has focused on and continues to focus on is the development and implementation of plans to stem the losses that the Company has suffered in recent years and to ameliorate the Company's financial position. As a result of those sustained losses, the Company lacks the cash necessary to fully fund the business operations and its strategic product initiatives. The Company is managing its cash flows carefully to mitigate risk of insolvency. Management has been successful in improving the Company's cash outlook in recent quarters. Nevertheless, without an infusion of cash in the months ahead, the Company may not be able to realize its strategic plans and could eventually cease to be a going concern.
To address that cash need, management has negotiated a CAD
Another factor contributing to the Company's financial situation is the competitive price pressure in the stevia market over the last year that has reduced mainstream "Reb A" products (such as Reb A 80 and Reb A 97) to the lowest price levels in years. While these products have historically formed the core of the Company's product sales, the margins on sales of these products have grown increasingly slim. To address this, the Company is taking a three-pronged approach.
First, the Company has taken decisive steps to reduce its SG&A costs as well as its production costs. Both its North American operations and Chinese operations have significantly reduced SG&A costs. For the last several years, the Company's production capacity has been far greater than its projected order levels as it had sought rapid increases in orders for Reb A products. The Company's goal is now to "right-size" its Chinese operations - i.e., to optimize its staffing and production planning to meet the Company's projected production requirements while retaining the ability to accommodate growth in future order volumes. Management expects that this will enable the Company to sell its goods at more competitive and/or more profitable prices to secure additional order volumes and/or retain additional margin.
Second, the Company is increasing its focus on specialty stevia products, relative to its Reb A products. These specialty products are more differentiated than Reb A products and can bring more revenue opportunities and more meaningful margin contributions to the Company's bottom line.
Third, the Company is exploring options to enter the CBD/hemp market, where it could leverage its production expertise and equipment towards an investment that would jump start its ability to quickly begin producing high-quality low-cost products. The Company has also entered into a distributorship agreement with East West Pharma Group for the distribution of its high-quality cannabidiol ("CBD") products and continues to explore other complementary opportunities in the CBD/hemp market.
While the Company continues to face substantial risks and 2021 remains a pivotal year for the Company, management remains optimistic about the future opportunities for the Company. With the first idle asset sale now closed, right-sizing efforts progressing well, the optimization of production efficiencies, costs, and planning, and the Company's refocused product strategies, management is proceeding down the best available path to increased financial stability and profitability.
2020 AGM Voting Results
The Company held its Annual General Meeting virtually on July 28, 2020. The shareholders voted in all nominated directors, with favorable votes for each exceeding
SELECTED FINANCIALS
As noted above, the complete set of financial statements and management discussion and analysis for the year ended December 31, 2020, are available on SEDAR and on the Company's website at www.glglifetech.com.
Results from Operations
The following results from operations have been derived from and should be read in conjunction with the Company's annual consolidated financial statements for 2020 and 2019.
| 3 Months Ended December 31 | % Change | 12 Months Ended December 31 | % Change | |||||||||||||||||||||
In thousands Canadian $, except per share amounts | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Revenue | $ | 2,784 | $ | 2,928 | (5 | %) | $ | 15,290 | $ | 10,150 | 51 | % | ||||||||||||
Cost of Sales | $ | (1,929 | ) | $ | (2,744 | ) | (30 | %) | $ | (11,722 | ) | $ | (8,593 | ) | (36 | %) | ||||||||
% of Revenue | (69 | %) | (94 | %) | 24 | % | (77 | %) | (85 | %) | 8 | % | ||||||||||||
Gross Profit (Loss) | $ | 855 | $ | 185 | 362 | % | $ | 3,568 | $ | 1,557 | 129 | % | ||||||||||||
% of Revenue | 31 | % | 6 | % | 24 | % | 23 | % | 15 | % | 8 | % | ||||||||||||
Expenses | $ | (438 | ) | $ | (1,897 | ) | (77 | %) | $ | (5,736 | ) | $ | (8,895 | ) | (36 | %) | ||||||||
% of Revenue | (16 | %) | (65 | %) | 49 | % | (38 | %) | (88 | %) | 50 | % | ||||||||||||
Net Income (Loss) from Operations | $ | 416 | $ | (1,712 | ) | 124 | % | $ | (2,169 | ) | $ | (7,338 | ) | 70 | % | |||||||||
% of Revenue | 15 | % | (58 | %) | 73 | % | (14 | %) | (72 | %) | 58 | % | ||||||||||||
Other Income (Expenses) | $ | 4,402 | $ | (8,321 | ) | 153 | % | $ | 30,252 | $ | (17,678 | ) | 271 | % | ||||||||||
% of Revenue | 158 | % | (284 | %) | 442 | % | 198 | % | (174 | %) | 372 | % | ||||||||||||
Net Income (Loss) before Income Taxes | $ | 4,818 | $ | (10,033 | ) | 148 | % | $ | 28,083 | $ | (25,016 | ) | 212 | % | ||||||||||
% of Revenue | 173 | % | (343 | %) | 516 | % | 184 | % | (246 | %) | 430 | % | ||||||||||||
Net Income (Loss) | $ | 4,818 | $ | (10,033 | ) | 148 | % | $ | 28,083 | $ | (25,016 | ) | 212 | % | ||||||||||
% of Revenue | 173 | % | (343 | %) | 516 | % | 184 | % | (246 | %) | 430 | % | ||||||||||||
Net Income (Loss) Attributable to Non-Controlling Interest (NCI) | $ | 11,195 | $ | (2,248 | ) | 598 | % | $ | 11,557 | $ | (5,725 | ) | 302 | % | ||||||||||
Net Income (Loss) Attributable to GLG | $ | (6,377 | ) | $ | (7,785 | ) | 18 | % | $ | 16,526 | $ | (19,291 | ) | 186 | % | |||||||||
% of Revenue | (229 | %) | (266 | %) | 37 | % | 108 | % | (190 | %) | 298 | % | ||||||||||||
Net Income (Loss) per share (LPS, Basic & Diluted) | $ | (0.17 | ) | $ | (0.20 | ) | 16 | % | $ | 0.43 | $ | (0.50 | ) | 186 | % | |||||||||
Other Comprehensive Income (Loss) | $ | (9,753 | ) | $ | (796 | ) | (1125 | %) | $ | (3,405 | ) | $ | 4,506 | (176 | %) | |||||||||
% of Revenue | (350 | %) | (27 | %) | (323 | %) | (22 | %) | 44 | % | (67 | %) | ||||||||||||
Comprehensive Net Income (Loss) | $ | (4,935 | ) | $ | (10,829 | ) | 54 | % | $ | 24,678 | $ | (20,510 | ) | 220 | % | |||||||||
Comprehensive Income (Loss) Attributable to NCI | $ | 10,449 | $ | (2,703 | ) | (487 | %) | $ | 10,829 | $ | (4,443 | ) | 344 | % | ||||||||||
Comprehensive Income (Loss) Attributable to GLG | $ | (15,384 | ) | $ | (8,126 | ) | (89 | %) | $ | 13,849 | $ | (16,067 | ) | 186 | % | |||||||||
% of Revenue | (553 | %) | (278 | %) | (275 | %) | 91 | % | (158 | %) | 249 | % | ||||||||||||
Revenue
Revenue for the three months ended December 31, 2020, was
Revenue for the twelve months ended December 31, 2020, was
Cost of Sales
For the quarter ended December 31, 2020, the cost of sales was
For the twelve months ended December 31, 2020, the cost of sales was
Capacity charges charged to the cost of sales ordinarily would flow to inventory and are a significant component of the cost of sales. Only two of GLG's manufacturing facilities were operating during the twelve months ended December 31, 2020, and capacity charges of
Gross Profit (Loss)
Gross profit for the three months ended December 31, 2020, was
Gross profit for the twelve months ended December 31, 2020, was
Selling, General, and Administration Expenses
Selling, General and Administration ("SG&A") expenses include sales, marketing, general and administration costs ("G&A"), stock-based compensation, and depreciation and amortization expenses on G&A fixed assets. A breakdown of SG&A expenses into these components is presented below:
General and Administration Expenses
In thousands Canadian $ | 3 Months Ended December 31 | % Change | 12 Months Ended December 31 | % Change | ||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||
G&A Expenses | $ | 539 | $ | 1,319 | (59 | %) | $ | 3,997 | $ | 6,366 | (37 | %) | ||||||||||||
Stock Based Compensation Expenses | $ | 45 | $ | 149 | (70 | %) | $ | 360 | $ | 598 | (40 | %) | ||||||||||||
Depreciation Expenses | $ | (146 | ) | $ | 429 | 134 | % | $ | 1,379 | $ | 1,931 | (29 | %) | |||||||||||
Total | $ | 438 | $ | 1,897 | (77 | %) | $ | 5,736 | $ | 8,895 | (36 | %) | ||||||||||||
G&A expenses for the three months ended December 31, 2020, were
G&A expenses for the twelve months ended December 31, 2020, were
Net Loss Attributable to the Company
| 3 Months Ended December 31 | % Change | 12 Months Ended December 31 | % Change | |||||||||||||||||||||
In thousands Canadian $ | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net Income (Loss) | $ | 4,818 | $ | (10,033 | ) | 148 | % | $ | 28,083 | $ | (25,016 | ) | 212 | % | ||||||||||
Net Income (Loss) Attributable to NCI | $ | 11,195 | $ | (2,248 | ) | 598 | % | $ | 11,557 | $ | (5,725 | ) | 302 | % | ||||||||||
% of Revenue | 402 | % | (77 | %) | 479 | % | 76 | % | (56 | %) | 132 | % | ||||||||||||
Net Income (Loss) Attributable to GLG | $ | (6,377 | ) | $ | (7,785 | ) | 18 | % | $ | 16,526 | $ | (19,291 | ) | 186 | % | |||||||||
% of Revenue | (229 | %) | (266 | %) | 37 | % | 108 | % | (190 | %) | 298 | % | ||||||||||||
For the three months ended December 31, 2020, the Company had a net loss attributable to the Company of
For the twelve months ended December 31, 2020, the Company had net income attributable to the Company of
Quarterly Basic and Diluted Loss per Share
The basic loss and diluted loss per share from operations was
For the twelve months ended December 31, 2020, the basic income and diluted income per share from operations was
Additional Information
Additional information relating to the Company, including our Annual Information Form, is available on SEDAR (www.sedar.com). Additional information relating to the Company is also available on our website (www.glglifetech.com).
For further information, please contact:
Simon Springett, Investor Relations
Phone: +1 (604) 669-2602 ext. 101
Fax: +1 (604) 662-8858
Email: ir@glglifetech.com
About GLG Life Tech Corporation
GLG Life Tech Corporation is a global leader in the supply of high-purity zero calorie natural sweeteners including stevia and monk fruit extracts used in food and beverages. GLG's vertically integrated operations, which incorporate our Fairness to Farmers program and emphasize sustainability throughout, cover each step in the stevia and monk fruit supply chains including non-GMO seed and seedling breeding, natural propagation, growth and harvest, proprietary extraction and refining, marketing and distribution of the finished products. Additionally, to further meet the varied needs of the food and beverage industry, GLG has launched its Naturals+ product line, enabling it to supply a host of complementary ingredients reliably sourced through its supplier network in China. For further information, please visit www.glglifetech.com.
Forward-looking statements: This press release may contain certain information that may constitute "forward-looking statements" and "forward looking information" (collectively, "forward-looking statements") within the meaning of applicable securities laws. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
While the Company has based these forward-looking statements on its current expectations about future events, the statements are not guarantees of the Company's future performance and are subject to risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such factors include amongst others the effects of general economic conditions, consumer demand for our products and new orders from our customers and distributors, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations, industry supply levels, competitive pricing pressures and misjudgments in the course of preparing forward-looking statements. Specific reference is made to the risks set forth under the heading "Risk Factors" in the Company's Annual Information Form for the financial year ended December 31, 2020. In light of these factors, the forward-looking events discussed in this press release might not occur.
Further, although the Company has attempted to identify factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
As there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements, readers should not place undue reliance on forward-looking statements.
SOURCE: GLG Life Tech Corporation
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