PyroGenesis Announces Q1 2021 Results Revenues $6.3MM; Net Earnings and Comprehensive Income $3.7MM; Gross Margin 34%; Current Backlog $26MM; Basic EPS $0.02
PyroGenesis Canada Inc. reported strong Q1 2021 results, achieving $6.26 million in revenues, a 771% increase from Q1 2020, and net income of $3.71 million. The company's cash balance rose to $26.27 million, with total assets at $87.34 million. The backlog of signed contracts reached $26 million. Despite a slight decrease in gross margin to 34.2%, the company remains optimistic about growth opportunities, particularly through new contracts and product innovations in plasma technology. The outlook emphasizes organic growth and potential mergers and acquisitions.
- Revenues increased by 771% to $6.26 million compared to Q1 2020.
- Net earnings rose by $5.47 million year-over-year to $3.71 million.
- Cash and cash equivalents improved to $26.27 million from $18.10 million.
- Backlog of signed contracts increased to $26 million.
- Positive outlook for future revenue growth from existing and new product lines.
- Gross margin decreased by 3% year-over-year to 34.2%.
- SG&A expenses increased by 132% from Q1 2020, totaling $2.80 million.
MONTREAL, May 17, 2021 (GLOBE NEWSWIRE) -- PyroGenesis Canada Inc. (http://pyrogenesis.com) (TSX: PYR) (NASDAQ: PYR) (FRA: 8PY), a high-tech company (hereinafter referred to as the “Company” or “PyroGenesis”), that designs, develops, manufactures and commercializes plasma atomized metal powders, environmentally friendly plasma waste-to-energy systems and clean plasma torch products, is pleased to announce today its financial and operational results for the first quarter ended March 31st, 2021.
“We are happy to be announcing that our Q1 2021 financial results continue to reflect the historical trend set early last year. The last several quarters saw PyroGenesis more than triple its backlog of signed contracts, reduce debt to basically zero, and recording over
Q1 2021 results reflect the following highlights:
- Revenues of
$6,264,503 , an increase of771% over$718,908 posted in Q1 2020, - Net earnings and comprehensive income of
$3,712,903 an increase of$5,469,931 over that posted in Q1 2020, - Gross margin profit of
$2,143,010 an increase of701% vs.$267,414 in Q1 2020, - Backlog of signed contracts of
$26M M, - Cash and cash equivalents at March 31, 2021 of
$26,274,344 (December 31, 2020:$18,104,899) , - Total Assets as at March 31, 2021 of
$87,339,065 (December 31, 2020:$74,531,378) , - Gross margin of
34.2% , a decrease of3% year over year, - Shareholders’ Equity at March 31, 2021 of
$72,122,309 (December 31, 2020:$59,423,106) , - Current Ratio at March 31, 2021 of 3.26x versus 2.20x at December 31, 2020 (versus 0.21x at March 31, 2020),
- Basic Earnings per Share (EPS) of
$0.02 for Q1 2021 as compared to ($0.01) in Q1 2020.
OUTLOOK
PyroGenesis continues to be well positioned, with a clean balance sheet, to execute on all its organic growth strategies as well as to actively pursue growth through synergistic mergers & acquisitions. The Company has recently focused its offerings to highlight their GHG emissions reduction benefits. Most of PyroGenesis’ product lines do not depend on environmental incentives (tax credits GHG certificates, environmental subsidies, etc.) to be economically viable.
We consider this strategy to be timely as many governments are considering stimulating their respective economies by promoting and funding both environmental technologies and infrastructure projects. As such, management expects that this will be a tailwind into an already strong pipeline which will further increase revenues, and add directly to shareholder value.
Organic Growth:
Organic growth will be spurred on by (i) the natural growth of our existing offerings which can now be accelerated given our strong balance sheet and (ii) leveraging off our “Golden Ticket” advantage. We have described in the past our Golden Ticket advantage as one which occurs when one sells directly, or is engaged directly, with the end user and, as a result, is “inside the fence”. A Golden Ticket affords the opportunity to either, (i) cross sell other products or, ideally, (ii) identify new areas of concern that can be addressed uniquely by PyroGenesis. We call the latter our Coffee and Donuts strategy (if you are selling coffee you could generate additional revenues, with little additional effort, by adding on donuts).
Over the past several years, PyroGenesis has successfully positioned each of its business lines for rapid growth by strategically partnering with multi-billion-dollar entities. These entities have identified PyroGenesis’ offerings to be unique, in demand, and of such a commercial nature as to warrant such unique relationships. We expect that these relationships are now positioned to transition into significant revenue streams.
DROSRITE™
Within the DROSRITE™ offering, the Company is aggressively exploring horizontal growth opportunities. The Company is currently bidding on an RFQ, valued at approx.
Additive Manufacturing
With respect to additive manufacturing, we expect to see significant year over year improvements in our 3D metal powders offering as our NexGen™ facility, which incorporates all the previously disclosed benefits (increased production rates, lower capex, lower opex), is now on-line. There are major top tier aerospace companies and OEMs, in both Europe and North America, eagerly awaiting powders from this new state-of-the-art production line.
Plasma Torches
With respect to the Company’s plasma torch offerings, we expect this offering to be significantly impacted by continued developments in the iron ore pelletization industry, where serious consideration is being given to replacing the fossil fuel burners, currently being used throughout the industry, with PyroGenesis’ proprietary plasma torches, in an effort to reduce their carbon footprint. To date, everything is proceeding as expected. Initial discussions have evolved into confirmation stages which typically consist of a computer simulation followed by a small torch order. These confirmation stages are expected, if successful, to result with a roll-out program to replace fossil fuel burners with PyroGenesis’ plasma torches in the iron ore pelletization industry, in which PyroGenesis is patent protected.
PyroGenesis expects that the previously mentioned government initiatives, geared to stimulating their respective economies by promoting and funding environmental technologies and infrastructure projects, will only serve to increase interest in PyroGenesis’ plasma torch offerings. However, this could delay the onset of contracts as potential clients seek government support for large initiatives. PyroGenesis is proactively targeting other industries which are experiencing significant pressure to reduce GHGs, and which utilize fossil fuel burners as well.
Separately, the Company also offers plasma torches to niche markets where there is a high probability of on-going sales from successful implementation. One such example is the previously announced contract with a very small company to produce a plasma torch ideal for tunneling. PyroGenesis has reason to believe that the real plasma-based tunneling opportunity may lie outside of the scope of the current agreement. PyroGenesis is in discussion with the client to determine the best way to terminate this arrangement. PyroGenesis is evaluating, and intends to pursue, plasma based tunneling opportunities, specifically those identified to be outside of the scope of the current agreement.
As sales of PyroGenesis’ plasma torches increase, the Company will also benefit from providing proprietary spare parts from which the Company expects to generate significant recurring revenue, thus complementing the Company’s long-term strategy to build upon a recuring revenue model.
HPQ/PUREVAP™
With respect to HPQ, the goal is continue to expand our role as HPQ’s technology provider for the game changing PUREVAP™ family of silicon processes which we are developing exclusively for HPQ and its wholly owned subsidiary HPQ Nano Silicon Powders Inc, namely:
- The PUREVAP™ “Quartz Reduction Reactors” (QRR), an innovative process (patent pending), which should permit the one step transformation of lower purity quartz (SiO2) then any traditional processes can handle into a silicon (Si) of a higher purity level (2N-4N) that can be produced by any traditional smelter, at reduced costs, energy input, and carbon footprint. The unique capabilities of this process could position HPQ as a leading provider of the specialized silicon material needed to propagate its considerable renewable energy potential; and
- The PUREVAP™ Nano Silicon Reactor (NSiR), which, if successful, could position itself as a new proprietary low-cost process that can transform the silicon (Si) made by the PUREVAP™ QRR into the nano-silicon materials (spherical silicon powders and silicon nanowires) sought after by energy storage, batteries, electric vehicle manufactures and clean hydrogen sectors participants. The aim of the ongoing work is to position HPQ NANO as the first to market with a commercial scale low-cost nanoparticle production system.
- A new plasma-based process that could convert Silica (Quartz, SiO2) into fumed silica (Pyrogenic Silica) in one step. This new process could be a low-cost and environmentally friendly option that combines HPQ Silicon High Purity Quartz initiatives with PyroGenesis’ industry leading know-how in the development of commercial plasma processes. It is envisioned that the process will eliminate harmful chemicals presently generated by traditional methods. This new process could revolutionize the manufacturing of fumed silica, while repatriating production back to North America.
We expect 2021 to be a year in which significant development occurs on both these fronts.
Growth through Synergistic Mergers and Acquisitions:
As previously disclosed, the Company would conservatively consider a synergistic M&A strategy to augment its growth, and the Company has been very actively involved in pursuing several opportunities in support of this strategy. In so doing, the focus has been on private companies exclusively which (i) primarily leverage the Company’s Golden Ticket advantage/Coffee & Donuts strategy or (ii) could uniquely benefit from the Company’s engineering advantage and/or international relationships.
PyroGenesis recently announced a Binding Letter of Intent with AirScience, a company with experience with biogas upgrading, under which the Company would acquire AirScience for
The Company has been evaluating the following opportunities, additional details of which should be disclosed over the coming weeks.
DROSRITE™
We expect to be able to announce within the next few weeks, the conclusion of a joint venture relationship with an existing and proven technology provider. The technology is geared to uniquely handle the residues resulting from the processing of dross in the aluminum industry. We had previously announced our intention to secure this technology and, if concluded, would not only make our traditional DROSRITE™ offering more appealing but could also be offered as a stand-alone product. We believe that valorizing the residues and producing high end products will further define us as the go-to company for all dross related processing. This is a prime example of our Coffee & Donuts strategy in play. For further clarity, the joint venture will only relate to the new technology and, as such, PyroGenesis will not have to vet in any assets, or IP (specifically not the DROSRITE™ technology).
Plasma Torches
PyroGenesis often considers opportunities to leverage its plasma expertise and continues to review a torch technology which could complement PyroGenesis’ existing offerings, and leverage off of our unique relationships. The Company gives this a very low probability of success given the initial valuation, provided by the sole owner, in the context of publicly available data. However, PyroGenesis has identified similar opportunities and is evaluating them in due course.
Conclusion
In conclusion, PyroGenesis is well positioned in 2021 to take advantage of its unique position in its four main business offerings to accelerate growth in each, with a particular emphasis on offerings geared to aggressively reducing GHG emissions. Furthermore, we do not expect at this point in time, given our strong balance sheet, a need to raise capital to execute on our growth strategy over the foreseeable future.
Financial Summary
Revenues
PyroGenesis recorded revenue of
Revenues recorded in the first quarter of 2021 were generated from: | ||
(i) | DROSRITE™ related sales of | |
(ii) | PUREVAP™ related sales of | |
(iii) | torch related sales of | |
(iv) | support services related to PAWDS-Marine systems supplied to the US Navy | |
(v) | other sales and services of |
Cost of Sales and Services and Gross Margins
Cost of sales and services before amortization of intangible assets was
In Q1 2021, employee compensation, subcontracting, direct materials and manufacturing overhead increased to
Investment tax credits related to qualifying projects from the provincial government were
The amortization of intangible assets of
Selling, General and Administrative Expenses
Included within Selling, General and Administrative expenses (“SG&A”) are costs associated with corporate administration, business development, project proposals, operations administration, investor relations and employee training.
SG&A expenses for Q1 2021 excluding the costs associated with share-based compensation (a non-cash item in which options vest principally over a four-year period), were
The increase in SG&A expenses in Q1 2021 over the same period in 2020 is mainly attributable to the net effect of:
- an increase of
35% in employee compensation due primarily to additional head count, - an increase of 1,
805% for professional fees, primarily due to an increase in accounting fees, legal fees, and listing fees. - an increase of
112% in office and general expenses, is due to an increase in safety supplies and computer related expenses, - travel costs decreased by
82% , due to a decrease in travel abroad, - depreciation on property and equipment increased by
659% due to higher amounts of property and equipment being depreciated, - depreciation on right of use assets increased by
14% due to higher amounts of right of use assets being depreciated, - Investment tax credits were the same year to year,
- government grants decreased by
100% due to lower levels of activities supported by such grants, - other expenses increased by
346% , primarily due to an increase in insurance.
Separately, share based payments increased by 1,
Research and Development (“R&D”) Costs
The Company incurred
In addition to internally funded R&D projects, the Company also incurred R&D expenditures during the execution of client funded projects. These expenses are eligible for Scientific Research and experimental Development (“SR&ED”) tax credits. SR&ED tax credits on client funded projects.
Net Finance Costs
Finance costs for Q1 2021 totaled
Strategic Investments
The adjustment to the fair market value of strategic investments for Q1 2021 resulted in a gain of
Net Earnings and Comprehensive Income (Loss)
The net comprehensive income for Q1 2021 of
- an increase in product and service-related revenue of
$5,545,595 arising in Q1 2021, - an increase in cost of sales and services of
$3,669,999 , primarily due to an increase in employee compensation, subcontracting, direct materials, manufacturing overhead & other, and a decrease in foreign exchange, investment tax credits, and amortization of intangible assets, - an increase in SG&A expenses of
$1,597,369 arising in Q1 2021 primarily due to an increase in employee compensation, professional fees, office and general, depreciation in property and equipment, depreciation ROU assets, other expenses and share based expenses, and a decrease in travel, and government grants, - an increase in R&D expenses of
$263,219 primarily due to an increase in subcontracting, material and equipment and other expenses, - a decrease in net finance costs of
$179,649 in Q1 2021 primarily due to lower interest and accretion on lower amounts of debt, - an increase in fair value adjustment of strategic investments of
$5,142,698 in Q1 2021.
EBITDA
The EBITDA gain in Q1 2021 was
Adjusted EBITDA gain in Q1 2021 was
The Modified EBITDA loss in Q1 2021 was
Liquidity
As at March 31, 2021, the Company has cash and cash equivalents of
About PyroGenesis Canada Inc.
PyroGenesis Canada Inc., a high-tech company, is a leader in the design, development, manufacture and commercialization of advanced plasma processes and products. The Company provides its engineering and manufacturing expertise and its turnkey process equipment packages to customers in the defense, metallurgical, mining, advanced materials (including 3D printing), and environmental industries. With a team of experienced engineers, scientists and technicians working out of its Montreal office and its 3,800 m2 and 2,940 m2 manufacturing facilities, PyroGenesis maintains its competitive advantage by remaining at the forefront of technology development and commercialization. The Company’s core competencies allow PyroGenesis to provide innovative plasma torches, plasma waste processes, high-temperature metallurgical processes, and engineering services to the global marketplace. PyroGenesis’ operations are ISO 9001:2015 and AS9100D certified. For more information, please visit www.pyrogenesis.com.
This press release contains certain forward-looking statements, including, without limitation, statements containing the words "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", "in the process" and other similar expressions which constitute "forward- looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Corporation's current expectation and assumptions and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, our expectations regarding the acceptance of our products by the market, our strategy to develop new products and enhance the capabilities of existing products, our strategy with respect to research and development, the impact of competitive products and pricing, new product development, and uncertainties related to the regulatory approval process. Such statements reflect the current views of the Corporation with respect to future events and are subject to certain risks and uncertainties and other risks detailed from time-to-time in the Corporation's ongoing filings with the securities regulatory authorities, which filings can be found at www.sedar.com, or at www.sec.gov. Actual results, events, and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements. The Corporation undertakes no obligation to publicly update or revise any forward- looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws. Neither the Toronto Stock Exchange, its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) nor the NASDAQ Stock Market, LLC accepts responsibility for the adequacy or accuracy of this press release.
FURTHER INFORMATION
Additional information relating to Company and its business, including, the first quarter ended March 31st 2021, the 2020 Financial Statements, the Annual Information Form and other filings that the Company has made and may make in the future with applicable securities authorities, may be found on or through SEDAR at www.sedar.com, EDGAR at www.sec.gov or the Company’s website at www.pyrogenesis.com.
SOURCE PyroGenesis Canada Inc.
For further information please contact:
Rodayna Kafal, Vice President, IR/Comms. and Strategic BD
Phone: (514) 937-0002, E-mail: ir@pyrogenesis.com
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