Viridis Energy Inc. Reports Third Quarter 2013 Financial Results

Vancouver, BC - Viridis Energy Inc. ("Viridis" or the "Company") , a "Cleantech" manufacturer and distributor of renewable energy providing waste biomass fuel to global residential and industrial markets, today reported financial results for its third quarter and nine month period ended September 30, 2013.

Third Quarter 2013 highlights:

- The Company commenced wood pellet production at its 120,000 tonne capacity, Nova Scotia facility, Scotia Atlantic Biomass Company Limited ("Scotia") acquired in 2012, and entered into a worldwide marketing agreement with Ekman & Co AB., one of the world's oldest trading houses and wholesalers of forest products, for Scotia's entire wood pellet production over the next 24 months;

- Subsequent to the third quarter, the Company formed a wholly owned dealer subsidiary, Viridis Merchants Inc., to arrange transactions between buyer and sellers of alternative energy products, including wood pellets and hired a commodities trading specialist with over 25 years of experience in the carbon, power and biomass sectors to manage its wholesale division. Viridis Merchants supports the Company's objective of securing a position as a leading source of wood pellets and other renewable energy sources to address growing demand from industrial users as legislation mandating progressive use of renewable energy products goes into effect.

- Subsequent to the third quarter, Viridis strengthened its board of directors with the appointment of commodity and financial specialist Robert Aaron as chairman. Mr. Aaron has 30 years of experience in the energy and forest products industries, as well as international commodities trading.

During the third quarter 2013, Viridis generated revenue of $3.0 million, an increase of 36% compared to $2.2 million in the third quarter 2012 and 19% improvement over the second quarter of 2013. The year-over-year improvement reflects strengthened market dynamics, coupled with the addition of production from the Company's new Scotia facilities that began operations in the latter part of the third quarter.

The Company reported a comprehensive loss of $(712,000) or $(0.01) per basic share for the third quarter of 2013, which includes final start-up costs of $520,000 associated with Scotia and approximately $100,000 of start-up costs associated with Viridis Merchants. This compares to a comprehensive loss of $(598,000) or $(0.01) per basic share during the same period in 2012 and a loss of $(491,000) or (0.01) per share in second quarter of 2013, which included $189,000 and $251,000 of Scotia start-up costs, respectively. As the Company noted, Scotia renewed production operation in late August 2013, which contributed $525,000 of revenue during the period, but also incurred two months of full operating costs as the Company trained personnel. With a production capacity in excess of 120,000 tonnes per year, Viridis expects Scotia will be operating at full capacity and become financially independent shortly.

The Company reported a gross profit (sales less cost of sales) of $595,000 for the third quarter of 2013 compared to $367,000 for the same period in 2012 and $465,000 for second quarter of this year. Improvements in capacity utilization and the shift from industrial (power) to residential (heat) market at the Okanagan Pellet Company supported the continued increase of the Company's gross margin to 19.7% in the third quarter 2013 from 18.8% in the second quarter 2013 and 16.5% in the prior year second quarter. Management expects its gross margin from its mature operations to continue to trend up as its revenue mix shifts towards the higher margin residential market during the home heating season; however, Scotia's gross margin is projected to lag until its operation reaches higher production levels and volume efficiencies are realized.

Operating expenses for the three month period ended September 30, 2013 were $1,200,000, an increase of $389,000 or 45% over the third quarter of 2012 and an increase of $408,000 or 49% from the second quarter of 2013. The year-over-year and quarter-over-quarter increases in operating expenses were primarily attributed to the completion of the restart of Scotia's production operations, which totaled $520,000 over the three month period and included full staffing costs while employees were trained in preparation for production resumption and certain costs to replace and upgrade electrical control equipment. Management believes Scotia's fixed production and overhead costs reached normal operating levels in the third quarter and expects Scotia to reach positive cash flow in the first quarter of 2014. Costs associated with Scotia totaled $189,000 in third quarter 2012 and $251,000 during second quarter 2013.

Financing and accretion costs incurred during the three months ended September 30, 2013 totaled $116,000 compared to $114,000 during the third quarter of 2013, which had no accretion expense and $125,000 in the second quarter of 2013. The Company completed a debt restructuring during the first quarter 2013 under more favorable terms than the prior facility, significantly reducing its financing expense.

For the nine month period ended September 30, 2013, Viridis reported revenues were $7.8 million compared to $7.1 million for the same period in 2012. The Company reported a comprehensive loss of $(2.0) million or $ (0.02) per basic and diluted share, compared to a comprehensive loss of $(2.8) million or $(0.06) per basic and diluted share for the same period in 2012. Included in the comprehensive loss was $1 million and $890,000 of Scotia related start-up costs for the respective periods in 2013 and 2012. The Company's gross margin on sales increased from 10% for the nine months ended September 30, 2012 to 18% for the same period of 2013. Operating loss for the first nine months of 2013 totaled $(1.6) million versus $(2.0) million for the first nine months of 2012.

At September 30, 2013, the Company reported cash and cash equivalents of $1.6 million, accounts receivable of $1.1 million, representing a DSO of approximately 33 days, and inventory of $1.7 million. The Company's current ratio stood was 1.6 at the end of the third quarter, a significant increase over the prior year level. The Company had negligible short-term debt of $46,000 and long term debt of $5.9 million as a result of the debt restructuring completed during the first quarter of 2013 eliminating $5.7 million of short term liabilities. The Company's shareholder equity totaled $4.6 million on September 30, 2013, an increase of $3.4 million since the beginning of the year.

On September 30, 2013, Viridis common stock outstanding totaled 114.3 million shares, compared to 59.8 million at year-end 2012. The Company's options, warrants, and convertible debt outstanding, which if converted and/or exercised were create an additional 36.1 million shares to the current outstanding and generate $8.0 million of additional capital for the Company

"The third quarter was an incredibly productive period for Viridis," commented Christopher Robertson, Viridis' CEO. "Despite a few unexpected delays, production was renewed at our Scotia plant and we secured the marketing expertise of one of the premiere forest product wholesalers in the world for Scotia's entire wood pellet production over the next two years. The increasing market activity in the wood pellet industry prompted us to expand our access to product beyond our production capacity. Viridis Merchants will enable us to accommodate commercial orders that exceed our own production capacity, while also positioning us to profit from arbitrage opportunities that arise. Our management team's vast network of product sources, coupled with our developing network of commercial and industrial buyers, will serve our ultimate objective to gain recognition as the 'go to' supplier of wood pellets and other renewable energy materials."

Robert Aaron, Viridis recently appointed chairman, added, "I have been involved with Viridis for several years on an independent basis, and now as chairman of the board I look forward to supporting its management team in this phase of its growth. Viridis has managed through critical periods, especially over the last two years, to surface financially stronger and operationally skilled to address the worldwide drive for renewable energy source use. Through 25 plus years of industry experience, our management team recognized the disconnect between the impetus driving the growth of renewable energy and sources of product and material. The implementation of a strategy that aggregates sources to accommodate demand positions Viridis as an integral partner."

About Viridis Energy Inc.

Viridis Energy Inc. /quotes/zigman/561044/realtime CA:VRD -5.26% is a publicly traded, "Cleantech" alternative energy company specializing in the agricultural and wood waste biomass. Located in Vancouver, B.C., Viridis Energy Inc. operates Cypress Pacific Marketing Inc., Okanagan Pellet Company Inc. and Scotia Atlantic Biomass Company Limited, thus providing the Company with vertical integration for distribution and manufacturing as well as coast to coast national presence. For more information on Viridis Energy Inc. please refer to the company website at

Source: Viridis Energy


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