VANCOUVER, British Columbia, May 13, 2014 (GLOBE NEWSWIRE) -- GLG Life Tech Corporation (TSX:GLG) ("GLG" or the "Company"), a vertically-integrated leader in the agricultural and commercial development of high-quality stevia and other natural sweeteners, announces financial results for the quarter ended March 31, 2014.
2014 FIRST QUARTER HIGHLIGHTS
New sales strategy delivers Top Line Sales Growth
Revenue for the three months ended March 31, 2014, was $4.7 million, an increase of 44% compared to $3.2 million in stevia-related revenue for the same period last year. We achieved this increase primarily by pursuing sales of higher purity stevia extracts to international customers that generate monthly recurring revenues. This focus was consistent with our strategy of moving away from sales of lower purity stevia extract sales to other China-based stevia providers, in favor of international sales of our higher purity products. As a result, international sales contributed to 48% of Q1 2014 revenues, compared to only 23% in the first quarter 2013, and international sales more than doubled year over year.
Other sales growth initiatives in 2014 include the introduction of the Company's second zero calorie natural sweetener – Luo Han Guo or "Monkfruit" – and the sale of other natural ingredients complementary to stevia (our GLG Naturals+ line of products). There were no sales of Luo Han Guo or GLG Naturals+ products in the first quarter 2014; however, Luo Han Guo production is expected to commence in the fourth quarter of 2014, following the next harvest, and sales of GLG Naturals+ ingredients are expected to commence in the second quarter of 2014. Additionally, the Company recently announced its launch of a new line of stevia sweeteners – organipureTM. Along with the clean finish and rounded sweetness of our usual high-quality GLG stevia extracts, the organipureTM products carry organic certifications recognized in both North America and Europe.
Cash-based SG&A expenses flat in Q1 2014 compared to Q1 2013
Cash based selling, general and administration expenses were flat at $1.3 million for the three months ended March 31, 2014, compared to the comparable period in 2013.
Non-cash-based SG&A expenses up in Q1 2014 compared to Q1 2013
Non-cash-based selling, general and administration expenses for stock-based compensation and amortization charges increased to $0.6 million for the three months ended March 31, 2014, from $0.3 million in 2013.
Other expenses were up in the first quarter of 2014 due to appreciation of US Dollar relative to the Canadian Dollar
Other expenses for the three months ended March 31, 2014, was $2.4 million, a $0.9 million or 59% increase compared to $1.5 million for the same period in 2013. Other expense increases are driven by the appreciation of the USD against the Canadian dollar during the quarter, which drove a net increase on foreign exchange losses between the two periods of $0.8 million.
33% increase in net loss in Q1 2014 driven primarily by appreciation of US Dollar relative to the Canadian Dollar
For the three months ended March 31, 2014, the Company had a net loss attributable to the Company of $5.0 million compared to a net loss of $3.7 million for same period in 2013.
Non-GAAP Financial Measures
Gross Profit (Loss) before capacity charges
This non-GAAP financial measure shows the gross profit (loss) before the impact of idle capacity charges are reflected on the gross profit margin. GLG had only 50% of its production facilities in operation in the first quarter of 2014 and idle capacity charges have a material impact on the gross profit (loss) line in the financial statements.
Gross Profit (Loss) before capacity charges for the three months ended March 31, 2014, was $0.9 million or 19% of first quarter revenues, compared to $1.1 million or 33% of first quarter revenues for the same period in 2013.
Improvement in Earnings before Interest Taxes and Depreciation ("EBITDA") and EBITDA Margin achieved in the first quarter of 2014 compared to 2013
EBITDA for the quarter ended March 31, 2014, was negative $1.3 million or negative 28% of revenues, compared to negative $1.2 million or negative 37% of revenues for the same period in 2013.
Financial Resources
| In thousands Canadian $ | 31-Mar-14 | 31-Dec-13 |
| Cash and Cash Equivalents | $3,418 | $5,133 |
| Working Capital | ($33,583) | ($29,445) |
| Total Assets | $85,840 | $87,796 |
| Total Liabilities | $103,887 | $101,164 |
| Loan Payable (<1 year) | $41,291 | $40,663 |
| Loan Payable (>1 year) | $22,792 | $23,010 |
| Total Equity | ($18,047) | ($13,367) |
The Company decreased its cash position by $1.7 million as at March 31, 2014, from the start of the year. The Company has a working capital deficit of $33.6 million as of March 31, 2014, compared to a working capital deficit of $29.4 million for the period ending December 31, 2013. The negative working capital has been driven by the total of $46.5 million of inventory impairment charges recognized since the year ended December 31, 2011. The Company has pursued the following actions to manage this situation since 2013. The Company has reduced short-term by loans refinancing with longer term debt from banks and through loans from its Chairman. The Company has also reduced accounts payable and negotiated with its creditors on extended payment terms.
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 2013 and the condensed interim consolidated financial statements for the three-month period ended March 31, 2014.
| In thousands Canadian $, except per | 3 Months Ended March 31 | % Change | |
| share amounts | 2014 | 2013 | |
| Revenue | $4,663 | $3,243 | 44% |
| Cost of Sales | $5,217 | $3,681 | 42% |
| % of Revenue | 112% | 114% | (2%) |
| Gross Profit (Loss) | ($554) | ($438) | 26% |
| % of Revenue | (12%) | (14%) | 2% |
| Expenses | $1,959 | $1,655 | 18% |
| % of Revenue | 42% | 51% | (9%) |
| Loss from Operations | ($2,513) | ($2,093) | 20% |
| % of Revenue | (54%) | (65%) | 11% |
| Other Income (Expenses) | ($2,459) | ($1,543) | 59% |
| % of Revenue | (53%) | (48%) | (5%) |
| Net (Loss) before Income Taxes | ($4,972) | ($3,636) | 37% |
| % of Revenue | (107%) | (112%) | 6% |
| Net (Loss) | ($4,972) | ($3,724) | 33% |
| % of Revenue | (107%) | (115%) | (7%) |
| Net (Loss) from continuing operations | ($4,972) | ($3,637) | 37% |
| % of Revenue | (107%) | (112%) | 6% |
| Net gain (loss) from discontinued operations | $0 | ($87) | (100%) |
| % of Revenue | 0% | (3%) | 3% |
| Loss per share (LPS, Basic & Diluted) | ($0.15) | ($0.11) | 32% |
| Loss per share from continuing operations (LPS, Basic & Diluted) | ($0.15) | ($0.11) | 35% |
| Loss per share from discontinued operations (LPS, Basic & Diluted) | $0.00 | $0.00 | 0% |
| Other Comprehensive Income (Loss) from continuing operations | ($150) | $1,220 | (112%) |
| % of Revenue | (3%) | 38% | (41%) |
| Other Comprehensive Income (Loss) from discontinued operations | $0 | $62 | (100%) |
| % of Revenue | 0% | 2% | (2%) |
| Total Comprehensive Income (Loss) | ($5,121) | ($2,443) | 110% |
| % of Revenue | (110%) | (75%) | (34%) |
For further information of the Company's financial performance for the quarter ended March 31, 2014, please see the Company's interim financial statements for the quarter ended March 31, 2014, and the Company's Management Discussion and Analysis for the quarter ended March 31, 2014.
Sales Outlook
The Company plans to focus on four key components to expand its sales in 2014.
1. Continued focus on increasing its international customers of high-purity stevia extracts.
2. Focus on developing Chinese market through its partnership with COFCO.
The Company currently has a number of formulation projects underway with COFCO NHRI and a number of COFCO's key subsidiaries.
3. Expansion of natural sweetener product line to include Luo Han Guo ("LHG") (Chinese Monk Fruit) in 2014.
The Company is currently working with key customers for LHG and expects to be in production in the fourth quarter of 2014, after the harvest of its first fruit. The Company continues to prepare all aspects of its operations for the formal launch of its production including agriculture, regulatory filings and production preparation. The Company plans on utilizing its currently idle plants to produce Luo Han Guo.
4. Sales of other complimentary natural ingredients through its GLG Naturals+ product line in 2014.
The Company is currently quoting a number of these products to existing and new potential customers and expects this product-line to be generating revenues in 2014.
Agriculture Outlook
The Company has arranged planting of its H3 Leaf in China in 2014. Analysis of its H3 and H4 leaf compared to other competitors' leaf available in China clearly shows GLG's lead in providing a seed that generates a significant amount of steviol glycosides in the leaf (13 to 15% range), a high percentage of Rebaudioside A (65 to 70% range) and a larger weight per acre planted than any other varieties available in China. The weight per acre is a key metric of interest to farmers in China who are evaluating whether to grow our stevia leaf versus other alternative crops or competing stevia seedlings.
The Company is also pleased to report on the success of its non-GMO hybrid breeding program which has resulted in a number of new strains that it plans to develop, which have individual advantages such as:
- higher amounts of total steviol glycosides and higher amounts of Rebaudioside A.
- higher amounts of targeted glycosides such as Rebaudioside C, Rebaudioside D and Rebaudioside M. The Company has seen some new seedling varieties with double to triple the amount of these strategic glycosides.
- The Company will continue on to the next step to bring these proprietary seedlings to the next stage of development and expects availability for planting within the next 3 to 5 years.
The Company is of the view that the Consumer's preference will always be "naturally sourced from a stevia leaf" glycosides compared to those originating from a different process such as fermentation.
About GLG Life Tech Corporation
GLG Life Tech Corporation is a global leader in the supply of high purity stevia extracts, an all-natural zero-calorie sweetener used in food and beverages. The Company's vertically-integrated operations cover each step in the stevia supply chain including non-GMO stevia seed breeding, natural propagation, stevia leaf growth and harvest, proprietary extraction and refining, marketing and distribution of the finished product. For further information, please visit www.glglifetech.com .
Forward-looking statements: This press release contains certain information that may constitute "forward-looking statements" and "forward looking information" (collectively, "forward-looking statements") within the meaning of applicable securities laws. Such forward-looking statements include, without limitation, statements evaluating the market, statements regarding the potential demand for stevia and general economic conditions and discussions of future-oriented costs and expenditures. 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 which 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, 2013. 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.