TSO3 Reports Record First Quarter 2016 Results
Commercial Rollout Drives Revenues of US$3.1 Million and Gross Profit of US$1.1 Million
QUÉBEC CITY, May 4, 2016 /PRNewswire/ - TSO3 Inc. (TSX: TOS), an innovator in sterilization technology for medical devices in healthcare settings, reported record results for the first fiscal quarter ended March 31, 2016. All figures are in U.S. dollars unless otherwise noted.
First Quarter 2016 Financial Summary in US Dollars
- Effective January 1, 2016, the company changed its functional and reporting currency from Canadian dollars to U.S. dollars as the significant majority of its current and future revenues are and are expected to be denominated in U.S. dollars. In addition, the company adopted a new financial statement presentation format that reflects its new level of operations.
- Revenues of $3.1 million in the first quarter of 2016 as compared to $0.1 million in the first quarter of 2015. On December 21, 2015, TSO3 announced that it had received purchase orders for delivery in 2016 from Getinge Infection Control, its channel partner, for the full amount of its 2016 minimum purchase commitment. TSO3 delivered 25 STERIZONE® VP4 Sterilizers, and related accessories to Getinge in the first quarter of 2016 in relation to those orders.
- Gross profit was $1.1 million, or 36% of revenues, in the first quarter of 2016 as compared to a gross loss of $0.1 million in the first quarter of 2015.
- Net income in the first quarter of 2016 was $0.6 million, or $0.01 per share, as compared to a net loss of $1.5 million, or $0.02 per share, in the same year-ago quarter. The increase included a non-recurring foreign currency exchange gain of $1.6 million associated with the translation of Canadian dollar cash reserves into U.S. dollars. Excluding this foreign exchange gain, the company's net loss was $0.9 million in the first quarter of 2016, or $0.01 per share.
- Adjusted EBITDA was negative $0.6 million in the first quarter of 2016 versus negative $1.1 million in the same year-ago quarter. See "About Presentation of Adjusted EBITDA" below for the definition of adjusted EBITDA, a non-GAAP financial metric and non-IFRS financial measure.
- As of March 31, 2016, TSO3 had cash, cash equivalents and short-term investments of $24.4 million (CAD$31.7 million), 91 million shares outstanding, no outstanding warrants and no debt. The company received $10.1 million (CAD$14.1 million) in proceeds from the exercise of outstanding warrants in the first quarter of 2016.
Management Commentary
"Our Q1 results were driven by the commercial rollout of STERIZONE® VP4 Sterilizers with our global channel partner Getinge Infection Control," said TSO3 president and CEO, R.M. (Ric) Rumble. "The commitment to our technology and product line has remained very strong throughout Getinge and in the second quarter of 2016 we will continue to invest in retrofitting our assembly operations to expand our manufacturing capacity, and focus our sales and marketing efforts on helping our channel partner meet or exceed their contractual performance objectives."
First Quarter 2016 Operational Highlights
- Received FDA 510(k) clearance from the U.S. Food and Drug Administration (FDA) for a universal design of its STERIZONE® VP4 Sterilizer.
- Received and prepared preliminary responses to comments from the FDA regarding the company's expanded claims filed in December 2015 relating to the use of the STERIZONE® VP4 Sterilizer in the U.S. These expanded claims correspond to increasing scrutiny by regulatory authorities over medical device reprocessing, particularly for colonoscopes and other complex medical devices used during minimally invasive surgical procedures. The claims sought in the U.S. represent similar claims for the STERIZONE® VP4 Sterilizer already available in Canada and those which will accompany the sterilizers' introduction in Europe this year.
- Reported an improved outlook for its production and operating capacity of STERIZONE® VP4 Sterilizers at its existing Québec, Canada facility. The company is investing in expanding its production capacity to one sterilizer per working day by the third quarter of 2016.
Annual General and Special Meeting of Shareholders
TSO3 will hold its Annual General and Special Meeting of Shareholders at 10:30 a.m. Eastern Daylight Time today. The meeting will be held at the Musée national des beaux-arts du Québec in Quebec City.
TSO3 President and CEO R.M. (Ric) Rumble and CFO Glen Kayll will host the meeting, where management will also discuss its first quarter 2016 financial results and provide an operational update, followed by a question and answer period.
The meeting will be webcast live and available for replay at:
http://event.on24.com/r.htm?e=1150732&s=1&k=3DFE465AE18FD41AF931DADAA9BD8D10 and via the Investors section of the company's website at www.tso3.com.
A replay of the meeting will be available on the same day through August 2, 2016.
Summary of Results
Income Statement
Periods ended March 31
(Unaudited, IFRS Basis) (in thousands of US dollars, except per share amounts)
First quarter | |||||
2016 $ | 2015 $ | ||||
Revenues | 3,071 | 72 | |||
Cost of sales | 1,961 | 156 | |||
Gross profit (loss) | 1,110 | (84) | |||
Expenses | |||||
Research and development | 606 | 441 | |||
Selling, general and administrative | 1,385 | 955 | |||
Other income | (1,588) | (22) | |||
Total Expenses | 403 | 1,374 | |||
Net income (loss) before income taxes | 707 | (1,458) | |||
Income taxes | 58 | - | |||
Net income (loss) | 649 | (1,458) | |||
Weighted Average Number of Outstanding Shares (in thousands) | 88,552 | 76,160 | |||
Basic and diluted net income (loss) per Share (in $) | 0.01 | (0.02) | |||
Financial Position Analysis
(Unaudited, IFRS Basis) (in thousands of US dollars)
March 31, 2016 $ | December 31, $ | ||
Cash, cash equivalents and short-term investments | 24,385 | 15,111 | |
Accounts receivable | 2,030 | 437 | |
Inventories | 2,021 | 1,302 | |
Property, plant and equipment | 429 | 366 | |
Intangibles assets | 1,708 | 1,691 | |
Accounts payable and accrued liabilities | 2,032 | 1,288 | |
Warranty provision | 165 | 29 | |
Deferred revenues (short and long term) | 7,385 | 7,536 | |
Equity | 21,093 | 10,133 |
Summary of Quarterly Results
(Unaudited, IFRS Basis) (in thousands of US dollars, except per share amounts)
This table shows the quarterly evolution of sales, gross profit (loss), net income (loss) and net income (loss) per share.
2016 | 2015 | |||||||
Q1 | Q4 | Q3 | Q2 | Q1 | ||||
Revenues | 3,071 | 151 | 914 | 111 | 72 | |||
Gross Profit | 1,110 | (333) | 248 | (161) | (84) | |||
Net income (loss) | 649 | (2,160) | (1,295) | (1,423) | (1,458) | |||
Net income (loss) per Share (basic and diluted) (in $) | 0.01 | (0.03) | (0.02) | (0.02) | (0.02) | |||
About Presentation of Adjusted EBITDA
Beginning with the reporting of results for the first quarter of 2016, the company began to report the measures of adjusted EBITDA, a non-IFRS financial measure. Generally, a non-IFRS financial measure is a numerical measure of an entity's historical or future financial performance, financial position or cash flows that is neither calculated nor recognized under IFRS. Management believes that such non-IFRS financial measures are important as they provide users of the financial statements with a better understanding of the results of the Company's recurring operations and their related trends, while increasing transparency and clarity into its operating results. Management also believes these measures can be useful in assessing the Company's capacity to discharge its financial obligations.
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