Warnex Inc. Reports First Quarter 2010 Results
LAVAL, QUEBEC--(Marketwire - May 11, 2010) - Warnex Inc. (TSX: WNX) today announced its financial results for the first quarter ended March 31, 2010.
Operating Highlights
-- Warnex's Medical Laboratories division obtained the renewal of its laboratory accreditation by COLA, a U.S. healthcare accreditation organization -- Warnex's CEO, Mark Busgang, participated in Quebec Premier Jean Charest's economic mission to India -- Subsequent to the quarter, Warnex announced that its Bioanalytical Services division successfully passed a Good Clinical Practices (GCP) inspection by the Austrian Agency for Health and Food Safety (AGES) -- Subsequent to the quarter, Warnex obtained a licence for a colorectal cancer blood screening test from Epigenomics -- Subsequent to the quarter, Warnex appointed a new director, Dr. Richard Lacombe, who has over 30 years of experience in the pharmaceutical and CRO industries"The decrease in our revenues this quarter compared to 2009 is partly due to the postponement of several bioanalytical studies to the second quarter as well as the Bioanalytical division's extraordinary performance in the first quarter of 2009, where they had several complex projects at higher prices," said Mark Busgang, President and CEO of Warnex. "Our Analytical and Medical divisions both showed growth this quarter in their revenues as well as in their net earnings. We will continue to focus strongly on our business development efforts as well as on improving efficiency and productivity in our operations, as we strive to attain profitability this year."
Financial Results
Consolidated revenue for the three-month period ended March 31, 2010, amounted to $5.1 million compared to $7.6 million during the same period last year, representing a decrease of 33%.
Net loss for the quarter amounted to $0.8 million or $0.01 per share compared to net earnings of $1.1 million or $0.02 per share for the same quarter in 2009.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter amounted to $(0.3) million versus $1.9 million for the same quarter last year.
Gross margins for the three-month period ended March 31, 2010, amounted to $0.8 million or 15% of sales compared to $3.1 million or 41% of sales for the same quarter last year. The decrease of $2.3 million in gross margin is mainly explained by the lower revenue in the Bioanalytical division compared to last year as well as the execution of high margin projects during the first quarter of 2009 in that division.
Selling and administrative expenses for the three-month period ended March 31, 2010, remained similar to last year at $1.5 million. In proportion of revenue, administrative and selling expenses were higher than last year at 30% (2009 - 20%).
Financial expenses decreased by $34,383, from $310,939 in the first quarter of 2009 to $276,556 in the first quarter of 2010, mainly due to less interest following repayments made on the long term debt.
About Warnex
Warnex (www.warnex.ca) is a life sciences company devoted to protecting public health by providing laboratory services to the pharmaceutical and healthcare sectors. Warnex Analytical Services provides pharmaceutical and biotechnology companies with a variety of quality control services, including chemistry, chromatography, microbiology, method development and validation, and stability studies. Warnex Bioanalytical Services specializes in bioequivalence and bioavailability studies for clinical trials. Warnex Medical Laboratories provides specialized testing for the healthcare industry as well as pharmaceutical and central laboratory services. Warnex PRO-DNA Services offers DNA identification tests for paternity, maternity and other family relationships, as well as for immigration and forensic testing purposes. Warnex has three facilities located in Laval and Blainville, Quebec, and Thunder Bay, Ontario.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this news release are forward-looking and are subject to numerous risks and uncertainties, known and unknown. For information identifying known risks and uncertainties, relating to financial resources, liquidity risk, key customers and business partners, credit risk, foreign currency risk, government regulations, laboratory facilities, volatility of share price, employees, suppliers, and other important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the heading Risks and Uncertainties in Warnex's most recent Management's Discussion and Analysis, which can be found at www.sedar.com. Consequently, actual results may differ materially from the anticipated results expressed in these forward-looking statements.
Interim Consolidated Balance Sheets (Unaudited) March 31 2010 December 31 2009 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Assets Current Cash and cash equivalents $301,617 $894,031 Accounts receivable 3,333,181 2,880,919 Work-in-progress 122,463 531,142 Inventory 160,457 177,027 Investment tax credits receivable 563,000 712,471 Prepaid expenses 496,591 388,502 ---------------------------------------------------------------------- ---------------------------------------------------------------------- 4,977,309 5,584,092 Future income taxes 1,221,000 1,221,000 Property, plant and equipment 7,083,261 7,375,516 Intangible assets 425,453 382,145 Goodwill 937,695 937,695 ---------------------------------------------------------------------- $14,644,718 $15,500,448 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Liabilities Current Bank indebtedness $460,000 $- Accounts payable 2,884,102 3,008,594 Deferred revenue 520,195 411,599 Current portion of long-term debt 1,614,019 1,800,372 ---------------------------------------------------------------------- 5,478,316 5,220,565 Long-term debt 291,050 447,661 Liability component of debentures 6,126,572 6,245,274 ---------------------------------------------------------------------- ---------------------------------------------------------------------- 11,895,938 11,913,500 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Shareholders' equity Capital stock 40,981,049 40,981,049 Equity component of debentures 312,288 312,288 Contributed surplus 2,425,012 2,466,016 Deficit (40,969,569) (40,172,405) ---------------------------------------------------------------------- ---------------------------------------------------------------------- 2,748,780 3,586,948 ---------------------------------------------------------------------- ---------------------------------------------------------------------- $14,644,718 $15,500,448 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Interim Consolidated Statements of Contributed Surplus (Unaudited) ---------------------------------------------------------------- For the three months ended March 31 2010 2009 ---------------------------------------------------------------- ---------------------------------------------------------------- Balance, beginning of period $2,466,016 $2,445,043 Stock-based compensation (41,004) 35 ---------------------------------------------------------------- Balance, end of period $2,425,012 $2,445,078 ---------------------------------------------------------------- ---------------------------------------------------------------- Interim Consolidated Statements of Deficit (Unaudited) ---------------------------------------------------------------- For the three months ended March 31 2010 2009 ---------------------------------------------------------------- ---------------------------------------------------------------- Balance, beginning of period $(40,172,405) $(40,008,157) Net earnings (loss) (797,164) 1,102,757 ---------------------------------------------------------------- Balance, end of period $(40,969,569) $(38,905,400) ---------------------------------------------------------------- ---------------------------------------------------------------- Interim Consolidated Statements of Accumulated Other Comprehensive Income (Unaudited) ---------------------------------------------------------------- For the three months ended March 31 2010 2009 ---------------------------------------------------------------- ---------------------------------------------------------------- Accumulated Other Comprehensive Income $- $- ---------------------------------------------------------------- ---------------------------------------------------------------- Interim Consolidated Statements of Earnings and Comprehensive Income (Unaudited) ------------------------------------------------------------------------- For the three months ended March 31 2010 2009 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Revenue $5,090,670 $7,557,655 Cost of goods sold 4,307,751 4,490,123 ------------------------------------------------------------------------- Gross margin 782,919 3,067,532 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Operating expenses Selling, general and administrative 1,535,832 1,481,504 Finance charges 276,556 310,939 Research and development tax credits (88,000) - ------------------------------------------------------------------------- 1,724,388 1,792,443 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings (loss) before under noted item and income taxes (941,469) 1,275,089 ------------------------------------------------------------------------- Unrealized foreign exchange gain (loss) on debentures 144,305 (172,332) ------------------------------------------------------------------------- Earnings (loss) before income taxes (797,164) 1,102,757 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Income taxes - 300,000 Recovery of income taxes due to utilization of prior years' losses - (300,000) ------------------------------------------------------------------------- - - ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net earnings (loss) and comprehensive income $(797,164) $1,102,757 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic net earnings (loss) per share $(0.01) $0.02 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Fully diluted net earnings (loss) per share $(0.01) $0.01 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares outstanding 67,117,191 64,317,191 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of fully diluted shares outstanding 67,117,191 88,876,998 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Interim Consolidated Statements of Cash Flows (Unaudited) ------------------------------------------------------------------------- For the three months ended March 31 2010 2009 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Operations Net earnings (loss) $(797,164) $1,102,757 Items not affecting cash: Amortization of property, plant and equipment 345,000 382,243 Amortization of intangible assets 21,579 15,108 Accretion of interest 25,603 22,253 Unrealized foreign exchange loss (gain) on debentures (144,305) 172,332 Foreign currency fluctuation 24,026 (31,141) Compensation cost for stock options (41,004) 35 ------------------------------------------------------------------------- (566,265) 1,663,587 Net change in non-cash working capital items (23,645) (403,682) ------------------------------------------------------------------------- Net cash provided by (used in) operations (589,910) 1,259,905 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Investing activities Acquisition of property, plant and equipment (52,745) (135,847) Acquisition of intangible assets (64,887) (95,486) ------------------------------------------------------------------------- Net cash used in investing activities (117,632) (231,333) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Financing activities Increase in operating line of credit 460,000 - Repayment of long-term debt (342,964) (383,383) ------------------------------------------------------------------------- Net cash provided by (used in) financing activities 117,036 (383,383) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Foreign exchange gain (loss) on cash held in foreign currencies (1,908) 43,170 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (592,414) 688,359 Cash and cash equivalents, beginning of period 894,031 2,433,488 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $301,617 $3,121,847 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Contacts:
Warnex Inc.
Mark J. Busgang
President & CEO
450-663-6724 x 310
mbusgang@warnex.ca
Warnex Inc.
Catherine Sartoros
Communications Specialist
450-663-6724 x 277
csartoros@warnex.ca