LAVAL, QUEBEC--(Marketwire - March 18, 2010) - Warnex Inc. (TSX: WNX) announced today financial results for the fourth quarter and year ended December 31, 2009.
2009 Highlights
-- Concluded the acquisition of Molecular World Inc., a laboratory located
in Thunder Bay, Ontario, specializing in human DNA identification
including forensic DNA testing
-- Obtained ISO 15189:2007 accreditation by the Standards Council of Canada
(SCC) for its Medical Laboratories division
-- Successfully passed a Health Canada inspection of Warnex's analytical
facilities in Laval and Blainville
-- Signed an exclusive distribution agreement with Rosetta Genomics to
offer Rosetta Genomics's microRNA-based assays in Canada
-- Launched a test for the detection of the influenza A H1N1 virus that
offers results in as little as 8 hours
-- Launched test for influenza A H1N1 virus mutation associated with
resistance to Tamiflu®
-- Signed a distribution agreement with Biron-Laboratoire medical to
promote and distribute Warnex's test for the influenza A H1N1 virus
-- Announced that Warnex Medical Laboratories now offers a new test in the
field of personalized medicine: K-ras mutation analysis for patients
with colorectal cancer
-- Received funding from the Northern Ontario Heritage Fund Corporation for
Warnex's subsidiary, Warnex PRO-DNA Services Inc., located in Thunder
Bay, Ontario, in collaboration with the Paleo-DNA Laboratory of Lakehead
University to develop a forensics database based on mitochondrial DNA
"2009 was a very difficult economic period for all industries and the pharmaceutical industry was not spared," said Mark Busgang, President and CEO. "While these challenging conditions impacted Warnex's top and bottom lines compared to last year, we are proud to have generated nonetheless $23.6 million in revenues, a net loss of $0.2 million and a positive EBITDA of $2.2 million, while achieving several of our strategic objectives including the acquisition of Molecular World Inc. Going forward, we will focus on growth in revenues and cash flow while maintaining our commitment to quality science and customer service. We will also continue to look at new business opportunities, including strategic acquisitions, to expand our service offering and increase critical mass."
Financial Results
Consolidated revenue for the twelve-month period ended December 31, 2009, amounted to $23.6 million compared to $25.8 million for the same period of last year, a decrease of 8%. Net loss for the twelve-month period amounted to $0.2 million or $0.00 per share in 2009 compared to net earnings of $2.4 million or $0.04 per share in 2008. In 2008, net earnings included a gain on extinguishment of debt of $1.8 million.
For the twelve-month period ended December 31, 2009, adjusted earnings before interests, taxes, depreciation and amortization (EBITDA) amounted to $2.2 million compared to $2.8 million for the twelve-month period ended December 31, 2008, a decrease of $0.6 million.
Gross margins for the twelve-month period amounted to $5.8 million, representing 24% of revenue, in 2009 compared to $7.8 million and 30% of revenue in 2008.
Selling and administrative expenses for the year ended December 31, 2009, totalled $6.0 million, similar to last year. As a percentage of revenue, selling and administrative expenses were 25% in 2009 compared to 23% in 2008. Financial expenses decreased to $1.2 million in 2009 from $1.3 million in 2008, mainly due to less interest on its long term debt.
Operating Highlights
The Medical division's revenue increased by 14% from $3.9 million in 2008 to $4.4 million in 2009. Prenatal testing revenues increased by 5% and molecular diagnostics increased by 71%, while pharmacogenetic contracts decreased by 13% compared to last year.
The Bioanalytical division's revenues decreased by 25% from $9.9 million in 2008 to $7.4 million in 2009. This decrease is mainly due to a volume reduction caused by an unprecedented number of cancellations and postponements of projects in the third quarter, which were a testament to the economic and industry conditions experienced during the summer months. Revenues improved in the last quarter, returning to more normal levels, and our business development efforts are ongoing to increase our business from new and existing customers.
The Analytical division's revenues decreased by 2% from $11.8 million in 2008 to $11.6 million in 2009. The analytical laboratory in Laval generated $4.9 million during the year (2008 - $5.8 million) while the Neopharm division in Blainville generated $6.7 million (2008 - $6.0 million). The increase in Neopharm's revenues was due to significant growth in volume from existing and new customers, while the Laval laboratory experienced lower volume from two major customers.
Annual Meeting
The Company will be hosting its Annual Meeting of Shareholders on April 27, 2010, at 11:00 am at the Sheraton Laval, Salon Duvernay, 2440 Autoroute des Laurentides, Laval, Quebec.
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.
Consolidated Balance Sheets
As at December 31 2009 2008
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Assets
Current
Cash and cash equivalents $894,031 $2,433,488
Accounts receivable 2,880,919 3,967,918
Work-in-progress 531,142 1,356,149
Inventory 177,027 121,701
Investment tax credits receivable 712,471 186,249
Prepaid expenses 388,502 306,238
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5,584,092 8,371,743
Future income taxes 1,221,000 750,000
Property, plant and equipment 7,375,516 8,309,317
Intangible assets 382,145 243,291
Goodwill 937,695 937,695
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$15,500,448 $18,612,046
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Liabilities
Current
Accounts payable $3,008,594 $3,860,615
Deferred revenue 411,599 1,358,586
Current portion of long-term debt 1,800,372 1,267,184
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5,220,565 6,486,385
Long-term debt 447,661 1,872,557
Liability component of debentures 6,245,274 6,952,881
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11,913,500 15,311,823
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Shareholders' equity
Capital stock 40,981,049 40,551,049
Equity component of debentures 312,288 312,288
Contributed surplus 2,466,016 2,445,043
Deficit (40,172,405) (40,008,157)
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3,586,948 3,300,223
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$15,500,448 $18,612,046
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Consolidated Statements of Contributed Surplus
For the years ended December 31 2009 2008
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Balance, beginning of year $2,445,043 $1,210,708
Transfer of the equity component of
debentures extinguished during the year - 1,428,114
Stock-based compensation 20,973 (193,779)
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Balance, end of year $2,466,016 $2,445,043
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Consolidated Statements of Deficit
For the years ended December 31 2009 2008
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Balance, beginning of year $(40,008,157) $(42,381,214)
Net earnings (loss) (164,248) 2,373,057
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Balance, end of year $(40,172,405) $(40,008,157)
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Consolidated Statements of Accumulated Other Comprehensive Income
For the years ended December 31 2009 2008
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Accumulated Other Comprehensive Income $- $-
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Consolidated Statements of Earnings and Comprehensive Income
For the years ended December 31 2009 2008
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Revenue $23,646,987 $25,786,721
Cost of goods sold 17,878,578 17,945,735
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Gross margin 5,768,409 7,840,986
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Operating expenses
Selling, general and
administrative 5,956,234 6,047,020
Finance charges 1,185,473 1,284,681
Research and development tax
credits (526,222) (230,284)
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6,615,485 7,101,417
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Earnings (loss) before under noted
items and income taxes (847,076) 739,569
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Unrealized foreign exchange gain
(loss) on debentures 682,828 (930,704)
Gain on extinguishment of debt - 1,814,192
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682,828 883,488
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Earnings (loss) before income
taxes (164,248) 1,623,057
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Income taxes (recovered) -
current 162,000 800,000
- future - (750,000)
Recovery of income taxes due to
utilization of prior years'
losses (162,000) (800,000)
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- (750,000)
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Net earnings (loss) and
comprehensive income $(164,248) $2,373,057
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Basic and fully diluted net
earnings per share $0.00 $0.04
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Weighted average number of shares
and fully diluted shares
outstanding 65,663,345 59,562,069
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Consolidated Statements of Cash Flows
For the years ended December 31 2009 2008
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Operations
Net earnings (loss) $(164,248) $2,373,057
Items not affecting cash:
Amortization of property, plant and
equipment 1,592,034 1,523,858
Amortization of intangible assets 79,932 59,504
Gain on disposal of property, plant and
equipment - (6,946)
Accretion of interest 95,221 200,864
Unrealized foreign exchange loss (gain)
on debentures (682,828) 930,704
Gain on extinguishment of debt - (1,814,192)
Foreign currency fluctuation 267,647 (133,281)
Compensation cost for stock options 20,973 (193,779)
Future income taxes - (750,000)
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1,208,731 2,189,789
Net change in non-cash working capital
items (1,066,248) 1,158,370
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Net cash provided by operations 142,483 3,348,159
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Investing activities
Decrease in long-term receivables - 125,000
Acquisition of property, plant and
equipment (312,861) (510,451)
Proceeds on disposal of property, plant
and equipment - 9,725
Acquisition of intangible assets (177,320) (10,189)
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Net cash used in investing activities (490,181) (385,915)
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Financing activities
Proceeds from long-term debt 350,000 2,000,000
Repayment of long-term debt (1,317,608) (2,234,389)
Repayment of liability component of
debentures - (1,377,737)
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Net cash used in financing activities (967,608) (1,612,126)
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Foreign exchange gain (loss) on cash held
in foreign currencies (224,151) 66,419
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Increase (decrease) in cash and cash
equivalents (1,539,457) 1,416,537
Cash and cash equivalents, beginning of
year 2,433,488 1,016,951
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Cash and cash equivalents, end of year $894,031 $2,433,488
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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
