LAVAL, QUEBEC--(Marketwire - November 13, 2009) - Warnex Inc. (TSX: WNX) announced today financial results for the third quarter ended September 30, 2009.
Operating Highlights
- Signed an exclusive distribution agreement with Rosetta Genomics to offer Rosetta Genomics's microRNA-based assays in Canada
- 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, specifically targeting industrial companies
"Our year-to-date revenues of $17.6 million are slightly below last year due to reduced volume in our Bioanalytical division. We have had an unprecedented number of cancellations and postponements of bioanalytical projects in the third quarter, which are a testament to the economic and industry conditions experienced during the summer months. The industry seems to be returning to more normal levels for the last quarter and our business development efforts are ongoing to increase our business from new and existing customers," said Mark Busgang, President and CEO of Warnex. "In addition, we are preparing for the potential outbreak of the pandemic influenza A H1N1 virus. Our test, which provides rapid turnaround times, can assist healthcare professionals in diagnosing their patients faster. We are also pleased to collaborate with Biron to offer this testing service to industrial companies, allowing them to rapidly take appropriate action to limit the spread of infection in their workforce."
Financial Results
Consolidated revenue for the three-month period ended September 30, 2009, amounted to $4.7 million compared to $6.7 million during the same period a year ago, a decrease of 30%. For the nine-month period ended September 30, 2009, revenue reached $17.6 million from $18.7 million for the same period in 2008.
Net loss for the quarter amounted to $0.8 million or $0.01 per share compared to net earnings of $0.5 million or $0.01 per share for the same quarter in 2008. For the nine-month period ended September 30, 2009, net loss totalled $26,700 or $0.00 per share compared to net earnings of $1.7 million or $0.03 per share in 2008, which included a gain on extinguishment of debt of $1.8 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter amounted to $(0.4) million versus $1.4 million for the same quarter last year. For the nine-month period ended September 30, 2009, EBITDA amounted to $1.5 million compared to $2.1 million in 2008.
Gross margins for the three-month period ended September 30, 2009, amounted to $0.4 million or 9% of sales compared to $2.3 million or 35% of sales for the same quarter last year. The decrease of $1.9 million in gross margin is mainly explained by the lower revenue in the Bioanalytical division compared to the same quarter last year. Gross margin for the nine-month period ended September 30, 2009, amounted to $4.5 million or 26% of sales compared to $5.2 million or 28% of sales in 2008, a decrease of $0.7 million.
Selling and administrative expenses amounted to $1.3 million for the three-month period ended September 30, 2009, compared to $1.2 million last year. The increase of $0.1 million is mainly explained by a loss on foreign exchange due to the strength of the Canadian dollar compared to the U.S dollar, the cost of options and an increased investment in business development. In proportion of revenue, administrative and selling expenses were higher than last year at 28% in 2009 (2008 - 18%). For the nine-month period ended September 30, 2009, selling and administrative expenses amounted to $4.3 million compared to $4.0 million for the same period in 2008.
Financial expenses for the quarter were similar to last year at $0.3 million. For the nine-month period ended September 30, 2009, financial expenses amounted to $0.9 million (2008 - $1.0 million).
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, government regulations, laboratory facilities, suppliers, employees, key customers and business partners, foreign currency risk, credit risk, liquidity risk, volatility of share price, 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) September 30 December 31 2009 2008 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Assets Current Cash and cash equivalents $1,375,294 $2,433,488 Accounts receivable 2,771,662 3,967,918 Work-in-progress - 1,356,149 Inventory 145,581 121,701 Investment tax credits receivable 237,471 186,249 Prepaid expenses 448,149 306,238 ------------------------------------------------------------------------ ------------------------------------------------------------------------ 4,978,157 8,371,743 Future income taxes 1,221,000 750,000 Property, plant and equipment 7,719,655 8,309,317 Intangible assets 368,327 243,291 Goodwill 937,695 937,695 ------------------------------------------------------------------------ $15,224,834 $18,612,046 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Liabilities Current Accounts payable $2,279,455 $3,860,615 Deferred revenue 351,080 1,358,586 Current portion of long-term debt 1,338,300 1,267,184 ------------------------------------------------------------------------ 3,968,835 6,486,385 Long-term debt 1,231,317 1,872,557 Liability component of debentures 6,300,354 6,952,881 ------------------------------------------------------------------------ 11,500,506 15,311,823 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Shareholders' equity Capital stock 40,981,049 40,551,049 Equity component of debentures 312,288 312,288 Contributed surplus 2,465,848 2,445,043 Deficit (40,034,857) (40,008,157) ------------------------------------------------------------------------ 3,724,328 3,300,223 ------------------------------------------------------------------------ ------------------------------------------------------------------------ $15,224,834 $18,612,046 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Interim Consolidated Statements of Contributed Surplus (Unaudited) Three months ended Nine months ended September 30 September 30 2009 2008 2009 2008 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Balance, beginning of period $ 2,465,635 $ 2,548,143 $ 2,445,043 $ 1,210,708 Transfer of the equity component of debentures extinguished during the period - - - 1,428,114 Stock-based compensation 213 (104,995) 20,805 (195,674) ------------------------------------------------------------------------ Balance, end of period $ 2,465,848 $ 2,443,148 $ 2,465,848 $ 2,443,148 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Interim Consolidated Statements of Deficit (Unaudited) Three months ended September 30 2009 2008 ------------------------------------------------------------ ------------------------------------------------------------ Balance, beginning of period $(39,252,060) $(41,147,119) Net earnings (loss) (782,797) 511,610 ------------------------------------------------------------ Balance, end of period $(40,034,857) $(40,635,509) ------------------------------------------------------------ ------------------------------------------------------------ Nine months ended September 30 2009 2008 ------------------------------------------------------------ ------------------------------------------------------------ Balance, beginning of period $(40,008,157) $(42,381,214) Net earnings (loss) (26,700) 1,745,705 ------------------------------------------------------------ Balance, end of period $(40,034,857) $(40,635,509) ------------------------------------------------------------ ------------------------------------------------------------ Consolidated Statements of Accumulated Other Comprehensive Income (Unaudited) Three months ended Nine months ended September 30 September 30 2009 2008 2009 2008 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Accumulated Other Comprehensive Income $- $- $- $- ------------------------------------------------------------------------- ------------------------------------------------------------------------- Interim Consolidated Statements of Earnings and Comprehensive Income (Unaudited) Three months ended Nine months ended September 30 September 30 2009 2008 2009 2008 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Revenue $4,656,405 $6,669,833 $17,635,534 $18,669,822 Cost of goods sold 4,257,685 4,352,157 13,126,804 13,429,038 ------------------------------------------------------------------------- Gross margin 398,720 2,317,676 4,508,730 5,240,784 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Operating expenses Selling, general and administrative 1,323,933 1,221,500 4,286,844 4,044,939 Finance charges 278,259 280,863 902,284 960,629 Research and development tax credits (51,222) - (51,222) - ------------------------------------------------------------------------- 1,550,970 1,502,363 5,137,906 5,005,568 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings (loss) before under noted items and income taxes (1,152,250) 815,313 (629,176) 235,216 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Unrealized foreign exchange gain (loss) on debentures 369,453 (303,703) 602,476 (303,703) Gain on extinguishment of debt - - - 1,814,192 ------------------------------------------------------------------------- 369,453 (303,703) 602,476 1,510,489 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings (loss) before income taxes (782,797) 511,610 (26,700) 1,745,705 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Income taxes recovered (225,000) - - - Recovery of income taxes due to utilization of prior years' losses 225,000 - - - ------------------------------------------------------------------------- - - - - ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net earnings (loss) and comprehensive income $(782,797) $511,610 $(26,700) $1,745,705 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic net earnings (loss) per share $(0.01) $0.01 $0.00 $0.03 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Fully diluted net earnings (loss) per share $(0.01) $0.01 $0.00 $0.03 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares outstanding 66,683,858 64,317,191 65,227,191 58,135,533 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of fully diluted shares outstanding 72,913,853 64,317,191 72,913,853 58,135,533 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Interim Consolidated Statements of Cash Flows (Unaudited) Three months ended Nine months ended September 30 September 30 2009 2008 2009 2008 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Operations Net earnings (loss) $ (782,797) $ 511,610 $ (26,700) $ 1,745,705 Items not affecting cash: Amortization of property, plant and equipment 408,888 381,716 1,180,297 1,099,109 Amortization of intangible assets 23,049 14,972 56,011 44,532 Loss on disposal of property, plant and equipment - - - 1,054 Accretion of interest 24,398 21,130 69,949 178,899 Unrealized foreign exchange loss (gain) on debentures (369,453) 303,703 (602,476) 303,703 Gain on extinguishment of debt - - - (1,814,192) Foreign currency fluctuation 82,912 (23,461) 223,945 (68,793) Compensation cost for stock options 213 (104,995) 20,805 (195,674) ------------------------------------------------------------------------ (612,790) 1,104,675 921,831 1,294,343 Net change in non-cash working capital items 68,227 289,173 (735,073) 812,232 ------------------------------------------------------------------------ Net cash provided by (used in) operations (544,563) 1,393,848 186,758 2,106,575 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Investing activities Decrease in long-term receivables - 125,000 - 125,000 Acquisition of property, plant and equipment (66,934) (58,399) (245,262) (374,825) Acquisition of intangible assets (14,875) - (139,582) (4,609) Proceeds on disposal of property, plant and equipment - - - 1,725 ------------------------------------------------------------------------ Net cash provided by (used in) investing activities (81,809) 66,601 (384,844) (252,709) ------------------------------------------------------------------------ ------------------------------------------------------------------------ Financing activities Proceeds from long-term debt - - 350,000 2,000,000 Repayment of long-term debt (301,869) (358,652) (996,024) (1,841,387) Repayment of liability component of debentures - - - (1,377,737) ------------------------------------------------------------------------ Net cash used in financing activities (301,869) (358,652) (646,024) (1,219,124) ------------------------------------------------------------------------ ------------------------------------------------------------------------ Foreign exchange gain (loss) on cash held in foreign currencies (123,320) 4,344 (214,084) 3,428 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Increase (decrease) in cash and cash equivalents (1,051,561) 1,106,141 (1,058,194) 638,170 Cash and cash equivalents, beginning of period 2,426,855 548,980 2,433,488 1,016,951 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Cash and cash equivalents, end of period $ 1,375,294 $ 1,655,121 $ 1,375,294 $ 1,655,121 ------------------------------------------------------------------------ ------------------------------------------------------------------------
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