Microbix Reports Record Third Quarter Sales
Year-Over-Year Sales Growth of 24% in First Nine Months
TORONTO, August 14, 2018 - Microbix Biosystems Inc. (TSX: MBX, Microbix®), an innovator of biological products and technologies, reports financial results for its third quarter of fiscal 2018, the three-month period ending June 30, 2018 (“Q3”), with record sales and progress toward its operational goals.
Third Quarter Financial Results
Total Q3 revenue was $3,235,224, a 17% increase over 2017 third quarter revenue of $2,773,365. Included were antigen and quality product revenues of $3,158,058, 17% higher than 2017 due largely to strong Asian growth via our distribution partner. Revenue from royalties were $77,166 (2017 - $67,954).
Gross margin for Q3 was 47%, up from 38% in fiscal Q2 of 2018, but down from 54% in Q3 of 2017. Such margin changes are due to quarterly fluctuations in sales mix and yield-control issues with a conventionally-produced antigen product, which reduced gross margin by an estimated 8.5% in Q3. Measures to improve yields and gross margins are being undertaken across Microbix’ product lines.
Total operating expenses for Q3 decreased by $139,335 compared to 2017. This was primarily due to lower legal expenses, as in 2017 Microbix was incurring the costs of defending a patent lawsuit which was later settled in our favour. In total, Microbix generated positive Q3 net operating income before restructuring and tax adjustments of $958, versus a loss of $164,104 in 2017. Cash provided by operations (CFO) in Q3 was $82,226, compared to $291,596 in 2017. The year-over-year decline in CFO was largely due to deployment of working capital into receivables and inventory to support sales growth ($695,202 in Q3), partly offset by greater customer deposits (increase of $444,674 in deferred revenue). Net cash used in investing activities was $335,107 (2017 − $145,482), due to continued investment in upgrading our manufacturing facilities ($300,925) and in prosecution and maintenance of our LumiSort™ patents ($34,182). Cash provided by financing activities was $217,131 (2017 – used by $14,984). Net of all entries, usage of cash was $35,749 in Q3 and liquidity is adequate to support near-term growth objectives.
Nine Month Financial Results
For the nine months ended June 30, 2018 (“YTD”), revenues were $9,120,984, up by 24% from 2017, with sales to each of Microbix’ two largest customers increasing. However, the benefits of shifting production of a leading viral antigen into bioreactors are as yet largely unrealized – as a key customer continues its real-time stability studies of test kits made with bioreactor-produced antigen. YTD provided a net comprehensive loss of $435,672, compared to $2,770,177 in 2017, of which $2,188,316 was due to effects of a debt restructuring, legal settlement and tax asset revaluation. Net of those items, the YTD loss for 2017 was $581,861. At the end of Q3, Microbix’ current ratio (current assets divided by current liabilities) was 1.39 and its debt to equity ratio (total debt over shareholders’ equity) was 0.52.
We continue to target double-digit sales growth over the balance of fiscal 2018 and through 2019. Microbix maintains a log of open purchase orders that, along with year-to-date results, supports meaningful sales growth. Efforts to improve gross margins and profitability are ongoing, with the goal of achieving successive quarterly improvements via greater yields, upgrades to production technologies and changes in product mix. Additionally, work continues with regards to securing partnership agreements to advance Microbix’ Kinlytic® urokinase and LumiSort™ cell-sorting projects.
About Microbix Biosystems Inc.
Microbix specializes in developing proprietary biological and technology solutions for human health and well-being. It manufactures a wide range of critical biological materials for the global diagnostics industry, notably antigens used in immunoassays or quality assessment products. Microbix’ products are sold to more than 100 customers worldwide, primarily to multinational diagnostics companies and laboratory accreditation organizations.
Microbix also applies its biological expertise and infrastructure to create proprietary new products and technologies. Currently it is commercializing two such products, (1) Kinlytic® urokinase, a biologic thrombolytic drug (used to dissolve blood clots) and (2) LumiSort™ cell-sorting, a technology platform for ultra-rapid and efficient sorting of somatic cells that can be used to enrich cell populations of interest (such as sexing semen for the livestock industry). Established in 1988, Microbix is a publicly traded company, listed on the Toronto Stock Exchange and headquartered in Mississauga, Ontario, Canada.
This news release includes “forward-looking information,” as such term is defined in applicable securities laws. Forward-looking information includes, without limitation, discussion of financial results or the outlook for the business, risks associated with its financial results and stability, its biologicals business, development projects such as those referenced herein, sales to foreign jurisdictions, engineering and construction, production (including control over costs, quality, quantity and timeliness of delivery), foreign currency and exchange rates, maintaining adequate working capital and raising further capital on acceptable terms or at all, and other similar statements concerning anticipated future events, conditions or results that are not historical facts. These statements reflect management’s current estimates, beliefs, intentions and expectations; they are not guarantees of future performance. The Company cautions that all forward looking information is inherently uncertain and that actual performance may be affected by a number of material factors, many of which are beyond the Company’s control. Accordingly, actual future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward-looking information. All statements are made as of the date of this news release and represent the Company’s judgement as of the date of this new release, and the Company is under no obligation to update or alter any forward-looking information.
Please visit www.microbix.com or www.sedar.com for recent Microbix filings.
For further information, please contact:
Cameron Groome, CEO
Jim Currie, CFO
Deborah Honig, Investor Relations
Adelaide Capital Markets
(647) 203-8793 firstname.lastname@example.org