Lower Sales, Improving Gross Margin, Positive Cash Flow from Operations
TORONTO, February 12, 2019 - Microbix Biosystems Inc. (TSX: MBX, Microbix®), an innovator of biological products and technologies, reports results for its first quarter of fiscal 2019, the three-month period ending December 31, 2018 (“Q1”), with lower sales, improving percentage gross margin, improving and positive cash flow from operations and progress toward its operational goals.
Sales for Q1 were held back by a combination of delayed shipment of a viral antigen product and a drive to reduce inventory by Microbix’s distributor for Asia-Pacific markets. While down year-over-year, Microbix does not consider Q1 sales to represent a lasting change to its double-digit sales growth targets.
In spite of lighter Q1 sales, Microbix demonstrated strong year-over-year improvement in percentage gross margin (up by 6%) and achieved positive cash flow from operations (an improvement of $1,462,810 vs. Q1 2018). Microbix expects double-digit sales growth over the balance of fiscal 2019, along with continuing improvement in percentage gross margin, cash flow and net earnings.
First Quarter Financial Results
Total Q1 revenue was $2,460,812, a 15% decrease from 2018 first quarter revenue of $2,885,567. Included were antigen and quality product revenues of $2,366,790, 16% lower than 2018 due to delayed shipments and reduced ordering from our Asia distributor. Revenue from royalties were $94,022 (2018 - $82,982).
Gross margin for Q1 was 52%, up from 46% in Q1 of fiscal 2018, and was largely unaffected by the yield control issues experienced from Q2 through Q4 of 2018. The mix of products sold varied versus Q1 of last year and had a favorable impact on margins. While revenues from bioreactor-produced antigen doubled year-over-year, most production of that antigen continued to be from conventional methods in Q1.
Operating expenses for Q1 were largely unchanged from 2018, with lower sales and administrative costs offset by higher financial and R&D expenses. A slightly increased net loss was incurred in Q1 ($119,296) as compared to 2018 ($94,128). Cash provided by operations in Q1 was improved to positive $28,725, compared to cash used of $1,434,085 in 2018.
At the end of Q1, Microbix’s current ratio (current assets divided by current liabilities) was 1.36 and its debt to equity ratio (total debt over shareholders’ equity) was 0.94.
For fiscal 2019, Microbix is again targeting double-digit sales growth, with that goal supported by its log of open purchase orders. 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 a partnership agreement to advance Microbix’ Kinlytic® urokinase project and to derive value from LumiSort.
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’s 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 has two; (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 email@example.com