Record Sales of $4.25 Million, Sales Growth of 42%, and Material Net Earnings
TORONTO, May 13, 2019 - Microbix Biosystems Inc. (TSX: MBX, Microbix®), an innovator of biological products and technologies, reports results for its second quarter and first half of fiscal 2019, the three-month and six-month periods ending March 31, 2019 (“Q2” & “H1”), with record sales, strong sales growth, improving percentage gross margin, materially positive net earnings, and progress on its strategic goals.
Sales of $4.25 million for Q2 were very strong (up 42% year-over-year) and were principally to antigen customers based in North America and Western Europe. Sales by Microbix’s distributor into the Asia-Pacific region were below target for Q2, with that variance believed due to the earlier-stage and resulting lower predictability of those markets. Microbix’s sales outlook remains solid for its established customers, while distribution of product to new customers in Asia may add to quarter-to-quarter sales volatility.
In Q2, Microbix demonstrated strong year-over-year improvement in percentage gross margin (up by 13%) and achieved materially positive net earnings (an improvement of $733,854 versus the prior fiscal year “Q2 2018”). Notably, those gains were achieved without the full benefits of its bioreactor program. Cash Flow from Operating Activities was negative in Q2, due largely to uncollected receivables from shipments made to longtime customers toward the end of the period. Microbix continues to target double-digit sales growth and is working continuously to improve gross margin, cash flow and net earnings.
Second Quarter Financial Results
Total Q2 revenues were $4,253,629, a new record and a 42% increase from Q2 2018 revenues of $3,000,193. Included were antigen and quality product revenues of $4,169,272, 43% greater than Q2 2018 in spite of below-target ordering from our Asia distributor. Revenues from royalties were $84,357 (2018 - $78,392).
Gross margin for Q2 was 51%, up from 38% in Q2 2018, with this improvement largely being independent of benefits from the ongoing bioreactor program. The mix of products sold also varied versus Q2 2018 and had a favorable margin impact. Revenues from bioreactor-produced antigen were nominal in Q2 due to in part to timing of order flows, while work toward conversion of all customers is continuing satisfactorily.
Operating expenses for Q2 increased by 12% from Q2 2018 (+$184,416), reflective of the higher level of overall business activity. Such expenses increased with further investment in sales and marketing, patent filing and maintenance fees, and foreign exchange losses during the quarter.
At the end of Q2, Microbix’s current ratio (current assets divided by current liabilities) was 1.45 and its debt to equity ratio (total debt over shareholders’ equity) was 0.90.
First Half Financial Results
Total H1 revenues were also a record at $6,714,441, a 14% increase from 2018 first half (“H1 2018”) revenues of $5,885,760. Included were antigen and quality product revenues of $6,536,062, 14% greater than H1 2018 in spite of low ordering from our Asia distributor. Revenue from royalties were $178,379 (H1 2018 - $161,374).
Gross margin for H1 was 51%, up from 42% in H1 2018, with this improvement largely being independent of benefits from the ongoing bioreactor program. Resolution of yield control issues encountered in fiscal 2018 helped to improved margins of a key conventionally-produced product across H1, with other process enhancements also contributing. The mix of products sold also varied versus H1 2018 and had a favorable margin impact. Revenues from bioreactor-produced antigen were lower than expected across H1, however work toward converting all customers to the new product is continuing satisfactorily.
Operating expenses for H1 increased by 6% from H1 2018 (+$181,147), reflective of the higher level of overall business activity. Expenses increased in all categories, with Selling and Business Development up by 10% (+$27,260), G&A up by 2% (+$29,596), R&D up by 2% (+$9,387), and interest by 28% (+$114,903).
Microbix continues to target double-digit sales growth, with ongoing efforts to improve gross margin and profitability. Its goal is to achieve successive quarterly improvements in financial results by increasing sales, improving yields, upgrading production technologies, and optimizing product mix. Additionally, work continues with regards to securing a partnership agreement to advance Microbix’ Kinlytic® urokinase project and to derive value from LumiSort™ technology.
About Microbix Biosystems Inc.
Microbix specializes in developing proprietary biological and technology solutions for human health and well-being. It makes 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 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 for ultra-rapid and efficient sorting that can be used to enrich cell populations of interest.
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