Q3 Sales of $3.1 Million and $9.8 Million Year-To-Date
TORONTO, August 12, 2019 - Microbix Biosystems Inc. (TSX: MBX, Microbix®), an innovator of biological products and technologies, reports results for its third quarter and nine months of fiscal 2019, the three-month and nine-month periods ending June 30, 2019 (“Q3” & “YTD”), with record YTD sales, strong YTD sales growth, improving percentage gross margin, and progress on its strategic goals.
Sales of $3.1 million for Q3 were down slightly vs. Q3 2018 and were to antigen customers spread across all geographic regions. Sales by Microbix’s distributor into the Asia-Pacific region were below target for Q3, however sales to our broader customer base were stronger than Q3 2018. Microbix’s sales outlook is satisfactory for its established-market customers, however the distribution of product to new customers in Asia and an expanding line of quality assessment products (QAPs™) are expected to increase quarter-to-quarter volatility of sales growth.
In Q3, Microbix continued its improvement in percentage gross margin, increasing versus the prior year for the fourth straight quarter. Those gains were achieved without the full benefits of its bioreactor program, which will only be realized across fiscal 2020. Increased operating expenses led to a loss of $191,322 during Q3, versus a nominal profit in Q3 2018. Microbix Cash Flow from Operating Activities was negative in Q3, due largely to the operating loss, a slight increase in inventory, and a reduction in deferred revenue. Microbix is working continuously to improve gross margin, cash flow and net earnings.
Third Quarter Financial Results
Total Q3 revenues were $3,110,615, a 4% decrease from Q3 2018 revenues of $3,235,224. Included were antigen and quality product revenues of $3,028,397, 4% down from Q3 2018. Revenues from royalties were $82,218 (2018 - $77,166).
Gross margin for Q3 was 49%, up from 47% in Q3 2018 even though margins in Q3 were unfavorably impacted by the mix of products sold versus Q3 2018, and this improvement in margins was largely independent of benefits from the ongoing bioreactor program. Revenues from bioreactor-produced antigen were nominal in Q3 due in part to timing of order flows, while work toward conversion of all customers is continuing satisfactorily, as disclosed by Microbix in its news release update of August 1.
Operating expenses were up 12% during Q3 due to an increased investment in sales and marketing, costs of facilities expansion, and a stronger Canadian dollar. At the end of Q3, Microbix’s current ratio (current assets divided by current liabilities) was 1.38 and its debt to equity ratio (total debt over shareholders’ equity) was 0.93.
Nine Month Financial Results
Total YTD revenues were $9,825,056, an 8% increase from the first nine months revenues of $9,120,984 in fiscal 2018. Included were antigen and quality product revenues of $9,564,459, 8% greater than 2018, in spite of lower than targeted ordering from our Asia-Pacific distributor. Revenue from royalties were $260,597 (YTD 2018 - $238,540).
Gross margin YTD was 51%, up from 44% in the first nine months of 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 improve YTD margins of a key conventionally-produced product, with other process enhancements also contributing. The mix of products sold also varied versus YTD 2018 and had a favorable margin impact. YTD revenues from bioreactor-produced antigen were lower than expected, however work toward converting all customers is continuing satisfactorily.
YTD operating expenses increased by 8% from YTD 2018, reflective of an increased investment in sales and marketing activities, facilities expansion costs and debenture interest costs that had been capitalized to product development in previous years.
For the nine month period, Microbix recorded a net income of $80,734; a $516,406 improvement over the same period in fiscal 2018.
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, optimizing product mix, and introducing new products. 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 (QAPs™). 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.
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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
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