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CRAiLAR TECHNOLOGIES, INC. REPORTS FOURTH QUARTER RESULTS
Fourth Quarter Highlights:
- Revenues increase to $1.9 million, up 378% from Q4 2013.
- Production volume increases 43% from Q3 2014.
- Adjusted EBITDA loss $0.3 million.
Victoria B.C. (April 13, 2015) CRAiLAR Technologies Inc. (the Company) (OTCQB: CRLRF) (TSXV: CL)), which produces and markets CRAiLAR® Flax fiberTheFriendliestFiberOnThePlanet, today reported sales of $1.9 million and a net loss of $8.2 million or $0.12 per share for the fourth quarter ended December 27, 2014. This loss includes an $8.0 million or $0.12 per share non-cash impairment charge associated with its idled South Carolina facility. This compares with sales of $0.4 million and a net loss of $3.2 million or $0.07 per share for the fourth quarter ended December 28, 2013, which included an inventory impairment charge of $1.2 million partially offset by a $0.4 million bargain purchase gain. The Companys Adjusted EBITDA for the quarter was a loss of $0.3 million, a reduction of $0.8 million from Q4 2013s Adjusted EBITDA loss of $1.1 million. For further information regarding Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to net loss, see non-GAAP Financial Measures below.
During the fourth quarter of 2014, the Company continued to make progress optimizing its European production facility. Fiber output volume increased by 43% over Q3 2014. Drying capacity was doubled with installation and programming of a second dryer and a kier overhaul which increases loads per cycle. Improved quality and volumes increased customer confidence and products using branded CRAiLAR fibers were launched this quarter. Forecasted demand for CRAiLAR Fibers now exceeds plant capacity. Two customers are investigating dedicated facilities and have scheduled validation trials for Q2 2015.
New equipment installation and overhaul this quarter led to some production disruptions, and some equipment failures limited output. A preventative maintenance regime is improving plant stability. An $8.0 million non-cash impairment charge was recorded in Q4 to write-down the value of our South Carolina plant, equipment and feedstock. This charge reflects the Companys focus on European production and lack of near term plans to restart the plant. Decortication equipment from that location may be redeployed to support future direct-to-farmer feedstock sourcing initiatives in Western or Eastern Europe.
For the year ended December 27, 2014, the Company reported sales of $4.2 million and a net loss of $14.2 million or $0.25 per share, compared with $0.6 million sales last year and a net loss of $15.2 million or $0.34 per share. This years loss includes the aforementioned $8.0 million impairment charge associated with the South Carolina plant. Last years loss included a $4.6 million write-down of feedstock and seed inventory. The Companys Adjusted EBITDA for the year was a loss of $3.4 million compared with an Adjusted EBITDA loss of $6.0 million last year. The Company is focused on two strategic initiatives: reducing feedstock costs and increasing production volume. To reduce feedstock costs we are expanding supply sources and beginning the process of contracting directly with farmers. Our feedstock strategies will allow us to improve margin, influence farming techniques (expanding potential fiber markets), and create a more secure supply chain. An optimized supply chain will create substantial cost advantages over traditional and competing sustainable fibers. To increase production volume and satisfy customer demand, we are optimizing the existing European plant and supporting customer validation trials. Expanded feedstock supply chain, direct to farmer sourcing, optimized production at our current plant, and future customer supported plants are critical future steps for CRAiLARs natural and sustainable fibers to disrupt the fiber industry.
Non-GAAP Financial Measures
Regulation G, Conditions for Use of Non-GAAP Financial Measures, and other provisions of the Securities Exchange Act of 1934, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide EBITDA, which is a non-GAAP financial measure that consists of net loss before (a) interest expense, (b) accretion expense and (c) depreciation amortization and depreciation. Adjusted EBITDA further adjusts EDITDA with respect to share-based compensation expense, facility commissioning expense, fair value adjustment to derivative liabilities, gain/loss on settlement of debt, write down of assets, rent inducement expense, deferred income tax recovery and bargain purchase.
The Company believes that these non-GAAP financial measures provide important supplemental information to management and investors. These non-GAAP financial measures reflect an additional way of viewing aspects of the Companys operations that, when viewed with the GAAP results and the accompanying reconciliation to corresponding GAAP financial measures, provides a more complete understanding of factors and trends affecting the Companys business and results of operations.
Management uses EBITDA and Adjusted EBITDA as a measure of the Companys operating performance because they assist in comparing the Companys operating performance on a consistent basis by removing the impact of items not directly resulting from core operations. Internally, these non-GAAP financial measures are also used by management for planning purposes, including the preparation of internal budgets; for allocating resources to enhance financial performance; for evaluating the effectiveness of operational strategies; and for evaluating the Companys capacity to fund capital expenditures and expand its business. The Company also believes that analysts and investors use these measures as supplemental measures to evaluate the overall operating performance of developemental companies. Additionally, the Company believes that lenders or potential lenders use EBITDA and Adjusted EBITDA to evaluate the Companys ability to repay loans.
These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Companys consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Companys non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.
|The table below reconciles net loss to Adjusted EBITDA for the periods presented (in thousands):|
|For the thirteen||For the fifty-two|
|weeks ended||weeks ended|
|Dec. 27,||Dec. 28,||Dec. 27,||Dec. 28,|
|Interest expense, net||540||676||2,198||1,931|
|Amortization and depreciation||188||212||615||856|
|Facility commissioning expense||83||9||675||366|
|Fair value adjustment to derivative|
|Gain/Loss on settlement of debt||133||-||(102||)||-|
|Write down of assets||8,014||1,220||8,014||4,654|
|Rent inducement expense||8||38||33||152|
|Deferred income tax recovery||(199||)||-||(199||)||-|
A conference call to discuss the companys fourth quarter and year ended December 27, 2014 results is scheduled to begin at 2:00 pm Pacific Daylight Time (5:00 pm Eastern Daylight Time) on April 13, 2015. Participants may access the call by dialing 877-705-6003 (North America) or 201-493-6725 (international), 5 to 10 minutes before the call and ask for the CRAiLAR Technologies Inc. Fourth Quarter 2014 Conference Call. In addition, the call will be broadcast live over the Internet and accessible through website: http://public.viavid.com/index.php?id=113929 If you are unable to participate during the live call, an audio replay will be available until midnight on April 27, 2015 by dialing 877-870-5176 or 858-384-5517 for international callers, and entering pin number 13606585. A transcript will be available approximately 24 hours after the call on CRAiLARs investor page.
About CRAiLAR Technologies Inc.
CRAiLAR Technologies Inc. CRAiLAR is focused on bringing cost-effective, sustainable, bast fiber-based products to market that are environmentally friendly natural fiber alternatives with equivalent or superior performance characteristics to cotton, wood or fossil-fuel based fibers. The Company's business operations consist primarily of the production of its natural and proprietary CRAiLAR® Flax fibers targeted at the natural yarn and textile industries, as well as the deployment of its CRAiLAR® processing technologies in the cellulose pulp and composites industries. For more information, visit www.crailar.com.
Safe Harbor Statement
This news release includes certain statements that may be deemed "forward-looking statements". All statements in this news release, other than statements of historical facts, are forward-looking statements. Forward-looking statements or information are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements or information and including, without limitation, risks and uncertainties relating to: any market interruptions that may delay the trading of the Company's shares, technological and operational challenges, needs for additional capital, changes in consumer preferences, market acceptance and technological changes, dependence on manufacturing and material supplies providers, international operations, competition, regulatory restrictions and the loss of key employees. In addition, the Company's business and operations are subject to the risks set forth in the Company's most recent Form 10-K, Form 10-Q and other SEC filings which are available through EDGAR at www.sec.gov. These are among the primary risks we foresee at the present time. The Company assumes no obligation to update the forward-looking statements.
Neither the TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Investor Relations Contact:
Genesis Select Corp:
Jay Nalbach, CMO
CRAiLAR Technologies Inc.
Consolidated Balance Sheets
(In Thousands US Dollars)
|December 27,||December 28,|
|Cash and cash equivalents||$||1,196||$||1,193|
|Prepaid expenses and deposits||336||291|
|Deferred Debt Issuance Costs||967||1,442|
|Property and Equipment, net||10,013||17,240|
|Intangible Assets, net||129||156|
|Current portion of loans payable||707||634|
|Deferred Income Tax Liability||-||199|
|Long Term Debt||18,024||16,675|
|Authorized: unlimited common shares without
Issued and outstanding: 66,378,003 common shares
(2013 - 47,806,031 common shares)
|Additional Paid-in Capital||15,219||9,934|
|Accumulated Other Comprehensive Income||1,483||585|
CRAiLAR Technologies Inc.
Consolidated Statements of Operations
(In Thousands US Dollars)
|For the thirteen week||Period ended|
|December 27,||December 28,||December 27,||December 28,|
|Cost of sales|
|Materials and direct product production costs||1,436||247||3,513||470|
|Facility commissioning costs||83||9||675||366|
|Impairment Loss on Inventory||370||1,220||370||4,642|
|Marketing and promotion||91||57||371||663|
|Amortization and depreciation||13||15||90||175|
|General and administrative||1,233||1,487||4,820||6,638|
|Research and development||115||132||275||355|
|Write down of plant and equipment||7,491||-||7,491||13|
|Loss before other items||(9,220||)||(2,989||)||(14,256||)||(13,787||)|
|Other income (expenses)|
|Gain (loss) on disposal of assets||(153||)||-||(153||)||1|
|Gain on debt settlement||(133||)||-||102||-|
|Fair value adjustment derivative liabilities||1,224||-||2,140||453|
|Exchange gain (loss)||527||-||527||(204||)|
|Loss before taxes||(8,358||)||(3,239||)||(14,371||)||(15,170||)|
|Deferred income tax recovery||199||-||199||-|
|Net loss after taxes||(8,159||)||(3,239||)||(14,172||)||(15,170||)|
|Loss per share (basic and diluted)||(0.12||)||(0.07||)||(0.25||)||(0.34||)|
|Weighted average number of common shares outstanding||66,378,003||44,730,439||56,309,118||44,508,011|
CRAiLAR Technologies Inc.
Consolidated Statements of Cash Flows
(In US Dollars)
|Period ended||Period ended|
|Dec 27, 2014||Dec 28, 2013|
|Cash flows used in operating activities|
|Adjustments to reconcile net loss to net cash from operating|
|Amortization and depreciation||615||855|
|Amortization of debt discount||534||128|
|Amortization of deferred debt issuance costs||428||347|
|Fair value adjustment of derivative liability||(2,140||)||(453||)|
|(Gain) loss on disposal of asset||153||(1||)|
|Gain on settlement of debt||(102||)||-|
|Write down of equipment||200||13|
|Write down of inventory||370||4,642|
|Write down of plant and equipment||7,291||-|
|Deferred income tax recovery||(199||)||-|
|Changes in working capital assets and liabilities|
|Increase in accounts receivable||(2,884||)||(87||)|
|Decrease (increase) in inventory||127||(2,683||)|
|Increase in prepaid expenses||(83||)||(184||)|
|Increase (decrease) in accounts payable||(248||)||971|
|Increase in unearned revenue||-||248|
|Increase (decrease) in accrued liabilities||(373||)||710|
|Net cash used in operating activities||(9,850||)||(8,081||)|
|Cash flows from (used in) investing activities|
|Sale of equipment||113||36|
|Purchase of property and equipment||(1,558||)||(3,908||)|
|Acquisition of intangible assets||(24||)||(89||)|
|Net cash flows used in investing activities||(1,470||)||(3,961||)|
|Cash flows used in financing activities|
|Issuance of capital stock on exercise of options and warrants||-||240|
|Promissory notes payable||(661||)||621|
|Proceeds from long term debt||3,000||-|
|Proceeds from private placement, net of issue costs||3,079||1,879|
|Proceeds from offering, net of issue costs||5,983||-|
|Proceeds from convertible debenture||-||8,307|
|Deferred issuance costs||(15||)||(887||)|
|Net cash flows from financing activities||11,210||10,161|
|Effect of exchange rate changes on cash and cash equivalents||113||197|
|Increase (decrease) in cash and cash equivalents||3||(1,684||)|
|Cash and cash equivalents, beginning||1,193||2,877|
|Cash and cash equivalents, ending||$||1,196||$||1,193|
The following information was filed by Crailar Technologies Inc (CRLRF) on Monday, April 13, 2015 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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