Viridis Energy reports first half & Q2 2015 results

The increase in revenue for the six-month period ended June 30, 2015 compared to the prior year period is primarily attributable to an increase of $3.2 million in sales from Viridis Merchants Inc., which was partially offset by a decrease in sales from Okanagan Pellet Company Ltd. due to the implementation of the three-phase plan previously reported.

For the three month period ended June 30, 2015, the company recorded revenues of $5.74 million compared to $6.65 million in the second quarter of 2014, a decrease of $906,000 or 14 per cent from the comparable period in 2014.

The company’s incurred a gross profit loss of $(313,000) for the six-month period ended June 30, 2015 from a profit of $6,000 for the comparable period in 2014. The change in gross profit is primarily the result of the early operational challenges at Scotia as the plant transitioned to the new right-sized operational strategy. In addition, the company’s OPC operations underwent necessary upgrades and improvements that resulted in lower production levels relative to its fixed cost base.

Gross profit (i.e., sales less cost of sales) was a loss of $(320,000) for the second quarter of the current year compared to a gross profit of $243,000 for the comparable period in 2014.

EBITDA was a loss of $1.7 million for the six month period ended June 30, 2015, compared to an EBITDA loss of $1.5 million the same period last year.

Operating expenses increased by $266,000 to $2.37 million for the six-month period ended June 30, 2015 from $2.11 million for the comparable period in 2014. Operating expenses as a percentage of revenues decreased to 16.3 per cent for the six-month period ended June 30, 2015 from 17.1 per cent for the comparable period last year. Operating expenses increased by $251,000 to $1.24 million for the three month period ended June 30, 2015 from $990,000 for the comparable period in 2014.

For the six months ended June 30, 2015, the net loss increased by $644,000 to $(3.19) million from $(2.54) million for the same six month period last year. The Company’s net loss increased by $905,000 to $(1.87) million for the quarter ended June 30, 2015 from $(966,000) in the comparable quarter last year.

“The losses incurred during the first half are not reflective of what we expect during the remainder of the year. We have right sized our operations at Scotia to deliver significantly improved results, and the first phase of upgrades at our OPC plant are near completion and we expect it to return to profitability in the fourth quarter,” said Christopher Robertson. “Viridis Merchants continues to experience solid growth in the U.S. residential markets. Our aggregation services and brand development sets us apart from distributors and producers in the region. As a result, we are revising revenue guidance for 2015 to $30 million and positive EBITDA and cash flow in the fourth quarter Q4,” he added.

At June 30, 2015, the company had cash and cash equivalents (including restricted cash) of $658,000, a decrease of $1.4 million from theDecember 31, 2014 balance. The company’s accounts receivable were $1.0 million, representing a DSO of 13 days. Inventory increased to$4,659,990 in anticipation of stronger projected heating sales in the upcoming winter season. Accounts payable and accrued liabilities increased by $844,000 to $4.7 million at June 30, 2015 from $3.8 million for the year ended December 31, 2014.

During to the quarter, the Okanagan Pellet Company Ltd.’s operating facility limit from Royal Bank of Canada was increased to $1.0 million, of which OPC has utilized $200,000 to fund the inventory build during residential off-season.

Subsequent to the quarter, Viridis Merchants Inc.entered into an agreement to establish a $3,000,000 line of credit with a strategic supplier. This line of credit bears interest at six per cent per annum and Viridis Merchants has pledged its inventory as security to the line of credit. Commencing in 2017, the line of credit requires Viridis Merchants to maintain a balance of $100 or less for a period of 30 consecutive days, annually. Further, commencing in 2017, the line of credit balance available will be the lesser of $3,000,000 or 100 per cent of the value of the inventory.

Consistent with the prior fourth quarter 2015, Viridis’ common shares outstanding on March 31, 2015 totalled 13,845,190 shares.The company’s fully diluted share totalled 14,312,690; inclusive of all options with an average exercise price of $1.69 and warrants with an average exercise price $3.50.

About Viridis Energy Inc.
Viridis Energy Inc. is a publicly traded, “Cleantech” manufacturer and distributor of renewable energy providing wood pellet biomass to global residential and industrial markets. Located in Vancouver, B.C., Viridis Energy Inc. operates Okanagan Pellet Company Ltd. (BC), Scotia Atlantic Biomass Company Limited (Nova Scotia) and Viridis Merchants Inc. (Delaware), with over 300,000 tons of trading and manufactured capacity on both coasts of North America. For more information on Viridis Energy Inc. please refer to the company website atwww.viridisenergy.ca.

Forward-looking statements
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company’s future operations. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management’s current views and are based on certain expectations, estimates and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a continued downturn in general economic conditions in North America and internationally, (2) the inherent uncertainties associated with the demand for biomass in Europe and Asia, (3) the risk that the Company does not execute its business plan, and the inability for the Company to complete the implementation of the Scotia Atlantic three step plan (4) inability to finance operations and growth (5) inability to retain key management and employees, (6) an increase in the number of competitors with larger resources, and (7) other factors beyond the Company’s control. These forward-looking statements are made as of the date of this news release and the Company intends to update such forward looking information in the Company’s MD&A in the event that actual results differ materially from such forward-looking statements contained herein. Additional information about these and other assumptions, risks and uncertainties are set out in the “Risks and Uncertainties” section in the Company’s MD&A filed with Canadian securities regulators.
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