Dec. 19, 2016 - BIOX Corporation's acquisition of two new biodiesel facilities in 2016 allowed the company to increase production by more than 300 per cent, the company announced in its Q4 report last week.
December 19, 2016 By BIOX Corporation
“Our acquisitions in 2016, together with our existing Hamilton facility, provide us with a diversified footprint to access the growing biodiesel markets in both the U.S. and Ontario,” said Alan Rickard, Chief Executive Officer of BIOX. “We have scaled production more than four-fold with the Houston and Sombra acquisitions. The timing of our acquisitions and their commissioning is ideal with both the U.S. Renewable Volume Obligation and the Ontario Greener Diesel mandates set to increase in 2017. The Houston facility is undergoing the final stages of commissioning and we expect it to operate at full production in the coming weeks. Given its scale, we expect Houston’s production will drive our bottom-line results significantly higher based on the existing pricing fundamentals in the U.S. biodiesel market.”
BIOX acquired, or participated in the acquisition of, two biodiesel production facilities in June 2016, expanding its capacity from 67 million litres to 287.5 million litres of owned capacity (458 million litres gross capacity including the joint venture).
On June 17, 2016, the Company acquired a 50 million litre nameplate capacity biodiesel facility in Sombra, near Sarnia, Ontario, for US$4.5 million. The Sombra facility is located on a 21-acre facility near Sarnia, Ontario with excellent logistics, including on site rail. Originally constructed in 2009, the facility has not achieved nameplate capacity due to working capital and market challenges, and is currently not in production. The Company will expend an additional $5.0 million over the next nine months on upgrades to the facility that will improve the facility’s efficiency and enable the use of a broader range of feedstock, specifically lower carbon intensity feedstocks, such as animal fats and recycled cooking oils. The Company expects the facility to be in production by the third quarter of calendar 2017.
In June 2016, BIOX invested with World Energy, an Advanced Biofuels supplier based in Boston, to form World Energy BIOX Biofuels LLC (WEBB), a joint venture for the purposes of the acquisition of the Houston facility. Each of BIOX and World Energy committed US$10 million cash to the joint venture. BIOX has joint control with World Energy in the joint venture and holds a 50% ownership interest. WEBB is structured as a separate vehicle and BIOX has a residual interest in the net assets of WEBB.
On June 30, 2016, WEBB acquired a 341 million litre (90 million U.S. gallon) nameplate capacity biodiesel facility in Houston, Texas. The Houston facility, formerly known as Green Earth Fuels, is strategically located on site within the Kinder Morgan Liquids terminal on the Houston Ship Channel. The Houston facility is the third largest biodiesel production facility in North America. The facility is currently undergoing the final stages of commissioning of the plant and WEBB expects to be in production in the coming weeks.
Sales were $27.9 million and $114.8 million for the three-month period (Q4 2016) and the twelve-month period (FY 2016) ended September 30, 2016, respectively, compared to $18.4 million and $75.4 million for the corresponding periods in fiscal 2015. The increase in sales in the quarterly period is primarily due to $6.9 million in revenue from an increase in volume of third-party product sold and an 18% increase in average revenue per litre of biodiesel sold. The increase in the annual period was primarily due to $41.2 million of revenue from the sale of third-party product as part of BIOX’s strategy to control and distribute more gallons. Management intends to take advantage of future opportunities to control and distribute third-party product on an ongoing basis, however the Company’s primary focus moving forward is its new acquisitions and investments, therefore management does not anticipate similar levels of third-party product sales in future periods.
BIOX sold 22.9 million and 98.2 million litres in Q4 2016 and FY 2016, respectively, compared to 18.3 million and 63.6 million litres in the corresponding periods in fiscal 2015. Included in the 2016 sales are 6.1 million litres and 38.9 million litres of third-party production for Q4 2016 and FY 2016, respectively.
These two acquisitions demonstrate BIOX’s ability to execute on its growth strategies through increasing the volume of biodiesel it produces, controls and distributes in strategic locations throughout North America. Prior to completing these acquisitions, BIOX leveraged its sales & marketing capabilities by significantly expanding sales of third-party product with 38.9 million litres of third-party product sold during fiscal 2016.
In the near term, BIOX’s primary focus is the start-up, operation, and marketing of product from its three facilities. BIOX expects plant commissioning and full production at the Houston facility in the coming weeks. BIOX continues to invest in upgrades to the Sombra facility with commissioning and production expected during third quarter of calendar 2017 to capture a portion of the 2017 blend season in Ontario.
BIOX is a renewable energy company that owns 287.5 million litres of nameplate biodiesel production capacity at plants located in southern Ontario and Houston, Texas. BIOX has an innovative, proprietary and patented production process that is capable of producing the highest quality, renewable, clean burning and biodegradable biodiesel fuel utilizing a variety of feedstocks – from pure seed oils to animal fats to recovered vegetable oils with no change to the production process. BIOX’s high quality biodiesel fuel meets North American (ASTM D-6751) quality standards.
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