NEWS
Viridis Energy Inc. Reports Full Year and Fourth Quarter 2010 Financial Results
May 2, 2011Viridis Energy Inc. ("Viridis" or the "Company") (TSXV: VRD) (OTC: VRDSF.PK), a “Cleantech” manufacturer and distributor of alternative energy providing biomass fuel to global residential and industrial markets, today reported financial results for its full year and fourth quarter ended December 31, 2010.
The Company has been highly productive during 2010 and into 2011, Viridis:
• completed the acquisition of Cypress Pacific Marketing and Okanagan Pellet Company during the first half of 2010, establishing the Company’s primary operations in the "Cleantech" industry in the renewable power generation sector as a manufacturer, marketer and distributor of wood pellets and other renewable fuel sources,
• entered into Letters of Intent to acquire two production facilities, which would double capacity, expand distribution reach coast to coast in North America, and establish efficient access to ports that serve international markets,
• secured an exclusive license to a patented biomass process that alters the biomass combustion and ash chemistry. When co-fired with coal in power plants, the technology reduces the maintenance costs associated with unscheduled plant shut down, while maintaining optimum heat transfer for more efficient power generation,
• secured a second biomass feedstock, Palm Kernel Shells (PKS), in Malaysia and have subsequent to the year end, signed a Letter of Intent to supply PKS into Asia,
• commenced shipment of bulk wood pellets to Europe in early 2011,
• added to the management team and strengthened the executive management talent and Board, and
• on December 22, 2010, began trading on the Frankfurt Stock Exchange under the trading symbol “VRI.F”.
Viridis generated revenue full year 2010, its first full year of operations, of $6.9 million compared with the previous year revenue of $1.4 million, during which the Company completed the disposition of its monitoring and control systems business. Revenues for 2010 were generated from the acquired businesses during 2010, reflecting the Company’s strategy to create a fully integrated biomass manufacturer and distributor, addressing both domestic and international residential and commercial markets. Viridis anticipates sequential revenue growth acceleration during 2011 as its manufacturing capacity increases, coupled with the sales efforts of its recently announced international strategic distribution partners.
The Company reported a comprehensive loss of $(2.3) million or $(0.09) per basic share for the full year 2010, which included a gain on acquisition of business operations of $2.8 million. This compares to comprehensive income of $798,000 or $0.08 per basic share for the full year 2009, which included a gain on sale of business of $1.9 million. Viridis reported a loss from operations of $4.7 million during 2010 versus a loss of $1.1 million during the prior year. The Company expects to achieve net profitability during 2011, its first full year of operations with the acquired wood pellet companies.
For the twelve months ended December 31, 2010, Viridis’ gross profit on revenue totaled $1.9 million, yielding a gross margin of 28 percent Viridis expects gross margin to remain at this level, as revenues grow substantially. The core business of wood pellets includes higher margin business in the low 40% range, while the distribution business of other biomass (PKS) offers significant revenue opportunity for the Company at lesser margin.
Operating expenses during 2010 increased approximately $4.9 million to $6.7 million, which included the assimilation of its two acquisitions, freight costs associated with it new line of business of $2.6 million, marketing expense of $239,000, and non-cash charges of $228,000 for stock based compensation and $428,000 for amortization and depreciation. While Viridis anticipates operating expenses to increase going forward, albeit at a significantly reduced pace, in relation to business growth, the Company believes it will be able to leverage its general and administrative expenses to deliver increased operating margins as revenues continue to rise.
The Company realized other income in 2010 totaling $2.4 million due primarily to the gain from the acquisition of business operations as a result of the discount purchase of Okanagan Pellet Company. The gain resulted from the difference between the cost of acquiring the business assets compared to what the company’s independent auditors determined to be the current fair market value for the purposes of including the acquired assets on the Company’s balance sheet. Interest expense (inclusive of bank charges) for the year was approximately $326,000, which compares to interest expense of approximately $97,000 during 2009.
For the fourth quarter ended December 31, 2010, Viridis reported revenues of $3.0 million, an increase of 11.2 percent over the prior third quarter 2010 of $2.7 million. The Company generated gross profit of $242,000 or 8 percent of total revenue. The decrease in gross margin compared to the third quarter 2010 average of 36 percent was due to an adjustment in the valuation of closing inventory, and a late start to the heating season due to an unseasonably warm fall and winter. Viridis anticipates a return to normal gross margins during 2011 as its business diversifies to include international and industrial opportunities. Viridis reported a loss from operations of $2.5 million for the fourth quarter 2010. Total operating expenses were $2.7 million in the fourth quarter, which increased approximately $970,000 from the third quarter 2010 due to the increased freight costs for the period and slightly higher general and administration costs. The company reported a comprehensive net loss of $(2.6) million or $(0.09) per basic share for the fourth quarter 2010 compared to the third quarter 2010 comprehensive loss of $(900,000) million or $(0.03) per basic share.
At December 31, 2010, the Company had accounts receivable of approximately $836,000, inventory of $1.8 million and total assets of $14.7 million. At year end 2010, Viridis had long term debt of $556,000 and shareholder equity of $6.6 million. Common shares issued and outstanding at December 31, 2010 and December 31, 2009 were 30.3 million and 12.7 million, respectively. The increase in outstanding shares largely was due to the acquisition of Cypress Pacific marketing during the first quarter and the completion of $6.0 million in private placements of the Company’s common shares during the year. As of December 31, 201, Viridis had approximately 44.2 million fully diluted shares, which if all options and warrants exercised would bring an additional $10 million into the company.
“2010 was a start-up year for Viridis, in many ways and the costs reflect this. However it was a dynamic year, during which we transitioned our business focus to become a clean-tech biomass company. This year is expected to be similarly, a highly eventful year, as we double our capacity and expand our reach into the international and industrial markets. We expect to deliver accelerated revenue growth and operating profitability in 2011,” commented Chris Robertson, Viridis’ chief executive officer. “Our mission is to strategically expand our operations and achieve scale. We are in the midst of growing our business geographically as well as entering into new markets. The demand for clean, inexpensive alternative fuel is growing rapidly. We see 2011 as a strong year and the beginning of a perfect positive storm in the energy industry for our company. We believe our traditional domestic heating business will continue at its current pace; however, the excitement of the year comes through our expansion into export sales, of which we have already announced approximately $33.6 million of annual revenue with a number of additional deals currently under negotiation. Consequently, I expect to see revenues materially increase from approximately $6.9 million in 2010 to approximately $30 million in 2011, which will carry our company into profitability and generate approximately $0.02 EPS for the full year 2011.”
Investor Contact: Yvonne L. Zappulla Managing Director Grannus Financial Advisors, Inc. 212-681-4108 [email protected]
Company Contact: Michele Rebiere Chief Financial Officer Viridis Energy Inc 905-847-5226 [email protected]
About Viridis Energy Inc. Viridis Energy Inc. (TSXV: VRD) is a publicly traded, "Cleantech" alternative energy company specializing in the agricultural and wood waste biomass. Located in Vancouver, B.C., Viridis Energy operates Cypress Pacific Marketing and Okanagan Pellet Company, two acquisitions in the wood pellet sector, thus providing the company with vertical integration for distribution and manufacturing. For more information on Viridis Energy Inc. please refer to the company website at www.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 biofuels, (3) the risk that the Company does not execute its business 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 security regulators.
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