TORONTO, Jan. 28, 2013 /CNW/ - Innovative Composites International Inc. ("ICI" or the "Company"), (TSXV: IC) (OTCQX: ICIZF, a producer of proprietary engineered composite products, reported today its financial results for the fiscal year ended September 30, 2012. All figures are in U.S. dollars unless otherwise stated.
"Fiscal 2012 was a challenging year for the Company as despite earning record revenue of approximately $3 million, we underperformed against expectations, primarily as a result of international housing contracts that did not materialize," said Terry Ball, CEO of ICI. "The Company has broadened its offerings and is marketing into four distinct, but complementary market segments and our priority in fiscal 2013 is extinguishing the operating burn rate and becoming cash flow positive by focussing on business segments with shorter sales cycles, such as industrial applications and shelters and containers. We are also developing our capabilities in the fire retardant market segment working with positive test results to-date in the forestry sector."
Selected 2012 Financial and Operational Highlights
- Revenue was approximately $3 million for fiscal 2012, compared with $0.5 million for fiscal 2011.
- Commenced production of specifically engineered enclosures for world leader in heating, air-conditioning and refrigeration ("HVAC") equipment.
- Developed RapTER (Rapid Tactical Emergency Response) shelters and containers for emergency relief, and oil & gas and mining sectors.
- Completed the acquisition of Eleison Composites LLC, a manufacturer of fiber reinforced thermoplastic skin material utilized in ICI's products
- Completed a bought deal public offering for gross proceeds of CDN$10.1 million.
- Began trading on the OTCQX under the symbol ICIZF.
Highlights Subsequent to Year End
- Developed and tested new "load floor" design with attractive cost and weight attributes for the automotive sector utilizing RMor Skin.
- Increased production volumes of specifically engineered HVAC enclosures
- Entered final phase of testing with the US Forestry Service of Evergreen Hero fire retardant for forestry applications
- Hired a new Vice President of Business Development to generate new business and increase business from existing customers
ICI had revenue of $3,012,000 for fiscal 2012 compared to $487,000, for fiscal 2011. The revenue for the year was generated primarily as a result of the Eleison acquisition and the Company is working to generate additional revenue through its initiatives in the housing, shelters and containers, industrial applications, and fire retardant market segments.
Cost of Sales for fiscal 2012 (after deducting the reallocation of amortization and depreciation expenses that IFRS requires be included in Cost of Sales) was $2,383,000, compared to $399,000 for fiscal 2011. The Gross Margin for fiscal 2012 (calculated using the adjusted Cost of Sales) was $629,000 or 21%, compared to $87,000 or 18% for fiscal 2011. The Company expects that as revenue increases, it will achieve certain economies of scale and that the Gross Margin will increase accordingly.
Total expenses for the 12-months ended September 30, 2012 were $11.0 million, compared to $5.2 million for the same period last year. The increase in expenses were the result of the overall expansion of the Company, specifically relating to the launch of the manufacturing facility in South Carolina, an increase in sales initiatives, ramping up several commercialization programs and costs incurred in new product and process development.
ICI recorded a net loss for fiscal 2012 of $9.9 million or $0.12 per share, compared to a net loss of $9.4 million, or $0.17 per share, for fiscal 2011.
Cash flow used in operating activities for fiscal 2012 were $6.9 million compared to $4.1 million for fiscal 2011. The increase is primarily due to the previously referenced increase in operating expenses.
At September 30, 2012, ICI had cash and cash equivalents of $4.2 million, compared to $6.6 million at the same date in 2011.
ICI has filed its financial statements for the fiscal year-ended September 30, 2012 and related Management's Discussion and Analysis (MD&A) with securities regulatory authorities. ICI's financial statements, MD&A and related documents are available via SEDAR (www.sedar.com) as well as through the Company's website, www.innovativecompositesinc.com.
The Board has created a Special Committee of independent Directors to assess the Company's business plan, prospects, and assets and, based on that assessment, to recommend the actions necessary to ensure the long term viability of the Company.
Granting of Options
The Company granted 1,000,000 options to the independent Directors of the Company, who are currently receiving no cash compensation for their services. These options are exercisable at $0.20 per share, which is a $0.10 premium over the closing price of ICI shares on the day prior to the grant of the options, and have a term of 7 years. These options vest on a straight-line basis over 12 months commencing on October 1st, 2012.
The Company granted 1,450,000 options to certain officers and employees of the Company, some of whom have taken a voluntary temporary 25% salary reduction in order to reduce the operating burn rate of the Company. These options are exercisable at $0.20 per share, which is a $0.10 premium over the closing price of ICI shares on the day prior to the grant of the options, and have a term of 7 years. These options are subject to the following vesting provisions: 25% shall vest upon the Company's South Carolina facility shipping commercial products having an aggregate value of $5 million; 25% shall vest upon the Company being cash flow positive for a combined 12-month period, upon the date that the financial statements of the Company evidence this and are publicly available; and 50% shall vest in 36 equal amounts with one-seventy second (1/72) of the options vesting on the first day of each of the 36 months following the date of grant.
ICI will host a conference call to discuss its 2012 fiscal year-end financial results on Wednesday, January 31, 2013 at 10:00 a.m. ET.
To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. A question and answer session for analysts and institutional investors will follow management's presentation.
About Innovative Composites International Inc.
Headquartered in Toronto, Canada, Innovative Composites International Inc. (TSXV: IC) (OTCQX: ICIZF) is a high-tech engineering and manufacturing company whose goal is to utilize its proprietary "green" composite materials and building systems to provide innovative, engineered product solutions to markets that include prefabricated modular housing, shelters and containers, and industrial applications.
To find out more about ICI please visit our website at: www.innovativecompositesinc.com.
Neither TSX Venture Exchange 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.
"Statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in its target markets, the demand for ICI's products and the availability of funding. These forward-looking statements are made as of the date hereof and ICI does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from ICI's expectations and projections."
SOURCE Innovative Composites International Inc.