PyroGenesis Announces 2013-Q3 Results: Revenues Increase 170%, Gross Margins exceed 40%

MONTREAL, Nov. 29, 2013 /PRNewswire/ - PyroGenesis Canada Inc. ("PyroGenesis" or the "Company") (TSXV: PYR), today announced its financial and operational results for the third quarter of fiscal 2013, ending September 30, 2013   ("2013-Q3").

Third Quarter Highlights:

During the third quarter of 2013, PyroGenesis has:

• Increased its revenues by 170% to $1,394,255;
• Increased gross margin (before amortization of licenses) to over 40%;
• Total comprehensive loss decreases by 47% to $915,156
• EBITDA loss decreases by 65% to $275,859

Results continue to reflect management's successful restructuring measures and its focus on increasing the effectives of its business development strategy. The Company continues to benefit from better utilization of resources and cost containments, on-time delivery, meeting key project milestones, and improved reporting with respect to project progress and issues. The changes recently implemented within the Company's business development focus are starting to have effect and management expects, as a result, further increases in revenues in the coming quarters.

Financial Summary for the nine months ended September 30, 2013

Revenues

Revenues for 2013-Q3 were $1,394,255, an increase of 170% over revenues of $516,595 reported during the same period in fiscal 2012. On a year-to-date ("YTD") basis revenues for fiscal 2013 increased 84% to $3,877,216 (9 months 2012: $2,101,735). This increase in revenue in 2013 reflects the end of the "gap period" the Company has been faced with while securing its first reorder from its established client base. In late November 2012, the Company announced that it had secured a $5.5 million reorder from Newport News Shipbuilding for a plasma waste destruction system to be installed on the CVN-79, the next US Navy Ford-class air craft carrier, which is to be delivered, and recognized into income, over the next two years. Revenues in 2013-Q3 were primarily impacted by the recognition of the revenue on this new major contract.

Cost of Sales

Cost of Sales and Services before amortization of licenses, posted an increase of 6% over net costs of $772,008 reported for 2012-Q3. On a YTD basis, cost of sales before amortization of licenses decreased 14% to $2,246,505 as compared to $2,604,633 for the same period in the prior year.

Gross margins continued to post impressive year over year improvements on both a quarter over quarter and year to date basis. The Company posted gross margin for 2013-Q3 before amortization of licenses of $575,462 (41.3% of revenues), versus negative $255,413 (negative 49.4% of revenues) for 2012- Q3. For the nine months ended September 30, 2013, the Company posted a YTD gross margin of $1,630,711 (42.1% of revenues), versus negative $502,898 (negative 23.9% of revenues) for the same period in 2012. The improved level of gross margin in 2013 was achieved through controlled project management, tight control over technical resources employed on projects, and favorable pricing on equipment purchases.

Management is pleased with the performance of its technical and project teams for completing projects under budget and on time. The ability to execute projects on time and also improve the project margins clearly demonstrates the success of PyroGenesis' 2012 restructuring and the fact that PyroGenesis is  now well positioned  to manage the anticipated growth in revenues.

Management is confident that with the increased focus on operations and project execution, PyroGenesis will continue to see favorable gross margins on projects. Margins will naturally fluctuate quarter to quarter depending on the types of projects under execution and the completion stage of the projects.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses, decreased by 3% in 2013-Q3 over the same time frame in 2012 (2013-Q3: $1,013,214; 2012-Q3: $1,041,685), and decreased 2% for 2013-YTD (2013-YTD: $3,021,782; 2012: $3,093,902). 2013 SG&A expenses incorporate the expansion of the Company's sales force with two seasoned business development professionals and investments in R&D develop technologies and products.

Net Loss

Loss from operations for 2013-Q3 decreased 47% to $916,604, over a loss of $1,742,758 reported during the same period in fiscal 2012. On a year-to-date ("YTD") basis, loss from operations for fiscal 2013 decreased 43% to $2,847,637 over a loss of $4,979,108 reported during the same period in fiscal year 2012. During 2012 and 2013, Management took several key steps to restructure and strengthen the Company's management, reduce fixed operating expenses, increase the focus on increasing revenues and improving the gross margins on projects. The results from these measures started to be evident towards the end of 2012 and throughout 2013.

Total Comprehensive Loss

The Corporation has achieved a 47% and 43% decrease in comprehensive loss for 2013- Q3 and 2013-YTD respectively over the 2012 comparatives. This decrease is due to an increase in revenues of 170% and 84% (net increase of $877,660 and $1,775,481) for the 2013-Q3 and 2013- YTD over comparative periods in 2012; and gross margin before amortization of licenses was $575,462 (41.3% GM) for 2013-Q3 and as compared to a negative margin of $255,413 (negative 49.4% GM) in 2012-Q3, for a net margin improvement in Q3-2013 of $830,875 or 90.7% points before amortization of licenses compared to Q3-2012 as well as for a 2013-YTD, the gross margin is $1,630,711 (42.1% GM) versus a negative margin of $502,898 (-23.9% GM) for the comparative period in 2012 (for an improvement in margin of $2,133,609).

EBITDA

EBITDA (earnings from operations before depreciation and amortization and special non-cash charges) for 2013-Q3 was negative $275,859, a decrease of 65% over the negative EBITDA of $782,367 reported during the same period in fiscal 2012. On a year-to-date ("YTD") basis, EBITDA for fiscal 2013 was negative $932,160, a decrease of 63% over the EBITA of negative $2,529,306 reported during the same period in fiscal year 2012.

Liquidity

At September 30, 2013, PyroGenesis had cash on hand of $594,390, no bank debt, no debt owing to non-related third parties, and a negative working capital of $3,691,001.

About PyroGenesis Canada Inc.

PyroGenesis Canada is an environmental solutions company that designs, develops and manufactures plasma waste-to-energy systems and plasma torch products. PyroGenesis' proprietary plasma technologies utilize the intense energy of plasma to gasify and vitrify virtually any type of waste without producing hazardous by-products. PyroGenesis' patented gasification and vitrification technology is different from incineration because it produces a clean synthetic gas from waste, which can be used for power generation. PyroGenesis' technology can also turn waste into a glassy rock that can be utilized as construction material. PyroGenesis has marquee defense industry and civilian customers that are using its technology in marine and land-based applications. For more information, please visit www.PyroGenesis.com

This press release contains certain forward-looking statements, including, without limitation, statements containing the words "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", "in the process" and other similar expressions which constitute "forward-looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, our expectations regarding the acceptance of our products by the market, our strategy to develop new products and enhance the capabilities of existing products, our strategy with respect to research and development, the impact of competitive products and pricing, new product development, and uncertainties related to the regulatory approval process. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks and uncertainties and other risks detailed from time-to-time in the Company's ongoing filings with the securities regulatory authorities, which filings can be found at www.sedar.com. Actual results, events, and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws.

Neither the 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.

SOURCE PyroGenesis Canada Inc.