Synthesis Energy Systems Announces Second Quarter 2010 Financial Results
Conference call scheduled for 4:30 p.m. Eastern Today
HOUSTON, Feb. 8 /PRNewswire-FirstCall/ -- Synthesis Energy Systems, Inc. (the "Company") (Nasdaq: SYMX), a global energy and gasification technology company, today announced results for the quarter ended December 31, 2009.
"I am pleased to report that revenue from product sales at our Hai Hua joint venture plant increased by almost a million dollars during the second quarter of fiscal 2010 compared to the first quarter. Additionally, our U-GAS® technology continues to perform very well, achieving high availability while consistently meeting Hai Hua's syngas quality requirements," said Robert Rigdon, President and CEO of the Company.
"Our technology licensing business continues to move ahead. We believe sales related to technology licensing and equipment components will be a near-term revenue generator and long-term value driver for us. Our recent strategic alliance with Coalworks and our collaboration with East China Engineering Corporation, both announced in December 2009, are significant achievements as we build out this business segment," Rigdon added.
"As we have previously disclosed, we have been seeking additional partners who would invest in and bring debt guarantees for our Golden Concord joint venture methanol and DME production project. Based on what we have learned from this effort, combined with the growing interest in our capability to gasify the lignite coals of this region, we have now refocused our efforts with the parties who have expressed interest in moving forward with us and have a broader goal of value creation from Inner Mongolia lignite into high value products such as SNG or olefins. As a result, during the second quarter we determined that the joint venture's assets including the original engineering design and initial construction work were impaired. This decision resulted in a non-cash asset impairment loss of $6.6 million. We continue to believe that this site holds promise due to its close proximity to very low cost lignite fuels, and we are actively engaged with these interested parties to align around a path forward for the development of a project on a larger scale and with a focus on energy or chemical products such as SNG or olefins," stated Rigdon.
Second Quarter Financial Results (Unaudited)
For the quarter ended December 31, 2009, the Company reported total revenue of $2.6 million. These results included revenue for product sales at the Hai Hua joint venture plant of $2.4 million, which is an increase of $0.8 million from the prior quarter. Product revenues have increased at the plant due to the plant's increased syngas volume offtake by its customer, Hai Hua, and increased byproduct sales, including sales of the Company's excess oxygen to Hai Hua under its ASU cost-sharing arrangement, which began in September 2009. Additionally, the Company reported other revenues of $0.2 million for the quarter ended December 31, 2009, which was generated primarily from a sponsorship grant related to lignite testing at the Hai Hua joint venture plant.
Cost of product sales and plant operating expenses were $2.6 million for the quarter ended December 31, 2009, an increase of $0.9 million from the prior quarter. The plant's operating costs, including coal, power and other materials' consumption, increased due to a 40% increase in syngas production compared to the prior quarter.
General and administrative expenses were $2.9 million during the quarter ended December 31, 2009, a decrease of $0.2 million from the prior quarter.
Project and technical development expenses were $0.5 million for the quarter ended December 31, 2009 and were related to U-GAS® technology development and product feasibility studies for a possible expansion of the Hai Hua joint venture plant.
The Company's operating loss for the quarter, which included $7.7 million of non-cash expenses comprised of the impairment loss, stock-based compensation expense and depreciation and amortization, was $11.1 million, compared to an operating loss of $4.9 million for the first quarter of fiscal 2010, which included $1.3 million of non-cash expenses.
Net loss attributable to noncontrolling interests was $2.3 million for the quarter ended December 31, 2009 and related to the remaining noncontrolling interest balance of the Company's joint venture partner in its Golden Concord joint venture. Golden Concord's equity contributions of $3.1 million were previously reduced by its 49% share of the operating losses of the Golden Concord joint venture to date.
At December 31, 2009, the Company had cash and cash equivalents of $50.9 million and working capital of $45.2 million.
Conference Call Information
Senior management will hold a conference call today at 4:30 p.m. Eastern Time to review the Company's financial results for the quarter ended December 31, 2009 and provide an update on corporate developments.
To access the live webcast, please log on to the Company's website at www.synthesisenergy.com. Alternatively, callers may participate in the conference call by dialing (612) 234-9960. An archived version of the webcast will be available on the website through March 8, 2010. A telephone replay of the conference call will be available approximately two hours after the completion of the call through Sunday, February 14, 2010. Callers can access the replay by dialing (320) 365-3844; the PIN access number is 144633.
About Synthesis Energy Systems, Inc.
The Company is an energy and technology company that builds, owns and operates coal gasification plants that utilize its proprietary U-GAS® fluidized bed gasification technology to convert low rank coal and coal wastes into higher value energy and chemical products, such as transportation fuel, substitute natural gas, fuel gas, methanol and ammonia. The U-GAS® technology, which the Company licenses from the Gas Technology Institute, gasifies coal without many of the harmful emissions normally associated with coal combustion plants. The primary advantages of U-GAS® relative to other gasification technologies are (a) greater fuel flexibility provided by our ability to use all ranks of coal (including low rank, high ash and high moisture coals, which are significantly cheaper than higher grade coals), many coal waste products and biomass feed stocks; and (b) our ability to operate efficiently on a smaller scale, which enables us to construct plants more quickly, at a lower capital cost, and, in many cases, in closer proximity to coal sources. The Company currently has offices in Houston, Texas and Shanghai, China. For more information on the Company, visit or call (713) 579-0600.
Forward Looking Statements
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are the Company's early stage of development, its estimate of the sufficiency of existing capital sources, its ability to raise additional capital to fund cash requirements for future operations, its ability to reduce operating costs, the limited history and viability of its technology, the effect of the current international financial crisis on its business, commodity prices and the availability and terms of financing opportunities, its results of operations in foreign countries and its ability to diversify, its ability to maintain production from its first plant in the Hai Hua joint venture project, approvals and permits for its Yima project and other future projects, the estimated timetables for achieving mechanical completion and commencing commercial operations for the Yima project, and the sufficiency of internal controls and procedures. Although the Company believes that in making such forward-looking statements its expectations are based upon reasonable assumptions, such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. The Company cannot assure you that the assumptions upon which these statements are based will prove to have been correct.
SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, June 30,
2009 2009
------------ --------
ASSETS
Current assets:
Cash and cash equivalents $50,876 $90,420
Accounts receivable 2,362 1,333
Prepaid expenses and other currents
assets 942 689
Inventory 858 780
--- ---
Total current assets 55,038 93,222
Construction-in-progress 572 6,078
Property, plant and equipment, net 36,846 37,713
Intangible asset, net 1,305 1,386
Investment in Yima joint ventures 32,238 1,500
Other long-term assets 3,284 6,237
----- -----
Total assets $129,283 $146,136
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses and accounts payable $7,573 $8,828
Current portion of long-term bank loan 2,255 2,254
----- -----
Total current liabilities 9,828 11,082
Long-term bank loan 7,835 8,958
----- -----
Total liabilities 17,663 20,040
Commitments and contingencies
Stockholders' Equity:
Common stock, $0.01 par value: 200,000
and 100,000 shares authorized: 48,218
and 48,118 shares issued and
outstanding, respectively 482 481
Additional paid-in capital 197,432 196,441
Deficit accumulated during development
stage (88,300) (74,701)
Accumulated other comprehensive income 1,610 1,598
----- -----
Total Synthesis Energy Systems, Inc.
stockholders' equity 111,224 123,819
------- -------
Noncontrolling interests in
subsidiaries 396 2,277
--- -----
Total stockholders' equity 111,620 126,096
------- -------
Total liabilities and stockholders'
equity $129,283 $146,136
======== ========
SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
------------------
Dec. Sep. Dec.
31, 30, 31,
2009 2009 2008
---- ---- ----
Revenue:
Product sales $2,423 $1,644 $483
Other 184 657 -
--- --- ---
Total revenue 2,607 2,301 483
Costs and Expenses:
Costs of sales and
plant operating
expenses 2,609 1,737 2,915
General and
administrative
expenses 2,921 3,081 4,742
Project and technical
development expenses 535 1,020 1,371
Stock-based
compensation expense 366 598 1,252
Asset impairment loss 6,575 - -
Depreciation and
amortization 720 722 722
--- --- ---
Total costs and
expenses 13,726 7,158 11,002
------ ----- ------
Operating loss (11,119) (4,857) (10,519)
Non-operating
(income) expense:
Equity in losses-
Yima joint ventures 50 - -
Interest income (13) (38) (687)
Interest expense 164 180 258
--- --- ---
Net loss (11,320) (4,999) (10,090)
Less: net loss
attributable to
noncontrolling
interests 2,299 422 338
----- --- ---
Net loss attributable
to stockholders $(9,021) $(4,577) $(9,752)
======= ======= =======
Net loss per share
attributable to
stockholders:
Basic and diluted $(0.19) $(0.10) $(0.20)
====== ====== ======
Weighted average
common shares
outstanding
Basic and diluted 48,183 48,148 48,011
====== ====== ======
SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Six Months Ended
----------------
Dec. 31, Dec. 31,
2009 2008
--------- ---------
Revenue:
Product sales $4,067 $608
Other 841 -
--- ---
Total revenue 4,908 608
Costs and Expenses:
Costs of sales and plant
operating expenses 4,346 4,338
General and
administrative expenses 6,004 9,301
Project and technical
development expenses 1,555 1,941
Stock-based compensation
expense 964 3,383
Asset impairment loss 6,575 -
Depreciation and
amortization 1,442 1,502
----- -----
Total costs and expenses 20,886 20,465
------ ----
Operating loss (15,978) (19,857)
Non-operating (income)
expense:
Equity in losses –Yima
joint ventures 50 -
Interest income (52) (1,463)
Interest expense 344 536
--- ---
Net loss (16,320) (18,930)
Less: net loss
attributable to
noncontrolling interests 2,721 662
----- ---
Net loss attributable to
stockholders............... $(13,599) $(18,268)
======== ========
Net loss per share
attributable to
stockholders:
Basic and diluted $(0.28) $(0.38)
====== ======
Weighted average common
shares outstanding
Basic and diluted 48,183 48,011
====== ======
SOURCE Synthesis Energy Systems, Inc.
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