Ceres Global Ag Corp. (TSX: CRP) (“Ceres” or the “Corporation”) today announced its financial and operational results for the three- and 12-month periods ended March 31, 2016. All amounts are in Canadian currency unless otherwise noted.
“Our Q4 results were marked by modest gains to each of our key financial and operating metrics, including gross profit, net income, number of bushels handled and number of rail cars transloaded,” said Mr. Patrick
nBracken, CEO of Ceres Global Ag. “This progress is encouraging, and suggests that our strategy of combining grain handling, storage and trading activities with a world-class logistics hub is gaining traction. With the buildout of the grain facility at our Northgate Commodities Logistics Hub now complete, we expect our recent momentum to continue as we head towards the start of the planting season.”
Financial and Operational Highlights for Q4 FY2016 compared to Q4 FY2015
- Generated revenue of $119.4 million, up 119%.
- Gross profit was $3.9 million compared to a gross loss of $208 thousand.
- Net income was $1.2 million, up from a net loss of $3.5 million.
- Earnings per share were $0.04, up from a loss per share of $0.13.
- Completed the buildout of the grain handling and shipping facility at the Corporation’s flagship Northgate Commodities Logistics Hub.
- Loaded 774 railcars, up 87%, of grains and/or oilseeds out of Northgate, for markets in the U.S., mLatin America and Asia.
- Renewed and extended the Corporation’s agreement with Elbow River Marketing to unload mliquefied petroleum gas.
- Loaded 153 railcars of propane on behalf of a third-party customer at Northgate.
- Began construction of the fertilizer storage warehouse in support of the agreement signed with Koch Fertilizer Canada, ULC to handle and store fertilizer at Northgate. The availability of fertilizer mproducts at Northgate will make it possible for grain suppliers to improve their transportation mcosts by back-hauling agriculture inputs to points of origination.
Highlights subsequent to Quarter End
- Announced that it will put three grain storage elevators located in Buffalo (Lakeport), New York,Minneapolis (Calumet) and Duluth (Lakeport), Minnesota out of service as part of a strategic mi nitiative designed to reduce operating costs and better align operations with the Corporation’s mlong-term plans and focus. The grain elevator closures will take effect with the start of 2016 crop season in July. Ceres expects that the closures will result in an annual reduction of operating expenses of US$2 to $2.5 million. Ceres’ Duluth storage facility, which has a capacity of 12.2 million bushels, will remain open and be the primary focus of operations in the area.
Revenue in Q4 2016 totaled $119.4 million, up 119% from $54.5 million for Q3 2015 despite lower grain prices. The revenue growth in Q4 was largely due to an increase in the number of bushels sold by 8.1 million, or 109%, over the comparative period. Revenue on a 12-month basis for FY2016 was $356.2 million, up from $192.8 million for FY2015, and also driven by an increase in the number of bushels sold.
Ceres is principally involved in an agricultural commodity-based businessin which changes to selling prices generally move in relation to changes to purchase prices. Therefore, increases or decreases in prices of the agricultural commodities that Ceres deals with will have a relatively equal impact on sales and cost of sales. Accordingly, management believes it is more important to focus on changes in gross profit and the number of bushels handled than it is to focus on changes in revenue in dollars.
Ceres generated gross profits of $3.9 million in Q4 2016, up from a gross loss of $208 thousand in the comparative period. The year-over-year turnaround was largely due to a $2.6 million, or 100%, increase in net trading margins stemming from higher carry income, increased inventory quantities and increased track-trading activities. On a 12-month basis, Ceres incurred a gross loss of $3.1 million in FY2016 compared to gross profits of $11.7 million for FY2015. The gross profit decline was largely due to durum wheat loss of $11.7 million incurred in Q3 2016. As disclosed previously, durum wheat prices experienced considerable declines over the past crop year, impacting the value of the Corporation’s existing grain inventory at the end of Q3 or December 31, 2015. Durum wheat prices and Ceres’ durum wheat inventory value have since stabilized. Operating and depreciation expenses for Q4 2016 totaled $5.4 million, up from $4.3 million for Q4 2015. The growth was due to increased activities at Northgate and the impact of the declining value of the Canadian dollar as the majority of Ceres’ operating expenses are translated from U.S. currency. Ceres owns and operates nine facilities, of which seven are located in the U.S. Operating and depreciation expenses for the 12-month period of FY2016 totaled $20.5 million, up from $16.6 million for FY2015. General and administrative expenses for Q4 2016 totaled $2.6 million, up from $2.2 million for Q4 2015. The increase was largely due to the impact the declining value of the Canadian dollar had on operations
as the majority of Ceres’ expenses are translated from U.S. currency. The expense increase was also attributable to increased staffing levels, particularly due to overall grain trading and origination at Northgate.
General and administrative expenses totaled $10.4 million forthe 12-month period of FY 2016 and $10.7 million for the comparable period in FY2015. The year-over-year decline in expenses for the 12-month period was attributable to non-capitalized third-party service costs incurred for the build-out of Northgate in FY2015. Net income for Q4 2016 $1.2 million or earnings per share of $0.04. These compare to a net loss of $3.5 million or a loss per share of $0.14 for comparative period. Net loss for the 12-month period of FY2016 mwas $13.9 million or a loss per share of $0.51. In the 12-month period of FY2015, Ceres incurred a net loss mof $1.4 million or an earnings per share loss of $0.08. The declines were due to factors already discussed, including the durum wheat loss of $11.7 million and costs incurred towards the buildout of Northgate.
Source: CERES