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8-K - FORM 8-K - SYNTHESIS ENERGY SYSTEMS INC | h82169e8vk.htm |
Exhibit 99.1
PRESS RELEASE |
SYNTHESIS ENERGY SYSTEMS ANNOUNCES FINANCIAL RESULTS AND
CORPORATE HIGHLIGHTS FOR THE THIRD QUARTER OF FISCAL 2011
CORPORATE HIGHLIGHTS FOR THE THIRD QUARTER OF FISCAL 2011
HOUSTON, May 10, 2011 Synthesis Energy Systems, Inc. (Nasdaq: SYMX) (the Company or SES), a
global energy and gasification technology company that provides products and solutions to the
energy and chemicals industries, today announced financial results and corporate highlights for the
third quarter of fiscal 2011, ended March 31, 2011.
The third quarter of 2011 was marked by a series of business development and technology
achievements for us, including the signing of our agreement with ZJX and China Energy and further
demonstrations of the efficiency and reliability of our U-GAS® technology at our Zao
Zhuang joint venture plant, commented Robert Rigdon, President and CEO.
Third Quarter 2011 Financial Results (Unaudited)
Total revenue increased $0.5 million, or 19%, for the three months ended March 31, 2011, to $3.1
million, versus $2.6 million for the three months ended March 31, 2010.
Product sales from the Companys Zao Zhuang (ZZ) joint venture plant increased to $2.6 million
for the three months ended March 31, 2011, compared to $2.3 million for the three months ended
March 31, 2010. For the three-month periods ended March 31, 2011 and 2010, the plant was available
100% and 96% of the time, respectively. ZZ operated for 72% of the third quarter of 2011 versus
78% in the third quarter of 2010.
Technology licensing and related services revenues for the three months ended March 31, 2011, were
$0.5 million, versus $0.3 million for the three month ended March 31, 2010. The technology
licensing and related services revenues for the quarter ended March 31, 2011, resulted from the
recognition of previously deferred revenues received under a license agreement entered into in
April 2010 related to a U.S. based biomass to fuels project which has since been terminated due to
the customers inability to finance the project.
The Company reduced its operating loss for the third quarter of fiscal 2011 to $3.6 million, a 31%
improvement from the $5.2 million reported for the third quarter of fiscal 2010. The $1.6 million
improvement was primarily due to the improved operating margin at its ZZ joint venture plant, the
licensing and related services revenue increase and reductions in other operating costs.
The net loss attributable to stockholders for the third quarter of fiscal 2011 fell to $3.6
million, or $0.07 per share, versus a net loss attributable to stockholders of $5.3 million, or
$0.11 per share, for the prior years third quarter.
At March 31, 2011, the Company had cash and cash equivalents of $29.4 million and working capital
of $27.2 million.
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Corporate Highlights
| SES, ZJX and China Energy entered into an agreement for China Energy to make an equity investment in SES of $83.8 million for 37.3 million shares of SES common stock, which will give ZJX/China Energy a 43.6% equity stake based on the issued and outstanding common stock of SES on March 31, 2011. ZJX is the controlling shareholder of China Energy. ZJX and China Energy brings extensive relationships throughout China that will be instrumental in developing new joint venture businesses to meet Chinas growing demand for clean energy products derived from secure, local energy sources, including low-quality coals. The transaction is subject to stockholder approval and other customary closing conditions. | |
| Using its new fines management system at the ZZ plant, SES demonstrated a significant improvement in carbon conversion rates over last year, achieving a rate above 98% with coal consumption of less than 0.75kg coal/NM3 syngas. | |
| SES completed negotiations for another coal test at the ZZ plant involving 2,100 tons of low quality coal from Xinjiang Autonomous Region of China supplied by a company planning to invest in a synthetic natural gas project. The tests are scheduled to begin in May. | |
| Yima construction continues to move forward, with the gasifier structure in the late stages of construction. Portions of the plant are scheduled to go online by mid-2012. | |
| SES presented U-GAS® data at the World CTL conference in Paris demonstrating the technologys advantages in enabling new coal-to-liquid projects, a significant commercial opportunity. |
Conference Call Information
Senior management will hold a conference call to review the Companys financial results for this
period and provide an update on corporate developments today at 8:30 a.m. Eastern Time.
To access the live webcast, please log on to the Companys website at www.synthesisenergy.com.
Alternatively, domestic callers may participate in the live conference call by dialing (800)
860-2442 and international callers should dial (412) 858-4600. An archived version of the webcast
will be available on the Companys website through June 13, 2011. A telephone replay of the
conference call will be available approximately one hour after the completion of the call through
June 13, 2011. Domestic callers can access the replay by dialing (877) 344-7529. International
callers should dial (412) 317-0088. The PIN access number for the live call and the replay is
450545#.
About Synthesis Energy Systems, Inc.
SES provides technology, equipment and engineering services for the conversion of low rank, low
cost coal and biomass feedstocks into energy and chemical products. Its strategy is to create
value through providing technology and equipment in regions where low rank coals and biomass
feedstocks can be profitably converted into high value products through its proprietary
U-GAS® fluidized bed gasification technology, which SES licenses from the Gas Technology
Institute. U-GAS® gasifies coal cost effectively, without many of the harmful emissions
normally associated with coal combustion plants.
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The primary advantages of U-GAS® relative to other gasification technologies are (a)
greater fuel flexibility provided by the ability of SES 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) the ability of SES to operate efficiently
on a smaller scale, which enables the construction of plants more quickly, at a lower capital cost,
and, in many cases, in closer proximity to coal sources. SES currently has offices in Houston,
Texas, and Shanghai, China. For more information on SES, visit www.synthesisenergy.com 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 early stage of development of SES, its estimate of the sufficiency of
existing capital sources, its ability to successfully develop its licensing business, its ability
to raise additional capital to fund cash requirements for future investments and 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 ZZ
joint venture, its ability to complete the expansion of the ZZ project, its ability to obtain the
necessary 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, its ability to negotiate the terms of the conversion of the Yima project from methanol to
glycol, its ability to close the ZJX/China Energy transaction, its ability to grow its business as
a result of the ZJX/China Energy transaction and the sufficiency of internal controls and
procedures. Although SES 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. SES cannot
assure you that the assumptions upon which these statements are based will prove to have been
correct.
Contact:
Synthesis Energy Systems, Inc. Kevin Kelly Chief Accounting Officer (713) 579-0600 Kevin.Kelly@synthesisenergy.com |
MBS Value Partners, LLC Matthew D. Haines Managing Director (212) 710-9686 Matt.Haines@mbsvalue.com |
- TABLES FOLLOW
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SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
(A Development Stage Enterprise)
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue: |
||||||||||||||||
Product sales and other related parties. |
$ | 2,626 | $ | 2,297 | $ | 6,622 | $ | 6,993 | ||||||||
Technology licensing and related services |
506 | 324 | 1,013 | 390 | ||||||||||||
Other |
| | | 146 | ||||||||||||
Total revenue |
3,132 | 2,621 | 7,635 | 7,529 | ||||||||||||
Costs and Expenses: |
||||||||||||||||
Costs of sales and plant operating expenses |
2,384 | 2,736 | 6,254 | 7,083 | ||||||||||||
General and administrative expenses |
3,329 | 3,401 | 9,646 | 9,403 | ||||||||||||
Project and technical development expenses. |
58 | 286 | 187 | 1,840 | ||||||||||||
Asset impairment losses |
| | | 6,575 | ||||||||||||
Stock-based compensation expense |
312 | 741 | 577 | 1,706 | ||||||||||||
Depreciation and amortization |
653 | 666 | 1,983 | 2,107 | ||||||||||||
Total costs and expenses |
6,736 | 7,830 | 18,647 | 28,714 | ||||||||||||
Operating loss |
(3,604 | ) | (5,209 | ) | (11,012 | ) | (21,185 | ) | ||||||||
Non-operating (income) expense: |
||||||||||||||||
Equity in losses of Yima joint ventures |
60 | 4 | 286 | 54 | ||||||||||||
Foreign currency (gain) loss |
(223 | ) | | (719 | ) | 1 | ||||||||||
Interest income |
(41 | ) | (38 | ) | (132 | ) | (90 | ) | ||||||||
Interest expense |
196 | 178 | 512 | 522 | ||||||||||||
Net loss |
(3,596 | ) | (5,353 | ) | (10,959 | ) | (21,672 | ) | ||||||||
Less: net loss attributable to noncontrolling
interests |
37 | 72 | 96 | 3,614 | ||||||||||||
Net loss attributable to stockholders |
$ | (3,559 | ) | $ | (5,281 | ) | $ | (10,863 | ) | $ | (18,058 | ) | ||||
Net loss per share: |
||||||||||||||||
Basic and diluted |
$ | (0.07 | ) | $ | (0.11 | ) | $ | (0.22 | ) | $ | (0.37 | ) | ||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic and diluted |
48,429 | 48,198 | 48,403 | 48,228 | ||||||||||||
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SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
(A Development Stage Enterprise)
Consolidated Balance Sheets
(In thousands)
(Unaudited)
(In thousands)
(Unaudited)
March 31, | June 30, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 29,423 | $ | 42,573 | ||||
Accounts receivable |
2,591 | 2,672 | ||||||
Prepaid expenses and other currents assets |
1,667 | 1,875 | ||||||
Inventory |
1,182 | 983 | ||||||
Total current assets |
34,863 | 48,103 | ||||||
Construction-in-progress |
433 | 565 | ||||||
Property, plant and equipment, net |
34,830 | 35,316 | ||||||
Intangible asset, net |
1,234 | 1,272 | ||||||
Investment in Yima joint ventures |
33,190 | 32,430 | ||||||
Other long-term assets |
2,938 | 2,895 | ||||||
Total assets |
$ | 107,488 | $ | 120,581 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accrued expenses and accounts payable |
$ | 5,292 | $ | 7,008 | ||||
Deferred revenue |
| 522 | ||||||
Current portion of long-term bank loan |
2,349 | 2,268 | ||||||
Total current liabilities |
7,641 | 9,798 | ||||||
Long-term bank loan |
4,637 | 6,744 | ||||||
Total liabilities |
12,278 | 16,542 | ||||||
Equity: |
||||||||
Common stock, $0.01 par value: 200,000
shares authorized: 48,537 and 48,337 shares issued and outstanding, respectively |
485 | 483 | ||||||
Additional paid-in capital |
199,400 | 198,720 | ||||||
Deficit accumulated during development stage |
(107,312 | ) | (96,449 | ) | ||||
Accumulated other comprehensive income |
3,284 | 1,836 | ||||||
Total stockholders equity |
95,857 | 104,590 | ||||||
Noncontrolling interests in subsidiaries. |
(647 | ) | (551 | ) | ||||
Total equity |
95,210 | 104,039 | ||||||
Total liabilities and equity |
$ | 107,488 | $ | 120,581 | ||||
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