PyroGenesis Announces 2017 Results

MONTREAL, April 30, 2018 (GLOBE NEWSWIRE) -- PyroGenesis Canada Inc. (http://pyrogenesis.com) (TSX-V:PYR) (OTCQB:PYRNF), a high-tech company (the “Company” or “PyroGenesis”) that designs, develops, manufactures and commercializes plasma waste-to-energy systems and plasma torch products, is pleased to announce today its financial and operational results for the fourth quarter and the fiscal year ended December 31, 2017.

“2017 was a year in which all key indicators of operational performance posted significant gains, year over year, and once again the Company is well positioned for the coming year,” said P. Peter Pascali, President and CEO of PyroGenesis. “2016 was a pivotal year for PyroGenesis as the Company decided to re-enter the market for metal powder production (this time for additive manufacturing), and leverage off of both its extensive Plasma expertise and the fact that it invented Plasma Atomization for this space.  2017 became the year in which the Company went from relative obscurity within the additive manufacturing industry to being nominated for “Materials Company of the Year” at the 3D Printing Industry Awards 2018.  2017 also saw the commercial acceptance of its patented DROSRITE™ System with the acceptance of its first commercial sale and a subsequent re-order by the same client.   As reviewed in a press release dated February 1st, 2018, we now have visibility on an additional 6-10 DROSRITE™ systems to be delivered in 2018 and there is a high probability that the Company will be profitable in 2018 from the addition of DROSRITE™ system sales to our backlog. All this to say that 2017 seems to have set the stage for a profitable 2018.”

Highlights

2017 was a year in which PyroGenesis posted:

  • An increase of 38% in Revenues to $7,192,861 year over year;
  • A 258% increase in Gross Profit to $3,126,967 compared to a loss of ($1,980,336) in 2016;
  • An increase in Gross margins (Before amortization of intangible assets and write-offs of inventories and costs and profits in excess of billings on uncompleted contracts) to 43.5% (2016: 41.6%);
  • An increase in Gross margins (After amortization of intangible assets and write-offs of inventories and costs and profits in excess of billings on uncompleted contracts) to 43.5% (2016: 14.8%);
  • 22% decrease in Modified EBITDA loss to ($1,445,784) for fiscal 2017;
  • A backlog of $7.2MM at December 31, 2017;
  • Pipeline exceeds $20MM (Pipeline is considered to be negotiations with either existing clients who wish to re-order, or new clients that have paid for demonstrations after receiving a quote).

Outlook

2017 was a year in which all key indicators of operational performance posted significant gains and positioned the Company for profitability in the future.  Building upon the successes of 2016, which saw the establishment of healthy gross margins, in excess of 40% continue and improve throughout 2017, as the Company put in place the infrastructure and personnel to ensure that these margins, not only continue into the foreseeable future, but improve once powder production is in full commercialization.

The following is a non-exhaustive review of PyroGenesis’ main commercial activities:

    A)  Powder Production:

2017 became the year in which the Company went from relative obscurity within the additive manufacturing industry, to being nominated “Materials Company of the Year” at the 3D Printing Industry Awards 2018. 

Not only, during this period,  did the Company successfully assemble and commission its first metal powder production system, but also (i) successfully delivered orders for Titanium and Inconel powders, all while still in the ramp up phase, (ii) generated new, game changing, IP which provides for more control over particle size distribution, with little to no waste, while increasing powder production even further, and (iii) entered into several NDA’s with significant players in the industry (end users, printer manufacturers, and distributors) all with a view of providing sample orders, repeat orders, long term orders, contract R&D, and/or strategic partnerships for long term powder supply contracts, some with a view to a possible acquisition.  Given the level of activity, and the prospect of significant orders in the near term, management decided to order the long lead items for two powder production systems, both of which should be fully operational by the end of July 2018. These new powder production units will incorporate some of the cutting-edge IP that has recently been developed and/or is in development. We expect these units will cost significantly less to manufacture, generate higher production rates, and provide greater control over particle size distributions.

Of note, although the Company’s strategic plan has always been based on its existing IP, know-how, and system (the economics of which remain true to this day), management has decided to leverage off of its significant advantage in plasma technology and dedicate certain limited assets to increasing its IP base with the goal of further significantly reducing capital and operating costs of the powder production system while at the same time improving production rates even further.  PyroGenesis is confident that these goals once achieved will significantly impact our build out strategy for the better.

The Company expects that one of the next significant milestones is to be formally placed on a powder user’s approved supplier list.  This requires significant time and money on the part of the user and would be the first formal step to a powder production contract. Although we cannot predict the time frame in which this might happen, we can confirm that we have not been rejected during any powder qualification process leading to this ultimate goal.

    B)  DROSRITE™:

As the Company positioned itself, during 2017, to become a significant powder producer to the Additive Manufacturing Industry, it also successfully positioned its DROSRITETM Furnace System to become a fully commercial product line in and of its own right.

2017 saw the commercial acceptance of PyroGenesis’ patented DROSRITE™ System with, not only an acceptance of its first commercial sale, but a subsequent re-order by the same client at a higher price.

During this time, a successful demonstration of the DROSRITE™ System in the Middle East has resulted in significant interest from that region while the Company’s demonstration unit is already fully booked in India, to September, with paid-for-demonstrations. This flurry of activity and interest for the DROSRITE™ System resulted in the Company hiring a full-time business development manager to market the DROSRITE™ System, and who’s role is exclusively to secure DROSRITE™ system sales. PyroGenesis is aggressively targeting both primary aluminum smelters in Asia and the Middle East where the market is estimated to be in excess of 1 million tonnes of dross1, as well as tertiary casting producers worldwide. These two markets alone represent a potential market for DROSRITE™ systems numbering in the hundreds of units.

1 http://www.world-aluminium.org/statistics/primary-aluminium-production/

As of this writing, PyroGenesis

  1. is currently discussing the purchase of an additional two (2) systems with an existing client;
  2. has demonstrated the system in the Middle East and are expected to close on the equivalent of three (3) systems over the next few months;
  3. has a demonstration system in India on contract for paid-for-demonstrations, which if successful could result in 1-4 additional orders;

Plus,

  1. as noted, this demonstration system is fully booked until September 2018.

Due to this high demand for on-site paid-for demonstrations, the Company is in the process of constructing a second DROSRITE™ demonstration system which is expected to be available for demonstrations in Q3 2018.  There is a high probability that PyroGenesis will be profitable in 2018 from DROSRITE™ system sales when combined with existing backlog.

    C)  US Military:

Originally it was thought that just one new US Aircraft Carrier would be ordered in 2018, with an estimated value of approximately $6MM, but now it seems that the interest is for two, for an estimated value of between $10-12MM.

The chemical warfare destruction unit, that PyroGenesis developed for a consortium involving various groups within the US military, and was in the process of being tested, continues to have its schedule delayed to accommodate other unrelated testing needs by the group. This testing timeline is out of the Company’s control.

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