PyroGenesis Announces 2013-Q2 Results: Revenues Increase by 57%, Gross Margins exceed 43%

MONTREAL, Aug. 29, 2013 /CNW Telbec/ - PyroGenesis Canada Inc. ("PyroGenesis" or the "Company") (TSXV: PYR), today announced its financial and operational results for the second quarter of fiscal 2013, ending June 30, 2013 ("2013-Q2").

Second Quarter Highlights:

Over the first six months of 2013 PyroGenesis has:

• Increased its revenues by over 57%;
• Decreased its Cost of Sales and Services by over 23% to $1,395,786; and
• Increased gross margin (before amortization of licenses) to over 43% to $572,281;

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 six months ended June 30, 2013

Revenues

Revenues for 2013-Q2 were $1,341,818, an increase of 73% over the revenue of $777,197 reported during the same period in fiscal 2012. On a year-to-date ("YTD") basis revenues for fiscal 2013 were $2,482,961, an increase of 57% over the revenues of $1,585,140 reported during the same period in fiscal year 2012. 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-Q2 are positively impacted by the work achieved and recognition of the revenues on this new major contract, as well as other projects in progress or completed in the quarter.

Cost of Sales

Cost of Sales before government grants and research and development tax credits for 2013-Q2 was $787,625, an increase of 18% as compared to net costs of $668,777 reported for 2012-Q2. On a YTD basis, cost of sales before government grants was $1,395,786 as compared to $1,832,625 for the same period in the prior year, for a decrease of 24%.

Building on the improvement in gross margin on projects that started in 2012-Q4, the 2013-Q2 shows an impressive improvement over most of 2012. Gross margin for 2013-Q2 before amortization of licenses was $554,193 (41.3% on revenues), versus $108,420 (14.0% on revenues) for 2012- Q2. For the six months ended June 30, 2013, the YTD gross margin was $1,087,175 (43.8% on revenues), versus negative $247,485 (negative 15.6% on 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 is a key demonstration that PyroGenesis is ready to face the challenges ahead as it volume of projects and revenues grow.

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

Before stock based compensation, Selling, general and administrative (SG&A) expenses, increased by 17% in 2013-Q2 over the same time frame in 2012 (2013-Q2: $941,894; 2012-Q2: $804,560), and 12% for 2013-YTD (2013-YTD: $1,838,691; 2012: $1,635,171). The increase in SG&A expenses is mainly attributable to the hiring of a senior financial executive, the expansion of the Company's sales force with two seasoned business development professionals and investments in R&D develop technologies and products. Increases in office and general spending are mainly attributed to further development of the Company's information systems.

Net Loss

Loss from operations for 2013-Q2 before non-cash items (share based payments: $149,785; amortization of licenses and property and equipment: $394,729) was $432,380.  During 2012, 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 in the first half of 2013.

Total Comprehensive Loss

The Corporation has achieved a 28% and 40% decrease in comprehensive loss in 2013- Q2 and 2013-YTD over the respective 2012 comparatives. This decrease is due to an increase in revenues by 73% and 57% (net increase of $564,621 and $879,821) for the 2013-Q2 and 2013- YTD over comparative periods in 2012; and gross margin before amortization of licenses was $554,193 (41.3% GM) for 2013-Q2 and as compared to a margin of $108,420 ( 14.0% GM) in 2012-Q2,for a net margin improvement in Q2-2013 of $445,773 or 27.3% points before amortization of licenses compared to Q2-2012 as well as for a 2013-YTD, the gross margin is $1,087,175 (43.8% GM) versus a negative margin of $247,485 (-15.6% GM) for the comparative period in 2012 (for an improvement in margin of $1,334,660). The dramatic improvement in gross margin is a positive sign that Management's restructuring to allow greater concentration on operations is bringing positive results.

Liquidity

At June 30, 2013, PyroGenesis had cash on hand of $608,786, no debt owing to non-related third parties or with nil bank indebtedness parties and negative working capital of $3,191,487. Subsequent to quarter end, PyroGenesis collected over $1.4M in receivables that were booked at June 30, 2013.

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.