Solegear Reports Record Q1 Revenues and Gross Margin, Financial Results for the Three Months Ended May 31, 2017
VANCOUVER, BRITISH COLUMBIA–(Marketwired – July 31, 2017) - Solegear Bioplastic Technologies Inc. (the “Company” or “Solegear”) (TSX VENTURE:SGB) today announced its first quarter financial results for the three months ended May 31, 2017 (“Q1 FY18″).
Q1 FY18 Key Highlights:
- Quarterly revenues of $670,532 a 53% increase compared to revenues of $437,667 for the three months ended May 31, 2016 (“Q1 FY17″). Revenue growth has been driven by recurring revenue from the existing customer base, the acquisition of Lindar Corporation’s bioplastics division, new customer acquisitions and cross selling additional product into the Company’s existing customer base.
- Gross profit margin grew 200 basis points to a record 35% compared to 33% in Q1FY17. Gross profit growth was driven by both product and market segment revenue mix. The Company launched its market segment selling strategy in Q1 FY18, which is designed to drive diverse revenue across all the Company’s categories.
- SG&A decreased slightly by 2% from Q1 FY17.
- The Company reported a net loss before other items of $754,660 a 7% improvement over Q1FY17. The net loss before Deprecation is $607, 480 compared to $808,302 for Q1FY17, an improvement of 25%. This included an increase of $143,351 in depreciation expense as a result of amortization costs associated with acquisitions completed in Fiscal 2017.
- The Company launched four new plant-based recycling bins into the marketplace as an extension of its Home and Office Products line, as well as one new food packaging design.
- The company had cash reserves of $636,019 at Q1 ending May 31, 2017 compared to $421,520 at May 31, 2016.
The Company’s financial statements and other disclosures are available on SEDAR.
Management continues to believe there are several Global and North American macro and fundamental trends that should continue to drive demand for alternatives to petroleum based packaging – products that are free of chemicals of concern, made from plant-based renewable materials, and better for the planet. These trends should continue to create new demand for bio-based products in what is projected to be $540 billion global petroleum plastic industry and a $600+ billion global packaging industry in 2019. This demand is a key factor in the company’s 14x revenue growth in the recently completed fiscal year, along with its 53% growth rate for Q1 ending May 31, 2017.
As a result, management continues to be optimistic that anticipated growth should continue to drive demand for the Company’s leading assortment of over 100 plant-based food packaging and 25 household/business organizational products. The Company expects that it will continue to grow through a two-prong strategy. Firstly, by driving organic growth through new customer acquisitions, new product line extensions, along with cross selling new and existing products into its customer base. The Company will target new customers across defined market segments to continue broadening its customer base and revenue mix. The Company launched four new plant-based recycling bins in Q1 and has a strong pipeline of new products under development. Secondly, macro market based trends over the last three years have more than doubled the bio-plastic industry, creating a highly fragmented competitive marketplace of new entrants and existing plant-based companies or divisions of large companies. The Company aims to take advantage of this and expects to continue to grow through strategic acquisitions of strong plant-based materials companies that bring a new set of customers, Intellectual Property, and/or a product assortment that can open up new product verticals that can be cross sold into the Company’s existing customer base. This is strategy is evidenced by the recent commercial announcement made by the Company.
The Company’s corporate profile is located at www.solegear.ca/investors
About Solegear Bioplastic Technologies Inc.
Solegear is a plant-based technology company that develops, produces and distributes packaging and consumer products under the good natured™ brand. Solegear’s product market offering includes over 100 plant-based food packages, 10 grades of rolled sheet stock, 28 household/business organizational products, and customized packaging solutions for food and general merchandise packaging.
Using the principles of Green Chemistry, Solegear sources and develops proprietary patented or patent pending bioplastics that use a high percentage of plant-based material and contain no hazardous materials or chemicals of concern, while maintaining performance characteristics equal to or better than traditional plastics. Our bioplastics are converted into certified plant-based consumer goods, packaging and sheet roll stock through an outsourced supply chain model. We work in direct partnership with retailers, food producers, food packers, consumer product companies, restaurants and thermoforming companies through inside and outside sales teams. The Company markets its assortment of product collections into three market segments – National, Regional, and Small Business. Solegear’s market strategy is designed to maximize revenue, margin and market share growth.
For more information: www.solegear.ca
On behalf of the Company:
Paul Antoniadis, Chief Executive Officer and Director
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.
Cautionary Statement Regarding Forward-Looking Information
Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the risk that: (i) that recent commercial announcements do not get executed as forecasted, (ii) that the Company’s sales pipeline does not convert into revenue generating customers as anticipated, and (iii) that suitable growth opportunities are not identified.
When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
Other than as required under securities laws, we do not undertake to update this information at any particular time.
Forward-looking information contained in this news release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.
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