Synthesis Energy Systems, Inc. (SES) (NASDAQ:SYMX), the global
leader in low cost, high performance clean energy gasification
technology, today reported financial and operating results for its
fiscal 2017 first quarter, ended September 30, 2016.
“During the first quarter of our fiscal year
2017, we have continued our focus on activities we believe will
build a strong foundation for generating future earnings. We
continue to make forward progress on many of our key initiatives,
including the development of equity investment platforms and our
expansion outside of China. We are very excited to have announced
positive results from our activities in Australia. SES owns
approximately 11% of Batchfire Resources, which acquired the
Callide thermal coal mine in Central Queensland late last month,”
said DeLome Fair, SES President and CEO.
“In China, we have received the final government
approval, thus finalizing the restructuring agreement of the Zao
Zhuang joint venture. We are moving forward with our partner,
Weijiao Group/Xuecheng Energy, on the exciting new project which
would generate hydrogen which will be used to convert
tar to clean burning, ultra-low sulfur diesel fuel. We have
received support from the local government to build this new
project in an expanded facility outside the city proper in Zouwu
Industrial Park, where our partner already has existing operations.
Our initial evaluation of the project looks positive and we are now
evaluating options to achieve a viable commercial structure with
Weijiao,” continued Ms. Fair.
“We have also progressed several nearer-term
technology licensing and equipment supply opportunities. In
addition to our ongoing bid to supply SGT technology and
proprietary equipment for a large project in South America, we are
now in advanced consideration for technology licensing and
equipment supply projects in India, Europe, and through our
Tianwo-SES JV. In addition, similar to our ongoing activities in
Australia, we continue our efforts to identify and develop
additional platforms globally,” added Ms. Fair.
Recent Corporate Highlights
SES Assets:
Callide Mine: In October, SES announced its
approximately 11% ownership position in Batchfire Resources Pty
Ltd., when Batchfire completed its acquisition of the Callide
thermal coal mine located in Central Queensland, Australia, from
Anglo American plc. The Callide Mine is a mature and significantly
sized coal producer with substantial recoverable thermal coal
reserves, according to Batchfire, and is supported by an
experienced local workforce, first-class logistics, and export
infrastructure. The Callide B and C power stations will be leading
customers for the mine’s output under long-term supply contracts,
essential for major power generation facilities with a combined
capacity of 1,510 megawatts. Batchfire’s management and board have
deep experience in coal mine operations in Australia, and the
Callide Mine continued its operations uninterrupted on a “walk-out,
walk-in” basis following the acquisition.
Yima Joint Ventures Methanol Plant (Yima): The
Yima plant began the process of restarting the plant on November 13
and is expected to resume normal operations during November,
following the Yima JV’s continued progress towards the
consolidation of its existing three-JV structure into one joint
venture company, which is expected to facilitate the facility’s
permanent environmental and safety permits.
Zao Zhuang New Gas Company Joint Venture (ZZ):
In October, SES received local government approval to successfully
finalize the restructuring agreement with the Company’s JV partner,
Shandong Weijiao Xuecheng Energy Co. Ltd. (Weijiao Group), which
transfers responsibility for all outstanding ZZ liabilities to
Weijiao Group. The newly restructured ZZ entity is now positioned
to develop and implement a new gasification facility, in the Zouwu
Industrial Park, intended to produce about 280 million Nm3 of
syngas per year using three SGT systems. The Zouwu Industrial Park
is a recently developed industrial zone in ZaoZhuang City, Shandong
Province, where Weijiao Group already has facilities operating. The
new facility’s clean syngas will primarily be used to generate
hydrogen. The hydrogen will be used to convert tar to clean
burning, ultra-low sulfur diesel fuel, a key contributor to
improving air quality in China. The local government has expressed
strong support for the project. This includes coordination and
support to the project through assistance in: permitting, land
needs, applications, tax preferences on project expansion,
upgrades, and re-construction; and financing preference.
Technology Licensing and
Equipment:
China Joint Venture: Tianwo-SES Clean Energy
Technologies Co., Ltd. (Tianwo-SES), SES’s China Joint Venture with
Suzhou THVOW Technology Co., Ltd. (THVOW) – SES continues to work
with its Tianwo-SES JV partner, to improve its operation to become
profitable and operate as intended per the contracts. SES
continues, on the business commercial side, to remain optimistic
about Tianwo-SES’s prospects to secure several projects including
its first large scale, national level project in China that is now
under discussion.
Fiscal First Quarter 2017 Financial
Results (Unaudited)
Revenues. During the three months ended
September 30, 2016 (the “Current Quarter”) there were no revenues
from continuing operations. This compares with total revenues of
$0.2 million for the three months ended September 30, 2015 (the
“Comparable Quarter”), which resulted from engineering feasibility
studies and coal testing services for two customers.
Costs of sales and plant operating expenses.
There were no costs of sales and plant operating expenses from
continuing operations during the Current Quarter. During the
Comparable Quarter there were $0.2 million of costs of sales and
plant operating expenses related to costs incurred for coal testing
and engineering studies for two customers discussed above.
General and administrative expenses. General and
administrative expenses were $2.3 million for continuing operations
in the Current Quarter as compared with $2.0 million the Comparable
Quarter. The $0.3 million increase is primarily related to
engineering expenses and consulting fees incurred for the
development of ongoing projects.
Net Loss from continuing operations attributable
to SES shareholders. The Company's net loss attributable to
SES shareholders from continuing operations for the Current Quarter
was $2.6 million ($0.03 per share) versus $3.0 million ($0.03 per
share) for the Comparable Quarter. This decrease in the loss was
primarily the result of the modification and replacement of
warrants in the Comparable Quarter.
Net Loss from discontinuing operations
attributable to SES shareholders. Loss from discontinued operation
related to our ZZ Joint Venture was $0.4 million for the Current
Quarter compared with $1.6 million for the Comparable
Quarter. The decrease in the loss was due primarily the
result of a reduction in costs as a result of the shutdown of the
ZZ Joint Venture plant in October 2015.
Net Loss attributable to SES shareholders. The
net loss attributable to SES stockholders for the Current Quarter
was $2.9 million ($0.03 per share) versus a loss of $4.6 million
($0.05 per share) for the Comparable Quarter.
Cash and Cash Equivalents. As of September 30,
2016, the Company had cash and cash equivalents of $11.0
million. This compares to cash and cash equivalents of $13.8
million as of June 30, 2016.
Conference Call Information
SES President and CEO DeLome Fair and CAO Scott
Davis will report on financial results and provide a business
update beginning at 4:15 p.m. EST on November 14.
To access the live conference call webcast,
please log on to the Investor Center of the corporate website,
www.synthesisenergy.com. Interested parties can pre-register for
the conference at: http://dpregister.com/10095691. Alternatively,
interested parties may participate in SES’s conference call by
phoning (877) 508-9602 (U.S.) or (412) 317-5113 (Int’l). Callers
should request the “Synthesis Energy Systems, Inc. call.”
An archived version of the SES conference call
webcast will be available, beginning approximately one hour after
its completion, through December 14, 2016. Interested parties can
access the telephonic replay on the Investor Center of the
company’s website, or by phoning (877) 344-7529 (U.S.) or (412)
317-0088 (Int’l). The PIN access code for both the live call and
replay is: 10095691.
About Synthesis Energy Systems,
Inc.
Synthesis Energy Systems (SES) is a
Houston-based technology company focused on bringing clean
high-value energy to developing countries from low-cost and
low-grade coal, biomass and municipal solid waste through its
proprietary gasification technology based upon U-Gas®, licensed
from the Gas Technology Institute. The SES Gasification Technology
(SGT) can produce clean, low-cost syngas for power generation,
industrial fuels, chemicals, fertilizers, and transportation fuels,
replacing expensive natural gas based energy. SGT can also produce
high-purity hydrogen for cleaner transportation fuels. SGT enables
Growth With Blue Skies, and greater fuel flexibility for both
large-scale and efficient small- to medium-scale operations close
to fuel sources. Fuel sources include low-rank, low-cost high ash,
high moisture coals, which are significantly cheaper than higher
grade coals, many coal waste products, biomass, and municipal solid
waste feedstocks. For more information, please visit:
www.synthesisenergy.com.
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 ability of our project with
Yima to produce earnings and pay dividends; our ability to develop
and expand business of the TSEC joint venture in the joint venture
territory; our ability to successfully partner our technology
business; our ability to develop our power business unit and
marketing arrangement with GE and our other business verticals,
including DRI steel, through our marketing arrangement with Midrex
Technologies, and renewables; our ability to successfully develop
the SES licensing business; the ability of the ZZ Joint Venture to
retire existing facilities and equipment and build another SGT
facility; the ability of Batchfire management to successfully grow
and develop Callide operations; the economic conditions of
countries where we are operating; events or circumstances which
result in an impairment of our assets; our ability to reduce
operating costs; our ability to make distributions and repatriate
earnings from our Chinese operations; our ability to successfully
commercialize our technology at a larger scale and higher
pressures; commodity prices, including in particular natural gas,
crude oil, methanol and power, the availability and terms of
financing; our ability to obtain the necessary approvals and
permits for future projects, our ability to raise additional
capital, if any, our ability to estimate the sufficiency of
existing capital resources; the sufficiency of internal controls
and procedures; and our results of operations in countries outside
of the U.S., where we are continuing to pursue and develop
projects. Although SES believes that in making such forward-looking
statements our 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 by us. SES cannot assure you that the assumptions upon
which these statements are based will prove to have been
correct.
Contact: MDC GroupInvestor
Relations:David CastanedaArsen
Mugurdumov414.351.9758IR@synthesisenergy.com
Media Relations:Susan
Roush805.624.7624PR@synthesisenergy.com
TABLES FOLLOW
|
|
SYNTHESIS ENERGY SYSTEMS, INC. |
|
Consolidated Statements of Operations |
|
(In thousands, except per share amounts) |
|
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
September 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
Technology licensing and related services |
$ |
— |
|
|
$ |
247 |
|
|
Total revenue |
|
— |
|
|
|
247 |
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses: |
|
|
|
|
|
|
|
|
Costs of
sales and plant operating |
|
— |
|
|
|
177 |
|
|
General
and administrative expenses |
|
2,332 |
|
|
|
1,965 |
|
|
Stock-based expense |
|
257 |
|
|
|
1,131 |
|
|
Depreciation and amortization |
|
39 |
|
|
|
57 |
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses |
|
2,628 |
|
|
|
3,330 |
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
(2,628 |
) |
|
|
(3,083 |
) |
|
|
|
|
|
|
|
|
|
|
Non-operating (income)
expense: |
|
|
|
|
|
|
|
|
Foreign
currency losses, net |
|
26 |
|
|
|
119 |
|
|
Interest
income |
|
(5 |
) |
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations |
|
(2,649 |
) |
|
|
(3,192 |
) |
|
Loss from discontinued
operations |
|
(389 |
) |
|
|
(1,584 |
) |
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
(3,038 |
) |
|
|
(4,776 |
) |
|
Less: net loss
attributable to noncontrolling interests |
|
(91 |
) |
|
|
(194 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to SES stockholders |
$ |
(2,947 |
) |
|
$ |
(4,582 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to SES stockholders: |
|
|
|
|
|
|
|
|
From continuing
operations |
$ |
(2,567 |
) |
|
$ |
(3,003 |
) |
|
From discontinued
operations |
$ |
(380 |
) |
|
$ |
(1,579 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to SES stockholders |
$ |
(2,947 |
) |
|
$ |
(4,582 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss per share
(Basic and diluted): |
|
|
|
|
|
|
|
|
From
continuing operations |
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
From
discontinued operations |
$ |
(0.00 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to SES stockholders |
$ |
(0.03 |
) |
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
86,988 |
|
|
|
86,346 |
|
|
|
|
|
|
|
|
|
|
|
SYNTHESIS ENERGY SYSTEMS, INC. |
Consolidated Balance Sheets |
(In thousands, except share and per share amounts) |
|
|
September
30,2016 |
|
June 30,2016 |
ASSETS |
(Unaudited) |
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
11,048 |
|
|
$ |
13,807 |
|
Accounts
receivable, net |
|
26 |
|
|
|
27 |
|
Prepaid
expenses and other currents assets |
|
1,132 |
|
|
|
828 |
|
Inventory |
|
42 |
|
|
|
43 |
|
Assets of
discontinued operations |
|
12,003 |
|
|
|
12,662 |
|
Total
current assets |
|
24,251 |
|
|
|
27,367 |
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net |
|
111 |
|
|
|
54 |
|
Intangible asset, net |
|
884 |
|
|
|
898 |
|
Investment in joint ventures |
|
26,201 |
|
|
|
26,201 |
|
Other
long-term assets |
|
625 |
|
|
|
661 |
|
|
|
|
|
|
|
|
|
Total
assets |
$ |
52,072 |
|
|
$ |
55,181 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accrued
expenses and accounts payable |
$ |
1,588 |
|
|
$ |
1,655 |
|
Liabilities of discontinued operations |
|
12,997 |
|
|
|
13,337 |
|
|
|
|
|
|
|
|
|
Total
current liabilities |
|
14,585 |
|
|
|
14,992 |
|
|
|
|
|
|
|
|
|
Commitment and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.01 par value- 20,000 shares authorized – no |
|
|
|
|
|
|
|
shares
issued and outstanding |
|
— |
|
|
|
— |
|
Common
stock, $0.01 par value: 200,000 shares authorized: 87,044 and
86,984 shares issued and outstanding, respectively |
|
870 |
|
|
|
870 |
|
Additional paid-in capital |
|
261,508 |
|
|
|
261,225 |
|
Accumulated deficit |
|
(229,885 |
) |
|
|
(226,938 |
) |
Accumulated other comprehensive income |
|
6,640 |
|
|
|
6,586 |
|
Total
stockholders’ equity |
|
39,133 |
|
|
|
41,743 |
|
Noncontrolling interests in subsidiaries |
|
(1,646 |
) |
|
|
(1,554 |
) |
|
|
|
|
|
|
|
|
Total
stockholder’s equity |
|
37,487 |
|
|
|
40,189 |
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholder’s equity |
$ |
52,072 |
|
|
$ |
55,181 |
|
|
|
|
|
|
|
|
|
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