Thousand Oaks, California, USA
July 11, 2013
- Calculated ethanol yields reached a peak of more than 3,600 liters per hectare.
- Ceres hybrids out-performed competitors for second straight year.
- Sweet sorghum yields were 50% higher year over year, but with greater variability than expected.
Energy crop company Ceres, Inc. (Nasdaq:CERE) today announced financial results for the quarter ended May 31, 2013 and provided an update on its business in Brazil, its largest immediate commercial opportunity.
The company reported that its mill customers in Brazil have made continued progress in crop performance this season, which concluded in May. For mills that reported results, yields of sugars that can be fermented into ethanol were approximately 50% higher on average across mill locations than the previous season primarily as a result of product improvements related to biomass quality and productivity, better crop management and favorable growing conditions at most planting locations. Yields from location to location, however, showed greater variability than expected. Ceres sweet sorghum hybrids were developed to complement existing sugarcane feedstock supplies and extend the ethanol production season in Brazil.
"We have clearly demonstrated that economically compelling yields can be achieved with our products," said Richard Hamilton, President and Chief Executive Officer of Ceres. "While further optimizations and additional hybrids are needed to consistently achieve high yields across wide-area plantings, we believe that we are well positioned to take a leading role in the ongoing development of the sweet sorghum market in Brazil."
Due in part to the variability of this season's yields, the company anticipates that many of its mill customers will repeat smaller scale commercial plantings before committing to broad, large-scale adoption. "As a result, we expect total sweet sorghum seed sales next season to grow more modestly than originally anticipated," said Hamilton.
Ceres Chief Financial Officer Paul Kuc noted that the company continues to prioritize investments in its sorghum pipeline and its opportunity in Brazil, while closely monitoring its working capital levels. "As we move forward, we intend to maintain the strength of our balance sheet with these priorities in mind," he said.
THIRD QUARTER BUSINESS HIGHLIGHTS
- Based on customer reports, Ceres' portfolio of sweet sorghum hybrids has outyielded competing products this season at multiple locations where side-by-side comparisons were available.
- For mills that reported results, ethanol yields from Ceres products ranged from approximately 450 to 3,600 liters per hectare, according to customer and company calculations. Mills representing the top 20% of yields, and which generally followed established crop management practices, achieved average yields ranging from 2,100 to 3,300 liters per hectare. Lower yields were primarily due to deviations from recommended crop management practices, weather-related delays during planting and disease infection late in the growing season. Yield results were available from approximately two-thirds of the mills that planted Ceres' hybrids; remaining mills reported incomplete results, did not complete the evaluation or chose not to report results.
- Ceres has completed field trials required to register more than 10 new sweet sorghum hybrids with the Brazilian government. The company plans to begin commercial evaluations of the first of these products during the upcoming 2013-2014 growing season.
- The company plans to evaluate hundreds of pre-commercial and experimental hybrids in Brazil next season, with dozens included in field evaluations at multiple locations. These cultivars have demonstrated higher yields, better adaptation to certain environmental conditions and other performance improvements over existing products in initial field evaluations.
THIRD QUARTER FINANCIAL RESULTS
Total revenues for the quarter ended May 31, 2013 were $1.4 million compared to $1.1 million for the same period last year. The increase was due to higher product sales of $0.4 million, which consisted primarily of biomass sales as well as recognition of deferred revenue related to certain sales incentive and promotional programs during the 2012-2013 growing season in Brazil. The increase was partially offset by reduced billings of $0.1 million under the company's various grants and collaborations.
Cost of product sales was $2.1 million for quarter ended May 31, 2013 compared to $0.6 million for the same period last year. The increase was due to expenses of $1.0 million for crop management services performed under the company's sales incentive and promotional programs in Brazil, and $0.5 million for obsolete seed inventory relating to the company's sweet sorghum products.
Research and development expenses decreased by $1.2 million to $4.1 million for the quarter ended May 31, 2013 from $5.3 million for the same period last year. The decrease was primarily due to reduced personnel and related expenses as well as reduced external R&D expenses.
Selling, general and administrative expenses were $4.5 million for the quarter ended May 31, 2013 compared to $3.3 million for the same period last year. The increase was primarily due to higher expenses related to expanded business operations and market development support in Brazil, which was partially offset by reduced patent, legal and professional fees in the U.S.
For the quarter ended May 31, 2013, Ceres reported a net loss of $9.3 million, or $0.38 per share, compared to a net loss of $8.4 million, or $0.34 per share, for the quarter ended May 31, 2012.
At May 31, 2013, cash and cash equivalents and marketable securities totaled $37.4 million.
Access to the July 11, 2013 webcast
Ceres CEO Discusses F3Q 2013 Results - Earnings Call Transcript (Seeking Alpha)
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