Synthesis Energy CEO Discusses Q1 2011 Results - Earnings Call Transcript
Synthesis Energy Systems, Inc. (
)
Q1 2011 Earnings Call
November 10, 2010 8:00 AM ET
Executives
Ann Tanabe – Vice President, Investor Relations
Robert Rigdon – President and CEO
Kevin Kelly – Chief Accounting Officer and Controller
Analysts
Robert Smith – Center for Performance Investing
David Neuhauser – Livermore Partners
Presentation
Operator
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Synthesis Energy Systems Inc. F1Q10 (Qtr End 9/30/09) Earnings Call Transcript
Ladies and gentlemen, thank you for standing by. And welcome to the Synthesis Energy Systems First Quarter Financial Results Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions)
As a reminder, today’s call is being recorded. And I would now like to turn the call over to our host, Ms. Ann Tanabe. Please go ahead.
Ann Tanabe
Thank you. Good morning. And thank you for joining Synthesis Energy Systems' conference call. My name is Ann Tanabe, and I'm the Vice President of Investor Relations for SES. Today, we will discuss financial results for the fiscal 2011 first quarter ended September 30, 2010, and will provide an update on corporate development. Following our prepared remarks, we will open the line for a brief question-and-answer session.
Before we begin, I would like to remind you that during this call, we will be making 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.
Although we believe 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. We cannot assure you that the assumptions upon which these statements are based will prove to have been correct.
Please refer to our annual report on Form 10-K to be filed for the year ended June 30, 2010 for a further discussion on risk factors. A copy of our filings can be found on the Securities and Exchange Commission's website at www.sec.gov, or on our website at www.synthesisenergy.com.
I would now turn the call over to Mr. Robert Rigdon, our President and CEO. Robert?
Robert Rigdon
Okay. Thank you, Ann. Welcome, everyone, to our conference call for the first quarter of fiscal 2011 ended September 30th. Joining me in Houston this morning is Kevin Kelly, our Chief Accounting Officer and Controller, along with Ann Tanabe, our Vice President of Investor Relations.
First, I’d like for Kevin to discuss our first quarter 2011 financial results. Kevin?
Kevin Kelly
Thank you, Robert. For the first quarter of fiscal 2011, total revenues were $1.6 million. Product sales from our Zao Zhuang plant were $1.4 million for the first quarter of fiscal 2011, compared to $1.6 million for the first quarter of fiscal 2010. The plant's availability for production was 100% for the first quarter of fiscal 2011, resulting in capacity fee revenue of $0.9 million.
Other product sales revenue decreased due to reduced syngas production and byproduct sales as a result of our customer shutdown which extended to August. The plant operated for 31% of the quarter, compared to 54% for the first quarter of fiscal 2010.
Other revenues for the first quarter of ‘10 of $0.6 million were generated from engineering services provided to the Yima joint ventures.
Technology licensing and related services revenue for the first quarter of fiscal 2011 were $0.2 million and were generated from coal testing, feasibility studies and other technical services provided in association with our technology licensing business.
Costs of sales and plant operating expenses were $1.3 million for the first quarter, a decrease from $1.7 million due to the ZZ plant reduced operating time and it’s improving operations.
Improved margin for the first quarter of fiscal 2011, resulted for an increase capacity fee revenue and a decrease of syngas production costs.
G&A expenses were $3.2 million, compared to $3.1 million for the first quarter of fiscal 2010. This 3% increase was primarily due to increase business development related costs and royalties due to GTI. Offsetting part by decrease in corporate personnel costs.
Project and technical development expenses decreased by $0.9 million, due to a consulting fee expense during the first quarter of fiscal 2010, operating loss for the first quarter of fiscal 2011 was $3.9 million, compared to $4.9 million for the first quarter of fiscal 2010.
This $1 million improvement in the operating loss was due primarily to the consulting fee expense during the first quarter of fiscal 2010 and improved operating margin at the ZZ plant and lower stock-based compensation expenses.
These factors were partially offset by the fiscal 2010 periods $0.6 million of revenue earned from Yima and the G&A expense increase. As of September 30, 2010 we had cash and cash equivalents of $37.7 million and working capital of $34.2 million.
Lastly, on October 27th we received the notification letter from NASDAQ indicating that the minimum bid price of the company’s common stock have been below $1 per share for 30 consecutive business days. And as a result, the company is on a compliance with the minimum bid price requirement for continued listing.
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