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PyroGenesis posts Q2 2019 financial results, starts to “bear the fruit” of 2018 strategy

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Montreal-based 3D printing certification metal powder producer and plasma torch specialist Pyrogenesis has posted its financial results for the second quarter of fiscal 2019.

For the three months ended June 30, 2019, headline revenue was reported at $913.8 thousand, compared to $1.4 million in Q2 2018. The company reported a gross margin of 20 percent in Q2 2019, compared to 35 percent in Q2 2018.

At the date of releasing the result (August 29, 2019) the company held a backlog of signed contracts valued at $10.5 million. The company also has other imminent contracts valued in excess of $32 million.

Having made the decision in 2018 to accelerate commercialization, management is confident that its strategy is starting to pay off. P. Peter Pascali, President and CEO of PyroGenesis, comments, “As we have said in the past, 2018 was the year in which the Company successfully positioned itself with unique and strategic partnerships, geared to effectively accelerate commercialization, and we are in the midst of benefiting from these efforts, and I would like to thank investors for their patience.”

“[…] As a result [of the move to pursue partnerships] we have press released imminent contracts in excess of $32 million, with associated future revenues, well in excess of that which, in my opinion, fully justified that strategy,” Pascali continues.

“At the risk of repeating myself, let me remind readers of the importance of reading 2019 results to date in the context of these decisions and recent press releases.”

PyroGenesis Q2 2019

Revenues for the first half of fiscal 2019 were primarily generated by sales related to its trademark PUREVAP silicon production process, plasma torch related sales, and support services for the U.S. Navy’s Plasma Arc Waste Destruction Systems (PAWDS). Each of these segments contributed sales of the following value:

Related sales Q2 2019 Q2 2018
PUREVAP™ 239,836 1,538,550 -1,298,714
Plasma torch 297,235 0 297,235
U.S. Navy PAWDS support services 455,427 706,595 -251,168

Cost of sales and services before amortization of intangible assets was reported at $723.6 thousand in Q2 2019, a decrease of 22 percent compared to $955.4 thousand for the same period in 2018.

The net comprehensive loss for Q2 2019 was $2.3 million, compared to $1.5 million in Q2 2018, a year over year increase of 47 percent.

The company finishes the quarter with $1.3 million cash on hand, compared to $645 thousand cash on hand on December 31, 2018.

Q2 2019 Q2 2018 Variance $ millions %
Revenue 913,769 1,421,352 -507,583 -35.71%
Cost of sales and services 723,641 924,954 -201,313 -21.76%
Gross margin 185,349 496,398 -311,049 -62.66%
Net comprehensive loss (2,253,390.00) (1,534,890.00) -718,500 46.81%

Bearing the fruit of commercial strategy

In its press release on the results, PyroGenesis states that “2019 is playing out to be the first of many years which will bear the fruit of strategic decisions made in the recent past.”

The $32 million in “imminent contracts” announced by the compnay is attributed to two articles. First, the company has another potential contract for two-ship builds of its PAWDS unit, generating approximately $13.5 million in revenue. The second potential contract is a deal which would contribute $20 million of revenue within the first year, plus revenues in subsequent years. If both of these contracts close, the company stands to generate approximately six times the amount of revenue that it did in fiscal 2018.

In addition to these contracts the company has confirmed that it is also considering other steps, outside the ordinary course of business, to unlock value for shareholders. This includes, but is not limited to, the company’s additive manufacturing certification spinoff, which recently completed a special order for an unnamed government entity.

Metal alloy powder. Photo via PyroGenesis
Metal alloy powder. Photo via PyroGenesis

PyroGensis financial results for the second quarter 2019 can be accesses here.

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Featured image shows firing on all plasma jets: Gas plasma jets as used in the atomization process. Photo via PyroGenesis.