19.7.2007: Meldung: GreenShift Announces Q3 Results
Three Months Ended September 30, 2007
Revenues for the three months ended September 30, 2007 were $14,519,000, corresponding to an increase of about $8,567,000 or 144% over the revenues of about $5,952,000 generated during the three months ended September 30, 2006, and an increase of about $7,938,000 or 121% over the revenues of about $6,581,000 generated during the three months ended June 30, 2007. These increases were primarily the result of the growth of GreenShift’s subsidiaries, GS CleanTech, GS AgriFuels, GS Energy and GS EnviroServices.
Net income from continuing operations for the three months ended September 30, 2007, was $1,047,000 as compared to a loss from continuing operations of $967,000 from the same period in 2006. Net income of $10,719,000 for the three months ended September 30, 2007 was due to increased revenues from new business initiatives, a reduction in selling, general and administrative expenses, and a reduction in amortization charges associated with financing and issuance of stock based compensation. These amounts were offset by additional expenses incurred during the third quarter relative to the Company’s various technology development activities.
The magnitude of certain of these items is expected to be non-recurring and linked to the future effect of adjusting derivatives to market value will depend on future changes in the stock prices of GreenShift and its subsidiaries. To clarify the effect of these items on GreenShift’s results, the following table reconciles the reported net income/(loss) of GreenShift and its subsidiaries on an unconsolidated basis with adjusted EBITDA (a non-GAAP measure of performance) for the three months ended September 30, 2007:
3 Months Ended 9/30/07 GreenShift GS CleanTech
GS AgriFuels GS Energy Total
Income (Loss) $ 9,775,820 $ (855,933) $ 123,842 $ 1,214,489 $ 461,456 $ 10,719,674
Interest 64,750 342,692 33,423 1,065,356 8,238 1,514,459
Depreciation & Amortization 1,475,754 613,540 69,967 758,509 -- 2,917,770
on Derivatives (2,473,251) (186,909) -- -- -- (2,660,160)
Realized Gains/Losses on Sale
of Discontinued Operations (9,765,281) 3,069 -- -- -- (9,762,212)
Stock-based Compensation 13,123 -- 28,999 -- -- 42,122
Other Non-recurring Items -- 540,025 -- -- -- 540,025
Taxes 25,144 1,079 25,961 253,331 -- 305,515
Adjusted EBITDA $ (883,941) $ 457,563 $ 282,192 $ 3,291,685 $ 469,694 $ 3,617,193
Nine Months Ended September 30, 2007
During the nine months ended September 30, 2007 the activities of GreenShift’s subsidiaries generated about $25,120,000 million in revenue, representing an increase of $7,860,569 or 46% over the revenues of $17,260,000 million reported for the nine months ended September 30, 2006.
Operating expenses for the nine months ended September 30, 2007 were about $15,982,000 or 64% of revenue compared to about $10,155,000, or 59% of revenue for the same period in 2006. The expenses for 2007 included about $6,092,000 in non-recurring stock based expenses. The increase in operating expenses is due primarily to increases in personnel and other overhead related to the Company’s process engineering, feedstock production, oilseed crush and equipment manufacturing operations.
Despite the 46% increase in revenues, net loss during the nine months ended September 30, 2007 was about $12,700,000, an increase from the $9,660,000 loss recorded in the same period of 2006. The two primary reasons for the magnitude of the nine month loss were expenses attributable to the transition from technology development to mature market execution and expenses attributable to past financing activities. Specifically, during the recent nine month period GreenShift incurred substantial expenses attributable to:
* Technology development activities;
* One-time equity grants to employees and consultants in lieu of cash compensation; and
* Adjustments to the book value of derivatives associated with financing activities in 2005 and 2006.
Management expects the magnitude of those three items of expense to be non-recurring, although the future effect of adjusting derivatives to market value will depend on future changes in the stock prices of GreenShift and its subsidiaries. To clarify the effect of these one-time charges and financing charges on GreenShift’s results, the following table reconciles the reported net income/(loss) of GreenShift and its subsidiaries on an unconsolidated basis with adjusted EBITDA (a non-GAAP measure of performance):
9 Months Ended 9/30/07 GreenShift GS CleanTech GS EnviroServices GS AgriFuels GS Energy Total
Income (Loss) $ (8,486,596) $ 252,195 $ 289,992 $ (5,184,394) $ 394,260 $ (12,734,543)
Interest 897,043 855,059 77,702 3,025,503 54,646 4,909,953
Depreciation & Amortization 1,135,136 2,920,612 209,902 2,240,851 -- 6.506,501
on Derivatives (669,173) (3,405,607) -- -- -- (4,074,780)
Realized Gains/Losses on Sale
of Discontinued Operations (323,077) (2,491,877) -- -- -- (2,814,954)
Stock-based Compensation 3,715,594 416,751 62,267 1,897,904 -- 6,092,516
Other Non-recurring Items -- 540,025 -- -- -- 540,025
Taxes 25,144 1,079 112,190 253,331 -- 391,744
Adjusted EBITDA $ (3,705,929) $ (911,763) $ 752,053 $ 2,233,195 $ 448,906$ (1,183,538)
Discussion and Analysis
“Our sales and net income from continuing operations during the third quarter were more than twice those of the third quarter of last year,” said Jacqueline Flynn, GreenShift’s Chief Financial Officer. “These increases were attributable to increased sales in our environmental services and manufacturing operations and, importantly, our recent transition from investing in emerging technology development in several technologies to market execution for our corn oil extraction and biodiesel production technologies.”
Ed Carroll, GreenShift’s Chief Operating Officer, added that “The adjusted EBITDA data are particularly telling of what has been going on with GreenShift as it relates to its structure and other administrative inefficiencies. Each of our operations produced positive EBITDA during the third quarter – $3.6 million in total. To the extent that we are still burning cash, it is happening at the corporate level. We have already taken steps to reduce these expenses and we are implementing still more steps to bring our administrative expenses under control and to increase cash flows from operations.”
“A key area of focus is finding rapid and cost-effective ways to further streamline our corporate structure,” continued Carroll. “We have cash flow producing assets today based on technologies that were not in the field a year ago. We have established that we can move clean technologies from the bench into a cash flowing business, and our growth rates of sales and earnings show that we can build an extremely exciting and profitable company.”
“In an ideal world, GreenShift would be one company – not five different companies sharing the same mission and differing only in their operational focus. Getting to less GS entities or even one GS entity is achievable but it would require diverting significant funds and focus away from growth. For the time being, we are going to content ourselves with keeping our corporate costs down as much as possible while we continue to focus on execution and raising the capital we need to build out our extraction, biodiesel, crush and environmental service assets,” said Carroll.
“Another important goal is the continued reduction of our debt,” added Flynn. “We have raised a great deal of capital from YA Global Investments and they have played a vital role in our development, but the time has come to accelerate repayment. We intend to do so with cash and stock at valuations much higher than our current market prices. We hope to have YA Global paid off at all GS companies in 2008 through a combination of cash flows and proceeds from GS AgriFuels’ planned $100 million capital raise.”
GreenShift reduced its debt during the nine months ended September 30, 2007 by about $9.6 million, or by about 16% – $2.6 million of this debt was forgiven and contributed to the Company’s capital by related parties for no additional consideration. If GreenShift can replace all convertible, derivative-laden debt on its balance sheet with more conventional financing, the burden of expenses attributable to those derivatives on GreenShift’s operating results can be alleviated.
Fourth Quarter Outlook
GreenShift expects its financial results for the fourth quarter of 2007 to be consistent with the trend set during the third quarter and that it will continue to increase sales and improve earnings.
GreenShift’s operating plan for the foreseeable future is to remain focused on sales and earnings growth through the deployment and commissioning of its corn oil extraction systems, the sales of biodiesel equipment, the financing, construction and operation of our co-located corn oil biodiesel production facilities, the expansion and operation of our oilseed crush plant, the growth of our environmental services group, and the growth of our design and manufacturing group. GreenShift currently expects fourth quarter sales to exceed $7 million as a result of these activities.
About GreenShift Corporation
GreenShift Corporation develops and supports clean technologies and companies that facilitate the efficient use of natural resources. GreenShift"s ambition is to catalyze the rapid realization of disruptive environmental gains by creating valuable opportunities for a great many people and companies to use resources more efficiently and to be more profitable. Additional information on GreenShift is available online at www.greenshift.com.
GreenShift currently owns 80% of GS CleanTech Corporation (OTC Bulletin Board: GSCT - News), which company now holds majority stakes in each of GS AgriFuels Corporation (OTC Bulletin Board: GSGF - News), GS Energy Corporation (OTC Bulletin Board: GSEG - News) and GS EnviroServices, Inc. (OTC Bulletin Board: GSEN - News).
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use an adjusted EBITDA calculation, which is a non-GAAP financial measure. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on this non-GAAP financial measure, please see the reconciliation of Net Income (loss) (GAAP) to Adjusted EBITDA (non-GAAP) presented in the body of this release.
We use this adjusted EBITDA (non-GAAP) for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that adjusted EBITDA (non-GAAP) provides meaningful supplemental information regarding our performance by excluding certain expenses and other non-recurring items that may not be indicative of our "recurring core business operating results," meaning our operating performance excluding not only non-cash charges, such as stock-based compensation and unrealized gains (losses) on derivatives, but also charges that are infrequent in nature. We believe that both management and investors benefit from referring to adjusted EBITDA (non-GAAP) in assessing our performance and when planning, forecasting and analyzing future periods. Adjusted EBITDA (non-GAAP) also facilitates management"s internal comparisons to our historical performance as well as comparisons to our competitors" operating results. We believe adjusted EBITDA (non-GAAP) is useful to investors because it allows for greater transparency with respect to key metrics used by management in its financial and operational decision-making.
Safe Harbor Statement
This press release contains statements that may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of GreenShift Corporation, GS CleanTech Corporation, GS AgriFuels Corporation, GS Energy Corporation and GS EnviroServices, Inc., and members of their management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-statements include fluctuation of operating results, the ability to compete successfully and the ability to complete before-mentioned transactions. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.
GreenShift Corporation, 212-994-5374
Andrew Hellman, 212-732-4300