Probex Reports First Quarter Results; Makes Excellent Progress Toward Start of Plant Construction
DALLAS--Feb. 6, 2001--Probex Corp. (AMEX: PRB), an energy technology company, today reported revenues for the first fiscal quarter ended December 31, 2000, of approximately $3.6 million, compared with no revenues for the same period a year earlier, when Probex was a development stage company. The net loss for the first fiscal quarter was approximately $6.3 million, or 24 cents per basic and diluted share, compared with a net loss of approximately $0.8 million, or 4 cents per basic and diluted share in the year-ago quarter.Bruce A. Hall, Probex Senior Vice President and Chief Financial Officer, noted that the revenues and cash flow generated by its expanding used oil collection system were in line with expectations. However, cash flow from the used oil collection network was more than offset by ongoing research, engineering and development activities necessary to bring the Company's environmentally beneficial lube base oil technology to market. In accordance with provisions of Financial Accounting Standard 123 and Emerging Issues Task Force 98-5, the Company recorded non-cash interest charges of approximately $4 million related to corporate financing activities. Used oil from the collection system, which is currently being sold into the burner fuel market, will supply the feedstock for Probex reprocessing facilities following the planned commercialization of the first plant in Wellsville, Ohio, late in the second quarter of 2002.
Charles M. Rampacek, Probex Chairman, President and Chief Executive Officer, added that Probex is continuing to make excellent progress in the execution of its business plan toward the commencement of construction of the Wellsville facility.
Among recent key activities, Probex:
- Significantly advanced work toward obtaining the project
financing required for the Wellsville facility.
During the quarter, Probex engaged Credit Suisse First Boston, a leading global investment banking firm, as its exclusive financial advisor. CSFB is assisting Probex in structuring and arranging financing for construction of its used lube oil reprocessing plants worldwide. The financing is anticipated to be completed near the end of this quarter, with a final closing in the April timeframe.
- Is nearing completion of the Wellsville process design
utilizing Bechtel.
Probex also signed an alliance agreement with Bechtel, forming a strategic worldwide alliance for engineering, procurement and construction services for Probex facilities worldwide. Also, a Bechtel affiliate, United Infrastructure Company (UIC), made an additional $1 million direct equity investment in Probex, bringing the total investment by Bechtel and its affiliates in the Company to date to $2.6 million. UIC has committed to invest an additional $3 million in Probex that will be earmarked for the Wellsville facility and has the option to make future investments in Probex for subsequent plants.
- Secured commitments from manufacturers of blended lube oil
products for over 85% of the lube base oil off-take from the
Wellsville plant.
Commitments for the fuel oil and asphalt modifier products are in the process of being obtained, and contracts are anticipated to be finalized late in the first quarter.
- Advanced work toward securing 100% of the used oil feedstock
required for the Wellsville facility.
Approximately 60% of the supply volume required for Wellsville is currently owned through the Probex used oil collection network, with the remaining portion anticipated to be secured this quarter through market expansion and supply contracts.
- Received a Draft Air Permit from the Ohio Environmental
Protection Agency and completed the public comment period.
The Final Air Permit is anticipated to be received this quarter, as are other permits necessary for construction. Site-clearing activities at Wellsville have been initiated in order to have the site ready for construction once project financing is obtained.
- Is finalizing a joint venture agreement with a multi-national
European conglomerate toward the development of the Company's
first European plant for operational start-up in the first
half of 2003.
Mr. Rampacek noted, "We are very pleased with the progress the Company is making on so many critical fronts. These achievements are vital not only to timely construction of the Wellsville facility, but to support our anticipated rapid growth in the U.S. and Europe. While we are squarely focused on accomplishing the priorities related to the successful development of our first facility in Wellsville, we are also working to put in place the foundation of our future growth.
"Our wholly owned collection subsidiary, Probex Fluids Recovery, Inc. (PFR) is working to build a national collection system capable of supplying 100% of the used oil feedstock which is expected to be required for the U.S. reprocessing facilities targeted for construction by 2006. This growth is expected to come from both targeted market expansion and acquisitions. In the shorter term, PFR's anticipated annualized revenue of approximately $15 million and net cash flow of approximately $5 million, will help offset ongoing Probex general and administrative expenses which occur outside of project development costs. Probex is also continuing to evaluate potential future reprocessing facility sites in the Northeast and along the Gulf Coast. These facilities are anticipated to be constructed near areas where PFR has or expects to establish major collection operations, in order to reduce transportation costs in support of expected strong plant economics," he said.
Outlook
Mr. Rampacek added, "The first calendar quarter of 2001 will see Probex finalizing the tasks necessary to initiate construction of the Wellsville reprocessing facility.
"Our critical Wellsville related goals, all of which are near completion, are to:
| - | Complete the structuring of project financing. |
| - | Execute the off-take contracts for the lube oil products. |
| - | Obtain the necessary permits for construction. |
| - | Secure 100% of the used oil feedstock supply. |
| - | Complete site clearing work in preparation for initiation of construction. |
"Other first calendar-quarter goals include:
- Execute joint venture agreement with European conglomerate.
- Continue targeted market expansion of PFR and advance
discussions toward the acquisition of additional used oil
collection companies.
- Advance work toward selection of anticipated Northeast and
Gulf Coast plant sites."
Mr. Rampacek concluded, "This continues to be a tremendously focused and exciting time for Probex as we work to bring the key elements of our business plan together and position ourselves to culminate over 6 years' work with the ground breaking and commencement of construction of our first plant. Successful completion and start-up of that plant is expected to pave the way for Probex to dominate a niche market with enormous potential over the next decade."
Conference Call
Probex will conduct a conference with securities analysts and any other interested persons to discuss these results today at 10 A.M. EST. Those who wish to participate in the call may telephone (888) 335-6674 approximately 15 minutes before the 10 A.M. starting time. A replay will be available by telephone for 90 days commencing one hour after completion of the call at (888) 603-6882 toll free in the United States or (402) 220-1454 for international callers. The call will be webcast live at www.vcall.com and a replay will also be posted on www.vcall.com for 90 days and on the Company's web site at www.probex.com.
About Probex
Probex is a Dallas-based energy technology company that has developed and patented its environmentally beneficial ProTerra(TM) lubricating oil technology for reprocessing, purifying and upgrading used motor oils. ProTerra(TM) has demonstrated unparalleled advantages in the highly economic creation of premium quality base oils capable of meeting new motor oil standards without creation of waste by-products. The goal of Probex is to become the world leader in reprocessing used lubricating oils into premium quality base lube oils through timely commercialization of its ProTerra(TM) technology.
For more information about Probex, visit the company's web site at: www.probex.com.
Certain statements contained herein may be considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon the belief of the Company's management, as well as assumptions made beyond information currently available to the Company's management, and may be, but not necessarily are, identified by such words as expect, plan, anticipate, target, and goal. Because such "forward-looking statements" are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations include financial performance, conditions in the lubricating oil industry, the Company's ability to obtain financing for its anticipated acquisitions and plant development, market acceptance of the Company's products and technologies, changes in local, national or global economic conditions, and similar variables. Also refer to the cautionary statements contained in the most recent Forms 10-KSB and 10-QSB which may be obtained under "Investor Relations-SEC Filings" on the Company's web site or by writing or calling the Company at One Galleria Tower, 13355 Noel Rd., Suite 1200, Dallas, TX 75240; (972) 788-4772.
PROBEX CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Dec. 31
2000 1999
REVENUES $ 3,602,800 $ -
COST OF SALES 1,050,855 -
-------------------------------
GROSS PROFIT 2,551,945 -
EXPENSES:
Operating 1,831,882 -
Research and development 865,502 271,351
Selling, general and administrative 1,713,192 452,054
Depreciation and amortization 289,320 54,755
-------------------------------
TOTAL EXPENSES 4,699,896 778,160
-------------------------------
OPERATING LOSS (2,147,951) (778,160)
Interest - net (4,140,887) 10,124
Other - net (1,821) -
-------------------------------
NET LOSS $ (6,290,659) $ (768,036)
===============================
NET LOSS PER SHARE $ (0.24) $ (0.04)
===============================
PROBEX CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
December 31, September 30,
2000 2000
ASSETS
Cash and cash equivalents $ 2,247,868 $ 434,812
Accounts and notes receivable 1,895,977 1,737,173
Inventories 219,027 98,161
Prepaid and other 140,608 115,848
---------------------------------
Total current assets 4,503,480 2,385,994
Property, plant and equipment - net 9,603,039 6,382,595
Goodwill - net 6,808,630 6,925,837
Patents - net 293,138 148,106
Deferred financing costs - net 2,032,307 -
Other assets 414,827 417,683
---------------------------------
TOTAL ASSETS $ 23,655,420 $ 16,260,215
=================================
LIABILITIES
Accounts payable $ 1,466,545 $ 1,158,936
Accrued liabilities 2,025,891 1,959,954
Current maturities of capital lease
obligations 128,902 25,732
Short-term debt 57,984 7,214,037
Current maturities of long-tem debt 300,000 300,000
---------------------------------
Total current liabilities 3,979,322 10,658,659
Capital lease obligations, long-term 158,622 43,491
Long-term debt 13,700,000 1,200,000
---------------------------------
TOTAL LIABILITIES 17,837,944 11,902,150
---------------------------------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Series A 10% Cumulative Convertible
Preferred Stock, $0.001 par value,
authorized 10,000,000 shares:
issued - 535,000 at Dec. 31, 2000
and at Sep. 30, 2000 4,634,412 4,634,412
Common Stock, $0.001 par value,
authorized 100,000,000 shares:
issued-27,426,714 at Dec. 31, 2000
and 25,531,137 at Sep. 30, 2000 27,426 12,705,748
Additional Paid In Capital 23,280,873 2,889,731
Deferred stock compensation expense (1,060,966) (1,233,153)
Accumulated Deficit (21,063,642) (14,638,046)
Less: Treasury Stock (common:
62,690 shares at Dec. 31, 2000
and at Sep. 30, 2000) at cost (627) (627)
---------------------------------
TOTAL STOCKHOLDERS' EQUITY 5,817,476 4,358,065
---------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 23,655,420 $ 16,260,215
=================================
PROBEX CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended Dec. 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (6,290,659) $ (768,036)
Adjustments:
Depreciation and amortization 289,320 54,755
Stock option compensation 171,145 -
Stock issued for consulting
services 33,332 550
Stock issued for employee
compensation 1,042 1,042
Beneficial conversion on 7%
convertible notes 3,125,000 -
Amortization of deferred
financing fees 740,134 -
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
and notes receivable (158,804) (18,631)
(Increase) decrease in
inventories (120,866) -
(Increase) decrease in
prepaid and other (24,760) (342,438)
(Increase) decrease in other
assets 2,856 -
Increase (decrease) in
accounts payable 307,609 (91,665)
Increase (decrease) in accrued
liabilities 239,040 (1,849)
---------------------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (1,685,611) (1,166,272)
---------------------------------
CASH FLOWS USED BY INVESTING
ACTIVITIES
Purchase of property, plant and
equipment (3,157,811) (142,942)
Cost of patents (148,635) -
---------------------------------
NET CASH USED BY INVESTING ACTIVITIES (3,306,446) (142,942)
---------------------------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Principal payment on capital lease
obligation (12,842) -
Proceeds from short-term borrowings 1,250,000 -
Principal payment on short-term
borrowings (6,906,053) -
Proceeds from long-term borrowings 12,500,000 (2,308)
Deferred financing costs (858,084) -
Proceeds from sale of preferred stock - 2,868,563
Proceeds from sale of common stock 832,092 15,000
---------------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 6,805,113 2,881,255
---------------------------------
NET INCREASE (DECREASE) IN CASH 1,813,056 1,572,041
CASH AT BEGINNING OF YEAR 434,812 2,658,055
---------------------------------
CASH AT END OF YEAR $ 2,247,868 $ 4,230,096
=================================
INTEREST PAID $ 146,039 $ 916
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