GLG Life Tech Corp. (TSX:GLG), a vertically integrated leader in the agricultural and commercial development of high-quality stevia and other natural sweeteners, announces financial results for the quarter ended March 31, 2014.
2014 first quarter highlights
- New sales strategy delivers top line sales growth
- Revenue for the three months ended March 31, 2014, was $4.7 million, an increase of 44 percent compared to $3.2 million in stevia-related revenue for the same period last year. We achieved this increase primarily by pursuing sales of higher purity stevia extracts to international customers that generate monthly recurring revenues. This focus was consistent with our strategy of moving away from sales of lower purity stevia extract sales to other China-based stevia providers, in favor of international sales of our higher purity products. As a result, international sales contributed to 48 percent of Q1 2014 revenues, compared to only 23 percent in the first quarter 2013, and international sales more than doubled year over year.
- Other sales growth initiatives in 2014 include the introduction of the Company's second zero calorie natural sweetener—luo han guo or monkfruit—and the sale of other natural ingredients complementary to stevia (our GLG Naturals+ line of products). There were no sales of luo han guo or GLG Naturals+ products in the first quarter 2014; however, luo han guo production is expected to commence in the fourth quarter of 2014, following the next harvest, and sales of GLG Naturals+ ingredients are expected to commence in the second quarter of 2014. Additionally, the Company recently announced its launch of a new line of stevia sweeteners—organipure. Along with the clean finish and rounded sweetness of our usual high-quality GLG stevia extracts, the organipure products carry organic certifications recognized in both North America and Europe.
- Cash-based SG&A expenses flat in Q1 2014 compared to Q1 2013
- Cash based selling, general and administration expenses were flat at $1.3 million for the three months ended March 31, 2014, compared to the comparable period in 2013.
- Non-cash-based SG&A expenses up in Q1 2014 compared to Q1 2013
- Non-cash-based selling, general and administration expenses for stock-based compensation and amortization charges increased to $0.6 million for the three months ended March 31, 2014, from $0.3 million in 2013.
- Other expenses were up in the first quarter of 2014 due to appreciation of US Dollar relative to the Canadian Dollar
- Other expenses for the three months ended March 31, 2014, was $2.4 million, a $0.9 million or 59 percent increase compared to $1.5 million for the same period in 2013. Other expense increases are driven by the appreciation of the USD against the Canadian dollar during the quarter, which drove a net increase on foreign exchange losses between the two periods of $0.8 million.
- 33 percent increase in net loss in Q1 2014 driven primarily by appreciation of US Dollar relative to the Canadian Dollar
- For the three months ended March 31, 2014, the Company had a net loss attributable to the Company of $5.0 million compared to a net loss of $3.7 million for same period in 2013.
The Company plans to focus on four key components to expand its sales in 2014.
1. Continued focus on increasing its international customers of high-purity stevia extracts.
2. Focus on developing Chinese market through its partnership with COFCO. The Company currently has a number of formulation projects underway with COFCO NHRI and a number of COFCO's key subsidiaries.
3. Expansion of natural sweetener product line to include luo han guo (LHG) (Chinese monk fruit) in 2014. The Company is currently working with key customers for LHG and expects to be in production in the fourth quarter of 2014, after the harvest of its first fruit. The Company continues to prepare all aspects of its operations for the formal launch of its production including agriculture, regulatory filings and production preparation. The Company plans on utilizing its currently idle plants to produce luo han guo. Sales of other complimentary natural ingredients through its GLG Naturals+ product line in 2014. The Company is currently quoting a number of these products to existing and new potential customers and expects this product-line to be generating revenues in 2014.
The Company has arranged planting of its H3 Leaf in China in 2014. Analysis of its H3 and H4 leaf compared to other competitors' leaf available in China clearly shows GLG's lead in providing a seed that generates a significant amount of steviol glycosides in the leaf (13 to 15 percent range), a high percentage of Rebaudioside A (65 to 70 percent range) and a larger weight per acre planted than any other varieties available in China. The weight per acre is a key metric of interest to farmers in China who are evaluating whether to grow our stevia leaf versus other alternative crops or competing stevia seedlings.
The Company is also pleased to report on the success of its non-GMO hybrid breeding program which has resulted in a number of new strains that it plans to develop, which have individual advantages such as:
- Higher amounts of total steviol glycosides and higher amounts of Rebaudioside A
- Higher amounts of targeted glycosides such as Rebaudioside C, Rebaudioside D and Rebaudioside M. The Company has seen some new seedling varieties with double to triple the amount of these strategic glycosides.
- The Company will continue on to the next step to bring these proprietary seedlings to the next stage of development and expects availability for planting within the next three to five years.
The Company is of the view that the Consumer's preference will always be "naturally sourced from a stevia leaf" glycosides compared to those originating from a different process such as fermentation.