Financial highlights for the year-end 2008 incorporated:
A lot of the revenue increase resulted from an increase in the facility management revenue and service fees primarily from the Florida N-Viro location, and also from sales of the N-Viro Soil product, with contributions from its Toledo facility also increasing;
The gross profit was $741,000 compared with $705,000, up 5% over previous year-end;
The gross profit margins were 15% compared with 17% for the previous year-end; the decline in gross profit margin resulted from the increase in facility management fee operations, which have a lower gross profit margin than our other types of revenue. The facility management operations represented 93% of revenues in 2008 compared to 76% in 2007. Operating expenses for the third and fourth quarters of 2008 were affected by considerable increases in fuel costs, which resulted in higher transportation costs.
The operating expenses decreased to $1.9 million compared with $2.2 million in the previous year-end, a 13% improvement. Included in operating expenses for 2007 was a non-cash impairment charge for the write-off of patents and other intangibles amounting to $331,000.
$175,000 of cash was used during 2008 for investment in processing and transportation equipment assets in order to secure additional business in both the Florida and Toledo operations. The company acquired a total of $924,000 in assets to fuel its growth and create operational efficiencies, the benefits of which are expected to be experienced in 2009 and beyond by increasing processing and hauling capacity.
Operating loss decreased to $1.2 million compared with $1.5 million for 2007;
The net loss in 2007 included the above-mentioned non-cash impairment charge for the write-off of patents and other intangibles.
Financial highlights for the fourth quarter of 2008 incorporated:
Revenue increased to $1.2 million, up 23.1%, over the $995,000 reported in the fourth quarter of 2007;
Gross profit increased to $188,000, a 37.2% increase over previous year $137,000, reported in the comparable quarter;
Gross profit margins for the quarter were 15.3% compared with 13.7% in last year’s fourth quarter;
Operating expenses decreased 22.4% to $602,000, compared with $777,000 in the fourth quarter of 2007.
Operating loss for the quarter decreased to $415,000 from $640,000 reported in the 2007 fourth quarter;
Net loss decreased to $423,000 compared to 2007 fourth quarter loss of $641,000.
Timothy R. Kasmoch, president and chief executive officer of N-Viro stated, ‘We believe that 2008 was a pivotal year for N-Viro as we demonstrated the strength and viability of our business model. Nearly all of our revenue emanated from facility management, products and services this year, reflecting the successful transformation that we began in 2007. An important part of this transformation was the contribution of the Florida N-Viro facility, which we purchased in full, in late 2006. This facility was a significant revenue driver this year, contributing approximately $1.2 million of the increase in our revenue, some of which came from the contracts we were awarded in 2008 from the City of Port Orange and the Toho Water Authority in Florida. Because we acquired several of our Florida customers during 2008, full-year revenue from these customers is not reflected in our results. In addition to full-year contributions from these customers, we also hope to acquire additional business at our Florida facility in 2009. We are also pleased that Volusia County recently signed a five-year lease renewal for our facility in Daytona Beach. We plan to aggressively explore expanding the capabilities of this facility to process biosolids into our patented biofuel, N-Viro Fuel, and look forward to continuing and expanding our relationship with Volusia County.’
Kasmoch added, ‘Our Toledo facility, where we process a majority of Toledo’s wastewater sludge and sell the resulting N-Viro Soil product, continues to be a productive operation. During 2008, we processed 36,000 tons of sludge, with all of the N-Viro Soil product being used for agricultural purposes. With strong demand for N-Viro Soil, which we hope will continue to grow, our goal is to increase our tonnage this year from that facility. The increased demand is evidenced by the fact that with only one quarter into the year, we have requests that already exceed our entire yearly contracted production with Toledo. To help meet the demand, we are currently in discussions with the city to increase the amount of sludge that we process this year to produce enough N-Viro Soil for agriculture.’
‘In addition to the successes in Daytona Beach and Toledo, we also made significant progress on the development of an N-Viro Fuel facility, with Michigan State University (MSU), Mahoning Valley (Ohio) and others. As previously announced, we are currently in the process of planning and designing the biofuel processing facility for MSU, and we expect the Board of Trustees to approve the plan this spring. If completed, we believe this would be the first replicable waste-to-energy model that could be implemented with other universities throughout the country,’ Kasmoch stated. ‘In Mahoning Valley, where another N-Viro Fuel facility is planned, we continue to evaluate sites with our joint venture partner. Once complete, we will begin the permitting process.’
Kasmoch added, ‘We are excited by the fact that N-Viro Fuel recently received alternative energy status from the U.S. Environmental Protection Agency, and we believe this status makes N-Viro Fuel an even more appealing solution to the public and private sectors. Given the current trend toward the use of renewable fuels, we believe that N-Viro Fuel presents a viable solution to potential customers. We are currently in discussions with several companies involved in the cement and fuel/power generation industries for the development and commercialization of the patented N-Viro Fuel technology. While we continue to focus on the development of regional biosolids processing facilities, we are currently in negotiations with several privatization firms to permit and develop independent, regional facilities.’
Kasmoch concluded, ‘We believe the increased level of inquiries and discussions with potential customers point to what we believe will be a strong year for the Company. We also anticipate more favorable transportation and fuel costs will favorably impact our operating expenses. Based upon the anticipated level of business and our expected lower operating costs, we believe we are on track to be cash-flow positive for the first quarter of 2009.’
N-Viro is a US-based company that owns and licenses the N-Viro Process, a technology to treat and recycle wastewater sledges and other bio-organic wastes.
