Lattice Biologics Ltd. Reports Third Quarter 2019 Results

BELGRADE, Mont.–(BUSINESS WIRE)–Lattice Biologics Ltd. (TSX-V: LBL) (OTCBB: LBLTF) (“Lattice Biologics” or the “Company”) announces financial results for Q3 2019.

Sales and Product Offerings

– Completion of the relocated processing facility to Belgrade, Montana and expanding reach into dental markets.

– Gross profit margin was 35.8% for the three months ended June 30, 2019, compared to 39.3% for the same period in the previous year. Gross profit margin was 63.7% for the nine months ended June 30, 2019, compared to 60.9% for the same period in the previous year.

– For the three months ended June 30, 2019, sales increased over 100% year over year, and gross profit also increased over 100% year over year. For the nine months ended June 30, 2019, sales increased 90% year over year, while gross profit increased 99% year over year.

– Launched new products into a higher margin dental market.

– Cash from operations was $147,848 for the nine months ended June 30, 2019 compared to $57,882 for the nine months ended June 30, 2018.

Finance

– Relocated operations to Belgrade, Montana from Scottsdale, Arizona, resulting in operational efficiencies.

– Gross profit of $0.2 million on sales of $0.4 million for the three months ended June 30, 2019 compared to the same period in the previous year of $0.1 million on $0.2 million of sales. Gross profit of $1.1 million on sales of $1.7 million for the nine months ended June 30, 2019 compared to the same period in the previous year of $0.5 million on $0.9 million of sales.

– Recognized a net loss of $0.3 million ($0.00 per share) for the three months ended June 30, 2019 compared to a net loss of $0.6 million ($0.01 per share) for the same period in the previous year. Incurred a net loss of $0.3 million ($0.00 per share) for the nine months ended June 30, 2019 compared to $0.9 million ($0.01 per share) for the same period in the previous year.

– Total liabilities increased to $8.6 million at June 30, 2019 from $8.4 million at September 30, 2018. Current liabilities increased to $7.1 million at June 30, 2019 from $7.0 million at September 30, 2018.

Q3 2019 Business Update:

“I am pleased to announce that the Company continues on its growth plans. Sales for Q3 2019 were expected to be lower relative to Q2 2019, as large stocking orders occurred in March of 2019. We expect sales to normalize in Q4, and continue to grow throughout 2020. We are reiterating our guidance for 2019 of 2.2 to 2.4 million, and issuing guidance of 3.0 – 3.5 million for 2020,” said Guy Cook, CEO of Lattice Biologics.

With strong distribution partners and an enhanced product line intended for dental indications, we expect sales to continue to grow throughout 2020. Operationally, the company is much more efficient and has lowered its operating and overhead costs to effectively compete in the dental market space.

As we continue to focus to higher margin product line, and to re-position the Amnioboost line for dental indications, we are confident we have turned the corner and positioned the company for profitable and continued growth.

The Company continues to make significant improvements on the PnL, and is working with creditors to convert certain debt balances to equity for working capital purposes.

Lattice Biologics maintains its commitment to honoring the gift of donation by implementing a strong quality control environment for the recovery and processing of donors. The Company has significantly increased its processing efficiencies, and has made additional key hires to insure continued growth.

As indicated below, the Company continues efforts to diversify the sales mix across the new higher margin product lines added in prior years.

Third Quarter 2019 Financial Results (all figures denoted in USD):

The product launches have been well received by our clients and the Company continues to replace unprofitable legacy contracts and focus on the newer higher margin products. Lattice Biologics’ total revenue was $447,973 in the three months ended June 30, 2019 compared to $190,524 for the three months ended June 30, 2018, an increase of 135%, as shown in the following quarter sales table:

 
Jun-30 Mar-31 Dec-31 Sep-30 Jun-30 Mar-31 Dec-31 Sep-30

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

 

 

2017

 

 

 

2017

 

 
Revenue

$

447,973

 

$

751,084

 

$

467,311

 

$

278,459

 

$

190,524

 

$

323,921

 

$

362,137

 

$

398,542

 

Cost of sales

 

287,484

 

 

172,788

 

 

144,849

 

 

271,398

 

 

115,588

 

 

102,963

 

 

123,938

 

 

554,717

 

Gross profit

 

160,489

 

 

578,296

 

 

322,462

 

 

7,061

 

 

74,936

 

 

220,958

 

 

238,199

 

 

(156,175

)

Operating costs (i)

 

331,795

 

 

344,397

 

 

283,062

 

 

567,058

 

 

434,925

 

 

382,764

 

 

336,332

 

 

536,590

 

EBITDA (ii)

 

(156,771

)

 

246,648

 

 

52,149

 

 

(546,873

)

 

(346,865

)

 

(148,682

)

 

(85,509

)

 

(678,425

)

 
Gross margin percent

 

35.8

%

 

77.0

%

 

69.0

%

 

2.5

%

 

39.3

%

 

68.2

%

 

65.8

%

 

-39.2

%

The following table sets out selected unaudited financial information, prepared in accordance with IFRS. The information contained herein is drawn from interim financial statements of the Company for each of the following quarterly periods ending:

 
Jun-30 Mar-31 Dec-31 Sep-30 Jun-30 Mar-31 Dec-31 Sep-30

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

 

 

2017

 

 

 

2017

 
ADM dermis

$

0

%

$

0

%

$

0

%

$

0

%

$

18,500

10

%

$

68,600

21

%

$

73,399

20

%

$

54,700

14

%

DBM putty

 

0

%

 

0

%

 

0

%

 

0

%

 

8,300

4

%

 

10,650

3

%

 

18,749

5

%

 

0

%

Bone scaffold

 

447,973

100

%

 

751,084

100

%

 

467,311

100

%

 

222,333

80

%

 

119,935

63

%

 

204,028

63

%

 

212,972

59

%

 

315,152

79

%

Other

 

0

%

 

0

%

 

0

%

 

56,126

20

%

 

43,789

23

%

 

40,643

13

%

 

57,017

16

%

 

28,690

7

%

 
Total revenue

$

447,973

100

%

$

751,084

100

%

$

467,311

100

%

$

278,459

100

%

$

190,524

100

%

$

323,921

100

%

$

362,137

100

%

$

398,542

100

%

 

Certain adjustments have been made to the quarterly information for the first three quarters of the fiscal year ended September 30, 2016, as compared to data contained in the quarterly filings for such quarters. These changes relate to certain adjustments for cost of sales and operating costs that were not recognized until the fourth quarter of such fiscal year.

  1. Operating costs are defined as all general and administrative costs, professional fees, rent, salaries and benefits, sales and marketing, and utilities expenses.
  2. EBITDA is defined as gross profit less operating costs (as defined above).

About Lattice Biologics Ltd.:

Lattice Biologics is traded on the TSX-V under the symbol: LBL. The Company is an emerging leader in the field of cellular therapies and tissue engineering, with a focus on dental indications.

Lattice Biologics develops and manufactures biologic products to domestic and international markets. The Company’s products are used in a variety of surgical applications.

Lattice Biologics maintains its headquarters, laboratory and manufacturing facilities in Belgrade, Montana as well as offices in Phoenix, Arizona. The facility includes ISO Class 1000 clean rooms, and specialized equipment capable of crafting traditional allografts and precision specialty allografts for various clinical applications. The Lattice Biologics team includes highly trained tissue bank specialists, surgical technicians, certified sterile processing and distribution technicians, and CNC operators who maintain the highest standards of aseptic technique throughout each step of the manufacturing process. From donor acceptance to the final packaging and distribution of finished allografts, Lattice is committed to maintaining the highest standards of allograft quality, innovation, and customer satisfaction.

Lattice Biologics maintains all necessary licensures to process and sell its tissue engineered products within the U.S. and internationally. This includes Certificates to Foreign Governments from the U.S. Food and Drug Administration (FDA) and registrations for multiple countries, which allow the export of bone, tendon, meniscus, ligament, soft tissue, and cartilage products outside of the U.S.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statement on Forward-Looking Information:

Certain information contained in this news release constitutes “forward-looking statements” within the meaning of the ‘safe harbour’ provisions of Canadian securities laws. All statements herein, other than statements of historical fact, are to be considered forward looking. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “planned”, “potential”, “future”, “expected”, “could”, “possible”, “goal”, “intends”, “will” or similar expressions. Forward-looking statements in this news release include, without limitation: information pertaining to the Company’s strategy, plans, or future financial performance, such as statements with respect to the Transaction, and other statements that express management’s expectations or estimates of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Lattice to be materially different from those expressed or implied by such forward-looking statements.

Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management as of the date such statements are made, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions that could prove to be incorrect, include, but are not limited to: that market prices will be consistent with expectations, the continued availability of capital and financing, and that general economic, market and business conditions will be consistent with expectations. The forward-looking statements are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statements, except as required by law. Readers are cautioned not to put undue reliance on these forward-looking statements.

United States Advisory: The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and may not be offered, sold, or resold in the United States or to, or for the account of or benefit of, a U.S. Person (as such term is defined in Regulation S under the U.S. Securities Act) unless an exemption from the registration requirements of the U.S. Securities Act is available. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in the state in the United States in which such offer, solicitation or sale would be unlawful.

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Contacts

Guy Cook, CEO

Lattice Biologics Ltd.

480-563-0800 Office

News@LatticeBiologics.com

www.LatticeBiologics.com

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