CERES INC 
By THOUSAND OAKS, Calif., April 10, 2014 /PRNewswire/ -- Ceres, Inc. (Nasdaq: CERE), an agricultural biotechnology and seed company, announced today financial results for the three months ended February 28, 2014 and provided an update on its business in Brazil.
The company reported that harvests for the 2013-2014 sorghum growing season in Brazil have commenced, with the majority of locations to be harvested over the next four to six weeks as various products reach maturity. Since the favorable start to the season, weather patterns in South-Central Brazil have been variable and drier than normal overall, with severely dry and hot conditions affecting several of the company's sorghum evaluation areas, most notably in western Sao Paulo state. The impact of variable weather has been ameliorated, in part, by the geographic distribution of the evaluation sites and the natural tolerance of sorghum to harsh conditions. At this time, the company expects to generate reliable yield and performance data at enough locations to select products for advanced field evaluations next season.
"With new hybrids moving forward in our pipeline, we are confident that we can continue to drive yields higher for our mill customers and address the industry's need for additional feedstock supply," said Richard Hamilton, President and Chief Executive Officer of Ceres.
The company has previously indicated that it plans to use this growing season and the next to demonstrate the field performance of its sweet and high-biomass sorghum product lines, which can be used to produce ethanol or combusted for electricity generation, respectively.
Ceres Chief Financial Officer Paul Kuc reported that expenses for the quarter were generally in line with management's expectations, and benefited from cost-saving measures initiated in the first fiscal quarter. "With the successful completion of our follow-on equity offering last month, we have strengthened our balance sheet and have the resources we need to launch new seed products as well as pursue additional out-licensing opportunities for our biotech traits and genetic technologies," said Kuc.
Recent Business Highlights
-- Ceres' sorghum field evaluations this season in Brazil have been managed
overall according to the company's recommended crop management
protocols, with variations among locations and hybrids primarily due to
differences in growing conditions during the season as well as
anticipated variations in the adaptation range of individual hybrids
under evaluation. At this time, approximately 40 customer evaluation
sites are expected to provide yield and performance data. Based on
visual inspections of plant health, size and populations per hectare,
company agronomists estimate that approximately 65% of these locations
are in good to excellent condition and 35% are in fair condition. Due
primarily to severe conditions in certain regions, approximately 15
customer evaluation sites are not expected to provide meaningful yield
data or have been lost. Plantings primarily consist of multi-hybrid
evaluations designed to determine yield potential, identify the best
performing hybrids for specific regions and demonstrate crop management
practices. Assessments of individual evaluation locations are subject to
change until harvests are completed. The company expects to collect
yield results by July.
-- Ceres has advanced its high sugar trait for evaluation in
commercial-type sweet sorghum hybrids. This biotech trait significantly
boosted sugar yields in non-commercial types of sorghum during field
evaluations last year. The company has planned both field and greenhouse
evaluations this year. Field trials for Ceres' other biotech traits are
also planned in both rice and corn, with results expected by the end of
this year, provided that necessary field trial permits are issued in a
timely manner.
-- On March 10, 2014, Ceres completed an underwritten public offering,
issuing 23,000,000 shares of common stock at $1.00 per share, including
3,000,000 shares issued pursuant to the exercise in full of the
underwriters' option to purchase additional shares to cover
over-allotments. Net proceeds, after deducting underwriting discounts,
commissions and estimated offering expenses, were $20.8 million.
Second Quarter Financial Results
Total revenues for the quarter ended February 28, 2014 were $0.5 million compared to $1.0 million for the quarter ended February 28, 2013. The change was primarily due to a decrease in collaborative research and government grant revenue. Product sales remained relatively unchanged compared to the second quarter of 2013.
Cost of product sales decreased by $1.7 million to $0.6 million for the three months ended February 28, 2014 compared to the same period in the prior year. The decrease was primarily due to reduced expenses of $1.1 million for obsolete seed inventory and reduced expenses of $0.6 million resulting from changes and reductions in the company's sales incentive and promotional programs in Brazil.
Research and development expenses decreased by $0.8 million to $3.6 million for the three months ended February 28, 2014 compared to the same period in the prior year. In the U.S., research and development expenses decreased by $0.9 million primarily due to reduced personnel and related expenses and reduced external research and development expenses. In Brazil, research and development expenses increased by $0.1 million primarily as a result of increased personnel and related expenses.
Selling, general and administrative expenses increased by $0.2 million to $3.6 million for the three months ended February 28, 2014 compared to the same period in the prior year. In the U.S., expenses decreased by $0.6 million due to reduced personnel and related expenses and reduced professional fees and patent expenses. The reduction in the U.S. was offset by an increase in Brazil of $0.8 million primarily for personnel and related expenses.
For the quarter ended February 28, 2014, Ceres reported a net loss of $7.2 million, or $0.29 per share, compared to a net loss of $9.0 million, or $0.36 per share, for the quarter ended February 28, 2013.
At February 28, 2014, cash and cash equivalents and marketable securities totaled $18.3 million.
Conference Call and Webcast Information
Ceres has scheduled a conference call for 4:30 p.m. EDT (1:30 p.m. PDT) today to discuss its fiscal second quarter results and to provide an update on its business. The webcast of the conference call may be accessed at investor.ceres.net. Audio of the teleconference is also available by dialing:
North America callers:
(877) 838-4153
International callers:
+1 (720) 545-0037
An audio replay of the call will be available two hours after the conclusion of the live call, and remain available on the Ceres website for 30 days.
About Ceres
Ceres, Inc. is an agricultural biotechnology company that markets seeds for energy crops used in the production of renewable transportation fuels, electricity and bio-based products. The company combines advanced plant breeding and biotechnology to develop products that can address the limitations of first-generation bioenergy feedstocks, increase biomass productivity, reduce crop inputs and improve cultivation on marginal land. Its development activities include sweet sorghum, high-biomass sorghum, switchgrass and miscanthus. Ceres markets its products under its Blade brand.
Ceres Forward-Looking Statements
This press release may contain forward-looking statements. All statements, other than statements of historical facts, including statements regarding Ceres' efforts to develop and commercialize its products, anticipated yields and product performance, status of crop plantings, short-term and long-term business strategies, market and industry expectations, future operating metrics, and future results of operations and financial position, including anticipated cost savings from the company's plan to align expenditures, are forward-looking statements. You should not place undue reliance on these forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond Ceres' control. Factors that could materially affect actual results can be found in Ceres' filings with the U.S. Securities and Exchange Commission. Ceres undertakes no obligation to update publicly, except to the extent required by law, any forward-looking statements for any reason after the date the company issues this press release to conform these statements to actual results or to changes in the company's expectations.
CERES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
February 28, February 28,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Revenues:
Product sales $46 $59 $66 $73
Collaborative
research and
government
grants 449 967 1,192 2,918
--- --- ----- -----
Total revenues 495 1,026 1,258 2,991
--- ----- ----- -----
Cost and operating expenses:
Cost of
product sales 556 2,280 1,865 2,980
Research and
development 3,570 4,368 7,984 8,711
Selling,
general and
administrative 3,585 3,392 6,845 7,236
----- ----- ----- -----
Total cost and
operating
expenses 7,711 10,040 16,694 18,927
----- ------ ------ ------
Loss from
operations (7,216) (9,014) (15,436) (15,936)
Interest
expense (19) (1) (19) (1)
Interest
income 10 49 26 78
--- --- --- ---
Loss before
income taxes (7,225) (8,966) (15,429) (15,859)
Income tax
expense - - (1) (1)
--- --- --- ---
Net loss $(7,225) $(8,966) $(15,430) $(15,860)
======= ======= ======== ========
Basic and
diluted net
loss per
share $(0.29) $(0.36) $(0.61) $(0.64)
Weighted average outstanding common
shares used for net loss per share:
Basic and
diluted 25,205,258 24,801,986 25,155,702 24,747,344
CERES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In thousands, except share amounts and par value)
(Unaudited)
February 28, August 31,
------------ ----------
2014 2013
---- ----
Assets
Current assets:
Cash and cash
equivalents $5,448 $8,881
Marketable
securities 12,883 21,630
Prepaid
expenses 541 791
Accounts
receivable 761 957
Inventories - 20
Deferred
offering
costs 625 -
Other current
assets 154 157
--- ---
Total current
assets 20,412 32,436
Property and
equipment,
net 4,429 4,633
Other assets 44 109
--- ---
Total assets $24,885 $37,178
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts
payable and
accrued
expenses $4,804 $3,825
Other current
liabilities 351 18
Current
portion of
long-term
debt 109 154
--- ---
Total current
liabilities 5,264 3,997
Other non-
current
liabilities 84 93
Long-term
debt, net of
current
portion 44 82
Total
liabilities 5,392 4,172
----- -----
Commitments and contingencies
Stockholders' equity:
Common stock
and shares issued 2013.
additional and
paid in outstanding
capital, at February
$0.01 par 28, 2014;
value; 24,897,199
490,000,000 shares issued
shares and
authorized; outstanding
25,204,602 310,154 308,286
Accumulated
other
comprehensive
loss (647) (696)
Accumulated
deficit (290,014) (274,584)
-------- --------
Total
stockholders'
equity 19,493 33,006
------ ------
Total
liabilities
and
stockholders'
equity $24,885 $37,178
======= =======
SOURCE Ceres, Inc.
