CRAiLAR Technologies, Inc. reports fourth quarter results

Fourth Quarter Highlights:

• Revenues increase to $1.9 million, up 378% from Q4 2013.
• Production volume increases 43% from Q3 2014.
• Adjusted EBITDA loss $0.3 million.

VICTORIA, BC, April 13, 2015 /CNW/ - CRAiLAR Technologies Inc. (the "Company") CRLRF CL), which produces and markets CRAiLAR® Flax fiber The Friendliest Fiber On The Planet™, today reported sales of $1.9 million and a net loss of $8.2 million or $0.12 per share for the fourth quarter ended December 27, 2014.  This loss includes an $8.0 million or $0.12 per share non-cash impairment charge associated with its idled South Carolina facility. This compares with sales of $0.4 million and a net loss of $3.2 million or $0.07 per share for the fourth quarter ended December 28, 2013, which included an inventory impairment charge of $1.2 million partially offset by a $0.4 million bargain purchase gain. The Company's Adjusted EBITDA for the quarter was a loss of $0.3 million, a reduction of $0.8 million from Q4 2013's Adjusted EBITDA loss of $1.1 million. For further information regarding Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to net loss, see non-GAAP Financial Measures below.

During the fourth quarter of 2014, the Company continued to make progress optimizing its European production facility.  Fiber output volume increased by 43% over Q3 2014. Drying capacity was doubled with installation and programming of a second dryer and a kier overhaul which increases loads per cycle. Improved quality and volumes increased customer confidence and products using branded CRAiLAR fibers were launched this quarter. Forecasted demand for CRAiLAR Fibers now exceeds plant capacity.  Two customers are investigating dedicated facilities and have scheduled validation trials for Q2 2015. 

New equipment installation and overhaul this quarter led to some production disruptions, and some equipment failures limited output.  A preventative maintenance regime is improving plant stability.  An $8.0 million non-cash impairment charge was recorded in Q4 to write-down the value of our South Carolina plant, equipment and feedstock. This charge reflects the Company's focus on European production and lack of near term plans to restart the plant. Decortication equipment from that location may be redeployed to support future direct-to-farmer feedstock sourcing initiatives in Western or Eastern Europe.

For the year ended December 27, 2014, the Company reported sales of $4.2 million and a net loss of $14.2 million or $0.25 per share, compared with $0.6 million sales last year and a net loss of $15.2 million or $0.34 per share. This year's loss includes the aforementioned $8.0 million impairment charge associated with the South Carolina plant. Last year's loss included a $4.6 million write-down of feedstock and seed inventory.  The Company's Adjusted EBITDA for the year was a loss of $3.4 million compared with an Adjusted EBITDA loss of $6.0 million last year. The Company is focused on two strategic initiatives: reducing feedstock costs and increasing production volume. To reduce feedstock costs we are expanding supply sources and beginning the process of contracting directly with farmers. Our feedstock strategies will allow us to improve margin, influence farming techniques (expanding potential fiber markets), and create a more secure supply chain.  An optimized supply chain will create substantial cost advantages over traditional and competing sustainable fibers. To increase production volume and satisfy customer demand, we are optimizing the existing European plant and supporting customer validation trials. Expanded feedstock supply chain, direct to farmer sourcing, optimized production at our current plant, and future customer supported plants are critical future steps for CRAiLAR's natural and sustainable fibers to disrupt the fiber industry.

Non-GAAP Financial Measures
Regulation G, "Conditions for Use of Non-GAAP Financial Measures," and other provisions of the Securities Exchange Act of 1934, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide "EBITDA," which is a non-GAAP financial measure that consists of net loss before (a) interest expense, (b) accretion expense and (c) depreciation amortization and depreciation.   "Adjusted EBITDA" further adjusts EDITDA with respect to share-based compensation expense, facility commissioning expense, fair value adjustment to derivative liabilities, gain/loss on settlement of debt, write down of assets, rent inducement expense, deferred income tax recovery and bargain purchase.

The Company believes that these non-GAAP financial measures provide important supplemental information to management and investors. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the accompanying reconciliation to corresponding GAAP financial measures, provides a more complete understanding of factors and trends affecting the Company's business and results of operations.

Management uses EBITDA and Adjusted EBITDA as a measure of the Company's operating performance because they assist in comparing the Company's operating performance on a consistent basis by removing the impact of items not directly resulting from core operations. Internally, these non-GAAP financial measures are also used by management for planning purposes, including the preparation of internal budgets; for allocating resources to enhance financial performance; for evaluating the effectiveness of operational strategies; and for evaluating the Company's capacity to fund capital expenditures and expand its business. The Company also believes that analysts and investors use these measures as supplemental measures to evaluate the overall operating performance of developemental companies. Additionally, the Company believes that lenders or potential lenders use EBITDA and Adjusted EBITDA to evaluate the Company's ability to repay loans.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company's non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

The table below reconciles net loss to Adjusted EBITDA for the periods presented (in thousands):

Conference Call

A conference call to discuss the company's fourth quarter and year ended December 27, 2014 results is scheduled to begin at 2:00 pm Pacific Daylight Time (5:00 pm Eastern Daylight Time) on April 13, 2015. Participants may access the call by dialing 877-705-6003 (North America) or 201-493-6725 (international), 5 to 10 minutes before the call and ask for the CRAiLAR Technologies Inc. Fourth Quarter 2014 Conference Call. In addition, the call will be broadcast live over the Internet and accessible through website: http://public.viavid.com/index.php?id=113929  If you are unable to participate during the live call, an audio replay will be available until midnight on April 27, 2015 by dialing 877-870-5176 or 858-384-5517 for international callers, and entering pin number 13606585. A transcript will be available approximately 24 hours after the call on CRAiLAR's investor page.

About CRAiLAR Technologies Inc.

CRAiLAR Technologies Inc. CRAiLAR is focused on bringing cost-effective, sustainable, bast fiber-based products to market that are environmentally friendly natural fiber alternatives with equivalent or superior performance characteristics to cotton, wood or fossil-fuel based fibers. The Company's business operations consist primarily of the production of its natural and proprietary CRAiLAR® Flax fibers targeted at the natural yarn and textile industries, as well as the deployment of its CRAiLAR® processing technologies in the cellulose pulp and composites industries. For more information, visit www.crailar.com.

Safe Harbor Statement

This news release includes certain statements that may be deemed "forward-looking statements". All statements in this news release, other than statements of historical facts, are forward-looking statements. Forward-looking statements or information are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements or information and including, without limitation, risks and uncertainties relating to: any market interruptions that may delay the trading of the Company's shares, technological and operational challenges, needs for additional capital, changes in consumer preferences, market acceptance and technological changes, dependence on manufacturing and material supplies providers, international operations, competition, regulatory restrictions and the loss of key employees. In addition, the Company's business and operations are subject to the risks set forth in the Company's most recent Form 10-K, Form 10-Q and other SEC filings which are available through EDGAR at www.sec.gov. These are among the primary risks we foresee at the present time. The Company assumes no obligation to update the forward-looking statements.

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

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SOURCE Crailar Technologies Inc.