Crailar Technologies Inc., which produces and markets Crailar flax fiber, reported a net loss of $3.2 million, or 7 cents a share, for the fourth quarter ended Dec. 28, compared with a net loss of $3.1 million, or 7 cents a share, for the same period a year earlier.
Sales in the quarter for the start-up were $400,000 compared with no sales in the year-ago period when product was still being tested.
This quarter’s loss included a $1.2 million writedown of feedstock inventory due to weather, partially offset by a $40,000 bargain purchase gain from the acquisition of its European production facility. The 2012 fourth quarter had included a $600,000 write-off of the company’s pilot scale decortication facility that was deemed not commercially viable and a $300,000 write-off of seed inventory.
The company’s adjusted earnings before interest, taxes, depreciation and amortization for the quarter was a loss of $1.2 million compared with a loss of $1.5 million a year earlier.
During the fourth quarter of 2013, Crailar completed the acquisition of a fiber dyeing facility in Belgium, strategically located in Europe’s flax-growing region, in a non-cash transaction through the assumption of $1.2 million of debt payable over five years. The facility currently has the necessary equipment to perform the enzymatic processing step and has the capacity to produce in excess of 280,000 pounds a week of Crailar flax fiber. Also during the fourth quarter, the company received $4.9 million of funding from retailer Ikea and Hydra Ventures, the corporate venture arm of Adidas Group AG. The Ikea funding is a $3 million facility with a term of 30 months at a low interest rate and is designated for working capital and equipment. Along with the loan, Ikea signed a general supply agreement that provides for exclusivity in certain domestic textile categories and requires minimum order quantities through 2022. The Hydra funding is a $1.9 million equity investment.
“The fourth quarter was a period of transition, where accounting numbers do not reflect the tremendous progress we made positioning the company for success,” said Kenneth C. Barker, chief executive officer. “We now have the ability to produce high-quality Crailar flax fiber for our customers and, for the first time, we have funding from highly regarded brands that serve as an endorsement of our product and our potential. We are now shipping Crailar flax fiber to our customers as we optimize our new production facility and we look forward to future investor updates.”
For the year, the company reported a net loss of $15.2 million, or 34 cents a share, compared with a net loss of $9.3 million, or 22 cents a share, in 2012. Sales for the 12 months were $600,000, compared with no sales last year. This year’s loss includes a $4.6 million writedown of feedstock and seed inventory and $2.1 million in interest. The company’s adjusted EBITDA for the year was a loss of $6.3 million compared with a loss of $5.4 million last year.
The company, based in Portland, Ore., expects first-quarter sales of $500,000. Capacity was limited during the first quarter as the plant was being configured to optimize Crailar production, and the firm expects those modifications to be complete in the second quarter and sales to more than double for that period.
Crailar supplies its branded flax to Hanesbrands, Georgia-Pacific, Brilliant Global Knitwear, Tuscarora Yarns, Target Corp. and Kowa Co. for commercial use, and to Levi Strauss & Co., Cintas, Carhartt, Ashland, PVH Corp., Cotswold Industries, Cone Mills and Lenzing for evaluation and development.