Synthesis Energy Systems (SYMX) recorded improved operating as well as financial performance for the fourth quarter and the full fiscal year 2009, largely driven by soaring revenues, lower costs and a favorable impact from stock-based compensation charges.

Net loss for the quarter was 14 cents per share, almost in line with the Zacks Consensus Estimate of 15 cents per share, but far better than 32 cents posted during the corresponding quarter of the last fiscal year. Net loss for the full year was 60 cents, better than the Zacks Consensus Estimate of 64 cents per share and 80 cents recorded a year ago.

Quarterly revenues amounted to $1.2 million, up $0.9 million from the year-ago quarter, as increased availability of the Hai Hua plant led to higher production. Operating loss improved significantly to $7.8 million from $12.5 million a year ago, primarily driven by lower general & administrative expenses (down 30%), project & technical development cost (down 50%) and stock-based compensation charges (down 87%).

Fiscal revenues totaled $2.1 million compared to $0.3 million a year ago, largely driven by the sales from the Hai Hua plant which commenced commercial production last December. Operating loss increased to $30.1 million from $28.1 million in the previous fiscal. Cost per unit of syngas produced declined substantially in fiscal 2009 and further improvement is expected in the next fiscal as production ramps up.

Synthesis Energy Systems has a compelling story as the wide spread between the cost of its inputs (low quality coal) and outputs (syngas, methanol, various chemicals) create significantly high gross margins. With the strategic partnerships and alliances the company has formed, it should be able to gain market share and grow its global footprint while taking on a fraction of the operational and financial risks associated with operating independently. We maintain our Outperform recommendation for Synthesis Energy Systems.
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