Avante Logixx Inc. (TSX.V: XX) (OTC: ALXXF) (“Avante” or the
“Company”) is pleased to announce its results for the three and
nine-month periods ended December 31, 2019 (all amounts in Canadian
dollars, unless otherwise indicated).
RESULTS FOR THE THREE-MONTH PERIOD ENDED DECEMBER 31,
2019
|
Three months ended December 31, |
Nine months ended December 31, |
$ in thousands, unless otherwise noted |
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
Revenues |
|
14,114 |
|
|
8,846 |
|
|
|
37,371 |
|
|
20,277 |
|
Gross profit (1) |
|
3,332 |
|
|
3,015 |
|
|
|
10,334 |
|
|
6,618 |
|
Gross profit margin (1) |
|
23.6 |
% |
|
34.1 |
% |
|
|
27.7 |
% |
|
32.6 |
% |
EBITDA (1) |
|
(1,248 |
) |
|
(704 |
) |
|
|
(858 |
) |
|
(629 |
) |
Adjusted EBITDA (1) |
|
(327 |
) |
|
(321 |
) |
|
|
512 |
|
|
165 |
|
Net income (loss) attributable to
Avante shareholders |
|
(1,634 |
) |
|
(1,073 |
) |
|
|
(2,404 |
) |
|
(1,681 |
) |
Comprehensive income (loss)
attributed to Avante shareholders |
|
(1,687 |
) |
|
(1,073 |
) |
|
|
(2,935 |
) |
|
(1,681 |
) |
Basic and fully diluted income
per share |
($0.077 |
) |
($0.056 |
) |
|
($0.113 |
) |
($0.088 |
) |
Basic and fully diluted Adjusted
EBITDA per share |
($0.015 |
) |
($0.015 |
) |
|
$0.024 |
|
$0.0078 |
|
|
|
|
|
|
|
|
|
|
|
“We continue to build our platform of technology-enabled
security solutions through acquisitions and organic growth,” said
Craig Campbell, CEO of Avante. “Our deliberate strategy within the
enterprise security sector has been to build capacity and a solid
core base business with a national scope in the Protective Services
segment. To that end, I am very pleased that Avante closed the
acquisition of A.S.A.P. Secured Inc. (“ASAP”) on December 1, 2019.
Although we were conscious of the fact that establishing a
national base in Protective Services would initially lower gross
margin percentages, our much enhanced national platform and
management team is now well-positioned to attract larger enterprise
clients, cross-sell higher-margin services to existing clients, and
generate increasing synergies from highly scalable back-office
infrastructure and technology. Since the end of the third quarter,
we have seen increased new business wins from large enterprise
clients that will be reflected in the last few months of Fiscal
2020 and beyond. The acquisition of ASAP contributed 31% of
Protective Services Division (“PSD”) services, and 19% of total
revenue for the third quarter with an EBITDA margin of 8.5%.
I am very pleased with the acquisitions we have closed since
implementing our XX 2.0 strategy, as evident by a 209.7% CAGR since
F2018 to Pro-forma TTM.”
“We have a clear vision, a detailed growth plan and an aligned
group of stakeholders that look forward to demonstrating our
ability to meaningfully grow the top and bottom line through scale,
financial discipline and acquisitions. We have a healthy and robust
acquisition pipeline, with multiple proprietarily sourced
opportunities from across Canada and the United States. During the
third quarter, we raised $8.3 million by way of 7.0% convertible
debentures from Fairfax Financial Holdings (“Fairfax”), and we have
the option (subject to shareholder and regulatory approval) to
raise an additional $9.7 million of these debentures prior to
August 27, 2020. This provides us with ample capital to continue to
scale our platforms as opportunities arise.”
Q3 FISCAL YEAR 2020 HIGHLIGHTS
- Generated revenues of $14.1MM for the quarter ended December
31, 2019, which represented 59.5% YoY2 growth.
- Organic year-over-year revenue growth of 2.9% versus 9.6% in Q2
F20.
- Generated gross profit of $3.3MM, or a 23.6% gross margin, for
the period ended December 31, 2019, which represented 10.5% YoY2
growth.
- Operating expenses (net of depreciation, amortization,
share-based payments, loss (gain) in fair value of the derivative
liability, accretion expense on the convertible debentures, other
adjustments and other interest expenses) were $3.5MM during Q3 F20,
unchanged versus the comparable period of Fiscal 2019. In
comparison to Q2 F20, operating expenses increased by $0.5MM, where
$0.2MM is attributable to the acquisition of ASAP.
- Generated Adjusted EBITDA of ($0.33MM), or an Adjusted EBITDA
margin of (2.3%).
- Balance sheet with $0.4MM of cash on hand, assets of $48.5MM,
and shareholders’ equity of $15.1MM, with undrawn credit facilities
of approximately $7.0M and ability to draw down further on the
convertible debenture facility entered into with Fairfax in the
quarter (subject to shareholder and regulatory approval).
- Entered into an amended credit agreement with the Royal Bank of
Canada.
- Entered into an agreement with Fairfax for up to $18.0 million
in financing through a private placement of unsecured convertible
debentures at a 7.0% coupon. During the quarter the Company
received $8.3 million to fund the acquisition of ASAP.
- Entered into a definitive share purchase agreement to acquire
all of the outstanding shares of ASAP for $10.5MM on a cash-free
and debt-free basis.
SUBSEQUENT EVENTS
- On January 20, 2020, the Company announced the appointment of
Mr. Steve Rotz as Chief Financial Officer.
CONFERENCE CALL
Avante will be hosting a conference call to discuss the above
financial results on Wednesday, February 26, 2020, at 8:30 AM
EST.
Dial in details are as follows:
Local: (+1)
416-764-8658 |
Toll Free:
(+1) 888-886-7786 |
Conference ID:
76907924 |
Playback details below, available until March 18,
2020:
Local: (+1)
416-764-8692 |
Toll Free:
(+1) 877-674-7070 |
Playback Pin:
907924 # |
This news release shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale
of the securities described herein in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. This news release does not constitute an offer of
securities for sale in the United States. The securities described
herein have not been, nor will they be, registered under the United
States Securities Act of 1933, as amended, and such securities may
not be offered or sold within the United States absent registration
under U.S. federal and state securities laws or an applicable
exemption from such U.S. registration requirements.
About Avante Logixx Inc.
Avante Logixx Inc. (TSXV: XX) is a Toronto-based
provider of high-end security services. We acquire, manage and
build industry leading businesses, which provide specialized,
mission-critical solutions that address the needs of our customers.
Our businesses continuously develop innovative solutions that
enable our customers to achieve their objectives. With an
experienced team and a proven track record of solid growth, we are
taking steps to establish a broad portfolio of security businesses
to provide our customers and shareholders with exceptional returns.
Please visit our website at www.avantelogixx.com and consider
joining our investor email list.
Avante Logixx Inc.
Craig CampbellCEO(416)
923-6984craig@avantelogixx.com
Forward-Looking Information
All statements in this press release, other than
statements of historical fact, may constitute “forward looking
information” with respect to Avante within the meaning of
applicable securities laws. Forward-looking information is often,
but not always, identified by the use of words such as “seek”,
“anticipate”, “plan”, “continue”, “planned”, “expect”, “project”,
“predict”, “potential”, “targeting”, “intends”, “believe”,
“potential”, and similar expressions, or describes a “goal”, or a
variation of such words and phrases or state that certain actions,
events or results “may”, “should”, “could”, “would”, “might” or
“will” be taken, occur or be achieved. This forward-looking
information includes statements with respect to, among other
things, the intention to create a platform capable of supporting a
business with significantly greater scale, Avante’s strategic plan,
Avante’s intentions to engage in mergers and acquisitions in the
near term, Avante’s intentions to identify, acquire and integrate
suitable targets for mergers and acquisitions, the ability to
achieve operational efficiencies and provide a better overall
customer experience, Avante’s run-rate, opportunities to grow
Avante’s revenue and Adjusted EBITDA profile, investments in
corporate infrastructure, Avante’s ability to execute and integrate
larger acquisitions, and the expected trajectory of corporate costs
as a percentage of revenue. Forward-looking information is subject
to a variety of known and unknown risks, uncertainties and other
factors that could cause actual events or results to differ from
those expressed or implied by the forward looking information,
including, without limitation, the ability to identify, acquire and
integrate suitable targets for mergers and acquisitions, the
ability to control corporate costs, and the list of risk factors
identified in Avante’s Management Discussion & Analysis, Annual
Information Form and other continuous disclosure, which list is not
exhaustive of the factors that may affect any of Avante’s
forward-looking information. In connection with the forward-looking
statements contained in this and subsequent press releases, Avante
has made certain assumptions about its business and the industry in
which it operates and has also assumed that no significant events
occur outside of Avante’s normal course of business. Although
management believes that the assumptions inherent in the
forward-looking statements are reasonable as of the date the
statements are made, forward-looking statements are not guarantees
of future performance and, accordingly, undue reliance should not
be put on such statements due to the inherent uncertainty therein.
Avante’s forward-looking information is based on the beliefs,
expectations and opinions of management on the date the statements
are made, and Avante does not assume any obligation to update
forward-looking information, whether as a result of new
information, future events or otherwise, other than as required by
applicable law. For the reasons set forth above, readers should not
place undue reliance on forward-looking information.
Non-IFRS Financial Measures
This press release includes certain measures which have not been
prepared in accordance with IFRS such as EBITDA, Adjusted EBITDA.
These non-IFRS measures are not recognized under IFRS and,
accordingly, users are cautioned that these measures should not be
construed as alternatives to net income determined in accordance
with IFRS. The non-IFRS measures presented are unlikely to be
comparable to similar measures presented by other issuers.
References to EBITDA are to net income before interest, taxes,
depreciation and amortization. References to Adjusted EBITDA are to
net income before interest, taxes, depreciation, amortization of
intangibles, amortization of capitalized commissions, share-based
payments, acquisition, integration and / or reorganization costs,
other adjustments, loss (gain) in fair value of derivative
liability and expensing of CWL fair value adjustment per IFRS, less
non-controlling interest’s share in earnings. Neither EBITDA nor
Adjusted EBITDA is an earnings measure recognized by International
Financial Reporting Standards (“IFRS”) and do not have a
standardized meaning prescribed by IFRS. Management believes that
Adjusted EBITDA is an appropriate measure in evaluating Avante’s
performance. Readers are cautioned that neither EBITDA nor Adjusted
EBITDA should be construed as an alternative to net income (as
determined under IFRS), as an indicator of financial performance or
to cash flow from operating activities (as determined under IFRS)
or as a measure of liquidity and cash flow. Avante’s method of
calculating Adjusted EBITDA may differ from methods used by other
issuers and, accordingly, Avante’s Adjusted EBITDA may not be
comparable to similar measures used by other issuers.
Neither the TSX Venture Exchange 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.
(1) Adjusted EBITDA, EBITDA, Gross Profit and Gross Profit
Margin are non-IFRS measures. See Description of Non-IFRS
Measures.(2) YoY or Year-over-Year represents the percentage change
from Q3 F19 to Q3 F20
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