Avante Logixx Inc. (TSX.V: XX) (OTC: ALXXF) (“Avante” or the
“Company”) released financial results for its second fiscal quarter
ended September 30, 2021 (all amounts in thousands of Canadian
dollars, unless otherwise indicated).
In addition, the Company’s Board of Directors
continues to make progress on and evaluate the various strategic
alternatives available to the Company as announced on August 24,
2021 (the “Strategic Review”).
RESULTS FOR THE THREE-MONTH PERIOD ENDED
SEPTEMBER 30, 2021
Avante’s Fiscal Year End is
March 31. |
Three Months Ended |
Expressed in C$ thousands, unless otherwise noted |
30-Sep-20 |
30-Jun-21 |
30-Sep-21 |
Revenues |
$23,602 |
$24,120 |
$22,601 |
Gross profit (1) |
$5,774 |
$5,894 |
$4,242 |
Gross profit margin (1) |
24.5% |
24.4% |
18.8% |
Direct Operating Expenses
(1) |
$4,034 |
$3,840 |
$3,668 |
EBITDA (1) |
$1,190 |
$1,799 |
($2,085) |
Adjusted EBITDA (1) |
$1,719 |
$2,008 |
$627 |
Comprehensive income (loss)
attributed to Avante shareholders |
($367) |
$277 |
($2,926) |
Basic and fully diluted income
per share |
($0.025) |
$0.013 |
($0.138) |
Basic and fully diluted Adjusted
EBITDA per share (1) |
$0.081 |
$0.095 |
$0.030 |
Cash Flow from Operations before
Working Capital |
$1,713 |
$1,370 |
$623 |
“During Q2 we have been responding to the
challenges created by the current economic environment,” said Craig
Campbell, CEO and Director of Avante. “It is a difficult operating
environment, driven by inconsistent re-opening and return to work
policies and implementation, coupled with a tight labour market and
supply chain constraints resulting in significant increases in our
labour costs as a percent of revenue. I am proud of the team and
our businesses that despite these challenges, we have demonstrably
grown recurring and contractual revenue, while reducing our direct
operating expenses. It is my belief that these challenges are
transitory and short term in nature. While navigating these
challenges we continue to drive profitable growth in new markets
while onboarding net new customers, increasing wallet share with
existing customers all while remaining focused on improving our
operating metrics.”
The Company reported year-over-year revenue
declines of 4.2% and Adjusted EBITDA declined from $1.72 million in
Q2 F21 to $0.63 million during Q2 F22. However, Avante delivered
growing recurring monthly revenue (“RMR”) and contractual revenue
streams of $17.3 million during the second quarter of this year
from $15.4 million in the prior year’s second quarter, representing
year-over-year growth of 12.5%, and sequential growth versus Q1 of
4.3%.
(1) Adjusted EBITDA, EBITDA, Gross Profit, Gross Profit
Margin and Direct Operating Expenses are non-IFRS measures. See
Description of Non-IFRS Measures.
|
Q2 F21 |
Q3 F21 |
Q4 F21 |
Q1 F22 |
Q2 F22 |
Recurring Monthly Revenue |
$2,137 |
$2,194 |
$2,380 |
$2,435 |
$2,437 |
Contractual Revenue |
$13,263 |
$15,019 |
$14,643 |
$14,171 |
$14,888 |
Total recurring/
contractual revenue |
$ 15,400 |
$ 17,213 |
$ 17,023 |
$ 16,606 |
$ 17,325 |
% of total revenues |
65.2% |
68.3% |
68.9% |
68.8% |
76.7% |
Q2 F22 HIGHLIGHTS
- Revenues of
$22.6 million for the quarter ended September 30, 2021, which
represented a 4.2% YoY decline and a sequential decline versus the
first quarter of 6.3%.
- Revenue by
segment during the second quarter of Fiscal 2022 was as
follows:
|
For the Quarter Ended |
|
30-Sept-21 |
$ in thousands |
Revenue |
% of Total |
Logixx Security |
$18,245 |
80.7% |
Avante Security |
$4,440 |
19.6% |
Intercompany |
($84) |
(0.4%) |
Total |
$22,601 |
100.0% |
- Gross profit
of $4.2 million for the quarter ended September 30, 2021, which
represented a decline of 26.5% year over year.
- Direct
Operating Expenses declined in absolute dollars, both year over
year and sequentially. Such costs were 16.2% of revenue during Q2
F22 from 17.1% in Q2 of the prior year but increased from 15.9%
during Q1 as the sequential revenue decline during the second
quarter was greater than the achieved cost savings.
- Adjusted
EBITDA during Q2 F22 of $0.6 million, or 2.8% of revenue, was $1.1
million less than the prior year and $1.4 million worse on a
sequential basis.
- Generated $0.6
million in cash flow from operations (before changes in working
capital) during Q2 F22.
- IFRS reported
net profit and EBITDA reflected a loss on the derivative component
of the Convertible Debentures of $2.2 million during Q2 Fiscal
2022. This loss is removed in the calculation of the quarter’s
Adjusted EBITDA. IFRS reported liabilities in respect of the
Convertible Debentures are now $2.7 million greater than the actual
contractual liability.
- IFRS reported
Net Loss of ($2.9) million or ($0.138) per share.
The Board of Directors are continuing with the
Strategic Review of the Company and there is no further update at
this time. The Board will provide an update once available.
CONFERENCE CALL
Avante will be hosting a conference call to discuss the above
financial results on Tuesday November 30, 2021, at 8:30 AM EDT.
Dial in details are as follows:
Local: (+1)
416-764-8658 |
Toll Free:
(+1) 888-886-7786 |
Conference ID:
14870119 |
Playback details below, available until December 30,
2021:
Local: (+1)
416-764-8692 |
Toll Free:
(+1) 877-674-7070 |
Playback Pin:
870119# |
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, the expected trajectory of corporate costs as
a percentage of revenue and the unwinding of Covid-19 related
revenue benefits and the normalization of pre-pandemic customer
revenues. This forward-looking information also includes statements
with respect to, among other things, information or statements
about Avante’s strategy, future operations, its review of strategic
alternatives, any transactions arising from the Strategic Review
and statements regarding Avante’s work with a strategic advisor.
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,
the effects of the ongoing Covid-19 pandemic and the list of risk
factors identified in Avante’s Management Discussion & Analysis
(MD&A), Annual Information Form (AIF) 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 and 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 & capitalized commissions,
share-based payments, acquisition, integration and / or
reorganization costs, deferred financing costs, loss (gain) in fair
value of derivative liability, expensing of CWL fair value
adjustment per IFRS less non-controlling interest’s share. 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.
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