Avante Corp. (TSX.V: XX) (OTC: ALXXF) (“Avante” or
the “Company”) is pleased to announce its financial results for its
first fiscal quarter ended June 30, 2023 (all amounts in Canadian
dollars thousands, unless otherwise indicated).
SUMMARY FINANCIAL
RESULTS FOR THE QUARTER
ENDED JUNE
30,
2023:
|
Three months ended |
thousands unless otherwise noted |
Jun 30,
2023 |
Jun 30,
2022 |
|
INCOME STATEMENT
INFORMATION: |
|
|
|
RMR in the period, continuing
operations (1) |
$ |
2,648 |
|
$ |
2,463 |
|
|
Revenues, continuing
operations |
$ |
5,410 |
|
$ |
4,568 |
|
|
Gross profit, continuing
operations (1) |
$ |
2,039 |
|
$ |
1,995 |
|
|
Gross profit margin, continuing
operations (1) |
|
37.7 |
% |
|
43.7 |
% |
|
Adjusted EBITDA, continuing
operations (1) |
$ |
508 |
|
$ |
565 |
|
|
Net Income (loss), continuing
operations |
$ |
80 |
|
$ |
(230 |
) |
|
Net Income (loss) |
$ |
80 |
|
$ |
3,505 |
|
|
Average Common Shares during the
year |
|
26,489,438 |
|
|
26,489,438 |
|
|
|
|
|
|
BALANCE SHEET
INFORMATION: |
Jun. 30,
2023 |
Mar 31,
2023 |
|
Cash balances & GIC
investments |
$ |
9,428 |
|
$ |
10,114 |
|
|
Total funded debt as reported,
IFRS |
$
nil |
$ |
500 |
|
|
Total funded debt & lease
obligations, IFRS |
$ |
1,375 |
|
$ |
2,134 |
|
|
Common Shares at period end |
|
26,489,438 |
|
|
26,489,438 |
|
|
(1) Adjusted
EBITDA and Recurring Monthly Revenues (“RMR”) are non-IFRS
financial measures that have no standard meaning under IFRS and as
a result may not be comparable to the calculation of similar
measures by other companies. See Description of Non-IFRS Financial
Measures. Reconciliations of Adjusted EBITDA and RMR to Net Income
or Revenues, as applicable, are provided in the Company’s
Management Discussion & Analysis (“MD&A”).
|
Three
months
ended |
RECONCILIATION OF ADJUSTED EBITDA |
Jun 30,
2023 |
Jun 30,
2022 |
|
Total comprehensive income (loss) from continuing operations |
$ |
80 |
|
$ |
(230 |
) |
|
Deferred income tax expense (recovery) |
|
32 |
|
|
28 |
|
|
Interest expense |
|
56 |
|
|
73 |
|
|
Depreciation and amortization |
|
319 |
|
|
245 |
|
|
Amortization on capitalized commission |
|
3 |
|
|
3 |
|
|
Share based payments |
|
(128 |
) |
|
(566 |
) |
|
Reorganization and acquisition expense |
|
147 |
|
|
972 |
|
|
Deferred financing fees |
|
- |
|
|
39 |
|
|
Adjusted
EBITDA from continuing operations |
$ |
508 |
|
$ |
565 |
|
|
“We are continuing to see positive engagement
and interaction with our clients as a result of the new initiatives
we have implemented to increase efficiencies and reinstate our
superior level of service. Our clients are our best advocates and
have been graciously providing a significantly increased
number of direct referrals” said Manny Mounouchos, Founder, CEO
& Board Chair of Avante. “We continue to actively seek new
opportunities to be leaders in the global security market, staying
true to the Avante brand and mission.”
Added Raj Kapoor, Chief Financial Officer of the
Company, “We continue to show strong sales performance while
creating efficiencies and opportunities as we streamline the
Company’s operations.”
FINANCIAL HIGHLIGHTS FOR THE
FIRST FISCAL QUARTER ENDED
JUNE 30,
2023:
Within continuing operations, the Company
reported year-over-year revenue growth of 18.4%, or $843, during
the first quarter of fiscal 2024, increasing to $5,410 from $4,568.
Gross profit margins within continuing operations declined to 37.7%
of revenue, versus 43.7% during the prior year’s first quarter,
with total gross profit increasing by $44.
The Company’s recurring monthly revenues
(“RMR”) from continuing operations during the last
eight quarters are summarized below. The Avante Security segment
delivered RMR of $2,648 during the first quarter of fiscal 2024, up
from $2,463 during the prior year’s first quarter.
Gross profit margins over the last eight
quarters ranged between 37.7% and 45.1%, and were 39.3% on a
trailing twelve-month basis to June 30, 2023:
Avante Security |
F22(1) |
F23(1) |
F24 |
$thousands |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
RMR in the period |
$ |
2,372 |
|
$ |
2,416 |
|
$ |
2,488 |
|
$ |
2,463 |
|
$ |
2,584 |
|
$ |
2,600 |
|
$ |
2,691 |
|
$ |
2,648 |
|
Other revenue |
|
2,066 |
|
|
2,335 |
|
|
2,450 |
|
|
2,105 |
|
|
2,350 |
|
|
2,492 |
|
|
2,675 |
|
|
2,762 |
|
Total revenue |
$ |
4,438 |
|
$ |
4,751 |
|
$ |
4,938 |
|
$ |
4,568 |
|
$ |
4,934 |
|
$ |
5,092 |
|
$ |
5,366 |
|
$ |
5,410 |
|
|
|
|
|
|
|
|
|
|
Total Gross Profit |
$ |
1,842 |
|
$ |
2,143 |
|
$ |
2,087 |
|
$ |
1,995 |
|
$ |
1,921 |
|
$ |
2,177 |
|
$ |
2,029 |
|
$ |
2,039 |
|
Gross Profit % |
|
41.5 |
% |
|
45.1 |
% |
|
42.3 |
% |
|
43.7 |
% |
|
38.9 |
% |
|
42.8 |
% |
|
37.8 |
% |
|
37.7 |
% |
(1) The
Company’s fiscal year end is on March 31 of each year. “F22” means
the fiscal year ended March 31, 2022; and “F23” means the fiscal
year ended March 31, 2023.
SEGMENT
RESULTS:
The Avante Security segment reported Adjusted
EBITDA of $691 during the first fiscal quarter ended June 30, 2023,
versus $765 during the first fiscal quarter ended June 30, 2022.
This decline of $74 was largely due to an increase of
reorganization expenses.
The loss in Adjusted EBITDA from central
corporate costs, net of eliminations, within continuing operations
was $(182) during the first fiscal quarter ended June 30, 2023.
This represented an improvement of $17 versus the $(199) Adjusted
EBITDA net of central costs during the first fiscal quarter ended
June 30, 2022. The current quarterly period benefits from
restructuring implemented in the previous financial year
LIQUIDITY
HIGHLIGHTS:
On June 1, 2022, all remaining funded debt of
the Company was repaid from proceeds of the sale of Logixx
Security. On the same date, the Company entered into amended and
restated credit facilities with its bank to provide a $2 million
revolving credit facility, provided on a demand basis and subject
to a customary borrowing base. In January, the Company
took a small draw on this credit facility and repaid it by June 30,
2023.
On July 7, 2022, the Company entered into a
definitive loan agreement with affiliates of its largest
shareholder. This agreement permits the Company to draw term loans,
on a non-revolving basis, for up to $10 million at a fixed rate of
5.0% with terms to maturity ending July 7, 2027. Drawings are
subject to a minimum senior leverage test and other conditions. A
standby fee on the unused portion of the facility of 0.5% is
payable annually in arrears. To date, the Company has not drawn on
this term loan facility.
With cash balances of $9.4 million, and access
to the senior secured revolver of $2 million and to the $10 million
unsecured term loan facility, the Company has excess liquidity to
more than meet its existing requirements.
Readers should refer to the Company’s financial
statements and MD&A in respect of its year ended March 31,
2023, for additional risk factors, accounting policies, detailed
financial disclosures, reconciliation of non-IFRS financial
measures to the most directly comparable IFRS financial measures,
related party transactions, contingencies and reporting of
subsequent events since the year ended March 31, 2023. Such
financial statements and MD&A are incorporated by reference
into this news release and are filed electronically through the
System for Electronic Document Analysis and Retrieval (“SEDAR”),
which can be accessed at www.sedar.com.
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.
Neither 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.
STOCK OPTION GRANT
Avante Corp., would also like to announce the
grant of stock options to Bruce Bronfman, a director of the
Company, to purchase up to 100,000 common shares of Avante,
effective as of today, subject to the terms and conditions of the
Company’s 10% rolling stock option plan. The options have been
granted to Mr. Bronfman in connection with his joining the board
earlier this year, have an exercise price of $0.88 per share, and
have fully vested upon grant. The options granted have a term of
five years from the date of the grant.
ABOUT
AVANTE
CORP.:
Avante Corp. (TSXV: XX), provides high-end
security services through its wholly owned subsidiary, Avante
Security Inc., serving residential customers located in Toronto and
Muskoka regions of Ontario, Canada. With an experienced team,
a focus on customer service excellence and development of
innovative solutions, we remain committed to providing our
shareholders with exceptional returns. Please visit our
website at avantelogixx.com.
Emmanuel MounouchosFounder, CEO & Board
Chair, Avante Corp.416-923-6984manny@avantesecurity.com
Forward-Looking
Information
This news release may contain forward-looking
statements (within the meaning of applicable securities laws)
relating to the business of the Company and the environment in
which it operates. Forward-looking statements are identified by
words such as “believe”, “anticipate”, “project”, “expect”,
“intend”, “plan”, “will”, “may” “estimate”, “pro-forma” and other
similar expressions. These statements are based on the Company’s
expectations, estimates, forecasts and projections. The
forward-looking statements in this news release are based on
certain assumptions. They are not guarantees of future performance
and involve risks and uncertainties that are difficult to control
or predict. A number of factors could cause actual results to
differ materially from the results discussed in the forward-looking
statements, including, but not limited to, the Company’s ability to
achieve the benefits expected as a result of the sale of Logixx
Security Inc., anticipated growth from acquisitions, new service
offerings and from development and deployment of new technologies
and the list of risk factors identified in the Company’s Management
Discussion & Analysis (MD&A), Annual Information Form (AIF)
and other continuous disclosure documents available at
www.sedar.com. There can be no assurance that forward-looking
statements will prove to be accurate as actual outcomes and results
may differ materially from those expressed in these forward-looking
statements. Readers, therefore, should not place undue reliance on
any such forward-looking statements. Further, these forward-looking
statements are made as of the date of this news release and, except
as expressly required by applicable law, the Company assumes no
obligation to publicly update any such statement, whether as a
result of new information, future events or otherwise.
Non-IFRS Financial Measures
This press release includes certain measures
which have not been prepared in accordance with International
Financial Reporting Standards (“IFRS”) such as EBITDA, Adjusted
EBITDA and Recurring Monthly Revenue (“RMR”). These non-IFRS
measures are not recognized under IFRS and and do not have a
standardized meaning prescribed by IFRS. 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 and
expensing of fair value adjustments per IFRS.
Recurring Monthly Revenues, or
RMR, represent revenue during the fiscal period
that benefited from contractual periodic billing to customers,
typically monthly, quarterly or annually.
Management believes that Adjusted EBITDA and
Recurring Monthly Revenues are appropriate additional measures for
evaluating Avante’s performance. Readers are cautioned that neither
EBITDA, Adjusted EBITDA nor Recurring Monthly Revenues should be
construed as an alternative to net income or revenues (as such
financial measures are 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 EBITDA, Adjusted EBITDA and
Recurring Monthly Revenues may differ from methods used by other
issuers and, accordingly, Avante’s reported Non-IFRS measures may
not be comparable to similar measures used by other issuers.
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