Legend Power Announces Results for Third Quarter 2017; Company Bests Quarterly Revenue and Unit Sales RecordsThursday, August 31, 2017
Legend Power Announces Results for Third Quarter 2017; Company Bests Quarterly Revenue and Unit Sales Records and Achieves Positive EBITDA
Burnaby, BC, August 31, 2017--(T-Net)--Legend Power Systems Inc. (TSXV: LPS) a global leader in voltage reduction and optimization technology, today reported its third quarter 2017 financial results for the three and nine months ended June 30, 2017. Currency amounts are in Canadian dollars.
Highlights for the three months ended June 30, 2017:
“The third quarter of fiscal 2017 was the Company's best ever,” said Randy Buchamer, Legend's President & CEO. “We have again taken significant steps along our 2017 transformation journey from an early stage entity to a growth stage company. We continue to add first class talent to the team, strengthen our balance sheet, and improve operational capacity.
For the first time in our company's history we have achieved positive EBITDA. A healthy trend in Committed Orders is a testament to our firmly established reputation as a leading energy efficiency company with a product that provides strong energy savings. We believe in our roadmap for success and our outlook has never been more optimistic.”
The Company's cash position has recently benefitted from the early exercise of 3,834,368 warrants at a price of $0.40 each for total proceeds of $1.53 million. Several insiders and a core group of shareholders exercised these warrants prior to their scheduled expiry on December 30, 2017.
The strategic direction for Legend's fourth quarter and beyond includes continued expansion in the Ontario region, strategic expansion into the United States as a second performing region, and the launch of a partner-based distribution sales channel for low-cost, rapid expansion.
Financial summary for the three and nine month periods ended June 30, 2017 and 2016:
|Three-months ended June 30,||Nine-months ended June 30,|
|(Cdn$, unless noted otherwise)||2017||2016||Change||2017||2016||Change|
|Cost of sales||799,219||284,262||181.2%||1,658,365||1,234,109||34.4%|
|Gross margin %1||47.3%||51.7%||(4.4)%||47.6%||39.4%||8.2%|
|Operating expense as % of sales||58.4%||149.2%||(90.8)%||75.7%||111.2%||(35.5)%|
1 Gross margin is based on a blend of both equipment and installation revenue.
2 Adjusted EBITDA; for the three and nine month periods ended June 30, 2017 and 2016, we are disclosing Adjusted EBITDA, which is a non-IFRS financial measure, as a supplementary indicator of operating performance. We define Adjusted EBITDA as net income or loss before; interest, income taxes, amortization, warranty expense, non-cash stock based compensation and foreign exchange gains and losses, as well as unusual non-operating items such as insurance settlement.
Revenue for the third quarter of 2017 was $1,516,813, up from $588,982 in the same period of fiscal 2016. Year to date revenue was $3,163,042, up from $2,036,782 in the same period of 2016. The higher revenue in both periods is attributable to increasing demand for the Company's product combined with particularly strong results realized in the education market vertical.
Gross blended margin in the third quarter 2017 was 47.3%, a slight decrease from 51.7% in the same period of 2016. Year to date gross blended margin was 47.6%, significantly improved from 39.4% in 2016. The decrease in blended gross margin for the three month comparative periods is due in most part to the effect of the Company's more comprehensive approach, in fiscal 2017, to capturing indirect manufacturing costs and to weaker margins associated with installation revenue from business written in prior periods. The increase in gross blended margin for year over year nine month periods is due primarily to economies of scale achieved through higher volume of units sold and a comparatively stronger profit margin contribution from installation services. Management expects gross blended margin to continue to improve with volume, cost optimization, and a strengthened field operations team focused on profitability in our installation services business.
Operating expense as a percentage of revenue in the third quarter 2017 was 58.4% compared with 149.2% in the same quarter of 2016. Year to date operating expense as a percentage of revenue was 75.7%, down from 111.2% in 2016. The decreases in both comparative periods is due primarily to increases in revenue in the current year periods, offset slightly by marginally higher operating expenses associated with the Company's growth in the current year. Effective control of operating expenses related to the Company's rapid growth remains a top priority of management. Thirteen new individuals have been added to the Legend team since the beginning of our fiscal year without a negative impact on our operating expense as a percentage of revenue results.
Third quarter 2017 Adjusted EBITDA was positive $39,088, a significant improvement from negative $330,720 in 2016. Year to date Adjusted EBITDA was negative $433,972, also a significant improvement over negative $1,163,194 in 2016. The Company was able to realize these improved results in both comparative periods by achieving stronger sales and gross margins, which was offset slightly by higher operating expenses.
Net loss for the third quarter 2017 was $161,510, down from $574,370 in 2016 and year to date was $881,244 down from $1,461,780 in 2016.
Included in the third quarter 2017 net loss were several significant non-cash items, which totaled $208,005, while in the year to date period non-cash items totaled $456,931.
* The Company is reporting Committed Orders, a non-IFRS measure, which is a supplementary indicator of sales activity. Committed Orders herein are tabulated as of the last day of the prior fiscal quarter. This measure is being presented based on the belief that it provides the reader a more complete and current understanding of the Company's sales activity. The measure does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines Committed Orders as the total number of units committed for purchase by customers, evidenced by either a purchase order, purchase agreement, or both on the last day of the most recently ended fiscal quarter, which had not been recognized in revenue during the proceeding financial periods.
A complete set of the June 30, 2017 Consolidated Financial Statements and Management's Discussion & Analysis have been filed on SEDAR (www.sedar.com)and are available on Legend's corporate website,http://legendpower.com/investors/financial-statements/.
About Legend Power Systems Inc.
Legend Power Systems Inc. (www.legendpower.com) is changing the way buildings around the world use power. The company's patented and proprietary technology reduces overvoltage, a natural condition present in power grids around the world.
Overvoltage inflates energy costs, damages electrical equipment, and increases the negative impact a building has on the environment. Legend's utility-proven Harmonizer improves the power efficiency of an entire building to reduce total energy consumption and power costs, while maximizing equipment life.
The solution provides customers risk free energy savings, improves the value of their physical assets, and enhances their sustainability efforts. As an application with demand side benefits, Legend is also a key contributor toward utility conservation goals. In 2015 Legend was recognized as the top performing cleantech company on the TSX Venture Exchange.
Randy Buchamer, CEO and President
+ 1 778 945 1501
Sean Peasgood, Investor Relations
+ 1 416 565 2805
Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.
This Press Release may contain statements which constitute “forward-looking information”, including statements regarding the plans, intentions, beliefs and current expectations of the Company, its directors, or its officers with respect to the future business activities and operating performance of the Company.
The words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” and similar expressions, as they relate to the Company, or its management, are intended to identify such forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future business activities or performance and involve risks and uncertainties, and that the Company's future business activities may differ materially from those in the forward-looking statements as a result of various factors.
Such risks, uncertainties and factors are described in the periodic filings with the Canadian securities regulatory authorities, including the Company's quarterly and annual Management's Discussion & Analysis, which may be viewed on SEDAR at www.sedar.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.
Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements other than as may be required by applicable law.
Burnaby (CleanTech & Energy)
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