Today's News

Burnaby, BC, November 22, 2021--(T-Net)--Smart grid technology leader Tantalus Systems Holding Inc. (TSX: GRID) announced today the financial results for the third quarter and nine months ended September 30, 2021.

Peter Londa, President and CEO, Tantalus Systems Corp.

"In the third quarter of 2021, Tantalus achieved a number of important milestones. We not only witnessed our user community exceed 200 utilities by adding 7 new utilities in the quarter, but we also launched our first commercially-available predictive data analytics tool to improve the resiliency and reliability of electric distribution grids. In addition to our continued commercial success, we also closed our first prospectus-based financing to further strengthen our balance sheet in support of growth initiatives," said Peter Londa, President & CEO of Tantalus.

Extreme weather continues to challenge the resiliency of distribution grids while the availability and accelerating adoption of electric vehicles and other distributed energy resources is stressing existing grid infrastructure.

Coupled with investments being made by homeowners and businesses to install roof-top solar panels to reduce carbon footprints, the utility industry continues to confront an unprecedented number of challenges that require upgrades to distribution grids across North America.

"These challenges create urgency among utilities to transform their grids into digital networks that are capable of accessing granular data in order to gain situational awareness, as well as command and control of critical assets," said Londa.

To help utilities improve the resiliency of their grids by leveraging such granular data, the Company commercially launched the Tantalus Grid Reliability Analytics ("TGRA") tool. TGRA accesses data from Tantalus' edge devices installed in meters and other grid equipment in order to help utilities detect anomalies in power quality that can lead to premature failure of critical assets and sustained outages. After launching the analytics tool in September, Tantalus quickly secured subscriptions to a Software-as-a-Service (SaaS) offering from six utilities within the Company's existing user community. The tool is delivering quantifiable benefits to those utilities and will serve as the foundation for leveraging data captured by Tantalus' smart grid platform to help improve their efficiency, reliability and sustainability.

"We are extremely pleased with our team's performance during the quarter despite witnessing the continuing impact of COVID-19 and global supply chain constraints for semiconductors and other electronic components. The global supply chain challenges directly correlated to backlog revenue being pushed out of Q3 and into future periods. Coupled with the absorption of costs associated with becoming a publicly-traded company and the loss of the Canadian government's Scientific Research & Experimental Development ("SR&ED") funding as a result of no longer being a private company, we delivered negative Adjusted EBITDA for the first time in over 4 years. While it is unfortunate to see our streak of 18 consecutive quarters of delivering positive Adjusted EBITDA come to an end, we remain confident that Tantalus is extremely well positioned to deliver next-generation smart grid solutions as the utility industry accelerates their investments to build the grid of the future," said Londa.

Q3, 2021 and Year to Date Financial Summary

Financial information is reported by Tantalus in United States dollars ("US$") unless otherwise specified and is presented in accordance with International Financial Reporting Standards ("IFRS").

Key results for the quarter are compared to the same timeframe in the previous year unless otherwise stated.

• Revenue of US$8.5 million reported compared to US$8.8 million for the prior year and US$24.6 million during the first nine-months of 2021 compared to US$23.7 million for the same nine-month period in 2020.
  
  
• Gross Profit of US$3.6 million representing Gross Profit margin of 42% for Q3, 2021 decreased from the prior year of US$4.1 million and 47% due to the revenue mix and increasing costs associated with supply chain constraints and logistics. Gross Profit reported for the first nine months of 2021 was US$11.0 million representing Gross Profit margin of 45% compared to US$11.3 million and 48% for 2020.
  
  
• Core Business Operating Expenses for Q3, 2021 increased to US$4.2 million compared to US$3.2 million in the prior year and to US$11.5 million during the first nine months of 2021 from US$9.5 million for the same nine-month period in 2020 due primarily to increased public company expenses and loss of funding from the Canadian government's SR&ED program as a result of becoming a publicly-traded company in 2021. On a comparative basis, excluding the impact of SR&ED benefits associated with being a private company in 2020, the variance between the Operating Expenses of the Company is US$4.2 million versus US$3.4 million dollars for the three months ended September 30, 2021 and 2020, respectively and US$11.6 million versus US$10.5 million for the nine months ended September 30, 2021 and 2020, respectively.
  
  
• Adjusted EBITDA decreased to (US$580,535) in Q3, 2021 compared to US$951,927 in the prior year and to (US$459,710) for the nine months ended September 30, 2021 compared to US$1.8 million in 2020 with the decline due primarily to the incremental public company expenses incurred and the reduction in SR&ED funding in 2021.
  
  
• Closed a CDN$10.6 million overnight-marketed financing on August 12, 2021 which strengthened the Company's balance sheet and positions Tantalus for additional organic growth as well as strategic partnerships and M&A opportunities.
  
  
• The Company had total assets of US$32.9 million as at September 30, 2021, inclusive of US$14.6 million in cash, compared to US$23.5 million as at December 31, 2020, inclusive of US$4.6 million in cash, with Adjusted Working Capital as at September 30, 2021 of US$15.6 million compared to US$3.5 million as at December 31, 2020.

While the growth horizon remains favorable for Tantalus and is being bolstered by the United States' unprecedented Infrastructure Investment and Jobs Act, signed into law on November 15, 2021, management is mindful of the ongoing worldwide disruption to the availability of electronic components, particularly with respect to semiconductors.

The COVID-19 pandemic continues to impact Tantalus through delays in project deployments, restricted access to in-person meetings with utilities as part of the sales process and delays in decision-making by utilities that are assessing modernization plans.

Management continues to implement polices to prioritize the health and safety of their employees while maintaining regular interactions with customers. Similarly, management is navigating through the semiconductor shortage by implementing a number of strategies to mitigate the impact of supply chain constraints by building inventory of long-lead components, qualifying alternative component providers, increasing buffer stock and coordinating directly with our contract manufacturer.

About Tantalus Systems Holding Inc. (TSX: GRID)

Tantalus is a smart grid technology company that transforms aging one-way grids into future-proofed multi-directional grids that improve the efficiency, reliability and sustainability of public power and electric cooperative utilities and the communities they serve. Our solutions are purpose-built to allow utilities to restore power quickly after major disruptions, adapt to rapidly shifting consumer expectations and population shifts, innovate new solutions based on the adoption of distributed energy resources and evolve their grid infrastructure at their own pace without needless cost or complexity. All this gives our user community the flexibility they need to get the most value from existing infrastructure investments while planning for future requirements. Learn more at www.tantalus.com.

Financial Statements and Management Discussion & Analysis

Please see the unaudited interim consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for more details. The unaudited interim consolidated financial statements for the three and nine months ended September 30, 2021 and related MD&A have been reviewed and approved by Tantalus' Audit Committee and Board of Directors. For a more detailed explanation and analysis, please refer to the MD&A that has been filed on SEDAR at www.sedar.com and is also available on the Company's website at www.tantalus.com.

Non-IFRS Measures

The preceding discussion of financial results includes reference to Gross Profit, Core Business Operating Expenses, Adjusted EBITDA and Adjusted Working Capital, which do not have a standardized meaning under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Management believes that Gross Profit is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company and is comprised of revenues less cost of sales. Management believes that Core Business Operating Expenses is a useful indicator for investors, and is used by management, in evaluating the operating expenses of the Company. Core Business Operating Expenses is exclusive of depreciation and amortization, share-based compensation and non-core business related expenses. Management believes that Adjusted EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. Adjusted EBITDA is comprised of income (loss) less interest, income tax, depreciation, amortization, stock-based compensation, foreign exchange gain (loss) and other non-core business related income / expenses and is provided as a proxy for the cash earnings from the operations of the business. Management believes Adjusted Working Capital is a useful indicator for investors, and is used by management, for evaluating the operating liquidity available to the Company. Adjusted Working Capital is comprised of current assets less current liabilities exclusive of the Company's bank loan.