Next Generation SmartGATE Units Began Shipping in Q2 F2022
VANCOUVER, BC / ACCESSWIRE / May 26, 2022 / Legend Power® Systems Inc. (TSXV:LPS, Financial) (OTCQB:LPSIF) ("Legend Power" or the "Company"), a global leader in commercial electrical system solutions, reports its financial results for the three months ended March 31, 2022 ("Q2 F2022"). The Company has also scheduled a conference call to provide a business update to discuss its Q2 F2022 financial results for Thursday, May 26, 2022 at 11:00 AM ET (8:00 AM PT) (details below). The call will be hosted by Randy Buchamer, President & Chief Executive Officer. A complete set of Financial Statements and Management's Discussion & Analysis has been filed at www.sedar.com. All dollar figures are quoted in Canadian dollars.
Q2 F2022 Financial Highlights
- Revenue of $343 thousand versus $482 thousand in Q2 F2021
- Adjusted EBITDA loss of $1.32 million versus a $708 thousand loss in Q2 F2021
- Net loss of $1.48 million versus a $983 thousand loss in Q2 F2021
- Cash of $6.03 million, no debt, and $7.63 million in working capital at March 31, 2022
Subsequent Events
- Launched new partner program page, new partner portal, and new true cost of power estimator
- Completed shipments of 20 Next Generation SmartGATE Platforms and secured inventory for 50 additional units
- First Next Generation SmartGATE platform installed and performing above initial expectations
- Reduced operating expenses and based on our budget have a twelve-month runway with existing cash and working capital
"We've worked diligently with new and existing suppliers to secure delivery commitments for long lead-time and critical inventory components," said Legend Power Systems CEO Randy Buchamer. "We're managing Legend's transition to fulfilling customer orders for the new SmartGATE Platform to balance forecasted customer demand with the amount of working capital committed to investing in inventory. While supply chains around the world are still a concern for many companies, Legend has significantly reduced its risk and will continue to work to secure supply to be able to deliver on anticipated growing demand."
Overview of Q2 F2022 Financials
During Q2 F2022 the Company continued to invest in its sales team and inventory while expanding production and field operations capacity in readiness for ramping Gen3 SmartGATE demand. These investments were highlighted in the Company's June 10, 2021 prospectus as primary use of proceeds in connection with the $10 million bought deal financing.
The Company's channel sales team now consists of 3 individuals experienced in growing reseller and ESCO relationships who can sell the value propositions that Insights and SmartGATE solutions bring to commercial real estate. Target markets and reseller channels continue to respond positively to Legend's solutions. The Company continues to secure partnering opportunities with channels, particularly ESCOs. During Q2 F2022, SmartGATE Insights was chosen by a global property owner, and the Company subsequently completed initial installations at a large building complex in Puerto Rico. The channel sales team also continued development of partner support tools for the partner portal, including marketing support, sales support, technical support, and deal registration. The partner portal was launched in May 2022.
During Q2 F2022 the Company continued to work through component inventory supply chain challenges and secured additional stock to complete the assembly of 20 plus Gen3 SmartGATE units to fill backlog sales orders. However, due to the delivery timing of components, revenue recognized during the quarter was lower than anticipated, as some units were delivered shortly after the quarter.
With the Gen3 SmartGATE system reaching commercial production, during Q2 F2022 the engineering team continues to focus on remote commands functionality. This functionality allows the Company to communicate remotely with Gen3 SmartGATE field units and is the foundation of a "remote upgrade" feature. In addition, the engineering department worked on cost reduction strategies including identifying alternative suppliers and design refinements.
Financial summary for the three and six months ended March 31, 2022 and 2021
| Three months ended March 31, | Six months ended March 31, | |||||||||||||||||||||||
(Cdn$, unless noted otherwise) | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||||
Revenue | 343,573 | 482,144 | (29 | )% | 512,793 | 1,248,370 | (59 | )% | ||||||||||||||||
Cost of sales | 286,012 | 393,624 | (27 | )% | 417,984 | 957,804 | (56 | )% | ||||||||||||||||
Gross margin1 | 57,561 | 88,520 | (35 | )% | 94,809 | 290,566 | (67 | )% | ||||||||||||||||
Gross margin %1 | 17 | % | 18 | % | (9 | )% | 18 | % | 23 | % | (21 | )% | ||||||||||||
Operating expenses | 1,536,477 | 1,068,146 | 44 | % | 2,855,953 | 2,145,538 | 33 | % | ||||||||||||||||
Adjusted EBITDA2 | (1,317,640 | ) | (708,025 | ) | 86 | % | (2,323,414 | ) | (1,385,632 | ) | 68 | % | ||||||||||||
Net loss | (1,479,789 | ) | (982,829 | ) | 51 | % | (2,761,144 | ) | (1,854,972 | ) | 49 | % | ||||||||||||
1 Gross margin is based on a blend of both equipment and installation revenue.
2 Adjusted EBITDA is a non-IFRS financial measure. See EBDITA Reconciliation for details.
Revenue for the second quarter of 2022 was $343,573 compared with $482,144 in the second quarter of fiscal 2021. The lower revenue during Q2 of fiscal 2022 was primarily due to customer preference install scheduling and delayed product deliveries to customers, as a result of inventory shortages caused by supply chain challenges and, to a lesser extent, the production ramp up required for the Gen3 version of SmartGATE.
Gross margin in the second quarter of fiscal 2022 was 17% versus 18% in second quarter of fiscal 2021. The comparative decrease in Q2 2022 gross margin was due primarily to higher cost of goods sold driven by widespread supply chain challenges, COVID-19 supplier surcharges, and component cost increases.
The Company's operating expenses for the second quarter of fiscal 2022 were $1,536,477, up from $1,068,146 in the second quarter of fiscal 2021. The primary cause for the increase was higher salaries and consulting costs as the Company recently expanded its channel sales team and the fact that internal cost cutting measures and COVID-19 government subsidies were still in place during Q2 of fiscal 2021.
Adjusted EBITDA for the second quarter of fiscal 2022 was negative $1,317,640, compared with negative $708,025 in second quarter of fiscal 2021.
Net loss for the second quarter of fiscal 2022 was $1,479,789, compared with a net loss of $982,829 in the second quarter of fiscal 2021. Lower gross margins and increased operating costs in Q2 of fiscal 2022 compared with the second quarter of fiscal 2021 resulted in a higher net loss.
Cash at the end of the quarter was $6.03 million. The Company has no debt and had working capital of $7.63 million. Given the challenges in supply chain and shipping that companies are experiencing around the world, management is focused on continuing to take costs out of the business while taking advantage of the large growth opportunity as our customers and potential strategic partners look to deploy our solutions throughout buildings across North America.
CONFERENCE CALL DETAILS:
DATE: | Thursday, May 26, 2022 |
TIME: | 11:00 AM ET (8:00 AM PT) |
DIAL-IN NUMBERS: | North America Toll Free Dial-in Number (888) 396-8049 |
ONLINE LISTENING | https://app.webinar.net/M1O9DZP02xE |
CONFERENCE ID: | 48955762 |
REPLAY: | Available at: www.legendpower.com |
About Legend Power® Systems Inc.
Legend Power® Systems Inc. (www.legendpower.com) provides an intelligent energy management platform that analyzes and improves building energy challenges, significantly impacting asset management and corporate performance. Legend Power's proven solutions support proactive executive decision-making in a complex and volatile business and energy environment. The proprietary and patented system reduces total energy consumption and power costs, while also maximizing the life of electrical equipment. Legend Power's unique solution is also a key contributor to both corporate sustainability efforts and the meeting of utility energy efficiency targets.
For further information, please contact:
Sean Peasgood, Investor Relations
+ 1 647 503 1054
[email protected]
Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
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 to 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.
SOURCE: Legend Power Systems Inc.
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