First quarter year-over-year revenue growth from continuing operations of 18.4% and Recurring Monthly Revenues improved by 7.5%
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TORONTO-Ontario, Aug. 29, 2023 (GLOBE NEWSWIRE) --
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 Mounouchos
Founder, CEO & Board Chair, Avante Corp.
416-923-6984
[email protected]
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.
