Cortex Business Solutions Announces Q4 and Full Year Fiscal 2018 Financial Results
24 October 2018 - 10:59AM
Cortex Completes Strong Fiscal 2018
with Record Adjusted EBITDA(1) and cash flows from
operations
Cortex Business Solutions Inc. (“Cortex”) (TSXV: CBX), a North
American network-as-a-service complete document management &
e-invoicing solutions provider, today announces its three and
twelve months ended July 31, 2018 (“Q4 F2018”) Management’s
Discussion and Analysis (“MD&A”) and Consolidated Annual
Financial Statements (“F/S”). The MD&A and F/S are
available at www.sedar.com.
“I believe these results are just the beginning
of the momentum that we are building at Cortex. Our team has
delivered our strongest results yet in F2018 while remaining
focused on helping our customers to deliver their own successful
results and savings with our ever-expanding service. With our
most recent acquisition we are able to work with customers on many
new levels by adding new product breadth and supply chain
value. I could not be more excited with the trajectory that
Cortex is on and look forward to another year of growth and
expansion” said Joel Leetzow, President and CEO.
“The strong financial results including revenue
which increased organically year over year by 13% and record
Adjusted EBITDA of $2.1 million for fiscal 2018 continue to show
that Cortex is adding consistent value for its shareholders.” said
Jason Baird, VP, Finance & CFO.
“Cortex completed a transformational fiscal year
with the recent strategic acquisition of Powervision Software Inc.
(“Powervision”) which is estimated to not only increases Cortex’s
revenue, Adjusted EBITDA, margins and cash flows, but has also
improved the solutions that Cortex can offer our customers as a
network-as-a service”
Q4 F2018 and F2018 Financial Highlights
Three months ended July 31, 2018 compared to July 31,
2018
- Adjusted EBITDA(1) increased 136% or by $0.2 million to
$0.4 million from $0.2 million
- Cash flow from operating activities increased 32% or by $0.2
million to $0.7 million from $0.5 million
- Overall revenue increased 5% or by $0.2 million to $3.1 million
from $2.9 million
- Access and usage fees increased 14% or by $0.4 million to $3.0
million from $2.6 million
- Access fees increased 34% to $2.1 million from $1.6
million
- Gross profit improved 3% or by $0.1 million to $2.2
million
- Net income improved by $3.2 million to $3.1 million from a net
loss of $0.1 million
Fiscal 2018 compared to Fiscal 2017
- Adjusted EBITDA(1) increased 282% or by $1.6 million to
$2.2 million from $0.6 million
- Cash flow from operating activities increased 281% or by $1.5
million to $2.0 million from $0.5 million
- Overall revenue increased 13% or by $1.4 million to $12.5
million from $11.1 million
- Access and usage fees increased 16% or by $1.6 million to $11.6
million from $10.0 million
- Access fees increased 28% to $7.7 million from $6.0
million
- Gross profit improved 17% or by $1.3 million to $9.2 million
from $7.8 million
- Net income improved by $4.7 million to $4.3 million from a net
loss of $0.4 million
Cash Position
The overall cash position of Cortex improved 31%
to $8.2 million at July 31, 2018, 2018 from $6.2 million at July
31, 2017 driven predominantly from an increase in net cash provided
by operating activities mainly from higher access and usage fees
and project management revenues. The cash position of Cortex
provided the flexibility to prudently use $4.7 million in the
acquisition of Powervision in September 2018.
(1) Adjusted EBITDA is defined as earnings
before interest, taxes, depreciation and amortization,
non-recurring charges and share based payments. Adjusted
EBITDA is a non-IFRS financial measure that does not have any
standardized meanings prescribed by IFRS and therefore may not be
comparable to similar measures presented by other reporting
issuers. This measure assists the Company in evaluating the
Company’s operating performance against its expectations and
against other entities. Please refer to the Company’s MD&A for
the quarter and year ended July 31, 2018 for further information on
the Company’s use of Adjusted EBITDA and a reconciliation of
Adjusted EBITDA to Net Income.
Cortex’s management will host a conference call, followed by a
question and answer period.
The details of the conference call are as follows:
Date: |
Wednesday, October 24th,
2018 |
Time: |
10:00 a.m. Eastern time
(8:00 a.m. Mountain time) |
Toll-free
dial-in number: |
1-800-273-9672 |
International
dial-in number: |
1-416-340-2216 |
Please call the conference telephone number ten
minutes prior to the start time. An operator will register your
name and organization. If you have any difficulty connecting with
the conference call, please contact Cortex
at 403 219-2838.
A replay of the conference call will be available after the call
through October 31, 2018.
Toll-free replay
number: |
1-800-408-3053 |
Toll replay
number: |
1-905-694-9451 |
Replay
ID: |
7332117# |
About Cortex
Cortex is a service-centric, digital transformation solutions
provider focused on revolutionizing B2B document exchange. We help
businesses save time and money by replacing traditional paper-based
manual systems with AP and AR invoice automation. Companies on the
Cortex Network are positioned for success with solutions that offer
the scalability and flexibility needed to evolve with their unique
business needs. Cortex specializes in the development and delivery
of integrated electronic document intake and management solutions
using flexible connection methods that leverage existing
technologies and processes.
Cortex is currently enabling digital transformation in over
11,000 companies in the Oil & Gas, Mining, Manufacturing and
Sports & Entertainment industries. For more information,
please visit www.cortex.net.
Investor Relations Contacts:
Joel Leetzow |
Jason Baird |
President and CEO |
VP, Finance &
CFO |
jleetzow@cortex.net |
jbaird@cortex.net |
403-219-2838 |
403-219-2838 |
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release. Cortex Business Solutions Inc.
Consolidated Statements of Financial
Position(Prepared in Canadian Dollars)
|
July 312018 |
|
July 312017 |
Assets |
|
|
|
|
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
8,197,785 |
|
|
$ |
6,248,176 |
|
Short-term investments |
|
60,000 |
|
|
|
60,000 |
|
Accounts receivable |
|
907,108 |
|
|
|
1,220,442 |
|
Prepaid expenses |
|
167,822 |
|
|
|
180,710 |
|
|
|
|
|
|
|
9,332,715 |
|
|
|
7,709,328 |
|
|
|
|
|
Long-term
receivable |
|
131,785 |
|
|
|
98,761 |
|
Deposits |
|
32,379 |
|
|
|
35,061 |
|
Property and
equipment |
|
148,479 |
|
|
|
178,118 |
|
Intangible assets |
|
21,012 |
|
|
|
30,018 |
|
Deferred tax
assets |
|
2,758,000 |
|
|
|
- |
|
|
|
|
|
|
$ |
12,424,370 |
|
|
$ |
8,051,286 |
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued liabilities |
$ |
1,197,295 |
|
|
$ |
1,834,471 |
|
Deferred revenue |
|
309,967 |
|
|
|
423,734 |
|
Current income tax payable |
|
20,858 |
|
|
|
9,203 |
|
Current portion of obligations under finance lease |
|
22,923 |
|
|
|
- |
|
|
|
|
|
|
|
1,551,043 |
|
|
|
2,267,408 |
|
|
|
|
|
Deferred rent |
|
141,035 |
|
|
|
- |
|
Obligations under
finance lease |
|
13,801 |
|
|
|
- |
|
|
|
|
|
|
|
1,705,879 |
|
|
|
2,267,408 |
|
Shareholders'
Equity |
|
|
|
|
|
|
|
Share capital |
|
60,771,418 |
|
|
|
60,562,286 |
|
Accumulated other
comprehensive income |
|
620,433 |
|
|
|
591,752 |
|
Contributed
surplus |
|
9,881,276 |
|
|
|
9,526,341 |
|
Deficit |
|
(60,554,636 |
) |
|
|
(64,896,501 |
) |
|
|
|
|
|
|
10,718,491 |
|
|
|
5,783,878 |
|
|
|
|
|
|
$ |
12,424,370 |
|
|
$ |
8,051,286 |
|
Cortex Business Solutions Inc.
Consolidated Statement of Income (Loss) and Comprehensive
Income (Loss)For the years ended July 31, 2018 and
2017(Prepared in Canadian Dollars)
|
Years endedJuly
31 |
|
|
|
2018 |
|
|
|
2017 |
|
Revenue |
|
|
|
|
|
Access and usage fees |
$ |
11,562,518 |
|
|
$ |
9,964,212 |
|
Integration fees |
|
240,227 |
|
|
|
268,579 |
|
Project management and other revenue |
|
651,035 |
|
|
|
826,501 |
|
|
|
|
|
|
|
|
|
12,453,780 |
|
|
|
11,059,292 |
|
|
|
|
|
|
|
Cost of
Sales |
|
3,287,242 |
|
|
|
3,217,622 |
|
|
|
|
|
|
|
Gross
Profit |
|
9,166,538 |
|
|
|
7,841,670 |
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Sales and marketing |
|
2,248,966 |
|
|
|
2,382,665 |
|
Research and development |
|
1,900,089 |
|
|
|
1,869,596 |
|
General and administrative |
|
3,276,424 |
|
|
|
3,676,862 |
|
Severance and termination |
|
184,911 |
|
|
|
138,897 |
|
Onerous contract |
|
- |
|
|
|
217,638 |
|
|
|
|
|
|
|
|
|
7,610,390 |
|
|
|
8,285,658 |
|
|
|
|
|
|
|
Income (loss) before
finance income |
|
1,556,148 |
|
|
|
(443,988 |
) |
|
|
|
|
|
|
Finance income |
|
36,481 |
|
|
|
6,546 |
|
|
|
|
|
Income tax (expense)
recovery - current |
|
(8,764 |
) |
|
|
22,128 |
|
Income tax recovery -
deferred |
|
2,758,000 |
|
|
|
- |
|
|
|
|
|
|
|
Net income (loss) |
$ |
4,341,865 |
|
|
$ |
(415,314 |
) |
|
|
|
|
|
|
Other comprehensive
income |
|
|
|
|
|
Items that may be reclassified subsequently to net income
(loss): |
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) on foreign operations |
|
28,681 |
|
|
|
(48,480 |
) |
|
|
|
|
|
|
Comprehensive income
(loss) |
$ |
4,370,546 |
|
|
$ |
(463,794 |
) |
|
|
|
|
|
|
|
|
Basic |
|
Diluted |
|
|
|
Basic |
Diluted |
|
Net income (loss) per
share |
$ |
0.48 |
$ |
0.47 |
|
|
$ |
(0.05) |
$ |
(0.05 |
) |
Cortex Business Solutions Inc.
Consolidated Statement of Changes in Shareholders’
Equity (Prepared in Canadian Dollars)
|
Number of Common Shares |
Share
Capital |
Accumulated Other
Comprehensive Income |
Contributed
Surplus |
Deficit |
Total Shareholders’
Equity |
|
|
|
|
|
|
|
Balance – July 31, 2016 |
8,984,704 |
$ |
60,291,515 |
$ |
640,232 |
|
$ |
9,126,948 |
|
$ |
(64,481,187 |
) |
$ |
5,577,508 |
|
|
|
|
|
|
|
|
Net loss |
- |
|
- |
|
- |
|
|
- |
|
|
(415,314 |
) |
|
(415,314 |
) |
Translation of foreign operations |
- |
|
- |
|
(48,480 |
) |
|
- |
|
|
- |
|
|
(48,480 |
) |
Compensation units & stock options exercised |
85,279 |
|
270,771 |
|
- |
|
|
(100,480 |
) |
|
- |
|
|
170,291 |
|
Deferred share units issued |
- |
|
- |
|
- |
|
|
200,000 |
|
|
- |
|
|
200,000 |
|
Stock based compensation |
- |
|
- |
|
- |
|
|
299,873 |
|
|
- |
|
|
299,873 |
|
|
|
|
|
|
|
|
Balance – July 31, 2017 |
9,069,983 |
$ |
60,562,286 |
$ |
591,752 |
|
$ |
9,526,341 |
|
$ |
(64,896,501 |
) |
$ |
5,783,878 |
|
|
|
|
|
|
|
|
Net income |
- |
|
- |
|
- |
|
|
- |
|
|
4,341,865 |
|
|
4,341,570 |
|
Translation of foreign operations |
- |
|
- |
|
28,681 |
|
|
- |
|
|
- |
|
|
28,681 |
|
Compensation units & stock options exercised |
27,163 |
|
89,132 |
|
- |
|
|
(31,051 |
) |
|
- |
|
|
58,081 |
|
Deferred share units exercised for shares |
40,554 |
|
120,000 |
|
- |
|
|
(120,000 |
) |
|
- |
|
|
- |
|
Deferred share units issued |
|
|
|
|
200,000 |
|
|
|
200,000 |
|
Stock based compensation |
- |
|
- |
|
- |
|
|
305,986 |
|
|
- |
|
|
305,986 |
|
|
|
|
|
|
|
|
Balance – July 31, 2018 |
9,137,700 |
$ |
60,771,418 |
$ |
620,433 |
|
$ |
9,881,276 |
|
$ |
(60,554,636 |
) |
$ |
10,718,491 |
|
Cortex Business Solutions Inc. Consolidated Statement of
Cash FlowsFor the years ended July 31, 2018 and
2017(Prepared in Canadian Dollars)
|
Years endedJuly
31 |
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
Cash provided by (used
in) |
|
|
|
|
|
|
|
Operating
activities |
|
|
|
Net income (loss) |
$ |
4,341,865 |
|
|
$ |
(415,314 |
) |
Items not affecting
cash |
|
|
|
Recovery for deferred taxes |
|
(2,758,000 |
) |
|
|
- |
|
Stock-based compensation |
|
505,986 |
|
|
|
499,873 |
|
Amortization |
|
183,624 |
|
|
|
139,051 |
|
Deferred Rent |
|
141,035 |
|
|
|
- |
|
Accretion on rebate provision |
|
- |
|
|
|
7,896 |
|
Loss on disposal of equipment |
|
868 |
|
|
|
1,096 |
|
Long term
receivables |
|
(33,024 |
) |
|
|
(98,761 |
) |
Rebate Payment |
|
|
|
(302,041 |
) |
Changes in non-cash
working capital |
|
(410,384 |
) |
|
|
685,343 |
|
|
|
|
|
Net cash provided by
operating activities |
|
1,971,970 |
|
|
|
517,143 |
|
|
|
|
|
Financing
activities |
|
|
|
Proceeds on exercise of
compensation units & stock options |
|
58,081 |
|
|
|
170,291 |
|
Finance lease
payments |
|
(30,081 |
) |
|
|
- |
|
|
|
|
|
Net cash provided by
financing activities |
|
28,000 |
|
|
|
170,291 |
|
|
|
|
|
Investing
Activities |
|
|
|
Acquisition of property
and equipment |
|
(79,043 |
) |
|
|
(12,610 |
) |
|
|
|
|
Net cash used in
investing activities |
|
(79,043 |
) |
|
|
(12,610 |
) |
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents held in foreign
currency |
|
28,682 |
|
|
|
(48,483 |
) |
|
|
|
|
Cash inflow |
|
1,949,609 |
|
|
|
626,341 |
|
|
|
|
|
Cash, beginning of
year |
|
6,248,176 |
|
|
|
5,621,835 |
|
|
|
|
|
Cash, end of year |
$ |
8,197,785 |
|
|
$ |
6,248,176 |
|
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