EnWave Announces 2019 Third Quarter Consolidated Interim Financial Results
29 August 2019 - 10:30PM
EnWave Corporation (TSX-V:ENW | FSE:E4U) (“EnWave”, or the
"Company") today reported the Company’s consolidated
interim financial results for the third quarter ended June 30,
2019.
Consolidated Financial
Performance:
($ ‘000s) |
Three months ended June 30, |
Nine months ended June 30, |
|
2019 |
2018 |
Change% |
2019 |
2018 |
Change% |
|
|
|
|
|
|
|
Revenues |
10,075 |
6,779 |
49% |
26,654 |
15,470 |
72% |
Direct
costs |
7,217 |
3,848 |
88% |
17,639 |
9,818 |
80% |
Gross margin |
2,858 |
2,931 |
(2%) |
9,015 |
5,652 |
60% |
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
General and administration |
1,118 |
510 |
119% |
3,165 |
1,709 |
85% |
Sales and marketing |
1,203 |
1,105 |
9% |
3,263 |
2,378 |
37% |
Research and development |
665 |
332 |
100% |
1,375 |
900 |
53% |
|
2,986 |
1,947 |
53% |
7,803 |
4,987 |
56% |
Net loss after taxes |
(1,322) |
(104) |
(1,170%) |
(1,561) |
(1,020) |
(53%) |
Adjusted EBITDA* |
139 |
1,313 |
(89%) |
2,304 |
1,632 |
41% |
|
|
|
|
|
|
|
Loss
per share – basic and diluted |
$ (0.01) |
$(0.00) |
|
$ (0.02) |
$(0.01) |
|
* Adjusted EBITDA is a non-IFRS financial
measure. Refer to the disclosure below regarding non-IFRS financial
measures below and in the Company’s MD&A.
EnWave’s interim condensed consolidated
financial statements and MD&A are available on SEDAR at
www.sedar.com and on the Company’s website www.enwave.net.
Key Financial Highlights for Q3
(expressed in ‘000s):
- Reported the highest ever quarterly revenue for the Company Q3
2019 of $10,075 compared to $8,773 in Q2 2019 and $6,779 in Q3
2018. Revenue growth was driven by increased REVTM equipment orders
by cannabis companies and continued growth in Moon Cheese®
distribution.
- Continued to be cash flow positive with Adjusted EBITDA(*) of
$139 for Q3 2019 compared to $1,313 for Q3 2018, a decrease of
$1,174. Q3 YTD Adjusted EBITDA(*) for the Company was $2,304,
compared to $1,632 for Q3 YTD 2018.
- Consolidated net loss for the period after taxes was $1,322 for
Q3 2019 compared to a net loss of $104 for Q3 2018, an increase of
$1,218. Consolidated net loss after taxes for Q3 YTD 2019 was
$1,561 compared to a net loss of $1,020 for Q3 YTD 2018, an
increase of $541. The Company recorded a restructuring cost of $612
in Q3 2019 related to the reorganization of the sales and marketing
function of NutraDried.
- Increased G&A expenses to $1,118 for Q3 2019 compared to
$510 for Q3 2018, an increase of $608. The Company expanded its
leadership team, including a new CEO for NutraDried and increased
expenses related to securing additional royalty-bearing license
agreements.
- Incurred S&M expenses of $1,203 for Q3 2019 compared to
$1,105 for Q3 2018, an increase of $98. Important foundational
investments were made to improve the Moon Cheese® branding in
preparation for a fall re-launch of the brand.
- Strengthened the balance sheet and completed a strategic
investment with Aurora Cannabis Inc. (“Aurora”) in the Company for
gross proceeds of $10,087. The cash available to finance growth in
the business was $21,824 on June 30, 2019.
Significant
Accomplishments:
- Commissioned the first 60kW REVTM machine for Tilray Inc.
(“Tilray”), marking first large-scale continuous cannabis
processing line installed by the Company. This major milestone for
the Company confirms that EnWave’s technology can consistently
produce high-quality dried cannabis and offer significant cost and
processing advantages for cannabis producers.
- Signed a royalty-bearing commercial sub-license agreement with
Aurora, granting Aurora non-exclusive rights to use EnWave’s
technology for processing cannabis in Canada. Aurora purchased two
120kW REVTM machines and a 10kW machine for installation in
Canada.
- Entered into royalty-bearing commercial license agreements with
Aurora granting Aurora exclusive rights, with the rights to grant
sub-licenses, for processing cannabis in the European Union
(excluding Portugal) and South America. Aurora committed to
purchasing a 60kW machine in 2020 for installation in South America
and the Company is working with Aurora to confirm the purchase of a
120kW Good Manufacturing Practice (“GMP”) REV™ machine to be
installed in Europe for Aurora to retain its exclusive rights.
- Partnered with Aurora to develop new innovations and
intellectual property related to REVTM and its applications in the
cannabis sector by signing an intellectual property agreement and
initiating new joint development projects.
- Secured the first bearing commercial license agreement for the
dehydration of industrial hemp products in the U.S. with Electric
Farms, LLC (“Electric Farms”). Electric Farms purchased a 10kW
machine for commercial dehydration of legalized hemp products.
- Signed a royalty-bearing commercial license agreement with
Calbee Inc. (“Calbee”) and received a purchase order for a 10kW
machine. Calbee is one of the largest snack companies in Japan and
is conducting intensive product development efforts on new REVTM
snack concepts.
- Signed a royalty-bearing commercial license agreement with
Fresh Business Consulting S.L. (“Fresh Business”) for the
production of premium dried fruit and vegetable products in Peru.
Fresh Business purchased a 10kW machine to initiate commercial
production and paid a deposit on a 100kW to retain exclusivity in
Peru.
- Restructured the sales and marketing function of NutraDried to
be managed in-house with the hiring a full-time Chief Marketing
Officer and a full-time Senior Vice President of Sales. The
addition of two experienced food industry executives is part of the
strategy to grow the Moon Cheese® brand and product distribution
throughout the United States and Canada.
- Confirmed Moon Cheese® will be distributed to all U.S. Costco
divisions as part of the autumn Most Valuable Member (“MVM”) coupon
program.
(*) Non-IFRS Financial
Measures:
Adjusted EBITDA is not a measure of financial
performance under IFRS. We define Adjusted EBITDA as earnings
before deducting amortization and depreciation, stock-based
compensation, foreign exchange gain or loss, finance expense or
income, income tax expense, non-recurring restructuring costs and
non-recurring impairment charges. This measure is not necessarily
comparable to similarly titled measures used by other companies and
should not be construed as an alternative to net income or cash
flow from operating activities as determined in accordance with
IFRS. Please refer to the discussion included in the Company’s
interim MD&A for June 30, 2019 and annual MD&A for the year
ended September 30, 2018.
About EnWave:
EnWave Corporation, a Vancouver-based advanced
technology company, has developed Radiant Energy Vacuum (“REV™”) –
an innovative, proprietary method for the precise dehydration of
organic materials. EnWave has further developed patent-pending
methods for uniformly drying and decontaminating cannabis through
the use of REV™ technology, shortening the time from harvest to
marketable cannabis products.
REV™ technology’s commercial viability has been
demonstrated and is growing rapidly across several market verticals
in the food, and pharmaceutical sectors including legal cannabis.
EnWave’s strategy is to sign royalty-bearing commercial licenses
with innovative, disruptive companies in multiple verticals for the
use of REV™ technology. The company has signed over thirty
royalty-bearing licenses to date. In addition to these licenses,
EnWave established a Limited Liability Corporation, NutraDried Food
Company, LLC, to manufacture, market and sell all-natural dairy
snack products in the United States, including the Moon Cheese®
brand.
EnWave has introduced REV™ as a disruptive
dehydration platform in the food and cannabis sectors: faster and
cheaper than freeze drying, with better end product quality than
air drying or spray drying.
EnWave currently offers two distinct commercial
REV™ platforms:
- nutraREV® which is used in the food industry to dry food
products quickly and at low-cost, while maintaining high levels of
nutrition, taste, texture and colour; and
- quantaREV® which is used for continuous, high-volume
low-temperature drying.
More information about EnWave is available at
www.enwave.net.
EnWave CorporationBrent
Charleton, CFAPresident and CEO
For further information:
Brent Charleton, CFA, President and CEO at +1 (778) 378-9616
E-mail: bcharleton@enwave.net
Dan Henriques, CPA, CA, Chief Financial Officer at +1 (604)
835-5212E-mail: dhenriques@enwave.net
Deborah Honig, Corporate Development at +1 (647) 203-8793E-mail:
dhonig@enwave.net
Safe Harbour for Forward-Looking Information
Statements: This press release may contain forward-looking
information based on management's expectations, estimates and
projections. All statements that address expectations or
projections about the future, including statements about the
Company's strategy for growth, product development, market
position, expected expenditures, and the expected synergies
following the closing are forward-looking statements. All third
party claims referred to in this release are not guaranteed to be
accurate. All third party references to market information in this
release are not guaranteed to be accurate as the Company did not
conduct the original primary research. These statements are not a
guarantee of future performance and involve a number of risks,
uncertainties and assumptions. Although the Company has attempted
to identify important factors that could cause actual results to
differ materially, there may be other factors that cause results
not to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements.
Neither the 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.
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