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Avante Corp. (TSX.V: XX) (OTC: ALXXF) (“Avante” or
the “Company”) is pleased to announce its financial results for its
fiscal year ended March 31, 2023 (all amounts in Canadian dollars
thousands, unless otherwise indicated).
SUMMARY FINANCIAL
RESULTS FOR THE YEAR
ENDED MARCH
31,
2023:
|
|
|
$ thousands unless otherwise noted |
Mar. 31,
2023 |
Mar 31,
2022 |
INCOME STATEMENT
INFORMATION: |
|
|
RMR in the period, continuing
operations (1) (3) |
$ |
10,337 |
|
$ |
9,649 |
|
Revenues, continuing operations
(1) |
$ |
19,960 |
|
$ |
18,156 |
|
Gross profit, continuing
operations (1) (3) |
$ |
8,122 |
|
$ |
7,848 |
|
Gross profit margin, continuing
operations (1) (3) |
|
40.7 |
% |
|
43.2 |
% |
Adjusted EBITDA, continuing
operations (1) (3) |
$ |
1,354 |
|
$ |
(7 |
) |
Net loss, continuing operations
(1) (2) |
$ |
(4,004 |
) |
$ |
(5,937 |
) |
Net Income (loss) (2) |
$ |
(525 |
) |
$ |
(4,392 |
) |
Average Common Shares during the
year |
|
26,489,438 |
|
|
26,489,438 |
|
|
|
|
BALANCE SHEET
INFORMATION: |
Mar. 31,
2023 |
Mar 31,
2022 |
Cash balances & GIC
investments (1) |
$ |
10,114 |
|
$ |
354 |
|
Total funded debt as reported,
IFRS |
$ |
500 |
|
$ |
443 |
|
Total funded debt & lease
obligations, IFRS (1) |
$ |
2,134 |
|
$ |
1,284 |
|
Common Shares at period end |
|
26,489,438 |
|
|
26,489,438 |
|
(1) The
Company sold Logixx Security Inc. (“Logixx Security”) on June 1,
2022. Its financial results are treated as discontinued operations
for the reporting periods noted above.
(2) The
net income (loss) during the year ended March 30, 2022 reflect
costs related to the Board’s strategic review initiated in August
2021 and restructuring costs related to the transition of the Board
and Management on March 30, 2022. The estimated gain on sale of
Logixx Security is reflected in fiscal 2023’s net income.
(3) 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”).
|
Year Ended |
RECONCILIATION OF ADJUSTED EBITDA |
Mar. 31,
2023 |
Mar. 31,
2022 |
|
Total comprehensive income (loss) from continuing operations |
$ |
(4,004 |
) |
$ |
(5,937 |
) |
|
Deferred income tax expense (recovery) |
|
741 |
|
|
61 |
|
|
Interest expense |
|
213 |
|
|
458 |
|
|
Depreciation and amortization |
|
1,099 |
|
|
1,224 |
|
|
Amortization on capitalized commission |
|
9 |
|
|
7 |
|
|
Share based payments |
|
697 |
|
|
118 |
|
|
Reorganization and acquisition expense |
|
2,560 |
|
|
4,406 |
|
|
Deferred financing fees |
|
39 |
|
|
125 |
|
|
Adjusted
EBITDA from continuing operations |
$ |
1,353 |
|
$ |
462 |
|
|
"Our sales continue to grow with the
introduction of new services such as Avante Black, International
Secured Transport, and refined Video Analytics, among many other
new services actively in developed. Focusing on efficiencies in
both office and field operations, while tightening internal
communication, has resulted in better client services and increased
client referrals. We are continuing to grow and I am excited about
introducing these unique new products and services to our clients,"
said Manny Mounouchos, Founder, CEO & Board Chair of
Avante.
Added Raj Kapoor, Chief Financial Officer of the
Company, “We are starting to see some results from our efforts to
streamline the company and create increased efficiency. I expect to
see continued improvement in the coming year.”
FINANCIAL HIGHLIGHTS FOR THE
YEAR ENDED MARCH
31,
2023:
Within continuing operations, the Company
reported year-over-year revenue growth of 9.9%, or $1,804, during
the fiscal year 2023, increasing to $19,960 from $18,156 for the
prior fiscal year. Gross profit margins within continuing
operations declined to 40.7% of revenue, versus 43.2% during the
prior year, with total gross profit increasing by $274.
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 $10,338 during the year ended March 31, 2023, up
from $9,649 during the prior year.
Gross profit margins over the last eight
quarters ranged between 37.8% and 45.1%, and were 40.7% on a
trailing twelve-month basis to March 31, 2023:
Avante Security |
F22(1) |
F23(1) |
|
$thousands |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
RMR in the period |
$ |
2,372 |
|
$ |
2,372 |
|
$ |
2,416 |
|
$ |
2,488 |
|
$ |
2,463 |
|
$ |
2,584 |
|
$ |
2,600 |
|
$ |
2,691 |
|
Other revenue |
|
1,657 |
|
|
2,066 |
|
|
2,335 |
|
|
2,450 |
|
|
2,105 |
|
|
2,350 |
|
|
2,492 |
|
|
2,675 |
|
Total revenue |
$ |
4,029 |
|
$ |
4,438 |
|
$ |
4,751 |
|
$ |
4,938 |
|
$ |
4,568 |
|
$ |
4,934 |
|
$ |
5,092 |
|
$ |
5,366 |
|
|
|
|
|
|
|
|
|
|
Total Gross Profit |
$ |
1,776 |
|
$ |
1,842 |
|
$ |
2,143 |
|
$ |
2,087 |
|
$ |
1,995 |
|
$ |
1,921 |
|
$ |
2,177 |
|
$ |
2,029 |
|
Gross Profit % |
|
44.1 |
% |
|
41.5 |
% |
|
45.1 |
% |
|
42.3 |
% |
|
43.7 |
% |
|
38.9 |
% |
|
42.8 |
% |
|
37.8 |
% |
(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 $3,009 during the year ended March 31, 2023, versus
$1,400 during the year ended March 31, 2022. This increase of
$1,611 was largely due to a decrease in divisional legal and
consulting costs and increased revenue.
The loss in Adjusted EBITDA from central
corporate costs, net of eliminations, within continuing operations
was $(1,654) during the year ended March 31, 2023. This represented
a decrease of $250 versus the $(1,407) Adjusted EBITDA net of
central costs during the year ended March 31, 2022. The current
quarterly benefits from restructuring implemented in the first and
second quarters, including closing the head office.
On December 1, 2022, the Company acquired the
assets of C & B Alarms Ltd. In Muskoka, Ontario. Four months of
revenue from the acquisition is included in the March 31, 2023
Avante Security results.
On June 1, 2022, the Company sold its ownership
interest in Logixx Security. During first quarter ended June 30,
2022, Discontinued Operations reflected two months of operations
from the Logixx Security Segment, whereas the first quarter of the
prior fiscal year reflected three months. During the first quarter
ended June 30, 2022, Adjusted EBITDA of Discontinued Operations was
$526, compared to $2,371 during the first quarter ended June 30,
2021, a decrease of $1,845. In addition to one less month of
operations reflected this quarter, Logixx Security’s prior year
quarterly period benefited more significantly from strong margins
on COVID-19 related service revenues.
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.
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 $10.1 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.
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 MounouchosFounder, CEO & Board
Chair, Avante Logixx Inc.416-923-6984manny@avantesecurity.com
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.
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