EnWave Announces 2019 Second Quarter Consolidated Interim Financial Results
May 29 2019 - 9:00AM
EnWave Corporation (TSX-V:ENW | FSE:E4U)
(“EnWave”, or the "Company") today reported the Company’s
consolidated interim financial results for the second quarter ended
March 31, 2019.
Consolidated Financial
Performance:
($ ‘000s) |
Three months ended March 31, |
|
Six months ended March 31, |
|
2019 |
|
2018 |
|
Change% |
|
2019 |
|
2018 |
|
Change% |
|
|
|
|
|
|
|
|
Revenues |
8,773 |
|
4,172 |
|
110% |
|
16,579 |
|
8,691 |
|
91% |
Direct
costs |
5,653 |
|
2,877 |
|
96% |
|
10,422 |
|
5,970 |
|
75% |
Gross margin |
3,120 |
|
1,295 |
|
141% |
|
6,157 |
|
2,721 |
|
126% |
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
General and administration |
1,049 |
|
606 |
|
73% |
|
2,047 |
|
1,199 |
|
71% |
Sales and marketing |
1,084 |
|
683 |
|
59% |
|
2,060 |
|
1,273 |
|
62% |
Research and development |
369 |
|
297 |
|
24% |
|
710 |
|
569 |
|
25% |
|
2,502 |
|
1,586 |
|
58% |
|
4,817 |
|
3,041 |
|
58% |
Net income (loss) after
taxes |
(224 |
) |
(519 |
) |
(57%) |
|
(239 |
) |
(916 |
) |
(74%) |
Adjusted EBITDA* |
1,002 |
|
4 |
|
n/a |
|
2,165 |
|
319 |
|
579% |
Loss per share – basic and
diluted |
(0.00 |
) |
(0.01 |
) |
|
|
(0.00 |
) |
(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 Q2
(expressed in ‘000s):
- Reported record quarterly revenue for the Company in Q2 2019 of
$8,773, an increase of $4,601 when compared to $4,172 for Q2 of
2018. Revenue growth was driven by increased sales and distribution
of the Company’s Moon Cheese® product as well as an increase in
REVTM equipment sales into the cannabis sector.
- More than doubled gross profit, improving to $3,120 for Q2 2019
compared to $1,295 for Q2 2018, an increase of $1,825 or 141%.
Gross margin as a percentage of revenue was 36% for Q2 2019
compared to 31% for Q2 2018.
- Increased cash profitability with Adjusted EBITDA(*) of $1,002
for Q2 2019 compared to $4 for Q2 2018, an increase of $998. Q2 YTD
Adjusted EBITDA(*) for the Company was $2,165, compared to $319 for
Q2 YTD 2018. The growth in positive EBITDA represents the
Company’s continued ability to generate cash from its
operations.
- Reduced the consolidated net loss for the period after taxes to
$224 for Q2 2019 compared to a net loss of $519 for Q2 2018, an
improvement of $295. With sales of Moon Cheese® and REVTM equipment
increasing the Company is making robust progress towards
consolidated profitability.
- Increased G&A expenses to $1,049 for Q2 2019 compared to
$606 for Q2 2018, an increase of $443. The Company added several
talented new personnel to the team, including a new CEO for
NutraDried, as well as invested in a scalable infrastructure to
facilitate growth in machine sales and Moon Cheese®.
- Invested in top-line growth with S&M expenses of $1,084 for
Q2 2019 compared to $683 for Q2 2018, an increase of $401. S&M
expenses increased as part of the Company’s strategy to invest in
the Moon Cheese® brand as well as more traditional selling activity
to promote REVTM technology across the food and cannabis
sectors.
- Reported cash on the balance sheet of $12,200 at the end of the
second quarter and subsequently completed a strategic investment
with Aurora Cannabis Inc. (“Aurora”) in the Company for gross
proceeds of $10,087. The Company is positioned with a debt-free
balance sheet and cash in excess of $20 million paired with a
positive cash flow profile.
Significant
Accomplishments:
- 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 a royalty-bearing commercial license agreement
with Aurora granting Aurora exclusive rights, with the rights to
grant sub-licenses, for processing cannabis in the European Union
(excluding Portugal). Aurora must purchase a 120kW REVTM machine
for installation in the European Union before June 25, 2019 to
retain the 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.
- Entered into a royalty-bearing commercial sub-license agreement
with The Green Organic Dutchman (“TGOD”) granting TGOD
non-exclusive rights to use EnWave’s technology for processing
legalized cannabis in Canada. TGOD purchased four large-scale REVTM
machines for installation in Canada including a 60kW REVTM machine
and three 120kW REVTM machines, all with automated robotic tray
handling systems.
- Shipped the first 60kW machine to Tilray Inc. (“Tilray”) and
began the installation and commissioning processes on the first
large-scale continuous cannabis processing line.
- Signed a royalty-bearing commercial license agreement with
Calbee Inc. (“Calbee”) and received a purchase order for a 10kW
machine. Calbee, a major Japanese snacking company, plans to
conduct intense product development in 2019 and to launch several
new products through market testing efforts in 2020.
- Converted Fresh Business Consulting S.L. (“Fresh Business) from
a technology evaluation agreement into a royalty-bearing commercial
license agreement and granted Fresh Business exclusive rights to
produce a variety of premium food products in Peru. Fresh Business
initially purchased a 10kW machine and must commit to purchasing a
100kW or larger machine before July 31, 2019 to retain exclusivity
in Peru.
- Advanced the development of nutrient rich field rations with
the U.S. Army and announced the purchase of a second small-scale
REVTM machine by the U.S. Army as part of the ongoing project. The
Company is collaborating with the U.S. Army and its approved
supplier network as part of the strategy to commercialize REVTM for
high quality field rations with superior taste and nutrients.
- Signed a royalty-bearing commercial license agreement with
Royal FrieslandCampina N.V. (“Friesland Campina”), one of Europe’s
largest dairy companies. Friesland Campina will deploy REVTM
technology to develop new products that fit evolving consumer needs
and taste preferences. Friesland Campina purchased a 10kW REVTM
unit to initiate production.
- Selected as a 2019 Venture 50TM company in the Clean Technology
& Life Sciences category.
- Appointed Mr. Stephen Sanford as a new independent member on
the Company’s Board of Directors. Mr. Sanford is Managing General
Counsel at Fluor Corporation and has significant experience
structuring major commercial transactions in a variety of legal
frameworks on a global basis.
- Continued to expand the sales and distribution of Moon Cheese®
throughout the United States in the club and retail grocery
channels. NutraDried hired Mr. Joe Spinazola as the new Senior Vice
President of Sales in April 2019 to further advance this effort and
Mr. Spinazola will work closely with NutraDried’s CEO to grow
distribution of its all-natural snack product, Moon Cheese®, and to
launch new products and flavours.
Investor Relations
Agreement:
The Company retained Mr. Jochen Staiger of Swiss
Resource Capital (“SRC”) to provide investor relations services for
the Company in the European capital markets. SRC will broaden
awareness of EnWave’s investment case in Europe with retail and
institutional investors. SRC will be remunerated CHF 5,000 per
month (CAD $6,650) for the twelve-month term of the contract
starting on June 1, 2019. The Company previously announced on
September 11, 2018 that 50,000 incentive stock options were granted
to Mr. Staiger; no additional incentive stock options have been
granted as part of SRC’s compensation.
(*) 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 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 March 31, 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 industry leaders in multiple verticals for the use of REV™
technology. The company has signed over twenty royalty-bearing
licenses to date, opening up nine distinct market sectors for
commercialization of new and innovative products. In addition to
these licenses, EnWave has formed a Limited Liability Corporation,
NutraDried Food Company, LLC, to develop, manufacture, market and
sell all-natural cheese snack products in the United States under
the Moon Cheese® brand.
EnWave has introduced REV™ as the new
dehydration standard in the food and biological material sectors:
faster and cheaper than freeze drying, with better end product
quality than air drying or spray drying. EnWave currently has three
commercial REV™ platforms:
1. 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;
2. powderREV® which is used
for the bulk dehydration of food cultures, probiotics and fine
biochemicals such as enzymes below the freezing point, and
3. quantaREV® which is
used for continuous, high-volume low-temperature drying.
An additional platform, freezeREV®, is being
developed as a new method to stabilize and dehydrate
biopharmaceuticals such as vaccines and antibodies. 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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