Xebec Adsorption Inc. (TSXV: XBC) (OTC: XEBEF) (FRANKFURT:
XB6) ("Xebec"), a global provider of clean energy
solutions announces its 2018 fourth quarter and full year
financial results. A new accounting policy method regarding revenue
recognition – IFRS15 – has been applied. As a result, the financial
statements reflect the impact of the change, with and without the
IFRS15 Standard.
Financial Highlights:
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
2018 |
|
2017 |
|
|
As Reported FY 2018 |
|
FY
2017 |
|
(In millions of
dollars) |
(unaudited) |
|
(unaudited) |
|
|
(audited) |
|
WithoutIFRS
15 |
|
ImpactIFRS 15 |
|
|
(audited) |
|
Revenues |
2.2 |
|
3.3 |
|
|
20.2 |
|
25.6 |
|
5.4 |
|
|
14.7 |
|
Gross profit |
0.04 |
|
1.02 |
|
|
5.69 |
|
7.98 |
|
2.29 |
|
|
5.77 |
|
Gross profit as a
percentage of revenues |
2 |
% |
31 |
% |
|
28 |
% |
31 |
% |
42 |
% |
|
39 |
% |
EBITDA* |
(2.0 |
) |
(0.2 |
) |
|
(1.01 |
) |
1.28 |
|
2.3 |
|
|
1.4 |
|
Net income (loss) |
(2.5 |
) |
(0.9 |
) |
|
(2.9 |
) |
(0.6 |
) |
2.3 |
|
|
0.1 |
|
Net income (loss) per
share - basic ($/share) |
(0.06 |
) |
(0.02 |
) |
|
(0.07 |
) |
(0.014 |
) |
0.054 |
|
|
0.002 |
|
Weighted
average number of shares |
42,737,000 |
|
40,562,060 |
|
|
42,737,000 |
|
|
|
40,562,060 |
|
|
|
|
|
|
|
|
|
|
As at: |
|
|
Dec 31, 2018 |
|
|
|
Dec 31, 2017 |
|
Total assets |
|
|
15.1 |
|
|
|
8.3 |
|
Total Liabilities |
|
|
15.7 |
|
|
|
12.7 |
|
Equity |
|
|
(0.6 |
) |
|
|
(4.4 |
) |
As
at: |
|
|
April 16, 2019 |
|
|
|
May 28, 2018 |
|
Back
log |
|
|
78.3 |
|
|
|
66.1 |
|
* EBITDA is a non-IFRS financial
measure and the Company defines it as earnings from operations
excluding financial charges, taxes, foreign exchange loss (gain)
and amortization. It is presented without the stock-based
compensation expense. |
Financial Results
Application of new IFRS 15
accounting standard: under IFRS 15, revenue
recognition as a percent of completion requires a cancellation
clause that stipulates that the company is entitled to cost, margin
and profit. This clause is present in Xebec’s North American and
European contracts but a recent audit of seven (7) contracts from
Xebec China worth approximately $5.44 million revealed that the
contract language did not meet the updated cancellation clause
requirements of IFRS 15. As a result, the Company will need to
complete the projects and hand over title before it recognizes
revenue. Completion for all 7 projects will occur within the first
three quarters of 2019.
- Revenues of $ 2.2 million for
the fourth quarter of 2018 ($7.6 million without IFRS15 change)
compared to $3.3 million for the same period in 2017, a 33%
decrease (130% increase without IFRS15 change). For the
twelve-month period ended December 31, 2018 total revenues amount
to $20.2 million ($25.6 million without IFRS15 change) compared to
$14.7 million for the corresponding period, an increase of 37% (74%
increase without IFRS15 change).
- Gross profit of $0.04 million or 2% of
revenues for the fourth quarter of 2018 ($2.3 million or 30% of
revenues without IFRS15 change) compared to $1.02 million for the
same quarter in 2017, a 96% decrease compared to the same period in
2017. For the twelve-month period ended December 31, 2018, gross
profit of $5.7 million or 28% ($7.9 million for the twelve-months
period without IFRS15 change) compared to $5.8 million for the same
period in 2017, a 0.1% decrease compared to the same period in
2017.
- Net loss of $2.5 million or $0.06 per share
for the three-month period ending December 31, 2018 (net loss of
$0.2 million without IFRS15 change) compared to a net loss of $0.9
million or $0.02 per share for the same period in 2017, a
deterioration of $1.6 million. For the twelve-month period ended
December 31, 2018 the net loss is $2.9 million or $(0.07) per share
(net loss of $0.6 million without IFRS15 change) compared to a net
profit of $0.1 million or $0.002 per share for the same period in
2017, a deterioration of $3.0 million.
- Negative EBITDA of $2.0 million for the
three-month period ending December 31, 2018 (positive $0.3 million
without IFRS15) compared to a negative EBITDA of $0.2 million for
the same period in 2017. For the twelve-month period ended December
31, 2018 the EBITDA is negative $1.0 million (positive $1.3 million
without IFRS15 change) compared to a positive EBITDA of $1.4
million for the same period in 2017. The revenue recognition
change is the main contributor.
- Backlog increased by $12.2 million, from $66.1
million at May 28, 2018 to $78.3 million at April 16, 2019.
- Selling and administrative expenses increase
by $0.7 million in the fourth quarter of 2018 compared to the same
quarter of 2017. For the twelve-month period ended December
31, 2018 SG&A increased by $2.0 million compared to the same
period of 2017. Intensive efforts to scale up resources and
investments are being made to support the anticipated rapid growth
of the Company.
As at December 31, 2018, the Company had $2.4
million of cash on hand and working capital improved to $5.3
million for a current ratio of 1.6:1 compared with a working
capital of $1.8 million and a 1.3:1 ratio in December 31, 2017.
Current Market Conditions and
Guidance for 2019The market
conditions for renewable natural gas and hydrogen purification
equipment remain strong across all our operating geographies. We
expect significant revenue growth both in our European and Chinese
subsidiaries, as well as strong growth in our North American
business for 2019. Our guidance for 2019 is based on current order
backlog, plus future orders we expect to book in the first 9 months
of 2019. We expect revenue growth for 2019 of at least 125%,
leading to revenues of CDN$ 45.0 million+, and earnings per share
(EPS) are expected to be in the range of $0.10 to $0.13.
Organizational scale-up is one of the important
activities for 2019 in order to assure future growth of the
company.
Systems - Clean
TechnologyOur Clean Technology segment continues
to outperform expectations and our quote activity has significantly
strengthened compared to prior years. We regard quote activity as
an early indicator for future order activity. Our current quote log
exceeds $540 million, and our order backlog is over $78 million.
Xebec is emerging as a worldwide leader in biogas upgrading
technology. We maintain our forecast that the Systems - Clean
Technology segment will grow 130% to 150% in 2019, generating
revenues of $33 million to $35 million.
Service and Support – Industrial
Air & Gas ProductsXebec continues to pursue
organic and inorganic growth opportunities in this segment and
expects to double revenues from $6.1 million in 2018 to $12 million
in 2019. GM has been lower than anticipated in 2018 at 33%, mainly
due to low margin OEM sales, but Xebec has taken steps to bring the
gross margins back in line with historical data at around 40%.
The first acquisition, Compressed Air
International (CAI) in Ontario, closed on January 1st, 2019, and
Xebec is currently working on its next two acquisitions. Xebec
expects to close the second acquisition by mid-year and the third
acquisition toward the end of 2019.
Infrastructure – Renewable Gas
GenerationXebec is actively working on the establishment
of its renewable gas generation business. Our intent is to build,
own, and operate (BOO) quality renewable gas infrastructure assets
in Canada, and to sell renewable natural gas to obligated parties
and other third party off-takers. Xebec hopes to announce its first
project within Q2/19. No revenue or costs have yet been
recorded.
2018 Fourth Quarter Financial Statements
and Management’s Discussion and Analysis
The complete financial statements, notes to financial statements
and Management’s Discussion and Analysis for the three-month and
twelve-month periods ended December 31, 2018, are available on the
Company’s Website at www.xebecinc.com and on the SEDAR Website at
www.sedar.com.
For more information:
Xebec Adsorption Inc.Sandi Murphy, Director, Investor Relations
and Communications+1 450.979.8718 smurphy@xebecinc.com
Kurt Sorschak, President and Chief Executive Officer+1
450.979.8701 ksorschak@xebecinc.com
About Xebec Adsorption
Inc.Xebec Adsorption Inc. is a global provider of gas
generation, purification and filtration solutions for the
industrial, energy and renewables marketplace. Its customers range
from small to multi-national corporations and governments looking
to reduce their carbon footprints. Headquartered in Montreal (QC),
Xebec designs, engineers and manufactures innovative and
transformative products, and has more than 1,500 customers
worldwide. With two manufacturing facilities in Montreal and
Shanghai, as well as a sales and distribution network in North
America, Europe, and Asia, Xebec trades on the TSX Venture Exchange
under the symbol XBC. For additional information on the company,
its products and services, visit Xebec at xebecinc.com.
Cautionary Statement 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. This news release contains forward-looking statements and
forward-looking information (together, “forward-looking
statements”) within the meaning of applicable securities laws. All
statements, other than statements of historical facts, are
forward-looking statements, and subject to risks and uncertainties.
Generally, forward-looking statements can be identified by the use
of terminology such as “plans”, “seeks”, “expects”, “estimates”,
“intends”, “anticipates”, “believes”, “could”, “might”, “likely” or
variations of such words, or statements that certain actions,
events or results “may”, “will”, “could”, “would”, “might”, “will
be taken”, “occur”, “be achieved” or other similar expressions.
Forward-looking statements, including statements concerning future
capital expenditures, revenues, expenses, earnings, economic
performance, indebtedness, financial condition, losses and future
prospects as well as the expectations of management of Xebec with
respect to information regarding the business and the expansion and
growth of Xebec operations, involve risks, uncertainties and other
factors that could cause actual results, performance, prospects and
opportunities to differ materially from those expressed or implied
by such forward-looking statements. Forward-looking statements are
subject to business and economic factors and uncertainties, and
other factors that could cause actual results to differ materially
from these forward-looking statements, including the relevant
assumptions and risks factors set out in Xebec's public documents,
including in the most recent annual management discussion and
analysis and annual information form, filed on SEDAR at
www.sedar.com. Furthermore, should one or more of the risks,
uncertainties or other factors materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those described in forward-looking statements or information.
These risks, uncertainties and other factors include, among others,
the uncertain and unpredictable condition of global economy,
Xebec’s capacity to generate revenue growth, limited number of
customers, and other factors. Although Xebec believes that the
assumptions and factors used in preparing the forward-looking
statements are reasonable, undue reliance should not be placed on
these statements, which only apply as of the date of this news
release, and no assurance can be given that such events will occur
in the disclosed times frames or at all. Except where required by
applicable law, Xebec disclaims any intention or obligation to
update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
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