Xebec Adsorption Inc. (TSXV: XBC) (OTC: XEBEF)
(“Xebec”), a global provider of clean energy solutions
announced today its 2019 second quarter and six-month periods
results, with the following highlights:
- Record revenues of
$12.8 million in the second quarter of 2019 compared to $5.3
million for the same period in 2018, a 140% increase.
- Positive EBITDA at
$1.8 million for the second quarter 2019 compared to $0.3 million
for the same period in 2018.
- Net profit of $1.0
million or $0.02/share for the second quarter 2019, compared to a
net loss of ($0.1) million or ($0.003)/share for the same period in
2018.
- Working capital
increased to $8.0 million on June 30, 2019, for a current ratio of
1.8:1 compared with working capital of $5.3 million and a 1.6:1
ratio on December 31, 2018.
Financial Highlights:
|
|
|
|
|
|
Three months ended June 30, |
|
% of Change |
|
Six months ended June 30, |
|
% of Change |
|
|
2019 |
|
2018 (1) |
|
|
2019 |
|
2018 (1) |
|
|
(In millions of dollars) |
(unaudited) |
|
(unaudited) |
|
|
(unaudited) |
|
(unaudited) |
|
|
Revenues |
12.8 |
|
5.3 |
|
140 |
% |
22.5 |
|
8.5 |
|
165 |
% |
Gross profit |
4.0 |
|
1.6 |
|
150 |
% |
7.3 |
|
2.4 |
|
200 |
% |
Gross profit as a percentage of revenues |
31 |
% |
30 |
% |
|
32 |
% |
28 |
% |
|
EBITDA (2) |
1.8 |
|
0.3 |
|
|
2.9 |
|
(0.6 |
) |
|
Net income (loss) |
1.0 |
|
(0.1 |
) |
|
1.4 |
|
(1.5 |
) |
|
Net income (loss) per share - basic ($/share) |
0.02 |
|
(0.003 |
) |
|
0.03 |
|
(0.03 |
) |
|
Weighted average number of shares |
58,116,344 |
|
42,620,528 |
|
|
57,648,164 |
|
42,562,769 |
|
|
As at: |
|
|
|
June 30, 2019 |
|
Dec. 31, 2018 |
|
|
Total assets |
|
|
|
22.4 |
|
15.1 |
|
|
Total Liabilities |
|
|
|
19.0 |
|
15.7 |
|
|
Equity |
|
|
|
3.4 |
|
(0.6 |
) |
|
As at: |
|
|
|
August 12, 2019 |
|
August 6, 2018 |
|
|
Backlog |
|
|
|
63.5 |
|
68.1 |
|
|
(1) The three-month and six-month periods ended
June 30, 2018, has been adjusted to reflect IFRS 15 application.(2)
EBITDA is a non-IFRS financial measure, and the Company defines it
as earnings from operations excluding finance charges, taxes,
foreign exchange loss (gain) and amortization. |
Financial Results
-
Revenues of $22.5 million for the
six-month period ended June 30, 2019, compared to $8.5 million for
the same period in 2018, a 165% increase. The increase is mainly
explained by the high volume of major cleantech contracts and a
company acquisition.
- Gross profit of
$7.3 million or 31% of revenues for the six-month period ended June
30, 2019, compared to $2.4 million for the same period in 2018, a
204% increase compared to the same period in 2018. The company has
a higher gross margin in the cleantech segment.
- Net profit of $1.4
million or $0.03 per share for the six-month period ended June 30,
2019, compared to a net loss of ($1.5) million or ($0.03) per share
for the same period in 2018, an improvement of $2.9 million. The
increase is mainly due to higher sales and margin.
- Positive EBITDA of
$2.9 million for the six-month period ended June 30, 2019, compared
to ($0.6) million for the same period in 2018, an increase of $3.5
million.
- Backlog decreased
by $4.6 million, from $68.1 million on August 6, 2018, to $63.5
million on August 12, 2019.
- Selling and administrative
expenses increased by $1.8 million in the six-month period
ended June 30, 2019, compared to the same quarter of 2018.
This is primarily due to an organizational scale-up of employees
and associated costs to support the increased level of sales, order
backlog and building quote log.
- Working capital:
as of June 30, 2019, the company had $1.2 million of cash on hand,
and positive working capital increased to $8.0 million compared to
$5.3 million on December 31, 2018.
- Bought Deal Public
Offering: on July 4, 2019, the Company has closed an
$11.6 Million Bought Deal Public Offering of Units and Listing of
Warrants.
Current Market and Guidance for
2019We continue to see positive developments in our
renewable gas, hydrogen, and industrial service and products
segments. In the first six months of 2019, we have made good
progress with revenues and profitability. Overall gross margin
generation was satisfactory; nevertheless, we continue to work on
gaining some additional GM points over the next 12 to 18 months.
The outlook for the Renewable Natural Gas (RNG) and hydrogen
purification Clean Technology segment remains unchanged from our
previous guidance. Our Industrial Service, Support and Products
segment continues to grow, and our CAI acquisition is
out-performing expectations. The SG&A ratio decreased by 15 %
to 22 % in the six-month period ended June 30, 2019, compared to 37
% for the same six months of 2018.
Xebec has been providing guidance for 2019 with
revenues of $45 million plus, net earnings in the $4 to $5 million
and EBITDA in the $6 to $7 million range. We are currently on track
to meet these numbers. Nonetheless, we are adjusting our EPS range
to between 0.07 and 0.10 cents due to the higher outstanding share
count from our July 2019 equity raise (units), some warrant
conversions of the November 2018 equity raise (units), and the
likely exercise of the 2017 convertible debentures in November this
year.
Renewable Gas Systems - Clean
TechnologyWe are seeing increased activity for RNG systems
and we have accelerated our efforts across our operating
geographies. Continued progress in Europe and North America,
especially in the landfill gas space, is instrumental for our
growth ambitions in 2020. We anticipate reporting progress on
the landfill opportunities by year end. Our current quote log is
close to $700 million, and our order backlog is over $63
million.
Service, Support and Products -
IndustrialOur Industrial segment continues to perform
well, despite some weakness in our gross margins. Growth will be
achieved organically, combined with our acquisition strategy. The
acquisition of profitable compressed air service companies is
crucial in supporting our growing RNG installations. As previously
stated, the product mix is an important contributor to achieving
our GM target in the Industrial segment. Our first acquisition,
Compressed Air International (CAI) in Ontario, has performed above
expectations in the first half of 2019 and is on track to grow
revenues by 20% full year. Xebec is currently working on its next
two acquisitions.
Renewable Gas Generation -
InfrastructureIn early May 2019, Xebec’s Board of
Directors approved an expanded strategy for Xebec’s Infrastructure
segment, allowing management to engage with a larger pool of
potential partners to explore more opportunities. Currently, Canada
has two provinces that offer renewable Gas Purchase Agreements
(GPAs) with terms of up to 20 years, and prices of up to $30/GJ
while California has recently announced a target of 20% RNG by
2030, offering unique investment opportunities. Xebec continues to
actively work on the establishment of its RNG infrastructure
business where we will build, own and operate (BOO) high-quality
renewable gas assets in Canada and California, and sell renewable
natural gas to obligated parties and other third-party off-takers.
The Infrastructure investment opportunities for RNG facilities have
created significant interest from a number of Industry
participants. Xebec is currently evaluating these opportunities and
potential partners. Great partnerships are paramount for success,
so striking the right foundational balance is our priority for
making this segment a reality. No revenues or costs have yet been
recorded.
Xebec still expects to announce its first BOO
project in 2019.
2019 Second Quarter Financial Statements
and Management’s Discussion and AnalysisThe complete
financial statements, notes to financial statements, and
Management’s Discussion and Analysis for the six-month period ended
June 30, 2019, are available on the company’s website at
www.xebecinc.com or the SEDAR website at www.sedar.com
Xebec to Host Live Investor Webinar to
Discuss Q2 ResultsAn investor webinar for shareholders,
analysts, investors, media representatives, and other stakeholders
will be held today, August 13, 2019 at 9:00AM EDT.
The webinar can be accessed at:
https://app.livestorm.co/xebec-adsorption-inc/q2-investor-webinar
A recording of the webinar and supporting
materials will be made available in the investor’s section of the
Company’s website at www.xebecinc.com.
Related
links:https://www.xebecinc.comhttps://www.cnn.com/2019/05/22/business/ups-renewable-natural-gas/index.html
For more information:Xebec
Adsorption, Inc.Sandi Murphy, Director, Investor Relations and
Marketing+1 450.979.8718 smurphy@xebecinc.com
Kurt Sorschak, President and Chief Executive
Officerksorschak@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) accept
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 the global economy,
Xebec’s capacity to generate revenue growth, a 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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