Xebec Adsorption Inc. (TSXV: XBC) ("Xebec"), a
global provider of clean energy solutions announced today its
2019 third quarter and nine-month periods results, with the
following highlights:
- Record revenues of
$13.2 million in the third quarter of 2019 compared to $5.6 million
for the same period in 2018, a 136% increase.
- Positive EBITDA at
$1.5 million for the third quarter 2019 compared to $0.1 million
for the same period in 2018.
- Net profit of $1.0
million or $0.02/share for the third quarter 2019, compared to a
net loss of ($0.4) million or ($0.01)/share for the same period in
2018.
- Working capital
increased to $19.0 million as of September 30, 2019, for a current
ratio of 2.3:1 compared with working capital of $5.2 million and a
1.6:1 ratio on December 31, 2018.
Financial Highlights:
|
|
|
|
|
|
|
|
|
|
|
Three months ended September
30, |
|
% of Change |
|
Nine months ended September
30, |
|
% of Change |
|
|
2019 |
|
2018 (1) |
|
|
2019 |
|
2018 (1) |
|
|
(In millions of dollars) |
(unaudited) |
|
(unaudited) |
|
|
(unaudited) |
|
(unaudited) |
|
|
Revenues |
13.2 |
|
5.6 |
|
136 |
% |
35.7 |
|
14.1 |
|
153 |
% |
Gross profit |
4.0 |
|
1.7 |
|
135 |
% |
11.4 |
|
4.2 |
|
171 |
% |
Gross profit as a percentage of revenues |
30 |
% |
30 |
% |
|
32 |
% |
30 |
% |
|
EBITDA (2) |
1.5 |
|
0.1 |
|
|
4.4 |
|
(0.4 |
) |
|
Net income (loss) |
1.0 |
|
(0.4 |
) |
|
2.5 |
|
(1.9 |
) |
|
Net income (loss) per share - basic ($/share) |
0.02 |
|
(0.01 |
) |
|
0.04 |
|
(0.04 |
) |
|
Weighted average number of shares |
69,516,473 |
|
46,762,963 |
|
|
61,546,642 |
|
43,978,219 |
|
|
As at: |
|
|
|
Sept. 30, 2019 |
|
Dec. 31, 2018 |
|
|
Total assets |
|
|
|
38.3 |
|
15.1 |
|
|
Total Liabilities |
|
|
|
22.7 |
|
15.7 |
|
|
Equity |
|
|
|
15.6 |
|
(0.6 |
) |
|
As at: |
|
|
|
Nov. 11, 2019 |
|
Nov. 8, 2018 |
|
|
Backlog Awarded Tenders (3) |
|
|
|
71.026.0 |
|
65.5 - |
|
(1) The three-month and nine-month periods ended
September 30, 2018 have 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 financial
charges, taxes, foreign exchange loss (gain) and amortization. (3)
Awarded Tenders represent tenders won by Xebec that have not yet
been formally contracted. |
Financial Results
- Revenues of $35.7 million for
the nine-month period ended September 30, 2019, compared to $14.1
million for the same period in 2018, a 153% increase. The increase
is mainly explained by the higher volume of major cleantech
contracts.
- Gross profit of $11.4 million or 32% of
revenues for the nine-month period ended September 30, 2019,
compared to $4.2 million for the same period in 2018, a 171%
increase compared to the same period in 2018. The company has
higher gross margins in the cleantech segment and a better
absorption of the overhead costs due to a higher volume of
sales.
- Net profit of $2.5 million or $0.04 per share
for the nine-month period ended September 30, 2019, compared to a
net loss of ($1.9) million or ($0.04) per share for the same period
in 2018, an improvement of $4.4 million. The increase is mainly due
to higher sales and margins.
- Positive EBITDA of $4.4 million for the
nine-month period ended September 30, 2019, compared to ($0.4)
million for the same period in 2018, an increase of $4.8
million.
- Backlog increased by $5.5 million, from $65.5
million on November 8, 2018, to $71.0 million on November 11,
2019.
- Awarded Tenders of $26.0 million as of
November 11, 2019 to be contractually formalized into the backlog
over the next 12 to 14 weeks.
- Selling and administrative expenses increased
by $2.8 million in the nine-month period ended September 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.
- Cash on hand of $10.2 million and increased
working capital of $19.0 million as of September 30, 2019, compared
to $5.2 million on December 31, 2018.
- Bought Deal Public Offering Units closed on
July 4, 2019 for $11.6 million and Listing of Warrants.
- Unsecured Convertible Debentures issued on
November 16, 2017 for $2 million has been completely converted as
of November 11, 2019.
CEO Quote:“I am pleased to see
that our team is implementing and executing the strategy we had
outlined for Xebec’s growth as a sustainable and profitable clean
tech company. Our rapid growth in the clean tech space is
underpinned by a strong industrial and service business that is
supportive of our cleantech operations. The benefits of this
strategy will become more evident as we deploy more RNG plants and
the infrastructure projects over the next few years. With
strong and balanced growth in Europe, North America and China we
are also benefitting from our global presence and associated market
exposure. I am also excited about our activities in the
gasification, carbon capture and hydrogen markets and we expect to
discuss more about these opportunities in the coming quarters”.
Operationally, we are making progress in establishing a strong
supply chain to support our growth and we expect this to be a focus
in the coming year leading to improved lead times and higher
margins for our products.”– Kurt Sorschak, President and CEO, Xebec
Adsorption Inc.
Guidance for the remainder of
2019
Our outlook for the Cleantech segment remains
unchanged from our previous guidance. Our Industrial Service and
Support segment continues to grow in line with our acquisition
strategy. Overall, we expect significant revenue growth in 2019.
This growth includes our European and Chinese subsidiaries. Our
guidance for the remainder of 2019 is based on current orders being
processed plus some short-term orders through year end, mainly in
our Industrial Service segment. We adjust our revenue guidance for
2019 to between $48.0 to $49.0 million and basic earnings per share
(EPS) of $0.06 to $0.07.
Execution and organizational development will be
a key factor for the continued successful growth of Xebec.
Management recognizes this and is fully focused on operational
performance and the creation of an environment that will allow the
company to scale. We are working on expanding our managerial
capabilities by building strong results-driven teams that will
deliver on the opportunities facing us.
Cleantech
Systems
Our renewable gas solutions are growing in line
with our expectations and delivering anticipated results. We
continue to regard quotes as an early indicator for future order
activity. Our quote log continues to increase and now exceeds
$880.0 million and our order backlog stands at $71.0 million. Xebec
has also been awarded a total of $26.0 million in tenders
(including a landfill) that will be contracted into our backlog
over the next 12 to 14 weeks. Landfill orders will be instrumental
to our continued growth in 2020 and beyond. These numbers reflect
the status as of November 11th, 2019.
We maintain our 2019 guidance for RNG systems
and equipment and expect segment growth between 130% to 150% in
2019, representing revenues in the $34 to $36 million range.
Industrial Service and
Support
Xebec continues to pursue organic and inorganic
growth opportunities in this segment and expects to double revenues
from $6.1 million in 2018 to about $11 to $12 million in 2019. We
are on track to hit these numbers. We have introduced new products
in 2019 and will be adding further products over the coming months
to help boost our overall revenues and gross margins.
Our first acquisition, Compressed Air
International (CAI) in Ontario, has performed exceptionally well in
the first three quarters and is on track to grow revenues by 25%
this year. As previously stated, Xebec is working on its next two
acquisitions and expects to announce one acquisition on the West
Coast before the end of
2019.
Renewable Gas
Infrastructure
Canada has two provinces that currently offer
renewable gas off-take agreements or GPAs (Gas Purchase Agreements)
with terms of up to 20 years and prices of up to $30/GJ. The
Liberal Government has just won re-election and consequently, Xebec
expects the Canadian Clean Fuel Standard (CFS) to come into law by
the middle of 2020. The CFS will create significant demand for RNG
over the next 10 years and, according to Xebec’s own estimates,
will require investment into renewable gas infrastructure of
approx. $15 to $18 billion and demand for RNG systems of approx.
$2.2 to $2.7 billion over the next 10 years.
In addition, Southern California Gas Company
(SoCalGas) earlier this year announced a target of 20% RNG by 2030,
offering further unique investment opportunities. As previously
stated, Xebec is actively working on the establishment of its RNG
Infrastructure business which will build, own and operate (BOO)
high-quality renewable gas assets in Canada and the United States,
and sell renewable natural gas to obligated parties and other
third-party off-takers. Xebec continues to work towards a first
project, and we continue to anticipate an announcement before
year-end. No revenues or costs have yet been recorded.
Guidance for
2020
For 2020 Xebec expects continued growth and
improved profitability. Given the current order backlog of $71.0
million and our $26.0 million in awarded tenders, we expect
consolidated revenues for 2020 in the range of $80 to $90 million,
net earnings of 7 to 9% and EBITDA margins of 11 to 13%.
More specifically, revenues in our Cleantech
segment are expected to be $50 to $55 million and revenues from our
Industrial Service & Support segment are expected to grow to
$30 to $35 million with half attributed to acquisitions, and the
rest to organic growth. Lastly, Xebec does not expect revenues to
be recorded for our Renewable Gas Infrastructure segment in
2020.
Xebec to Host Live Investor Webinar to
Discuss Q3 2019 Results
An investor webinar for shareholders, analysts,
investors, media representatives, and other stakeholders will be
held today, November 12, 2019 at 11:00AM EDT (8:00AM PDT).
The webinar can be accessed at:
https://app.livestorm.co/xebec-adsorption-inc/2019-q3-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.
2019 Third Quarter Financial Statements
and Management’s Discussion and AnalysisThe complete
financial statements, notes to financial statements, and
Management’s Discussion and Analysis for the nine-month period
ended September 30, 2019, are available on the company’s website at
www.xebecinc.com or on the SEDAR website at www.sedar.com
Related
links:https://www.xebecinc.com
For more information:Xebec
Adsorption Inc.Brandon Chow, Investor Relations Specialist +1
450.979.8700 ext. 5762 bchow@xebecinc.com
Kurt Sorschak, President and Chief Executive
Officer+1 450.979.8701 ksorschak@xebecinc.com
About Xebec Adsorption
Inc.Xebec is a global provider of gas generation,
purification and filtration solutions for the industrial, energy
and renewables marketplace. Well-positioned in the energy
transition space with proprietary technologies that transform raw
gases into clean sources of renewable energy, Xebec’s 1500+
customers range from small to multi-national corporations,
governments and municipalities looking to reduce their carbon
footprints. Headquartered in Montréal, Quebec, Canada, Xebec has
several Sales and Support offices in North America and Europe, as
well as two manufacturing facilities in Montréal and Shanghai.
Xebec trades on the TSX Venture Exchange under the symbol XBC and
on the OTCQX Exchange under the symbol XEBEF. 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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