Reports Second Quarter Fiscal 2018
Results
Omni-Lite Industries Canada Inc. (“Omni-Lite” or the “Company”)
(TSXV: OML; OTCQX: OLNCF) reported operating results for its second
quarter of fiscal 2018. The Company is also pleased to announce
today that it has signed a definitive agreement to acquire Monzite
Corporation (“Monzite”), a private company based in Nashua, New
Hampshire. Monzite manufactures multi-chip microelectronic
components for aerospace, defense, industrial and medical
applications.
Concurrent with execution of the definitive
agreement (the “Merger Agreement”), David Robbins, the CEO and
principal shareholder of Monzite, has been appointed CEO of
Omni-Lite. Mr. Robbins will also be nominated as a Director, taking
effect as of the closing date of the acquisition. Further, Carl
Lueders, Monzite’s CFO, has been appointed as CFO of Omni-Lite.
David Robbins is the co-founder and CEO of
Monzite and the former CEO of Micronetics Inc., which was a
publicly-owned aerospace and defense manufacturer prior to its
acquisition by Mercury Systems in 2012. Mr. Robbins will bring his
deep industry experience in defense and aerospace markets along
with his significant public company leadership and management
skills while working with the senior management team of Omni-Lite.
Mr. Robbins’ mission will focus on strengthening and building the
Omni-Lite platform, cultivating and enhancing existing and new
customers and programs, both through organic and inorganic means.
Carl Lueders is a co-founder and CFO of Monzite, and is a seasoned
finance executive with 40 years of public and private company
experience, including time as the CFO of Micronetics and at
Pro-Pharmaceuticals, R.F. Morse & Son, and the Polaroid
Corporation. Mr. Lueders will bring to Omni-Lite his full range of
financial, operational and transactional expertise.
“David Robbins will be a valuable addition to
our Company and leadership team, bringing his wealth of experience
and strategic and operational insight gained through his management
experiences spanning over 20 years in public and private company
settings. By working directly with the leadership of both Omni-Lite
and Monzite, and leveraging the combined platform, we are confident
that David will be instrumental in driving revenue and earnings
growth and creating long-term shareholder value. To emphasize
commitment to this shared vision, David and his team will be
receiving shares of Omni-Lite common stock in exchange for 100% of
their ownership in Monzite and will become meaningful shareholders
of the Company going forward” said Chuck Samkoff, on behalf of the
Board of Directors of Omni-Lite.
In conjunction with the Monzite transaction,
David Grant, the founder and long-time CEO of Omni-Lite, has
retired as CEO of the Company. David Grant founded Omni-Lite in
1992, and through his leadership and unwavering dedication,
developed a world class supplier of precision forgings to many
Fortune 500 OEM manufacturers. It was through David's vision that
Omni-Lite became a leading provider of engineering and
manufacturing services that has distinguished themselves within the
market for mission critical components. In recognition of his very
significant role in the creation of the Company, the Omni-Lite
Board of Directors has honored David Grant as a Director
Emeritus.
The Board of Directors, management and employees
of Omni-Lite offer their gratitude to David for his many years of
service to Omni-Lite and his many hours of hard work that have
allowed the Company to achieve its many successes over the
years.
Monzite Profile and
Rationale
Monzite is a value-add contract manufacturer of
electronic components for high performance electronic sensors to
the largest of the OEM system integrators serving the Defense,
Aerospace, Medical, Industrial IoT, and Secure Communications
markets. The combination of Omni-Lite and Monzite brings together
the natural marriage of high-performance microelectronics and
advanced materials where small size is a premium, strong product
design manufactured to operate in harsh environments that must
yield specialized performance. As a result, the Company will be
able to take advantage of integrating miniature electronics with
metal enclosure components including functional block performance
as either a sensor or sensor component. The companies will be able
to leverage its current relationships, market knowledge to expand
cold metal forging capabilities into new industry verticals. Both
companies address the same markets with complementary mission and
capability: specialized performance, strong and durable solutions,
and products built in volume at low cost.
Monzite business model of value added
electronics manufacturing services and engineered electronic
products have generated year-over-year double digit revenue growth,
with revenue of US$1.5 million in the twelve-months ended June 30,
2018 (unaudited). Monzite targets margins similar to Omni-Lite
while making significant investments in research and development
(R&D) for product and technology supporting next generation RF
microwave millimeter systems for the aerospace and defense,
specialized mobile telecommunications, semiconductor processing and
robotics markets.
Monzite Transaction
Omni-Lite, through a wholly owned and newly
formed subsidiary, will acquire 100% of the shares of Monzite
common stock through a merger transaction and the extinguishment of
Monzite’s outstanding debt. Shareholders of Monzite will receive
1,225,000 shares of Omni-Lite, subject to certain provisions, in
exchange for 100% of the outstanding shares of common stock of
Monzite. Monzite currently has outstanding debt of approximately
US$340,000, excluding transaction costs. The acquisition is subject
to customary closing conditions, and is currently expected to close
in September.
Warrant Agreement
The Board of Directors of Omni-Lite has approved
the award of 1,200,000 warrants (the “Warrants”) to certain Monzite
management members and directors. The Warrants will be allocated
among six (6) tranches with each tranche having specified number of
Warrants, strike price, and vesting provisions. The strike prices
will be determined at closing and will range from 100% to 200% of
the grant date value. The grant date value will be the higher of
the closing price of the Company’s common stock as quoted on the
TSXV on the date before signing the definitive agreement and the
closing date. Each tranche will have time and performance vesting
provisions, subject to change-in-control, clawback and other
customary provisions, and have a eight year term and vest over a
period of no less than three years.
Second Quarter Fiscal 2018
Results
For the three months ended June 30, 2018, the
Company reported revenue of US$1.6 million, representing
approximately 21.0% increase over the first quarter fiscal 2018
revenue. Despite raw material cost increases in the quarter
resulting from the impending US tariffs, the Company generated
gross profit margins comparable to the year ago period.
EBITDAi and Adjusted EBITDAi was US$422,700 and US$482,567,
respectively, representing a decrease of approximately 16% and 7%,
respectively, over the prior year period, but an increase of 2,113%
and 158%, respectively, over the first quarter fiscal 2018 results.
Cash flow from operations was US$105,044, or a US$223,312 increase
over the first quarter of fiscal 2018, a net outflow of US$118,268.
Net income was US$113,429 a decrease of 65% over the same period in
2017, but a substantial increase over the first quarter of fiscal
2018 which was a loss of US$187,833. Earnings per share for the
second quarter of fiscal 2018 were US$0.01.
Total bookings for the first half of fiscal 2018
were US$3.0 million, yielding a book-to-bill ratio of 1.03 for
the first half. Year-to-date total bookings were US$5.3
million, yielding a book-to-bill ratio in excess of 1.35 and an
increase of approximately 25.5% over total bookings for the
comparable year ago period.
The Company ended the second quarter fiscal 2018
with cash of US$519,621, no outstanding debt, and availability
under its revolving credit facility of US$1.2 million.
Early Warning Reporting
Prior to the announcement of the Monzite
transaction with Omni-Lite (the “Transaction”), Mr. Robbins did not
have control of or direction over any shares in Omni-Lite. As a
result of the proposed Transaction, Mr. Robbins will receive
ownership, control of or direction over more than 10% of the issued
and outstanding share capital in Omni-Lite pursuant to the Merger
Agreement. Under section 5.2 of National Instrument 62-104
Take-Over Bids and Issuer Bids, an individual is required to
disclose obtaining control of or direction over more than 10% of a
class of securities of a listed issuer.
Upon the closing, Mr. Robbins will receive
629,813 common shares in Omni-Lite, representing 5.6% of the issued
and outstanding common shares of the Company. Mr. Robbins will also
receive 948,000 Warrants pursuant to the Transaction, which
together with the common shares, will give Mr. Robbins ownership,
control of or direction over 12.8% of the issued and outstanding
shares of Omni-Lite, on a partially-diluted basis assuming the
exercise of the Warrants held by Mr. Robbins only. The Warrants to
be issued to Mr. Robbins consist of six (6) tranches with exercise
prices to be determined at closing and will range from 100% to 200%
of the grant date value, each with an 8-year term. In exchange for
the common shares and Warrants in Omni-Lite, Mr. Robbins will
surrender his shares in Monzite to facilitate the closing of the
Transaction.
The securities of Omni-Lite acquired by Mr.
Robbins pursuant to the Merger Agreement will be held for
investment purposes. Depending on market and other conditions, Mr.
Robbins may, from time to time, in the future increase or decrease
his respective ownership, control or direction over securities of
Omni-Lite through market transactions, private agreements, or
otherwise.
In satisfaction of the requirements of National
Instrument 62-104 – Take-Over Bids and Issuer Bids and National
Instrument 62-103 – The Early Warning System and Related Take-Over
Bid and Insider Reporting issues, an Early Warning Report
respecting the acquisition of common shares and Warrants by Mr.
Robbins will be filed under the Company’s SEDAR profile at
www.sedar.com.
Omni-Lite Industries Canada Inc. is incorporated
under the laws of Alberta and its head office is located at 900,
715-10th Avenue SW, Calgary, Alberta, T2R 0A8. The principle
business of Omni-Lite is the manufacturing of specialized
components for the aerospace, defense, automotive, and industrial
sectors.
Omni-Lite is a rapidly growing high technology
company that develops and manufactures mission critical, precision
components utilized by Fortune 500 companies including Boeing,
Airbus, Bombardier, Embraer, Alcoa, Ford, Borg Warner, Chrysler,
John Deere, the U.S. Military and Nike.
Except for historical information contained
herein this document contains forward-looking statements. These
statements contain known and unknown risks and uncertainties that
may cause the Company’s actual results or outcomes to be materially
different from those anticipated and discussed herein.
For further
information, please
contact:
Mr. Chuck SamkoffMr. Roger DentMr. Allen
MaxinTel. No. (562) 404-8510 or (800) 577-6664Fax. No. (562)
926-6913, email: a.maxin@omni-lite.comWebsite:
www.omni-Iite.com
Reader Advisory Except
for statements of historical fact, this news release contains
certain "forward-looking information" within the meaning of
applicable securities law. Forward-looking information is
frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. In particular, forward-looking information
in this press release includes, but is not limited to the expected
future performance of the Company. Although we believe that the
expectations reflected in the forward-looking information are
reasonable, there can be no assurance that such expectations will
prove to be correct. We cannot guarantee future results,
performance or achievements. Consequently, there is no
representation that the actual results achieved will be the same,
in whole or in part, as those set out in the forward-looking
information. Forward-looking information is based on the opinions
and estimates of management at the date the statements are made and
are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ
materially from those anticipated in the forward-looking
information. Some of the risks and other factors that could cause
the results to differ materially from those expressed in the
forward-looking information include, but are not limited to: the
ability to successfully integrate the Monzite acquisition; general
economic conditions in Canada, the United States and globally;
industry conditions, governmental regulation, including
environmental regulation; unanticipated operating events or
performance; failure to obtain industry partner and other
third-party consents and approvals, if and when required; the
availability of capital on acceptable terms; the need to obtain
required approvals from regulatory authorities; stock market
volatility; competition for, among other things, capital, skilled
personnel and supplies; changes in tax laws; and the other risk
factors disclosed under our profile on SEDAR at www.sedar.com.
Readers are cautioned that this list of risk factors should not be
construed as exhaustive. The forward-looking information contained
in this news release is expressly qualified by this cautionary
statement. We undertake no duty to update any of the
forward-looking information to conform such information to actual
results or to changes in our expectations except as otherwise
required by applicable securities legislation. Readers are
cautioned not to place undue reliance on forward-looking
information.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
i EBITDA is a non-IFRS financial measure defined
as earnings before interest, taxes, depreciation and amortization.
Adjusted EBITDA is a non-IFRS financial measure defined as earnings
before interest, taxes, depreciation, amortization, stock-based
compensation provision, gains (losses) on sale of assets, and
non-recurring items, if any. These are non-IFRS financial measures,
as defined herein, and should be read in conjunction with IFRS
financial measures and they are not intended to be considered in
isolation or as a substitute for, or superior to, financial
information prepared and presented in accordance with IFRS. The
non-IFRS financial measures as used herein may not be comparable to
similarly titled measures reported by other companies. We believe
the use of EBITDA and Adjusted EBITDA along with IFRS financial
measures enhances the understanding of our operating results and
may be useful to investors in comparing our operating performance
with that of other companies and estimating our enterprise value.
EBITDA is also a useful tool in evaluating the operating results of
the Company given the significant variation that can result from,
for example, the timing of capital expenditures and the amount of
working capital in support of our customer programs and contracts.
We also use EBITDA and Adjusted EBITDA internally to evaluate the
operating performance of the Company, to allocate resources and
capital, and to evaluate future growth opportunities.
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