Generation Next Announces Changes in Quarterly Reporting
Reiterates Full Year
Revenue Projection of $16 Million
SAN DIEGO, CA -- May 20, 2019 -- InvestorsHub NewsWire --
Generation Next reported results for the quarter ended March 31,
2019 and used the opportunity to begin introducing changes to how
the Company communicates actual performance and future
expectations.
“Everyone following our story understands that the production
delays experienced during 2018 weakened the balance sheet,” said
new CFO Ryan Polk. “Fortunately, we have very capable and loyal
supporters in our franchisee community, supply chain, and capital
markets that have been available to assist us throughout this
period. Overcoming the engineering and production challenges has
allowed us to begin delivering on the backlog of over 3,000 robots.
Our monthly results in March and April began shedding light on the
progress. This will continue in May and beyond.”
Generation Next operates on a fiscal year ending on June 30. The
Company communicated on April 29 that revenue during the fourth
quarter, would average $2.7 million per month which would deliver
full fiscal year revenue of $16.0 million. Polk repeated that
estimate today and signaled in the recent filing that the Company
is focusing on profitability following its success converting $3.0
million of the $146 million backlog into recognized revenue during
April.
“By October 1st, we will achieve our gross margin target of 26%
for each robot. Assembly costs are already decreasing
month-to-month as production scales.” Polk noted the high inventory
balance as a constraint to reducing part costs faster. “We
purchased a significant amount of inventory during the last half of
2018 and set up an unfavorable cash conversion cycle with our
supply chain. During the next six months, this excessive inventory
balance will gradually reduce to four to six weeks of supply from
its current run rate of almost four months of supply. Per unit
costs on most parts will be decreasing when we are in position to
begin replenishing these parts.”
Further, Polk emphasized a reduction in monthly SG&A from an
average of almost $1.4 million for the first six months of the year
to a monthly rate of $1.1 million during the third quarter. A
continual review of SG&A spending is part of the Company’s plan
to deliver EBITDA and cash flow while it increases the rate of
delivery on the backlog of Reis & Irvy’s kiosks.
Polk began working at Generation Next as a consultant in early
January 2019 with a mandate to get the supply chain working and
improve the balance sheet. “Our stakeholders ask straightforward
and reasonable questions. In January, the most pressing question
was ‘Can you successfully produce the kiosks at scale?’ The next
question in the progression is ‘When will you be profitable and
have positive cash flow?’” Polk commented, “We have an increasing
average sales price and a decreasing per unit cost. This wasn’t
clear from the March quarter report because the of a low number of
robots delivered combined with recognizing an inventory adjustment
during the quarter. The margin profile will look different in Q4
with 200 robots delivered and improved cost control at the assembly
line.”
On the task to shore up the balance sheet, Polk noted, “the
capital markets noticed of our consistent production and growing
monthly rate of installations. We are engaging with fund managers
and investors on proposals which provide the cash needed to ensure
the supply chain continues operating well. People are attracted to
two items about VEND. First is the backlog of contract revenue and
second is the growth of recurring revenue through royalties and
rebates. Fortunately for the Company, the stability in production
has reduced the risk profile and increased the interest level in
working with us on reasonable debt and equity investments that
bridge us from a weak balance sheet to a stronger balance
sheet.”
Polk cautioned there is still much work to do which included
finishing up the diligence with capital sources, expanding
production capacity with a new contract manufacturer, and improving
the cash conversion cycle through better supply chain management.
He concluded by saying, “Nick Yates, our CEO, and I have worked out
a good partnership. He stays focused on generating demand for our
unattended retail platforms while I take responsibility for
consistently delivering reliable technology. All of the
circumstances endured during the last 18 months can be overcome.
Let’s keep it simple. Just consistently fulfill the backlog.”
For more information, visit Generation NEXT
Website: www.gennextbrands.com or
call Toll-Free (888) 902-7558.
About Generation NEXT Franchise Brands,
Inc.
Generation NEXT Franchise Brands, Inc., based in San Diego,
California, is a publicly traded company on the OTC Markets trading
under the symbol OTCBB: VEND. Generation NEXT Franchise Brands,
Inc. is parent company to Reis and Irvy’s Inc and 19 Degrees
Corporate Service LLC
About Reis & Irvy’s, Inc.
Reis & Irvy’s, Inc. is a subsidiary franchise concept of
Generation NEXT Franchise Brands, Inc. (VEND). Launched in early
2016, the revolutionary Reis & Irvy’s Vending Robot serves
seven different flavors of frozen yogurt, ice cream, sorbets and
gelatos, a choice of up to six custom toppings and to customers
within 60 seconds or less at the point of sale. The unique
franchise opportunity has since established itself as a high-demand
product and currently showcases a franchise network both
domestically as well as internationally. Visit Reis & Irvy’s
website - www.reisandirvys.com
This information is not intended as an offer to sell, or the
solicitation of an offer to buy, a franchise. It is for information
purposes only. No Reis & Irvy’s franchises will be sold to any
resident of any state until the offering has been exempted from the
requirements of, or duly registered in and declared effective by,
such state and the required FDD (if any) has been delivered to the
prospective franchisee before the sale in compliance with
applicable law. Currently, the following states in the United
States regulate the offer and sale of franchises: California,
Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York,
North Dakota, Oregon, Rhode Island, South Dakota, Virginia,
Washington, and Wisconsin. If you reside in one of these states, or
even if you reside elsewhere, you may have certain rights under
applicable franchise laws or regulations.
Cautionary note on forward-looking statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements include, among others,
statements concerning our future financial performance, including
statements regarding: our ability to generate revenue and recognize
deferred revenue; our ability to timely launch delivery and
installation of our frozen yogurt robots; and our ability to grow
our franchising and licensing divisions and launch our
corporate-owned and direct sales platforms. The Company bases these
forward-looking statements on its current expectations, estimates
and projections about future events and the industry in which it
operates using information currently available to it. Actual
results could differ materially from those discussed in, or implied
by, these forward-looking statements. Forward-looking statements
are identified by words such as “believe,” “anticipate,” “propose,”
“expect,” “intend,” “plan,” “will,” “may,” “estimates,” variations
of such words and other similar expressions. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances are
forward-looking statements. Factors that could cause actual results
to differ from those implied by the forward-looking statements
contained in this press release are set forth in our filings with
the Securities and Exchange Commission (SEC), including our most
recent Annual Report on Form 10-K for the year ended June 30, 2018,
our Quarterly Reports, and our Current Reports on Form 8-K. Be
advised that developments subsequent to this press release are
likely to cause these statements to become outdated and the Company
is under no obligation (and expressly disclaims any such
obligation) to update or revise any forward-looking statements
whether as a result of new information, future events, or
otherwise.
Contact:
Andrew Beach
Andrew.beach@gennextbrands.com