Xebec Adsorption Inc. (TSX: XBC) ("Xebec"),
a global provider of clean energy solutions, announced
today its 2021 first quarter results, with the following
highlights:
-
Revenues increased by $8.4 million to $20.6
million for the three-month period ended March 31, 2021, compared
to $12.2 million for the same period the prior year.
- Adjusted EBITDA of
($5.8) million for the three-month period ended March 31, 2021,
compared to $0.7 million for the same period last year.
-
Net loss of $9.2 million or ($0.06) per share in
the three-month period ended March 31, 2021 compared to a net loss
of $0.7 million or ($0.01) per share compared for the same period
in the prior year.
-
Working capital of $129.4 million on March 31,
2021, for a current ratio of 3.6:1, compared to working capital of
$171.1 million and a current ratio of 4.1:1 on December 31,
2020.
-
Management guidance maintained for fiscal 2021,
consisting of consolidated revenues in the range of $110.0 to
$130.0 million and an adjusted EBITDA margin in the range of 3.0%
to 4.0%.
-
As at March 31, 2021, the company had $108.5 million of cash
compared to $168.6 million as at December 31, 2020.
Financial Highlights:
|
|
|
|
|
|
% of Change |
|
Q1 2021 |
|
Q1 2020 |
|
|
(In millions of dollars) |
(unaudited) |
|
(unaudited) |
|
|
Revenues |
20.6 |
|
12.2 |
|
69 |
% |
Gross margin |
4.2 |
|
3.1 |
|
35 |
% |
Gross margin as a percentage of revenues |
20% |
|
25% |
|
|
Adjusted EBITDA (1) |
(5.8) |
|
0.5 |
|
|
Net income (loss) |
(9.2) |
|
(0.7) |
|
|
Net income (loss) per share - basic ($/share) |
(0.06) |
|
(0.01) |
|
|
Weighted average number of shares |
152,512,158 |
|
85,288,048 |
|
|
As at: |
March 31, 2021 |
|
Dec. 31, 2020 |
|
|
Total assets |
419.4 |
|
444.7 |
|
|
Total liabilities |
95.2 |
|
100.7 |
|
|
Equity |
324.2 |
|
344.0 |
|
|
As at: |
May 12, 2021 |
|
May 20, 2020 |
|
|
Backlog |
88.5 |
|
89.8 |
|
|
(1) Adjusted EBITDA starts with EBITDA and adjusts for Stock-based
compensation expenses, impairment of inventories, exchange
gain/loss on the obligation arising from non-controlling interest
participation in a subsidiary, foreign exchange loss (gain) and
accretion of debt |
Financial Results
-
Revenues increased by $8.4 million to $20.6
million for the three-month period ended March 31, 2021, compared
to $12.2 million for the same period the prior year. The increase
is mainly explained by acquisitions in 2020 and 2021, including (1)
$4.7 million for services companies, and (2) $5.5 million for
HyGear and Inmatec.
-
Gross margin increased from $3.1 million to $4.2
million for the three-month period ended March 31, 2021 compared to
the same period the prior year. The gross margin percentage
decrease from 25% to 20% is mainly due to lower margins for the
company’s renewable natural gas (RNG) projects.
-
Selling and administrative expenses (“SG&A”)
for the three-month period ended March 31, 2021, of $10.9 million
were higher by $7.1 million compared to $3.8 million for the same
three months of 2020. The increase is primarily due to additional
SG&A expenses associated with the newly acquired companies: (1)
$1.5 million for the services companies and ACS, and (2) $3.1 for
HyGear and Inmatec. In addition, $1.0 million was attributed to
transaction and integration expenses related to the newly acquired
companies. Finally, SG&A expenses increased due to an
organizational scale up of employees and associated costs to
support the increased level of sales.
- Research and development
expenses of $0.5 million for the three-month period of
2021 were related to the development of the second generation of
the BGX Biostream™ (“Biostream”) product and the continued
development of biogas upgrading projects.
- Operating loss of
$7.9 million for the three-month period of 2021 compared to an
operating loss of $0.2 million for the same quarter in 2020. The
decrease is mainly explained by the above-noted increase in
SG&A.
- Net loss of $9.2
million or ($0.06) per share in the three-month period ended March
31, 2021 compared to a net loss of $0.7 million or ($0.01) per
share for the same period the prior year.
- Adjusted EBITDA of
($5.8) million for the three-month period ended March 31, 2021,
compared to $0.7 million for the same period last year.
- Backlog decreased
by $1.3 million over the last 12 months, from $89.8 million on May
20, 2020 to $88.5 million on May 12, 2021.
CEO Quote:
“While the business environment continues to be
challenging, Xebec posted a record revenue quarter and saw
improvements in its gross margins as the number of profitable
orders processed during the quarter increased. We are on track to
have a solid year despite supply chain constraints and price
pressures we are realizing from suppliers. This has in turn led us
to start increasing prices on a wide range of our products, but we
are able to maintain pricing power due to our robust business model
and unique technologies.
Given the trajectory of the economic recovery
and the RNG and hydrogen industry activity, we believe we are at
the start of a significant economic upturn that will support the
company’s continued rapid growth. There are positive indications
for increased manufacturing activity across North America and
Europe, alongside accelerated decarbonization cuts which will drive
traction for our cleantech solutions.
Furthermore, the quarter saw first time revenue
contributions from HyGear and Inmatec, the latter of which has
benefited from the worldwide accelerating need of hospitals to
scale up and secure more predictable oxygen supplies. The team in
Germany is working long hours to ensure these on-site oxygen
generators get to the customers who need them the most. We believe
that the COVID-19 pandemic has increased the awareness and adoption
of on-site gas generation as customers realize its strong value
proposition. On-site generation is a core component in our
long-term strategy and will help us bring other gases such as RNG,
hydrogen and nitrogen to new markets.
Overall, we are maintaining our guidance for
2021, which is expected to result in strong revenue growth this
year, while showing an improvement to our bottom line as costs
normalize and we achieve better operating leverage. Xebec is now a
more diversified company with unique exposure to several
fast-growing markets for our lower carbon gases,” stated Kurt
Sorschak, Chairman, President and CEO of Xebec Adsorption Inc.
Current Market Outlook
The political and regulatory backdrop for
Xebec’s products and services continues to see positive
developments. North Europe and North America are moving
aggressively towards net-zero positions by 2050.
On April 22, 2021, at the Earth Day Summit, the
U.S. administration pledged its commitment to target a 50%
reduction in GHG emissions by 2030. At the same time, Canada’s
federal government increased its commitment to reduce emissions by
40% by 2030. These targets represent accelerated actions over the
next decade to decarbonize energy, industry and transportation,
which is expected to provide significant support for the uptake of
Xebec’s solutions.
Cleantech Systems
Renewable Natural Gas
(RNG)Xebec continues to accelerate its shift toward to
focus on standardized biogas upgrading products for the RNG market.
The company launched and delivered its first two fully
containerized and standardized BGX Biostream™ (“Biostream”) units
for small-scale biogas upgrading applications. We will deliver an
additional four units in the next five months and are working to
increase our production capacity to two units per month effective
August 2021. The Biostream units that have been delivered to
California and Idaho are now in operation at customer facilities
and injecting RNG into local utility pipelines.
Overall, Xebec expects that Biostream will lead
to more predictable cost management and improved gross margins. The
product’s value proposition offers customers significantly shorter
lead times, one week installation and start-up periods, a modular
and scalable design, and the ability to handle smaller, fluctuating
biogas flow rates. With the recently announced acquisition of
Nortec, additional manufacturing capacity will be created for
Xebec’s Blainville Québec facility for the streamlined production
of these units. As a result of demand, there are 11 Biostream units
currently in production for customer deliveries in the coming
months.
HydrogenThe hydrogen economy is
rapidly growing and presents a large-scale market opportunity
worldwide. This continued traction has been shown through more than
100 high-profile transactions, investments and project
announcements to date in 2021. Xebec’s hydrogen purification
business coincides with the market’s expanding opportunities as the
need for high-purity hydrogen for use in fuel cell electric
vehicles increases.
On March 15, 2021, Xebec announced a partnership
with Coregas, a Wesfarmers company, to develop a robust ecosystem
for the deployment of highly efficient hydrogen supply to the
transport, industrial and commercial markets across Australia and
New Zealand. Xebec also signed a similar partnership agreement in
Q1/21 with OmAir in India to develop the Indian hydrogen ecosystem
by leveraging OmAir’s customer network and fleet of over 50
hydrogen trailers. The company continues to build partnerships to
help accelerate the adoption of its hydrogen technologies and
products.
A cornerstone of Xebec’s hydrogen strategy is to
satisfy the existing and evolving needs for industrial hydrogen,
while also facilitating the upcoming demand for fuel cell electric
vehicles (FCEVs) and mobility. This is supported by on-site
hydrogen generation from both steam methane reforming and
electrolysis technologies, and local decentralized hydrogen
production hubs in strategic areas. Decentralized hydrogen
production hubs will be a key aspect of Xebec’s hydrogen supply
strategy going forward and the full details will be provided in a
corporate update later this year.
Industrial Service &
SupportXebec continues its roll-up strategy by acquiring
compressed air service companies to build out the company’s
Cleantech Service Network. The company expects to complete
additional acquisitions in 2021 as the need for service coverage
expands in North America and Europe. As a result, Xebec is
targeting approximately 30 companies (6 completed to date) by 2025,
resulting in a yearly revenue run rate in the segment of
approximately $250 million by 2025.
This strategy supports Xebec’s long-term plan to
transition to a more services-based company. Increased exposure to
service revenues is expected to improve the company’s overall
revenue predictability and profitability. Lastly, the company’s
service offering is not limited to its own equipment as technicians
can interface with other vendors’ RNG and hydrogen systems.
Xebec’s on-site oxygen and nitrogen business
continues to achieve record delivery and sales volumes. Medical
oxygen has seen surging demand as a result of the worldwide
COVID-19 pandemic. A number of high-profile deliveries were
completed in Q1/21 to healthcare facilities in India, Peru, United
Kingdom, Africa and the Middle East. In addition, several follow-on
orders were received in the last week for the South Asian market
such as a 41-unit oxygen generator order for India.
Renewable Gas
Infrastructure
Xebec continues to address the renewable gas
infrastructure opportunity through GNR Quebec Capital L.P.
(“GNRQC”), a fund created in partnership with The Fonds de
solidarité FTQ (“Fonds”), the largest capital development fund in
Québec. As a result, all of Xebec’s renewable gas infrastructure
investment activities were folded into GNRQC. Xebec is an equal
equity investor alongside the Fonds and will participate in the
sale of renewable natural gas equipment alongside long-term service
contracts for the equipment. GNRQC is dedicated to
developing high-performance organic waste treatment facilities for
the production and distribution of RNG in Québec. When fully
capitalized with $100 million in equity and appropriately
leveraged, GNRQC expects to finance approximately 12 to 15 RNG
projects in the province over the next decade.
The fund has more than 20 projects under
evaluation of both greenfield and brownfield varieties in
agriculture, municipal and industrial waste applications. GRNQC
expects to complete several investments in 2021 as projects
progress over their average three-to-four-year development
cycle.
Management Guidance for 2021For
fiscal full-year 2021, Xebec’s previously announced guidance
remains unchanged. Given the current order backlog of $88.5 million
(as of May 12, 2021), the projected revenues of HyGear, Inmatec,
and the Cleantech Service Network, we continue to target
consolidated revenues for 2021 in the range of $110.0 to $130.0
million and adjusted EBITDA margins in the range of 3.0% to
4.0%.
Xebec to Host Live Investor Webinar to
Discuss Q1 2021 ResultsAn investor webinar for
shareholders, analysts, investors, media representatives, and other
stakeholders will be held today, May 13, 2021, at 8:30AM EST
(5:30AM PST).
Register here:
https://app.livestorm.co/xebec-adsorption-inc/2021-q1-investor-webinar
A recording of the webinar and supporting
materials will be made available later today in the investor’s
section of the Company’s website
at xebecinc.com/investors.
2021 First Quarter Financial Statements
and Management’s Discussion and AnalysisThe complete
financial statements, notes to financial statements, and
Management’s Discussion and Analysis for the three-month period
ended March 31, 2021, are available on the company’s website at
xebecinc.com/investors or on the SEDAR website at
www.sedar.com.
Related
links:https://xebecinc.com/
For more information:Xebec
Adsorption Inc.Brandon Chow, Director, Investor Relations+1
450.979.8700 ext 5762bchow@xebecinc.com
About Xebec Adsorption Inc.
Xebec is a global provider of clean energy solutions for renewable
and low carbon gases used in energy, mobility and industry
applications. The company specializes in deploying a portfolio of
proprietary technologies for the distributed production of
hydrogen, renewable natural gas, oxygen and nitrogen. By focusing
on environmentally responsible gas generation, Xebec has helped
thousands of customers around the world reduce their carbon
footprints and operating costs. Headquartered in Québec, Canada,
Xebec has a worldwide presence with six manufacturing facilities,
eight Cleantech Service Centers and four sales offices spanning
over four continents. Xebec trades on the Toronto Stock Exchange
under the symbol (TSX: XBC). For more
information, xebecinc.com.
Cautionary Statement This press
release contains forward-looking statements within the meaning of
applicable Canadian securities law. These statements relate to
future events or future performance and reflect the expectation of
Management regarding the growth, results of operations, performance
and business prospects and opportunities of the Corporation or its
industry. Forward-looking statements typically contain words such
as “believes”, “expects”, “anticipates”, “continues”, “could”,
“indicates”, “plans”, “will”, “intends”, “may”, “projects”,
“schedules”, “would” or similar expressions suggesting future
outcomes or events, although not all forward-looking statements
contain these identifying words. Examples of such statements
include, but are not limited to, statements concerning: (i) actions
expected to be undertaken to achieve the Company’s strategic goals;
(ii) the key market drivers impacting the Company’s success; (iii)
intentions with respect to future renewable gas work; (iv)
expectations regarding business activities and orders that may be
received in fiscal 2021 and beyond; (v) trends in, and the
development of, the Company’s target markets; (vi) the Company’s
market opportunities; (vii) the benefits of the Company’s products,
(viii) the intention to enter into agreements with partners; (ix)
future outsourcing; (x) expectations regarding competitors; (xi)
the expected impact of the described risks and uncertainties; (xii)
intentions with respect to the payment of dividends; (xiii) the
management of the Company’s liquidity risks in light of the
prevailing economic conditions; (xiv) the Company’s cost reduction
plan; (xv) the search for additional financing over the next
months; (xvi) statements regarding the merits of the class action
complaints filed against the Company; and (xvii) 2021 revenue and
EBITDA guidance.
These statements are neither promises nor
guarantees but involve known and unknown risks and uncertainties
that may cause the Company’s actual results, level of activity or
performance to be materially different from any future results,
levels of activity or performance expressed in or implied by these
forward-looking statements. These risks include, generally, risks
related to revenue growth, operating results, industry and
products, technology, competition, the economy, the sufficiency of
insurance and other factors which are discussed in greater details
in this press release and in the Annual Information Form of the
Corporation filed on SEDAR at www.sedar.com.
Forward-looking statements contained herein are
based on a number of assumptions believed by the Corporation to be
reasonable as at the date of this press release, including, without
limitations, assumptions about trends in certain market segments,
the economic climate generally, the pace and outcome of
technological development, the identity and expected actions of
competitors and customers, assumptions relating to the merits of
the class action complaints filed against the Company and their
impact, the value of the Canadian dollar and of foreign currency
fluctuations, interest rates, working capital requirements, the
anticipated margins under new contracts awards, the state of the
Corporation’s current backlog, the regulatory environment, the
sufficiency of internal and disclosure controls, the ability of the
Corporation to successfully integrated acquired business, and the
acquisition and integration of businesses in the future. Other
assumptions, if any, are set out throughout this press release. If
these assumptions prove to be inaccurate, the Corporation’s actual
results may differ materially from those expressed or implied in
the forward-looking statements. The forward-looking statements
contained herein are made as of the date of this press release and
are expressly qualified in their entirety by this cautionary
statement. Except to the extent required by law, the Company
undertakes no obligation to publicly update or revise any
forward-looking statements contained herein. Readers should not
place undue reliance on forward looking statements.
Non-IFRS MeasuresThis press
release refers to financial measures that are not recognized under
International Financial Reporting Standard (“IFRS”). A non-IFRS
financial measure is a numerical indicator of a company's
performance, financial position or cash flow that excludes or
includes amounts or is subject to adjustments that have the effect
of excluding or including amounts that are included or excluded in
most directly comparable measures calculated and presented in
accordance with IFRS. Non-IFRS measures do not have any
standardized meaning under IFRS and therefore are unlikely to be
comparable to similar measures presented by other companies having
the same or similar businesses.
The Corporation believes these measures are
useful supplemental information. The following non-IFRS measures
are used by the Corporation in this press release: EBITDA, EBITDA
margin, Adjusted EBITDA, Adjusted EBITDA margin, backlog, quote log
of Xebec.
Please find below definitions of non-IFRS
financial measures used by herein:
“EBITDA” means the earnings before interest,
income taxes, depreciation and amortization, where interest is
defined as net finance costs as per the consolidated statement of
comprehensive income.
“EBITDA margin” being EBITDA as a percentage of
revenues.
“Adjusted EBITDA” means starting with EBITDA and
adjust for Stock-based compensation expenses, impairment of
inventories, exchange gain/loss on the obligation arising from
non-controlling interest participation in a subsidiary, foreign
exchange loss (gain) and accretion of debt.
“Adjusted EBITDA margin” being Adjusted EBITDA
as a percentage of revenues.
“Backlog” means contracts that have been
received and considered as firm orders.
“Quote log” means sales quotes that have been
provided and are being pursued by business development and sales
representatives of Xebec.
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