Clear Blue Technologies International Inc. (“Clear Blue” or “the
Company”) (TSXV: CBLU) (FRANKFURT: 0YA), the Smart Off-Grid™
company, today reported its financial results for the second
quarter of the year ended June 30, 2019.
Key Financial Results (all figures in Canadian
dollars)
- Revenue for the three months (Q2) ended June 30, 2019 was
$568,037, a decrease of 67% over Q2 2018 revenue of
$1,697,696.
- Gross margin was $125,374 for the period ended June 30, 2019, a
decline of 57% compared to the same period in 2018. However, gross
margin percentage increased from 17% to 22%, showing management’s
initiatives for higher margin work.
- TFQ revenue for the period ended June 30, 2019 was $2,665,967,
a decrease of 32% over revenue of $3,908,519 in the TFQ period
ended June 30, 2018.
- On a TFQ basis, gross margin was $787,198, an increase of 103%
over the previous equivalent TFQ period. Gross margin percentage in
the quarter was 30%, compared to 10% in the previous equivalent TFQ
period.
Chief Executive Officer Remarks
Clear Blue CEO Miriam Tuerk commented: “Our
trailing four quarters results reflect the typical lower revenue
generated in the first half of most years, however we are pleased
with the significant improvement in trailing four quarter gross
margin and gross margin percentage which reflect our efforts to
drive profitability for the Company. We have increased inventory
year over year in anticipation of the trend repeating in 2019. Most
importantly, we are beginning to see results from our push into the
telecom marketplace in Africa and South America where conversion of
even one of our pilot projects into a full rollout would be
transformative for the Company. Because these are large, very
visible public projects where we bid with multiple partners, we
have provided guidance on the scale and timing of potential
opportunities. While there can be no assurance we will win one of
these projects and it will be 2020 before successful bidders are
selected and achieve rollout, we are encouraged to have delivered 8
Proof of Concept projects and 3 First Installs, representing a
total of 146 systems to date.”
Q2 2019 Revenue and Gross Margin
Revenue for the three months (Q2) ended June 30,
2019 was $568,037, a decrease of 67% over Q2 2018 revenue of
$1,697,696. TFQ revenue for the period ended June 30, 2019 was
$2,665,967, a decrease of 32% over revenue of $3,908,519 in the TFQ
period ended June 30, 2018.
Over the last 3 years, the first half of the
Company’s fiscal year has traditionally been a small portion of its
full year revenue, ranging from 14% to 39% of fiscal year full
revenue. 2018 was at the high end of this range due to a single
large order in Q2 of 2018. Notwithstanding this, the YTD results
for 2019 are lower than 2018. The Company believes this is not
indicative of any change in the company’s outlook and is due to
timing of a number of orders and the lumpy nature of Clear Blue’s
current business.
Gross margin was $125,374 for the period ended
June 30, 2019, a decline of 57% compared to the same period in
2018. However, gross margin percentage increased from 17% to 22%,
showing management’s initiatives for higher margin work. On a TFQ
basis, gross margin was $787,198, an increase of 103% over the
previous equivalent TFQ period. Gross margin percentage in the
quarter was 30%, compared to 10% in the previous equivalent TFQ
period.
While Clear Blue had a 32% TFQ revenue decline
to June 30, 2019 year over year, gross margin increased 103%, in
effect doubling gross margin with half the revenue. These results
reflect the Company’s focus on generating positive cash flows from
operations. Management believes this trend demonstrates that we are
executing to plan and delivering on the opportunity for profitable
future growth.
Q2 2019 Operating Expenses
Operating expenses increased $442,567 or 35% for
the three-month period ended June 30, 2019 compared to the same
period in 2018. As the Company concluded its RTO in Q3 of 2018, the
Q2 2018 period is prior to funding and Q2 2019 is post funding. The
additional expense is mainly due to increased research and
development expenditures and increased business development
expenses.
Outlook
Clear Blue competes in a marketplace where most
competitors focus on large, on-grid systems or they focus only on
one-time sales of hardware products. The Company’s focus is on the
off-grid market and the Company’s business model is to provide an
ongoing Energy as a Service delivery model where customers receive
long term assurance of reliable power and the Company is paid
additional revenue over time for that reliability. As a result,
Clear Blue holds a first mover advantage and leads the market as
evidenced by deployment of our systems in more than 35
countries.
2018 was a year of 65% growth year over year.
Although the first part of 2019 has shown smaller numbers than in
2018, management believes its go forward growth plan and
substantially enhanced gross margins will follow the trajectory
that it has demonstrated in the past.
Lighting
In the lighting vertical, the Company’s future
growth prospects rely on three things:
- Continued robust year over year growth in its North American
Street off-grid streetlight business
- Continued growth in the size and quantity of streetlight
projects in emerging markets
- Full rollout and implementation of its Energy-as-a-Service
(EaaS) offering, which was launched at the end of May in Q2
2019.
The Company believes the EaaS program will have
a significant impact on its future growth. Clear Blue
estimates that for each million of upfront sales, the ten year
value of the contract with EaaS is $1.48 million. The involved
nature of EaaS revenues is projected to further facilitate customer
relationships for future contracts.
Telecom
With respect to the Telecom vertical, it is now
two years since the Company did its first pilot project with its
first telecom customer. As of the end of Q2 2019, the Company has
delivered 146 systems over 8 Proof of Concept projects and 3 First
Installs. Most of these projects are in developing regions such as
Africa and South America where off grid powered telecom will be the
primary communications network. This includes development of
traditional tower infrastructure, satellite/wifi networks and, in
the future, new 5G networks.
In the telecom industry, infrastructure projects
follow a frequent pattern of:
- Proof of Concept pilots consisting of 1 – 10 systems, followed
by
- First Installs of 10 – 100 systems, followed by
- Large Rollout of hundreds to thousands of systems
As customers transition to the full rollout
phase, the size and value of the contract grows significantly.
There can be no assurance we will win a Rollout contract, however
the bid processes currently underway are structured for a mid-2020
decision by the project operators. Taking into consideration our
caution regarding forward looking statements, the Company does see
potential for one or more of its early installs transitioning to
the larger rollout stage if one of our bid partners wins a portion
of one of the major Rollout contracts.
In summary, the Company expects to continue to
see variable quarterly revenue due to the variance in size and
timing of new contracts and market expansion rates. Management’s
longer-term goal and strategy is to mitigate revenue variability
through continued diversification into a balanced blend of
developed and emerging markets, as well as to increase the
recurring portion of our revenue.
Conference Call
The Company will host a conference call to discuss its latest
financial results at 12:00 PM Eastern Time (Canada/U.S.) on
Wednesday, 28th August 2019. Those interested can register
at https://zoom.us/webinar/register/WN_5HrRcQKnTpmKKKAenylHRg
About Clear Blue Technologies International
Clear Blue Technologies International, the Smart Off-Grid™
company, was founded on a vision of delivering clean, managed,
“wireless power” to meet the global need for reliable, low-cost,
solar and hybrid power for lighting, telecom, security, Internet of
Things devices, and other mission-critical systems. Today, Clear
Blue has thousands of systems under management across 35 countries,
including the U.S. and Canada. Clear Blue is publicly
traded on the Toronto Venture Exchange under the symbol
CBLU.
Legal Disclaimer
Neither the 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.
Forward-Looking Statement
This press release contains certain
"forward-looking information" within the meaning of applicable
Canadian securities legislation and may also contain statements
that may constitute "forward-looking statements" within the meaning
of the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking information and
forward-looking statements are not representative of historical
facts or information or current condition, but instead represent
only the Resulting Issuer’s beliefs regarding future events, plans
or objectives, many of which, by their nature, are inherently
uncertain and outside of Clear Blue's control. Generally, such
forward-looking information or forward-looking statements can be
identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words
and phrases or may contain statements that certain actions, events
or results "may", "could", "would", "might" or "will be taken",
"will continue", "will occur" or "will be achieved". The
forward-looking information contained herein may include, but is
not limited to, information concerning the prospective operating
results and performance of the Company.
By identifying such information and statements
in this manner, the Resulting Issuer is alerting the reader that
such information and statements are subject to known and unknown
risks, uncertainties and other factors that may cause the actual
results, level of activity, performance or achievements of the
Resulting Issuer to be materially different from those expressed or
implied by such information and statements.
An investment in securities of the Resulting
Issuer is speculative and subject to several risks including,
without limitation, the risks discussed under the heading "Risk
Factors" in the Resulting Issuer's listing application dated July
12, 2018. Although the Resulting Issuer has attempted to identify
important factors that could cause actual results to differ
materially from those contained in the forward-looking information
and forward-looking statements, there may be other factors that
cause results not to be as anticipated, estimated or intended.
In connection with the forward-looking
information and forward-looking statements contained in this press
release, the Resulting Issuer has made certain assumptions.
Although the Resulting Issuer believes that the assumptions and
factors used in preparing, and the expectations contained in, the
forward-looking information and statements are reasonable, undue
reliance should not be placed on such information and statements,
and no assurance or guarantee can be given that such
forward-looking information and statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information and
statements. The forward-looking information and forward-looking
statements contained in this press release are made as of the date
of this press release, and the Resulting Issuer does not undertake
to update any forward-looking information and/or forward-looking
statements that are contained or referenced herein, except in
accordance with applicable securities laws. All subsequent written
and oral forward- looking information and statements attributable
to the Resulting Issuer or persons acting on its behalf is
expressly qualified in its entirety by this notice.
Media Contact:Becky Nye Director Montieth &
Company 155 E 44th St., New York, NY 10017
bnye@montiethco.com +1 646.864.3517
Investor Relations:Miriam Tuerk Co-Founder and
CEO+1 (855) 733-0119 x200
investors@clearbluetechnologies.com
http://www.clearbluetechnologies.com/en/investors
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