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 year ended
December 31, 2019.
Key Financial Results (all figures in
Canadian dollars)
- Record quarterly revenues of $2,392,839 in Q4, a 114% increase
over Q4 2018;
- Trailing Four Quarterly (TFQ) Revenue of $3,971,301, a 5%
increase over 2018;
- TFQ Gross Margin percentage decreased from 24.8% to 22.4%, a
reduction resulting from a new allocation, beginning in 2019 as a
result of our scale, to record direct service cost expenses to
Gross Margin. Without this, TFQ Gross increased to
25.3%;
- Q4 Gross Margin percentage of 16.5%, compared to 19.6% in Q4
2018;
- TFQ Adjusted EBITDA (see Non-IFRS Measures) was $(4,157,128)
versus $(4,565,513) in 2018;
- The Company exceeded its previous guidance on telecom pilots by
selling 12 Proof of Concepts and 5 First Installs in 2019.
Subsequent Events
The period following the quarter ended on Dec
31, 2019, was notable for the Company with the following
outcomes:
- On April 20, 2020, the Company announced the signing of a Large
Rollout project with an initial purchase order for 50 units of a
planned multi-year 500-unit sale. The contract has the potential to
lead to an estimated $3.5 million in sales in the fiscal year
2020;
- On April 14, 2020, the Company arranged additional liquidity
through a $5 million loan from BDC Capital Inc. The Company
received the first $2 million tranche with an additional $3 million
available upon meeting certain financial milestones.
Chief Executive Officer
Remarks
The fiscal year 2019 was a year that had some
great successes, albeit tempered by slow results impacting the
bottom line. The first three quarters were slow, and while we
had a great Q4, it did not fully offset our lower results from Q1
through Q3. As a result, the revenue growth in 2019 over 2018
was relatively flat, with a 5% growth year over year.
The Company’s position in the market
strengthened substantially and, its investments in the African and
telecommunications market yielded great success with the Company
exceeding its guidance on the number of pilots and first install
projects. As these projects mature into large scale rollouts,
significant contracts with long term multi-year sustainable growth
are on the horizon. While COVID-19 will impact our business,
we believe that it is a small delay and that telecommunications
infrastructure will be a key area of investment and growth
post-COVID-19. Subsequent to the quarter, Clear Blue
announced its first large contract roll out and we see potential
for additional contracts in 2020.
Revenue and Gross Margin
Revenue in the quarter increased by 114% to
$2,392,839. Full-year revenues were $3,971,301, an increase
of 5% over 2018. Telecom sales posted a 438% revenue increase
to $928,287 for the TFQ ended December 31, 2019. This illustrates
the Company’s traction in the telecom sector as projects moved from
small Proof of Concepts to Initial Install system deployments.
2019 Gross Profit was $891,163, a decrease from 24.8% to
22.4% over 2018. As a result of our scale, to direct service
cost expenses now attributed Gross Margin. Without this,
gross margin would have increased to 25.3%.
Telecom Sector Adoption &
Progress
During Q4, Clear Blue exceeded its previous
guidance on Telecom Sector Adoption, bringing the total at the end
of 2019 to 12 Proof of Concepts and 5 First Installs.
After year-end, in April 2020, the Company
announced it had won a large rollout contract. Taking into
consideration our caution regarding forward-looking statements, the
Company sees the potential for one or more additional First
Installs transitioning to significant rollout deals in 2020
depending on the success of our bid partners.
Clear Blue Service Adoption &
Recurring Revenue
In 2019, Clear Blue deployed 1,478 units for a
total of 5,018 units to date. Today, Clear Blue has the most
extensive data collection of production systems in the world, with
3.2 million operating days of site production data, allowing us to
build ever smarter and higher performing products and services.
Clear Blue’s balance sheet item showing the
amount of sold and paid for Service revenue that it will recognize
over-time increased by 77% to $514,608. This growth was
primarily driven by the Company’s launch of Energy as a Service in
Q2 2019.
Operating Expenses
Operating expenses decreased by $95,177 or 2%
for the TFQ ended December 31, 2019, compared to the same period in
2018. This included an increase in bad debt provision to
anticipate potential effects caused by COVID-19, non-cash stocked
based compensation, and reduced SRED tax amounts as public
companies do not get the same amounts as private companies (the
Company was private for part of 2018, and thus this amount was
higher). Net of these items, operating expenses have declined
year over year.
Net loss and comprehensive
loss
Clear Blue is a high-tech Company, and R&D
investments are substantial parts of our costs. This
investment will enable Clear Blue to emerge as the market leader in
a new and exciting global market. For the TFQ ended December 31,
2019, the Company reported a Net Loss of $(5,101,918), a decrease
$2,996,649 or 37% over 2018.
2019 Fiscal Year Non-IFRS Adjusted
EBITDA
Beginning in the fiscal year 2019, Clear Blue
began reporting non-IFRS Adjusted EBITDA. For 2019, Adjusted
EBITDA was ($4,157,728), a 9% improvement over 2018.
Outlook
Clear Blue competes in a marketplace where
competitors focus on large, on-grid systems, and one-time sales of
hardware products. Clear Blue focuses on the wireless
off-grid market. The Company's business model is to provide
"Energy as a Service" ("EaaS"), an ongoing delivery model where
customers receive long term assurance of reliable power, and the
Company is paid additional revenue overtime for that reliability.
As a result, Clear Blue holds the first-mover advantage and leads
the market, as evidenced by the deployment of our systems in 37
countries.
In 2019, the Company undertook several new
product initiatives, driven by significant technology innovations,
which should allow for a material improvement in gross margin in
2020.
Lighting sales continued to provide a stable
base of revenues and gross margin during 2019 while the telecom
market for our product matured. High margin EaaS sales did
well following its launch in May 2019. We believe EaaS
revenues will continue to grow as a percentage of revenues in
2020.
By the end of 2019, we had deployed 5,018
systems in 37 countries, primarily in North America, Africa, and
the Middle East. They have generated approximately 3.2
million days of operating history.
Like all international businesses, Clear Blue
sees some impact from the COVID-19 pandemic. We have experienced a
backlog in orders with suppliers and, there are longer lead times
than seen pre-COVID-19. Additionally, transportation networks
are being impacted by the push to prioritize the shipment of
critical medical equipment. We have benefited from the large
inventory of essential components we conservatively carried through
2019 and intend to manage supply chain risk through inventory, long
lead time planning, and multi-vendor sourcing in 2020. We believe
that communications infrastructure is going to be a critical
component of COVID-19 mitigation and anticipate telecom projects
will continue to proceed in all regions on this basis, but perhaps
with some COVID-19 related delays. As reported on April 20, 2020,
we have secured a $5 million credit facility from BDC to provide
additional liquidity. The supply chain will continue to be a risk,
and management is actively working on mitigation strategies to
ensure any impact is minimal.
For guidance, we have previously provided
forecasts of telecom Proof of Concept, First Installs, and Rollout
orders as a measure of future opportunity. While these
activities are continuing to progress, the speed and pace of these
initiatives may be affected by COVID-19 related shutdowns.
Given the COVID-19 pandemic, the Company cannot provide an estimate
of similar projects for 2020 at this time, although it has already
received orders for one new Proof of Concept and one First Install
in 2020.
From a long-term perspective, management
believes its market potential remains very strong. The
Company has a strong sales funnel and, we have experienced
continued customer interest throughout this period.
Conference Call
The Company will host a conference call to discuss its latest
financial results at 11:00 AM Eastern Time (Canada/U.S.) on
Thursday, April 30, 2020.
Those interested can register
at:https://zoom.us/webinar/register/WN_EMAPh4TbSQuEVB_D9FbTUA
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 37 countries, including the U.S. and Canada. Clear Blue is
publicly traded on the Toronto Venture Exchange under the symbol
CBLU (TSXV: CBLU) (FRANKFURT: 0YA).
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, the effects of COVID-19 on
the Company, expected future sales, and our competitive position in
the market.
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 NyeDirectorMontieth & Company155 E 44th St., New York,
NY 10017bnye@montiethco.com+1 646.864.3517
Investor Relations:
Miriam TuerkCo-Founder and CEO+1 416 433
3952investors@clearbluetechnologies.comhttp://www.clearbluetechnologies.com/en/investors
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