AVANTE CORP. ANNOUNCES FINANCIAL RESULTS FOR THE THIRD FISCAL QUARTER ENDED DECEMBER 31, 2023
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- The Company is debt free, has cash balances of $5.7 million and access to $12 million of unused credit facilities.
- Avante Corp. achieved third quarter year-over-year revenue growth of 36.3% from continuing operations and Recurring Monthly Revenues improved by 11.1%.
TORONTO-Ontario, Feb. 27, 2024 (GLOBE NEWSWIRE) -- Avante Corp. (TSX.V: XX) (OTC: ALXXF) ("Avante" or the "Company") is pleased to announce its financial results for its third fiscal quarter ended December 31, 2023 (all amounts in Canadian dollars thousands, unless otherwise indicated).
Manny Mounouchos, Founder, CEO and Board Chair of Avante, commented, "Third quarter was another exceptional quarter for Avante as we increased revenue by 36% compared to the same quarter last year, and completed the acquisition of NSSG. Our core business remains solid with Recurring Monthly Revenue increasing by 11%, while we are starting to witness the benefits of the NSSG acquisition. We expect international revenue to increase over the next year as NSSG now allows us to service customers globally. The recently launched Argus App, Homeworxx and Toyboxx services have received strong interest in the market. Meanwhile, we continue to actively seek new opportunities to expand and enhance our services."
Raj Kapoor, Avante's Chief Financial Officer, added, "I am pleased to report that we continue to have a strong balance sheet and are able to fund the Company's organic growth initiatives through positive cash flows from operations. The Company is debt free and has $5.7 million of cash on its balance sheet as well as access to $12 million of unused credit facilities. We continue to have a positive outlook for the fourth quarter and into next fiscal year."
FINANCIAL HIGHLIGHTS FOR THE THIRD FISCAL QUARTER ENDED DECEMBER 31, 2023:
- Within continuing operations, the Company reported revenue of $6,941 during the third quarter of fiscal 2024, representing year-over-year revenue growth of 36.3%, or $1,849, compared to $5,092 for the prior fiscal year third quarter. The increase in revenue was primarily driven by the integration of the newly acquired entity NSSG.
- Gross profit margins within continuing operations decreased to 42.5% of revenue, versus 42.8% during the prior year's third quarter, with total gross profit increasing by $771. Gross profit margins within continuing operations remained relatively stable, indicating a consistent level of profitability.
- The Avante Security segment delivered recurring monthly revenues ("RMR") of $2,889 during the third quarter of fiscal 2024, up from $2,600 during the Company's third quarter in the prior year, a year-over-year growth of 11.1%. The increase in recurring revenue was driven by net growth in monitoring customers.
- The Company achieved Adjusted EBITDA from continuing operations of $442 during the third quarter, a decrease of 26.4%, or $(159), compared to $600 for the prior fiscal year third quarter.
- With cash balances of $5.7 million as at December 31, 2023, and access to the senior secured revolver of $2 million and to the $10 million unsecured term loan facility, the Company has excess liquidity to more than meet its existing requirements. The decrease in cash over the past year was primarily due to the NSSG acquisition and changes in working capital.
TRAILING TWELVE MONTH FINANCIAL HIGHLIGHTS:
On a trailing twelve-month basis to December 31, 2023,
- The Company's total revenue was $23,057, compared to trailing twelve month revenue of $19,532 one year prior, an increase of 18.0%.
- The Company's RMR was $11,062, representing 48.0% of total trailing twelve months revenue.
- The Company's Adjusted EBITDA from continuing operations was $1,075, representing Adjusted EBITDA margin of 6.1% of total trailing twelve months revenue.
ACQUISITION of NSSG:
On September 19, 2023, Avante announced its majority stake acquisition of North Star Support Group S.R.L. ("NSSG"), through its subsidiary Avante International Inc. The transaction's effective date is October 1, 2023. Avante acquired a 55% majority interest in NSSG, for an aggregate purchase price of EUR1,300,000, paid by way of a combination of cash in the amount of EUR1,200,000 and the issuance of 154,301 common shares in the capital of the Company. In addition, as part of the transaction, Avante advanced to NSSG a loan in principal amount of up to EUR 1 million for a term of 4 years, bearing interest at a rate equal to the Bank of Canada Prime Rate plus 1%, and repayable in 8 quarterly equal repayments starting on the date that is 24 months after the date of each drawdown under the loan.
NSSG is a highly reputed risk management and security company operating globally. Founded in 2017, NSSG is headquartered in Bucharest, Romania, with offices in New York, Cairo, and Kyiv, with representations in Saudi Arabia, Italy, Israel and the United Kingdom. NSSG offers a wide range of integrated corporate security solutions, with a strong focus on technological advancements and integration with existing corporate security platforms. NSSG has a worldwide clientele and has established itself as a trusted partner to Fortune 500 companies in the risk management industry. NSSG generated revenue of $5.9 million for the twelve-month period ended December 31, 2022 with net profit of $1.3 million.
RECENT BUSINESS HIGHLIGHTS
- On September 28, 2023, the Company announced the launch of Avante Argus app, a mobile connectivity app for corporate clients. Avante Argus app provides peace of mind for Avante's Executive Clients with instant connectivity to the Avante Crisis Centre with real-time location tracking, enabling immediate emergency and medical response capabilities. Argus is designed to provide unparalleled security and support for Avante clients locally and for Avante Black clients internationally.
- On November 2, 2023, the Company announced it accepted an invitation to join the Global Shield Network, a law enforcement and intelligence network immersed in public/private sector partnerships designed to prevent crime and terrorism and improve public safety. After the safe and successful evacuation of its clients from the conflict zone in Israel, Avante was recognized for its world-class security and crisis management services with an invitation to join the Global Shield Network. This strategic alliance provides Avante with real-time access to police and international intelligence agencies worldwide.
SUMMARY FINANCIAL RESULTS FOR THE THIRD FISCAL QUARTER ENDED DECEMBER 31, 2023:
Readers should refer to the Company's financial statements and MD&A in respect of its third fiscal quarter ended December 31, 2023, for additional risk factors, accounting policies, detailed financial disclosures, reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures, related party transactions, contingencies, and reporting of subsequent events since the year ended March 31, 2023. Such financial statements and MD&A are incorporated by reference into this news release and are filed electronically through the System for Electronic Document Analysis and Retrieval ("SEDAR+"), which can be accessed at www.sedarplus.ca.
| Three Months Ended | |||||||||
| $ thousands unless otherwise noted | Dec. 31, 2023 | Sept. 30, 2023 | June 30, 2023 | ||||||
| INCOME STATEMENT INFORMATION: | Q3 F24 | Q2 F24 | Q1 F24 | ||||||
| RMR in the period, continuing operations (1) | $2,889 | $2,834 | $2,648 | ||||||
| Revenues, continuing operations (1) | $6,941 | $5,338 | $5,410 | ||||||
| Gross profit, continuing operations (1) | $2,948 | $2,117 | $2,039 | ||||||
| Gross profit margin, continuing operations (1) | 42.5% | 39.7% | 37.7% | ||||||
| Adjusted EBITDA, continuing operations (1) | $442 | $227 | $407 | ||||||
| Net Income (loss), continuing operations (1) | $3 | $(396) | $80 | ||||||
| Net Income (loss) | $3 | $(252) | $80 | ||||||
| Average Common Shares during the quarter | 26,575,442 | 26,504,868 | 26,489,438 | ||||||
| As At | |||||||||
| BALANCE SHEET INFORMATION: | Dec. 31, 2023 | Sept. 30, 2023 | June 30, 2023 | ||||||
| Cash balances & GIC investments (1) | $5,729 | $4,909 | $9,428 | ||||||
| Total funded debt as reported, IFRS | $0 | $0 | $0 | ||||||
| Total funded debt & lease obligations, IFRS (1) | $1,300 | $1,226 | $1,375 | ||||||
| Common Shares at period end | 26,643,739 | 26,643,739 | 26,489,438 | ||||||
(1) Adjusted EBITDA and Recurring Monthly Revenues ("RMR") are non-IFRS financial measures that have no standard meaning under IFRS and as a result may not be comparable to the calculation of similar measures by other companies. See Description of Non-IFRS Financial Measures. Reconciliations of Adjusted EBITDA and RMR to Net Income or Revenues, as applicable, are provided in the Company's Management Discussion & Analysis ("MD&A").
| Three months ended | ||||||||
| RECONCILIATION OF ADJUSTED EBITDA | Dec 31, 2023 | Dec 31, 2022 | ||||||
| Total comprehensive income (loss) from continuing operations | $3 | $(269) | ||||||
| Deferred income tax expense (recovery) | (8) | 394 | ||||||
| Interest expense | 4 | (64) | ||||||
| Depreciation and amortization | 336 | 269 | ||||||
| Amortization on capitalized commission | - | 2 | ||||||
| Share based payments | 44 | 72 | ||||||
| Reorganization and acquisition expense | 63 | 196 | ||||||
| Adjusted EBITDA from continuing operations | $442 | $600 | ||||||
The Company's ("RMR") from continuing operations during the last eight quarters are summarized below. Gross profit margins over the last eight quarters ranged between 37.7% and 43.7%, and were 39.6% on a trailing twelve-month basis to December 31, 2023:
| Avante Security | F22(1) | F23(1) | F24 | |||||||||||||||||||||||
| $thousands | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||||
| RMR in the period | $2,488 | $2,463 | $2,584 | $2,600 | $2,691 | $2,648 | $2,834 | $2,889 | ||||||||||||||||||
| Other revenue | 2,450 | 2,105 | 2,350 | 2,492 | 2,675 | 2,762 | 2,505 | 4,052 | ||||||||||||||||||
| Total revenue | $4,938 | $4,568 | $4,934 | $5,092 | $5,366 | $5,410 | $5,339 | $6,941 | ||||||||||||||||||
| Total Gross Profit | $2,087 | $1,995 | $1,921 | $2,177 | $2,029 | $2,039 | $2,118 | $2,948 | ||||||||||||||||||
| Gross Profit % | 42.3% | 43.7% | 38.9% | 42.8% | 37.8% | 37.7% | 39.7% | 42.5% | ||||||||||||||||||
(1) The Company's fiscal year end is on March 31 of each year. "F23" means the fiscal year ended March 31, 2023; and "F24" means the fiscal year ended March 31, 2024.
INVESTOR WEBINAR SCHEDULED FOR WEDNESDAY, MARCH 6, 2024 at 1:00 pm ET (10:00 am PT)
The Company will also host an investor webinar to provide a corporate update and review its fiscal third quarter financial results, on Wednesday, March 6, 2024, at 1:00 pm ET (10:00 am PT). The call will be hosted by: Emmanuel Mounouchos, CEO, Chairman, and Founder of Avante, and Raj Kapoor, CFO of Avante.
Webinar Details:
| Webinar Registration: | https://bit.ly/Avante-FYQ3-2024 |
| Date: | Wednesday, March 6, 2024 |
| Time: | 1:00 pm ET (10:00 am PT) |
| Dial-in: | 778-907-2071 (Vancouver local) |
| 647-374-4685 (Toronto local) | |
| Confirmation #: | 878 3000 7448 |
ABOUT AVANTE CORP.:
Avante Corp Inc. is a Toronto based provider of high-end security services. We acquire, manage, and build industry leading businesses which provide specialized, mission-critical solutions that address the needs of our customers. Our businesses continuously develop innovative solutions that enable our customers to achieve their objectives. With an experienced team and a proven track record of solid growth, we are taking steps to establish a broad portfolio of security businesses to provide our customers and shareholders with exceptional returns. Avante is listed on the TSX Venture Exchange under the ticker "XX". For more information, please visit www.avantecorp.ca and consider joining our investor email list.
Emmanuel Mounouchos
Founder, CEO & Board Chair, Avante Corp.
416-923-6984
[email protected]
This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities described herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This news release does not constitute an offer of securities for sale in the United States. The securities described herein have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent registration under U.S. federal and state securities laws or an applicable exemption from such U.S. registration requirements.
Non-IFRS Financial Measures
This press release includes certain measures which have not been prepared in accordance with International Financial Reporting Standards ("IFRS") such as EBITDA, Adjusted EBITDA and Recurring Monthly Revenue ("RMR"). These non-IFRS measures are not recognized under IFRS and and do not have a standardized meaning prescribed by IFRS. Accordingly, users are cautioned that these measures should not be construed as alternatives to net income determined in accordance with IFRS. The non-IFRS measures presented are unlikely to be comparable to similar measures presented by other issuers.
References to EBITDA are to net income before interest, taxes, depreciation and amortization. References to Adjusted EBITDA are to net income before interest, taxes, depreciation, amortization of intangibles & capitalized commissions, share-based payments, acquisition, integration and / or reorganization costs, deferred financing costs, loss (gain) in fair value of derivative liability and expensing of fair value adjustments per IFRS. Recurring Monthly Revenues, or RMR, represent revenue during the fiscal period that benefited from contractual periodic billing to customers, typically monthly, quarterly or annually.
Management believes that Adjusted EBITDA and Recurring Monthly Revenues are appropriate additional measures for evaluating Avante's performance. Readers are cautioned that neither EBITDA, Adjusted EBITDA nor Recurring Monthly Revenues should be construed as an alternative to net income or revenues (as such financial measures are determined under IFRS), as an indicator of financial performance or to cash flow from operating activities (as determined under IFRS) or as a measure of liquidity and cash flow. Avante's method of calculating EBITDA, Adjusted EBITDA and Recurring Monthly Revenues may differ from methods used by other issuers and, accordingly, Avante's reported Non-IFRS measures may not be comparable to similar measures used by other issuers.
Forward-Looking Information
This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the Company and the environment in which it operates. Forward-looking statements are identified by words such as "believe", "anticipate", "project", "expect", "intend", "plan", "will", "may" "estimate", "pro-forma" and other similar expressions. These statements are based on the Company's expectations, estimates, forecasts and projections. The forward-looking statements in this news release are based on certain assumptions. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the Company's ability to achieve the benefits expected as a result of the sale of Logixx Security Inc., anticipated growth from acquisitions, new service offerings and from development and deployment of new technologies and the list of risk factors identified in the Company's Management Discussion & Analysis (MD&A), Annual Information Form (AIF) and other continuous disclosure documents available at www.sedarplus.ca. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the Company assumes no obligation to publicly update any such statement, whether as a result of new information, future events or otherwise.
Neither 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.
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