MONTREAL, QUEBEC--(Marketwired - March 9, 2017) - Lumenpulse Inc. (TSX:LMP), the parent company of the Lumenpulse Group, a leading manufacturer of high performance, specification-grade LED lighting solutions, released today its third quarter of Fiscal 2017 results for the period ended January 31, 2017.
Key Financial Results for Q3 Fiscal 2017
- Consolidated revenues grew by 49.4% versus Q3 of Fiscal 2016, reaching $53.1 million
- Reflecting a change in product mix and acquired product portfolio, gross margin stood at 46.1% versus 48.8% for Q3 of Fiscal 2016
- Adjusted Gross Margin1 at 47.3% versus 50.3% for Q3 of Fiscal 2016
- Operating income stood at $1.4 million, up from a negligible operating loss for the same period last fiscal year
- Adjusted EBITDA1 of $5.3 million up from $3.6 million for the same period last year
- Net loss of $3.7 million (or $0.15 per diluted share2) down from net income of $1.6 million (or $0.06 diluted per share), primarily caused by a $3.4 million change in fair value of contingent consideration impact in Q3 Fiscal 2017 related to the Fluxwerx earn-out
- Adjusted Net Income at $2.8 million (or $0.10 per diluted share2) down from $4.1 million (or $0.16 per diluted share)
- Net cash flows from operating activities of $3.9 million
- Net cash position of $12.6 million
"Third quarter revenues grew by almost 50%, mainly from the contribution of our recent acquisitions that boast indoor product portfolios. Our revenue growth and product mix reaffirm our product portfolio acquisition strategy and the value proposition of our two last acquisitions. Even as foreign exchange headwinds and changes in product mix weighted on our gross margin during the quarter, we delivered double digit Adjusted EBITDA. The Adjusted EBITDA delivered during what is always a challenging quarter of our fiscal year demonstrates our ability to leverage our expenses," said François-Xavier Souvay, President and CEO of the Lumenpulse Group.
On a year-to-date basis, our revenues grew by 48% reaching $155 million. These results are in line with expectations as we anticipated a slower start to the fiscal year followed by accelerated growth during the fourth quarter. We continue to expect to deliver solid year-over-year growth in this fourth quarter. However, we believe that recent changes in the political landscape have created temporary volatility that, combined with the timing of various product introductions and the realignment of our North American sales force by brand, negatively impacted our pipeline and backlog conversion rates. Our market remains strong and our sales teams are better equipped and focused. To account for the reduced momentum expected in the fourth quarter, we are taking a conservative approach and adjusting our Fiscal 2017 Financial Outlook accordingly.
For Fiscal 2017, the Company expects revenues in the range of $205 to $210 million and an Adjusted EBITDA margin target of 9% to 11%.
This updated financial outlook represents revenue growth of 41 % to 45% for the fiscal year and an Adjusted EBITDA growth of 66% to 108% over Fiscal 2016.
Please refer to "Forward-Looking Information" below and the Updated Fiscal 2017 Financial Outlook section of the Company's MD&A filed for the Third Quarter Fiscal 2017 for further details regarding the material assumptions underlying the foregoing guidance.
"Despite the short-term challenges created by changes in the political environment, we believe that the long-term fundamentals of our market and industry remain intact. The various segments in which the Company operates are expected to continue growing and we remain confident in our long-term guidance", said François-Xavier Souvay, President and CEO of the Lumenpulse Group.
| Financial Highlights1, 2 | ||||||||||||||||||
| (Unaudited, in millions of Canadian dollars, except per share amounts) | ||||||||||||||||||
| For the third quarters ended January 31, 2017 and 2016 | ||||||||||||||||||
| Q3 2017 | Q3 2016 | Change | YTD 2017 | YTD 2016 | Change | |||||||||||||
| Revenues - Consolidated | 53.1 | 35.5 | 17.6 | 154.7 | 104.8 | 49.9 | ||||||||||||
| Growth | 49 | % | 48 | % | ||||||||||||||
| Gross Profit % | 46 | % | 49 | % | -3 pts | 48 | % | 48 | % | 0 pts | ||||||||
| Adjusted Gross Profit %1 | 47 | % | 50 | % | -3 pts | 49 | % | 49 | % | 0 pts | ||||||||
| Operating Income | 1.4 | 0.0 | 1.4 | 4.7 | 2.5 | 2.2 | ||||||||||||
| Adjusted EBITDA1 | 5.3 | 3.6 | 1.7 | 16.1 | 9.8 | 6.3 | ||||||||||||
| Adjusted EBITDA %1 | 10 | % | 10 | % | 0 pts | 10 | % | 9 | % | 1 pts | ||||||||
| Net (Loss) Income | (3.7 | ) | 1.6 | (5.3 | ) | (2.0 | ) | 5.6 | (7.6 | ) | ||||||||
| Adjusted Net Income1 | 2.8 | 4.1 | (1.3 | ) | 10.1 | 9.8 | 0.3 | |||||||||||
| (Loss per Share) EPS - Diluted2 | (0.15 | ) | 0.06 | (0.21 | ) | (0.08 | ) | 0.22 | (0.30 | ) | ||||||||
| Adjusted EPS - Diluted1, 2 | 0.10 | 0.16 | (0.06 | ) | 0.38 | 0.39 | (0.01 | ) | ||||||||||
| 1 | Please refer to our definitions and reconciliations of these non-IFRS financial measures at the end of this document. |
| 2 | The calculations for the Earnings per share - Diluted and Adjusted Earnings per share - Diluted for the third quarter and the nine-month period ended of January 31, 2017 include the effect of 1,238,714 and 1,223,478 stock options, respectively, which are deemed to be dilutive. |
Revenues
During the third quarter ended January 31, 2017, consolidated revenues increased by $17.6 million, or 49.4%, to $53.1 million compared with $35.5 million for the corresponding period last year, resulting from Acquisition Growth3 of 29.9% and Organic Growth4 of 26.7%. Foreign exchange rate volatility affected consolidated revenues negatively by 7.2%.
| 3 | Acquisition Growth reflects the period-over-period increase in revenues attributable to the revenues of the acquired product portfolios realized for the commensurate period prior to their acquisition. |
| 4 | Organic Growth reflects period-over-period growth of all our product portfolios including the growth of acquired product portfolios over their existing revenues for the commensurate period prior to their acquisition. |
During the third quarter ended January 31, 2017, revenues in Canada increased by 39.8% to $9.1 million, driven by Organic Growth of 25.5% and Acquisition Growth of 14.3%. Revenues in the United States increased by 64.1%, to $32.5 million, with Acquisition Growth of 36.2% and Organic Growth of 34.7%, including a negative foreign exchange effect of 6.8%. Revenues from the Rest of the World increased by 24.5% reaching $11.5 million reflecting Acquisition Growth of 27.3% and Organic Growth of 10.5% with overall revenue growth being negatively impacted by foreign exchange volatility of 13.3%.
During the nine-month period ended January 31, 2017, consolidated revenues increased by 47.6% to $154.7 million, up from $104.8 million during the equivalent period of last year. This increase results from Acquisition Growth of 28.6% and Organic Growth of 22.1%, and includes a negative effect of 3.1% from variations in foreign exchange rates.
Gross Margin and Adjusted Gross Margin
During the third quarter ended January 31, 2017, gross margin decreased to 46.1% from 48.8% during the equivalent quarter of last year, impacted significantly by the gross margin contribution from our acquired product portfolio. Adjusted Gross Margins were 47.3% compared with 50.3% in the third quarter of Fiscal 2016.
During the nine-month period ended January 31, 2017, gross margin decreased to 47.5% from 48.2%, primarily due to the same dynamics as stated above. Adjusted Gross Margins stood at 48.6% compared with 49.1% in the equivalent period of Fiscal 2016.
Operating Income and Adjusted EBITDA
During the third quarter ended January 31, 2017, operating income grew to $1.4 million from a negligible operating loss in the comparable quarter of last year. During the nine-month period ended January 31, 2017, operating income also increased, to $4.7 million from $2.5 million during the equivalent period of last year. This improvement reflects an improvement in gross profit and Lumenpulse's ability to manage its operating expenses and leverage its cost structure.
As a percentage of total revenues, Adjusted EBITDA stood at 10.0%, in-line with 10.1% of revenues in the equivalent quarter of last year. For the nine-month period ended January 31, 2017, Adjusted EBITDA Margin stood at 10.4%, an improvement from 9.3% in the equivalent period of Fiscal 2016.
Net Income and Adjusted Net Income
During the third quarter ended January 31, 2017, net loss reached $3.7 million (or $0.15 per share on a diluted basis), down from a net income of $1.6 million (or $0.06 per share on a diluted basis) in the comparable quarter of last year. Offsetting higher operating income during the quarter were net financing costs which increased to $4.2 million, mainly reflecting changes in the fair value of contingent consideration from the Fluxwerx acquisition which amounted to $3.4 million and foreign exchange losses of $0.8 million, combined with higher amortization from the acquired intangible assets. Adjusted Net Income stood at $2.8 million (or $0.10 per share on a diluted basis) in the third quarter of Fiscal 2017, down from $4.1 million (or $0.16 per share on a diluted basis) in the equivalent period of Fiscal 2016, which was primarily caused by an unfavourable impact in net financing costs (income), and an increase in depreciation, amortization and income taxes, net of their adjusting items.
During the nine-month period ended January 31, 2017, net loss stood at $2.0 million (or $0.08 per share on a diluted basis) down from net income of $5.6 million (or $0.22 per share on a diluted basis) in the comparable period of last year. Offsetting higher operating income during the first nine months of Fiscal 2017 were net financing costs which increased to $5.3 million, resulting from changes in the fair value of contingent considerations which amounted to $5.1 million, and on higher amortization from the acquired intangible assets. Adjusted Net Income stood at $10.1 million (or $0.38 per share on a diluted basis), up from $9.8 million (or $0.39 per share on a diluted basis) in the equivalent period of Fiscal 2016, which was primarily caused by an increase in Adjusted EBITDA and partly offset an unfavorable variance in net financing costs (income), and an increase in depreciation, amortization and income taxes, net of their adjusting items.
Financial Position
Net cash flows generated from operating activities were $3.9 million for the third quarter of Fiscal 2017, in-line with $3.8 million for the same period last year. The Company also had, as at January 31, 2017, cash and cash equivalents of $21.5 million and a $40.0 million revolving credit facility of which $9.0 million was used.
Conference Call
Lumenpulse scheduled a conference call to discuss these results on Thursday, March 9, 2017, beginning at 11:00 A.M. (ET). This conference call will be broadcast live on the Internet at the following link: Q3 2017 Earnings Conference Call (A slideshow presentation intended for real-time viewing with the conference call will also be available. Alternatively, investors may join by dialing in North America: 1-844-825-4409 (conference ID: 74919225). The webcast will be archived at www.lumenpulsegroup.com/investors/financial-information/quarterly-results.
Non-IFRS Measures
This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from Management's perspective.
The non-IFRS measures permit the assessment of the results generated by the Company's core business, prior to consideration of how the activities are financed, how the results are taxed or the non-cash impact associated to the volatility of the Company's share price. Unusual or other items of a non-recurring nature, that could make the period-over-period comparison of the Company's underlying business less meaningful or not representative of future performance, are further excluded from adjusted non-IFRS measures. Although amortization of acquired intangible assets, professional fees related to business acquisitions, acquired profit on finished goods inventory, change in fair value of contingent consideration and acquisition related gain on investment, non-cash share-based compensation, relocation expenses, employee termination costs, expenses for unrealized gains or losses on revalued cash share-based compensation, depreciation of leasehold improvements and unusual deferred income tax expense or recovery have been recognized in prior periods and could reoccur in future periods, Management excludes these charges, net of taxes, during internal reviews of performance, operational analysis, decision making, and other activities. These measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. Management's definition of these measures may differ from similarly titled measures reported by other companies.
We use non-IFRS measures, including Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Gross Profit and Adjusted Earnings (Loss) per share-basic and diluted, to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures.
Glossary of Adjusted Non-IFRS Measures
Adjusted EBITDA is defined as earnings before net financing (income) costs, income taxes (recovery), and depreciation and amortization, employee termination costs, professional fees related to business acquisitions, acquired profit on finished goods inventory, non-cash share-based compensation, relocation expenses and unrealized (gains) or losses on revalued cash share-based compensation.
- Unrealized (gains) or losses on revalued cash share-based compensation is defined as gains or losses on revalued cash share-based compensation which have been expensed and are unexercised at the end of the reporting period. These unrealized gains or losses are driven by the fluctuation of the Company's common share price during the reference period.
Adjusted Net Income (Loss) is defined as net income (loss) before employee termination costs, professional fees related to business acquisitions, acquired profit on finished goods inventory, non-cash share-based compensation, relocation expenses, unrealized (gains) or losses on revalued cash share-based compensation, amortization of acquired intangible assets, unusual deferred income tax expense (recovery), change in fair value of contingent consideration and acquisition related gain on investment, and additional depreciation expense on leasehold improvements caused by the reassessment of their useful life as a result of the upcoming relocation of the Montréal facility, net of taxes.
- Unusual deferred income tax expense (recovery) is defined as the impact of the measurement and recoverability of unrecognized tax attributes in the prior periods.
- Change in fair value of contingent consideration is related to the achievement of certain financial performance targets in specific periods following the acquisitions of Exenia S.r.l. and Fluxwerx Illumination Inc.
Adjusted Gross Profit is defined as gross profit less non-cash share-based compensation, acquired profit on finished goods inventory, unrealized gains or losses on revalued cash share-based compensation and depreciation and amortization.
Adjusted Earnings (Loss) per share - basic is defined as the Adjusted Net Income (Loss) on the weighted average number of ordinary shares outstanding during the period.
Adjusted Earnings per share - diluted is defined as the Adjusted Net Income on the weighted average number of ordinary shares outstanding during the period and all potentially dilutive stock options.
| Reconciliation of Non-IFRS measures | |||||||||||||
| Quarters Ended January 31 |
Nine Months Ended January 31 |
||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||
| (in thousands of Canadian dollars) | |||||||||||||
| Gross Profit | 24,488 | 17,354 | 73,455 | 50,488 | |||||||||
| Gross margin % | 46.1 | % | 48.8 | % | 47.5 | % | 48.2 | % | |||||
| Non-cash share-based compensation | 41 | 9 | 157 | 32 | |||||||||
| Acquired profit on finished goods inventory1 | 99 | 238 | 318 | 238 | |||||||||
| Unrealized (gains) or losses on revalued cash share-based compensation | 16 | 18 | 12 | 19 | |||||||||
| Depreciation and amortization | 467 | 241 | 1,316 | 655 | |||||||||
| Adjusted Gross Profit | 25,111 | 17,860 | 75,258 | 51,432 | |||||||||
| Adjusted Gross margin % | 47.3 | % | 50.3 | % | 48.6 | % | 49.1 | % | |||||
| Operating Income (Loss) | 1,392 | (29 | ) | 4,746 | 2,465 | ||||||||
| % of revenues | 2.6 | % | (0.1 | )% | 3.1 | % | 2.4 | % | |||||
| Relocation expenses2 | 65 | - | 383 | - | |||||||||
| Employee termination costs | - | 131 | - | 1,008 | |||||||||
| Professional fees related to business acquisitions3 | - | 1,164 | 17 | 1,164 | |||||||||
| Acquired profit on finished goods inventory1 | 99 | 238 | 318 | 238 | |||||||||
| Depreciation and amortization | 3,096 | 1,632 | 9,064 | 3,971 | |||||||||
| Non-cash share-based compensation | 445 | 122 | 1,465 | 583 | |||||||||
| Unrealized (gains) or losses on revalued cash share-based compensation | 230 | 338 | 151 | 346 | |||||||||
| Adjusted EBITDA | 5,327 | 3,596 | 16,144 | 9,775 | |||||||||
| % of revenues | 10.0 | % | 10.1 | % | 10.4 | % | 9.3 | % | |||||
| Net (Loss) Income | (3,731 | ) | 1,598 | (1,982 | ) | 5,624 | |||||||
| % of revenues | (7.0 | )% | 4.5 | % | (1.3 | )% | 5.4 | % | |||||
| Relocation expenses2 | 65 | - | 383 | - | |||||||||
| Employee termination costs | - | 131 | - | 1,008 | |||||||||
| Professional fees related to business acquisitions3 | - | 1,164 | 17 | 1,164 | |||||||||
| Acquired profit on finished goods inventory1 | 99 | 238 | 318 | 238 | |||||||||
| Unusual deferred income tax expense (recovery)4 | 793 | - | 793 | (277 | ) | ||||||||
| Non-cash share-based compensation | 445 | 122 | 1,465 | 583 | |||||||||
| Unrealized (gains) or losses on revalued cash share-based compensation | 230 | 338 | 151 | 346 | |||||||||
| Change in fair value of contingent consideration and acquisition related gain on investment5 | 3,322 | - | 4,960 | - | |||||||||
| Amortization of acquired intangible assets | 1,519 | 527 | 4,604 | 1,088 | |||||||||
| Depreciation of leasehold improvements6 | 181 | - | 544 | - | |||||||||
| Tax effect of normalization adjustments7 | (149 | ) | - | (1,108 | ) | - | |||||||
| Adjusted Net Income | 2,774 | 4,118 | 10,145 | 9,774 | |||||||||
| % of revenues | 5.2 | % | 11.6 | % | 6.6 | % | 9.3 | % | |||||
| 1 | Acquired profit on finished goods inventory related to Exenia. |
| 2 | Relocation expenses related to the new Montréal facility. |
| 3 | Professional fees related to the Fiscal 2016 Acquisitions (Exenia S.r.l. and Fluxwerx Illumination Inc.) |
| 4 | For the third quarter and nine-month period ended January 31, 2017, a deferred tax reassessment net impact of $793 was recognized. Refer to Note 17 of the unaudited condensed consolidated interim financial statements issued on March 8, 2017. Certain Fiscal 2016 comparative figures have been reclassified to be aligned with the Fiscal 2017 definitions. |
| 5 | For the third quarter and nine-month period ended January 31, 2017, adjustments include, respectively, $3,453 and $5,091 of change in fair value of contingent consideration, and $131 of acquisition related gain on investment. |
| 6 | Additional depreciation expense on leasehold improvements caused by the reassessment of their useful life as a result of the upcoming relocation of the Montréal facility. |
| 7 | Tax impact of the adjusting items in order to present them net of taxes. |
Forward-Looking Information
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Such forward-looking information includes, but is not limited to, information with respect to our objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. This forward-looking information is identified by the use of terms and phrases such as "may", "would", "should", "could", "expect", "intend", "estimate", "outlook", "target", "goal", "guidance", "anticipate", "plan", "foresee", "believe", or "continue", the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. Statements with respect to potential benefits and synergies resulting from completed transactions and to future accretion to earnings per share constitute forward-looking information. Forward-looking information includes statements relating to annual targets, outlook, guidance and updates. See Assessment of the Company's Performance against Long-Term Guidance and Updated Fiscal 2017 Financial Outlook in the Company's Management's Discussion & Analysis filed for the Third Quarter Fiscal 2017 with the Canadian securities regulatory authorities, which is available on the SEDAR website at www.sedar.com.
Forward-looking information is provided for the purposes of assisting the reader in understanding the Company's financial performance, financial position, cash flows, its business, operations, prospects and risks at a point in time, and to present information about Management's current expectations and plans relating to the future and therefore the reader is cautioned that such information may not be appropriate for other purposes.
Forward-looking information is based upon a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, the risk factors discussed under "Risk Factors" in the Company's Management's discussion & Analysis filed for the Third Quarter Fiscal 2017.
Although the forward-looking information contained herein is based upon what we believe are reasonable assumptions, investors are cautioned against placing undue reliance on this information since actual results may vary from the forward-looking information. These assumptions, risks and uncertainties include, but are not limited to, the risk factors identified in and the assumptions used in preparing our updated Fiscal 2017 financial guidance found under the section "Updated Fiscal 2017 Financial Outlook" of the Company's MD&A filed for the Third Quarter Fiscal 2017 with the Canadian securities regulatory authorities, which is available on the SEDAR website at www.sedar.com.
Consequently, all of the forward-looking information contained herein is qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained herein is provided as of the date hereof, and we do not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law and the Company reserves the right to change, at any time at its sole discretion, its current practice of providing annual targets and guidance.
About Lumenpulse Group
Founded in 2006, the Lumenpulse Group designs, develops, manufactures and sells a wide range of high performance and sustainable specification-grade LED lighting solutions for commercial, institutional and urban environments. The Lumenpulse Group is a leading pure-play specification-grade LED lighting solutions provider and has earned many awards and recognitions, including several Product Innovation Awards (PIA), three Next Generation Luminaires Design Awards, two Red Dot Product Design Awards, a Lightfair Innovation Award, and an iF Design Award. The Lumenpulse Group now has 670 employees worldwide, with corporate headquarters in Montreal, Canada, and offices in Vancouver, Québec City, Boston, Paris, Florence, London and Manchester. Lumenpulse Inc., the parent company of the Lumenpulse Group, is listed on the Toronto Stock Exchange under the symbol LMP. For more information, visit www.lumenpulsegroup.com.
Contact Information:
Investor Relations
(514) 937-3003
investorrelations@lumenpulse.com
www.lumenpulsegroup.com