Lumenpulse Inc.
TSX : LMP

Lumenpulse Inc.

September 08, 2016 06:45 ET

Lumenpulse Reports First Quarter of Fiscal 2017 Results

- Total revenues of $45.3 million for Q1 Fiscal 2017; up 42% over Q1 Fiscal 2016

- Fluxwerx and Exenia product portfolios delivered organic growth of 54% versus the same period last year

- Solid Q1 Gross Margin at 47.6% and Adjusted Gross Margin(1) at 49.1%

- Operating income at $0.1 million, up from operating loss of $0.3 million

- Q1 Adjusted EBITDA(1) of $4.1 million, or 9.0% of revenues, up 2.8 points

- Q1 Net loss per diluted share of $0.01 and Adjusted diluted EPS(1) of $0.10

- Q1 Fiscal 2017 Net cash flows from operating activities of $2.5 million, up from negative $1.0 million

MONTREAL, QUEBEC--(Marketwired - Sept. 8, 2016) - Lumenpulse Inc. (TSX:LMP), a leading manufacturer of high performance, specification-grade LED lighting solutions, released today its first quarter of Fiscal 2017 results for the period ended July 31, 2016.

"Our solid first quarter growth rate of 42% reflects the integration of our Fiscal 2016 acquired product portfolios, and confirms our expectations for the indoor applications we now provide solutions for. Fluxwerx was a significant revenue contributor for North America this quarter despite a longer than expected phase-in of an upgraded View product. Our Exenia product lines performed above expectations with strong sales in Europe and growing traction in the U.K." said Francois-Xavier Souvay, President and CEO of Lumenpulse.

"While quarterly performance is not an indicator of expected annual performance, the United States market has not performed to the level of our expectations in this first quarter. In addition, Canada was impacted by a customer that temporarily postponed an important shipment in the Montreal area. However, with Fluxwerx's phase-in complete and our focus on leveraging our expanded product portfolio, we are ready to capitalize on future opportunities. The International segment performed in line with expectations as our U.K. sales force works on building a stronger foundation and presence in that market.

"With our recent M&A activities now complete, our focus is squarely on driving our organic growth. As we enter our second quarter of Fiscal 2017, we look to building on the momentum of our acquired portfolios and the launch of several new products that will further fuel our growth.

"We are satisfied with our Adjusted EBITDA performance at 9.0%, up about 3 points from last year, as a result of increased revenues and improved gross margins. We remain focused on integrating our product portfolios, executing on our product development roadmap, and increasing operational leverage to drive profitability. We are therefore reaffirming our long-term guidance for revenues and Adjusted EBITDA and our Fiscal 2017 Financial Outlook," concluded Mr. Souvay.

Financial Highlights

For the first quarters ended July 31, 2016 and 2015
Q1 2017 Q1 2016 Change
Revenues - Consolidated 45.3 31.9 13.4
Growth 42 %
Gross Profit % 48 % 47 % 1 pts
Adjusted Gross Profit %1 49 % 47 % 2 pts
Operating Income (Loss) 0.1 (0.3 ) 0.4
EBITDA 3.1 0.9 2.2
Adjusted EBITDA1 4.1 2.0 2.1
Adjusted EBITDA %1 9 % 6 % 3 pts
Net Income (Loss) (0.3 ) 1.5 (1.8 )
Adjusted Net Income1 2.7 2.6 0.1
EPS (Loss per Share) - Diluted2 (0.01 ) 0.06 (0.07 )
Adjusted EPS - Diluted1,2 0.10 0.10 -
1 See the Non-IFRS financial measures section below.
2 The calculations for the Adjusted Earning per share for the first quarters of Fiscal 2017 and Fiscal 2016 include the effect of 1,153,581 and 1,408,293 stock options respectively, which are deemed to be dilutive.

Revenues

For its first quarter ended July 31, 2016, Lumenpulse revenues increased by $13.4 million, or 42%, to $45.3 million compared with $31.9 million for the corresponding period last year. This increase was mainly driven by the contribution of product portfolios obtained through Fiscal 2016 acquisitions. International revenues continued to be an important contributor to the first quarter performance representing 29% of consolidated revenues.

Gross Margin and Adjusted Gross Margin

For the first quarter ended July 31, 2016, the Gross Margin increased to 47.6% from 46.5% for the same period last year. The increase was primarily due to manufacturing efficiencies which were partly offset by an unfavourable foreign exchange impact mainly related to the strengthening of the U.S. dollar against the Canadian dollar. Gross margin was also impacted by the lower margin contribution of Fiscal 2016 acquisitions, which follow a different profitability model, as well as a negative impact due to acquired profit in finished goods inventory related to the acquisition of Exenia. For the first quarter ended July 31, 2016, the Adjusted Gross Margin increased to 49.1% from 47.1% for the same period last year.

Operating (Loss) Income and Adjusted EBITDA

Operating income increased to $0.1 million from an operating loss of $0.3 million for the comparable period last year. The increase is the result of higher gross profit driven by higher revenues and improved gross margin partly offset by higher operating expenses. When excluding Fiscal 2016 acquisitions, the Company achieved $0.4 million in operating income for the first quarter of Fiscal 2017.

Adjusted EBITDA increased to $4.1 million from $2.0 million when compared to the same period last year. The increase was due to a higher Adjusted Gross Profit partially offset by higher operating expenses. As a percentage of revenues, Adjusted EBITDA increased to 9.0% compared to 6.2% for the comparable period last year.

Net (Loss) Income and Adjusted Net Income1

For the first quarter of Fiscal 2017, the Company recorded a net loss of $0.3 million compared to a net income of $1.5 million for the comparable period last year. The variance is explained by an increase in net financing costs that was partly offset by an increase in operating income. Adjusted Net Income increased to $2.7 million for the first quarter of Fiscal 2017 from $2.6 million for the same period last year. The variance is explained by a higher Adjusted EBITDA partly offset by increased net financing costs and increased depreciation and amortization.

1 Adjusted measures and EBITDA are non-IFRS financial measures used to provide management, investors and analysts with additional measures to evaluate and analyze the Company's results. These non-IFRS financial measures do not have standard meanings prescribed by IFRS and are not directly comparable to similar measures used by other companies. Please refer to our definitions and reconciliations of these non-IFRS financial measures, to measures prescribed by IFRS, at the end of this document.

Financial Position

The Company's financial position remains solid with Net cash flows generated from operating activities of $2.5 million for the first quarter of Fiscal 2017 compared to $1.0 million used for the comparable period last year. The improvement of $3.5 million was mostly due a positive variation of non-cash operating items and an improved EBITDA. The Company also had, as at July 31, 2016, cash and cash equivalents of $14.1 million and a $40.0 million revolving credit facility of which $5.0 million was used as at July 31, 2016.

Conference Call

Lumenpulse has scheduled a conference call to discuss these results on Thursday, September 8, 2016, beginning at 11:00 A.M. (ET). This conference call will be broadcast live on the Internet at the following link: Q1 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: 64210956). The webcast will be archived at www.lumenpulse.com/en/investors/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 acquisitions, acquired profit on finished goods inventory, change in fair value of contingent consideration, non-cash share-based compensation, relocation expenses, employee termination costs, expenses for unrealized gains or losses on revalued cash share-based compensation and unusual deferred income tax asset recognition have been recognized in prior periods and could reoccur in future periods, Management excludes these charges 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 EBITDA, 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.

EBITDA is defined as earnings before net financing (income) costs, income taxes (recovery), and depreciation and amortization. Adjusted EBITDA is defined as EBITDA before employee termination costs, professional fees related to 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 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 asset recognition, change in fair value of contingent consideration and additional depreciation expense on leasehold improvements caused by the reassessment of their useful life as a result of the upcoming relocation of the Montreal facility, net of taxes. Unusual deferred tax asset recognition is defined as the deferred income tax asset recognized by assessing the measurement and recoverability of operating tax losses. 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 Illuminations 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.

Adjusted Loss per share - diluted is defined as the Adjusted Net Loss on the weighted average number of ordinary shares outstanding during the period. In the periods where the Company incurred net losses, all potentially dilutive stock options have been excluded from the calculation of diluted loss per share. All outstanding share options could potentially dilute earnings per share in the future.

For additional information on Non-IFRS measures please see the Management's Discussion & Analysis for the First Quarter Fiscal 2017 filed with the Canadian securities regulatory authorities, which is available on the SEDAR website at www.sedar.com.

Reconciliation of Non-IFRS measures

First Quarters Ended July 31
2016 2015
(in thousands of Canadian dollars)
Net (Loss) Income (294 ) 1,457
% of revenues (0.6 )% 4.6 %
Net financing costs (income) 390 (1,514 )
Income tax expense (recovery) 50 (195 )
Depreciation and amortization 2,943 1,132
EBITDA 3,089 880
% of revenues 6.8 % 2.8 %
Relocation expenses(1) 238 -
Employee termination costs - 877
Professional fees related to acquisitions(2) 17 -
Acquired profit on finished goods inventory(3) 219 -
Non-cash share-based compensation 492 254
Unrealized gains or losses on revalued cash share-based compensation 16 (12 )
Adjusted EBITDA 4,071 1,999
% of revenues 9.0 % 6.2 %
Depreciation and amortization (2,943 ) (1,132 )
Net financing (costs) income (390 ) 1,514
Change in fair value of contingent consideration(4) 826 -
Amortization of acquired intangible assets 1,549 262
Depreciation on leasehold improvement(5) 181 -
Income tax (expense) recovery (50 ) 195
Unusual deferred income tax asset recognition(6) - (277 )
Tax effect of normalization adjustments(7) (520 ) -
Adjusted Net Income 2,724 2,561
% of revenues 6.0 % 8.0 %
Gross Profit 21,556 14,811
Gross margin % 47.6 % 46.5 %
Non-cash share-based compensation 58 12
Acquired profit on finished goods inventory(3) 219 -
Unrealized gains or losses on revalued cash share-based compensation 1 -
Depreciation and amortization 415 201
Adjusted Gross Profit 22,249 15,024
Adjusted Gross margin % 49.1 % 47.1 %
(1) Relocation expenses related to the Montreal facility.
(2) Professional fees related to the acquisitions of Fluxwerx and Exenia.
(3) Acquired profit on finished goods inventory related to Exenia.
(4) Change in fair value of contingent consideration due to accretion expense.
(5) Additional depreciation expense on leasehold improvements caused by the reassessment of their useful life as a result of the upcoming relocation of the Montreal facility.
(6) Certain Fiscal 2016 comparative figures have been reclassified to be aligned with the Fiscal 2017 definitions.
(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 "Fiscal 2017 Financial Outlook" in the Company's Management's Discussion & Analysis filed for the First 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 First 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 Fiscal 2017 financial guidance found under the section "Fiscal 2017 Financial Outlook" of the Company's Management's Discussion & Analysis filed for the First 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 Inc.

Founded in 2006, Lumenpulse designs, develops, manufactures and sells a wide range of high performance and sustainable specification-grade LED lighting solutions for commercial, institutional and urban environments. Lumenpulse 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 and a Lightfair Innovation Award. Lumenpulse now has 605 employees worldwide, with corporate headquarters in Montreal, Canada, and offices in Vancouver, Quebec City, Boston, Paris, Florence, London and Manchester. Lumenpulse is listed on the Toronto Stock Exchange under the symbol LMP.

Contact Information