Lumenpulse Inc.
TSX : LMP

Lumenpulse Inc.

December 10, 2015 06:45 ET

Lumenpulse Reports Second Quarter of Fiscal 2016 Results

Q2 Lumenpulse Products revenue growth at 60% over Q2 Fiscal 2015; Q2 Adjusted EBITDA reaching $4.2 million, or 11.1%

MONTREAL, QUEBEC--(Marketwired - Dec. 10, 2015) - Lumenpulse Inc. (TSX:LMP)

  • Total revenues of $37.4 million for Q2 Fiscal 2016, including $35.1 million of Lumenpulse Products Revenues

  • Strong growth in North America with revenue up 105% in Q2 Fiscal 2016 over Q2 Fiscal 2015

  • Q2 Adjusted Consolidated Gross Margin at 49.5%, a 5.5 percentage point increase over Q2 Fiscal 2015. Q2 Adjusted Lumenpulse Products Gross Margin at 50.7% compared to 45.6% for the same period last year

  • Q2 Adjusted EBITDA increased to $4.2 million, or 11.1% of revenues, an improvement of 5.7 percentage points compared to Q2 Fiscal 2015

  • Q2 Adjusted Net Income of $2.8 million compared to $0.6 million for the same period last year

  • Q2 Adjusted diluted EPS of $0.11 compared to $0.03 for the same period last year

  • Record Q2 operating cash flow of $5.1 million and a strong financial position with cash and cash equivalents of $48.7 million

Lumenpulse Inc. (TSX:LMP), a leading manufacturer of high performance, specification-grade LED lighting solutions, released today its financial results for the second quarter and six-month period ended October 31, 2015.

"We are very pleased to report an outstanding quarter with record revenues, gross margin, EBITDA, and net income. Q2 Fiscal 2016 and year-to-date results clearly validate our long-term business model," said François-Xavier Souvay, the Company's President and CEO.

"Lumenpulse Products revenues grew in Q2 by 60% compared to last year with a very significant contribution from North America which grew 105%. Our top-line growth remains well above the industry growth rate.

Q2 Lumenpulse Products Adjusted Gross Margin reached 50.7%, a 5 percentage point increase over the same period last year benefiting from the favourable impact of our infrastructure investments and our productivity initiatives. Adjusted EBITDA was $4.2 million or 11.1% of total revenues, reaching a double digit margin for the first time in our history, and clearly confirming our ability to leverage the capacity of our existing organization," added Mr. Souvay.

"Cash flows from operating activities reached $5.1 million allowing us to begin the third quarter with a solid balance sheet, including $48.7 million in cash, providing us with the financial flexibility to execute on our disciplined acquisition strategy," stated Robert Comeau, Chief Financial Officer.

"Our objectives remain to continue growing Lumenpulse's business at a rate that exceeds the growth rate in the general lighting market for LED products, and, within the next four years, to converge towards market growth, to maintain an Adjusted Gross Margins of approximately 50% and ultimately to deliver Adjusted EBITDA margins of approximately 18% to 20%.

Financial Highlights

(Unaudited, in millions of Canadian dollars, except per share amounts)

For the second quarters and the six-month periods ended October 31, 2015 and 2014
Q2 2016 Q2 2015 ChangeYTD 2016 YTD 2015 Change
Revenues - Consolidated37.4 25.6 11.869.3 44.2 25.1
Growth46% 57%
Revenues - Lumenpulse products (LP)35.1 21.9 13.264.3 37.4 26.9
Growth60% 72%
Adjusted Gross Profit % - Consolidated149%44%5 pts49%43%6 pts
Gross Profit % - Consolidated49%44%5 pts48%43%5 pts
Adjusted Gross Profit % - LP151%46%5 pts50%45%5 pts
Gross Profit % - LP50%45%5 pts49%44%5 pts
Adjusted EBITDA14.2 1.4 2.86.2 0.4 5.8
EBITDA14.0 1.1 2.94.8 (0.8)5.6
Adjusted Net Income12.8 0.6 2.25.1 (0.8)5.9
Net Income (Loss)2.6 0.4 2.24.0 (1.9)5.9
Adjusted EPS (Loss per Share) - Diluted1,20.11 0.03 0.080.20 (0.03)0.23
EPS (Loss per Share) - Diluted20.10 0.02 0.080.16 (0.08)0.24
1 See the Non-IFRS financial measures section below.
2 The calculations for the second quarter and the six-month period ended October 31, 2015 include the effect of 1,137,255 and 1,281,474 stock options, respectively, which are deemed to be dilutive. 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.

Revenues

For the second quarter of Fiscal 2016, revenues increased by $11.8 million, or 46%, to $37.4 million compared to $25.6 million for the corresponding period last year. This increase is driven by the organic revenue growth of the Lumenpulse Products segment, which achieved significant year-over-year growth of 60% with revenues of $35.1 million from $21.9 million for the same period last year. For the six-month period, Lumenpulse recorded revenues of $69.3 million, representing an increase of 57% compared to revenues of $44.2 million for the same period last year, primarily due to the organic revenue growth of Lumenpulse Products.

The Lumenpulse Products growth was fueled by a strong performance in the U.S. with year-over-year quarter growth of 117% and six-month growth of 99%. For both periods, the increase is primarily due to the greater market adoption of our existing lines of products, the introduction of new products complementing our existing product portfolio, increased market penetration through our agent networks and the net favourable foreign exchange impact.

International revenues were down slightly when compared to the same quarter last year, driven in part by a decrease in Other Manufacturers' Product revenue. International revenues remained an important contributor to the second quarter and six-month period representing 21% and 23% of total revenues, respectively.

Adjusted Gross Margin1

For the second quarter and the six-month period ended October 31, 2015, the Adjusted Gross Margin increased to 49.5% from 44.0% and to 48.5% from 43.1% respectively. For both periods, the increases were primarily related to the greater proportion of Lumenpulse Products, which generated a higher and improved gross margin.

For the second quarter and the six-month period of Fiscal 2016, the Adjusted Gross Margin on Lumenpulse Products increased to 50.7% from 45.6% and to 49.8% from 44.7% respectively. The improvement was primarily due to manufacturing efficiencies and greater production capacity utilization, cost reduction initiatives, and a favourable product mix.

Adjusted EBITDA1

For the second quarter of Fiscal 2016, Adjusted EBITDA increased to $4.2 million from $1.4 million for the same period last year. For the six-month period, Adjusted EBITDA increased to $6.2 million from $0.4 million a year ago. For both periods, the increases were mainly attributable to improved gross profits partially offset by the higher level of operating expenses. As operating expenses decreased in percentage of revenues, Adjusted EBITDA has benefitted from the improvement in operating leverage.

Adjusted Net Income1

For the second quarter of Fiscal 2016, the Adjusted Net Income increased to $2.8 million, or $0.11 per diluted share, from $0.6 million, or $0.03 per diluted share, for the corresponding period last year. The improvement was primarily due to the improved Adjusted EBITDA, slightly offset by higher depreciation and amortization, and a foreign exchange loss, included in the net financing costs. Adjusted Net Income for the six-month period increased to $5.1 million, or $0.20 per diluted share, compared to an Adjusted Net Loss of $0.8 million, or a loss of $0.03 per diluted share a year ago. This favourable variance was primarily due to the improved Adjusted EBITDA and a foreign exchange gain included in the net financing income, partially offset by the increase in depreciation and amortization.

Financial Position

The Company's financial position remains solid. With cash flow from operations of $5.1 million in the second quarter, driven mainly by improved EBITDA and reduction in inventory levels, the Company's cash and cash equivalents reached $48.7 million as of October 31, 2015.

1 Please refer to the table in the Financial Highlights section above for IFRS measures and to the Non-IFRS Measures section at the end of this press release.

Conference Call

Lumenpulse has scheduled a conference call to discuss these results on Thursday, December 10, 2015, beginning at 11:00 A.M. (ET). This conference call will be broadcast live on the Internet at the following link: Q2 2016 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: 84071444). 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 non-IFRS 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 our results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.

We use non-IFRS measures including EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Gross Profit, Adjusted Operating Expenses, Adjusted Selling and Marketing Expenses, Adjusted Research and Development Expenses, Adjusted General and Administrative Expenses 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, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA less unusual and non-recurring items, and non-cash share-based compensation. Unusual and non-recurring items is defined as expenses incurred for the initial public offering ("IPO"), acquisition-related costs and restructuring costs. Adjusted Net Income (Loss) is defined as net income (loss) before net change in carrying value of the redeemable shares at the option of the holders and related financial derivative liability, early repayment fee on long-term debt, unusual and non-recurring items net of taxes, unusual and non-recurring tax recoveries and non-cash share-based compensation. Unusual and non-recurring tax recoveries is defined as income tax recoveries resulting from estimated values of acquired assets and liabilities. Adjusted Gross Profit is defined as gross profit before non-cash share-based compensation, and depreciation and amortization. Adjusted Operating Expenses is defined as operating expenses less non-cash share-based compensation, depreciation and amortization, and unusual and non-recurring items.

Adjusted Selling and Marketing Expenses is defined as selling and marketing expenses less non-cash share-based compensation, and depreciation and amortization. Adjusted Research and Development Expenses is defined as research and development expenses less non-cash share-based compensation, and depreciation and amortization. Adjusted General and Administrative Expenses is defined as general and administrative expenses less non-cash share-based compensation, depreciation and amortization, and unusual and non-recurring items. 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 a reconciliation of net income (loss) to EBITDA, Adjusted EBITDA and Adjusted Net Income (Loss), a reconciliation of gross profit to Adjusted Gross Profit, a reconciliation of operating expenses to Adjusted Operating Expenses, a reconciliation of selling and marketing expenses to Adjusted Selling and Marketing Expenses, a reconciliation of research and development expenses to Adjusted Research and Development Expenses and a reconciliation of general and administrative expenses to Adjusted General and Administrative Expenses please refer to "Reconciliation of Non-IFRS Measures" in the Company's Management's Discussion & Analysis for the Second Quarter Fiscal 2016 filed with the Canadian securities regulatory authorities, which is available on the SEDAR website at www.sedar.com.

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", "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. 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 identified in the Company's annual information form filed with the Canadian securities regulatory authorities, which is available on the SEDAR website at www.sedar.com. There can be no assurance that such information will prove to be accurate, and readers are cautioned not to place undue reliance on this forward-looking information. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Company's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to help investors measure progress towards management's objectives and the reader is cautioned that such statements may not be appropriate for other purposes. Unless otherwise noted, 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.

To obtain the complete unaudited interim condensed consolidated financial statements, Management's Discussion & Analysis and additional information about the Company, including our 2015 Annual Information Form, please consult our website at www.lumenpulse.com and on the SEDAR website at www.sedar.com.

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, a Red Dot Product Design Award and a Lightfair Innovation Award. Lumenpulse has more than 451 employees worldwide, with corporate headquarters in Montreal, Canada, and offices in Québec City, Boston, Paris, London and Manchester. Lumenpulse is listed on the Toronto Stock Exchange under the symbol LMP.

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