Lumenpulse Inc.
TSX : LMP

Lumenpulse Inc.

December 11, 2014 07:00 ET

Lumenpulse Reports Second Quarter Results for Fiscal 2015

Q2 Lumenpulse Product Revenues Increased 89% and Adjusted EBITDA Reached $1.4 million

- Revenues of $25.6 million for Q2 2015; up 68% over last year, including Lumenpulse Product revenues up 89%

- Solid Q2 Adjusted Gross Profit margin on Lumenpulse Products of 46% compared to 44% in Q2 Fiscal 2014

- Q2 Adjusted EBITDA of $1.4 million compared to $0.2 million in Q2 Fiscal 2014

- Q2 Adjusted Net Income of $0.6 million compared to an Adjusted Net Loss of $0.9 million in Q2 Fiscal 2014

- Q2 positive cash flow from operations of $1.3 million

MONTREAL, QUÉBEC--(Marketwired - Dec. 11, 2014) - 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, 2014.

"For the second quarter, we reported solid financial results and have mitigated all the risks related to the manufacturing and supply chain issues encountered during the first quarter. Through various measures implemented in recent months, we have solidified our manufacturing capabilities to meet future demand for our growing portfolio of products.

Lumenpulse Product revenues grew by 89% over last year with international revenues reaching a record level and representing 35% of our total revenues for the second quarter. Our revenues of $25.6 million for the second quarter bring us at a run rate of over $100 million on an annualized basis. Finally, our Adjusted EBITDA of $1.4 million was the highest level reached in the Company's short history and clearly a step towards our profitability goals.

We are very pleased with the integration process of AlphaLED and its second quarter revenue contribution of $6.5 million, exceeding anticipated annualized revenues of between $21 and $24 million. The next key milestone will be the launch of AlphaLED products in North America late in the third quarter with deliveries starting in the fourth quarter of Fiscal 2015.

The solid consolidated revenue growth achieved in the first half of 2015 is a clear indication of our ability to execute our strategy on a global scale and continue to deliver above-industry growth," said François-Xavier Souvay, President and CEO.

"This quarter, the Company generated positive operating cash flow of $1.3 million and was free cash flow neutral. Additionally, the Company reached profitability for the first time in its history with a Net Income of $0.4 million (Adjusted Net Income of $0.6 million). These achievements are positive indicators that we are heading in the right direction," said Robert Comeau, Executive Vice President and CFO.

"Our objectives remain to continue growing Lumenpulse's business at a growth rate exceeding the growth rate in the general lighting market for LED products and, over time, converging towards market growth, and to reach Adjusted Gross Profit margin approaching 50% and Adjusted EBITDA margin of approximately 18% to 20% within the next five years," concluded Mr. Souvay.

Financial Highlights

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

For the Second Quarters and Six-Month Periods ended October 31, 2014 and 2013
Q2 2015 Q2 2014 Change YTD 2015 YTD 2014 Change
Revenues - Consolidated 25.6 15.3 10.3 44.2 28.0 16.2
Growth 68 % 58 %
Revenues - Lumenpulse products (LP) 21.9 11.6 10.3 37.4 21.2 16.2
Growth 89 % 77 %
Adjusted Gross Profit % - Consolidated (1) 44 % 42 % 2 pts 43 % 41 % 2 pts
Adjusted Gross Profit % - LP (1) 46 % 44 % 2 pts 45 % 43 % 2 pts
Adjusted EBITDA (1) 1.4 0.2 1.2 0.4 (0.5 ) 0.9
Net Income (loss) 0.4 (1.3 ) 1.7 (1.9 ) (6.9 ) 5.0
Adjusted Net Income (loss) (1) 0.6 (0.9 ) 1.5 (0.8 ) (2.8 ) 2.0
Ajusted EPS (loss per share) - Basic (1), (2) 0.03 (0.08 ) 0.11 (0.03 ) (0.25 ) 0.22
(1) See the Non-IFRS financial measures section
(2) Per share amounts reflects retroactively the 8.4 to 1 consolidation of the common shares, that occurred in the fourh quarter of Fiscal 2014. Preceding the IPO, redeemable shares at the option of the holders were not included in the loss per share calculation.

Revenues

For its second quarter of Fiscal 2015 ended October 31 2014, Lumenpulse revenues increased by $10.3 million, or 68%, to $25.6 million compared with $15.3 million for the corresponding period last year. This increase is primarily due to the increase of the Lumenpulse Products segment which achieved significant year-over-year growth of 89% with revenues of $21.9 million from $11.6 million for the same period last year. For the six- month period, Lumenpulse recorded revenues of $44.2 million, representing an increase of 58% compared to revenues of $28.0 million for the same period last year.

For both periods, the increase in revenues was mainly attributable to the solid growth from our Lumenpulse Products segment which was fueled by the acquisition of AlphaLED, the introduction of new products, and by further penetration of the North America and international network of agents and VARs.

International revenues were an important and increasingly large contributor to the second quarter and six-month period representing 35% and 31% of total revenues, respectively.

Adjusted Gross Profit margin

For the second quarter and the six-month period ended October 31, 2014, the consolidated Adjusted Gross Profit margin increased to 44% from 42% and to 43% from 41%, respectively. For both periods, the increases were primarily related to the larger proportion of revenues derived from higher margin Lumenpulse Products and also from continued margin improvements in this product segment.

For the quarter and the six-month period ended October 31, 2014, the Adjusted Gross Profit margin on Lumenpulse Products increased to 46% from 44% and to 45% from 43%, respectively. The progress in Lumenpulse Products margin reflects the impact of manufacturing efficiency improvements and higher capacity utilization. This upward trend supports our mid-term objective of reaching Lumenpulse Products Adjusted Gross Profit margin in the range of 50%.

For the second quarter, when excluding AlphaLED, the Lumenpulse Products Adjusted Gross Profit margin rose to 48% from 44% last year. Adjusted Gross Profit margin for AlphaLED reached 41% from 29% in the first quarter reflecting the benefits of cost reduction initiatives, among other things.

Adjusted EBITDA

For the second quarter, Adjusted EBITDA increased to $1.4 million from $0.2 million for the same period last year. For the six-month period, Adjusted EBITDA increased to $0.4 million from a negative $0.5 million for the same period last year. For both periods, the increases in Adjusted EBITDA are mainly attributable to increased revenues, higher gross margins partially offset by the higher level of operating expenses to support growth and the requirements of a public company.

Adjusted Net Income (Net Loss)

For the second quarter, Adjusted Net Income increased to $0.6 million from a $0.9 million loss for the same period last year. The improvement is mainly attributable to higher Adjusted EBITDA, as described above. For the six-month period, Adjusted Net Loss decreased to $0.8 million from a $2.8 million loss for the same period last year. The Adjusted Net Loss decrease was primarily due to improved Adjusted EBITDA and also to a favorable variance in net financing costs.

Cash Flow

For the second quarter, the Company generated $1.3 million of cash flow from operations compared to a use of cash of $1.0 million for the same period last year. For the six-month period, cash flow from operations used was $4.0 million compared to $4.3 million for the same period last year.

Conference Call

Lumenpulse has scheduled a conference call to discuss these results on Thursday, December 11, 2014, beginning at 11:00 A.M. (EST). This conference call will be broadcast live on the Internet at the following link: Q2 2015 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: 32063237). 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 those 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 and Adjusted General and Administrative Expenses 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 interest and other financing 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") and acquisition-related 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, and non- cash share-based compensation. 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.

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 and Analysis for the Second Quarter Fiscal 2015 filed with the Canadian securities regulatory authorities, which is available at www.lumenpulse.com and 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.

Additional information about the Company, including our 2014 Annual Information Form, is available on 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 365 employees worldwide, with corporate headquarters in Montreal, Canada, and offices in Boston, Paris, London and Manchester. Lumenpulse is listed on the Toronto Stock Exchange under the symbol LMP.

Additional information about Lumenpulse, including its 2014 Annual Information Form, is available at www.lumenpulse.com and on the SEDAR website at www.sedar.com.

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