MISSISSAUGA, ONTARIO--(Marketwired - Jan. 31, 2017) - Pioneering Technology Corporation (TSX VENTURE:PTE) ("Pioneering" or the "Company"), a technology company and North America's leader in cooking fire prevention technologies and products, is pleased to report its audited 2016 financial results and business highlights for the year ended September 30, 2016. Pioneering's audited financial statements and MD&A are available on SEDAR (www.sedar.com).
Pioneering has now been profitable (positive net income) for each of the past six quarters, has consistently delivered positive Adjusted EBITDA (each of the last eight quarters and eleven of the last twelve quarters) and continues to grow significantly.
Highlights for the year ended September 30, 2016 include:
The Company enjoyed its best year to date, meeting all of its 2016 objectives/goals and surpassing its guidance forecast, achieving new highs in revenue, gross profit, net income and adjusted EBITDA.
Some highlights for the 2016 fiscal year include:
- Revenue of $6,644,252 (an increase of 51% versus 2015).
- Gross margins were approximately 67%.
- Net income of $1,388,962 an increase of 885% versus 2015 and EPS of $0.04.
- Adjusted EBITDA of $1,683,346 (an increase of 158% versus 2015).
- Solidified channel partnerships with the 3 largest U.S. distributors in North America.
- Completed a $1.5M private placement and $1.75M long-term loan to strengthen balance sheet.
- Delivered meaningful shareholder value - a top performer on the TSXV in 2016.
Pioneering CEO Kevin Callahan said of the results, "We accomplished everything we set out to do in 2016 and we are now well positioned for continued growth and success in 2017 and beyond. Our patented solutions are easy to understand and to date have delivered 100% efficacy. The market for our products is huge (we created it), awareness is growing and we are just in the early stages of market penetration. We believe we are just starting and have other opportunities that will enable the Company to continue to deliver further results and shareholder value."
Pioneering expects that 2017 revenue will achieve approximately 50% year over year growth on the basis of a number of factors including: its current sales pipeline; the strength of growing interest in both new and existing products; support from the U.S. fire prevention community; and Pioneering's new distribution/channel relationships. Pending industry regulatory changes and potential OEM relationships are not currently factored into anticipated revenue growth but could contribute to incremental gains for the Company.
Selected Financial Highlights for the Fiscal Years Ended September 30, 2016, 2015 & 2014
|Net Income (Loss)
|EPS Basic (Loss)
|*Includes $586,794 of stock-based compensation in FY 2016 vs $34,500 of stock-based compensation in FY 2015
|** Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures" below.
The audited 2016 results are generally consistent with the preliminary selected unaudited financial results the Company disclosed on October 19, 2016 (the "Preliminary Results"). The principal differences between the audited FY 2016 results and the Preliminary Results are:
- FY 2016 revenue was slightly lower at approximately $6.6 million versus the Preliminary Results reported due to certain rebates deducted from revenue and one order that was deemed recognizable as revenue in Q1 2017 vs 2016;
- gross margins increased to 67% versus 61%, due to a reclassification of certain expenses out of cost of goods sold and into expenses;
- net income increased to approximately $1.4 million and to earnings per share of $0.04 from net income of approximately $1.06 million and earnings per share of $0.03 reported in the Preliminary Results. These changes are due to an increase in gross margin and as a result of the income recognition of tax deferred assets which is anticipated to reduce the cash requirement on income tax expense in future periods: and;
- expenses were approximately $3.4 million or an increase of approximately $600K as reported in the Preliminary Results due to certain expenses that were reclassified out of cost of goods sold and into expenses and in stock-based compensation being higher than previously reported.
Fiscal 2016 Business Highlights
Financing and Strengthening the Balance Sheet
During the year the Company completed a $1.5 million private placement of units consisting of shares and warrants and secured a $1.75 million long-term loan agreement with Roynat Capital (a division of ScotiaBank).
These developments significantly strengthened the Company's balance sheet, enabling the Company to enter into a new banking relationship with Toronto Dominion bank that provides a $500k line of credit. This new banking relationship could also help support future growth.
Creating Shareholder Value
Beginning in late March of 2016, Pioneering began actively promoting its story to the investment community for the first time. Since then Pioneering has continued to deliver growing and profitable financial results and to tell its story resulting in it being one of the top performers in 2016 on the TSX Venture Exchange (total gain of 725% from January 1 to December 31, 2016).
New Distribution Agreements signed with Industry Leaders
In fiscal 2016, Pioneering further solidified its business partnerships with distribution partners Staples U.S. and HD Supply Canada (with whom agreements were originally established in 2015). In 2016 the Company signed another new distribution agreement with Wilmar/Interline, the largest supplier to multifamily housing in the U.S. With three of the largest B2B multi-residential, facility and institutional supply distributors in North America, Pioneering, which historically only had a handful of sales people on the ground selling its products, is now being promoted by over 600 sales people.
Sales Activities of Note
The Company sold 8,806 SmartBurner units to one of the largest suite style hotel chains in North America for use in 138 hotel properties (representing approximately 16,000 hotel units). This purchase order represented approximately 20% of the hotel chain's total North American suite style hotel property portfolio. The hotel/motel segment with fully equipped kitchens is a large, growing and a natural channel for Pioneering's cooking fire prevention solutions. Major suite style hotel chain properties (with kitchens) in North America number over 3,200 hotel properties with approximately 320,000 hotel units.
The Company's products continued to be supported by the U.S. Federal Emergency Management Agency (FEMA) Fire Prevention and Safety grant program. Large public housing authorities and universities receive these grants in order invest in fire prevention products and education. The Company continues to work with the U.S. fire prevention community to create awareness for cooking safety problems and solutions with a view to creating fire code changes and/or jurisdictional ordinances that will mandate or incent third parties to purchase Pioneering's products.
Pioneering has disrupted the multi-billion-dollar cooking appliance industry in North America. The UL standard change for electric coil stoves, which will require all electric coil stoves sold in North America to pass an oil ignition test, has been finalized and is expected to be published shortly and is scheduled to be implemented sometime in the next 18 months. The Company believes that at present, Safe-T-element and SmartBurner are the only products currently available that meet the new standard for electric coil stoves - the stove type of choice in multi-residential housing.
Multi-residential Insurance Providers Now Providing Premium Reductions. Pioneering announced that MiddleOak, an insurance carrier that operates in 33 states across the United States specializing in multifamily insurance for apartments and community associations, will provide an annual discount of 7% off the property premium to all of their policyholders who install the SmartBurner product in their properties. Pioneering is in the process of pursuing similar opportunities with insurers throughout North America.
Pioneering Exploring New Partnerships to Broaden Product Offering and Expand Overseas Reach. The Company announced a partnership with Innohome OY, the market leader in cooking fire prevention technologies and products in Europe and the first to pass new EU standards. Pioneering and Innohome entered into this partnership with the objective of generating incremental revenue and profit by enabling sales of each company's products in the other's markets while reducing duplication of effort in R&D, sales/marketing, manufacturing and logistics.
Multi-Unit Housing Expansion. The Company announced that Pennrose Properties LLC ("Pennrose") of Philadelphia had specified the installation of SmartBurner for all of its new building and redevelopment projects. The Pennrose development and management project portfolio includes close to 16,000 multi-family housing apartment units in 12 states and over 80 municipalities. Pennrose is just one of many premier real estate development and property management companies in the U.S. that Pioneering is currently working with together with its new channel partners.
Hotel/Motel Channel Validation and Expansion. In Q1 2017, Pioneering received a follow-on purchase order from its existing suite style hotel chain customer to equip an additional 159 hotel properties (representing approximately 19,000 hotel rooms) with Pioneering's SmartBurner. The new purchase order represented the second phase of major installations for this hotel chain which will now have equipped 297 of their over 700 hotel properties. This recent development/repeat hotel channel purchase validates the effectiveness of Pioneering's product and confirms its relevance in this new channel.
About Pioneering Technology Corp: Pioneering, based in Mississauga, Ontario is an "energy smart" technology company and North America's leader in innovative cooking fire prevention technologies. Pioneering engineers and brings to market energy-smart solutions for everyday consumer appliances making them safer, smarter, and more efficient. The company's patented technologies/products address a multi-billion-dollar problem - cooking fires. According to the National Fire Protection Association, stovetop cooking is the number one cause of household fire and fire injuries in North America (48% of all household fires - up from 20% in 1980). Pioneering's temperature limiting control (TLC) technology is now installed in approximately 200,000 multi-residential housing units across North America without a single cooking fire being reported and delivering a return on investment for its customers. Pioneering has proprietary cooking fire prevention solutions, including its trademarked Safe-T-element, SmartBurner, RangeMinder & Safe-T-sensor, for the majority of the more than 140 million stoves/ranges and over 140 million microwave ovens throughout North America. For more info, go to www.pioneeringtech.com.
Forward Looking Statements
The statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in Pioneering's target markets, the demand for Pioneering's products, the availability of funding and the efficacy of Pioneering's technology and governmental regulation. These forward-looking statements are made as of the date hereof an, except as required by applicable law, Pioneering does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from Pioneering's expectations and projections.
Adjusted EBITDA is a measure not recognized under Canadian generally accepted accounting principles ("GAAP"). However, management of Pioneering believes that most shareholders, creditors, other stakeholders and investment analysts prefer to have these measures included as reported measures of operating performance, a proxy for cash flow, and to facilitate valuation analysis. Adjusted EBITDA is defined as earnings before interest income, taxes, depreciation and amortization, impairment losses, stock-based compensation, restructuring costs included in general and administration expense, fair value movement - derivative liability and other non-recurring gains or losses including transaction costs related to acquisition. Management believes Adjusted EBITDA is a useful measure that facilitates period-to-period operating comparisons. Adjusted EBITDA does not have any standard meanings prescribed by GAAP and therefore may not be comparable to similar measures presented by other issuers. Readers are cautioned that Adjusted EBITDA is not an alternative to measures determined in accordance with GAAP and should not, on its own, be construed as indicators of performance, cash flow or profitability. References to the Pioneering's Adjusted EBITDA should be read in conjunction with the financial statements and management's discussion and analysis of Pioneering posted on SEDAR (www.sedar.com).
This news release contains certain forward-looking statements reflecting the Company's current views or expectations on its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly.
The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy and accuracy of this release.