Lumenpulse Reports Fourth Quarter and Fiscal Year 2016 Results and Initiates Guidance for Fiscal 2017
Lumenpulse posts record revenues of $145.1 million for Fiscal 2016 and Adjusted EBITDA of $11.1 million
Management expects revenues of $230 to $240 million for FY 2017 and an Adjusted EBITDA margin of 12% to 14%
Fiscal Year 2016 and Q4 2016 compared to the same periods last year:
- Consolidated revenues of $145.1 and $40.3 million, up respectively 44% and 30%
- Lumenpulse Product revenues of $137.1 and $38.9 million, up 55% and 37%
- US revenues of $79.9 and $21.4 million, up 76% and 38%
- Adjusted EBITDA of $11.1 million, up 207% and $1.3 million down from $1.9 million
- Fiscal 2016 Net cash flows from operating activities of $15.3 million from negative $6.4 million
- Net Cash Position of $7.8 million as of April 30, 2016
Montreal, Quebec, June 22, 2016 - Lumenpulse Inc. (TSX: LMP), a leading manufacturer of high performance, specification-grade LED lighting solutions, released today its financial results for the fourth quarter and fiscal year ended April 30, 2016.
"In Fiscal 2016, with the successful completion of our recent acquisitions, Exenia and Fluxwerx ("In-year Acquisitions"), we achieved our objective, earlier than expected, of having a product portfolio capable of reaching 80% of the addressable market in our industry. Our plan now is to execute, deliver and leverage one of the strongest product portfolios in the industry. Our focus in Fiscal 2017 will be to continue the integration of our recent acquisitions and focus on delivering on our organic growth plan '' said Francois-Xavier Souvay, President and CEO of Lumenpulse.
"We are pleased by our overall results for Fiscal 2016 with revenues reaching $145.1 million. This solid performance was fueled by high growth in North America of 76% (59% on a constant currency basis) for Lumenpulse Products, partially offset by some short-term challenges in the international market.
"For the year, Adjusted EBITDA was $11.1 million, up three-fold from $3.6 million last year. In the fourth quarter, our Adjusted Gross Margin of 46.9% compared to 50.3% in the third quarter, was unfavourably impacted by higher inventory costs primarily due to the increased volatility in the foreign exchange rate of the U.S dollar versus the Canadian dollar. Adjusted EBITDA in the fourth quarter was consequently impacted by the Adjusted Gross Margin, and also impacted by higher operating expenses, including additional headcount, our second participation within the same fiscal year at Lightfair and sales and marketing initiatives relating to the integration of our recent acquisitions, Exenia and Fluxwerx.
"With these recent acquisitions, we have significantly changed the financial outlook for the Company. With this in mind, we have decided to provide annual guidance to facilitate communication with our stakeholders, allowing them to better assess the Company's financial performance. For Fiscal 2017, we expect revenues of $230 to $240 million and anticipate an Adjusted EBITDA margin of 12% to 14%. Given the profitability model resulting from the Company's expanded product portfolio and geographic reach, we feel that revenue and Adjusted EBITDA margin are the best indicators of the Company's performance.
"In addition to our annual guidance, we remain committed to our long-term goals. Management's objectives are 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 an Adjusted EBITDA margin of approximately 18% to 20% within the next three years,'' concluded Mr. Souvay.
For Fiscal 2016, Lumenpulse recorded revenues of $145.1 million, compared to revenues of $100.7 million last year, a 44% increase (31% in constant currency). The increase was driven by Lumenpulse Products (LP) revenue growth, with a strong performance in the U.S. with year-over-year growth of 76% (55% in constant currency), primarily due to the increasing adoption of our existing lines of products, further penetration of our existing network of agents, the introduction of new products and the contribution of In-year Acquisitions. International revenues for the fiscal year contributed $36.3 million, a 14% year-over-year growth, including In-year Acquisitions and a favorable impact from foreign currency offset by an expected decrease in OMP revenues.
For the fourth quarter ended April 30, 2016, revenues increased by 30% to $40.3 million compared to $31.0 million for the corresponding period last year. This increase was mainly due to higher Lumenpulse Products revenues driven by In-year Acquisitions, the favourable impact of foreign exchange fluctuations of $1.2 million, the increased market penetration through our existing network of agents, partially offset by an expected decrease in OMP revenues.
Adjusted Gross Margin
For Fiscal 2016 and the fourth quarter, Adjusted Gross Margin increased to 48.4% from 43.4% and to 46.9% from 43.6% 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 Fiscal 2016 and the fourth quarter, Adjusted Gross Margin on Lumenpulse Products increased to 49.3% from 44.8% and to 47.1% from 44.7% respectively. The improvement was primarily due to a favourable geographical mix, manufacturing efficiencies and greater production capacity utilization, offset by the impact of our In-year Acquisitions, which partially reduced our gross margins due to different profitability.
For Fiscal 2016, Adjusted EBITDA increased to $11.1 million from $3.6 million a year ago. The increase was mainly attributable to a significant increase in Adjusted Gross Profit, partially offset by the higher level of operating expenses.
For the fourth quarter, Adjusted EBITDA decreased to $1.3 million from $1.9 million for the same period last year. The decrease was due to higher operating expenses partially offset by a higher Adjusted Gross Profit. Moreover, we saw no significant Adjusted EBITDA contribution from Fluxwerx due to the timing of this acquisition within our fourth quarter.
Adjusted Net Income1
In Fiscal 2016, Adjusted Net Income increased by $5.0 million to $7.5 million from $2.5 million for the comparable period last year. This favourable variance was mostly due to the improvement in Adjusted EBITDA partly offset by an increased depreciation and amortization.
For the fourth quarter, Adjusted Net Loss amounted to $2.3 million, an unfavorable variance of $3.2 million compared to the same period last year. The variance is explained by a lower Adjusted EBITDA combined with increased net financing costs and increased depreciation and amortization.
The Company's financial position remains solid with Net cash flows generated from operating activities of $15.3 million for Fiscal 2016 compared to $6.4 million used for the comparable period last year. In Fiscal 2016, non-cash operating items, net of acquired assets and liabilities, generated $8.1 million driven by improved working capital management. The EBITDA of $4.7 million also generated higher cash flows compared to the same period last year. The Company also has cash and cash equivalents of $21.1 million and a $40.0 million revolving credit facility of which $13.3 million was used as of April 30, 2016.
Lumenpulse has scheduled a conference call to discuss these results on Wednesday, June 22, 2016, beginning at 11:00 A.M. (EDT). This conference call will be broadcast live on the Internet at the following link: Q4 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: 21950080). The webcast will be archived at www.lumenpulse.com/en/investors/quarterly-results.
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 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, expense for share-based compensation, non-recurring expenses, expense for unrealized gains or losses on revalued cash share-based compensation and unusual tax recoveries 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, Adjusted Operating Expenses, Adjusted Selling and Marketing Expenses, Adjusted Research and Development Expenses, Adjusted General and Administrative Expenses, Adjusted Earnings (Loss) per share-basic and diluted and Constant Currency revenues 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 less unusual and non-recurring items, non-cash share-based compensation and unrealized gains or losses on revalued cash share-based compensation. Unusual and non-recurring items is defined as expenses incurred for the initial public offering ("IPO"), acquisition-related costs, including acquired profit in finished good inventory, and employee termination costs associated with an operational restructuring. Unrealized gains or losses on revalued cash share-based compensation is defined as gains or losses on revalued cash share-based compensation which has been expensed and is 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 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, unusual tax recoveries, unusual and non-recurring deferred income tax asset recognition, non-cash share-based compensation, unrealized gains or losses on revalued cash share-based compensation and amortization of acquired intangible assets. Unusual tax recoveries is defined as temporary differences between the carrying amounts of assets and liabilities acquired through business acquisitions and the corresponding tax basis used in the computation of taxable profit. Unusual and non-recurring deferred tax asset recognition is defined as the deferred income tax asset recognized by assessing the measurement and recoverability of operating tax losses when considering the impact of the recent acquisitions on future forecasted profitability.
Adjusted Gross Profit is defined as gross profit less non-cash share-based compensation, unusual and non-recurring items, 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.
Constant Currency revenue is a measure of revenue before foreign exchange impacts. The revenue is calculated by translating current period results in local currency using the conversion rates of the comparable period of the prior year. Management believes that it is helpful to adjust revenue to exclude the impact of currency fluctuations to facilitate period-to-period comparisons of our performance.
For a reconciliation of Non-IFRS Measures and for a reconciliation of the Constant Currency revenues, please refer respectively to sections 2.2.1 and 2.3.1 of the Management's Discussion & Analysis for the Fourth Quarter Fiscal 2016 filed with the Canadian securities regulatory authorities, which is available on the SEDAR website at www.sedar.com.
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 "Financial Outlook" in the Company's Management's Discussion & Analysis filed for the Fourth Quarter Fiscal 2016.
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 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 "Financial Outlook" of the Company's Management's Discussion & Analysis filed for the Fourth Quarter Fiscal 2016 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 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 587 employees worldwide, with corporate headquarters in Montreal, Canada, and offices in Vancouver, Québec City, Boston, Paris, Florence, London and Manchester. Lumenpulse is listed on the Toronto Stock Exchange under the symbol LMP.
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 Please refer to the table in the Financial Highlights above for IFRS measures and to the Non-IFRS measures section at the end of this press release.