VANCOUVER, British Columbia, Feb. 27, 2020 (GLOBE NEWSWIRE) -- Legend Power® Systems Inc. (TSX.V: LPS) (“Legend Power” or the “Company”), a global leader in onsite energy management technology, today reported its Q1 fiscal 2020 financial results for the three months ended December 31, 2019. A conference call to discuss the results is set for 10:00am EST today (dial in details below). A complete set of Financial Statements and Management’s Discussion & Analysis has been filed at www.sedar.com. All dollar figures are quoted in Canadian dollars.

Financial Highlights for the three months ending December 31, 2019

  • Revenue of $1.0 million, a 149% year-over-year increase from $0.4 million reported in Q1 2019;
  • Gross margin of 21% down from 81% in the quarter a year-ago, due to anticipated higher installation costs with our first several deals in New York City;
  • Adjusted EBITDA loss of $1.3 million versus $1.0 million loss in Q1 2019;
  • Net loss of $1.5 million versus the $1.1 million loss in Q1 2019;
  • Cash of $4.2 million, no debt, and $6.4 million of working capital at December 31, 2019.

Management Commentary
“During the first quarter of 2020, 64% of revenues came from the U.S. with the remaining 36% from Canada,” said CEO Randy Buchamer. “This is evidence that we’ve overcome many of the challenges we faced selling into the U.S. market. We accomplished this in part by introducing SmartGATE Insights™ into our market in November, shifting our strategy from selling a product to selling an onsite energy management platform for commercial building portfolios. As a metering and data analytics solution, SmartGATE Insights™ provides building owners with visibility into their buildings’ power quality metrics. Customers and prospects have been very receptive to Insights, and initial interest suggests that we could see shortened sales cycles for our flagship SmartGATE™ units. Legend’s balance sheet remains strong, giving us the ability to drive platform adoption, which is anticipated to accelerate in the second half of the year.”

Financial summary for the three months ended December 31, 2019 and 2018.

 Three months ended December 31,
(Cdn$, unless noted otherwise)20192018Change
Revenue1,003,329403,400149%
Cost of sales789,22976,832927%
Gross margin1214,100326,568(34)%
Gross margin %121%81%(60)%
Operating expenses(1,620,431)(1,484,843)9%
Adjusted EBITDA2(1,325,161)(1,048,352)(26)%
Net loss(1,482,198)(1,091,332)36%

1 Gross margin is based on a blend of both equipment and installation revenue.
2 Adjusted EBITDA is a non-IFRS financial measure. See EBDITA Reconciliation for details.

Revenue for the first quarter of 2020 was $1,003,329, a 149% increase from $403,400 in the first quarter of fiscal 2019. The increase is primarily due to a large number of installations reaching substantial completion during the three months ended December 31, 2019 and a comparatively low amount of revenue recognized in the same period of the prior year.

Gross margin in the first quarter of fiscal 2020 was 21%, down from 81% in the first quarter of fiscal 2019. The Company’s long-term average gross margin has been approximately 45%. The significantly lower gross margins experienced in the first quarter of 2020 were due primarily to two projects completed for an early adopter, marquee, New York City customer. Early projects in new regions typically involve higher overall install costs, in particular electrical contractor costs due to a significant learning curve in understanding the nuances of installing a new and unfamiliar technology. The lower margin is also due to a disproportionate amount of total revenue derived from installation services (89%), which has historically yielded lower gross margins. The gross margin achieved in Q1 of fiscal 2019 was significantly above the Company’s long-term average due to an inventory valuation adjustment which impacted cost of goods sold during the period.

Adjusted EBITDA for the first quarter of fiscal 2020 decreased by 26% to negative $1,325,161 from negative $1,048,352 in the first quarter of fiscal 2019. The decrease in EBITDA is due primarily to lower gross margin and higher operating costs incurred during Q1 of fiscal 2020.

Net loss for the first quarter of fiscal 2020 was $1,482,198, an increase of 36% from the $1,091,332 loss reported in the first quarter of 2019. In spite of significantly higher revenue in Q1 of fiscal 2020, the combination of lower gross margin, higher operating costs and an inventory write-down caused the increase in net loss compared with the same quarter in fiscal 2019. 

The Company’s operating expenses for the quarter ended December 31, 2020 were $1,620,431, up from $1,484,433 in the same period of 2019. The increase of $135,998 is due primarily to higher salaries and consulting fees, professional fees and foreign exchange loss offset by lower general and overhead and selling costs.

CONFERENCE CALL DETAILS:

The Company has scheduled a conference call to provide a business update and discuss its first quarter of fiscal 2020 financial results on Thursday, February 27, 2020 at 10:00AM EST (7:00AM PST). The call will be hosted by Randy Buchamer, President & Chief Executive Officer and Steve Vanry, Chief Financial Officer. 

DATE:Thursday, February 27, 2020
  
TIME:10:00AM EST (7:00AM PST)
  
DIAL-IN NUMBER:North America Toll Free Dial-in Number (877) 201-0168
 International Dial-in Number – (647) 788-4901
  
CONFERENCE ID:2062007
  
REPLAY:Available at: www.legendpower.com

About Legend Power® Systems Inc.

Legend Power® Systems Inc. (www.legendpower.com) is a global leader in onsite energy management technology. They help buildings to overcome grid volatility challenges common to utilities around the world. Legend’s industry-proven SmartGATE™ enables dynamic power management of an entire building. The proprietary and patented system reduces total energy consumption and power costs, while also maximizing the life of electrical equipment. Legend Power’s unique solution is also a key contributor to both corporate sustainability efforts and the meeting of utility energy efficiency targets.

For further information, please contact:

Steve Vanry, CFO
+ 1 604 671 9522
svanry@legendpower.com

Sean Peasgood, Investor Relations
+ 1 647 503 1054
sean@sophiccapital.com

Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

This Press Release may contain statements which constitute “forward-looking information”, including statements regarding the plans, intentions, beliefs and current expectations of the Company, its directors, or its officers with respect to the future business activities and operating performance of the Company. The words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” and similar expressions, as they relate to the Company, or its management, are intended to identify such forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future business activities or performance and involve risks and uncertainties, and that the Company’s future business activities may differ materially from those in the forward-looking statements as a result of various factors. Such risks, uncertainties and factors are described in the periodic filings with the Canadian securities regulatory authorities, including the Company’s quarterly and annual Management’s Discussion & Analysis, which may be viewed on SEDAR at www.sedar.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results to not be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements other than as may be required by applicable law.