VANCOUVER, British Columbia, Jan. 29, 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 fiscal 2019 financial results for the year ended September 30, 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 Fiscal 2019

  • Revenue of $2.3 million; a decrease of 65% year-over-year from $6.9 million reported in fiscal 2018
  • Gross margin of 42% down from 45% the prior year
  • Adjusted EBITDA loss of $5.3 million versus $2.0 million loss in fiscal 2018
  • Net loss of $6.1 million compared to $2.6 million loss in fiscal 2018
  • Cash of $5.7 million, no debt and $7.9 million working capital as at September 30, 2019

Management Commentary
“Fiscal 2019 was a transitional year for Legend,” said CEO Randy Buchamer. “As we’ve stated on prior calls, we faced unique challenges entering the U.S. market, requiring strategic shifts in our sales process as well as investment of time to build relationships with key stakeholders. We’ve completed this transition and have pressed onward. Through our conversations with prospects, we learned that we needed to shift from product sales to providing an entire onsite energy management platform. This led to post year-end release of our SmartGATE Insights™ metering and data analytics solution which 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 and twelve months ended September 30, 2019 and 2018.

 Three months ended September 30,Twelve months ended September 30,
(Cdn$, unless noted
otherwise)
2019
2018
(reclassified)1
Change2019
2018
(reclassified)1
Change
Revenue485,543  1,283,433 (62)% 2,334,525  6,595,063 (65)%
Cost of sales2 582,537  1,078,252 (46)% 1,363,977  3,604,254 (62)%
Gross margin3(96,994) 205,181 (147)%970,548  2,990,809 (68)%
Gross margin %3(20)%16%(36)%42%45%(3)%
Operating expenses(1,476,683)(1,441,263)3%(6,351,413)(5,618,313)13%
Adjusted EBITDA4(1,798,936)(1,050,094)(71)%(5,265,924)(1,981,639)(166)%
Net loss(2,243,219)(1,181,896)105%(6,093,156)(2,559,385)138%

1 Certain components of previous year columns have been reclassified to conform with the presentation of fiscal 2019 periods.
2 Cost of Sales has been adjusted to better conform with current accounting practice; namely, sales commissions and selling fees are now accounted for separately under “Selling Costs”.
3 Gross margin is based on a blend of both equipment and installation revenue.
4 Adjusted EBITDA is a non-IFRS financial measure. See EBDITA Reconciliation for details.

Revenue for the fourth quarter of 2019 was $485,543, a 62% decrease from $1,283,433 in the fourth quarter of fiscal 2018. Revenue for fiscal 2019 was $2,334,525 down 65% from $6,595,063 in 2018. 

Gross margin in the fourth quarter of fiscal 2019 was negative 20% down from 16% in the fourth quarter of fiscal 2018. Gross margin for fiscal 2019 and 2018 were similar at 42% and 45% respectively. The significantly lower gross margin experienced in the fourth quarter of 2019 was due primarily to a disproportionate amount of production overhead costs realized in the quarter on lower than forecasted throughput during the year. The lower gross margin realized in the fourth quarter of 2018 was primarily the result of year-end adjustments to cost of goods sold relating to inventory valuation amounts and a proportionately higher amount of low margin installation revenue recorded during those quarters.

Adjusted EBITDA for the fourth quarter of fiscal 2019 decreased by 71% to negative $1,798,936 from negative $1,050,094 in the fourth quarter of fiscal 2018. For the year ended September 30, 2019 adjusted EBITDA was negative $5,265,924, compared to negative $1,981,639 in the year ended September 30, 2018.

Net loss for the fourth quarter of fiscal 2019 was $2,243,219, an increase of 105% from $1,181,896 in the fourth quarter of 2018. Net loss for the year ended September 30, 2019 was $6,093,156, an increase of 138% from $2,559,385 in the year ended September 30, 2018. The net loss in both Q4 2019 and fiscal 2019 were impacted by an impairment of intangible assets totaling $772,818. During the fourth quarter of fiscal 2019, the Company tested its product development costs for impairment. The tests were performed using pro-forma cash flow projections and certain other assumptions. Based on this analysis development costs associated with internally generated technologies was impaired.

The Company’s operating expenses for the quarter ended September 30, 2019 were $1,476,683, up from $1,154,348 in the same period of 2018. Fiscal year 2019 operating expenses were $6,351,413 up from $3,758,599 in fiscal 2018. The trend of higher operating expenses is expected to continue during this phase of the Company’s U.S. expansion and then level off when the optimum number of U.S. regions has been established (currently projected at a total of 6 including NY).

CONFERENCE CALL DETAILS:

The Company has also scheduled a conference call to provide a business update and discuss its 2019 financial results for Wednesday, January 29, 2020 at 10:00AM ET (7:00AM PT). The call will be hosted by Randy Buchamer, President & Chief Executive Officer and Steve Vanry, Chief Financial Officer. 

DATE:Wednesday, January 29, 2020
 

TIME:
 

10:00AM ET (7:00AM PT)
DIAL-IN NUMBER: 

North America Toll Free Dial-in Number (877) 201-0168
International Dial-in Number – (647) 788-4901
 

CONFERENCE ID:
 

8417818
 

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.