Avante Logixx Q2 FY19 Earnings Release November 22, 2018
F O R W A R D - L O O K I N G S T A T E M E N T S & D I S C L A I M E R This presentation contains “forward - looking information” within the meaning of applicable securities legislation. Generally, for ward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “antic ipa tes” or “does not anticipate”, or “believes” or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. In particular, this presentation contains statements regarding: potential acquisition targets of Avante Logixx Inc. (“Avante”); the ability of Avante to execute on its strategic plan and acquisition strategy; the estimated transaction models for future acquisition; and the estimated potential value creation and total shareholder returns which management believes may be realized by Avante’s acquisition strategy. All such forward -looking information is based on certain assumptions and analyses which management of Avante believes to be reasonable in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that management believes to be appropriate in the circumstances. Such assumptions include: trends in the physical security industry; the ability of Avante to raise capital on acceptable terms; general and administrative expenses and interest expenses; Avante’s ability to maintain existing customer, supplier and partner relationships; the ability of Avante’s managem ent team to execute Avante’s business strategy, and other matters. Statements containing forward-looking information are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Avante to be materially different from those expressed or implied by any statements containing forward-looking information. The risks, uncertainties and other factors are difficult to predict and may include, without limitation, risks relating to: general economic conditions; industry conditions; the ability of Avante to raise capital; operating risks; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by Avante, and other f actors, many of which are beyond Avante’s control. The foregoing factors are not exhaustive. Although Avante has attempted to identify important factors that could cause actual results to differ materially from those statements containing forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Avante does not undertake to update any statements containing forward-looking information, except in accordance with applicable securities laws. Any “financial outlook” in this presentation, as defined by applicable securities legislation, has been approved by managemen t of Avante. Such financial outlook as at the date hereof is provided for the purpose of providing information about management’s current expectations and plans relating to the future. Readers are cautioned that re liance on such information may not be appropriate for other purposes. Any data, graphs or information in this presentation that have been compiled by, or drawn from, a third party has been credited to that third party and Avante does not take responsibility for the accuracy of such information. This presentation is for information purposes only and is not intended to, and should not be construed to constitute, an offer t o sell or the solicitation of an offer to buy, Avante’s securities. This presentation and its contents should not be construed, under any circumstances, as investment, tax or legal advice. Any person viewing or accepting delivery of this presentation acknowledges the need to conduct their own thorough investigation into Avante’s business and its activities before considering any investment in Avante’s securities. Among other th ings, investors should review Avante’s public filings which are available in Canada at www.sedar.com. Non-IFRS Financial Measures This presentation contains certain financial measures that are not determined in accordance with IFRS, including Adjusted EBITDA. Adjusted EBITDA is calculated by adding back: Expense fair value adjustment of CWL inventory; Depreciation on property, plant and equipment; Amortization of intangible assets; Share based payments; and • Management reorganization & integration costs to Income before income taxes. Adjusted EBITDA is used by management of Avante to provide a more accurate measure of its operating performance. These measurements should not be considered an alternative to, or more meaningful than, other measures as determined in accordance with IFRS. These measurements do not have a standardized meaning under IFRS; thus, Avante’s determination of Adjusted EBITDA may not be comparable to that reported by other companies. Reference should be made to Avante’s management’s discussion and a nalysis and related financial statements for more information relating to the calculation of Adjusted EBITDA. A V A N T E L O G I X X 2 0 1 8
W H A T W E W I L L D I S C U S S T O D A Y Focused Execution Around Strategic Priorities 5 Q2 FY19 Financial Highlights 14 3
K E Y M E S S A G E S Building a Team Accelerate Growth w/ M&A • Developing shared services • 3 acquisitions in Q2 (marketing, corporate • Announced Intelligarde acquisition development, HR) subsequent to quarter end • Hired Chief Legal & People • Active & disciplined deal pipeline Officer, and SVP Finance subsequent to quarter • Actively searching for CFO Alignment w/Shareholders Building a Platform • Experienced management team • Restructure existing; • Realize synergies in core subsidiaries to • Management & Senior Executives are promote organic growth; considerable shareholders • Integrate acquisitions & realized • Insiders / Management control synergies; >40% of outstanding shares • Build platform for growth. 4
F O C U S E D E X E C U T I O N A R O U N D S T R A T E G I C P R I O R I T I E S 5
Q 2 ’ 1 9 O V E R V I E W Company Update Business Summary Implementing strategic plan and executing on Generated revenues of $5,855,951 in Q2 FY19 • • growth vision representing 5.3% YoY growth Announced and closed three transactions: Recurring monitoring and response revenue • • grew 11.0% YoY Architronics Limited – Non-recurring revenues grew 6.1% QoQ or • Watermark Security Inc. – 2.9% YoY Veridin Systems Canada Inc. – Gross margin in-line with Q2 FY18 at 29.7% • Announced strategic partnership and • Adj. EBITDA fell to $106,864 as significant investments • investment in 3|Sixty Secure Corp. were made in building a platform to support key Announced acquisition of Intelligarde • strategic initiatives International Inc. Adj. EBITDA margins declined to 1.8% as Q2 FY19 • Added depth and experience to senior • focused on investing in strategic initiatives to leadership team execute on long-term vision Announced share consolidation (1:5) • Strong balance sheet • Elected three new directors • Cash and cash equivalents $7.7MM • Announced $10MM acquisition facility with • Shareholder’s equity $19.4MM • RBC Quarter shows the continued execution of long-term vision against strategic initiatives 6
K E Y S T R A T E G I C P R I O R I T I E S Strengthen our competitive Drive organic growth by Enhance portfolio with advantage with selling technology- strategic M&A investments in strong enabled solutions business systems Added infrastructure & Investing in: • • 4 investments/ transactions • strategic capabilities to offer since June 1, 2018 adding People • unique value propositions to ~$21MM in pro-forma Systems • large national accounts revenue Technology • Expansion into new markets • Amalgamated Architronics • & Watermark on Oct 1, 2018 Launching Oakville • on Dec 1, 2018 7 7
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