VANCOUVER, British Columbia, Aug. 22, 2019 (GLOBE NEWSWIRE) -- Legend Power® Systems Inc. (LPS.V), a global leader in onsite energy management technology, today reported its third quarter of fiscal 2019 financial results for the quarter ended June 30, 2019. A conference call to discuss the results is set for 4:30pm EST today (dial in details are 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.
Q3 F2019 Highlights
- Revenue for the quarter was $676,139, down 68% versus $2.1 million in the year-ago quarter and down 12% versus Q2 F2019;
- 8 system sales and 3 installations recognized in revenue;
- Gross margin was 48% versus 57% in Q3 F2018 and 54% in Q2 F2019;
- Cash position of $7.2 million compared to $8.7 million end of Q2 F2019, no debt, and $9.9 million working capital.
Financial summary for the three and nine months ended June 30, 2019
|Three months ended June 30,||Nine months ended June 30,|
|(Cdn$, unless noted |
|2019 ||2018 |
|Change||2019 ||2018 |
|Cost of sales2||349,280||913,941||(62)%||781,440||2,637,861||(70)%|
|Gross margin %3||48%||57%||(8)%||58%||50%||7%|
|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.|
“Although not yet reflected in our revenue, we have far more sales opportunities in multiple locations and verticals than at anytime in Legend’s history,” said Randy Buchamer, CEO of Legend Power. “We have reworked our sales processes, sales team, marketing efforts, structure and will shortly enhance our product platform. We will continue to make the necessary changes to drive the right results. We are focused on near term revenue and are doing do so while carefully nurturing long-term value for customers and shareholders. Our strong balance sheet provides the working capital we need to get us through this early growth phase as we enter new markets and execute on realizing the significant potential of our business.”
Revenue for the third quarter of 2019 was $676,139, a 68% decrease from $2.1 million in the same quarter of F2018 and down 12% compared with Q2 F2019. Revenue for the nine months ended June 30, 2019 was $1,848,982 a 65% decrease from $5,311,630 in the same period 2018. During fiscal Q3 the Company recognized revenue from the sale of 8 SmartGATE platforms sold and installation revenue associated with the commissioning of 3 SmartGATE platforms. Systems sales recognized in revenue were to; 3 multi-residential customers, 2 commercial office tower customers, and 3 education customers. 5 sales recognized in revenue were in Canada and 3 in the U.S.
Gross margin in the third quarter of fiscal 2019 was 48%, a decrease from 57% in third quarter of 2018. The lower comparative gross margin experienced in the third quarter of fiscal 2019 was due primarily to special pricing for select showcase sales to a leading New York property manager who facilitated the follow-on purchase of two SmartGATE™ systems for the New York City building complex of a global Fortune 100 technology company.
Cash and Working Capital
As at June 30, 2019, the Company had cash and cash equivalents of $7,195,776 (September 30, 2018 - $10,046,366) and working capital of $9,854,430 (September 30, 2018 - $13,618,319). The Company has no debt. Based on working capital as at June 30, 2019, estimated cash requirements for the next twelve months and the Company’s ability to timely collect accounts receivable, management believes the Company has sufficient working capital to comfortably continue business operations over the ensuing year.
- Since the beginning of fiscal 2019 we have grown our sales pipeline by over 800%
- Accelerated the average time to win a deal from 402 days to 215 days – a 46% decrease
- Accelerated the average time to call a deal lost from over 700 days to 211 days – a 71% reduction
- Reduced the averages number of deals being lost or stalled from 75% to 31% – a 41% decrease
Earning the right to be an accepted energy solution is a lengthy process in the New York market. However, we are making progress and closing deals. We are navigating through the rigorous incentive approval process and respect that historically, NY property managers have been skeptical of new. They seek confidence that entrants will endure and new technologies are real and have longevity. By patiently and persistently educating the gatekeepers in the New York market, we have made strong progress and see huge potential.
We have more deals progressing through our sales funnel and they are notably larger than previous business. The cycle times to decision are longer due to more rigor in the NY customer buying process. Additionally, the time to installation and revenue recognition has much more variability - ranging from as little as 60 days to as much as 12 months in some cases. This is due to limited shutdown windows which extend our time to complete an installation and ultimately realize the related revenue.
The US Markets are gaining momentum with more verbal commitments for projects that are going through the contracting process. In Seattle, we have two separate verbal commitments to include SmartGATE systems as part of large energy improvement projects in 2020. Most importantly, the commitments come from two significant ecosystem players on behalf of their large customers. These deals are being sourced by the most significant channel partners in the region and support a repeatable path to long-term sustainable revenue. The quick acceptance of Legend’s value proposition by industry partners in new regions is very encouraging.
In early 2020 we will officially announce the enhancement of our product to a solutions platform that will add the capability to address the three most customer-stated energy challenges experienced in commercial buildings. This transformation will enhance our value proposition, provide prospects with reasons to buy Legend beyond just saving energy, increase our market potential, open up the industrial markets, expand our competitive advantage and provide the sales team with an unequalled story and product to sell.
We continue to experience significant increases in our pre-sales activities and funnel growth. The multiple sales and marketing initiatives are driving awareness and interest levels in all markets. Our new sales leader has driven sales team improvements and sales process enhancements that will lead to strong sales growth. The market interest in our product is strong and we continue to build “comfort” within our markets, and we expect to achieve sales growth as a result. With the imminent launch of our enhanced product platform, we are excited about the business.
Investor Conference Call
The Company will host a conference call to provide a business update and discuss its third quarter of fiscal year 2019 financial results. The call will be hosted by Randy Buchamer, President & Chief Executive Officer and Steve Vanry, Chief Financial Officer. Investors may access the conference call via the following numbers:
DATE: Thursday, August 22, 2019
TIME: 1:30PM PT (4:30pm ET)
DIAL-IN NUMBER: Toll Free Dial-in Number (877) 201-0168
International Dial-in Number (647) 788-4901
CONFERENCE ID: 2290796
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. We help buildings 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’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
Sean Peasgood, Investor Relations
+ 1 647 503 1054
Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.
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.