- Record revenues of
$32.7 million for the three-month period endedJune 30, 2021 , compared to$19.6 million for the same period the prior year. - Adjusted EBITDA of
($4.6) million for the three-month period endedJune 30, 2021 , compared to($0.1) million for the same period last year. - Net loss of
$7.5 million or ($0.05 ) per share in the three-month period endedJune 30, 2021 , compared to a net loss of$0.8 million or ($0.01 ) per share compared for the same period in the prior year. - Working capital of
$97.4 million onJune 30, 2021 , for a current ratio of 2.9:1, compared to working capital of$171.1 million and a current ratio of 4.1:1 onDecember 31, 2020 . - Management guidance updated with revenues maintained in the range of
$110.0 to$130.0 million and adjusted EBITDA margins lowered in the range of -3.0% to -4.0% from 3.0% to 4.0%. Adjusted EBITDA margin is affected by new investments in supporting higher than originally forecasted future revenues and lower gross margins from RNG projects. - As at
June 30, 2021 , the company had$79.9 million of cash and restricted cash compared to$168.6 million as atDecember 31, 2020 .
Financial Highlights:
Three months ended | % of Change | Six months ended | % of Change | ||||
2021 | 2020 | 2021 | 2020 | ||||
(In millions of dollars) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||
Revenues | 32.7 | 19.6 | 67% | 53.3 | 31.8 | 67% | |
Gross profit | 5.0 | 4.3 | 16% | 9.2 | 7.3 | 26% | |
Gross profit % | 15% | 22% | 17% | 23% | |||
Adjusted EBITDA (1) | (4.6) | (0.1) | (9.3) | 0.3 | |||
Net income (loss) | (7.5) | (0.8) | (16.7) | (1.5) | |||
Net income (loss) per share - basic ($/share) | (0.05) | (0.01) | (0.11) | (0.02) | |||
Weighted average number of shares | 153,138,535 | 88,884,226 | 152,836,023 | 87,086,137 | |||
As at: | 2021 | 2020 | |||||
Total assets | 420.2 | 444.7 | |||||
Total liabilities | 100.8 | 100.7 | |||||
Equity | 319.4 | 344.0 | |||||
As at: | August 11, 2021 | 2020 | |||||
Backlog (2) | 75.9 | 85.5 | |||||
(1) | Adjusted EBITDA starts with EBITDA and adjusts for Stock-based compensation expenses, impairment of inventories, exchange gain/loss on the obligation arising from non-controlling interest participation in a subsidiary, foreign exchange loss (gain) and accretion of debt. | ||||||
(2) |
Financial Results
- Revenues increased by
$21.5 million to$53.3 million for the six-month period endedJune 30, 2021 , compared to$31.8 million for the same period the prior year. The 68% increase is mainly explained by acquisitions in 2020 and 2021, including (1)$15.3 million for services companies and ACS, and (2)$21.5 million for HyGear and Inmatec. This was offset by lower revenues from long-term production-type RNG projects. - Gross margin increased from
$7.3 million to$9.2 million for the six-month period endedJune 30, 2021 compared to the same period the prior year. The gross margin percentage decrease from 23% to 17% is due to working through the company’s lower margin RNG projects. - Selling and administrative expenses (“SG&A”) for the six-month period ended
June 30, 2021 , of$23.2 million were higher by$14.6 million compared to$8.6 million for the same six months of 2020. The increase is primarily due to additional SG&A expenses associated with the newly acquired companies: (1)$3.7 million for services companies and ACS, and (2)$6.1 million for HyGear and Inmatec. In addition,$2.3 million was attributed to transaction, due diligence and integration expenses related to newly acquired and potential future acquisitions. Finally, SG&A expenses increased due to an organizational scale up of employees, hiring fees and associated costs to support the increased level of future sales. - Research and development expenses of
$1.4 million for the six-month period endedJune 30, 2021 were related to the development of the company’s second generation of the Biostream product, and the continued development of biogas upgrading and hydrogen products. As ofJanuary 1, 2021 , R&D expenses are expensed as they are incurred. - Operating loss of
$15.9 million for the six-month period endedJune 30, 2021 compared to an operating loss of$0.7 million for the same period in 2020. The increase of the operating loss is mainly explained by the above-noted increase in SG&A and lower consolidated gross margin percentage. - Net loss of
$16.7 million or ($0.11 ) per share in the six-month period endedJune 30, 2021 compared to a net loss of$1.5 million or ($0.02 ) per share for the same period the prior year. - Adjusted EBITDA decreased to
($9.3) million for the six-month period endedJune 30, 2021 , from$0.7 million for the same period last year. - Backlog decreased by
$9.6 million over the last 12 months, from$85.5 million onAugust 10, 2020 to$75.9 million onAugust 11, 2021 .
CEO Quote:
“In Q2 we delivered record quarterly revenues as we continued to build the organisational foundations which will support us to manage and operate a significantly larger and more diversified cleantech company. While we still saw a meaningful impact from our legacy production type RNG contracts, I am happy to report that this impact will be reduced going forward. The rest of our verticals in hydrogen, oxygen, nitrogen, and the Cleantech Service Network, are EBITDA profitable and continue to perform very well from a revenue growth and margin perspective.
A significant commercial milestone this quarter was the Biostream contract signed with one of the leading
2021 has been challenging so far, but we anticipate improved performance for the rest of the year accompanied by strong year-over-year revenue growth as we prepare for continued growth into 2022 and beyond. Over the next few quarters, we also expect a progressive return to normal EBITDA performance. I am proud of the foundation the team is building as we tackle the long-standing need for renewable and decentralized on-site gas generation solutions around the world,” stated
Current Market Outlook
Xebec continues to see increasingly favourable political and regulatory backdrop for its products and services, as evidenced by the recent master service agreement for 18 BGX Biostream with a leading US dairy RNG developer, as referred to above.
While consolidated gross margins continue to be impacted by the previously announced loss making long-term, production-type RNG contracts, the company expects that this impact will be tapered down in subsequent quarters. Xebec has implemented learnings from these contracts and expects that with its new standard Biostream product, its improved quoting processes and adjusted installation and integration processes, margins will start to revert to normal levels with new contracts.
Continued strong demand for our products has led Xebec to commence investments in its renewable natural gas, hydrogen, oxygen, and nitrogen generation segments. These investments include continued improvements and expansion in Biostream sales and production capacity, significantly increasing Inmatec’s production floorspace and expanding sales and production staffing which will allow for future revenue growth. Xebec believes that these are necessary investments to achieve a larger market presence, taking advantage of growing market opportunities.
Systems -
Xebec achieved a significant commercial win that serves to accelerate its shift towards standardized biogas upgrading products for the agriculture RNG market, as underlined by the agreement with a leading dairy RNG developed for 18 Biostream units referred to earlier. The supply agreement provides important validation of the new product that was launched last year. To date, several first-generation Biostream units have been delivered to customers in
On
According to the
Due to anticipated market demand, Xebec is initially targeting production of 30 Biostream units for delivery over the next year in its Canadian manufacturing facility. The manufacturing facility is also being modified and is expected to allow for the annual production of approximately 30 to 40 Biostream units. Furthermore, Xebec is exploring new capacity in the
Overall, Xebec expects that Biostream will lead to a stronger organic revenue growth profile for the segment, more predictable cost management and improved gross margins. With larger quantities of standardized components and parts, Xebec has started to see significant improvements in economies of scale as it prepares for assembly of the second-generation Biostream. This is an improvement over the less predictable and lower gross margins seen in its long-term, production-type RNG contracts, which have experienced cost overruns.
Hydrogen
Xebec’s hydrogen activity through HyGear continues to be robust. The key developments in Q2 2021 including signing its second hydrogen refueling station supply contract in
In addition, HyGear is making the successful transition from one-time equipment sales to deploying Gas-as-a-Service assets. As a result of the transition to this business model, the company will see more recurring and profitable revenue streams as it shifts towards selling hydrogen molecules instead of equipment.
Xebec continues to see increased interest for its hydrogen PSA purification platform worldwide as more hydrogen generation systems and refueling stations come online. For example, a
Oxygen and Nitrogen
Inmatec continues to see record production levels primarily due to the heightened demand caused by the COVID-19 pandemic for sustainably and reliably sourced medical-grade oxygen. In Q2 2021, a lease was signed to double Inmatec’s production space to support further growth in medical oxygen and nitrogen generators. After receiving several large follow-on contracts from
On-site oxygen and nitrogen generation significantly reduces the burden on the environment and costs for customers. Generating gases on-premises results in more environmentally friendly gas generation through reduced CO2 emissions by avoiding the transportation of gases, leading to a reduction of particulate matter, delivery bottlenecks and congestion on the road network. In addition, Inmatec’s on-site oxygen generators are used in biogas and renewable natural gas plants as a component within the desulphurization process.
Inmatec’s on-site oxygen and nitrogen generation revenues are now being included under the “Systems – Cleantech” segment due to the nature of its products.
Support – Industrial Products & Services
Xebec continues to make solid progress in its roll-up strategy by acquiring compressed air service companies to build out the company’s Cleantech Service Network. In Q2 2021 a new
Xebec closed two important and complementary acquisitions of
Nortec became the company’s first
Xebec expects additional acquisitions this year, and is targeting a yearly revenue run rate in the segment of approximately
Renewable Gas Infrastructure
Xebec is addressing the renewable gas infrastructure opportunity through
The fund has evaluated 24 projects to date and is actively engaged with 20 of both greenfield and brownfield varieties in agriculture, municipal, landfill and industrial waste applications. Several projects are in advanced stages and once the detailed engineering phase is completed, GRNQC expects to announce these investments.
Management Guidance for 2021
For fiscal full-year 2021, Xebec is updating its guidance with revenues maintained in the range of
Xebec to Host Live Investor Webinar to Discuss Q2 2021 Results
An investor webinar for shareholders, analysts, investors, media representatives, and other stakeholders will be held today,
Register here: https://app.livestorm.co/xebec-adsorption-inc/2021-q2-investor-webinar
A recording of the webinar and supporting materials will be made available later today in the investor’s section of the Company’s website at xebecinc.com/investors.
2021 Second Quarter Financial Statements and Management’s Discussion and Analysis
The complete financial statements, notes to financial statements, and Management’s Discussion and Analysis for the three-month period ended
Related links:
https://xebecinc.com/
About
Xebec is a global provider of clean energy solutions for renewable and low carbon gases used in energy, mobility and industry applications. The company specializes in deploying a portfolio of proprietary technologies for the distributed production of hydrogen, renewable natural gas, oxygen and nitrogen. By focusing on environmentally responsible gas generation, Xebec has helped thousands of customers around the world reduce their carbon footprints and operating costs. Headquartered in
Cautionary Statement
This press release contains forward-looking statements within the meaning of applicable Canadian securities law. These statements relate to future events or future performance and reflect the expectation of Management regarding the growth, results of operations, performance and business prospects and opportunities of the Corporation or its industry. Forward-looking statements typically contain words such as “believes”, “expects”, “anticipates”, “continues”, “could”, “indicates”, “plans”, “will”, “intends”, “may”, “projects”, “schedules”, “would” or similar expressions suggesting future outcomes or events, although not all forward-looking statements contain these identifying words. Examples of such statements include, but are not limited to, statements concerning: (i) actions expected to be undertaken to achieve the Company’s strategic goals; (ii) the key market drivers impacting the Company’s success; (iii) intentions with respect to future renewable gas work; (iv) expectations regarding business activities and orders that may be received in fiscal 2021 and beyond; (v) trends in, and the development of, the Company’s target markets; (vi) the Company’s market opportunities; (vii) the benefits of the Company’s products, (viii) the intention to enter into agreements with partners; (ix) future outsourcing; (x) expectations regarding competitors; (xi) the expected impact of the described risks and uncertainties; (xii) intentions with respect to the payment of dividends; (xiii) the management of the Company’s liquidity risks in light of the prevailing economic conditions; (xiv) the Company’s cost reduction plan; (xv) the search for additional financing over the next months; (xvi) statements regarding the merits of the class action complaints filed against the Company; and (xvii) 2021 revenue and EBITDA guidance.
These statements are neither promises nor guarantees but involve known and unknown risks and uncertainties that may cause the Company’s actual results, level of activity or performance to be materially different from any future results, levels of activity or performance expressed in or implied by these forward-looking statements. These risks include, generally, risks related to revenue growth, operating results, industry and products, technology, competition, the economy, the sufficiency of insurance and other factors which are discussed in greater details in this press release and in the Annual Information Form of the Corporation filed on SEDAR at www.sedar.com.
Forward-looking statements contained herein are based on a number of assumptions believed by the Corporation to be reasonable as at the date of this press release, including, without limitations, assumptions about trends in certain market segments, the economic climate generally, the pace and outcome of technological development, the identity and expected actions of competitors and customers, assumptions relating to the merits of the class action complaints filed against the Company and their impact, the value of the Canadian dollar and of foreign currency fluctuations, interest rates, working capital requirements, the anticipated margins under new contracts awards, the state of the Corporation’s current backlog, the regulatory environment, the sufficiency of internal and disclosure controls, the ability of the Corporation to successfully integrated acquired business, and the acquisition and integration of businesses in the future. Other assumptions, if any, are set out throughout this press release. If these assumptions prove to be inaccurate, the Corporation’s actual results may differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements contained herein are made as of the date of this press release and are expressly qualified in their entirety by this cautionary statement. Except to the extent required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements contained herein. Readers should not place undue reliance on forward looking statements.
Non-IFRS Measures
This press release refers to financial measures that are not recognized under International Financial Reporting Standard (“IFRS”). A non-IFRS financial measure is a numerical indicator of a company's performance, financial position or cash flow that excludes or includes amounts or is subject to adjustments that have the effect of excluding or including amounts that are included or excluded in most directly comparable measures calculated and presented in accordance with IFRS. Non-IFRS measures do not have any standardized meaning under IFRS and therefore are unlikely to be comparable to similar measures presented by other companies having the same or similar businesses.
The Corporation believes these measures are useful supplemental information. The following non-IFRS measures are used by the Corporation in this press release: EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, backlog of Xebec.
Please find below definitions of non-IFRS financial measures used by herein:
“EBITDA” means the earnings before interest, income taxes, depreciation and amortization, where interest is defined as net finance costs as per the consolidated statement of comprehensive income.
“EBITDA margin” being EBITDA as a percentage of revenues.
“Adjusted EBITDA” means starting with EBITDA and adjust for Stock-based compensation expenses, impairment of inventories, exchange gain/loss on the obligation arising from non-controlling interest participation in a subsidiary, foreign exchange loss (gain) and accretion of debt.
“Adjusted EBITDA margin” being Adjusted EBITDA as a percentage of revenues.
“Backlog” means contracts that have been received and considered as firm orders.
For more information:Xebec Adsorption Inc. Brandon Chow , Director, Investor Relations +1 450.979.8700 ext 5762 bchow@xebecinc.com
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