Vancouver, Canada, January 24, 2018 – Legend Power Systems Inc. (TSXV: LPS), a global leader in voltage reduction and optimization technology, today reported its fiscal 2017 financial results for the year ended September 30, 2017. All dollar figures are quoted in Canadian dollars.
Summary highlights for fiscal year ended September 30, 2017
- 103% year over year revenue growth
- A record, 67 units sold during year
- Blended gross profit margin of 39%
- $4.1 million proceeds from warrant exercises
Fiscal 2017 was a successful year on all fronts for Legend Power as reflected in the Company’s share price performance. During fiscal year 2017 the price of Legend Power shares increased 96% and on a 2017 calendar basis the stock increased in price by 114%. We believe our share price performance mirrored timely execution of our stated objectives, the Company’s transition from an early stage to a growth stage entity, and healthy order flow signalling the strong value proposition inherent in our technology.
A share price chart is available at the following link: https://web.tmxmoney.com/quote.php?locale=en&qm_symbol=lps
During fiscal 2017 the Company’s sales doubled to $4.22 million, continuing the growth trend established over recent years. We continue to be focused on and have made significant progress in several key areas of our future growth strategy, including (up to the date of this press release):
USA Expansion
- Con Edison, the Power Utility in New York City, significantly increased its financial incentives for new energy saving technologies including the Company’s proprietary Harmonizer system. New customers who apply for incentives will be eligible for additional cash contributions;
- Hired and trained three proven industry, business development professionals, including a senior sales executive previously with New York’s power utility, Con Edison;
- Focused on contacting owner and key recommender markets and creating awareness and education of the Company’s technology;
- Signed first distribution partner, to promote and sell Legend’s proprietary Harmonizer voltage management technology, with the objective of building a network of knowledgeable, influential, and well-connected partners which is key to Legend’s success in the US.
Growing New Verticals in Ontario
- Expanded sales team to seven individuals and three outside active lead generation partners;
- Rebranded sales material, implemented CRM solution and generally instituted a more systematic approach to managing and cultivating our sales funnel;
- Received follow on orders in four different verticals during fiscal 2017.
New Product Development
- Completed design and fabrication of key components for new generation of product which provides expanded capabilities for energy savings in voltage management;
- New product will move the value offering outside of the electrical room dramatically improving the ability to make data driven decisions around energy efficiency and power quality.
Field Operations
- Further to the Company’s strategy of seeking a more cost competitive solution for our installation services, we deployed an in-house installation team during Q1 2018 which in its first several installations completed, has resulted in significantly improved margins on our installation revenue and is a solution scalable for continued growth and margin improvements.
Working Capital
- As at September 30, 2017 the Company had working capital totaling $4.1 million due in large part to warrant exercise proceeds received from our strong shareholder base. 100% of all warrants expiring in calendar 2017 were exercised for total proceeds of $5.9 million.
New Branding
- Designed and launched a new corporate brand to further build credibility in the marketplace;
- Refined and launched the Legend Story: who we are, what we do, and why people should care;
- Produced new brand sales literature and website to increase brand awareness and educate prospective customers on the value of Legend’s unique product offering.
Financial summary for the three and twelve-month periods ended September 30, 2017 and 2016
| Three-months ended September 30, | Years ended September 30, | |||||
| (Cdn$, unless noted otherwise) | 2017 | 2016 | Change | 2017 | 2016 | Change |
| Revenue | 1,065,714 | 42,344 | 2,417% | 4,228,756 | 2,079,126 | 103.4% |
| Cost of sales | 915,053 | 214,787 | 326.0% | 2,573,418 | 1,448,896 | 77.6% |
| Gross margin1 | 150,661 | (172,443) | 187.4% | 1,655,338 | 630,230 | 162.7% |
| Gross margin %1 | 14.1%* | (407.2)% | 421.4% | 39.1% | 30.3% | 8.8% |
| Operating expenses | (1,127,367) | (801,538) | 40.7% | (3,522,947) | (3,068,399) | 14.8% |
| Adjusted EBITDA2 | (809,354) | (707,324) | (14.4)% | (1,340,327) | (1,835,420) | 27.0% |
| Net (loss) | (965,443) | (860,925) | 12.1% | (1,846,687) | (2,437,363) | (24.2)% |
1 Gross margin is based on a blend of both equipment and installation revenue.
2 Adjusted EBITDA; for the three-months and fiscal years ended September 30, 2017 and 2016, we are disclosing Adjusted EBITDA, which is a non-IFRS financial measure, as a supplementary indicator of operating performance. We define Adjusted EBITDA as net income or loss before; interest, income taxes, amortization, non-cash stock based compensation and foreign exchange gains and losses, as well as unusual non-operating items such as insurance settlement. Warranty expense is no longer included in the Adjusted EBITDA calculation, as such historical amounts have been updated.
* Gross margin was lower than anticipated due to several year-end adjustments which boosted cost of goods sold and there was also a bias towards installation revenue during the quarter which historically has yielded lower margins. Management will be discussing margins in more detail during the conference call referenced below.
Complete financial statements and management’s discussion and analysis for the twelve months ended September 30, 2017 are available at the Company’s website and with the Company’s filings on SEDAR (www.sedar.com).
The Company will host a conference call to provide a business update and discuss its 2017 financial results for Wednesday, January 24, 2018 at 1:15 pm Pacific time (4:15 pm ET). The call will be hosted by Randy Buchamer, President & Chief Executive Officer and Steve Vanry, Chief Financial Officer.
CONFERENCE CALL DETAILS:
| DATE: | Wednesday, January 24, 2018 |
| TIME: | 1:15 pm PT (4:15 pm ET) |
| DIAL-IN NUMBER: | Toronto (647) 788-4901
Toll Free – North America (+1)(877) 201-0168 |
| CONFERENCE ID: | 6194178 |
| REPLAY: | Available at: www.legend20.wpengine.com |
About Legend Power Systems Inc.
Legend Power Systems Inc. (www.legend20.wpengine.com) is changing the way buildings around the world use power. The company’s patented and proprietary technology reduces overvoltage, a natural condition present in power grids around the world. Overvoltage inflates energy costs, damages electrical equipment, and increases the negative impact a building has on the environment. Legend’s utility-proven Harmonizer improves the power efficiency of an entire building to reduce total energy consumption and power costs, while maximizing equipment life. The solution provides customers risk free energy savings, improves the value of their physical assets, and enhances their sustainability efforts. As an application with demand side benefits, Legend is also a key contributor toward utility conservation goals. In 2015 Legend was recognized as the top performing cleantech company on the TSX Venture Exchange.
For further information, please contact:
Randy Buchamer, CEO and President
+ 1 778 945 1501
Sean Peasgood, Investor Relations
+ 1 416 565 2805
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 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.