Vancouver, B.C., Canada – January 28, 2021 ‐ Legend Power® Systems Inc. (TSX.V: LPS) (OTCQB: LPSIF) (“Legend Power” or the “Company”), a global leader in commercial electrical system solutions, today reported its fiscal 2020 financial results for the year ended September 30, 2020. The Company has also scheduled a conference call to provide a business update and discuss its 2020 financial results for Thursday, January 28, 2021 at 4:15PM ET (1:15PM PT). The call will be hosted by Randy Buchamer, President & Chief Executive Officer and Steve Vanry, Chief Financial Officer (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 the quarter ending September 30, 2020 (Q4 2020)
- Revenue of $347k versus $486k reported in Q4 2019;
- Gross profit of $66k compared to $(97k) in Q4 2019;
- Adjusted EBITDA loss of $569k versus a $1.80 million loss in Q4 2019;
- Net loss of $769k versus the $2.42 million loss in Q4 2019; and
- Cash of $2.29 million, no debt, and $3.76 million in working capital at September 30, 2020.
“Heading into fiscal 2021, our business activity has increased significantly,” said Randy Buchamer, CEO of Legend Power. “While 2020 was a challenging year to get units installed, we now are not only seeing strong demand for our SmartGATE Insights service, but also significant SmartGATE platform orders. As we anticipated, our Insights service is providing metrics that our customers and prospects knew about but couldn’t quantify. And as they uncover how much they underestimated the high operational costs associated with power quality issues, our customers, prospects, and partners have a heightened sense of urgency. The end result is more frequent and rapid engagements, which shortens our sales cycles and sets up 2021 for strong growth.”
Operational Highlights in Q4
Our pipeline of opportunities – both with prospects and existing clients – continued to grow through the fourth quarter of fiscal 2020. We gained more access to senior decision‐makers, especially those concerned about tenant safety and reducing costs by optimizing incoming grid power. The increase in commitments from building owners continues to scale. Some of these commitments include multi‐ building assessments with our SmartGATE InsightsTM service and others for full SmartGATE platforms. This resurgence in activity has been broad‐based and includes engagements in the multi‐family, schools, commercial office and ESCO verticals. During the fourth quarter of fiscal 2020, these resulted in:
- a premier international Fortune 100 corporation purchasing two SmartGATE platforms for a New
York school district customer;
- an existing customer decided to evaluate 8 additional buildings as candidates for SmartGATE;
- an existing major Ontario‐based multi‐family and commercial property customer enabled the 14th building of its portfolio with SmartGATE;
- an Ontario college chose SmartGATE for two of its new facilities;
- a leading international financial services and insurance firm in Boston deployed SmartGATE Insights in 4 of its buildings, and;
- a multi‐Family REIT in Boston deployed SmartGATE Insights to evaluate the business impact of electrical energy supply.
Operational Highlights Post the Fourth Quarter of Fiscal 2020
Business momentum has continued post the fourth quarter of Fiscal 2020 into the first and second quarters of fiscal 2021:
- a 17‐unit follow‐on order from a North American commercial property customer, now putting the total of its multi‐family buildings enabled with SmartGATE at 33. This was the largest order in the Company’s history at $1.26 million;
- Haven Consultants International, a Legend Channel partner, purchased three additional SmartGATE platforms for a government customer;
- after completing an initial pilot, the Region of Peel began implementing SmartGATE as a standard solution that can be deployed across their building portfolio to make achieving their sustainability targets easy;
- the findings from evaluating 8 multi‐family buildings from a leading commercial real‐estate operator with approximately $50 billion of real estate assets indicated that none of the 8 buildings were operating optimally;
- channel partner Haven Consultants ordered 29 SmartGATE Insights service engagements;
- the Company began trading on the OTCQB under the ticker symbol LPSIF.
The Company is now well positioned for growth in fiscal 2021. The introduction of Insights, which illustrates and quantifies the power quality issue building operators are facing, has been eye opening for both customers and partners. It is now clear that data provided from Insights installations, uncover issues and costs that were previously invisible to building operators. This education and auditing tool is leading to shortened sales cycles for SmartGATE, the platform that corrects for and monitors and measures the positive impact from both a dollar standpoint and an energy conservation or ESG standpoint. Subsequent to the end of fiscal 2020 and the introduction of our SmartGATE Insights service we have exceeded our expectations for customer engagements. While the Company is not providing financial guidance at this time, we are on pace to meet our target of 90 engagements in the current quarter ending March 2021 (Q2). It is our goal to achieve 90 engagements per quarter on a go forward basis, which we anticipate to meet and likely exceed.
Financial summary for the three and twelve months ended September 30, 2020 and 2019
1Gross margin is based on a blend of both equipment and installation revenue.
2Adjusted EBITDA is a non‐IFRS financial measure.
Revenue for the fourth quarter of 2020 was $346,697 compared with $485,543 in the same quarter of 2019. Revenue for the fiscal year 2020 was $2,027,933 a decrease from $2,334,525 from fiscal 2019. During fiscal 2020, and in particular during Q3, COVID‐19 caused a significant curtailment of sales cycles and prevented the Company from accessing customer buildingsto complete SmartGATE installations. This situation eased slightly in Q4 of 2020.
Gross margin in the fourth quarter of fiscal 2020 was 19%, compared with negative 20% in same quarter of 2019. Gross margin during the fiscal year 2020 was 25%, a decrease from 42% compared with fiscal 2019. The lower gross margin experienced during fiscal 2020 was due primarily to: i) two projects completed for an early adopter, marquee, New York City customer during Q1 of 2020. Early projects in new regions typically involve higher overall install costs, in particular electrical contractor costs due to a significant learning curve in understanding the nuances of installing a new and unfamiliar technology; and ii) management’s focus on inventory management through strategic pricing.
The Company’s operating expenses for the fourth quarter of 2020 were $951,264, down from $1,476,683 in the same quarter of 2019 and for the fiscal year 2020 were $5,291,444 compared with $6,351,413 in fiscal 2019. The decreases in both comparative periods are due to cost cutting measure implemented in response to the economic slowdown caused by COVID‐19.
Adjusted EBITDA for the fourth quarter of fiscal 2020 was negative $569,493, compared with negative $1,798,936 in the fourth quarter of 2019. Adjusted EBITDA for the fiscal year 2020 decreased to negative $4,228,194, from negative $5,265,924 in fiscal 2019. Net loss for the fourth quarter of fiscal 2020 was $769,444, compared with a net loss of $2,423,219 in the fourth quarter of fiscal 2019. Net loss for the fiscal year 2020 was $4,783,511, a decrease of 22% from a loss of $6,093,156 in fiscal 2019. Lower gross margins in fiscal 2020 were offset by significantly reduced operating and other expenses compared with fiscal 2019.
CONFERENCE CALL DETAILS:
DATE: Thursday, January 28, 2021
TIME: 4:15PM ET (1:15PM PT)
DIAL‐IN NUMBER: North America Toll-Free Dial‐in Number – (877) 201‐0168
International Dial‐in Number – (647) 788‐4901
OR ONLINE PARTICIPATION: Legend Fiscal 2020 Conference Call
CONFERENCE ID: 4284675
REPLAY: Available at: www.legendpower.com
About Legend Power® Systems Inc.
Legend Power® Systems Inc. (www.legendpower.com) provides an intelligent energy management platform that analyzes and improves building energy challenges, significantly impacting asset management and corporate performance. Legend Power’s proven solutions support proactive executive decision‐making in a complex and volatile business and energy environment. 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
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, orshould 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 resultsto differ materially, there may be othersthat 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.