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Avante Corp(XX-X)
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AVANTE LOGIXX INC. ANNOUNCES FINANCIAL RESULTS FOR THE FISCAL YEAR ENDED MARCH 31, 2023

GlobeNewswire - Tue Aug 1, 2023

TORONTO-Ontario, Aug. 01, 2023 (GLOBE NEWSWIRE) --

Not for distribution to U.S. news wire services or for dissemination in the United States

Avante Corp. (TSX.V: XX) (OTC: ALXXF) (“Avante” or the “Company”) is pleased to announce its financial results for its fiscal year ended March 31, 2023 (all amounts in Canadian dollars thousands, unless otherwise indicated).

SUMMARY FINANCIAL RESULTS FOR THE YEARENDED MARCH 31, 2023:

   
$ thousands unless otherwise notedMar. 31, 2023Mar 31, 2022
INCOME STATEMENT INFORMATION:  
RMR in the period, continuing operations (1)(3)$10,337 $9,649 
Revenues, continuing operations (1)$19,960 $18,156 
Gross profit, continuing operations (1) (3)$8,122 $7,848 
Gross profit margin, continuing operations (1) (3) 40.7% 43.2%
Adjusted EBITDA, continuing operations (1) (3)$1,354 $(7)
Net loss, continuing operations (1) (2)$(4,004)$(5,937)
Net Income (loss) (2)$(525)$(4,392)
Average Common Shares during the year 26,489,438  26,489,438 
   
BALANCE SHEET INFORMATION:Mar. 31, 2023Mar 31, 2022
Cash balances & GIC investments (1)$10,114 $354 
Total funded debt as reported, IFRS$500 $443 
Total funded debt & lease obligations, IFRS (1)$2,134 $1,284 
Common Shares at period end 26,489,438  26,489,438 

            (1)   The Company sold Logixx Security Inc. (“Logixx Security”) on June 1, 2022. Its financial results are treated as discontinued operations for the reporting periods noted above.

            (2)   The net income (loss) during the year ended March 30, 2022 reflect costs related to the Board’s strategic review initiated in August 2021 and restructuring costs related to the transition of the Board and Management on March 30, 2022. The estimated gain on sale of Logixx Security is reflected in fiscal 2023’s net income.

            (3)   Adjusted EBITDA and Recurring Monthly Revenues (“RMR”) are non-IFRS financial measures that have no standard meaning under IFRS and as a result may not be comparable to the calculation of similar measures by other companies. See Description of Non-IFRS Financial Measures. Reconciliations of Adjusted EBITDA and RMR to Net Income or Revenues, as applicable, are provided in the Company’s Management Discussion & Analysis (“MD&A”).

                                    Year Ended
RECONCILIATION OF ADJUSTED EBITDAMar. 31, 2023Mar. 31, 2022 
Total comprehensive income (loss) from continuing operations$(4,004)$(5,937) 
Deferred income tax expense (recovery) 741  61  
Interest expense 213  458  
Depreciation and amortization 1,099  1,224  
Amortization on capitalized commission 9  7  
Share based payments 697  118  
Reorganization and acquisition expense 2,560  4,406  
Deferred financing fees 39  125  
Adjusted EBITDA from continuing operations$1,353 $462  

"Our sales continue to grow with the introduction of new services such as Avante Black, International Secured Transport, and refined Video Analytics, among many other new services actively in developed. Focusing on efficiencies in both office and field operations, while tightening internal communication, has resulted in better client services and increased client referrals. We are continuing to grow and I am excited about introducing these unique new products and services to our clients," said Manny Mounouchos, Founder, CEO & Board Chair of Avante.

Added Raj Kapoor, Chief Financial Officer of the Company, “We are starting to see some results from our efforts to streamline the company and create increased efficiency. I expect to see continued improvement in the coming year.”

FINANCIAL HIGHLIGHTS FOR THE YEARENDED MARCH 31, 2023:

Within continuing operations, the Company reported year-over-year revenue growth of 9.9%, or $1,804, during the fiscal year 2023, increasing to $19,960 from $18,156 for the prior fiscal year. Gross profit margins within continuing operations declined to 40.7% of revenue, versus 43.2% during the prior year, with total gross profit increasing by $274.

The Company’s recurring monthly revenues (“RMR”) from continuing operations during the last eight quarters are summarized below. The Avante Security segment delivered RMR of $10,338 during the year ended March 31, 2023, up from $9,649 during the prior year.

Gross profit margins over the last eight quarters ranged between 37.8% and 45.1%, and were 40.7% on a trailing twelve-month basis to March 31, 2023:

Avante Security                                      F22(1)                                                                            F23(1) 
$thousandsQ1Q2Q3Q4Q1Q2Q3Q4
RMR in the period$2,372 $2,372 $2,416 $2,488 $2,463 $2,584 $2,600 $2,691 
Other revenue 1,657  2,066  2,335  2,450  2,105  2,350  2,492  2,675 
Total revenue$4,029 $4,438 $4,751 $4,938 $4,568 $4,934 $5,092 $5,366 
         
Total Gross Profit$1,776 $1,842 $2,143 $2,087 $1,995 $1,921 $2,177 $2,029 
Gross Profit % 44.1% 41.5% 45.1% 42.3% 43.7% 38.9% 42.8% 37.8%

      (1)   The Company’s fiscal year end is on March 31 of each year. “F22” means the fiscal year ended March 31, 2022; and “F23” means the fiscal year ended March 31, 2023.

SEGMENT RESULTS:

The Avante Security segment reported Adjusted EBITDA of $3,009 during the year ended March 31, 2023, versus $1,400 during the year ended March 31, 2022. This increase of $1,611 was largely due to a decrease in divisional legal and consulting costs and increased revenue.

The loss in Adjusted EBITDA from central corporate costs, net of eliminations, within continuing operations was $(1,654) during the year ended March 31, 2023. This represented a decrease of $250 versus the $(1,407) Adjusted EBITDA net of central costs during the year ended March 31, 2022. The current quarterly benefits from restructuring implemented in the first and second quarters, including closing the head office.

On December 1, 2022, the Company acquired the assets of C & B Alarms Ltd. In Muskoka, Ontario. Four months of revenue from the acquisition is included in the March 31, 2023 Avante Security results.

On June 1, 2022, the Company sold its ownership interest in Logixx Security. During first quarter ended June 30, 2022, Discontinued Operations reflected two months of operations from the Logixx Security Segment, whereas the first quarter of the prior fiscal year reflected three months. During the first quarter ended June 30, 2022, Adjusted EBITDA of Discontinued Operations was $526, compared to $2,371 during the first quarter ended June 30, 2021, a decrease of $1,845. In addition to one less month of operations reflected this quarter, Logixx Security’s prior year quarterly period benefited more significantly from strong margins on COVID-19 related service revenues.

LIQUIDITY HIGHLIGHTS:

On June 1, 2022, all remaining funded debt of the Company was repaid from proceeds of the sale of Logixx Security. On the same date, the Company entered into amended and restated credit facilities with its bank to provide a $2 million revolving credit facility, provided on a demand basis and subject to a customary borrowing base.   In January, the Company took a small draw on this credit facility.

On July 7, 2022, the Company entered into a definitive loan agreement with affiliates of its largest shareholder. This agreement permits the Company to draw term loans, on a non-revolving basis, for up to $10 million at a fixed rate of 5.0% with terms to maturity ending July 7, 2027. Drawings are subject to a minimum senior leverage test and other conditions. A standby fee on the unused portion of the facility of 0.5% is payable annually in arrears. To date, the Company has not drawn on this term loan facility.

With cash balances of $10.1 million, and access to the senior secured revolver of $2 million and to the $10 million unsecured term loan facility, the Company has excess liquidity to more than meet its existing requirements.

Readers should refer to the Company’s financial statements and MD&A in respect of its year ended March 31, 2023, for additional risk factors, accounting policies, detailed financial disclosures, reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures, related party transactions, contingencies and reporting of subsequent events since the year ended March 31, 2023. Such financial statements and MD&A are incorporated by reference into this news release and are filed electronically through the System for Electronic Document Analysis and Retrieval (“SEDAR”), which can be accessed at www.sedar.com.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities described herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This news release does not constitute an offer of securities for sale in the United States.The securities described herein have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent registration under U.S. federal and state securities laws or an applicable exemption from such U.S. registration requirements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

ABOUT AVANTE CORP.:

Avante Corp. (TSXV: XX), provides high-end security services through its wholly owned subsidiary, Avante Security Inc., serving residential customers located in Toronto and Muskoka regions of Ontario, Canada.  With an experienced team, a focus on customer service excellence and development of innovative solutions, we remain committed to providing our shareholders with exceptional returns.  Please visit our website at avantelogixx.com.

Emmanuel Mounouchos
Founder, CEO & Board Chair, Avante Logixx Inc.
416-923-6984
manny@avantesecurity.com

Forward-Looking Information

This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the Company and the environment in which it operates. Forward-looking statements are identified by words such as “believe”, “anticipate”, “project”, “expect”, “intend”, “plan”, “will”, “may” “estimate”, “pro-forma” and other similar expressions. These statements are based on the Company’s expectations, estimates, forecasts and projections. The forward-looking statements in this news release are based on certain assumptions. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the Company’s ability to achieve the benefits expected as a result of the sale of Logixx Security Inc., anticipated growth from acquisitions, new service offerings and from development and deployment of new technologies and the list of risk factors identified in the Company’s Management Discussion & Analysis (MD&A), Annual Information Form (AIF) and other continuous disclosure documents available at www.sedar.com. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the Company assumes no obligation to publicly update any such statement, whether as a result of new information, future events or otherwise.

Non-IFRS Financial Measures

This press release includes certain measures which have not been prepared in accordance with International Financial Reporting Standards (“IFRS”) such as EBITDA, Adjusted EBITDA and Recurring Monthly Revenue (“RMR”). These non-IFRS measures are not recognized under IFRS and and do not have a standardized meaning prescribed by IFRS. Accordingly, users are cautioned that these measures should not be construed as alternatives to net income determined in accordance with IFRS. The non-IFRS measures presented are unlikely to be comparable to similar measures presented by other issuers.

References to EBITDA are to net income before interest, taxes, depreciation and amortization. References to Adjusted EBITDA are to net income before interest, taxes, depreciation, amortization of intangibles & capitalized commissions, share-based payments, acquisition, integration and / or reorganization costs, deferred financing costs, loss (gain) in fair value of derivative liability and expensing of fair value adjustments per IFRS.   Recurring Monthly Revenues, or RMR, represent revenue during the fiscal period that benefited from contractual periodic billing to customers, typically monthly, quarterly or annually.

Management believes that Adjusted EBITDA and Recurring Monthly Revenues are appropriate additional measures for evaluating Avante’s performance. Readers are cautioned that neither EBITDA, Adjusted EBITDA nor Recurring Monthly Revenues should be construed as an alternative to net income or revenues (as such financial measures are determined under IFRS), as an indicator of financial performance or to cash flow from operating activities (as determined under IFRS) or as a measure of liquidity and cash flow. Avante’s method of calculating EBITDA, Adjusted EBITDA and Recurring Monthly Revenues may differ from methods used by other issuers and, accordingly, Avante’s reported Non-IFRS measures may not be comparable to similar measures used by other issuers.


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