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Avante Corp(XX-X)
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AVANTE CORP. ANNOUNCES FINANCIAL RESULTS FOR THE SECOND FISCAL QUARTER ENDED SEPTEMBER 30, 2023

GlobeNewswire - Wed Nov 29, 2023

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

 

  • The Company is debt free, has cash balances of $4.9 million and access to $12 million of unused credit facilities.
  • Avante Corp. achieved second quarter year-over-year revenue growth of 8.2% from continuing operations and Recurring Monthly Revenues improved by 9.7%.

TORONTO-Ontario, Nov. 29, 2023 (GLOBE NEWSWIRE) --  Avante Corp. (TSX.V: XX) (OTC: ALXXF) (“Avante” or the “Company”) is pleased to announce its financial results for its second fiscal quarter ended September 30, 2023 (all amounts in Canadian dollars thousands, unless otherwise indicated).

Manny Mounouchos, Founder, CEO and Board Chair of Avante, commented, “Second quarter was an exceptional quarter for Avante as we increased revenue and Adjusted EBITDA, while completing the acquisition of NSSG. We are starting to gain traction on our initiatives to increase efficiencies and re-instate our high level of service.  Our clients are noticing the difference in the level of service being provided to them and are becoming our advocates through providing a significantly increased number of referrals. Meanwhile, we continue to actively seek new opportunities to expand and enhance our services.”

Raj Kapoor, Avante’s Chief Financial Officer, added, “I am pleased to report that the company has successfully acquired and integrated our latest acquisition, NSSG, while maintaining growth and liquid assets. We are expecting a boost in revenue and EBITDA in the fourth quarter with the contribution from NSSG. We continue to have a strong balance sheet and are able to fund the Company’s organic growth initiatives through positive cash flows from operations.”

FINANCIAL HIGHLIGHTS FOR THE SECOND FISCAL QUARTER ENDED SEPTEMBER 30, 2023:

  • Within continuing operations, the Company reported revenue of $5,339 during the second quarter of fiscal 2024, representing year-over-year revenue growth of 8.2%, or $404, compared to $4,934 for the prior fiscal year second quarter. The increase in revenue was mainly due to increased revenue from new products and services introduced during the past year.
  • Gross profit margins within continuing operations increased to 39.7% of revenue, versus 38.9% during the prior year’s second quarter, with total gross profit increasing by $196. Higher Gross profit margins were due to stronger margins within protective service contracts and pricing increases implemented during the last twelve months for monitoring and managed services.
  • The Avante Security segment delivered recurring monthly revenues (“RMR”) of $2,834 during the second quarter of fiscal 2024, up from $2,584 during the Company’s second in the prior year, a year-over-year growth of 9.7%. The increase in recurring revenue was driven by increased pricing and net growth in monitoring customers.
  • The Company achieved Adjusted EBITDA from continuing operations of $309 during the second quarter, an increase of 38.6%, or $86, compared to $223 for the prior fiscal year second quarter.
  • With cash balances of $4.9 million as at September 30, 2023, 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. The decrease in cash over the past year was primarily due to the NSSG acquisition, the provision of a loan for NSSG and changes in working capital.

TRAILING TWELVE MONTH FINANCIAL HIGHLIGHTS:

On a trailing twelve-month basis to September 30, 2023,

  • The Company’s total revenue was $21,207, compared to trailing twelve month revenue of $19,191 one year prior, an increase of 10.5%.
  • The Company’s RMR was $10,773, representing 50.8% of total trailing twelve months revenue.
  • The Company’s Adjusted EBITDA from continuing operations was $1,383, representing Adjusted EBITDA margin of 6.5% of total trailing twelve months revenue.

ACQUISITION of NSSG:

On September 19, 2023, Avante announced its majority stake acquisition of North Star Support Group S.R.L. (“NSSG”), through its subsidiary Avante International Inc. The transaction’s effective date is October 1, 2023. Avante acquired a 55% majority interest in NSSG, for an aggregate purchase price of EUR1,300,000, paid by way of a combination of cash in the amount of EUR1,200,000 and the issuance of 154,301 common shares in the capital of the Company.  In addition, as part of the transaction, Avante advanced to NSSG a loan in principal amount of up to EUR 1 million for a term of 4 years, bearing interest at a rate equal to the Bank of Canada Prime Rate plus 1%, and repayable in 8 quarterly equal repayments starting on the date that is 24 months after the date of each drawdown under the loan.

NSSG is a highly reputed risk management and security company operating  globally. Founded in 2017, NSSG is headquartered in Bucharest, Romania, with offices in New York, Cairo, and Kyiv, with representations in Saudi Arabia, Italy, Israel and the United Kingdom. NSSG offers a wide range of integrated corporate security solutions, with a strong focus on technological advancements and integration with existing corporate security platforms. NSSG has a worldwide clientele and has established itself as a trusted partner to Fortune 500 companies in the risk management industry. NSSG generated revenue of $5.9 million for the twelve-month period ended December 31, 2022 with net profit of $1.3 million.

RECENT BUSINESS HIGHLIGHTS

  • On September 28, 2023, the Company announced the launch of Avante Argus app, a mobile connectivity app for corporate clients. Avante Argus app provides peace of mind for Avante’s Executive Clients with instant connectivity to the Avante Crisis Centre with real-time location tracking, enabling immediate emergency and medical response capabilities. Argus is designed to provide unparalleled security and support for Avante clients locally and for Avante Black clients internationally. 
  • On November 2, 2023, the Company announced it accepted an invitation to join the Global Shield Network, a law enforcement and intelligence network immersed in public/private sector partnerships designed to prevent crime and terrorism and improve public safety. After the safe and successful evacuation of its clients from the conflict zone in Israel, Avante was recognized for its world-class security and crisis management services with an invitation to join the Global Shield Network. This strategic alliance provides Avante with real-time access to police and international intelligence agencies worldwide.

SUMMARY FINANCIAL RESULTS FOR THE SECOND FISCAL QUARTER ENDED SEPTEMBER 30, 2023:

Readers should refer to the Company’s financial statements and MD&A in respect of its second fiscal quarter ended September 30, 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.

 Three Months Ended
$ thousands unless otherwise notedSept. 30, 2023June 30, 2023March 31, 2023
INCOME STATEMENT INFORMATION:Q2 F24Q1 F24Q4 F23
RMR in the period, continuing operations (1)$2,834 $2,648 $2,691 
Revenues, continuing operations (1)$5,338 $5,410 $5,336 
Gross profit, continuing operations (1) $2,117 $2,039 $2,029 
Gross profit margin, continuing operations (1) 39.7% 37.7% 37.8%
Adjusted EBITDA, continuing operations (1) $309 $508 $(125)
Net Income (loss), continuing operations (1)$(396)$80 $(2,930)
Net Income (loss)$(252)$80 $(2,771)
Average Common Shares during the quarter 26,504,868  26,489,438  26,489,438 
 As At
BALANCE SHEET INFORMATION:Sept. 30, 2023June 30, 2023March 31, 2023
Cash balances & GIC investments (1)$4,909 $9,428 $10,114 
Total funded debt as reported, IFRS$0 $0 $500 
Total funded debt & lease obligations, IFRS (1)$1,226 $1,375 $2,134 
Common Shares at period end 26,643,739  26,489,438  26,489,438 

            (1)   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”).

  Three months ended
RECONCILIATION OF ADJUSTED EBITDASep 30, 2023Sep 30, 2022 
Total comprehensive income (loss) from continuing operations$(396)$(404) 
Deferred income tax expense (recovery) (26) -  
Interest expense 65  78  
Depreciation and amortization 314  276  
Amortization on capitalized commission -  3  
Share based payments 99  (81) 
Reorganization and acquisition expense 250  355  
Adjusted EBITDA from continuing operations$309 $227  

The Company’s (“RMR”) from continuing operations during the last eight quarters are summarized below. Gross profit margins over the last eight quarters ranged between 37.7% and 42.8%, and were 39.5% on a trailing twelve-month basis to September 30, 2023:

Avante Security                 F22(1)                            F23(1)F24
$thousandsQ3Q4Q1Q2Q3Q4Q1Q2
RMR in the period$2,416 $2,488 $2,463 $2,584 $2,600 $2,691 $2,648 $2,834 
Other revenue 2,335  2,450  2,105  2,350  2,492  2,675  2,762  2,505 
Total revenue$4,751 $4,938 $4,568 $4,934 $5,092 $5,366 $5,410 $5,339 
         
Total Gross Profit$2,143 $2,087 $1,995 $1,921 $2,177 $2,029 $2,039 $2,118 
Gross Profit % 45.1% 42.3% 43.7% 38.9% 42.8% 37.8% 37.7% 39.7%

      (1)   The Company’s fiscal year end is on March 31 of each year. “F23” means the fiscal year ended March 31, 2023; and “F24” means the fiscal year ended March 31, 2024.

INVESTOR WEBINAR SCHEDULED FOR TUESDAY, DECEMBER 5, 2023 at 1:00 pm ET (10:00 am PT)

The Company will also host an investor webinar to provide a corporate update and overview of the business, on Tuesday, December 5, 2023 at 1:00 pm ET (10:00 am PT). The call will be hosted by: Emmanuel Mounouchos, CEO, Chairman, and Founder of Avante, and Raj Kapoor, CFO of Avante.

Webinar Details:

Webinar Registration:      https://bit.ly/Avante_Q2_2024
Date: December 5, 2023
Time: 1:00 pm ET (10:00 am PT)
Dial-in: 778-907-2071 (Vancouver local)
 647-374-4685 (Toronto local)
Confirmation #:  849 3804 9871

              

ABOUT AVANTE CORP.:

Avante Corp Inc. is a Toronto based provider of high-end security services. We acquire, manage, and build industry leading businesses which provide specialized, mission-critical solutions that address the needs of our customers. Our businesses continuously develop innovative solutions that enable our customers to achieve their objectives. With an experienced team and a proven track record of solid growth, we are taking steps to establish a broad portfolio of security businesses to provide our customers and shareholders with exceptional returns. Avante is listed on the TSX Venture Exchange under the ticker “XX”. For more information, please visit www.avantecorp.ca and consider joining our investor email list.

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

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.

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.

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.

 


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