Second Quarter 2016 Results Earnings Conference Call

Transcription

1 Second Quarter 2016 Results Earnings Conference Call December 10 th, 2015

2 Forward-Looking Information 2 This document contains forward-looking information within the meaning of applicable Canadian securities legislation. Such forward-looking information includes, but is not limited to, information with respect to our objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. This forward-looking information is identified by the use of terms and phrases such as may, would, should, could, expect, intend, estimate, anticipate, plan, foresee, believe, or continue, the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. Forward-looking information is provided for the purposes of assisting the reader in understanding the Company s financial performance, financial position, cash flows, its business, operations, prospects and risks at a point in time, and to present information about management s current expectations and plans relating to the future and therefore the reader is cautioned that such information may not be appropriate for other purposes. Forward-looking information is based upon a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, the risk factors discussed under section Risk Factors in the Company s Management s Discussion and Analysis for the Second Quarter Fiscal Although the forward-looking information contained herein is based upon what we believe are reasonable assumptions, investors are cautioned against placing undue reliance on this information since actual results may vary from the forward-looking information. Certain assumptions made in preparing the forward-looking information and our objectives include: our ability to generate sufficient revenue while controlling our costs and expenses; our ability to manage our growth effectively; the absence of material adverse changes in our industry or the global economy; trends in our industry and markets; our ability to manage risks related to international expansion; our ability to maintain good business relationships with our agents and value-added resellers; our ability to expand our sales and distribution infrastructure and our marketing; our ability to develop products and technologies that keep pace with the continuing changes in technology, evolving industry standards, new product introductions by competitors and changing client preferences and requirements; our ability to purchase components for our products at competitive prices; our ability to protect our intellectual property rights; the absence of intellectual property infringement or invalidity claims against us; our ability to manage and integrate acquisitions; our ability to retain key personnel; and our ability to raise sufficient debt or equity financing to support our business growth. Consequently, all of the forward-looking information contained herein is qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained herein is provided as of the date hereof, and we do not undertake to update or amend such forwardlooking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.

3 Presenters 3 François-Xavier Souvay President and CEO Robert Comeau Executive Vice President and CFO Peter Timotheatos Senior Vice President, Financial Planning, Analysis and Results

4 Lumenpulse Inc. Second Quarter 2016 Results François-Xavier Souvay President and CEO 4

5 Highlights Q2 Fiscal Significant revenue growth - Consolidated revenues of $37.4 million, 46% growth Y/Y - Lumenpulse Product (LP) revenues of $35.1 million 60% growth Y/Y - LP revenues in North America more than doubled Y/Y Improving profitability - Consolidated Adjusted Gross Margin at 49.5% and LP Adjusted Gross Margin at 50.7% - Adjusted EBITDA of $4.2 million, or 11.1% - Adjusted Net Income of $2.8 million (Net Income of $2.6 million) - Adjusted Diluted EPS of $0.11 (Diluted EPS of $0.10) Consolidated Adjusted Gross Margin at the higher end of our long term guidance of 48% - 50%

6 North American Market 6 Q2 Accomplishments Strong growth of Lumenpulse Products in North America, 105% Y/Y Strong demand for all Lumenpulse products led by our core products Lumenbeam and Lumenfacade Strong demand for new Lumenfacade Inground Gaining market share in Western US Several high-profile projects Training events Held our first webinar training Lumentalk, Lumenarea and DMX RDM training Continued education for sales staff and sales network

7 International Market 7 Q2 Accomplishments International revenues at $8.0 million or 21% of total revenues Solid base in the UK to build upon Mid to long term investments planned to expand our presence internationally Timing of major projects in APAC/ME Several notable projects Completed urban lighting projects for the City of Paris Completed the Lafayette Bridge for the City of Lyon Began 1 st phase of Strasbourg Cathedral Early penetration in new markets (Spain and Australia) Marketing Showcased at the Professional Lighting Design Convention 2015 (PLDC) in Rome

8 Product and Technology Update 8 Q2 Accomplishments Lumenbeam LBX HO luminaire won the 2015 Light Middle East Award for Outdoor Lighting Product of the Year Lumentalk installation at Next Rugby, UK named Lux Awards Controls Project of the Year Product improvements Completed the introduction of the wallwash optics throughout the Lumenfacade family of products 66 patents 1 Smart Data Bridge 1 As of October 31 st 2015

9 Manufacturing and Supply Chain 9 Q2 Accomplishments Delivered a record output Progressing towards a lean manufacturing philosophy Improving supply chain synchronization with demand Improving inventory flow and its management Strengthening our quality assurance Widened the scope of our test strategy Increased automated test stations These initiatives are impacting positively our customer service and cost structure as well as allowing for greater flexibility

10 Landmark Project MIT Collier memorial 10

11 Lumenpulse Inc. Second Quarter Fiscal 2016 Robert Comeau Executive Vice President and CFO 11 Peter Timotheatos Senior Vice President, Financial Planning, Analysis and Results

12 Key Financials Q2 Fiscal 2016 (millions CAN$ - except per share data) Unaudited Q2 was marked by Solid Y/Y revenue growth Record Adjusted Gross Margin at 49% Adjusted EBITDA growth 12 For the second quarters ended October 31, 2015 and 2014 Adjusted 1 Adjusted 1 IFRS IFRS Q Q Change Q Q Change Revenues - Consolidated Growth 46% 46% Revenues - Lumenpulse products (LP) Growth 60% 60% Gross Profit % - Consolidated 49% 44% 5 pts 49% 44% 5 pts Gross Profit % - LP 51% 46% 5 pts 50% 45% 5 pts EBITDA Net Income EPS - Diluted See the IFRS measures in Appendix as well as the Non-IFRS financial measures section at the end of the document. 2 The calculations for the second quarter include the effect of 1,137,255 stock options which are deemed to be dilutive. In the periods where the Company incurred net losses, all potentially dilutive stock options have been excluded from the calculation of diluted loss per share. All outstanding share options could potentially dilute earnings per share in the future.

13 Revenue Performance 13 LP Y/Y GROWTH: 60% Q over Q Consolidated Revenues (millions CAN$) Revenues LTM Annualized run-rate 1 Lumenpulse product revenues reached $35.1 million, a 60% growth Y/Y OMP now representing only 6.1% of total revenues Annualized Q consolidated revenues of approximately $150 million LP Product growth of 18% from Q to Q Based on Q2 consolidated revenues of $37.418M

14 Lumenpulse Products Revenues Breakdown by geographic market 14 (millions CAN$) Strong Q2 performance for LP in North America Q vs Q North America LP increased 105% Y/Y driven by: - Leveraging our existing lines of products - Further penetration of our existing network of agents and VARs - Expansion of our addressable market coverage over the last quarters - Net favourable foreign exchange impact International LP decreased by $0.7M or 8% Y/Y - Timing of major projects - Mid to long term investments planned Continuing to follow our opportunistic strategy in the APAC/ME regions

15 Profitability EBITDA Margin Adjusted EBITDA breakdown For the past 5 quarters we remained profitable with Q2 at a record Adjusted EBITDA of 11% EBITDA breakdown (unadjusted for unusual and non recurring items) Q Adjusted EBITDA increasing to 11%, a 6 percentage point increase Y/Y driven by: Adjusted LP GM % improvement due to: - Manufacturing efficiencies and a higher production capacity utilization - Cost reduction initiatives - A favourable mix (proportion of native products) Decrease in Adjusted OPEX % Y/Y mainly due to the leveraging of previous OPEX investment Q Adjusted EBITDA increasing 5 percentage points from Q1 to Q2 mainly driven by : Operating leverage which delivered a decrease in Adjusted OPEX % of 3 percentage points 1 Numbers truncated for calculation purposes

16 Adjusted OPEX Analysis 16 (% of Total Revenues) Q2 Adjusted OPEX % at 38%: Benefits of operational leverage materializing in Q2 Downward trend is expected to continue consistent with our long term guidance (millions CAN$) OPEX increased in Q2 vs last year due to: Additional headcount to support growth Variable compensation costs Unfavourable F/X impact IFRS Measures (OPEX - Total) Q Q Q Q Q (M CAD$) (%) 42% 42% 42% 47% 42%

17 Key Financials Balance sheet and cash flow overview (millions CAN$) Strong balance sheet 17 As at October As at April Record positive operating cash flow of $5.1M Change Cash Working capital Revolving credit facilities Long term debt Cash flow from operating activities before net change in non-cash operating items Q Q Change Net change in non-cash operating items Operating cash flow Capital expenditures (0.8) (1.1) 0.3 Cash flow after capital expenditures Long term debt is comprised of finance lease obligations and other loans. Includes current portion.

18 Cash Flow Cycle Elements 18 (millions CAN$) Cash flow from operating activities Positive Q2 cash flow from operating activities due to EBITDA improvement Stable quarterly capital spending despite strong growth, confirming available production capacity Maintaining DSO level within target levels Inventory reduced to $18M in Q2 despite increased demand. Turnover improved to 3.2x

19 Going Forward Continue to gain share in North America Continue to invest in targeted international markets Focus our efforts on promoting and selling LP products in Europe Increase production capacity utilization and drive profitability via operating leverage Continue to evaluate potential acquisitions Goal remains to maintain Adjusted Gross Profit margins close to 50%, and to reach Adjusted EBITDA margins of approximately 18% to 20% within the next four years

20 Thank you There s more online Lumenpulse.com Questions? Investor Relations IR@lumenpulse.com 20

21 Appendix

22 Key Financials YTD Fiscal (millions CAN$ - except per share data) Unaudited For the six-month periods ended October 31, 2015 and 2014 Adjusted 1 Adjusted 1 IFRS IFRS IFRS YTD 2016 YTD 2015 Change YTD 2016 YTD 2015 Change Revenues - Consolidated Growth 57% 57% Revenues - Lumenpulse products (LP) Growth 72% 72% Gross Profit % - Consolidated 49% 43% 6 pts 48% 43% 5 pts Gross Profit % - LP 50% 45% 5 pts 49% 44% 5 pts EBITDA (0.8) 5.6 Net Income (Loss) 5.1 (0.8) (1.9) 5.9 EPS (Loss per Share) - Diluted (0.03) (0.08) See the Non-IFRS financial measures section at the end of the document. 2 The calculations for the six-month period ended October 31, 2015 include the effect of 1,281,474 stock options which are deemed to be dilutive. In the periods where the Company incurred net losses, all potentially dilutive stock options have been excluded from the calculation of diluted loss per share. All outstanding share options could potentially dilute earnings per share in the future. 3 The terms Adjusted EBITDA and Adjusted EBITDA margin do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers

23 Reconciliation of Non-IFRS Measures 23 ('000 of dollars) Q2'16 YTD'16 Actual Actual Net Income (Net Loss) $2,569 $4,026 Net financing (income) cost $191 ($1,323) Income tax expenses ($14) ($209) Depreciation and amortization $1,207 $2,339 EBITDA $3,953 $4,833 Unusual and non-recurring items $0 $877 Non-cash share-based compensation $207 $461 (1) Adjusted EBITDA $4,160 $6,171 Depreciation and amortization ($1,207) ($2,339) Net financing (income) cost ($191) $1,323 Income tax expenses $14 $209 Unusual and non-recurring tax recoveries $0 ($277) Adjusted Net Income (Net Loss) $2,776 $5,087 (2) Adjusted Earnings (Loss) per share - Diluted $0.11 $0.20 (1) Includes Restructuring costs (2) Includes exceptional deferred tax recovery indirectly resulting from purchase price allocation estimates For reconciliation of all non-ifrs measures please refer to please refer to Reconciliation of Non-IFRS Measures in the Company's Management's Discussion & Analysis for the Second Quarter Fiscal 2016 filed with the Canadian securities regulatory authorities, which is available on the SEDAR website at

24 Non-IFRS Measures 24 This document makes reference to certain non-ifrs measures. These non-ifrs measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these. measures are provided as additional information to complement IFRS measures by providing further understanding of our results of operations from management s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non-ifrs measures including EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Gross Profit, Adjusted Operating Expenses, Adjusted Selling and Marketing Expenses, Adjusted Research and Development Expenses, Adjusted General and Administrative Expenses and Adjusted Earnings (Loss) per share- basic and diluted to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. EBITDA is defined as earnings before net financing (income) costs, income taxes, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA less unusual and non-recurring items, and noncash share-based compensation. Unusual and non-recurring items is defined as expenses incurred for the initial public offering ( IPO ), acquisition-related costs and restructuring costs. Adjusted Net Income (Loss) is defined as net income (loss) before net change in carrying value of the redeemable shares at the option of the holders and related financial derivative liability, early repayment fee on long-term debt, unusual and non-recurring items net of taxes, unusual and non-recurring tax recoveries and non-cash share-based compensation. Unusual and non-recurring tax recoveries is defined as income tax recoveries resulting from estimated values of acquired assets and liabilities. Adjusted Gross Profit is defined as gross profit before non-cash share-based compensation, and depreciation and amortization. Adjusted Operating Expenses is defined as operating expenses less non-cash share-based compensation, depreciation and amortization, and unusual and non-recurring items. Adjusted Selling and Marketing Expenses is defined as selling and marketing expenses less noncash share-based compensation, and depreciation and amortization. Adjusted Research and Development Expenses is defined as research and development expenses less non-cash share-based compensation, and depreciation and amortization. Adjusted General and Administrative Expenses is defined as general and administrative expenses less non-cash share-based compensation, depreciation and amortization, and unusual and non-recurring items. Adjusted Earnings (Loss) per share basic is defined as the Adjusted Net Income (Loss) on the weighted average number of ordinary shares outstanding during the period. Adjusted Earnings per share diluted is defined as the Adjusted Net Income on the weighted average number of ordinary shares outstanding during the period and all potentially dilutive stock options. Adjusted Loss per share diluted is defined as the Adjusted Net Income Loss on the weighted average number of ordinary shares outstanding during the period. In the periods where the Company incurred net losses, all potentially dilutive stock options have been excluded from the calculation of diluted loss per share. All outstanding share options could potentially dilute earnings per share in the future. For a reconciliation of net income (loss) to EBITDA, Adjusted EBITDA and Adjusted Net Income (Loss), a reconciliation of gross profit to Adjusted Gross Profit, a reconciliation of operating expenses to Adjusted Operating Expenses, a reconciliation of selling and marketing expenses to Adjusted Selling and Marketing Expenses, a reconciliation of research and development expenses to Adjusted Research and Development Expenses and a reconciliation of general and administrative expenses to Adjusted General and Administrative Expenses, see Reconciliation of Non-IFRS Measures in the Company s Management s Discussion and Analysis for the Second Quarter Fiscal 2016 filed with the Canadian securities regulatory authorities, which is available on the SEDAR website at

25