Pioneering Technology Reports 2018 Q3 Financial Results
/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/
MISSISSAUGA, ON, Aug. 29, 2018 /CNW/ - Pioneering Technology Corp. (TSXV: PTE), ("Pioneering" or the "Company"), a technology company and North America's leader in cooking fire prevention technology and products reports today its unaudited financial results for the third quarter and the nine months ended June 30, 2018. Pioneering's unaudited condensed interim financial statements and MD&A are available on SEDAR (www.sedar.com).
Financial Highlights:
- Revenue in Q3 was down 67% vs. prior year and is down 45% year to date vs. same period a year ago.
- Net loss in Q3 was ($1,105,202) vs. $1,163,675 during the same quarter year ago
- Net loss for the nine-month period declined to ($1,724,587) from a profit of $57,435 in 2017
- Total Comprehensive loss per share for the nine-month period declined to ($0.03) from $0.00 in 2017
- Gross margins remained strong at 51% and 52% respectively.
- Strong balance sheet and business fundamentals.
After delivering three consecutive years of over 50% year-over-year revenue growth and profitability, the Company has been experiencing revenue declines and no longer expects that 2018 revenue will exceed 2017 revenue. 2018 has been a year of transition. After completing its private placement in 2017 the Company began implementing plans to help accelerate its long-term growth. At present the Company has a strong balance sheet with no debt, almost $6 million in cash and short-term investments and total current assets of close to $10 million. Year to date the Company has invested in people, research and development, new products and sales and marketing activities to support its growing distributor network and its plans to make the SmartBurner available to retail consumers in the United States.
The Company believes that the decline in revenue in 2018 is primarily due to the Company's recent transition from a direct sales model to a distributor model. In the short- term this transition has resulted in some longer than usual sales cycles and time spent training and educating distributor sales teams and their customers. Under the distributor model the Company has less direct contact with the end customer and therefore less ability to directly control the pace of sales/installation activities. In addition, the Company currently has some significant customer prospects sourced by distributors that take longer to move forward as some of these customers require running pilot programs to evaluate the Company's products before making portfolio wide purchasing decisions. Although longer sales cycles are associated with these types of customers they offer the long-term benefit of large, steady and repeat sales volume. The Company's current sales pipeline is deep, active and remains strong, validating the Company's decision to move to a distributor sales model, but requires more time to mature into revenue generating activity than was previously the case under the Company's direct sales approach.
To support our distributor network, we have engaged in business development activities and recently announced new partnerships with large buying groups and insurers in the multi-residential world to provide distributor customers with even greater incentives to purchase and an even bigger return on their investment. The Company remains committed to this distributor model and believes that these longer than normal sales cycles are temporary growing pains and that it will achieve faster sales conversions over time as the Company deepens its relationships with distributors and end customers.
Some of the recent declines in net income is also due in part to recent investments made year to date to support the transition to a distributor sales model and long-term growth initiatives. Over the past nine months the Company has invested in: strengthening its management team (CFO and VP Marketing) and sales and marketing support/activities; educating its distributor network; building buying group relationships, research and development (by developing new complementary products and existing product enhancements); preparing SmartBurner for an anticipated US retail market launch; strengthening overseas partnerships; increasing its operational capabilities; and moving to a new facility all in an effort to help manage and prepare for future growth. Additionally, the Company is looking at potential acquisition opportunities that are consistent with the Company's mandate of 'protecting people and property'.
Selected Financial Highlights for the Third Quarter & Nine-months Ended June 30, 2018 & 2017:
| Three Months Ended June 30 |
Three Months Ended June 30 |
Nine Months Ended June 30 |
Nine Months Ended June 30 |
||
| Revenue |
844,706 |
2,567,510 |
3,968,863 |
7,204,028 |
|
| Total Comprehensive Income (loss) † |
(929,614) |
1,163,675 |
(1,302,680) |
57,435 |
|
| Total Comprehensive Income (loss) per share † |
(0.02) |
0.03 |
(0.03) |
0.00 |
|
| Adjusted EBITDA # |
(765,666) |
374,513 |
(1,389,529) |
1,709,754 |
|
| Total Assets |
11,704,831 |
13,565,770 |
11,704,831 |
13,565,770 |
|
| Financial liabilities † |
421,376 |
2,647,396 |
421,376 |
2,647,396 |
| † Includes non-cash items (fair value movement/derivative liability of warrants). See the MD&A for further explanation. |
| # Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures" below for further explanation. |
Q3 2018 Business Highlights
Expansion in Core Channels. The Company continued to focus on increasing its penetration into the multi-family public and affordable housing and rental housing channels, the university and college channel, the U.S. military and the retail channel. Through its growing distributor relationships, the Company has established large customer opportunities that will help deliver expansion and growth going forward with new and existing large customers. The Company believes its growing relationships with its distribution partners and the realignment of its sales resources to create greater focus on its distributor network will help fuel broader reach and deeper penetration going forward.
Partnership with Leading Buying Group. In Q3, the Company announced a strategic partnership with HPN Select. The partnership consists of HPN Select and Pioneering working together to promote Pioneering's best-selling SmartBurner to HPN Select's affordable, multi-family housing membership. HPN Select is a strategic purchasing alliance created in 2015 by 19 Housing Partnership Network (HPN) shareholders representing a collaborative of 100 of the leading affordable housing developers and property managers in the U.S. HPN Select's mission is to provide competitively priced, high quality procurement solutions for its members in the affordable housing sector. HPN Select is also partnered with Neighborworks America, a network that includes 240 of the nation's best community development organizations. As part of the new partnership, HPN Select will actively promote the SmartBurner through targeted marketing campaigns and during property site visits focused on risk and/or operating cost reduction.
Introduction of new after-market product for smooth top stoves category: In June 2017, the Company finalized a definitive partnership agreement with Innohome OY, a leading European cooking fire prevention company, with the objective of generating incremental revenue and profit by enabling sales of each company's products in the other's markets while reducing duplication of effort in R&D, sales/marketing, manufacturing and logistics. Pioneering executed an initial trial of the Innohome product, SmartRange, at Princeton University in Q4 2017. In Q1 2018, the Company initiated additional trial installations at prominent schools in upstate New York, Utah and Michigan. The results have been very positive. The Company is receiving strong interest for this new product solution and expects to initiate more installations in the remainder of 2018. This new product provides another cooking fire solution for Pioneering to offer to its customers that have glass cooktops.
Subsequent Events
Insurance Premium Reductions. In July the Company, finalized an insurance rebate program with Millers Capital Insurance Company. The company based out of Harrisburg PA is a regional property and casualty insurer serving commercial policy holders in Pennsylvania, Delaware, Maryland, Ohio, Virginia and Washington D.C. through a network of independent agents. Millers is focused on multifamily housing & dwellings and affordable housing. Millers is now marketing the rebate program to its customers to create awareness for the SmartBurner™ and the associated insurance benefits – a key focus for the Company's product/ROI story going forward.
Agreement with Leading Buying Group. In August, the Company announced another strategic partnership with Buyers Access of Denver Colorado. Buyers Access is the leading provider of purchasing optimization services and customized purchasing solutions to the multifamily industry in the United States, serving more than 600,000 housing units nationwide. As part of this partnership, Buyers Access will deliver targeted marketing programs centered around cooking fire awareness and work directly with Buyers Access member owners and operators to promote Pioneering's SmartBurner as a cooking fire prevention solution. Buyers Access is the leading Group Purchasing Organization (GPO) in the multifamily housing market and therefore a perfect partner. Buyers Access has recognized our industry leading cooking fire prevention product solutions to help better protect their member's residents and properties while also delivering a return on investment. The Company is committed to growing awareness of its product portfolio by working strategically with Buyers Access and other leading GPO's.
The Company completed its first North American Sale of SmartRange™ A New Cooking Fire Product Solution for Glass Cooktops: The Company announced on August 15, 2018 the first North American sale of its new SmartRange aftermarket product for electric ranges with glass cooktops to a prominent U.S. college. This unnamed U.S. college has on-campus housing that offers its students apartment style suites with electric glass cooktop ranges. This college recently experienced a cooking fire in one of its residences and was looking for a cooking fire prevention solution for glass cooktop ranges to help protect its students and properties while delivering peace of mind for parents, faculty and administrators. Pioneering has spent the last six months conducting pilot projects for this new aftermarket glass cooktop technology. Pioneering has been very pleased with the results and feedback from these pilot installations and has used the learning to develop a marketing program for this new product to drive additional sales opportunities going forward.
About Pioneering Technology Corp.: Pioneering Technology is an "energy smart" technology company and North America's leader in innovative cooking fire prevention technologies and products. Our mission is simple: To help save lives and property from the number one cause of household fire – cooking fires. We do this by engineering and bringing to market energy-smart solutions that make consumer appliances safer, smarter, and more efficient. Our patented cooking-fire prevention products address the multi-billion-dollar problem of cooking fires. According to the National Fire Protection Association, stovetop cooking is the number one cause of household fire and fire injuries in North America. Pioneering's patented temperature limiting control (TLC) technology is now installed in over 250,000 multi-residential housing units across North America without a single cooking fire being reported, delivering peace of mind and a solid return on investment for its customers. Pioneering's proprietary cooking fire prevention solutions include Safe-T-element, SmartBurner, RangeMinder & Safe-T-sensor and are suitable for the majority of the more than 140 million stoves/ranges and over 140 million microwave ovens in use throughout North America. For more information, visit www.pioneeringtech.com.
Forward Looking Statements
The statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in Pioneering's target markets, the demand for Pioneering's products, the availability of funding and the efficacy of Pioneering's technology and governmental regulation. These forward-looking statements are made as of the date hereof an, except as required by applicable law, Pioneering does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from Pioneering's expectations and projections.
Non-IFRS Measures
Adjusted EBITDA is a measure not recognized under International Financial Reporting Standards ("IFRS"). However, management of Pioneering believes that most shareholders, creditors, other stakeholders and investment analysts prefer to have these measures included as reported measures of operating performance, a proxy for cash flow, and to facilitate valuation analysis. Adjusted EBITDA is defined as earnings before interest income, taxes, depreciation and amortization, impairment losses, stock-based compensation, restructuring costs included in general and administration expense, fair value movement – derivative liability and other non-recurring gains or losses including transaction costs related to acquisition. Management believes Adjusted EBITDA is a useful measure that facilitates period-to-period operating comparisons. Adjusted EBITDA does not have any standard meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Readers are cautioned that Adjusted EBITDA is not an alternative to measures determined in accordance with IFRS and should not, on its own, be construed as indicators of performance, cash flow or profitability. References to the Pioneering's Adjusted EBITDA should be read in conjunction with the financial statements and management's discussion and analysis of Pioneering posted on SEDAR (www.sedar.com). For a reconciliation of Adjusted EBITDA as presented by Pioneering to net income, please refer to Pioneering's management's discussion and analysis.
This news release contains certain forward-looking statements reflecting the Company's current views or expectations on its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly.
The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy and accuracy of this release.
SOURCE Pioneering Technology Corp.
Pioneering Technology Corp.: Kevin Callahan, CEO, Phone: 647-945-7515, Email: [email protected]; For investor relations please contact: Contact Financial Corp., Rob Gamley, Phone: 604-689-7422, Email: [email protected]
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