Pluribus Technologies Corp. Announces Q3 2023 Financial Results

Third Quarter delivers Positive Adjusted EBITDA however recessionary environment continues to adversely affect revenue

TORONTO, Nov. 29, 2023 /CNW/ - Pluribus Technologies Corp. (TSXV: PLRB) ("Pluribus" or the "Company"), an acquiror of small, profitable technology companies, today announced its financial results for the third quarter ended September 30, 2023. The Company's consolidated financial statements and accompanying notes for the quarters ended September 30, 2023 and 2022 are available under Pluribus' profile on SEDAR (www.sedarplus.com). All dollar amounts are in thousands of Canadian dollars unless otherwise noted. Certain metrics, including Adjusted EBITDA, are non-IFRS measures (see "Non-IFRS Measures" below).

"We continue to experience a challenging macroeconomic environment, impacting customer spending at eLearning and increased churn within eCommerce," said Richard Adair, CEO of Pluribus Technologies. "In light of the lack of growth in 2023, we have announced a second round of restructuring to right size our cost base to current revenue levels. We are also exploring strategic alternatives to maximize shareholder value through a strategic review process, announced today. The management team will continue to execute on our business strategy to drive revenue growth during the strategic review."

Selected Financial and Business Highlights for the Fourth Quarter

• Revenue for the three months to September 30, 2023, was $9,166, a decline of 15% when compared to the prior year quarter. The decline in revenue was primarily driven by lower customer spending at the Learning Network. Adjusted EBITDA¹ for the quarter decreased by $1,009, or 49%.
• Revenue for the nine-month period ended September 30, 2023 declined by 2% to $27,542 in 2023. For the nine months ended September 30, 2023, Adjusted EBITDA was $2,847, a decrease of 30% versus the comparable period. The decrease was the result of lower Adjusted EBITDA from the eLearning business unit.
• A second round of restructuring which will reduce annualized costs by $1,600 to $1,800 was initiated in November 2023. This is in addition to the announcement in August 2023 of an initial restructuring with annualized savings of $1,200 to $1,400. These cost savings will be achieved through the reduction of the employee base across a number of businesses. These annualized costs totalling $2,800 to $3,200 are expected to be fully implemented in 2023 and fully reflected in operating results in Q1 2024.
• Net loss for the quarter ended September 30, 2023 was $2,264, an increase of 19%, versus the comparable period. The increase in net loss is attributable to the decline in Adjusted EBITDA and income tax recovery, primarily offset by a decrease in share-based compensation, foreign exchange and the gain on deferred consideration recognized the quarter.
• For the nine months ended September 30, 2023, net loss was $6,139, a decrease of 35%, versus the comparable period. The loss to September 2023 declined due to a reduction in acquisition costs, share-based compensation, foreign exchange and nil transaction costs, offset by an increase in the income taxes and a decline in Adjusted EBITDA.
• Cash on hand at September 30, 2023 was $1.7 million compared with $5.3 million on December 31, 2022. During Q4, the Company determined that it was not in compliance with its external debt covenants under the FY2022 Credit Facility relating to its financial position as at September 30, 2023. The Company has advised National Bank of such default and National Bank has issued a reservation of rights letter in relation thereto. The Company is currently in discussions with National Bank regarding potential steps to rectify this default, including further amendments to the terms of the covenants under the facility.

¹ Adjusted EBITDA is a non-IFRS measure as described in the "Non-IFRS Measures" section of this news release. These measures are not recognized measures under IFRS, do not have a standardized meaning under IFRS and are, therefore, unlikely to be comparable to similar measures presented by other companies. 

Results of Operations

(000's)	Three Months					Nine Months
For the period ended September 30,	2023	2022	Var	Var		2023	2022	Var	Var
	$	$	$	%		$	$	$	%
Revenue	9,166	10,746	(1,580)	-15 %	#	27,542	28,057	(515)	-2 %
Gross Profit	5,981	6,887	(906)	-13 %	#	17,500	18,061	(561)	-3 %
Operating Expenses	4,919	4,816	103	2 %	#	14,653	13,998	655	5 %
Non-Operational Expenses	3,328	4,442	(1,114)	-25 %	#	8,933	14,082	(5,149)	-37 %
Net Loss	(2,264)	(1,907)	(357)	-19 %	#	(6,139)	(9,444)	3,305	35 %
Adjusted EBITDA	1,062	2,071	(1,009)	-49 %		2,847	4,063	(1,216)	-30 %
Adjusted EBITDA %	11.6 %	19.3 %		-7.7 %		10.3 %	14.5 %		-4.1 %

Outlook

While management believes all the business units have significant opportunity, the Company continues to be negatively affected by lower customer spending in the eLearning and eCommerce verticals in a difficult macro-economic recessionary environment.

Management continues to closely monitor cash to meet our operating obligations and debt service requirements. To address its financing requirements, the Company will explore the viability of raising capital through debt financing/refinancing, equity rights offerings, and the sale of core and/or non-core assets. The Company will also focus on increasing cashflow from operations by restructuring its cost base to align to current revenues and prioritizing projects with a greater expected rate of return.

To facilitate finding a solution to address these challenges, in November 2023, the Company announced a review and evaluation of strategic alternatives that may be available to the Company to further enhance the Company's growth, development and prosperity in the short and long terms with the goal of maximizing shareholder value. The Company has established a Special Committee of the Board of Directors for such purpose and has engaged Canaccord Genuity as its strategic advisor. There can be no assurances that the strategic review process will result in a transaction and whether such transaction will have its intended outcome.

Conference Call Details

Pluribus' management team will host a conference call to discuss its fiscal 2023 second quarter financial results on Thursday November 30, 2023.

Date: Thursday November 30, 2023
Time: 8:30 a.m. EST

To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/3RfKXmN to receive an instant automated call back.

Dial-In Numbers: [phone] or [phone]
Conference ID: 84045051
Webcast: Available on the Events & Presentations page of the Company's investor website
Replay: [phone] or [phone] (playback code: 045051#) – available until midnight (EST) on December 7, 2023

About Pluribus Technologies Corp.

Pluribus is a technology company that is a value-based acquirer and operator of small, profitable business-to-business technology companies in a range of verticals and industries. Pluribus provides its acquisitions access to experienced sales and marketing resources, strategic partnership opportunities, a diverse portfolio of customers in different geographical markets and enabling technologies to create new revenue streams and provide the opportunity for these companies to grow in their respective markets. When market conditions are conducive to raising capital at reasonable costs, Pluribus focuses on rapidly acquiring and integrating new acquisitions to accelerate growth. When the environment does not support this, Pluribus focuses on implementing strategies to maximize organic growth and increase cashflow from operations in its existing portfolio companies. For more information, please visit: pluribustechnologies.com.

Non-IFRS Measures

The Company uses non-IFRS measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Company uses Adjusted EBITDA as a measure of operating performance. Management uses Adjusted EBITDA to evaluate operating performance as it excludes amortization of software and intangibles (which is an accounting allocation of the cost of software and intangible assets arising on acquisition), any impact of finance and tax related activities, asset depreciation, foreign exchange gains and losses, other income, restructuring and transition costs primarily related to acquisitions and other one-time non-recurring transactions.

Reconciliation of Non-IFRS Measures

The Company uses the non-IFRS measure Adjusted EBITDA to evaluate performance. The following table presents the reconciliation from net income (loss) to Adjusted EBITDA for the three and nine months ended September 30, 2023.

	Three Months					Nine Months
For the period ended September 30,	2023	2022	Var	Var		2023	2022	Var	Var
	$	$	$	%		$	$	$	%
Total Revenue	9,166	10,746	(1,580)	-15 %		27,542	28,057	(515)	-2 %
Net loss for the period	(2,264)	(1,907)	(357)	19 %		(6,139)	(9,444)	3,305	-35 %
Acquisition costs	1,354	1,389	(35)	-3 %		2,655	3,925	(1,270)	-32 %
Transaction costs	—	—	—	N/A		—	1,665	(1,665)	-100 %
Amortization and depreciation	1,354	1,471	(117)	-8 %		4,141	3,992	149	4 %
Share-based compensation	95	437	(342)	-78 %		373	1,716	(1,343)	-78 %
Gain on revaluation of contingent consideration	(332)	—	(332)	N/A		(332)	—	(332)	N/A
Gain on disposal of fixed assets	(2)	—	(2)	N/A		(2)	—	(2)	N/A
Loss on lease termination	2	—	2	N/A		2	—	2	N/A
Loss from change of fair value of financial liabilities	—	—	—	0 %		—	9	(9)	-100 %
Finance expense, net	681	624	57	9 %		2,109	1,630	479	29 %
Foreign exchange loss (gain)	176	521	(345)	-66 %		(13)	1,145	(1,158)	-101 %
Income tax expense (recovery)	(2)	(464)	462	-100 %		53	(575)	628	-109 %
Total Adjustments	3,326	3,978	(652)	-16 %	#	8,986	13,507	(4,521)	-33 %
Adjusted EBITDA	1,062	2,071	(1,009)	-49 %		2,847	4,063	(1,216)	-30 %
Adjusted EBITDA %	11.6 %	19.3 %		-7.7 %		10.3 %	14.5 %		-4.1 %

Forward-Looking Information

Certain information in this press release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information in this press release includes, but is not limited to, statements with respect to the business plans of the Company, including the completion of future acquisitions, the Company management's expectation on the growth, profitability and performance of its portfolio companies, the Company's ability to acquire business-to-business technology companies in the future, the Company's ability to grow its portfolio companies, the results and effectiveness of the Company's internal restructuring, results of discussions with National Bank, and the Company achieving a positive transaction as a result of its strategic review process. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "potential", "believe", "intend" or negatives of these terms and similar expressions.

Forward-looking statements are based on certain assumptions, including the Company's ability to manage a complex portfolio of companies effectively; and the Company's ability to raise sufficient financing to continue its acquisition strategy. Other assumptions include industry trends, the availability of growth opportunities, and general business, economic, competitive, political, regulatory and social uncertainties will not prevent the Company from conducting its business. While the Company considers these assumptions to be reasonable based on information currently available, they are inherently subject to significant business, economic and competitive uncertainties and contingencies and they may prove to be incorrect. Forward-looking information speaks only to such assumptions as of the date of this release.

Forward-looking statements also necessarily involve known and unknown risks, including without limitation, risks associated with general economic conditions, including the COVID-19 pandemic, adverse industry events, marketing costs, loss of markets, future legislative and regulatory developments, the inability to access sufficient capital on favourable terms, the Company's limited operating history; ability to complete favourable acquisitions; the technology industry in Canada and internationally, income tax and regulatory matters, the ability of the Company to execute its business strategies, including the ability manage a complex portfolio of companies effectively, competition, currency and interest rate fluctuations, and other risks.

Readers are cautioned that the foregoing is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ from those anticipated. Forward-looking statements are not guarantees of future performance. The purpose of forward-looking information is to provide the reader with a description of management's expectations, and such forward-looking information may not be appropriate for any other purpose. Except as required by law, the Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

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

Contact: 

Richard Adair
Chief Executive Officer
Pluribus Technologies Corp.
1 [phone]

SOURCE Pluribus Technologies Corp.