Tantalus Systems Holding Inc. Reports Financial Results for Q2 of 2023

Delivers record results for revenue during a second quarter and gross profit margin while posting positive Adjusted EBITDA and investing in future growth

Burnaby, British Columbia--(Newsfile Corp. - August 14, 2023) - Tantalus Systems (TSX: GRID) ("Tantalus" or the "Company"), a smart grid technology company focused on helping build sustainable utilities for the future, is pleased to announce its financial and operating results for the quarter ended June 30, 2023 ("Q2").

Financial Highlights for Q21:

  • Revenue: Generated $11.2 million (CND$15.0 million), representing 24% growth over the prior year period and setting a new milestone for revenue generated during the second quarter of a year. Revenue in Q2 from the Utility Software Applications and Services segment ("Software & Services") represented 37% of total revenue in the quarter and included the first commercial license of the C.IQ Connect software platform to an investor-owned utility.

    Coupled with its first quarter revenue results, the Company set a new milestone for revenue generated during the first six months of a year at $21.6 million (CND$29.2 million).

  • Annual Recurring Revenue (ARR)²: Grew to approximately $10.5 million (CND$14.1 million), representing 17% growth over the prior year period. Recurring Revenue recognized in the quarter represented 25% of total Q2 revenue.

  • Gross Profit² Margin: Delivered 56% as compared to 46% from the prior year period. The Gross Profit Margin for Q2 establishes a new high-water mark for Gross Profit Margin during a quarter and was bolstered by strong revenue contributions from Software & Services.

  • Adjusted EBITDA²: Delivered $0.3 million (CND$0.4 million) of positive Adjusted EBITDA as compared to negative $1.5 million (negative CND$1.9 million) for the prior year period. The Company delivered positive Adjusted EBITDA while continuing its heavy investment in the commercialization of the TRUSense™ Gateway, a turnkey solution designed to accelerate utilities' modernization of the electric distribution grid.
  • Total Assets: Ended the quarter with $37.0 million (CND$49.0 million) as compared to $37.4 million (CND$50.7 million) as of December 31, 2022.

  • Sales Orders: The Company converted an additional $5.2 million (CND$6.9 million) in orders from its sales pipeline and increased its user community to 283 utilities through the addition of 5 new customers in Q2. The Company set a new milestone for orders converted during the first six months of the year by securing $22.6 million (CND$30.4 million) in orders through June 30th.

  • Fortified Balance Sheet: The Company closed a 6-year term loan for up to $7.0 million from Export Development Canada (EDC) to fortify its balance sheet, which is timely in anticipation of activating field trials of the TRUSense Fiber Gateway.

"Q2 represented another strong quarter for Tantalus, with a number of important milestones achieved by our team. We are pleased to remain on a favorable trajectory for our shareholders," said Peter Londa, President & CEO of Tantalus. "Our strong financial results put us in an excellent position to continue investing in the development and deployment of innovative solutions, such as our TRUSense Gateway, the Congruitive software platform and other data analytics capabilities. We believe these investments in our solutions represent a substantial near- and long-term opportunity for the company."

The Company will hold a conference call and webcast to discuss the financial results on Tuesday, August 15, 2023, at 11:00 am Eastern Time.

Conference Call

Participant Dial In (Toll Free): 1-844-854-4410
Participant International Dial In: 1-412-317-5791

Webcast

Webcast URL: https://event.choruscall.com/mediaframe/webcast.html?webcastid=bHUt3I4A

Replay Information

A conference call and webcast replay will be available until August 22, 2023. To access the conference call replay, please see details below:

US Toll Free: 1-877-344-7529
International Toll: 1-412-317-0088
Canada Toll Free: 1-855-669-9658
Replay Access Code: 6618356

Financial Statements and Management Discussion & Analysis

Please see the Company's consolidated financial statements ("Financial Statements") and related Management's Discussion & Analysis ("MD&A") for more details. The Financial Statements for the three months ended June 30, 2023, and related MD&A have been reviewed and approved by Tantalus' Audit Committee and Board of Directors. For a more detailed explanation and analysis, please refer to the MD&A that has been filed on SEDAR+ at www.sedarplus.ca and is also available on the Company's website at www.tantalus.com.

Non-IFRS and Other Financial Measures
This press release refers to the following non-IFRS measures:

"EBITDA" is comprised as income (loss) less interest, income tax and depreciation and amortization. Management believes that EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. "Adjusted EBITDA" is comprised as income (loss) less interest, income tax, depreciation, amortization, stock-based compensation, foreign exchange gain (loss) and other income / expenses not attributable to the operations of the Company. Management believes that Adjusted EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. See "Reconciliation of Net (Loss) / Income to Adjusted EBITDA" for a quantitative reconciliation of Adjusted EBITDA to the most directly comparable financial measure.

"Gross Profit" is comprised as the Company's revenues less cost of sales. Management believes that Gross Profit is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. See "Gross Profit Reconciliation" for a quantitative reconciliation of Gross Profit to the most directly comparable financial measure. This press release refers to "Gross Profit Margin" which is a non-IFRS ratio. Gross Profit Margin is comprised of Gross Profit expressed as a percentage of the Company's revenues. Management believes that Gross Profit Margin is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company.

"Adjusted Working Capital" is comprised as current assets less current liabilities exclusive of the Company's bank loan and contingent consideration on the Congruitive acquisition. Management believes Adjusted Working Capital is a useful indicator for investors, and is used by management, for evaluating the operating liquidity to the Company. See "Adjusted Working Capital Reconciliation" for a quantitative reconciliation of Adjusted Working Capital to the most directly comparable financial measure.

"Recurring Revenue" is comprised of the Company's revenues that are recurring in nature and attributable to its analytics and other software as a service ("SaaS") offering, hosting services and software maintenance and technical support agreement services. "Annual Recurring Revenue" or "ARR" is comprised of the Company's Recurring Revenue as expressed on an annualized revenue basis attributable to its customer agreements at a point in time.

Such non-IFRS measures and non-IFRS ratio do not have a standardized meaning under IFRS and may not be comparable to a similar measure disclosed by other issuers.

Gross Profit Margin Reconciliation

     Three months           Three months           Six months           Six months      
     ended June 30,           ended June 30,           ended June 30,           ended June 30,      
     2023     %     2022     %     2023     %     2022     %
Revenue  $ 11,220,916     100%   $ 9,075,464     100%   $ 21,633,603     100%   $ 18,366,942     100%
Cost of sales    4,977,312     44%     4,911,669     54%     10,527,290     49%     9,782,034     53%
Gross Profit  $ 6,243,604     56%   $ 4,163,795     46%   $ 11,106,313     51%   $ 8,584,908     47%


Reconciliation of Net (Loss)/Income to Adjusted EBITDA

    Three months     Three months     Six months     Six months
    ended June 30,     ended June 30,     ended June 30,     ended June 30,
    2023     2022     2023     2022
Loss for the period $ (941,659)
$ (2,410,646)
$ (2,578,709)
$ (4,200,029)
Finance expense (a)   389,077     252,249     743,766     489,235
Income taxes   23,621     30,983     23,725     30,983
Depreciation and amortization   459,624     551,225     918,384     1,044,394
EBITDA   (69,337)
  (1,576,189)
  (892,834)
  (2,635,417)
Stock-based compensation (b)   118,819     201,940     224,947     404,996
Foreign exchange (c)   121,683     (121,575)
  147,433     (506,625)
Congruitive acquisition related costs (d)   -     -     -     586,960
EDC Loan related legal costs (e)   80,000     -     80,000     -
Adjusted EBITDA $ 251,165   $ (1,495,824)
$ (440,454)
$ (2,150,086)


(a)
Finance expense comprised of interest and related finance expense on bank loans and lease liabilities.
(b) Share-based non-cash compensation expense.
(c) Foreign exchange comprised of unrealized (gain) / loss from non-functional currency assets and liabilities.
(d) General and administrative expenses pertaining to the Company's acquisition of Congruitive.
(e) Legal fees pertaining to the EDC Loan.

Adjusted Working Capital Reconciliation

    June 30,     December 31,
Adjusted Working Capital   2023     2022
Total current assets $ 23,286,001   $ 22,794,298
Less: current liabilities   (32,402,915)
  (29,496,580)
    (9,116,914)
  (6,702,282
Add: Bank loans - current portion   8,794,311     9,200,000
Add: Contingent consideration on Congruitive acquisition   2,458,702     2,458,702
Adjusted Working Capital $ 2,136,099   $ 4,956,420


About Tantalus Systems Holding Inc. (TSX: GRID)

Tantalus is a smart grid technology company that transforms aging one-way grids into future-proofed multi-directional grids that improve the efficiency, reliability and sustainability of utilities and the communities they serve. Our solutions are purpose-built to allow utilities to restore power quickly after major disruptions, adapt to rapidly shifting consumer expectations and population shifts, innovate new solutions based on the adoption of distributed energy resources and evolve their grid infrastructure at their own pace without needless cost or complexity. All this gives our user community the flexibility they need to get the most value from existing infrastructure investments while planning for future requirements. Learn more at www.tantalus.com.

Forward-Looking Statements:

This news release contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information is generally identifiable by use of the words "believes", "may", "plans", "will", "anticipates", "intends", "could", "estimates", "expects", "forecasts", "projects" and similar expressions, and the negative of such expressions. Forward-looking information in this news release includes statements such as those relating to: increasing demand for the Company's solutions going forward, the adoption, performance and development of the Company's solutions, such as the TRUSense Gateway and data analytics, and the benefits of investment in related R&D initiatives to support and accelerate growth for the Company in the near- and long-term.

To the extent any forward-looking information in this news release constitutes a "financial outlook" within the meaning of securities laws, such information is being provided because management's estimate of the future financial performance of Tantalus is useful to investors, and readers are cautioned that this information may not be appropriate for any other purpose and that they should not place undue reliance on such information.

In connection with the forward-looking information contained in this news release, Tantalus has made numerous assumptions, regarding, among other things: the expected impact of COVID-19, the expected impact of supply chain constraints, the expected impact of inflationary pressures on costs and the expected timing of new product introductions. While Tantalus considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies. Additionally, there are known and unknown risk factors which could cause Tantalus' actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. A complete discussion of the risks and uncertainties facing Tantalus is disclosed under the heading "Risk Factors" in the Tantalus' Annual Information Form dated March 31, 2023, as well as those risk factors included with Tantalus' continuous disclosure filings with Canadian securities regulatory authorities available at www.sedarplus.ca. All forward-looking information herein is qualified in its entirety by this cautionary statement, and Tantalus disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.

Contact Tantalus:

Deborah Honig
Investor Relations
647-203-8793 | deborah@adcap.ca
Website: www.tantalus.com
LinkedIn: LinkedIn/company/tantalus
Twitter: @TantalusCorp


[1] Financial information is reported in United States dollars ("$") unless otherwise stated and in accordance with International Financial Reporting Standards ("IFRS"). Where balances are also expressed in Canadian dollars ("CND$") in this press release, an average foreign exchange rate of 0.7447 and 0.7421 for the three and six months ended June 30, 2023 (0.7834 and 0.7866 for three and six months ended June 30, 2022) for income statement items and a foreign exchange rate of 0.7553 as at June 30, 2023 (0.7760 as at June 30, 2022 and 0.7383 as of December 31, 2022) for balance sheet items has been applied.

[2] See "Non-IFRS and Other Financial Measures."

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/177092

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