EnWave Reports 2023 Third Quarter Consolidated Interim Financial Results
VANCOUVER, British Columbia, Aug. 25, 2023 (GLOBE NEWSWIRE) — EnWave Corporation (TSX-V:ENW | FSE:E4U) (“EnWave”, or the “Company”) today reported the Company’s consolidated interim financial results for the third quarter ended June 30, 2023.
All values in thousands and denoted in CAD unless otherwise stated.
- Reported revenue for Q3 2023 of $2,486, representing a decrease of $174 relative to the comparable period in the prior year. The decrease was partially offset by royalty revenues of $394, representing an increase of $93 relative to the comparable period in the prior year.
- Reported an Adjusted EBITDA(1) loss of $192 for Q3 2023, an improvement of $32 from the comparable period in the prior year.
- Reported an overall decrease in Selling, General & Administrative (“SG&A”) costs (including Research & Development (“R&D”)) of $569 for Q3 2023 relative to the comparable period in the prior year, with the decrease primarily related to a continued focus on managing non-revenue generating spending.
- Reported cash and cash equivalents of $4,471 and no debt as at June 30, 2023, an increase of $984 from March 31, 2023.
- Signed a Commercial License Agreement with Bridgford Foods and sold a 120kW REVTM machine to produce military ration components for the U.S. Army, among others.
Consolidated Financial Performance:
| ($ ‘000s) | Three months ended June 30, | Nine months ended June 30, | |||||||||||||||
| 2023 | 2022 | Change % |
2023 | 2022 | Change % |
||||||||||||
| Revenues | 2,486 | 2,660 | (7 | %) | 9,906 | 8,224 | 20 | % | |||||||||
| Direct costs | (1,767 | ) | (1,423 | ) | 24 | % | (5,894 | ) | (4,147 | ) | 42 | % | |||||
| Gross margin | 719 | 1,237 | (42 | %) | 4,012 | 4,077 | (2 | %) | |||||||||
| Operating expenses | |||||||||||||||||
| General and administration | 501 | 736 | (32 | %) | 1,753 | 2,200 | (20 | %) | |||||||||
| Sales and marketing | 277 | 576 | (52 | %) | 1,167 | 1,681 | (31 | %) | |||||||||
| Research and development | 408 | 443 | (8 | %) | 1,220 | 1,530 | (20 | %) | |||||||||
| 1,186 | 1,755 | (32 | %) | 4,140 | 5,411 | (23 | %) | ||||||||||
| Net income(loss) continuing operations | (918 | ) | (807 | ) | (14 | %) | (974 | ) | (2,191 | ) | 56 | % | |||||
| Net loss discontinued operations | (1,031 | ) | (1,208 | ) | 15 | % | (5,703 | ) | (2,463 | ) | (132 | %) | |||||
| Adjusted EBITDA(1) | (192 | ) | (224 | ) | 14 | % | 703 | (654 | ) | 207 | % | ||||||
| Loss per share: | |||||||||||||||||
| Basic and diluted – continuous operations | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | |||||
| Basic and diluted – discontinued operations | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.02 | ) | |||||
| $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.04 | ) | ||||||
(1) Adjusted EBITDA is a non-IFRS financial measure. Refer to the Non-IFRS Financial Measures disclosure below for a reconciliation to the nearest IFRS equivalent.
EnWave’s annual consolidated financial statements and MD&A are available on SEDAR at www.sedar.com and on the Company’s website www.enwave.net
Key Financial Highlights for the Nine Months Ended Q3 2023 (expressed in ‘000s):
- Revenue for the nine months ended Q3 2023 of $9,906, compared to $8,224 for the nine months ended Q3 2022, an increase of $1,682. The increase in revenue was primarily due to the resale of two large-scale machines, relative to the comparable period of the prior year which had one machine resale.
- Royalty Revenues for the nine months ended Q3 2023 of $1,085, compared to $1,051 for the nine months ended Q3 2022, an increase of $34. The increase in royalties was a result of increased production and sales by current Partners in Q3 2023.
- Gross margin for the nine months ended Q3 2023 was 41% compared to 50% for the nine months ended Q3 2022. The decrease in margin was a result of the overall machine sale mix, including resales, relative to the comparable period of the prior year.
- SG&A expenses (including R&D) for the nine months ended Q3 2023 of $4,140, compared to $5,411 for the nine months ended Q3 2022, a decrease of $1,271. The decrease resulted from concerted efforts to maintain discretionary spending, including lower personnel costs across all departments.
- Adjusted EBITDA (refer to Non-IFRS Financial Measures section below) for the nine months ended Q3 2023 was $703, compared to a loss of $654 for the nine months ended Q3 2022, an increase of $1,357. The increase in adjusted EBITDA was primarily due to the wind down of NutraDried and its classification as discontinued operations, the resale of two large scale machines and the reduction of SG&A expenses (including R&D).
Significant Corporate Accomplishments in Q3 2023 and Subsequently:
- Sold a 120kW REV™ machine to Bridgford Foods in partnership with the United States Department of Defence for production of military rations. Bridgford will also use the REVTM technology to develop additional consumer-branded products at their North Carolina facility.
- Signed a Technology Evaluation and License Option Agreement with Moleciwl Cyf of Wales to develop fruit and vegetable products for the Welsh market.
- Received approval for a cost-shared funding project through the Food Processing Growth Fund, for which we gratefully acknowledge the financial support of the Province of British Columbia through the Ministry of Agriculture and Food. The program will fund up to 75% of approved project costs to a maximum contribution in the amount of $750. The funding will be used for capital additions to the REVworx™ facility, including but not limited to a retail packaging system.
- NutraDried received correspondence from the Internal Revenue Service advising a tax refund of $497 USD, of an estimated total potential $1,183 USD tax refund, would be issued in Q4 2023 relating to the Employee Retention Tax Credit for businesses affected during the COVID-19 pandemic. There has not been any additional correspondence from the Internal Revenue Service concerning the remaining tax refund and there is no certainty it will be issued.
Non-IFRS Financial Measures:
This news release refers to Adjusted EBITDA which is a non-IFRS financial measure. We define Adjusted EBITDA as earnings before deducting amortization and depreciation, stock-based compensation, foreign exchange gain or loss, finance expense or income, income tax expense or recovery and non-recurring impairment, restructuring and severance charges, government assistance and discontinued operations. This measure is not necessarily comparable to similarly titled measures used by other companies and should not be construed as an alternative to net income or cash flow from operating activities as determined in accordance with IFRS. Please refer to the reconciliation between Adjusted EBITDA and the most comparable IFRS financial measure reported in the Company’s consolidated financial statements.
| Three months ended June 30, |
Nine months ended June 30 |
|||||||||
| ($ ‘000s) | 2023 | 2022 | 2023 | 2022 | ||||||
| Net (loss) income after income tax | (1,949 | ) | (2,015 | ) | (6,677 | ) | (4,654 | ) | ||
| Amortization and depreciation | 276 | 323 | 841 | 769 | ||||||
| Stock-based compensation | 103 | 308 | 468 | 920 | ||||||
| Foreign exchange loss | 54 | (48 | ) | 86 | 18 | |||||
| Finance expense (income), net | (22 | ) | – | (33 | ) | (23 | ) | |||
| Non-recurring impairment expense | 315 | – | 315 | – | ||||||
| Government assistance | – | – | – | (147 | ) | |||||
| Discontinued operations | 1,031 | 1,208 | 5,703 | 2,463 | ||||||
| Adjusted EBITDA | (192 | ) | (224 | ) | 703 | (654 | ) | |||
Non-IFRS financial measures should be considered together with other data prepared accordance with IFRS to enable investors to evaluate the Company’s operating results, underlying performance and prospects in a manner similar to EnWave’s management. Accordingly, these non-IFRS financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For more information, please refer to the Non-IFRS Financial Measures section in the Company’s MD&A available on www.sedar.com.
About EnWave
EnWave is a global leader in the innovation and application of vacuum microwave dehydration. From its headquarters in Delta, BC, EnWave has developed a robust intellectual property portfolio, perfected its Radiant Energy Vacuum (REV™) technology, and transformed an innovative idea into a proven, consistent, and scalable drying solution for the food, pharmaceutical and cannabis industries that vastly outperforms traditional drying methods in efficiency, capacity, product, quality, and cost.
With more than fifty royalty-generating partners spanning twenty six countries and five continents, EnWave’s licensed partners are creating profitable, never-before-seen snacks and ingredients, improving the quality and consistency of their existing offerings, running leaner and getting to market faster with the company’s patented technology, licensed machinery, and expert guidance.
EnWave’s strategy is to sign royalty-bearing commercial licenses with food and cannabis producers who want to dry better, faster and more economical than freeze drying, rack drying and air drying, and enjoy the following benefits:
- Food and ingredients companies can produce exciting new products, reach optimal moisture levels up to seven times faster, and improve product taste, texture, color and nutritional value.
- Cannabis producers can dry four to six times faster, retain up to 20% more terpenes and 25% more cannabinoids, and achieve at least a 3-log reduction in crop-destroying microbes.
EnWave Corporation
Mr. Brent Charleton, CFA
President and CEO
For further information:
Brent Charleton, CFA, President and CEO at +1 (778) 378-9616
E-mail: bcharleton@enwave.net
Dylan Murray, CPA, CA, CFO at +1 (778) 870-0729
E-mail: dmurray@enwave.net
Safe Harbour for Forward-Looking Information Statements: This press release may contain forward-looking information based on management’s expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Company’s strategy for growth, product development, market position, expected expenditures, the Company ceasing to make investments in NutraDried, the timing of the wind-down and dissolution of NutraDried, expectations around the cost of winding down NutraDried, and the Company’s intended focus for the future are forward-looking statements. These statements are not a guarantee of future performance and involve a number of risks, uncertainties and assumptions. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended, including that the process of winding up NutraDried will involve time and expense to the Company materially greater than anticipated, that the realization of assets of NutraDried will not sufficiently cover the orderly wind-up of NutraDried, which could result in the requirement for additional funding by the Company to complete such wind-up, that the foregoing developments will adversely affect the Company, in terms of cost, management time and focus, outlook or reputation; the ability of the Company to achieve its longer-term outlook, the ability to lower costs, and the other risk factors set forth in the Company’s public filings. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Neither the 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.
