Improved Results & Significant Strengthening of Leadership Team Highlight Quarter
Third quarter revenue of $5.6 million vs. $3.9 million posted in Fiscal 2020, an increase of 45%
Gross margin of 38% as company continues to benefit from sales of higher margin Matrix Series X-Ray scanners
Positive Adjusted EBITDA achieved in the quarter
Company delivered 170 security scanning systems to a wide range of global clients across a diversified base of sectors versus 95 sold in Q3 of fiscal 2020, an increase of 79%
Important inroads continue to be made within the sports and entertainment as well as the state and local government verticals
New 3 year supply agreement signed with the United Nations High Commissioner for Refugees
Significant strengthening of executive team with key hires of seasoned industry veterans
Due to the slower than anticipated post COVID recovery and the impact of the disruption in the global supply chain, now expecting a 26% increase in year over year Fiscal 2021 revenues versus original expectation of a 47% revenue increase
MONTREAL, Sept. 28, 2021 /CNW Telbec/ - VOTI Detection Inc. ("VOTI" or "the Company") (TSXV: VOTI), a leading-edge Canadian technology company that develops latest-generation X-ray security systems based on 3D Perspective™ technology, today announced results for its third quarter ended July 31, 2021.
"The unexpected intensity of the fourth wave of the COVID-19 pandemic has caused our recovery to be slower than initially expected, but we are pleased with our performance year to date, and with revenues increasing 45% and the achievement of positive Adjusted EBITDA for the quarter. We continue and will continue, to benefit from the significant efficiency initiatives that we implemented in Fiscal 2020. However, as cautioned in our second quarter release, in addition to the slower than anticipated recovery, our company, like most other industries, has been impacted by the COVID-led global supply chain disruptions. Massive dislocations are evident within shipping routes and all other forms of transportation and warehousing have been impacted. We have been diligent in mitigating the risk of shortages of key manufacturing components, order backlogs, delivery delays and the increase in transportation costs. Given these extraordinary circumstances, we will not be able to meet our initial expectations of reaching pre-pandemic sales by this fiscal yearend which will also impact our ability to achieve positive adjusted EBITDA and positive cash flow from operations for the year. This does not take away from the strength of our success in this current fiscal year given the return to strong sales volumes of our X-ray scanners and the benefits of our development activities. It's important to note that this is not lost revenue, just delayed revenue. We are looking at continued growth into Fiscal 2022 and are buoyed by the strong demand that we are seeing for our scanners, software and training modules. The strength of the company's margins resulting from the introduction of new products, as well as the continuing wide and growing distribution of transactions position VOTI for solid sustained growth going forward" commented Rory Olson, President and CEO of VOTI Detection.
For a discussion of risks related to the COVID-19 pandemic, please see VOTI`s MD&A filed today under VOTI's profile at www.sedar.com
Strengthening of Executive Team
As part of VOTI's strategic initiatives focused on operating excellence and growth on a global scale, over the past two months the company has significantly strengthened its executive leadership team with the hires of the following individuals.
Daniel Menard, COO. Daniel is a seasoned senior executive with more than 35 years experience in management. As COO, Daniel will have the primary responsibility of leading day-to-day operations of the company.
Bally Panesar, Vice President Product Management, New Product Introduction & Interim Vice President Engineering. Bally brings over 24 years of product development and engineering experience in the X-ray industry, 17 years of which were with one of VOTI's major competitors.
Richard Coombs, Vice President, Global Sales. Richard has 25 years of experience having held sales leadership roles in the security industry and spent the past 5 years at one of VOTI's major competitors.
Commented Rory Olson, "The addition of these three individuals is a gamechanger for our company, significantly improving and bolstering our operating, engineering and sales capability. All three of these seasoned industry veterans saw the potential in VOTI's growth trajectory and were anxious to be a part of our disruption of the X-ray scanning industry. Daniel's extensive operating experience and overall capability have already made a very significant impact on our day to day operations. With 17 years of direct Engineering and Product Management expertise, Bally's hiring is a considerable coup for VOTI. His addition will immediately improve and enhance VOTI's capability in these areas. Lastly, Richard's vast experience and successes in building winning sales strategies for some major competitors will immediately benefit our sales efforts on a global basis."
New Agreement Signed With UNHCR
On September 23, 2021 VOTI announced that it had signed a new three year agreement with the office of the United Nations High Commissioner For Refugees (UNHCR). VOTI signed the original agreement with UNHCR in 2016. Under the previous contract, VOTI delivered 32 scanning systems over the course of a three year period. The new three year contract contains an option to extend for an additional 2 years. The estimated annual requirements under this agreement are for 15 X-ray scanning systems per year. The UNHCR has been in operation for over 70 years and currently operates in over 132 countries. The organization is charged with protecting and assisting refugees around the world.
(Unaudited, all amounts are in Canadian dollars)
Period Ended April 30
Gross margin %*
Adjusted net income (loss)*
Cash (used in) from operating activities
Revenue for the three-month period ended July 31, 2021 totaled $5,602,091 compared to $3,855,653 for the same period in Fiscal 2020, an increase of $1,746,438 or 45%. The Company sold 170 security scanning systems compared to 95 during the same period in Fiscal 2020. The increase is primarily attributed to the greater number of systems sold, partially offset by a decrease in the average selling price per scanner resulting from the change in product mix sold and the decrease in the US dollar foreign exchange rate.
Revenue for the nine-month period ended July 31, 2021 totaled $17,805,266 compared to $14,161,526 for the same period in Fiscal 2020, an increase of $3,643,740 or 26%. The Company sold 515 security scanning systems compared to 390 during the same period in Fiscal 2020. The increase is primarily attributed to the greater number of systems sold during the period, the Company's first time sales of its VotiINSIGHTS fleet management and analytics dashboard, an increase in the average price per scanner resulting from the change in product mix sold, and an increase in after-sale services and extended warranties, partially offset by the decrease in the US dollar foreign exchange rate.
Gross profit for the three-month period ended July 31, 2021 increased to $2,151,109 or 38% of revenue, compared to $1,227,675 or 32% of revenue, for the same period in Fiscal 2020, an increase of $923,434 or 6% of revenue. The increase in gross margin of 6% is primarily due to a decrease in the average component cost per scanner resulting from the cost reduction initiatives that were executed by the Company, partially offset by a decrease in revenue from after sales services and extended warranty as a percentage of overall revenue, which carry higher margins, and an increase in freight costs allocated to inventory being sold.
Gross profit for the nine-month period ended July 31, 2021 increased to $6,346,234 or 36% of revenue, compared to $4,499,133 or 32% for the same period in Fiscal 2020. The 4% increase in gross margin compared to the same period in Fiscal 2020 is primarily due to a decrease in the average component cost per scanner resulting from the cost reduction initiatives that were executed by the Company, the Company's first time sales of its VotiINSIGHTS fleet management and analytics dashboard, and the increase in after sale services and revenue from extended warranty, partially offset by an increase in freight costs allocated to inventory being sold and certain scanner sales with low margins.
Net loss for the three-month period ended July 31, 2021 decreased to $1,008,299 compared to $1,944,838 for the same period in Fiscal 2020. The decrease in net loss of $936,539 is primarily related to the increase in gross profit, a decrease in net financial expenses, general and administrative expenses, non-cash share-based payments expense, and the increase in the non-cash gain from change in fair value of warrants, partially offset by an increase in research and development and selling and distribution expenses, and the decrease in non-cash gain from changes in fair value of embedded derivatives.
Net loss for the nine-month period ended July 31, 2021 increased to $5,024,003 compared to $4,518,961 for the same period in Fiscal 2020. The increase of $505,042 is primarily related to an increase in loss in change in fair value of embedded derivatives and warrants, and an increase in net financial expenses and research and development expenses, partially offset by an increase in gross profit, a decrease in non-cash share-based payments expenses and the decrease in general and administrative expenses and selling and distribution expenses.
Adjusted EBITDA for the three-month period ended July 31, 2021 increased to a positive $112,535 compared to a negative ($409,861) for the same period of Fiscal 2020. The increase of $522,396 is primarily related to the increase in gross profit, partially offset by an increase in net operating expenses.
Adjusted EBITDA for the nine-month period ended July 31, 2021 increased to ($95,842) compared to ($2,430,427) for the same period of Fiscal 2020. The increase of $2,334,585 is primarily related to the increase in gross profit and a decrease in net operating expenses.
Net cash from operating activities during the nine-month period ended July 31, 2021 increased by $2,873,680 when compared to Fiscal 2020. The increase in net cash from operations is primarily due to the improvement of the Company's cash-based operating results for the nine-month period ended July 31, 2021, and the positive impact from the change in the Company's non-cash working capital.
Fiscal 2021 Third Quarter Results Conference Call:
When: September 29th, 2021 at 9:00 a.m. ET.
Dial in number: (+1) 888 390 0546, (+1) 416 764 8688 or (+1) 514 225 6995
Conference call replay available until Wednesday, October 6th, 2021.
Recording Playback Number: (+1) 888 390 0541
Playback passcode: 243704#
To access the webcast, click on this link:
The conference ID is 48243704.
A full version of VOTI Detection Inc.'s Fiscal 2021 Third Quarter Management's Discussion and Analysis (MD&A) and Interim condensed consolidated financial statements for the quarter-ended July 31, 2021 are available on www.sedar.com.
*Non-IFRS Financial Measures
Certain financial and non-financial measures included in this news release, including Adjusted EBITDA, Gross margin percent and Adjusted net loss, do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. The Company includes these measures because it believes they provide to certain investors a meaningful way of assessing financial performance. For a more complete description of these measures and a reconciliation of VOTI's non-IFRS financial measures to financial results, please see VOTI's Management Discussion and Analysis for the third quarter ended July 31, 2021.
VOTI's definition of the non-IFRS terms are as follows:
Gross margin percent is defined as Gross profit divided by Revenue.
Adjusted EBITDA is defined as net income or loss before net finance expenses, depreciation and amortization expense and income tax expense, share-based compensation expenses and items that Management believes do not necessarily arise as part of the Company's normal day-to-day operations and could distort the analysis of trends in business performance.
Adjusted net loss is defined as net loss adjusted for share-based compensation and items Management believes do not necessarily arise as part of the Company's normal day-to-day operations and could distort the analysis of trends in business performance.
About VOTI Detection
VOTI Detection, headquartered in Montreal, Quebec, and listed on the TSX Venture Exchange, is a leading-edge Canadian technology company that develops latest-generation X-ray security systems based on 3D Perspective™ technology. VOTI's technology produces remarkably sharp and more revealing X-ray images that are competitively superior while delivering enhanced threat detection capabilities and an improved user experience. Since its inception, VOTI has installed scanners in more than 50 countries and has consulted heavily with government agencies and security specialists worldwide to develop feature-rich and easy-to-use scanners that meet the sophisticated needs of modern security screening operations. www.votidetection.com
Notice regarding forward-looking statements:
This release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") which the meaning of applicable securities laws. Forward-looking statements may relate to VOTI's financial outlook and anticipated events or results and may include information regarding VOTI's financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, plans and objectives. Particularly, information regarding VOTI's expectations of future results, performance, achievements, prospects or opportunities or the markets in which it operates and the impact thereon of the ongoing COVID-19 pandemic declared by the World Health Organization on March 11, 2020 ("COVID-19"), as well as statements relating to expectations regarding industry trends, growth rates, expectations regarding revenue and the revenue generation potential, business plans and strategies, VOTI's competitive position in its industry, VOTI's expectations relating to its rollout of its next generation MATRIX Series line of X-Ray scanners and the results associated therewith and its projections and forecasts relating to its expectations that it will return to or exceed pre-pandemic sales and gross margins constitute forward-looking statements.
In some cases, when used in this release, the words ''may'', ''would'', ''could'', ''will'', ''intend'', ''plan'', ''anticipate'', "does not anticipate", ''believe'', ''seek'', ''propose'', ''estimate'', ''project'', ''expect", "does not expect", "forecasts", "projection", "prospects", "outlook", "targets", or similar expressions, variations of such terms or the negative of such terms are intended to identify forward- looking statements. Such forward-looking statements reflect VOTI's then current views with respect to future events based on certain material facts, assumptions, opinions and estimates in light of management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors VOTI currently believes are appropriate and reasonable in the circumstances and as of the date such forward-looking statements are made. Despite a careful process to prepare and review the forward-looking statements, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. The forward- looking statements are based on certain key expectations and assumptions made by VOTI, including expectations and assumptions concerning availability of capital resources and ability to finance, business performance, market conditions, and customer demand. Although VOTI believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements since no assurance can be given that they will prove to be correct.
Forward-looking statements are necessarily based on a number of opinions, estimates and assumptions that VOTI considered appropriate and reasonable as of the date such statements are made, are subject to certain known and unknown risks and uncertainties that may cause the actual results or events to differ materially from anticipated in such forward-looking statements, including without limitation risks regarding the threat detection technology industry, failure to obtain regulatory approvals, or changes in regulatory environment, economic factors, management's ability to manage and to operate the business of VOTI, the equity markets generally and risks associated with growth and competition, in addition to other risks identified in VOTI's most recently filed management's discussion and analysis and in other publicly filed documents under VOTI's profile at www.sedar.com as well as other unknown risks.
Many factors could cause VOTI's actual results, performance or achievements to vary from those described in this release, including without limitation those listed above, as well as the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this MD&A as intended, planned, anticipated, believed, sought, proposed, estimated or expected, and such forward-looking statements should not be unduly relied upon. VOTI does not intend, and does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking statements contained in this release are expressly qualified by these cautionary statements. Forward-looking statements contained in this release about prospective results of operations, financial position or cash flows are based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that outlook information contained in this release should not be used for the purposes other than for which it is disclosed herein or therein, as the case may be. In addition, the current situation and future developments with respect to COVID-19 could cause certain of the assumptions and information set forth herein or the fact that on which such assumptions are based to differ materially from previous expectations including in respect of demand for VOTI's products, supply chain and availability of materials, mobility and shipping of materials and or products, access to debt and equity capital and other factors.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE VOTI Detection Inc.
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