MISSISSAUGA, ONTARIO–(Marketwired – Oct. 19, 2016) – Pioneering Technology Corporation (TSX VENTURE:PTE)(OTC:PTEFF), (“Pioneering” or the “Company“), a technology company and North America’s leader in cooking fire prevention technologies and products is very pleased to announce preliminary selected unaudited financial results and business highlights for the fourth quarter and the year ended September 30, 2016. Pioneering’s audited financial statements for the year ended September 30, 2016 will be filed on or before January 28, 2017. Audited financial statements for the years ended September 30, 2015 and 2014 are available on SEDAR (www.sedar.com). The financial results discussed below are unaudited and subject to change upon completion of Pioneering’s annual audit.
Financial Highlights:
- Fiscal 2016 revenue of approximately $6.8M, an increase of 55% versus $4.4M in 2015. This represents a 70% compound annual growth rate since 2013.
- Record fourth quarter revenue of approximately $2.6M, an increase of 120% versus the fourth quarter of fiscal 2015 ($1.183M) and up 60% versus Q3 2016 ($1.624M – the Company’s previous best reported quarter).
- Gross margin continues to be strong at 61% for the full year 2016.
- Fiscal 2016 net income of approximately $1.056M or $0.03 EPS, an increase of 649% versus net income of $141K in 2015. Net income for the fourth quarter is estimated at approximately $640K
- Adjusted EBITDA in fiscal 2016 of approximately $1.9M versus $653K in 2015, an increase of 191% and for the fourth quarter Adjusted EBITDA is estimated at approximately $902K.
- Operating Expenses for 2016 fiscal year of approximately $2.8M includes one-time expenses associated with stock based compensation. With these one-time costs removed Pioneering’s expenses increased approximately 9.8% versus the same period in fiscal 2015 and is attributed to investments in sales/marketing and administration to support a growing business.
- Funding from operations, the $1.5 million private placement completed in March, 2016 and new long term debt financing enabled Pioneering to turn its negative working capital as of September 30, 2015 of ($1.0M) into positive working capital of approximately $3.6M as of September 30, 2016. This turnaround enabled the pay-out of high interest borrowing, a new, fully supportive banking arrangement and will lead to lower future interest rates on long term debt and bank borrowing.
Pioneering CEO Kevin Callahan said of the results, “As a company we have accomplished much in 2016 and we are well positioned for continued growth in 2017 and beyond. Having exceeded our targets and delivered our 6th consecutive quarter of profitability we are well past our inflection point and have proven our business to be profitable, sustainable and capable of delivering increased value to shareholders. With that said, we believe we are just getting started. We believe that our continued focus on penetrating B2B channels combined with external industry developments will help drive revenue growth and company value.”
Selected Financial Highlights for Q4 2016 & Year-ended September 30, 2016, 2015 & 2014
| 2016 | 2015 | 2014 | Q4 2016 | |||||
| (unaudited) | (audited) | (audited) | (unaudited) | |||||
| Revenue | $6,820,000 | $4,393,534 | $2,924,472 | $2,603,000 | ||||
| Gross Profit | 4,145,000 | 2,936,677 | 1,756,788 | 1,561,800 | ||||
| Expenses | 3,089,000(1) | 2,420,416 | 2,736,978 | 921,000(1) | ||||
| Net Income (Loss) | 1,056,000 | 140,976 | (1,183,915) | 640,000 | ||||
| EPS Basic (Loss) | 0.03 | 0.00 | (0.04) | 0.02 | ||||
| Adjusted EBITDA(2) | 1,872,000 | 652,641 | (364,535) | 902,000 | ||||
| (1) Expenses include stock based compensation and financing related costs. | ||||||||
| (2) Adjusted EBITDA is a Non-GAAP measure. See “Non-GAAP Measures” below. | ||||||||
Business Highlights:
Customer, Distribution and Market Developments
- In 2016 Pioneering signed vendor and distribution agreements with three of the largest B2B multi-residential, facility and institutional supply distributors in North America. These new partnerships helped Pioneering deliver one of its key strategic objectives for 2016: to secure formal business relationships with large scale U.S. distributors who have logistics, sales & marketing capabilities and relevant sales channel expertise. The new supply distributors are:
- STAPLES Advantage, a division of Staples Inc. and one of the largest facility suppliers in North America, warehoused and began to distribute the SmartBurner and Safe-T-sensor products in the U.S.
- HD Supply Canada began selling the SmartBurner product to its B2B customers throughout Canada. Success to date in Canada has resulted in HD Supply U.S. selling the product to its customers in the United States. HD Supply is one of the largest maintenance and facility supply companies in North America.
- Wilmar/Interline Brands, owned by Home Depot and the largest supplier to multifamily housing in the U.S., warehoused and began selling the SmartBurner product to their B2B customers throughout the United States. They have SmartBurner inventory in 8 distribution centers across the country.
These distribution partners have large existing customer bases and strong relationships with primary decisions makers. The relationships are expected to continue to provide Pioneering with opportunities to increase sales significantly in key market verticals where cooking fires are a problem. These new partners have extensive sales networks focused on selling into all of Pioneering’s desired channels helping to accelerate channel penetration and growth while at the same time helping to keep sales and marketing related expenses in check.
An example of the significant impact these partnerships will have on future sales growth can be evidenced by the sale to a large suite style hotel chain (see press release dated September 6, 2016) that equipped over 17,000 hotel rooms with the SmartBurner product. This purchase represents approximately 20% of this hotel chain’s hotel inventory. Pioneering is currently working with its distribution partner to equip the remaining 80% in 2017 and 2018. This one customer represents a small percentage of this distributors entire customer base. Penetrating this channel and other distributor channel customers in 2017 is a strategic priority for Pioneering and has the potential to drive significant revenue growth.
- Pioneering continued to work on large energy efficiency projects with industry heavyweights Johnson Controls and Siemens in the United States. These organizations continue to include the Safe-T-element as a key component of their overall energy efficiency contracts both individually and in conjunction with the Department of Housing and Urban Development. In affordable housing channels Safe-T-element is a proven and preferred solution for energy performance contractors.
- MiddleOak, an insurance carrier that specializes in multifamily insurance for apartments and community associations through its network of authorized agents in 33 states across the United States, is now providing an annual discount of 7% off the property premium to all of their policyholders who install the SmartBurner product in their properties. Pioneering has many partnerships with insurance brokers and underwriters, but MiddleOak is the first insurance carrier to offer a premium discount that rewards policyholders for installing the SmartBurner product – this is a trend that Pioneering expects to leverage and grow with other insurance carriers.
Industry Developments
- The UL standard change for electric coil stoves is expected to be published in the coming months and is expected to be effective in June 2018. This new standard change, when implemented, will require all electric coil stoves sold in North America to pass an oil ignition test. Pioneering believes it is well positioned with its Temperature Limiting Control technology and Safe-T-element™ and SmartBurner™ products to take advantage of this impending standard change. Pioneering’s technology is the only technology that currently meets the new standard for electric coil stoves – the stove type of choice in multi-residential housing. Pioneering led the efforts that created the new industry standard and will continue to develop/source new products that will help prevent cooking fires on ALL stove platforms (not just electric coil) which could result in further standard changes in the future.
Financing Developments
Historically, the Company financed its working capital requirements through a combination of cash flow generated by operations and debt financing. During 2016 Pioneering worked hard to strengthen its balance sheet and position the company for long term growth. In 2016 Pioneering:
- Completed its planned, non-brokered private placement equity financing for $1.5M.
- Secured a new $1.75M long-term debt facility with RoyNat Capital (a division of Scotia Bank) at a significantly lower interest rate than it had previously been paying on a prior debt financing arrangement.
- Secured a new bank operating line with TD for $500K.
- Paid off all of its debt with suppliers and invested in inventory to support the planned business growth.
The above financing activities, coupled with 55% revenue growth, means that as of September 30, 2016 Pioneering had a working capital ratio of approximately 3.87 – a significant improvement from the working capital ratio as of September 30, 2015.
About Pioneering Technology Corp: Pioneering, based in Mississauga, Ontario is an “energy smart” technology company and North America’s leader in innovative cooking fire prevention technologies. Pioneering engineers and brings to market energy-smart solutions for everyday consumer appliances making them safer, smarter, and more efficient. The company’s patented technologies/products address a multi-billion-dollar problem – 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 (48% of all household fires – up from 20% in 1980). Pioneering’s temperature limiting control (TLC) technology is now installed in over 150,000 multi-residential housing units across North America without a single cooking fire being reported and delivering a return on investment for its customers. Pioneering has proprietary cooking fire prevention solutions, including its trademarked Safe-T-element, SmartBurner, RangeMinder & Safe-T-sensor, for the majority of the more than 140 million stoves/ranges and over 140 million microwave ovens throughout North America. For more info, go to 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-GAAP Measures
Adjusted EBITDA is a measure not recognized under Canadian generally accepted accounting principles (“GAAP”). 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, stock based compensation, restructuring costs, impairment charges and other non-recurring gains or losses. 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 GAAP 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 GAAP 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).
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.
Kevin Callahan
President & CEO
905-712-2061 ext. 222
kcallahan@pioneeringtech.com
Contact Financial Corp.
Rob Gamley
Investor Relations
604-689-7422
rob@contactfinancial.com