Covalon Announces Profitable Second Quarter Fiscal 2024 Results
Recent changes and effective execution pave the way for strong Q2 results
-
Q2 EBITDA of
$1.7 million , Adjusted EBITDA of$2.5 million , and EPS of$0.06 - Q2 year-on-year Revenue growth of 16%, focus area of US Product segment grew 54%
- Q2 Gross Margin increased to 63%, the highest in recent company history
- Achieved strong growth while reducing operating expenses by 22% versus prior year
Conference Call Scheduled
A conference call and webcast to discuss Covalon’s Q2 fiscal 2024 financial results will be held
https://events.q4inc.com/attendee/221238520
To listen and participate via the conference call, please dial:
North American Toll-Free: 1-800-549-8228
Local (
Local (
Conference ID: 29401
Participants will be able to ask questions of Company management during the Q&A portion of the conference call either by asking them on the call or by submitting them using the chat function on the webcast.
A recording of the call will also be available on www.covalon.com under Financials on the Investors tab.
Q2 Financial Overview
Total revenue for the three months ended
Global product revenue for the three month period ended
Global product revenue for the six months ended
Development and consulting services revenue for the three-month period ended
Licensing and royalty fees for the three months ended
Revenue fluctuates from quarter to quarter depending on the composition of contractual arrangements entered into in each quarter, the timing of product shipments, and completion of services in any period.
Gross margins for the three-month period ended
Gross margins for the six months ended
Operating expenses for the three months ended
Operating expenses for the six months ended
The Operations department covers expenses related to Quality Control, Quality Assurance, Production, and Regulatory activities. Operations expenses decreased to
Operations expenses increased
Sales and marketing expenses decreased 43% to
General and administrative expenses decreased to
Wages, benefits, and consulting fees (for all departments) include a non-cash expense related to stock-based compensation. During the three months ended
Statement of Operations
The following audited table presents Covalon’s consolidated statements of operations for the three- and six-month periods ended
(unaudited) |
Three months ended
|
Six months ended
|
||||||
|
2024 |
2023 |
2024 |
2023 |
||||
Revenue |
|
|
|
|
||||
Product |
|
|
|
|
||||
Development and consulting services |
- |
1,108,466 |
56,358 |
1,926,812 |
||||
Licensing and royalty fees |
25,588 |
30,434 |
56,520 |
152,229 |
||||
|
|
|
|
|
||||
Total revenue |
8,413,610 |
7,244,594 |
13,076,667 |
13,429,999 |
||||
|
|
|
|
|
||||
Cost of sales |
3,101,103 |
3,072,566 |
4,917,668 |
5,563,139 |
||||
|
|
|
|
|
||||
Gross profit before operating expenses |
5,312,507 |
4,172,028 |
8,158,999 |
7,866,860 |
||||
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
||||
Operations |
423,239 |
542,755 |
1,053,952 |
750,634 |
||||
Research and development activities |
450,510 |
279,491 |
761,921 |
565,466 |
||||
Sales, marketing and agency fees |
1,262,960 |
2,209,894 |
2,909,263 |
4,239,830 |
||||
General and administrative |
1,690,995 |
1,861,677 |
3,422,620 |
3,388,572 |
||||
|
3,827,704 |
4,893,817 |
8,147,756 |
8,944,502 |
||||
|
|
|
|
|
||||
Finance expenses (income) Gain on finance lease receivable |
22,340 - |
(23,708) - |
12,376 (610,008) |
1,260 - |
||||
|
|
|
|
|
||||
Net income (loss) |
|
|
|
|
||||
Other comprehensive income (loss) Amount that may be reclassified to profit or loss |
|
|
|
|||||
|
|
|
|
|||||
Foreign currency translation adjustment - continued operations |
576,178 |
(246,523) |
188,905 |
(263,308) |
||||
|
|
|
|
|
||||
Total comprehensive income (loss) |
|
|
|
|
||||
|
|
|
|
|
||||
Income (loss) per common share |
||||||||
Basic income (loss) per share |
|
|
|
|
||||
Diluted income (loss) per share |
|
|
|
|
||||
Non-GAAP Financial Measures
This press release makes reference to certain non-GAAP measures. These measures are not recognized or defined measures under IFRS Accounting Standards, do not have standardized meaning prescribed by IFRS Accounting Standards and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional financial information to complement those IFRS Accounting Standards measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS Accounting Standards. The non-GAAP financial measures, adjustments, and reasons for adjustments should be carefully evaluated as these measures have limitations as analytical tools and should not be used in substitution for an analysis of the Company’s results under IFRS Accounting Standards. We use non-GAAP measures including “Adjusted Gross Margin” and “Adjusted EBITDA” to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS Accounting Standards measures. We believe that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Our management also uses non-GAAP measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. The following non-GAAP financial measures are presented in this news release, and a description of the calculation for each measure is included below:
- Adjusted Gross Margin is defined as gross profit before operating expenses, plus depreciation and amortization included in cost of sales, plus inventory provision amounts.
- Adjusted EBITDA is defined as net loss, plus interest expense, plus depreciation and amortization, plus stock-based compensation, less government subsidies, plus inventory provisions, plus accounts receivable write-off expenses.
You should also be aware that the Company may recognize income or incur expenses in the future that are the same as, or similar to some of the adjustments in these non-GAAP financial measures. Because these non-GAAP financial measures may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The table below provides a reconciliation of gross profit before operating expenses under IFRS Accounting Standards in the consolidated financial statements to Adjusted Gross Margin for the three months, and six months ended
(unaudited) |
Three months ended |
Six months ended |
||
|
2024 |
2023 |
2024 |
2023 |
Gross profit before operating expenses |
|
|
|
|
Add: Depreciation and amortization |
58,322 |
53,050 |
110,870 |
109,083 |
Add: Inventory provisions (reversals) |
674,866 |
(158,724) |
482,095 |
(158,724) |
Adjusted Gross Margin |
6,043,650 |
4,066,354 |
8,751,964 |
7,817,219 |
Adjusted Gross Margin (%) |
72% |
56% |
67% |
58% |
The table below provides a reconciliation of net loss under IFRS Accounting Standards in the consolidated financial statements to Adjusted EBITDA for the three and six months ended
(unaudited) |
Three months ended |
Six months ended |
||
|
2024 |
2023 |
2024 |
2023 |
Net income (loss) |
|
( |
|
( |
Add: Finance expense (gains) |
22,340 |
(23,708) |
12,376 |
1,260 |
Add: Depreciation and amortization |
247,756 |
233,324 |
487,950 |
483,409 |
Add: Stock based compensation |
81,464 |
173,150 |
197,393 |
329,457 |
Add: Inventory provisions (reversals) |
674,866 |
(158,724) |
482,095 |
(158,724) |
Add: Gain of finance lease receivable |
- |
- |
(610,008) |
- |
Adjusted EBITDA |
|
( |
|
( |
About
Neither the
This news release may contain forward-looking statements which reflect the Company's current expectations regarding future events. The forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan, "estimate", "expect", "intend", or variations of such words and phrases or state that certain actions, events, or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur”, or “be achieved”. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts, but instead represent management’s expectations, estimates, and projections regarding future events. Forward-looking statements involve risks and uncertainties, including, but not limited to, the factors described in greater detail in the “Risks and Uncertainties” section of our management’s discussion and analysis of financial condition and results of operations for the year ended
(1) See “Non-GAAP Measures” below, including for a reconciliation of the non-GAAP measures used in this release to the most comparable IFRS Accounting Standards measures.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240529712389/en/
To learn more about
Investor Relations,
Email: investors@covalon.com
Website: https://covalon.com/
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