Covalon Announces Strong Third Quarter Fiscal 2024 Results
Progress on key priorities drives outstanding performance
-
Q3 EBITDA of
$1.7 million , adjusted EBITDA of$2.4 million , and EPS of$0.06
-
Q3 Revenue of
$9.2 million , year-on-year growth of 47%
-
Q3 Gross Profit of
$5.4 million , year-on-year growth of 51%
“We delivered a very successful Q3 – solid performance on growth, margins and operating expenses all led to another strong quarter of profitability,” said
Conference Call Scheduled
A conference call and webcast to discuss Covalon’s third quarter fiscal 2024 financial results will be held on
https://events.q4inc.com/attendee/177616087
To listen and participate via the conference call, please dial:
North American Toll-Free: 1-800-549-8228
Local (
Local (
Conference ID: 69066
Participants will be able to ask questions of Company management during the Q&A portion of the conference call.
A recording of the call will also be available on www.covalon.com under Financials on the Investors tab.
Financial Performance
For the three-month period ended
Total revenue increased 47% to
Gross margin increased to 59% compared to 57% in the same period for the prior year. During the three months ended
Operating expenses decreased to
Operations department expenses, comprising of Quality Control, Quality Assurance, Production, and Regulatory activities, decreased to
Research and development expenses increased to
Sales and marketing expenses decreased 24% to
General and administrative expenses increased to
Wages, benefits, and consulting fees (for all departments) include a non-cash expense related to stock-based compensation. During the three months ended
For the nine-month period ended
Total revenue increased by 13% to
Gross Margin increased to 61% compared to 58% in the same period for the prior year. During the nine months ended
Operating expenses decreased to
Operations department expenses, comprising of Quality Control, Quality Assurance, Production, and Regulatory activities, increased to
Research and development expenses increased to
Sales and marketing costs decreased to
General and administrative expenses increased to
During the nine months ended
Q3 Financial Overview
Statement of Operations
The following audited table presents Covalon’s consolidated statements of operations for the three- and nine-month periods ended
Three months ended
|
|
Nine months ended
|
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|
2024 |
2023 |
|
2024 |
2023 |
|||
Revenue |
|
|
|
|
|
|||
Product |
|
|
|
|
|
|||
Development and consulting services |
- |
205,169 |
|
56,540 |
2,131,981 |
|||
Licensing and royalty fees |
17,499 |
30,218 |
|
73,837 |
182,447 |
|||
|
|
|
|
|
|
|||
Total revenue |
9,224,307 |
6,270,039 |
|
22,300,974 |
19,700,038 |
|||
|
|
|
|
|
|
|||
Cost of sales |
3,792,582 |
2,665,602 |
|
8,710,250 |
8,228,741 |
|||
|
|
|
|
|
|
|||
Gross profit |
5,431,725 |
3,604,437 |
|
13,590,724 |
11,471,297 |
|||
|
|
|
|
|
|
|||
Operating expenses |
|
|
|
|
|
|||
Operations |
608,476 |
627,001 |
|
1,662,428 |
1,377,635 |
|||
Research and development activities |
378,647 |
365,922 |
|
1,140,568 |
931,388 |
|||
Sales, marketing, and agency fees |
1,387,869 |
1,826,912 |
|
4,297,132 |
6,066,742 |
|||
General and administrative |
1,581,319 |
1,372,243 |
|
5,003,939 |
4,760,815 |
|||
|
3,956,311 |
4,192,078 |
|
12,104,067 |
13,136,580 |
|||
|
|
|
|
|
|
|||
Finance expenses (income) |
27,364 |
(85,874) |
|
39,740 |
(84,614) |
|||
Gain on finance lease receivable |
- |
- |
(610,008) |
- |
||||
|
|
|
|
|
|
|||
Net income (loss) |
|
|
|
|
|
|||
Other comprehensive income (loss) |
|
|
|
|
||||
Amount that may be reclassified to profit or loss |
||||||||
|
|
|
|
|
||||
Foreign currency translation adjustment |
287,426 |
(235,941) |
|
476,331 |
(499,249) |
|||
|
|
|
|
|
|
|||
Total comprehensive income (loss) |
|
|
|
|
|
|||
|
|
|
|
|
|
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Income (loss) per common share |
||||||||
Basic income (loss) per share (Note 16) |
|
|
|
|
|
|||
Diluted income (loss) per share (Note 16) |
|
|
|
|
|
|||
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 as earnings (loss) before interest expense (income), depreciation and amortization, stock-based compensation, inventory provisions (reversals), accounts receivable write-offs, gain (loss) on finance lease receivable, and loss (gain) on disposal of property and equipment.
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 nine months ended
|
Three months ended
|
Nine months ended
|
||
|
2024 |
2023 |
2024 |
2023 |
Gross profit before operating expenses |
|
|
|
|
Add: Depreciation and amortization |
58,017 |
59,466 |
168,887 |
168,560 |
Add: Inventory provisions (reversals) |
424,606 |
(221,225) |
906,701 |
(379,949) |
Adjusted Gross Margin |
5,914,348 |
3,442,678 |
14,666,312 |
11,259,908 |
Adjusted Gross Margin (%) |
64% |
55% |
66% |
57% |
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 nine months ended
|
Three months ended
|
Nine months ended
|
||
|
2024 |
2023 |
2024 |
2023 |
Net income (loss) |
|
( |
|
( |
Add: Finance expense (income) |
27,364 |
(85,874) |
39,740 |
(84,614) |
Add: Depreciation and amortization |
246,416 |
271,184 |
734,366 |
754,604 |
Add: Stock based compensation |
150,100 |
107,825 |
347,493 |
437,282 |
Add: Inventory provisions (reversals) |
424,606 |
(221,225) |
906,701 |
(379,949) |
Add: Loss (gain) on disposal of property and equipment |
85,021 |
- |
85,021 |
- |
Add: Loss (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/20240821321173/en/
To learn more about
Investor Relations,
Email: investors@covalon.com
Website: https://covalon.com/
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