TORONTO, ON / ACCESSWIRE / May 15, 2024 / Route1 Inc. (TSXV:ROI) (the "Company" or "Route1"), an advanced North American provider of data-centric business empowerment solutions, today reported its financial results for the three month period ended March 31, 2024.
Statement of operations In 000s of CAD dollars | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | ||||||||||||||
Revenue | |||||||||||||||||||
Subscription and services | $ | 906 | $ | 1,064 | $ | 1,148 | $ | 1,159 | $ | 1,086 | |||||||||
Devices and appliances | 3,123 | 3,222 | 3,370 | 3,026 | 3,486 | ||||||||||||||
Other | 3 | 10 | 5 | (1 | ) | 3 | |||||||||||||
Total revenue | 4,032 | 4,296 | 4,523 | 4,184 | 4,575 | ||||||||||||||
Cost of revenue | 2,716 | 2,797 | 2,998 | 3,011 | 2,897 | ||||||||||||||
Gross profit | 1,317 | 1,499 | 1,525 | 1,173 | 1,678 | ||||||||||||||
Operating expenses | 1,431 | 1,558 | 1,542 | 1,533 | 1,805 | ||||||||||||||
Operating profit 1 | (115 | ) | (59 | ) | (18 | ) | (360 | ) | (128 | ) | |||||||||
Total other expenses 2, 3 | 34 | 223 | 52 | 265 | 175 | ||||||||||||||
Net income (loss) | $ | (149 | ) | $ | (282 | ) | $ | (70 | ) | $ | (625 | ) | $ | (303 | ) |
1 Before stock-based compensation
2 Includes gain or loss on asset disposal, stock-based compensation expense, interest expense, income tax recovery, foreign exchange loss or gain, other expenses and acquisition expense.
3 For Q4 2022, the Company wrote down its deferred tax asset and liabilities with a net impact of ($1,141).
Adjusted EBITDA 1 In thousands of Canadian dollars | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | ||||||||||||||
Adjusted EBITDA | $ | 134 | $ | 226 | $ | 297 | $ | (27 | ) | $ | 219 | ||||||||
Depreciation and amortization | 248 | 285 | 314 | 333 | 349 | ||||||||||||||
Operating profit | $ | (115 | ) | $ | (59 | ) | $ | (18 | ) | $ | (360 | ) | $ | (128 | ) |
1 Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, stock-based compensation, patent litigation, restructuring and other costs. Adjusted EBITDA does not have any standardized meaning prescribed under IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. Adjusted EBITDA allows Route1 to compare its operating performance over time on a consistent basis.
Subscription and services revenue in 000s of CAD dollars | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | ||||||||||
Application software | $ | 129 | $ | 139 | $ | 280 | $ | 343 | $ | 456 | |||||
Other services | 777 | 925 | 868 | 816 | 630 | ||||||||||
Total | $ | 906 | $ | 1,064 | $ | 1,148 | $ | 1,159 | $ | 1,086 |
Other services revenue in 000s of CAD dollars | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | ||||||||||
Technology life-cycle maintenance and support | $ | 347 | $ | 323 | $ | 314 | $ | 310 | $ | 285 | |||||
Professional services | 430 | 602 | 553 | 506 | 345 | ||||||||||
Total | $ | 777 | $ | 925 | $ | 867 | $ | 816 | $ | 630 |
Operating Results Commentary
- A short delay late in March 2024 in the completed manufacturing of additional Route1 PocketVault P-3X devices resulted in certain sales orders not fulfilled and recognized in Q1 2024. The net result was a reduction in gross profit and EBITDA reducing Route1's Q1 2024 EBITDA to a level below the quarterly norms established in the second half of the 2023 fiscal year.
- Recurring ALPR support contracts grew to a value in excess of US $1.0 million in annualized revenue for the first time.
- Adjustments in February 2024 to Route1's standard payment terms for "direct" ALPR clients (versus through a parking industry partner) led to increased cash received in deposits on new sales orders which in turn led to a reduction in bank debt, from $3.3 million as at December 31, 2024 to $2.8 million as at March 31, 2024.
- Route1's trailing four quarter EBITDA value is expected to improve after the completion of the second quarter of 2024, moving towards $1.0 million annually in EBITDA. Further, the return on total assets deployed to generate the improving trailing four quarters cash flow should increase due to the positive impact of the above noted adjustment to Route1's standard payment terms for "direct" ALPR clients reducing Route1's investment in working capital and long-term assets continue to be amortized without a similar investment by Route1 in sustenance capital expenditures.
Balance Sheet Extracts
In 000s of CAD dollars | Mar 31 2024 | Dec 31 2023 | Sep 30 2023 | Jun 30 2023 | Mar 31 2023 | ||||||||||||||
Cash | $ | 27 | $ | 38 | $ | 23 | $ | 27 | $ | 80 | |||||||||
Total current assets | 2,650 | 3,071 | 3,877 | 3,563 | 3,691 | ||||||||||||||
Total current liabilities | 7,856 | 8,089 | 8,728 | 8,484 | 8,001 | ||||||||||||||
Net working capital | (5,206 | ) | (5,018 | ) | (4,851 | ) | (4,921 | ) | (4,329 | ) | |||||||||
Total assets | 9,017 | 9,541 | 10,678 | 10,571 | 11,016 | ||||||||||||||
Net bank debt and seller notes | 2,783 | 3,258 | 3,248 | 3,378 | 3,425 | ||||||||||||||
Total shareholders' equity | $ | 407 | $ | 584 | $ | 838 | $ | 936 | $ | 1,499 | |||||||||
Business and Operations Metrics
Route1 has established three operating metrics that are critical to the Company's business model initially creating cash flow stability and then generating sustainable shareholder value. It is the Company's goal to demonstrate success through cash flow generation that provides for meaningful debt reduction and improved returns on invested capital, and additionally demands scaling the business model through acquisition.
A. Gross profit (GP) generated from non-MobiKEY and other Route1 software application sales on a quarterly basis needs to achieve and maintain a minimum value of US $1.15 million ("Benchmark A"). Gross profit is defined as revenue less devices and appliances direct costs but does not include other direct costs including salaries, wages and consulting fees, bad debts and travel expenses.
in US 000s | Q1-24 | Q4-23 | Q3-23 | Q2-23 | Q1-23 | Q4-22 | Q3-22 | ||||||||||||||
Quarter Value | $ | 1,064 | $ | 1,170 | $ | 1,124 | $ | 794 | $ | 1,163 | $ | 862 | $ | 1,231 |
B. Recurring ALPR support contracts need to grow to in excess of US $1.0 million in annualized revenue ("Benchmark B").
Route1 started the 2022 fiscal year at a base of US $595,000 per annum.
in US 000s | Q1-24 | Q4-23 | Q3-23 | Q2-23 | Q1-23 | Q4-22 | Q3-22 | ||||||||||||||
Quarter Value | $ | 258 | $ | 237 | $ | 235 | $ | 228 | $ | 212 | $ | 222 | $ | 213 | |||||||
Annualized Value | $ | 1,032 | $ | 946 | $ | 941 | $ | 914 | $ | 847 | $ | 888 | $ | 852 |
C. Fixed costs including amortization need not to exceed CAD $1.65 million per quarter ("Benchmark C").
In CAD 000s | Q1-24 | Q4-23 | Q3-23 | Q2-23 | Q1-23 | Q4-22 | Q3-22 | ||||||||||||||
Fixed Costs | $ | 1,431 | $ | 1,558 | $ | 1,542 | $ | 1,533 | $ | 1,805 | $ | 1,859 | $ | 1,802 |
Route1 Inc. is an advanced North American technology company that empowers their clients with data-centric solutions necessary to drive greater profitability, improve operational efficiency and gain sustainable competitive advantages, while always emphasizing a strong cybersecurity and information assurance posture. Route1 delivers exceptional client outcomes through real-time secure delivery of actionable intelligence to decision makers. Route1 is listed in Canada on the TSX Venture Exchange under the symbol ROI. For more information, visit: www.route1.com.
For More Information, Contact:
Tony Busseri
President and Chief Executive Officer
+1 480 578-0287
[email protected]
This news release, required by applicable Canadian laws, does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
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.
© 2024 Route1 Inc. All rights reserved. No part of this document may be reproduced, transmitted or otherwise used in whole or in part or by any means without prior written consent of Route1 Inc. See https://www.route1.com/terms-of-use/ for notice of Route1's intellectual property.
This news release may contain statements that are not current or historical factual statements that may constitute forward-looking statements or future oriented financial information. These statements are based on certain factors and assumptions, including, expectations regarding the expected growth in the value of support contracts for the LPR business, price and liquidity of the common shares, competition for skilled personnel, expected financial performance and subscription-based revenue, business prospects, technological developments, development activities and like matters. While Route1 considers these factors and assumptions to be reasonable, based on information currently available, they may prove to be incorrect. These statements involve risks and uncertainties, including but not limited to the market demand for the Company's products and services and risk factors described in reporting documents filed by the Company. Actual results could differ materially from those projected as a result of these and other risks and should not be relied upon as a prediction of future events. The Company undertakes no obligation to update any forward-looking statement or future oriented financial information to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, except as required by law. Estimates used in this presentation are from Company sources. Past or forecasted performance is not a guarantee of future performance and readers should not rely on historical results or forward-looking statements or future oriented financial information as an assurance of future results.
SOURCE: Route1 Inc.