TORONTO, ONFebruary 5, 2019 – BSM Technologies Inc. (TSX: GPS) (“BSM” or the “Company”), a leading provider of Internet of Things (IoT) enabled telematics and asset management solutions, today announced its unaudited consolidated financial and operating results for the three months ended December 31, 2018 (the “First Quarter”). The First Quarter is reported in accordance with the newly adopted IFRS 15 accounting standard, Revenue from Contracts with Customers (IFRS 15). The adoption of this standard has had a significant impact on the Company’s reported results. For further information and a description of the Company’s revenue recognition policy under IFRS 15, refer to the Company’s condensed interim consolidated financial statements on SEDAR at www.sedar.com. Comparable amounts for the first quarter of fiscal 2018 have been restated to conform with the adoption of IFRS 15. All amounts are in Canadian dollars unless otherwise stated.

First Quarter Highlights:

  • Total revenue of $7 million, an increase of 2% compared to $15.4 million in the first quarter of fiscal 2018 (“Q1 F2018”) and an increase of 3% compared to $15.3 million in the fourth quarter of fiscal 2018 (“Q4 F2018”).
  • Subscription Fee Revenue (i) of $11.4 million, an increase of 1% compared to $11.3 million in Q1 F2018 and an increase of 3% compared to $11.1 million in Q4 F2018.
  • Adjusted EBITDA(i) of $1.6 million, a decrease of 6% compared to $1.7 million in Q1 F2018 and Q4 F2018.
  • Subscriber Gross Additions(ii) of 6,200 and Subscriber Churn(ii) of 2,700, resulting in a December 31, 2018 Subscriber(ii) base of 168,100 as compared to 164,600 as at September 30, 2018.
  • Average Revenue Per Subscriber (“ARPU”)(ii) was $22.77 compared to $23.39 in Q1 F2018 and $22.49 in Q4 F2018, calculated on a constant currency basis(iii).

Management Commentary:

“We are pleased to begin fiscal 2019 with a significant improvement in our subscriber growth metrics,” said Louis De Jong, President and Chief Executive Officer of BSM. “Moving forward in the year, we are focused on increasing sales momentum following the January launch of BSM illuminate, our analytics software platform designed to enable data-driven operational decision-making.  We are encouraged by the feedback we have received following the introduction of BSM illuminate and are confident in its future success.”

Financial Highlights for the First Quarter:

(unaudited)

($ thousands, except margin and per share data)

Three months ended December 31

2018

2017 (restated) (iv)

Total revenue

$  15,669

$  15,391

Subscription Fee Revenue(i)

11,364

11,251

Hardware Revenue(i) and Professional Services Revenue(i)

4,305

4,140

Gross profit

9,083

9,336

Gross profit margin %

58%

61%

Net loss

(85)

(2,008)

Loss per share – basic

(0.001)

(0.025)

Loss per share – diluted

(0.001)

(0.025)

Adjusted EBITDA(i)

1,620

  1,713

Notes:

  • Subscription Fee Revenue, Hardware Revenue, Professional Services Revenue, and Adjusted EBITDA are non-GAAP financial measures and do not have standardized meanings under IFRS; therefore, they are unlikely to be comparable to similar measures presented by other companies. See “Non-GAAP Financial Measures and KPIs” below for more details, including a reconciliation of these measures to their most comparable GAAP financial measure.
  • Subscriber, Subscriber Gross Additions, Subscriber Churn and Average Revenue Per Subscriber (ARPU) are key performance indicators of the Company and are therefore unlikely to be comparable to similar measures presented by other companies. Refer to the “Non-GAAP Financial Measures and KPIs” section below for more details.
  • In the calculation of ARPU on a constant currency basis, United States dollar (“USD”) denominated revenues have been translated to Canadian dollars (“CAD”) using the average effective USD to CAD exchange rate for the First Quarter for all periods presented. ARPU on a constant currency basis removes the impact of foreign currency fluctuations from the calculation of ARPU on a Canadian dollar consolidated basis.  Refer to the “Non-GAAP Financial Measures and KPIs” section below for more details.
  • Results for Q1 F2018 have been restated to conform with Company’s adoption of IFRS 15 which has had a significant impact on the Company’s reported results. For more information regarding the impact of adopting IFRS 15, refer to the Company’s condensed interim consolidated financial statements for the three months ended December 31, 2018 and 2017.

The Company’s condensed interim consolidated financial statements (unaudited) for the three months ended December 31, 2018 and 2017, together with its corresponding management’s discussion and analysis can be found under the Company’s profile on SEDAR at www.sedar.com and on the Company’s website at https://www.bsmtechnologies.com.

Conference Call Details:

DATE:

Wednesday, February 6, 2019

TIME:

8:30 a.m. ET

DIAL-IN NUMBER:

647-427-7450 or 1-888-231-8191

CONFERENCE ID:

9355448

TAPED REPLAY:

416-849-0833 or 1-855-859-2056

Reference number 9355448

Available until Wednesday, February 13, 2019, at midnight

LIVE WEBCAST:

https://bit.ly/2HCvdZ0
Webcast will be archived for 90 days

About BSM Technologies:

With more than 20 years of experience, BSM Technologies Inc., through its subsidiaries and affiliates, is a leading provider of Internet of Things (IoT) enabled telematics and asset management solutions. Focused on the Government, Service, Rail and Construction markets, BSM provides the technology, tools and services required to connect, analyze and optimize fleets, equipment and people – empowering data-driven operational decision-making. BSM illuminate, BSM’s software platform, enables companies to leverage data insights, analytics and optimization tools for competitive advantage.  

For more information, please visit https://www.bsmtechnologies.com.

Non-GAAP Financial Measures and KPIs:

This Circular refers to “Subscription Fee Revenue”, “Hardware Revenue”, “Professional Services Revenue” and “Adjusted EBITDA”, which are “non-GAAP financial measures” under applicable securities laws. Non-GAAP financial measures do not have any standardized meaning under the Company’s GAAP determined in accordance with IFRS and therefore may not be comparable to similar measures presented by other issuers. Readers are cautioned that that the disclosure of these items are meant to add to, and not replace, the discussion of financial results or cash flows from operations as determined by the Company’s GAAP under IFRS. These non-GAAP financial measures are identified and defined as follows:

Non-GAAP Measure:

Why We Use It

How We Calculate or Define It

Most Comparable IFRS Financial Measure

Subscription Fee Revenue

 

Hardware Revenue

 

Professional Services Revenue

·  The Company believes that separately disclosing these revenue categories helps to explain period-over-period variation in the Company’s financial performance.  Furthermore, gross profit margin generated by each revenue category varies and the Company believes disclosure of these different categories helps investors to better understand the composition of the Company’s total revenue and the impact of relative changes in revenue categories on total gross profit.

·  Subscription Fee Revenue is comprised of recurring software application subscription fees which are charged to customers for access to the Company’s data portal and for the data reported from their monitored assets.  Subscription fees are generally invoiced monthly and are charged to customers on a per asset basis where those assets are vehicles, equipment or other types of stationary and mobile equipment.

·  Hardware Revenue is defined by the Company as revenue from the sale of the Company’s proprietary and third-party telematics devices.

·  Professional Services Revenue is defined by the Company as: revenue from installation fees, project management fees, custom development fees, fees for integration of systems and other one-time fees for services provided to the Company’s customers.

Revenue

 

These categories of revenue, when added together, are equivalent to total revenue as reported by the Company under IFRS.

Adjusted EBITDA

·  The Company believes that Adjusted EBITDA provides useful information to the Company’s investors because it excludes transactions not related to the core cash operating business activities and normalizes for certain non-recurring charges recognized in net income, allowing for a meaningful analysis of the performance of the Company’s core operating activities.

·  The Company believes Adjusted EBITDA provides a meaningful continuity with respect to the comparison of the Company’s operating results over time.

·  Adjusted EBITDA is defined by the Company as net income adjusted for the impact of:

o   financing activities;

o   depreciation of capital assets and the amortization of intangible assets;

o   taxes with respect to various jurisdictions;

o   acquisition, integration and restructuring related costs;

o   share-based compensation expenses;

o   write-off of goodwill or other impairments to any financial and non-financial assets;

o   fair value adjustments;

o   costs related to certain legal actions; and

o   foreign exchange gains and losses recognized in net income.

Net Income/(Loss)

 

See below for a reconciliation of Adjusted EBITDA to net income/(loss) as disclosed in the Company’s interim consolidated statement of loss and comprehensive income (loss).

Reconciliation of Adjusted EBITDA to Net Loss:

 

Three months ended December 31

($ thousands)

2018

 ($)

2017 (restated)

 ($)

Change

 ($)

Change

 (%)

Net loss as reported

(85)

(2,008)

        1,923

(96%)

Add (deduct):

 

 

 

 

 

Net interest expense

53

142

(89)

(63%)

 

Amortization of intangible assets

952

2,041

(1,089)

(53%)

 

Depreciation of capital assets

211

295

(84)

(28%)

 

Tax expense

495

267

228

85%

 

Share-based compensation

291

416

(125)

(30%)

 

Foreign exchange gain

(297)

(136)

(161)

118%

 

Acquisition, integration and restructuring expenses

696

(696)

(100%)

Adjusted EBITDA

1,620

  1,713

       (93)

(5%)

Key Performance Indicators:

In addition to the non-GAAP financial measures previously described, the Company uses a number of key performance indicators (KPIs). The Company believes these KPIs allow the Company to appropriately measure its performance against the Company’s operating strategy. The following KPIs are not measurements in accordance with GAAP and should not be considered as an alternative to any other measure of performance under GAAP.

A “Subscriber” is defined by the Company as a customer’s individual asset monitored by a telematics device.  A Subscriber is an important metric for the Company’s investors because it provides an indication of the Company’s ability to generate Subscription Fee Revenue from providing subscription services to the Company’s customers.  Subscriber additions occur when the Company invoices Subscription Fee Revenue for a new device not previously in the Company’s Subscriber base, and Subscriber churn occurs when the Company no longer invoices the Subscriber for Subscription Fee Revenue due to cancellation or expiry of the subscription services.

Average Revenue Per User or Subscriber” or “ARPU” is calculated monthly as Subscription Fee Revenue divided by the average number of Subscribers during the month. The Company believes ARPU helps to identify trends and to indicate whether the Company have been successful in attracting and retaining higher value Subscribers. ARPU calculated on a constant currency basis is presented in Canadian dollars (the Company’s presentation currency) using the effective average foreign exchange rate from the current period for all prior periods presented. Calculating ARPU on a constant currency basis removes the impact of foreign currency fluctuations on foreign denominated revenue when ARPU is presented in the Company’s consolidated currency.

Subscriber Additions” is the gross number of Subscribers added to the Company’s Subscriber base in a given period and “Subscriber Churn” in the gross number of Subscribers reduced from the Company’s Subscriber base due to either a temporary or permanent deactivation of subscription services for a monitored asset.

Cautionary Note Regarding Forward-Looking Statements:

This news release includes certain forward-looking statements or information under applicable Canadian, U.S. and other securities laws. Such forward-looking information and statements are often, but not always, identified by the use of words such as “seek,” “anticipate,” “believe,” “plan,” “estimate,” “expect” and “intend” and statements that an event or result “may,” “will,” “should,” “could,” or “might” occur or be achieved and any other similar expressions. Such forward-looking information includes but is not limited to, statements with respect to future sales and Subscriber growth, and the BSM illuminate software platform enabling the Company to increase sales. These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business and include, but are not limited to, successfully launching the BSM illuminate software platform, successfully expanding the Company’s relationship with Geotab, successfully evolving into a leader of analyzing and optimizing data for clients and current and future customers reacting positively to BSM illuminate, including the increased focus on analyzing and optimizing client data, leading to increased commercial growth. Management believes that these assumptions are reasonable; however, some risks include, but are not limited to, failing to efficiently or successfully launch BSM illuminate, failing to expand the Company’s partnership with Geotab, failing to identify or implement effectively key business analytics and optimization metrics for clients and failing to engage customers or position products effectively with customers. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking information. Some of these risks, uncertainties and other factors are described under the heading “Risk Factors” in BSM’s most recent annual information form available at www.sedar.com. Forward-looking statements or information are based on estimates and opinions of management at the date the statements are made. Except as required by applicable law, BSM does not undertake any obligation to update forward-looking information. Readers should not place undue reliance on forward-looking information.

For inquiries, please contact:

Louis De Jong

Craig MacPhail

President & CEO

Investor Relations

BSM Technologies Inc.

NATIONAL Capital Markets

(416) 675-1201

(416) 586-1938

louis.dejong@bsmtechnologies.com

cmacphail@national.ca