TORONTO, ONDecember 19, 2018 – 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 consolidated financial and operating results for the three and twelve months ended September 30, 2018 (the “Fourth Quarter” and “Fiscal 2018”, respectively). All amounts are in Canadian dollars unless otherwise stated.

 

Fiscal 2018 Highlights:

  • Total revenue of $59.7 million, a decrease of 10% compared to $66.7 million in fiscal 2017 (“F2017”).
  • Recurring Revenue(i) of $44.6 million, a decrease of 2% compared to $45.7 million in F2017.
  • Adjusted EBITDA(i) of $5.5 million, a decrease of 34% as compared to $8.3 million in F2017.
  • Subscriber Gross Additions(ii) of 16,900 and Subscriber Churn(ii) of 14,000, resulting in a September 30, 2018, Subscriber(ii) base of 164,600 as compared to 161,700 as at September 30, 2017.
  • Appointed Mr. Louis De Jong as the new President and Chief Executive Officer of the Company, and Mr. Stephen De Bolster as the new Interim Chief Financial Officer of the Company.

 

Fourth Quarter Highlights:

  • Total revenue of $14.3 million, a decrease of 9% compared to $15.7 million in the fourth quarter of fiscal 2017 (“Q4 F2017”), due, primarily, to a decrease in hardware sales.
  • Recurring Revenue (i) of $11.1 million, an increase of 1% compared to $11.0 million in Q4 F2017 and unchanged compared to $11.1 million in the third quarter of fiscal 2018 (“Q3 F2018”).
  • Adjusted EBITDA(i) of $0.9 million, a decrease of 25% compared to $1.2 million in Q4 F2017 and a decrease of 44% as compared to $1.6 million in Q3 F2018.
  • Subscriber Gross Additions(ii) of 3,100 and Subscriber Churn(ii) of 3,700, resulting in a September 30, 2018, Subscriber(ii) base of 164,600 as compared to 165,200 as at June 30, 2018.
  • Average Revenue Per Subscriber(ii) calculated on a constant currency basis(iii) was $22.35 compared to $23.28 in Q4 F2017 and $22.49 in Q3 F2018.
  • During the Fourth Quarter, the Company recognized $1.3 million in termination and severance expenses associated with a restructuring plan to re-align resources.
  • The Company derecognized $7.2 million against its deferred tax asset related to tax attributes for certain subsidiaries in connection with a review of the Company’s legal entity tax structure. The reduction in the deferred tax asset was recognized as a deferred tax expense in the Fourth Quarter.
  • The Company recognized a $9.1 million impairment loss related to specified intangible assets associated with legacy telematics offerings which were determined to be impaired in connection with the introduction of replacement products.

Subsequent to the Fourth Quarter, the Company launched BSM illuminate, a suite of powerful data analytics and optimization modules delivered through a single software platform.  In addition to the launch of BSM illuminate, the Company also announced a significantly expanded partnership with Geotab Inc. (“Geotab”).  Vehicle telematics data within BSM illuminate will leverage Geotab’s MyGeotab® product, providing customers the combined power of Geotab telematics with the analytics capabilities of the BSM.  The Company expects BSM illuminate will be available to customers in January 2019.  

 

Management Commentary

“Through fiscal 2018, BSM progressed in its goal of consolidating our legacy software platforms, albeit at a pace below our expectations,” said Mr. Louis De Jong, President and Chief Executive Officer of BSM.  “However, over the past three months we have made a number of important strategic decisions designed to accelerate the pace of consolidation and reposition BSM for future success.  As we near the end of the first quarter of fiscal 2019, we are excited to announce the achievement of a significant product milestone; the launch of BSM illuminate,” Mr. De Jong continued. “BSM illuminate offers its users a series of analytic and optimization software modules that leverage the strengths of our analytics capabilities with the telematics data of Geotab.  Our expanded Geotab partnership provides BSM illuminate users with best in class vehicle and driver behavior data and will allow us to focus our development efforts on further advancing our analytics and optimization software products. We are confident that BSM illuminate offers a very strong value proposition in the market and will provide the foundation for future growth in our business.”

 

Financial Highlights for the Fourth Quarter and Fiscal 2018:

($ thousands except gross margin % and per share data)

 

Three months ended September 30

Twelve months ended
September 30

2018

2017

2018

2017

Total revenue

$  14,259

$  15,690

$  59,735

$  66,717

Recurring Revenue(i)

11,061

10,976

44,648

45,660

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

3,198

4,714

15,087

21,057

Gross profit

8,165

9,150

34,444

39,339

Gross margin %

57%

58%

58%

59%

Net loss

(18,828)

(1,218)

(20,060)

(4,202)

Loss per share – basic

(0.233)

(0.014)

(0.248)

(0.052)

Loss per share – diluted

(0.233)

(0.014)

(0.248)

(0.052)

EBITDA(i)

(9,591)

343

(3,959)

5,292

Adjusted EBITDA(i)

890

  1,189

5,523

8,324

Notes:

  • Recurring Revenue, Hardware Revenue, Professional Services Revenue, EBITDA 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.
  • Subscriber, Subscriber Gross Additions, Subscriber Churn and Average Revenue Per Subscriber 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 Fourth Quarter for all periods presented. ARPU on a constant currency basis is identified by the Company as a non-GAAP key performance indicator which 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.

The Company’s consolidated financial statements for the three and twelve months ended September 30, 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:

Thursday, December 20, 2018

TIME:

8:30 a.m. ET

DIAL-IN NUMBER:

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

CONFERENCE ID:

8399695

TAPED REPLAY:

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

Reference number 8399695

Available until Thursday, December 27, 2018 at midnight

LIVE WEBCAST:

https://bit.ly/2Q3RwL3
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 news release includes the measures “Recurring Revenue,” “Hardware Revenue,” “Professional Services Revenue,” “EBITDA” and “Adjusted EBITDA,” which are “non-GAAP financial measures” under applicable laws. Non-GAAP financial measures do not have any standardized meaning under the Company’s GAAP and therefore may not be comparable to similar measures presented by other companies. Readers are cautioned 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 International Financial Reporting Standards. BSM believes that investors use these non-GAAP financial measures as indicators to assess companies in our industry.

Non-GAAP Measure:

Why We Use It

How We Calculate or Define It

Most Comparable IFRS Financial Measure

Recurring Revenue

Hardware Revenue

Professional Services Revenue

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

·  We believe that Recurring Revenue provides useful information to our investors because it shows the long-term nature of revenue earned from our customer relationships.

·  Recurring Revenue is defined by us as: revenue from our monthly services fees, monthly monitoring fees and the cost of cellular and satellite data. Recurring Revenue is recognized monthly as services are delivered.

·  Hardware Revenue is defined by us as: revenue from the sale of our proprietary and third-party telematics devices.

·  Professional Services Revenue is defined by us as: revenue from installation fees, project management fees, custom development fees, cancellation fees and other one-time fees for services provided to our customers.

Revenue

EBITDA

Adjusted EBITDA

·  We believe that EBITDA and Adjusted EBITDA provide useful information to our investors because they exclude transactions not related to the core cash operating business activities, allowing meaningful analysis of the performance of BSM’s core cash operations.

·  We believe Adjusted EBITDA provides more meaningful continuity with respect to the comparison of BSM’s operating results over time.

·  We believe that using these metrics enhances an overall understanding of the Company’s results and we present them for that purpose.

·  EBITDA is defined by us as:

Net income/(loss) adjusted by: cost of debt financing activities; depreciation of property and equipment; amortization of intangible assets; and taxes with respect to various jurisdictions.

·  Adjusted EBITDA is defined by us as:

EBITDA adjusted by: acquisition, integration and restructuring related costs; share-based compensation expenses; write-off of goodwill or other impairments to any financial and non-financial assets; fair value adjustments on contingent consideration; costs related to certain legal actions; and gains and losses resulting from the translation of non-Canadian dollar working capital balances.

Net Income/(Loss)

 

Reconciliation of Recurring Revenue, Hardware Revenue and Professional Services Revenue to Total Revenue:

Each of these revenue categories are components of total revenue as disclosed in the statement of operations in the Company’s financial statements and presented within the financial highlights table of this press release.

($ thousands)

Three months
ended September 30

Twelve months ended September 30

 

2018

2017

2018

2017

Hardware Revenue

2,326

4,183

11,003

17,700

Recurring Revenue

11,061

10,976

44,648

45,660

Professional Services Revenue

872

531

4,084

3,357

Total Revenue

14,259

15,690

59,735

66,717

 

Reconciliation of EBITDA and Adjusted EBITDA to Net Income/(Loss):

($ thousands)

Three months
ended September 30

Twelve months
ended September 30

 

2018

2017

2018

2017

Net loss as reported

(18,828)

(1,218)

(20,060)

(4,202)

Add (deduct):

 

 

 

 

    Interest expense, net of interest received

71

123

419

1,297

    Income tax expense (recovery)

7,145

(491)

7,065

(109)

    Amortization

2,021

1,929

8,617

8,306

EBITDA

(9,591)

343

(3,959)

5,292

Add (deduct):

 

 

 

 

    Share-based compensation

87

453

1,316

1,911

    Foreign exchange (gain) loss

278

174

(140)

567

    Acquisition, integration and restructuring costs

1,279

504

1,977

839

    Impairment loss on intangible assets

9,101

9,101

    Fair value adjustment on contingent consideration

(264)

(285)

(2,772)

(285)

Adjusted EBITDA

890

1,189

5,523

8,324

 

Key Performance Indicators:

In addition to the non-GAAP financial measures previously described, the Company uses a number of key performance indicators (KPIs). BSM believes these KPIs allow the Company to appropriately measure its performance against its 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 as a BSM customer’s individual asset monitored by a telematics device. The Company believes that a Subscriber is an important metric for the Company investors because it provides an indication of the Company’s ability to generate Recurring Revenue from providing recurring service to its customers. Subscriber additions occur when the Company invoices for monthly services to a new telematics device not previously in the Company’s Subscriber base, and Subscriber churn occurs when the Company no longer invoices a Subscriber for monthly services due to cancellation or expiry of the monthly services.

“Average Revenue Per User or Subscriber” or “ARPU” is calculated monthly as Recurring Revenue divided by the average number of Subscribers during the month. The Company believes that ARPU helps to identify trends and to indicate whether it is 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.

 

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 the launch of the BSM illuminate software platform, the BSM illuminate software platform enabling the Company to focus on analyzing and optimizing data for clients, the Company’s strategic decisions accelerating the pace of software consolidation, software consolidation and expanded Geotab partnership enabling BSM to focus its development efforts on further advancing our analytics and optimization software products. 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