Q3 FY19 Earnings Presentation F o r t h e q u a r t e r e n d e d D e c e m b e r 3 1 , 2 0 1 8 C r a i g C a m p b e l l | F e b r u a r y 2 0 1 9
Disclaimer and Forward Looking Statements This presentation may contain “forward - looking information” within the meaning of applicable securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “ ant icipates” or “does not anticipate”, or “believes” or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. In particular, this presentation contains statements regarding: potential acquisition targets of Avante Logixx Inc. (“Avante”); the ability of Avante to execute on its strategic plan and acquisition strategy; the estima ted transaction models for future acquisition; and the estimated potential value creation and total shareholder returns which management believes may be realized by Avante’s acquisition strategy. All such forward -looking information is based on certain assumptions and analyses which management of Avante believes to be reasonable in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that management believes to be appropriate in the circumstances. Such assumptions include: trends in the physical security industry; the ability of Avante to raise capital on acceptable terms; general and administrative expenses and interest expenses; Avante’s ability to maintain existing customer, supplier and partner relationships; the ability of Avante’s managem ent team to execute Avante’s business strategy, and other matters. Statements containing forward-looking information are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Avante to be materially different from those expressed or implied by any statements containing forward-looking information. The risks, uncertainties and other factors are difficult to predict and may include, without limitation, risks relating to: general economic conditions; industry conditions; the ability of Avante to raise capital; operating risks; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by Avante, and other f actors, many of which are beyond Avante’s control. The foregoing factors are not exhaustive. Although Avante has attempted to identify important factors that could cause actual results to differ materially from those statements containing forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Avante does not undertake to update any statements containing forward-looking information, except in accordance with applicable securities laws. Any “financial outlook” or “future - oriented financial information” in this presentation, as defined by applicable securities leg islation, has been approved by management of Avante. Such financial outlook or future- oriented financial information is provided for the purpose of providing information about management’s current expectations a nd plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Any data, graphs or information in this presentation that have been compiled by, or drawn from, a third party has been credited to that third party and Avante does not take responsibility for the accuracy of such information. This presentation is for information purposes only and is not intended to, and should not be construed to constitute, an offer t o sell or the solicitation of an offer to buy, Avante’s securities. This presentation and its contents should not be construed, under any circumstances, as investment, tax or legal advice. Any person viewing or accepting delivery of this presentation acknowledges the need to conduct their own thorough investigation into Avante’s business and its activities before considering any investment in Avante’s securities. Among other th ings, investors should review Avante’s public filings which are available in Canada at www.sedar.com. Non-IFRS Financial Measures This presentation contains certain financial measures that are not determined in accordance with IFRS, including Adjusted EBITDA. Adjusted EBITDA is calculated by adding back: Expense fair value adjustment of CWL inventory; Depreciation on property, plant and equipment; Amortization of intangible assets; Share based payments; and • Management reorganization & integration costs to Income before income taxes. Adjusted EBITDA is used by management of Avante to provide a more accurate measure of its operating performance. These measurements should not be considered an alternative to, or more meaningful than, other measures as determined in accordance with IFRS. These measurements do not have a standardized meaning under IFRS; thus, Avante’s determination of Adjusted EBITDA may not be comparable to that reported by other companies. Reference should be made to Avante’s management’s discussion and a nalysis and related financial statements for more information relating to the calculation of Adjusted EBITDA. 2
Agenda Focused Execution on Strategic 06 Priorities Financial Highlights 10 Q & A 17 3
Platform at a Glance Revenue Adjusted EBITDA $2,381 $2,145 $26,649 $1,713 $20,898 $23,337 $1,484 $1,243 $14,581 $6,746 $8,938 $10,026 $628 $452 FY13 FY14 FY15 FY16 FY17 FY18 LTM FY13 FY14 FY15 FY16 FY17 FY18 LTM Trading Summary - Q3 FY19 Enterprise Value Ticker TSXV: XX $2.50 12,000,000 $1.95 Share Price @ Dec 31, 2018 10,000,000 $2.00 $1.95 $1.30 8,000,000 Fully Diluted Shares Outstanding $1.50 6,000,000 (Weighted) 19,364,401 $1.00 4,000,000 Market Cap $37,760,582 $0.50 2,000,000 Total Debt 1 $0.00 - $4,213,475 2017-10-02 2017-11-06 2017-12-11 2018-01-15 2018-02-19 2018-03-26 2018-04-30 2018-06-04 2018-07-09 2018-08-13 2018-09-17 2018-10-22 2018-11-26 2018-12-31 Cash Balance $3,024,116 Minority Interest $527,641 Volume XX.V Enterprise Value $39,477,582 1. Total Debt = bank indebtedness and vehicle loans + obligations under finance lease, + long term portion of bank indebtedness and vehicle loans 4
Key Messages Building a Foundation Accelerate Growth w/ Platform • Building a strong foundation to • Investments in platform companies are facilitate long term, sustainable beginning to pay dividends organic and acquisitive growth • Completed acquisition of Intelligarde as • Investing in people and corporate of Nov 30, 2018 shared services to reduce operational • Active, and healthy pipeline expenses at scale • Disciplined acquirers • Investing in an ERP to facilitate more efficient operations and actionable intelligence to drive further growth Accelerating Growth • 44.6% YoY acquisitive revenue growth and 2.4% YoY organic revenue growth • 38.5% QoQ acquisitive revenue growth and 12.5% QoQ organic revenue growth • 18% YoY growth in recurring monitoring and response revenue and 57.7% YoY growth in other security services revenue 5 • QoQ gross margin improvement, 440 BPS
Q3 FY19 Focused Execution on Strategic Priorities
Q3 FY19 Highlights Company Update Business Summary • • Announced and closed $4.75 million acquisition of Q3 FY19 revenue grew to $8,846,014 resulting in Intelligarde International Inc. 51.1% (38.5% acquisitive, 12.5% organic) QoQ growth and 47.0% (44.6% acquisitive, 2.4% organic) YoY • Strengthened executive team through critical hires: growth highlighting Avante’s ability to execute • Francis Michaud: Senior VP, Finance and Interim against its organic and acquisitive growth strategy CFO • Recurring monitoring and response revenue grew • Dan Marston: Senior VP, Sales and Business +6.7% QoQ and 18.0% YoY Development • Non-recurring security services grew +70.5% QoQ • Continued to integrate acquisitions to realize revenue and 57.7% YoY and cost synergies • Gross margin of 34.1% increased 440 BPS QoQ, and • Continued to invest in and implement enterprise decreased 150 BPS YoY resource planning (ERP) platform to facilitate scalable • Adj. EBITDA before corporate was $1,272,005 in Q3 platform FY19 representing a 14.3% margin vs reported • Focus on cross-selling services across platform Adjusted EBITDA of ($354,964) highlighting core companies business operations are strong and profitable with room to capture further upside through unlocking cross-selling opportunities, as well as streamlining core business operations of acquired companies Quarter shows continued investments in platform infrastructure along with strong business unit performance/ improvement driven by both acquisitive and organic growth with room for additional margin expansion as Avante continues to integrate acquisitions and unlock 7 cross-selling opportunities
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