Mississauga, ON (January 28, 2021) – Pioneering Technology Corp. (TSXV: PTE) (“Pioneering” or the “Company”), a technology company and North America’s leader in cooking fire prevention technologies and products, reports its audited 2020 financial results for the fiscal year ended September 30, 2020. Pioneering’s audited financial statements and MD&A are available on SEDAR (www.sedar.com).
Selected Financial Information for the Twelve Months Ended September 30, 2020
- Revenue was $6,540,550, an increase of 66% versus the same period year ago ($3,941,621).
- Gross margin in 2020 was 41% versus 57% in 2019. Gross margins declined due to US tariffs, special incentives for select customers and inventory accounting consequences of supplier price increases.
- Expenses in 2020 were $3,465,566, a decrease of 29% versus year ago ($4,890,909).
- Loss for the year was $883,267 versus a loss of $3,855,738 in fiscal 2019.
- Adjusted EBITDA was ($352,862) an improvement from Adjusted EBITDA of ($1,778,035) a year ago.
- The Company lost $0.02 per share in 2020 versus a loss of $0.07 per share in 2019.
- Balance sheet remains strong with $2.2M in cash and $3.5M in accounts receivable and inventory.
While revenue increased significantly in 2020, there was a decline in the second half of the year due to the impact of COVID-19 on customer orders. Pioneering believes that the impact of the pandemic will be short-lived given the prospect of widespread vaccination in 2021 and that revenues will resume their upward trajectory as businesses activity in the United States resumes. The Company has worked hard to overcome its recent challenges and believes that its current strategic plan will help position it for future growth.
Selected Financial Results – Past Four Fiscal Years Ended September 30th
| FY2020
(audited) |
FY2019
(audited) |
FY2018
(audited) |
FY2017
(audited) |
|
| Revenue | $6,540,550 | $3,941,621 | $4,749,536 | $10,287,537 |
| Gross Profit | $2,674,008 | 2,235,195 | 2,488,279 | 5,243,254 |
| Expenses | $3,465,566 | 4,890,909 | 6,072,092 | 4,251,713 |
| Net Income (Loss) | $883,267 | (3,855,738) | (3,305,329) | 245,054 |
| EPS Basic (Loss) | (0.02) | (0.07) | (0.06) | 0.01 |
| Adjusted EBITDA(1) | (352,862) | (1,778,035) | (2,240,678) | 1,961,574 |
| Tariff Adjusted EBITDA(1) | 163,777 | (1,778,035) | (2,240,678) | 1,961,574 |
(1) Adjusted EBITDA and Tariff Adjusted EBITDA are non-IFRS measures. Please refer to “Non-IFRS Measures” at the end of this press release.
Pioneering CEO Kevin Callahan said of the results, “Despite the temporary setback due to COVID-19, we are pleased with the progress we made in 2020, increasing revenue and having taken proactive steps to decrease expenses, manage pricing, cost of goods sold and gross profit while continuing to pursue top-line revenue growth. We have a plan in place to address some of our challenges and feel confident that we will continue moving forward stronger than ever”.
While revenue, gross profits and Adjusted EBITDA have all significantly increased in fiscal 2020 relative to fiscal 2019, gross profit margin declined due to the impact of tariffs imposed by the United States on the products produced in China and sold in the United States and special incentives and discounts offered to some customers as part of their commitment to make recurring purchases. These special incentives and discounts to select customers will be discontinued at end of this fiscal year.
The COVID-19 pandemic and U.S. tariffs on Chinese made goods have presented challenges, but the Company has a strong sales pipeline and balance sheet and a plan going forward to strengthen gross margins and address our current tariff situation which we expect will allow us to manage these challenges and take advantage of new opportunities while continuing to invest in new product development and meet increasing customer need and demand.
Although Pioneering currently expects that revenues will increase in 2021, we did see a decline in product shipments in Q3 and Q4 2020 due to COVID-19. It is not possible to reliably estimate the impact of the pandemic on the Company’s financial results or operations in future periods, however the introduction of vaccines in 2021 should have a positive effect. Those distributors and customers whose orders were interrupted by the pandemic have reiterated their intentions to complete those projects.
The pandemic has triggered a number of economic and social responses aimed at reducing the spread of COVID-19, including the closure of restaurants and self-isolation and “work from home” measures. These changes have significantly increased the amount of home cooking and, as a consequence, cooking related fires. This has increased awareness of the problem and the need for solutions to reduce the risk of cooking fires. Pioneering believes that these circumstances provide an opportunity for it to strengthen the profile of its products and to attract new customers.
In the second half of 2020, the pandemic affected the Company’s supply chain temporarily interrupting its supply of product. However, the Company has now resolved these issues and its product supply is currently sufficient to satisfy the anticipated demand in 2021. Any future supplier disruptions could create delays in the Company’s ability to fulfill customer orders on a timely basis.
2021 Strategic Objectives
The Company’s 2021 strategic plan is focused on the following five key objectives aimed at improving its financial results in the short term and positioning the Company for continued growth:
- Improve Gross Margins. The Company is focused on improving gross margins with a target of getting back to margin levels currently enjoyed. The Company has developed a multi-faceted plan to do this (see Results of Operations in MD&A).
- Build a High Performing Sales Model. The Company intends to continue to build on and execute against the sales related initiatives it began in 2020 to build a high performing sales model that is focused on distributor acquisition and engagement, end customer lead generation, closing deals, and superior customer service.
- Invest for Growth with Key Distributors. The Company will continue to invest aggressively in Maintenance, Repair and Operations (“MRO”) distributors who provide access to multiple sales channels where the Company’s products are relevant. HD Supply USA remains the ideal “partner model” that we have had the most success with and so the Company’s focus will be on taking this learning to help entrench with other relevant distributors.
- Drive B2B Awareness of the Cooking Fire Problem & Pioneering Solutions. The Company will continue to invest in marketing focused on building B2B customer awareness of the cooking fire problem and its solutions. The pandemic has created an environment where the cooking fire problem has become an even bigger issue. Pioneering intends to continue investing in marketing primarily via highly targeted digital marketing to its primary markets and influencers to drive awareness for both the growing problem and its solutions. The Company will also leverage old, new, and existing B2B customer traffic to generate additional sales opportunities.
- Leverage SmartBurner Equity to Enable a Healthy Product Pipeline. The Company invested in R&D in 2020 and intends to launch new and enhanced cooking fire prevention solutions and products in 2021 to generate additional revenue opportunities. Pioneering’s product development plan also includes further development in 2021 to expand its portfolio of fire prevention technologies and products.
Management Update
Pioneering also announces that Dan MacDonald, President, has left the Company to pursue other opportunities. “Dan has been an important part of Pioneering for many years and we thank him for his many contributions,” said Mr. Callahan. “We wish him well in his new endeavours.”
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About Pioneering Technology Corp: Pioneering, based in Mississauga, Ontario is an “energy smart” technology company and North America’s leader in innovative cooking fire prevention technologies and products. Our mission is simple: To help save lives and property from the number one cause of household fire – cooking fires. We do this by engineering and bringing to market energy-smart solutions that make consumer appliances safer, smarter, and more efficient. Our patented cooking-fire prevention products address the multi-billion-dollar problem of cooking fires. According to the National Fire Protection Association, stovetop cooking is the number one cause of household fire and fire injuries in North America. Pioneering’s temperature limiting control (TLC) technology is now installed in over 300,000 multi-residential housing units across North America without a single cooking fire being reported, delivering peace of mind and a solid return on investment for its customers. Pioneering’s proprietary cooking fire prevention solutions include Safe-T-element, SmartBurner, RangeMinder & Safe-T-sensor and are suitable for the majority of the more than 140 million stoves/ranges and over 140 million microwave ovens in use throughout North America. For more info, go to www.pioneeringtech.com.
For investor relations please contact:
Michael Quast
VP Marketing & Communications Phone: 647-945-7521
Email: michaelquast@pioneeringtech.com
Forward Looking Statements
The statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management’s current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in Pioneering’s target markets, the demand for Pioneering’s products, the availability of funding and the efficacy of Pioneering’s technology, governmental regulation and the impact of the COVID-19 pandemic. These forward- looking statements are made as of the date hereof an, except as required by applicable law, Pioneering does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from Pioneering’s expectations and projections.
Non-IFRS Measures
Adjusted EBITDA is a measure not recognized under International Financial Reporting Standards (“IFRS”). However, management of Pioneering believes that most shareholders, creditors, other stakeholders and investment analysts prefer to have these measures included as reported measures of operating performance, a proxy for cash flow, and to facilitate valuation analysis. Adjusted EBITDA is defined as earnings before interest income, taxes, depreciation and amortization, impairment losses, stock-based compensation, restructuring costs included in general and administration expense, fair value movement – derivative liability and other non-recurring gains or losses including transaction costs related to acquisition. Management believes Adjusted EBITDA is a useful measure that facilitates period-to-period operating comparisons. Adjusted EBITDA does not have any standard meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Readers are cautioned that Adjusted EBITDA is not an alternative to measures determined in accordance with IFRS and should not, on its own, be construed as indicators of performance, cash flow or profitability. References to the Pioneering’s Adjusted EBITDA should be read in conjunction with the financial statements and management’s discussion and analysis of Pioneering posted on SEDAR (www.sedar.com). For a reconciliation of Adjusted EBITDA as presented by Pioneering to net income, please refer to Pioneering’s management’s discussion and analysis.
Tariff Adjusted EBITDA, defined as Adjusted EBITDA adjusted for tariff and tariff related costs, is used by management to measure operating performance of the Company and is a supplement to our unaudited condensed interim financial statements presented in accordance with IFRS. Tariff Adjusted EBITDA is a helpful measure of operating performance, similar to Adjusted EBITDA, enabling management and investors to gain a clearer understanding of the underlying financial performance of the Company without the impact of U.S. Section 301 tariffs and related costs. While management considers Tariff Adjusted EBITDA a meaningful measure for assessing the underlying financial performance of the Company, Tariff Adjusted EBITDA is a non-IFRS measure and does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Readers are cautioned that Tariff Adjusted EBITDA is not an alternative to measures determined in accordance with IFRS and should not, on its own, be construed as indicators of performance, cash flow or profitability. References to the Pioneering’s Tariff Adjusted EBITDA should be read in conjunction with the financial statements and management’s discussion and analysis of Pioneering posted on SEDAR (www.sedar.com). For a reconciliation of Tariff Adjusted EBITDA as presented by Pioneering to net income, please refer to Pioneering’s management’s discussion and analysis.
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