Kontrol Technologies Announces Second Quarter 2024 Financial Results and Provides Corporate Update

Rhea-AI Summary

Kontrol Technologies Corp. (OTCQB:KNRLF) announced its Q2 2024 financial results and provided a corporate update. Key highlights include:

- Q2 2024 revenue of $3.7 million, down from $4.7 million in Q2 2023
- YTD 2024 revenue of $7.4 million, compared to $9.1 million in the same period last year
- YTD 2024 gross margin of 58%, slightly down from 61% in the prior year
- YTD 2024 income from continuing operations of $12.9 million, a significant improvement from a loss of $(371,057) in the same period last year
- Recognized a $13.3 million gain on sale of air monitoring and compliance related assets
- Paid off all interest-bearing bank debt, totaling $11.1 million

The company is now focused on growing its core business organically and through strategic acquisitions in the sustainable building services sector.

Positive

• Significant improvement in income from continuing operations, reaching $12.9 million YTD 2024
• Recognized a $13.3 million gain on sale of assets
• Paid off all interest-bearing bank debt, strengthening the balance sheet
• Maintained a healthy gross margin of 58% YTD 2024
• Positioned for future growth with improved cash position and debt-free status

Negative

• Q2 2024 revenue decreased to $3.7 million from $4.7 million in Q2 2023
• YTD 2024 revenue declined to $7.4 million from $9.1 million in the same period last year
• Gross margin slightly decreased to 58% YTD 2024 from 61% in the prior year
• Adjusted EBITDA from continuing operations decreased to $440,037 YTD 2024 from $1.5 million in the prior year

TORONTO--(BUSINESS WIRE)-- Kontrol Technologies Corp. (CBOE.CA:KNR) (OTCQB:KNRLF) (FSE:1K8) (“Kontrol Technologies” or “Kontrol” or “Company”) announces its results for the three months and year to date ended June 30, 2024. A complete set of the Financial Statements and Management's Discussion & Analysis have been filed on SEDAR (www.sedar.com).

“During the second quarter we significantly improved the balance sheet, grew our cash position and closed out the secured debt facility,” said Paul Ghezzi, CEO of Kontrol. “We are now in a position to focus on growing our core business both organically and through strategic acquisitions.”

Second Quarter and Year to Date 2024 Highlights

• Revenues for the three months ended June 30, 2024 were $3.7 million, compared to $4.7 million for the same quarter in the prior year; Revenues for the six months ended June 30, 2024 were $7.4 million, compared to $9.1 million for the same period in the prior year.
• Gross margin for the six months ended June 30, 2024 was 58%, compared to 61% for the same period in the prior year.
• Income from continuing operations for the six months ended June 30, 2024 was $12.9 million compared to a loss from continuing operations of $(371,057) for the same period in the prior year.
• Adjusted EBITDA from continuing operations for the six months ended June 30, 2024 was $440,037 compared to $1.5 million for the same period in the prior year.
• A gain on sale of $13.3 million was recognized in Q2 2024 in connection with the sale of air monitoring and compliance related assets.
• All interest-bearing bank debt was paid off - principal payments totalled $11.1 million during the six months ended June 30, 2024.

Corporate Update

The Company is focused on providing sustainable building services and solutions to a wide range of real estate owners, property managers and institutions. The Company’s customer footprint includes commercial, multi-residential and industrial customers who face similar challenges, including managing energy consumption and decarbonization.

Over the past several quarters the Company has successfully managed some significant challenges and worked diligently to right size the balance sheet, and efforts have created opportune conditions for future growth. In Q2 2024 the Company paid off the remaining revolver and term loan balances and executed the sale of air monitoring and compliance related assets which raised internal cash and delivered a significant gain to book value. The Company is now well positioned with the necessary resources to accelerate organic growth plans and to execute on potential acquisitions.

Acquisition Targets

The Company has a number of targets under review with a focus on sustainable buildings and driving synergies across a core platform of services and solutions. The Company is targeting certain metrics for potential acquisitions which include, but are not limited to, revenues in the range of $1 to $5 million, up to 50% in recurring revenues, gross margin in the range of 40% to 50% with an established customer base.

Normal Course Issuer Bid

During the six months ended June 30, 2024, the Company announced that approvals were granted for a new Normal Course Issuer Bid program to buy back common shares of Kontrol through the NEO Exchange and alternative trading systems. The Company repurchased 807,000 common shares for a total of $230,000 during the six months ended June 30, 2024.

Q2 2024 and Year to Date Financial Summary

Financial Results	Three months ended			Six months ended
(Unaudited)	June 30, 2024	June 30, 2023		June 30, 2024	June 30, 2023
Revenue	$3,654,825	$4,678,027		$7,441,059	$9,139,345
Gross profit	$2,020,525	$2,901,891		$4,352,600	$5,540,115
Income (loss) from continuing operations	$12,321,014	$98,405		$12,854,502	$(371,057)
Gain from discontinued operations	-	-		-	$21,786,635
Net income and comprehensive income	$12,321,014	$98,405		$12,854,502	$21,415,578
Basic EPS - continuing operations	$0.21	$0.00		$0.22	$(0.01)
Diluted EPS - continuing operations	$0.17	$0.00		$0.18	$(0.01)
Basic EPS - discontinued operations	-	-		-	$0.41
Diluted EPS - discontinued operations	-	-		-	$0.33
Add/Deduct for Adjusted EBITDA reconciliation - continuing operations:
Amortization and depreciation	$228,334	$360,615		$450,717	$719,507
Finance expense	$91,967	$391,080		$250,629	$902,344
Gain on sale of assets	$(13,241,405)	-		$(13,241,405)	-
Share based compensation	$73,637	$13,292		$125,594	$233,713
Adjusted EBITDA - continuing operations	$(526,453)	$863,392		$440,037	$1,484,507

Adjusted EBITDA is a non-International Financial Reporting Standards (“IFRS”) measure used by management that is not defined by IFRS. Adjusted EBITDA does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA provides meaningful and useful financial information as these measures demonstrate the operating performance of the business excluding non-cash charges.

“Adjusted EBITDA” is calculated as net income or loss before interest, income taxes, amortization, and depreciation, share based compensation, acquisition related expenses, listing expense, gain or loss on sale of assets, and impairment of assets.

Readers are cautioned that Adjusted EBITDA should not be construed as an alternative to net income as determined under IFRS; nor as an indicator of financial performance as determined by IFRS; nor a calculation of cash flow from operating activities as determined under IFRS; nor as a measure of liquidity and cash flow under IFRS. The Company's method of calculating Adjusted EBITDA may differ from methods used by other companies and, accordingly, the Company's Adjusted EBITDA may not be comparable to similar measures used by any other company.

Kontrol Technologies Corp.

Kontrol Technologies Corp., a Canadian public company, is a leader in smart buildings and cities. Kontrol provides solutions and services to its customers to improve energy management and accelerate the sustainability of all buildings. Additional information about Kontrol Technologies Corp. can be found on its website at www.kontrolcorp.com and by reviewing its profile on SEDAR at www.sedar.com

Neither IIROC nor any stock exchange or other securities regulatory authority accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

This news release contains “forward-looking information” within the meaning of applicable securities laws. All statements contained herein that are not clearly historical in nature may constitute forward-looking information. In some cases, forward-looking information can be identified by words or phrases such as “may”, “will”, “expect”, “likely”, “should”, “would”, “plan”, “anticipate”, “intend”, “potential”, “proposed”, “estimate”, “believe” or the negative of these terms, or other similar words, expressions, and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussions of strategy.

Where Kontrol expresses or implies an expectation or belief as to future events or results, such expectation or belief is based on assumptions made in good faith and believed to have a reasonable basis. Such assumptions include, without limitation, that sufficient capital will be available to the Company and that technology will be as effective as anticipated.

However, forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by such forward-looking statements. Such risks include, but are not limited to, that sufficient capital and financing cannot be obtained on reasonable terms, or at all; that those technologies will not prove as effective as expected; those customers and potential customers will not be as accepting of the Company's product and service offering as expected; and government and regulatory factors impacting the energy conservation industry.

Accordingly, undue reliance should not be placed on forward-looking statements and the forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as at the date hereof and are based on the beliefs, estimates, expectations, and opinions of management on such date. Kontrol does not undertake any obligation to update publicly or revise any such forward-looking statements or any forward-looking statements contained in any other documents whether as a result of new information, future events or otherwise or to explain any material difference between subsequent actual events and such forward-looking information, except as required under applicable securities law. Readers are cautioned to consider these and other factors, uncertainties, and potential events carefully and not to put undue reliance on forward-looking information.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240814696005/en/

Kontrol Technologies Corp.

Paul Ghezzi, CEO

info@kontrolcorp.com

11 Cidermill Avenue, Suite 201

Vaughan, ON L4K 4B6

Tel: (905) 766.0400

Source: Kontrol Technologies Corp.

FAQ

What was Kontrol Technologies' (KNRLF) revenue for Q2 2024?

Kontrol Technologies' revenue for Q2 2024 was $3.7 million, compared to $4.7 million in Q2 2023.

How much income from continuing operations did Kontrol Technologies (KNRLF) report for the first half of 2024?

Kontrol Technologies reported income from continuing operations of $12.9 million for the six months ended June 30, 2024.

What was the gain on sale recognized by Kontrol Technologies (KNRLF) in Q2 2024?

Kontrol Technologies recognized a gain on sale of $13.3 million in Q2 2024 from the sale of air monitoring and compliance related assets.

How much bank debt did Kontrol Technologies (KNRLF) pay off in the first half of 2024?

Kontrol Technologies paid off $11.1 million in interest-bearing bank debt during the six months ended June 30, 2024.