(All financial figures are in Canadian dollars unless otherwise noted)

MONTRÉAL (QC), May 12, 2022 – Xebec Adsorption Inc. (TSX: XBC) (“Xebec” or the “Company”), a global provider of sustainable gas technologies, announced today its 2022 first quarter results, with the following highlights:

First Quarter 2022 Highlights

  • Revenues of $41.2 million compared to $20.6 million
  • Gross margin of $4.6 million (11%) compared to $4.2 million (20%)
  • Adjusted EBITDA of ($9.0) million compared to ($4.9) million
  • Adjusted EBITDA excluding legacy BGX activities of ($6.4) million compared to ($1.7) million
  • Net loss of $18.4 million or $0.12 per share compared to a net loss of $10.1 million or ($0.07) per share
  • Backlog of $260.5 million on May 11, 2022 compared to $88.5 million on May 12, 2021
  • Working capital of $66.6 million on March 31, 2022 for a current ratio of 1.83:1, compared to working capital of $82.1 million and a current ratio of 1.96:1 on December 31, 2021
  • Presented three-year strategic plan on March 29, 2022 to power Xebec’s growth in sustainable gases with a target of approximately $300–$350 million in revenues and an adjusted EBITDA margin of approximately 8%–10% for fiscal year ended December 31, 2024
  • Executing Center of Excellence Framework in line with strategic plan to ensure the Company grows sustainably by reducing its overall cost profile to deliver on long-term adjusted EBITDA goals
  • As at March 31, 2022 the company had $34.7 million of cash and restricted cash compared to $51.1 million as at December 31, 2021


Financial Highlights:

% of Change
Q1 2022   Q1 2021
(In millions of dollars) (unaudited) (unaudited)
Revenues 41.2 20.6 100%
Gross margin 4.6 4.2 10%
Gross margin % 11% 20%
Adjusted EBITDA (1) (9.0) (4.9)
Adjusted EBITDA ex. legacy BGX activities (2) (6.4) (1.7)
Net income (loss) (18.4) (10.1)
Net income (loss) per share – basic ($/share) (0.12) (0.07)
Weighted average number of shares 154,717,934 152,398,367
As at: March 31,
  Dec. 31,
Total assets 464.1 496.6
Total liabilities 174.3 181.8
Equity 289.8 314.8
As at:  May 11,
   May 12,
Backlog 260.5 88.5
  1. Adjusted EBITDA is a non-IFRS measure. Adjusted EBITDA starts with EBITDA and adjusts for Stock-based compensation expenses, impairment of inventories, exchange gain/loss on the obligation arising from non-controlling interest participation in a subsidiary, foreign exchange loss (gain), accretion of debt, impairment charge of tangible assets, remeasurement of investments, M&A transaction fees, and one-time payments arising from the prior departure of employees and legal costs.
  2. Removes the impact from legacy BGX activities which are customized, production-type RNG contracts. 


Financial Results

  • Revenues increased by $20.6 million to $41.2 million for the three-month period ended March 31, 2022 compared to $20.6 million for the same period the prior year. The increase is mainly explained by the integration of newly acquired companies, delivery of second-generation Biostreams and organic growth initiatives. The increase is partly offset by the reduction of revenue from our Shanghai Joint-Venture which was fully consolidated last year.
  • Gross margin increased from $4.2 million to $4.6 million for the three-month period ended March 31, 2022 compared to the same period the prior year. The gross margin % decrease from 20% to 11% is due to loss provisions taken for legacy RNG contracts currently in the startup and commissioning phase, lower margin hydrogen contracts and increasing material and supply chain costs.
  • Selling and administrative expenses (“SG&A”) for the three-month period ended March 31, 2022 were $16.2 million, an increase of $5.5 million, compared to $10.7 million for the same three months of 2021. $2.2 million of the increase was associated with depreciation and amortization of intangible assets in addition to SG&A expenses associated with newly acquired companies.
  • Research and development expenses of $0.7 million for the three-month period ended March 31, 2022 related to the continued development of the Company’s second generation Biostream product and new hydrogen generation technologies.
  • Other (gains) and losses of $3.7 million for the three-month period ended March 31, 2022 compared to $1.7 million for the same three months of 2021. The increase is mainly due to a net loss on foreign currency exchange differences, a legal settlement and related costs, partly offset by lower integration and acquisition costs.
  • Operating loss of $16.7 million for the three-month period of 2022 compared to an operating loss of $8.8 million for the same quarter in 2021. The increase in operating loss is mainly explained by the above-noted lower gross margin and increase in SG&A expenses due to the impact of acquisitions as well as legal settlement and related costs.
  • Net loss of $18.4 million or $0.12 per share in the three-month period ended March 31, 2022 compared to a net loss of $10.1 million or ($0.07) per share for the same period the prior year.
  • Adjusted EBITDA decreased to ($9.0) million for the three-month period ended March 31, 2022 from ($4.9) million for the same period last year.
  • Adjusted EBITDA loss excluding legacy BGX activities increased to $6.4 million for the three-month period ended March 31, 2022 from $1.7 million for the same period last year.


CEO Quote:

“We had a solid start to the year on our aggressive growth plan by doubling our revenues and almost tripling our backlog year-over-year. This backlog sets us up well for our three-year strategic plan as we aim to become a global powerhouse in sustainable gases. Our forward outlook remains positive, and we are well on our way to achieving our overall goals but need to be mindful of the impacts that we are seeing in material costs, supply chain disruptions, logistics challenges and the start-up of the final units of our legacy BGX business. Tackling these challenges will be a focus for Xebec in the short-term as we take advantage of synergies offered from our acquisitions and execute on our Center of Excellence Plan for sustainable growth. As I head into my first full quarter leading the Company, I am excited about the team, technologies and mega trends that support Xebec’s strong growth,” stated Jim Vounassis, President and CEO of Xebec Adsorption Inc.


Executing Center of Excellence Framework for Sustainable Growth

  • Initiative started by newly appointed President & CEO Jim Vounassis, and presented during investor day, to ensure the Company grows sustainably by reducing its overall cost profile to align with recently presented strategic plan
  • Puts the Company on a pathway to generate positive cashflows from operations and achieve the three-year goal of 8%–10% adjusted EBITDA margin for fiscal year ended December 31, 2024
  • Center of Excellence Framework revolves around three levers: 1) core vs. non-core activities, 2) product rationalization, and 3) workforce and supply chain synergies
  • Includes wrapping up the continued costs of legacy BGX activities which impacted adjusted EBITDA negatively by $2.6 million in Q1 2022
  • Execution of plan over twelve months expected to drive 2%–4% absolute improvement in adjusted EBITDA margin


Current Market Outlook
As evidenced by strong revenue, backlog and quote growth, Xebec remains optimistic about the outlook as the Company continues to execute on its three-year plan. Supply chain, logistics and material costs were unprecedented hurdles in Q1 2022, and the Company is working to address these challenges alongside other cost savings measures under its Center of Excellence Framework. This framework gives the Company an opportunity to drive intended synergies from the acquisitions completed in the last 24 months and leverage recent senior hires in global manufacturing and strategic sourcing. As a result, Xebec expects to continue its topline revenue growth and see its cost profile improve as the framework is executed.


Systems – Cleantech

Renewable Natural Gas (RNG)
Xebec continues to execute its strategy of focusing on standardized and containerized products. The Company’s target market (North American agriculture) continues to see solid quoting levels for the all-in-one solution. As of April 2022, the number of outstanding quotes in Q1 2022 are approximately double the number from the same period last year. Xebec is aiming to convert a number of these quotes into the backlog this year and expects these efforts will be important in backfilling excess capacity at its recently acquired facility in Denver, Colorado.

Production of the second generation Biostream is ongoing at two of Xebec’s North American manufacturing facilities (Blainville and Xebec Systems USA). Q1 2022 saw revenues recognized from second generation Biostream units destined to Brightmark RNG Holdings LLC, a joint venture between Brightmark and Chevron U.S.A. Inc.

Lastly, the Company has continued to experience the impact from legacy BGX contracts during the commissioning phase of several projects. Higher than anticipated costs were incurred to ensure that projects are running to specification for customers. Xebec is focused on moving the last of these projects to the serviceability stage as soon as possible which is expected to be positive for margins in the segment. Going forward, standardized and containerized products bring benefits in shorter installation and commissioning times, and less exposure to engineering, procurement and construction (EPC) work which reduces the risks seen in its legacy BGX activities.

Xebec’s hydrogen activities continue to develop with a goal this year to secure a financial partner to go global with its hydrogen business as the Company expands out of Europe. Q1 2022 saw a Gas-as-a-Service hydrogen generation project with Messer Group in the Czech Republic commissioned for two end users. Lastly, this quarter also saw lower revenues and gross margins due to timing and an increase in raw material costs.

Furthermore, the Company is seeing increased activity for hydrogen equipment for mobility applications which it believes will be a key trend in supporting the target of 20–25 decentralized hydrogen production hubs by 2024. For example, a hydrogen PSA order was received this quarter for a hydrogen refueling station in India and quotes for this product continue to increase. Xebec continues to target industrial hydrogen users to build the initial infrastructure as mobility demand comes online, allowing the Company to profitably scale up local supply.

Carbon Capture and Sequestration
Carbon capture and sequestration is an emerging vertical for Xebec as the world transitions to a net-zero or carbon negative economy. Xebec has leveraged its PSA and compression technology platforms to create new carbon capture solutions for customers who wish to reduce their emissions further in energy, heating and industrial processes.

On April 12, 2022, Xebec announced the Company’s largest order ever valued at $143.2 million with Iowa-based SCS Carbon Removal LLC, a subsidiary of Summit Carbon Solutions. The contract is for 51 carbon dioxide (CO2) reciprocating compression packages which is expected to be used in the world’s largest proposed carbon capture project to date. The Company will manufacture these units out of its Denver-based facility over the course of 2022 and 2023. Xebec expects that as new markets emerge for carbon capture and sequestration, its unique technologies and solutions will play a more important role in broader decarbonization efforts.

Oxygen and Nitrogen
Xebec’s oxygen and nitrogen business came off a record year in 2021 with more than 600 units produced. However, an increase in material and logistics costs weighed on gross margins in Q1 2022 which were partly attributable to the ongoing Russian invasion of Ukraine. As with Xebec’s other verticals, the Company is working to improve margins by leveraging new senior executive hires in supply chain and manufacturing to drive synergies and cost reductions.

In addition, Xebec successfully concluded a 12-month test period for a sustainable urban farming project in Wiesbaden, Germany. An on-site oxygen generator was provided to ECF Farmsystems that combines fish and basil production in an urban environment by building on the rooftop of a grocery store. This aquaponic farm system grows approximately 800,000 basil plants and 20,000 cichlids per year and requires no fertilizer for the plants. Xebec’s oxygen generator ensures the necessary oxygen saturation of the water. This approach to combine fish farming with urban agriculture closer to consumers, has proven to be a more sustainable food production method due to reduced transportation, higher energy efficiency and resource savings.


Support – Industrial Products & Services
The Support segment, now being rebranded under XBC Flow Services, delivered solid results in Q1 2022 but felt the impacts of supply chain constraints, increased logistics costs and continued COVID-19 restrictions. Despite this, backlog for this segment is at record highs and as such, securing skilled technicians remains a top priority this year as the segment continues growing organically.

Furthermore, over 1,000 hours were logged in Q1 2022 to support renewable natural gas installations in the U.S., which coincides with the official launch of the new cleantech service training program for new hires. As Xebec executes on its brand transition to XBC Flow Services this year, its customer-centric values in providing a consistent, high-quality customer experience irrespective of which location is taking the lead.

Renewable Gas Infrastructure
Xebec is addressing the renewable gas infrastructure opportunity through GNR Quebec Capital L.P. (“GNRQC”), a limited partnership created by Xebec and The Fonds de solidarité FTQ (the “Fonds. Xebec is an equal equity investor alongside the Fonds and will participate in the sale of renewable natural gas equipment alongside long-term parts & service agreements for the equipment.

GRNQC has evaluated 31 projects to date and is actively involved with 18 of both greenfield and brownfield varieties in agriculture, municipal, landfill, mixed use, and industrial waste applications. The fund has now successfully executed several letters of intent (LOI) for projects in Québec.

Xebec to Host Live Investor Webinar to Discuss Q1 2022 Results
An investor webinar for shareholders, analysts, investors, media representatives, and other stakeholders will be held today, May 12, 2022, at 8:30AM EDT (5:30AM PDT).

Register here: https://app.livestorm.co/xebec-adsorption-inc/2022-q1-investor-webinar

A recording of the webinar and supporting materials will be made available later today in the investor’s section of the Company’s website at xebecinc.com/investors.

2022 First Quarter Financial Statements and Management’s Discussion and Analysis
The financial statements, notes to financial statements, and Management’s Discussion and Analysis for the three-month period ended March 31, 2022, are available on the company’s website at xebecinc.com/investors or on the SEDAR website at www.sedar.com.

Non-IFRS Measures
This press release refers to financial measures that are not recognized under International Financial Reporting Standard (“IFRS”). A non-IFRS financial measure is a numerical indicator of a company’s performance, financial position or cash flow that excludes or includes amounts or is subject to adjustments that have the effect of excluding or including amounts that are included or excluded in most directly comparable measures calculated and presented in accordance with IFRS. Non-IFRS measures do not have any standardized meaning under IFRS and therefore are unlikely to be comparable to similar measures presented by other companies having the same or similar businesses.

The Company believes these measures are useful supplemental information. The following non-IFRS measures are used by the Company in this press release: EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin and backlog.

Please find below definitions of non-IFRS financial measures used by herein:

EBITDA” means the earnings before interest, income taxes, depreciation and amortization, where interest is defined as net finance costs as per the consolidated statement of comprehensive income.

EBITDA margin” being EBITDA as a percentage of revenues.

Adjusted EBITDA” starts with EBITDA and adjusts for Stock-based compensation expenses, impairment of inventories, exchange gain/loss on the obligation arising from non-controlling interest participation in a subsidiary, foreign exchange loss (gain), accretion of debt, impairment charge of tangible assets, remeasurement of investments, M&A transaction fees, and one-time payments arising from the prior departure of employees and legal costs.

Adjusted EBITDA margin” being Adjusted EBITDA as a percentage of revenues.

Backlog” means contracts that have been received and are considered as firm orders.

Reconciliations and Calculations
The table set forth below provides a quantitative reconciliation of EBITDA, EBITDA margin, Adjusted EBITDA, and Adjusted EBITDA margin, each of which are non-IFRS financial measures, to the most comparable IFRS measure disclosed in the Company’s financial statements to which the measure relates for the three months ended March 31, 2022 and March 31, 2021. The reconciliation of non-IFRS measures to the most directly comparable measure calculated in accordance with IFRS is provided below where appropriate.  Backlog does not have a directly comparable IFRS measure.


EBITDA Reconciliation  
In millions of $   For the three-month period
ended March 31,
  2022 2021
Net income (loss)   (18.4)              (10.1)
Depreciation and amortization   3.9                2.2
Income taxes   (0.1)                 0.1
Financing Expenses   1.9                    1.2
EBITDA   (12.7) (6.6)
Foreign exchange loss (gain)   1.1               0.7
Legal settlement and related costs   1.8                       –
Integration and acquisition costs   0.8     1.0
Adjusted EBITDA   (9.0) (4.9)
Adjusted EBITDA in percentage of sales   -22% -24%
Adjusted EBITDA excluding legacy BGX activities   (6.4)                (1.7)


Additional details for these non-IFRS financial measures can be found below and in Section 14 of Xebec’s Management’s Discussion and Analysis for the period ended March 31, 2022 (which sections are incorporated by reference into this press release), filed with the securities regulatory authorities in Canada, available on SEDAR at www.sedar.com and on the Company’s website at xebecinc.com under the “Investors” section.

Related links:

For more information:
Xebec Adsorption Inc.
Brandon Chow, Director, Investor Relations
+1 450.979.8700 ext 5762
[email protected]

About Xebec Adsorption Inc.
Xebec is a global provider of clean energy solutions for renewable and low carbon gases used in energy, mobility and industrial applications. The company specializes in deploying a portfolio of proprietary technologies for the distributed production of hydrogen, renewable natural gas, carbon capture, oxygen and nitrogen which is supported by a service network under the brand “XBC Flow Services”. By focusing on environmentally responsible gas generation, Xebec has helped thousands of customers around the world reduce their carbon footprints and operating costs. Headquartered in Québec, Canada, Xebec has a worldwide presence with nine manufacturing facilities, seventeen Cleantech Service Centers and four sales offices spanning over four continents. Xebec trades on the Toronto Stock Exchange under the symbol (TSX: XBC). For more information, xebecinc.com.

Cautionary Statement

This press release contains forward-looking statements within the meaning of applicable Canadian securities law. These statements relate to future events or future performance and reflect the expectation of Management regarding the growth, results of operations, performance and business prospects and opportunities of the Company or its industry. Forward-looking statements typically contain words such as “believes”, “expects”, “anticipates”, “continues”, “could”, “indicates”, “plans”, “will”, “intends”, “may”, “projects”, “schedules”, “would” or similar expressions suggesting future outcomes or events, although not all forward-looking statements contain these identifying words. Examples of such statements include, but are not limited to, statements concerning: (i) actions expected to be undertaken to achieve the Company’s strategic goals; (ii) the key market drivers impacting the Company’s success; (iii) intentions with respect to future renewable gas work; (iv) expectations regarding business activities and orders that may be received in fiscal 2022 and beyond; (v) trends in, and the development of, the Company’s target markets; (vi) the Company’s market opportunities; (vii) the benefits of the Company’s products, (viii) the intention to enter into agreements with partners; (ix) future outsourcing and supply chain; (x) expectations regarding competitors; (xi) the expected impact of the described risks and uncertainties; (xii) intentions with respect to the payment of dividends; (xiii) the management of the Company’s liquidity risks in light of the prevailing economic conditions; (xiv) the Company’s cost reduction plan; (xv) the search for additional financing over the next months; (xvi) statements regarding the merits of the class action complaints filed against the Company; (xvii) that the expected delivery of second generation Biostream systems in 2022; (xviii) expectation that increased quotes could lead to more orders for the Company; and (xix) the Company’s plan to become a go-to service market leader;

These statements are neither promises nor guarantees but involve known and unknown risks and uncertainties that may cause the Company’s actual results, level of activity or performance to be materially different from any future results, levels of activity or performance expressed in or implied by these forward-looking statements. These risks include, generally, risks related to revenue growth, operating results, industry and products, technology, competition, the economy, the sufficiency of insurance and other factors which are discussed in greater details in this press release and in the Annual Information Form of the Company filed on SEDAR at www.sedar.com.

Forward-looking statements contained herein are based on a number of assumptions believed by the Company to be reasonable as at the date of this press release, including, without limitations, assumptions about trends in certain market segments, the economic climate generally, the pace and outcome of technological development, the identity and expected actions of competitors and customers, assumptions relating to the merits of the class action complaints filed against the Company and their impact, the value of the Canadian dollar and of foreign currency fluctuations, interest rates, working capital requirements, the anticipated margins under new contracts awards, the state of the Company’s current backlog, the regulatory environment, the sufficiency of internal and disclosure controls, the ability of the Company to successfully integrated acquired business, and the acquisition and integration of businesses in the future. Other assumptions, if any, are set out throughout this press release. If these assumptions prove to be inaccurate, the Company’s actual results may differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements contained herein are made as of the date of this press release and are expressly qualified in their entirety by this cautionary statement. Except to the extent required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements contained herein. Readers should not place undue reliance on forward looking statements.