MONTREAL, (QC), March 12, 2021 – Xebec Adsorption Inc. (TSX: XBC) (“Xebec”), a global provider of clean energy solutions, announced today that the Company is in the process of finalizing its financial results for the fourth quarter and year ended December 31, 2020, which will be released on March 25th, 2021. As a result of extraordinary items in its Cleantech business segment and due to the impact of the Covid-19 pandemic, Xebec no longer expects to achieve its previous full year 2020 revenue guidance of $70 to $80 million. While the financial review remains ongoing, revenues for the full year are expected to be approximately $57 million. Full year 2020 gross margin is expected to be in the range of negative $1.0 million to positive $1.0 million. SG&A expenses in Q4 2020 are expected to be between $15 and $16 million. This increase is mainly due to transaction expenses, provision for bad debt, and an accelerated amortization amount of capitalized R&D expenses. Final figures are subject to completion of the Company’s annual audit.
The difference in revenues is mainly due to the following extraordinary items, all of which occurred within Xebec’s Cleantech business segment:
|List of Extraordinary Items||
Impact on Revenue
|Xebec underwent a detailed review of its fixed price contracts for renewable natural gas (RNG) projects, where revenues are recognized based on the percentage of completion method. As a result of its review, Xebec determined that:
i. Previously incurred expenses represented a lower percentage of total costs than previously estimated, and previously recognized revenue is required to be adjusted to reflect the revised percentage of completion for contracts that remain profitable under Xebec’s updated estimates.
ii. Some of the contracts previously estimated to be profitable are now projected to result in losses. The percentage of completion method requires that the losses on such contracts be recognized immediately.
|Cancellation of the sale of two systems for which approximately 50% of the revenue was already recognized based on the percentage of completion method.||
|Reversal of revenue previously recognized based on the percentage of completion method due to the deteriorating financial position of a client where collection for payment became uncertain.||
Xebec launched and delivered its first fully containerized and standardized BGX Biostream™ unit for small-scale biogas upgrading applications in 2020. The Company expects that this new product will lead to more predictable cost management and improved gross margins for RNG projects going forward. Xebec continues to see a positive backdrop for the industry as organizations and governments around the world aim to manage organic waste more effectively and decarbonize their natural gas supplies.
Since Q4 2020, Xebec has completed several key strategic investments to better position the company for long-term growth. This includes the launch of its hydrogen strategy and on-site oxygen and nitrogen generation business, with the transformative acquisitions of HyGear and Inmatec, as well as the continued growth of its Cleantech Service Network in North America.
As a result of Xebec’s recent acquisitions and the increasingly diversified nature of its revenues, the company expects that approximately 20% of its revenues will come from its renewable natural gas business in 2021. The remainder of revenues are expected to come from hydrogen generation, recurring 15-year Gas-as-a-Service contracts, the Cleantech Service Network and industrial compressed air and gas products.
2020 Q4 and Audited Year End Results Date
Xebec will announce its 2020 fourth quarter and audited year end financial results on Thursday, March 25th, 2021 before the market opens at 7:00 AM EST, followed by a webinar at 8:30 AM EST (5:30 AM PST).
Xebec invites shareholders, analysts, investors, media representatives, and other stakeholders to attend our webinar where management will discuss 2020 Q4 and full year results followed by a Question and Answer (“Q&A”) period.
Kurt Sorschak, President and CEO will host the webinar alongside CFO, Stéphane Archambault.
Investor Webinar Registration and Replay
Register here: https://app.livestorm.co/xebec-adsorption-inc/2020-q4-investor-webinar
A recording of the webinar can be accessed with the above link and supporting materials will be made available in the investor’s section of the company’s website at xebecinc.com/investors.
Xebec Adsorption Inc.
Brandon Chow, Director, Investor Relations
+1 450.979.8700 ext 5762
About Xebec Adsorption Inc.
Xebec is a global provider of clean energy solutions for renewable and low carbon gases used in energy, mobility and industry applications. The company specializes in deploying a portfolio of proprietary technologies for the distributed production of hydrogen, renewable natural gas, oxygen and nitrogen. 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 five manufacturing facilities, eight 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.
Neither Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release. This news release contains forward-looking statements and forward-looking information (together, “forward-looking statements”) within the meaning of applicable securities laws. All statements, other than statements of historical facts, are forward-looking statements, and subject to risks and uncertainties. Generally, forward-looking statements can be identified by the use of terminology such as “plans”, “seeks”, “expects”, “estimates”, “intends”, “anticipates”, “believes”, “could”, “might”, “likely” or variations of such words, or statements that certain actions, events or results “may”, “will”, “could”, “would”, “might”, “will be taken”, “occur”, “be achieved” or other similar expressions. Forward-looking statements, including statements concerning future capital expenditures, revenues, expenses, earnings, economic performance, indebtedness, financial condition, losses and future prospects as well as the expectations of management of Xebec with respect to information regarding the business and the expansion and growth of Xebec operations, involve risks, uncertainties and other factors that could cause actual results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements are subject to business and economic factors and uncertainties, and other factors that could cause actual results to differ materially from these forward-looking statements, including the relevant assumptions and risks factors set out in Xebec’s public documents, including in the most recent annual management discussion and analysis and annual information form, filed on SEDAR at www.sedar.com. Furthermore, should one or more of the risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements or information. These risks, uncertainties and other factors include, among others, the uncertain and unpredictable condition of global economy, notably as a consequence of the Covid-19 pandemic, Xebec’s capacity to generate revenue growth, the availability to Xebec of financing and credit alternatives and access to capital, Xebec’s capacity to meet all its other commitments and business plans, Xebec’s limited number of customers, the potential loss of key employees, changes in the use of proceeds relating to the loan, share price volatility, and other factors. Although Xebec believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed times frames or at all. Except where required by applicable law, Xebec disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.