Xebec Provides Updated 2020 Guidance
MONTREAL, March 12, 2021 (GLOBE NEWSWIRE) -- 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:
Xebec Provides Updated 2020 Guidance
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March 12, 2021 08:00 ET | Source: Xebec Adsorption
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MONTREAL, March 12, 2021 (GLOBE NEWSWIRE) -- 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:
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.
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.
$5.6 Million
Cancellation of the sale of two systems for which approximately 50% of the revenue was already recognized based on the percentage of completion method. $5.4 Million
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. $1.9 Million
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.