VOTI DETECTION REPORTS FIRST QUARTER RESULTS

March 29, 2022

First quarter revenue of $4.3 million in line with guidance; Delivered 116 security scanning systems in the quarter; Registered gross margin of 33%; Industry leading features and technology are...

  • First quarter revenue of $4.3 million in line with guidance;
  • Delivered 116 security scanning systems in the quarter;
  • Registered gross margin of 33%;
  • Industry leading features and technology are leading to a growing pipeline in new verticals such as the U.S. Federal Government, prison networks and the global air cargo market;
  • Company on track for FY2022 revenue and gross margin guidance
  • Company closes private placement for aggregate gross proceeds of $2.36 million

MONTREAL, March 29, 2022 /CNW/ - VOTI Detection Inc. ("VOTI" or "the Company") (TSXV: VOTI), a leading-edge Canadian technology company that develops the latest-generation X-ray security systems based on 3D Perspective™ technology, announces results for its first quarter F2022.  Unless otherwise noted, all dollar amounts are Canadian dollars. Please refer to the interim condensed consolidated financial statements and Management's Discussion and Analysis (" MD&A ") for the three months ended January 31,2022 filed on SEDAR at www.sedar.com for more information.

"As discussed in our yearend results release last month, the weakness in our first quarter results was directly related to the impact of the Omicron variant and the resulting slower than expected recovery from the pandemic's fifth wave," commented Rory Olson, President and CEO of VOTI Detection. "Our sales pipeline has strengthened as we exited our first quarter. We continue to see a rebound in orders and anticipate continued growth throughout the back half of Fiscal 2022. We recently announced strategic new orders including first time orders with India Customs and the Scottish Ministry of Justice and a follow-on order with Ports America. New and recurring orders have begun to ship in the second quarter and will accelerate into the third and fourth quarters. We announced earlier today the successful closing of our previously announced private placement. While we had originally set out to raise $4 million, we closed on $2.36 million in what was a very challenging market environment for micro-cap financings."

For a discussion of risks related to the Covid-19 pandemic, please see VOTI`s MD&A filed today under VOTI`s profile at www.sedar.com 

Financial Highlights
(Unaudited, all amounts are in Canadian dollars)

First Quarter Ended January 31

2022

2021

 Change

Revenue

4,284,856

6,324,215

(2,039,359) 





Gross profit

1,431,881

2,364,836

(932,955) 

Gross margin* (%)

33%

37%

(4%)­  

Net (loss) income

(1,190,502)

(1,130,531)

(59,971)

Adjusted net (loss) income*

(1,498,137)

(867,194)

(630,943)

Adjusted EBITDA*

(953,072)

503,375

(1,456,447)

Cash from (used in) operating activities

(482,349)

2,203,019

(2,685,368)

Revenue

Revenue for the three months ended January 31, 2022, totaled $4,284,856 compared to $6,324,215 for the same period in Fiscal 2021, a decrease of $2,039,359 or 32%. The Company sold 116 security scanning systems compared to 167 during the same period in Fiscal 2021.  The decrease is primarily attributed to the lower volume of systems sold, including the product and geography mix of the systems sold, which in the three months ended January 31, 2022, includes a greater number of systems at a lower pricing compared to the same period in Fiscal 2021. This is partially offset by an increase in after sales services and extended warranties revenue.

Gross Profit

Gross profit decreased to $1,431,881 or 33% of revenue, compared to $2,364,836 or 37% of revenue, for the same period in Fiscal 2021, a decrease of $932,955 or 4% of revenue. The decrease in gross margin of 4% is primarily related to the lower number of systems sold, including their product and geography mix, the 3.5% increase in the average component cost per scanner, resulting mainly from an increase in freight costs allocated to the inventory sold (due to the impact of COVID-19 on the global supply chain), and the termination of funding from the Canadian Federal Government CEWS stimulus program. Those are partially offset by an increase in revenue from after sales services and extended warranties as a percentage of overall revenue, which carry higher margins.

Net Loss

Net loss increased to $1,190,502 compared to $1,130,531 for the same period in Fiscal 2021. The increase in net loss of $59,971 is primarily related to the decrease in gross profit, the increase in general and administrative expenses, selling and distribution expenses and research and development expenses, partially offset by a decrease in net financial expenses, increase in non-cash gain from changes in fair value of embedded derivative, increase in non-cash gain from change in fair value of warrants, and a decrease in share-based payments.

Adjusted EBITDA* 

Adjusted EBITDA decreased to a loss of ($953,072) compared to a gain of $503,375 for the same period of Fiscal 2021. The decrease of $1,456,447 is primarily related to the decrease in gross profit and the increase in net operating expenses.

Cash Flows

During the three months ended January 31, 2022, the Company had a balance of net cash used in operating activities of ($482,349), compared to net cash from operating activities of $2,203,019 for the same period in Fiscal 2021. The decrease of $2,685,368 is primarily due to a decreased cash-based operating results for the period and the negative impact from the change in the Company's non-cash working capital compared to the same period in Fiscal 2021.

First Quarter Fiscal 2022 Results Conference Call:
Details of the Conference Call

When: March 30th, 2022 at 9:00 a.m. ET.
Dial in number: (+1) 888 390 0546, (+1) 416 764 8688 or (+1) 514 225 6995

Conference call replay available until Wednesday, April 6th, 2022. 
Recording Playback Number: (+1) 888 390 0541
Playback passcode: 354538 #

To access the webcast, click on this link:

https://produceredition.webcasts.com/starthere.jsp?ei=1538986&tp_key=d71a67822b

The conference ID is 81354538.

A full version of VOTI Detection Inc.'s First Quarter Fiscal 2022 Management's Discussion and Analysis (MD&A) and consolidated financial statements for the first quarter ended January 31, 2022 are available on www.sedar.com.

*Non-IFRS Financial Measures
Certain financial and non-financial measures included in this news release, including Adjusted EBITDA, Gross margin percent and Adjusted net loss, do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. The Company includes these measures because it believes they provide to certain investors a meaningful way of assessing financial performance. For a more complete description of these measures and a reconciliation of VOTI's non-IFRS financial measures to financial results, please see VOTI's Management Discussion and Analysis for the first quarter ended January 31, 2022.

VOTI's definition of the non-IFRS terms are as follows:
Gross margin percent is defined as Gross profit divided by Revenue.

Adjusted EBITDA is defined as net income or loss before net finance expenses, depreciation and amortization expense and income tax expense, share-based compensation expenses and items that Management believes do not necessarily arise as part of the Company's normal day-to-day operations and could distort the analysis of trends in business performance.

Adjusted net loss is defined as net loss adjusted for share-based compensation and items Management believes do not necessarily arise as part of the Company's normal day-to-day operations and could distort the analysis of trends in business performance.

About VOTI Detection
VOTI Detection, headquartered in Montreal, Quebec, and listed on the TSX Venture Exchange, is a leading-edge Canadian technology company that develops latest-generation X-ray security systems based on 3D Perspective™ technology. VOTI's technology produces remarkably sharp and more revealing X-ray images that are competitively superior while delivering enhanced threat detection capabilities and an improved user experience. Since its inception, VOTI has installed scanners in more than 50 countries and has consulted heavily with government agencies and security specialists worldwide to develop feature-rich and easy-to-use scanners that meet the sophisticated needs of modern security screening operations.  www.votidetection.com

Notice regarding forward-looking statements:

This release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") which the meaning of applicable securities laws. Forward-looking statements may relate to VOTI's financial outlook and anticipated events or results and may include information regarding VOTI's financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, plans and objectives. Particularly, information regarding VOTI's expectations of future results, performance, achievements, prospects or opportunities or the markets in which it operates and the impact thereon of the ongoing COVID-19 pandemic declared by the World Health Organization on March 11, 2020 ("COVID-19"), as well as statements relating to expectations regarding industry trends, growth rates, expectations regarding revenue and the revenue generation potential, business plans and strategies, VOTI's competitive position in its industry, VOTI's expectations relating to its rollout of its next generation MATRIX Series line of X-Ray scanners and the results associated therewith and its projections and forecasts relating to its expectations that it will return to or exceed pre-pandemic sales and gross margins constitute forward-looking statements.

In some cases, when used in this release, the words ''may'', ''would'', ''could'', ''will'', ''intend'', ''plan'', ''anticipate'', "does not anticipate", ''believe'', ''seek'', ''propose'', ''estimate'', ''project'', ''expect", "does not expect", "forecasts", "projection", "prospects", "outlook", "targets", or similar expressions, variations of such terms or the negative of such terms are intended to identify forward- looking statements.  Such forward-looking statements reflect VOTI's then current views with respect to future events based on certain material facts, assumptions, opinions and estimates in light of management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors VOTI currently believes are appropriate and reasonable in the circumstances and as of the date such forward-looking statements are made. Despite a careful process to prepare and review the forward-looking statements, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. The forward- looking statements are based on certain key expectations and assumptions made by VOTI, including expectations and assumptions concerning availability of capital resources and ability to finance, business performance, market conditions, and customer demand. Although VOTI believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements since no assurance can be given that they will prove to be correct.

Forward-looking statements are necessarily based on a number of opinions, estimates and assumptions that VOTI considered appropriate and reasonable as of the date such statements are made, are subject to certain known and unknown risks and uncertainties that may cause the actual results or events to differ materially from anticipated in such forward-looking statements, including without limitation risks regarding the threat detection technology industry, failure to obtain regulatory approvals, or changes in regulatory environment,  economic factors, management's ability to manage and to operate the business of VOTI, the equity markets generally and risks associated with growth and competition, in addition to other risks identified in VOTI's most recently filed management's discussion and analysis and in other publicly filed documents under VOTI's profile at www.sedar.com as well as other unknown risks.

Many factors could cause VOTI's actual results, performance or achievements to vary from those described in this release, including without limitation those listed above, as well as the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this MD&A as intended, planned, anticipated, believed, sought, proposed, estimated or expected, and such forward-looking statements should not be unduly relied upon. VOTI does not intend, and does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking statements contained in this release are expressly qualified by these cautionary statements. Forward-looking statements contained in this release about prospective results of operations, financial position or cash flows are based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that outlook information contained in this release should not be used for the purposes other than for which it is disclosed herein or therein, as the case may be. In addition, the current situation and future developments with respect to COVID-19 could cause certain of the assumptions and information set forth herein or the fact that on which such assumptions are based to differ materially from previous expectations including in respect of demand for VOTI's products, supply chain and availability of materials, mobility and shipping of materials and or products, access to debt and equity capital and other factors.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE VOTI Detection Inc.

For more information:  Daniel Menard, Chief Operating Officer, (514) 782-1566, IR@votidetection.com

Interested in more information?