10 Consecutive Quarters of Positive Adjusted EBITDA;
- Q3/2022 income at $16.0 million elevated by 3.3% versus Q3/2021 and 6.1% YTD
- Posted 10th consecutive quarter of optimistic adjusted EBITDA
- Trailing Twelve Months (“TTM”) income elevated by $4.7 million (7.9%)
- TTM gross revenue stays flat
MISSISSAUGA, Ontario, Oct. 31, 2022 (GLOBE NEWSWIRE) — Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV: SEB) (OTCQB: SEBFF) studies its monetary outcomes for the third quarter ending August 31, 2022 (“Q3/2022”). SEB is an Insurtech firm centered on applied sciences that present modern, cloud primarily based end-to-end IT and profit processing software program, options and providers for the life and group advantages market and authorities.
Please confer with the interim unaudited consolidated monetary statements and Management’s Discussion and Analysis (“MD&A”) for the 9 months ended August 31, 2022, filed on SEDAR at www.sedar.com for extra info. Unless in any other case specified, all greenback quantities are denominated in Canadian {dollars}.
Q3/2022 Financial Highlights:
- Consolidated:
- Revenue: Grew 3.3% to $16.0 million versus $15.5 million in Q3/2021
- Ten consecutive quarters of optimistic Adjusted EBITDA
- Benefits Solutions:
- Revenue: $4.7 million versus $4.5 million in Q3/2021
- Nine consecutive quarters of optimistic EBITDA
- Technology Services:
- Revenue (adjusted for intercompany gross sales adjustment in Q3/22 of $311K vs Q3/21- $929K): $11.3 million versus $10.9 million in Q3/2021
- The Technology Services has a protracted historical past of optimistic EBITDA
- Adjusted EBITDA: $0.6 million versus $0.9 million in Q3/2021
- EBITDA: $0.5 million versus $0.9 million in Q3/2021
- Over 70% of year-to-date revenues come from shoppers who’ve been with SEB over 5-years
- With over $70 million of contract wins within the final 9 months and over $470 million of whole contract worth, administration expects year-over-year will increase in fiscal 2022 Revenue.
States John McKimm, President/CEO/CIO of Smart Employee Benefits Inc.:
“On the back of our recent three wins announced in September and new Vendor Management Agreements, SEB extended its record of delivering positive adjusted EBITDA to 10 consecutive quarters. Since our inception, SEB has invested in both Technology Services operations and more significantly in Benefits Solutions. Historically, Technology Services has strong profitability. Benefits Solutions has required significant investment, the majority of which has been expensed. The cost structure from acquisitions and integrations has been largely realigned and we anticipate both Technology Services and Benefits Solutions to show growth and positive cash flow in Fiscal 2022 and beyond. The contract values, including backlog, option years and evergreen, remain strong, with the Company continually renewing or winning sufficient new business to maintain and grow future annual revenues. The Company has established strong traction in multiple new business initiatives and is well positioned to win new business going forward. A one-time contract in the first half of 2022 increased the cost structure and reduced margins; however, this contract is considered an investment in the future as it contributes to both Intellectual Property assets opening opportunities with new clients and longer-term managed services revenue.”
Business Development Activities Fiscal 2022:
Relationships have been consolidated and grown with a number of new business companions. The Company’s Channel Partner technique has gained sturdy traction, signing 3 new Vendor Management Agreements that authorize SEB to provide ITS software program, options and providers. These contracts give the Company the approval to take part within the IT budgets that exceed an estimated $40.0 million yearly. The preparations have phrases as much as 5 years, which generally are renewed as soon as attaining accepted vendor standing.
SEB can also be engaged in over a dozen energetic negotiations with brokerage organizations, Master General Agents, Third Party Administrators (“TPA”), insurers, unions, and company entities. Several agreements have been executed with Channel Partners; with income progress anticipated in 2022 and past.
The Company’s RFP and Channel Partner gross sales pipeline is the most important it has ever been (in each company and authorities alternatives) for each Technology Services and Benefits software program and options pushed income streams.
Business Outlook:
Technology Services revenues have traditionally been money circulation optimistic, and web new business wins and renewals stay sturdy. Benefits Solutions income is changing into money circulation optimistic after appreciable investments in know-how, business infrastructure, and shopper acquisition. We count on each income streams to have continued sturdy sustainable progress going ahead. Since November 30, 2020, the Company has gained over $240 million of web new contracts, together with choice years.
COVID-19 has led to growing demand for the Company’s Benefits Solutions, together with “online medical care partnerships”. We noticed a rise in year-to-date revenues within the Technology Services within the first 9 months of the yr which was a direct results of the contract wins up to now 21 months. Total Contract Values for the Company proceed to develop, and utilization of the contracts is gaining stronger traction as authorities and companies streamline and modify to COVID-19 working business processes.
The majority of the Company’s business is essentially multi-year, managed services-driven recurring income contracts for managing and working mission crucial know-how and folks infrastructure for our shoppers. On a consolidated degree, in Q3/2021 the Company utilized for and acquired roughly $247,000 of COVID-19 authorities reduction to help the Technology Services operations versus no help in Q3/2022. This resulted in decrease profitability when evaluating the 2 quarters. However, this has allowed the Company to maintain invaluable full-time workers employed all through the pandemic, who at the moment are deployed to help the present and anticipated progress.
The consolidated gross sales pipeline is the strongest it has ever been. The value financial savings initiatives taken over the previous a number of years largely benefited the Company in 2020 and 2021 with some continued advantages into fiscal 2022.
Comparative Consolidated Results for the Third Quarter and Nine Months 2022 and 2021:
| 3 months ended | YTD ended | |||||||||||
| Aug-22 | Aug-21 | Aug-22 | Aug-21 | |||||||||
| Revenue | $ | 15,990,075 | $ | 15,470,625 | $ | 48,653,945 | $ | 45,858,689 | ||||
| Cost of revenues | 10,493,398 | 9,947,474 | 32,280,614 | 28,917,668 | ||||||||
| Gross Margin | 5,496,677 | 5,523,151 | 16,373,331 | 16,941,021 | ||||||||
| Gross Margin as a % of Revenue | 34.4 | % | 35.7 | % | 33.3 | % | 36.9 | % | ||||
| Operating prices | 5,150,373 | 4,776,608 | 15,411,614 | 13,883,192 | ||||||||
| Professional charges | 117,244 | 154,389 | 531,213 | 780,204 | ||||||||
| Adjusted EBITDA | 229,060 | 592,154 | 430,504 | 2,277,625 | ||||||||
| Change in Investment | – | – | – | 104,164 | ||||||||
| Gain on sale of funding | – | – | (89,618 | ) | – | |||||||
| Decommissioning prices | – | – | 104,037 | – | ||||||||
| Share-based compensation | 175,871 | 80,618 | 578,451 | 698,904 | ||||||||
| Transaction prices | 309,671 | 42,962 | 883,960 | 124,961 | ||||||||
| EBITDA | $ | (256,482 | ) | $ | 468,574 | $ | (1,046,326 | ) | $ | 1,349,596 | ||
| Net loss from operations | $ | (2,323,446 | ) | $ | (1,063,828 | ) | $ | (6,744,814 | ) | $ | (3,329,557 | ) |
Consolidated Segmented outcomes for the Nine Months ended August 31, 2022 and 2021:
| Smart Employee Benefits Inc. | |||||||||||||
| Segmented Income Statement Detail for the Nine Months August 31, 2022 (in C$) | Technology | Benefits | Corporate | Intercompany Sales/COS |
Total Company | ||||||||
| Revenue | $ | 35,938,117 | $ | 13,768,173 | $ | – | $ | (1,052,345 | ) | $ | 48,653,945 | ||
| Cost of revenues | |||||||||||||
| Cost of revenues | 29,819,825 | 3,513,133 | – | (1,052,345 | ) | 32,280,614 | |||||||
| Gross margin | 6,118,292 | 10,255,040 | – | – | 16,373,331 | ||||||||
| Expenses | |||||||||||||
| Salaries and different compensation prices | 3,677,768 | 7,162,491 | 743,851 | – | 11,584,110 | ||||||||
| Office and basic | 519,035 | 2,205,926 | 1,102,541 | – | 3,827,502 | ||||||||
| Professional charges | 88,293 | 29,013 | 413,907 | – | 531,213 | ||||||||
| 4,285,096 | 9,397,431 | 2,260,298 | – | 15,942,825 | |||||||||
| Adjusted EBITDA | 1,833,196 | 857,610 | (2,260,298 | ) | – | 430,505 | |||||||
| Decommissioning value | 104,037 | – | – | – | 104,037 | ||||||||
| Gain on sale of funding | – | – | (89,618 | ) | – | (89,618 | ) | ||||||
| Transaction prices | 87,031 | – | 796,929 | – | 883,960 | ||||||||
| Share-based compensation | 6,517 | 12,617 | 559,317 | – | 578,451 | ||||||||
| EBITDA | 1,635,611 | 844,993 | (3,526,926 | ) | – | (1,046,326 | ) | ||||||
| Amortization of intangible property | 8,922 | 346,646 | 59,865 | – | 415,434 | ||||||||
| Depreciation of apparatus | 60,615 | 33,312 | – | – | 93,927 | ||||||||
| Depreciation of right-of-use property | 81,582 | 163,372 | 451,617 | – | 696,570 | ||||||||
| Interest and financing prices | 125,020 | 139,353 | 4,227,913 | – | 4,492,287 | ||||||||
| Income tax restoration | 268 | – | – | – | 268 | ||||||||
| Net revenue (loss) | $ | 1,359,205 | $ | 162,309 | $ | (8,266,322 | ) | $ | – | $ | (6,744,814 | ) | |
| Smart Employee Benefits Inc. | |||||||||||||
| Segmented Income Statement Detail for the Nine Months ended August 31, 2021 (in C$) | Technology | Benefits | Corporate | Intercompany Sales/COS |
Total Company | ||||||||
| Revenue | $ | 34,509,633 | $ | 13,291,886 | $ | – | $ | (1,942,831 | ) | $ | 45,858,689 | ||
| Cost of revenues | 27,746,198 | 3,114,302 | – | (1,942,831 | ) | 28,917,668 | |||||||
| Gross margin | 6,763,435 | 10,177,585 | – | – | 16,941,021 | ||||||||
| Expenses | |||||||||||||
| Salaries and different compensation prices | 3,203,338 | 7,006,011 | 901,180 | – | 11,110,530 | ||||||||
| Office and basic | 518,931 | 1,726,249 | 527,483 | – | 2,772,662 | ||||||||
| Professional charges | 105,207 | 86,972 | 588,025 | – | 780,204 | ||||||||
| 3,827,476 | 8,819,232 | 2,016,689 | – | 14,663,396 | |||||||||
| Adjusted EBITDA | 2,935,959 | 1,358,353 | (2,016,689 | ) | – | 2,277,624 | |||||||
| Investment loss | – | – | 104,164 | – | 104,164 | ||||||||
| Transaction prices | – | – | 124,961 | – | 124,961 | ||||||||
| Share-based compensation | 121,217 | 208,681 | 369,006 | – | 698,904 | ||||||||
| EBITDA | 2,814,742 | 1,149,672 | (2,614,821 | ) | – | 1,349,594 | |||||||
| Amortization of intangible property | 7,688 | 312,416 | 59,866 | – | 379,970 | ||||||||
| Depreciation of apparatus | 81,668 | 61,908 | – | – | 143,576 | ||||||||
| Depreciation of right-of-use property | 81,582 | 191,832 | 451,618 | – | 725,031 | ||||||||
| Interest and financing prices | 124,951 | 92,505 | 3,212,175 | – | 3,429,632 | ||||||||
| Income tax restoration | 943 | – | – | – | 943 | ||||||||
| Net revenue (loss) | $ | 2,517,911 | $ | 491,011 | $ | (6,338,480 | ) | $ | – | $ | (3,329,557 | ) | |
Consolidated Segmented outcomes for the Third Quarters ended August 31, 2022 and 2021:
| Smart Employee Benefits Inc. | |||||||||||||||
| Segmented Income Statement Detail for the quarter ended August 31, 2022 (in C$) | Technology | Benefits | Corporate | Intercompany Sales/COS |
Total Company | ||||||||||
| Revenue | $ | 11,651,134 | $ | 4,650,057 | $ | – | $ | (311,116 | ) | $ | 15,990,075 | ||||
| Cost of revenues | |||||||||||||||
| Cost of revenues | 9,657,553 | 1,146,960 | – | (311,116 | ) | 10,493,398 | |||||||||
| Gross margin | 1,993,581 | 3,503,097 | – | – | 5,496,677 | ||||||||||
| 17.11 | % | 75.33 | % | ||||||||||||
| Expenses | |||||||||||||||
| Salaries and different compensation prices | 1,156,982 | 2,423,869 | 248,511 | – | 3,829,362 | ||||||||||
| Office and basic | 175,524 | 728,152 | 417,334 | – | 1,321,010 | ||||||||||
| Professional charges | 30,451 | 6,716 | 80,078 | – | 117,245 | ||||||||||
| 1,362,957 | 3,158,737 | 745,923 | – | 5,267,616 | |||||||||||
| Adjusted EBITDA | 630,624 | 344,360 | (745,923 | ) | – | 229,060 | |||||||||
| Decommissioning value | – | – | – | – | – | ||||||||||
| Gain on sale of funding | – | – | – | – | – | ||||||||||
| Transaction prices | 87,031 | – | 222,640 | – | 309,671 | ||||||||||
| Share-based compensation | 1,631 | – | 174,239 | – | 175,870 | ||||||||||
| EBITDA | 541,962 | 344,360 | (1,142,802 | ) | – | (256,482 | ) | ||||||||
| Amortization of intangible property | 2,974 | 121,608 | 19,953 | – | 144,537 | ||||||||||
| Depreciation of apparatus | 19,975 | 10,762 | – | – | 30,737 | ||||||||||
| Depreciation of right-of-use property | 27,493 | 36,186 | 152,195 | – | 215,872 | ||||||||||
| Interest and financing prices | 33,500 | 32,902 | 1,609,148 | – | 1,675,549 | ||||||||||
| Net revenue (loss) | $ | 457,752 | $ | 142,901 | $ | (2,924,096 | ) | $ | – | $ | (2,323,446 | ) | |||
| Smart Employee Benefits Inc. | |||||||||||||||
| Segmented Income Statement Detail for the quarter ended August 31, 2021 (in C$) | Technology | Benefits | Corporate | Intercompany Sales/COS |
Total Company | ||||||||||
| Revenue | $ | 11,868,110 | $ | 4,531,197 | $ | – | $ | (928,682 | ) | $ | 15,470,625 | ||||
| Cost of revenues | |||||||||||||||
| Cost of revenues | 9,747,283 | 1,128,873 | – | (928,682 | ) | 9,947,474 | |||||||||
| Gross margin | 2,120,827 | 3,402,324 | – | – | 5,523,151 | ||||||||||
| 17.87 | % | 75.09 | % | ||||||||||||
| Expenses | |||||||||||||||
| Salaries and different compensation prices | 1,069,317 | 2,400,500 | 265,429 | – | 3,735,246 | ||||||||||
| Office and basic | 156,213 | 577,344 | 307,806 | – | 1,041,363 | ||||||||||
| Professional charges | 973 | 37,687 | 115,729 | – | 154,389 | ||||||||||
| 1,226,503 | 3,015,532 | 688,963 | – | 4,930,998 | |||||||||||
| Adjusted EBITDA | 894,324 | 386,792 | (688,963 | ) | – | 592,154 | |||||||||
| Transaction prices | – | – | 42,962 | – | 42,962 | ||||||||||
| Share-based compensation | – | – | 80,618 | – | 80,618 | ||||||||||
| EBITDA | 894,324 | 386,792 | (812,544 | ) | – | 468,574 | |||||||||
| Amortization of intangible property | 2,582 | 104,748 | 19,957 | – | 127,286 | ||||||||||
| Depreciation of apparatus | 25,816 | 21,816 | – | – | 47,632 | ||||||||||
| Depreciation of right-of-use property | 27,493 | 64,647 | 152,195 | – | 244,333 | ||||||||||
| Interest and financing prices | 37,477 | 27,930 | 1,047,745 | – | 1,113,150 | ||||||||||
| Net revenue (loss) | $ | 800,957 | $ | 167,651 | $ | (2,032,438 | ) | $ | – | $ | (1,063,828 | ) | |||
Reconciliation of Consolidated Net loss to EBITDA for the Nine Months ended August 31, 2022 and 2021:
| 3 months ended | YTD ended | ||||||||||||
| Aug-22 | Aug-21 | Aug-22 | Aug-21 | ||||||||||
| Net loss from operations | $ | (2,323,446 | ) | $ | (1,063,828 | ) | $ | (6,744,814 | ) | $ | (3,329,557 | ) | |
| Interest and financing prices | 1,675,549 | 1,113,151 | 4,492,287 | 3,429,633 | |||||||||
| Income tax expense | 268 | – | 268 | 943 | |||||||||
| Depreciation and amortization | 175,275 | 174,918 | 509,363 | 523,546 | |||||||||
| Depreciation of right-of-use property | 215,872 | 244,333 | 696,571 | 725,031 | |||||||||
| EBITDA | (256,482 | ) | 468,574 | (1,046,325 | ) | 1,349,596 | |||||||
| Change in funding | – | – | – | 104,164 | |||||||||
| Gain on sale of funding | – | – | (89,618 | ) | – | ||||||||
| Decommissioning prices | – | – | 104,037 | – | |||||||||
| Share- primarily based compensation | 175,871 | 80,618 | 578,451 | 698,904 | |||||||||
| Transaction prices | 309,671 | 42,962 | 883,960 | 124,961 | |||||||||
| Adjusted EBITDA | $ | 229,060 | $ | 592,154 | $ | 430,505 | $ | 2,277,625 | |||||
Revenue Increased 3.3% Quarter Over Quarter:
During Q3/2022, consolidated revenues from persevering with operations was $16.0 million versus $15.5 million in Q2/2021. Technology Services income adjusted for intercompany gross sales elevated by $0.4 million whereas the Benefits Solutions revenues elevated by $0.1 million. Contract values stay excessive with over $240 million of recent wins within the final 21 months. Approximately 80% of 2022 forecast consolidated income streams are underneath contract for the following 4 years, representing >90% for Benefits Solutions revenues and >70% for Technology Services income. The Company’s progress focus is on the upper margin Benefit Solutions income, though Technology Services revenues additionally anticipated to proceed to expertise progress.
Gross Margin and Gross Profit:
The Company generated $5.5 million in Gross Profit in Q3/2022 versus $5.5 million in Q3/2021. Gross Margin was 34.4% in Q3/2022 in comparison with 35.7% in Q3/2021. The discount in Gross Margin and Gross Profit within the Q3/2022 was largely as a result of a notable one-time mission in Q3/2021.
Technology Services Gross Profit (Gross Margin) in Q3/2022 was $2.0 million (17.1%) versus $2.1 million (17.9%) in Q3/2021.
The Benefits Solutions Gross Profit (Gross Margin) was $3.5 million (75.3%) versus $3.4 million (75.1%) in Q3/2021.
Operational Costs:
- Salaries and Other Compensation – Salaries and different compensation prices elevated by $0.09 million throughout Q3/2022 in comparison with the identical interval the prior yr. The enhance is because of a discount in COVID reduction funding when in comparison with the identical interval final yr.
- Office and General Costs – Office and basic prices elevated by practically $0.28 million throughout Q3/2022 versus Q3/2021. The enhance is essentially as a result of no COVID-19 subsidy and lease credit in Q3/2022 as opposed Q3/2021.
- Professional Fees – Professional charges remained comparatively flat in Q3/2022 in comparison with Q3/2021. Professional charges differ with the quantity of financing or acquisition/disposition exercise in the course of the interval.
Non-Cash Expenses:
Non-Cash bills embrace amortization, depreciation and share-based (choices, RSUs) compensation stay flat throughout Q3/2022 versus Q3/2021.
Interest and Financing Costs, Interest Accretion and Transaction Costs:
Interest and financing prices, curiosity accretion from persevering with operations elevated from $1.1 million in Q3/2021 to $1.7 million in Q3/2022, which is because of elevated credit score facility and convertible debt. The transaction prices expense elevated by $0.267 million in Q3/2022 in comparison with Q3/2021. There have been no important transactions prices in fiscal 2021 as in comparison with the actively concerned fairness and debt financing that occurred within the present quarter.
Decommissioning Costs:
There are not any decommissioning prices in Q3/2022.
Grant of Options and RSUs in Q3/2022:
A minimal of 25% of the administrators’ charges for Fiscal 2021 and 2022 have to be compensated in RSUs and the administrators can select to be both compensated in money or RSUs for the remaining 75%. As a outcome, the Company has additionally dedicated to problem 212,714 RSUs at $0.20 per share, 296,807 RSUs at $0.16 per share and 937,500 RSUs at $0.12 per share to the administrators for the service offered in Q1, Q2 and Q3 2022. The RSUs will vest 100% after 12 months.
About Smart Employee Benefits Inc. (“SEB”):
SEB is an Insurtech firm centered on Benefits Administration Technology driving two interrelated income streams – Benefits Solutions and Technology Services. The Company is a confirmed supplier of modern IT and advantages processing software program, options and providers for the Life and Group advantages market and authorities. We design, customise, construct and handle mission crucial, end-to-end know-how, folks and infrastructure options utilizing SEB’s proprietary applied sciences and experience and companion applied sciences. We handle mission crucial business processes for over 150 blue chip and authorities accounts, nationally and globally. Over 90% of our income and contracts are multi-year recurring income streams contracts associated to authorities, insurance, healthcare, advantages and e-commerce. Our options are supported nationally and globally by over 600 multi-certified technical professionals in a multi-lingual infrastructure, from a number of workplaces throughout Canada and globally.
Our options embrace each software program and providers pushed ecosystems together with a number of SaaS options, cloud options & providers, managed providers providing good sourcing (close to shore/offshore), managed safety providers, customized software program improvement and help, skilled providers, deep techniques integration experience and a number of specialty follow areas together with AI, CRM, BI, Portals, EDI, e-commerce, digital transformation, analytics, mission administration to say a couple of. The Company has greater than 20 strategic partnerships/relationships with main international and regional know-how and consulting organizations.
Forward-looking statements:
Certain info on this launch, could represent forward-looking info. In some instances, however not essentially in all instances, forward-looking info might be recognized by means of forward-looking terminology resembling “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such phrases and phrases or state that sure actions, occasions or outcomes “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. In addition, any statements that confer with expectations, projections or different characterizations of future occasions or circumstances include forward-looking info. Statements containing forward-looking info are usually not historic info however as a substitute characterize administration’s expectations, estimates and projections relating to future occasions.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS RELEASE REPRESENTS THE COMPANY’S CURRENT EXPECTATIONS AND, ACCORDINGLY, IS SUBJECT TO CHANGE. HOWEVER, THE COMPANY EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.
Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that time period is outlined within the insurance policies of the TSX Venture Exchange Inc.) accepts accountability for the adequacy or accuracy of this launch.
All figures are in Canadian {dollars} except in any other case said.
Media and Investor Contact
John McKimm
President/CEO/CIO
Office (888) 939-8885 x 2354
Cell (416) 460-2817
[email protected]
