Wed, 27 May 2020

Innovest Global Announces Fiscal 2019 Operational Results

ACCESSWIRE
18 May 2020, 22:31 GMT+10

Company Grows Revenue to $40.2 Million in 2019, Engages BDO USA LLP as Auditor in Advance of SEC Registration and Uplisting Initiatives

CLEVELAND, OH / ACCESSWIRE / May 18, 2020 / Innovest Global, Inc. (OTC PINK:IVST), a diversified industrials company, today announced results for the fiscal year ended December 31, 2019.

Key Fourth Quarter 2019 and Subsequent Operational Highlights

  • Completed the acquisition of a 100% interest in StemVax Therapeutics, a biotechnology company developing novel therapies for brain tumor patients, which will be a stand-alone public company once spun out from Innovest Global in mid-2020.
  • Identified four additional acquisition targets, with letters of intent signed for three of the four targets, which together represent over $35 million in revenue and $5 million in net income.
  • Filed a Form 10 Registration Statement with the U.S. Securities and Exchange Commission (SEC) to become a fully reporting company, subject to quarterly, annual and other reporting documents.
  • Appointed BDO USA, LLP on May 14, 2020 as the Company's independent registered public accounting firm.
  • Engaged MZ Group to lead a comprehensive strategic investor relations and financial communications program across all key markets.

Management Commentary

Dan Martin, Chairman and Chief Executive Officer, stated 'Innovest now has stable, growing operations in personal protective equipment (PPE), call center services which are HIPAA compliant and energy efficiency and cost saving solutions. It also has the potential to re-establish the Wholesale Purchasing segment revenues with a more profitable model than utilized in 2019 and to secure one or more of the several multi-million dollar contracts out for bid in its wall systems business where customer decisions were temporarily delayed due to COVID-19 disruptions. The spinout of our biotech holding, StemVax, will serve to enhance the Innovest balance sheet significantly in the second half of 2020.

'2019 marked the first full year of all of the acquired businesses performing under the Innovest umbrella, and we are more enthusiastic than ever that the proper foundation has been set for the creation of a major diversified industrials platform company. The path from a four person company that generated less than $50 thousand dollars in revenues in 2017, to a nearly 80 person company and over $40 million in revenues in 2019 was the product of achieving the following challenging requirements of starting a company like Innovest:

  • Attracting talented people necessary for the complex business model;
  • Attracting acquisitions despite Innovest having no revenue history or cash;
  • Structuring acquisitions efficiently to create value for shareholders;
  • Integrating the acquired companies and building scalable infrastructure;
  • Creating awareness in the public markets and capitalizing the effort;
  • Remaining compliant with reporting and audit requirements;
  • Building a board of directors and corporate governance;
  • Achieving organic sales growth post-acquisition;
  • Establishing a productive and positive culture.'

'Doing all of the above in less than two years was not the measure of success, it was the entry point for being in business. Now that so much of the formative work is done, we plan to improve, grow, and serve our mission: ‘Extraordinary customer experiences from exceptional people, novel solutions, and streamlined operations that prioritize relationships and integrate cutting edge technologies.' We cannot thank our shareholders enough for the opportunity to accomplish what has been done so far. In the next season, we will scale and advance these efforts to produce significant value for all of our stakeholders.'

Full Year 2019 Financial Results (unaudited)

  • Revenue in 2019 increased $33.7 million from 2018 to $40.2 million, largely due to the full year of sales from the Authority National Supply and Midwest Curtainwall acquisitions, which occurred in late 2018.
    • Revenue from the Wholesale Purchasing segment was $30.7 million in 2019, as compared to $2.6 million in 2018, with the increase largely attributable to increased sales due to the addition of two new member participating companies.
    • Revenue from the Commercial Solutions segment grew to $9.5 million in 2019, as compared to $3.9 million in 2018, with the increase primarily attributable to the Primary Metering Systems asset acquisition as well as the realization of a full year of Midwest Curtainwall revenue.
    • In 2019, the Company had a legacy contract inherited from one of the acquisitions in the Commercial Solutions segment that had substantial losses recognized in the fourth quarter which under US GAAP accounting offset previously recorded revenue through the third quarter 2019 and also accelerated losses that would have been recognized in 2020 into 2019.
  • Segment contribution margin loss was $8.8 million in 2019, largely due to the contract loss noted above. Excluding this contract loss, total segment contribution margin would have been $2.4 million in 2019.
  • Selling, general and administrative expenses increased $3.9 million to $7.2 million in 2019, due to an increase in overhead and infrastructure to support acquired businesses. Approximately $560 thousand of the increase was due to one-time acquisition costs and non-cash charges related to the adoption of ASC 842 for lease accounting.
  • Net loss from continuing operations was $19.5 million 2019, as compared to $4.9 million in 2018.
  • Adjusted EBITDA was a loss of $4.1 million and excludes $15.2 million in non-cash charges related to stock compensation expense, goodwill impairment, fair value adjustments on acquisition stock guarantees, a loss on the legacy Midwest Curtainwalls contract, financing charges on asset back sales, costs and expenses related to acquisition integration and non-cash charges from operating leases. Adjusted EBITDA is further described under 'Use of Certain Non-GAAP and Adjusted Financial Measures' below.

About Innovest Global, Inc.

Innovest Global, Inc. (OTC PINK:IVST) is a diversified industrials company applying technology and innovation to provide value-added solutions across multiple business markets. Innovest Global builds long-term shareholder value by acquiring established industrial businesses on favorable terms, realizing synergies and achieving organic growth through investments in innovative technology and business systems. For more information, please click here.

Use of Certain Non-GAAP and Adjusted Financial Measures

Innovest reports its financial results in accordance with GAAP. However, Innovest's management believes that certain non-GAAP financial measures help facilitate comparisons of Company operating performance across periods. To supplement our unaudited financial results prepared in accordance with GAAP, we have prepared certain non-GAAP measures that include or exclude special items. This release includes EBITDA, Adjusted EBITDA, Segment Contribution Margin and Adjusted Segment Contribution Margin which are non-GAAP financial measures. Innovest defines EBITDA as net income from continuing operations before interest expense, income tax expense, depreciation and amortization expenses and other non-recurring items. Adjusted EBITDA is defined as EBITDA before non-cash stock-based compensation, goodwill impairments and other income or expense. Segment contribution margin is defined as segment revenues less segment cost of sales, excluding depreciation and amortization expenses, selling, general and administrative costs and Corporate overhead costs. Segment contribution margin is not a measure of our financial performance under GAAP and should not be considered as an alternative or superior to measures derived in accordance with GAAP. Adjusted segment contribution margin further excludes the impact from non-recurring items for year over year comparison purposes.

These non-GAAP measures are not meant to be considered in isolation or as a substitute for financial information presented in accordance with GAAP and should be viewed as a supplemental and in addition to our financial information presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures. In addition, other companies may report similarly titled measures, but calculate them differently, which reduces their usefulness as a comparative measure. Management utilizes these non-GAAP metrics in evaluating and making operational decisions regarding our business.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this press release are forward-looking statements. These statements relate to future events or to the Company's future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown uncertainties and other factors which are, in some cases, beyond the Company's control which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects the Company's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. Such risks, uncertainties and other factors, which could impact the Company and the forward-looking statements contained herein are included in the Company's filings with the OTC Markets. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Investor Contact:

Indrani Egleston
Executive Vice President, Chief Financial Officer
Innovest Global, Inc.
440-644-1027
info@innovestglobal.com
ir.innovestglobal.com

Chris Tyson
Managing Director
MZ Group - MZ North America
949-491-8235
IVST@mzgroup.us
www.mzgroup.us

Innovest Global, Inc.
Consolidated Balance Sheet (unaudited)
December 31, 2019 and 2018


Innovest Global, Inc.
Consolidated Statement of Operations (unaudited)
Years Ended December 31, 2019 and 2018


Innovest Global, Inc.
Consolidated Statement of Cash Flows (unaudited)
Years Ended December 31, 2019 and 2018


Innovest Global, Inc.
Segment Contribution Margin (unaudited)
Years Ended December 31, 2019 and 2018

* - Segment contribution margin is defined as segment revenues less segment cost of sales, excluding depreciation and amortization expenses, selling, general and administrative costs and Corporate overhead costs. Adjusted segment contribution margin further excludes the impact from non-reoccurring items for year over year comparison purposes.

(1) Segment contribution margin for the Commercial Solutions segment in 2019 includes a contract loss of $11.2 million as a result of an inherited legacy contract for Midwest. As a result of the negative gross profit on the contract, future anticipated losses were accelerated into the full year 2019 results and netted against year to date reported segment revenues. Excluding this one time charge, contribution margin for the Commercial Segment would have been $2.1 million and the Total Company contribution margin would have been $2.4 million.

Innovest Global, Inc.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA (unaudited)
Years Ended December 31, 2019 and 2018

Adjusted EBITDA is defined as EBITDA before non-cash stock-based compensation, asset impairments and other income or expense.

(1) Represents non-cash expense for stock-based awards issued to our employees and outside service providers.
(2) Represents the loss on a one time contract inherited with the acquisition of Midwest Curtainwalls. As a result of the negative gross profit on the contract, future anticipated losses were accelerated into the full year 2019 results.
(3) Represents the expense associated with the impairment of Goodwill for the Midwest Curtainwall business as a result of the losses incurred on the legacy contract inherited in the acquisition.
(4) Represents the non-cash charges for changes or establishment of stock guarantee valuations associated with acquisitions.
(5) Represents the financing cost associated with short term working capital funding.
(6) Costs and expenses related to the integration of acquired companies including legal, accounting, and advisory services which are reported under selling, general and administrative expenses.
(7) Represents the amount of operating lease expense related to Operating right-of-use assets, net on the Consolidated Balance Sheet, as a result of the adoption of ASC 842 and reported under selling, general and administrative expenses.

SOURCE: Innovest Global Inc.



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