Press Releases

TORONTO, August 28, 2019 (GLOBE NEWSWIRE) -- Clear Blue Technologies International Inc. (Clear Blue or “the Company”) (TSXV: CBLU) (FRANKFURT: 0YA), the Smart Off-Grid™ company, today reported its financial results for the second quarter of the year ended June 30, 2019.

Key Financial Results (all figures in Canadian dollars)

• Revenue for the three months (Q2) ended June 30, 2019 was $568,037, a decrease of 67% over Q2 2018 revenue of $1,697,696.
  
• Gross margin was $125,374 for the period ended June 30, 2019, a decline of 57% compared to the same period in 2018. However, gross margin percentage increased from 17% to 22%, showing management’s initiatives for higher margin work.
  
• TFQ revenue for the period ended June 30, 2019 was $2,665,967, a decrease of 32% over revenue of $3,908,519 in the TFQ period ended June 30, 2018.
  
• On a TFQ basis, gross margin was $787,198, an increase of 103% over the previous equivalent TFQ period.  Gross margin percentage in the quarter was 30%, compared to 10% in the previous equivalent TFQ period.

Chief Executive Officer Remarks 

Clear Blue CEO Miriam Tuerk commented: "Our trailing four quarters results reflect the typical lower revenue generated in the first half of most years, however we are pleased with the significant improvement in trailing four quarter gross margin and gross margin percentage which reflect our efforts to drive profitability for the Company. We have increased inventory year over year in anticipation of the trend repeating in 2019. Most importantly, we are beginning to see results for our push into the telecom marketplace in Africa and South America where conversion of even one of our pilot projects into a full rollout would be transformative for the Company. Because these are large, very visible public projects where we bid with multiple partners, we have provided guidance on the scale and timing of potential opportunities. While there can be no assurance we will win one of these projects and it will be 2020 before successful bidders are selected and achieve rollout, we are encouraged to have delivered 8 Proof of Concept projects and 3 First Installs, representing a total of 146 systems to date."

Q2 2019 Revenue and Gross Margin 

Revenue for the three months (Q2) ended June 30, 2019 was $568,037, a decrease of 67% over Q2 2018 revenue of $1,697,696. TFQ revenue for the period ended June 30, 2019 was $2,665,967, a decrease of 32% over revenue of $3,908,519 in the TFQ period ended June 30, 2018.  

Over the last 3 years, the first half of the Company’s fiscal year has traditionally been a small portion of its full year revenue, ranging from 14% to 39% of fiscal year full revenue.  2018 was at the high end of this range due to a single large order in Q2 of 2018.  Notwithstanding this, the YTD results for 2019 are lower than 2018.  The Company believes this is not indicative of any change in the company’s outlook and is due to timing of a number of orders and the lumpy nature of Clear Blue’s current business.   

Gross margin was $125,374 for the period ended June 30, 2019, a decline of 57% compared to the same period in 2018. However, gross margin percentage increased from 17% to 22%, showing management’s initiatives for higher margin work. On a TFQ basis, gross margin was $787,198, an increase of 103% over the previous equivalent TFQ period.  Gross margin percentage in the quarter was 30%, compared to 10% in the previous equivalent TFQ period.   

While Clear Blue had a 32% TFQ revenue decline to June 30, 2019 year over year, gross margin increased 103%, in effect doubling gross margin with half the revenue. These results reflect the Company’s focus on generating positive cash flows from operations.  Management believes this trend demonstrates that we are executing to plan and delivering on the opportunity for profitable future growth.

Q2 2019 Operating Expenses 

Operating expenses increased $442,567 or 35% for the three-month period ended June 30, 2019 compared to the same period in 2018.  As the Company concluded its RTO in Q3 of 2018, the Q2 2018 period is prior to funding and Q2 2019 is post funding.  The additional expense is mainly due to increased research and development expenditures and increased business development expenses.

Outlook  

Clear Blue competes in a marketplace where most competitors focus on large, on-grid systems or they focus only on one-time sales of hardware products.  The Company’s focus is on the off-grid market and the company’s business model is to provide an ongoing Energy as a Service delivery model where customers receive long term assurance of reliable power and the Company is paid additional revenue over time for that reliability. As a result, Clear Blue holds a first mover advantage and leads the market as evidenced by deployment of our systems in more than 35 countries.

2018 was a year of 65% growth year over year.  Although the first part of 2019 has shown smaller numbers than in 2018, management believes its go forward growth plan and substantially enhanced gross margins will follow the trajectory that it has demonstrated in the past.

Lighting 

In the lighting vertical, the company’s future growth prospects rely on three things:

• Continued robust year over year growth in its North American Street off-grid streetlight business
  
• Continued growth in the size and quantity of streetlight projects in emerging markets
  
• Full rollout and implementation of its Energy-as-a-Service (EaaS) offering, which was launched at the end of May in Q2 2019.
  

The company believes the EaaS program will have a significant impact on its future growth. Clear Blue estimates, for each million dollars of yearly product sales, over a 10-year period, the EaaS will accumulate rates for an additional $650k of revenue.  The involved nature of EaaS revenues is projected to further facilitate customer relationships for future contracts.

Telecom 

With respect to the Telecom vertical, it is now two years since the Company did its first pilot project with its first telecom customer.  As of the end of Q2 2019, the Company has delivered 146 systems over 8 Proof of Concept projects and 3 First Installs. Most of these projects are in developing regions such as Africa and South America where off grid powered telecom will be the primary communications network.  This includes development of traditional tower infrastructure, satellite/wifi networks and, in the future, new 5G networks.

In the telecom industry, infrastructure projects follow a frequent pattern of:

• Proof of Concept pilots consisting of 1 – 10 systems, followed by
  
• First Installs of 10 – 100 systems, followed by
  
• Large Rollout of hundreds to thousands of systems
  

As customers transition to the full rollout phase, the size and value of the contract grows significantly.  There can be no assurance we will win a Rollout contract, however the bid processes currently underway are structured for a mid-2020 decision by the project operators.  Taking into consideration our caution regarding forward looking statements, the Company does see potential for one or more of its early installs transitioning to the larger roll out stage if one of our bid partners wins a portion of one of the major Rollout contracts.

In summary, the Company expects to continue to see variable quarterly revenue due to the variance in size and timing of new contracts and market expansion rates.  Management’s longer-term goal and strategy is to mitigate revenue variability through continued diversification into a balanced blend of developed and emerging markets, as well as to increase the recurring portion of our revenue.

Conference Call 

The Company will host a conference call to discuss its latest financial results at 12:00 PM Eastern Time (Canada/U.S.) on Wednesday, 28th August 2019. Those interested can register at https://zoom.us/webinar/register/WN_5HrRcQKnTpmKKKAenylHRg 

About Clear Blue Technologies International 

Clear Blue Technologies International, the Smart Off-Grid™ company, was founded on a vision of delivering clean, managed, “wireless power” to meet the global need for reliable, low-cost, solar and hybrid power for lighting, telecom, security, Internet of Things devices, and other mission-critical systems.  Today, Clear Blue has thousands of systems under management across 35 countries, including the U.S. and Canada. Clear Blue is publicly traded on the Toronto Venture Exchange under the symbol CBLU.

Legal Disclaimer  

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

Forward-Looking Statement  

This press release contains certain "forward-looking information" within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Resulting Issuer’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Clear Blue's control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "will continue", "will occur" or "will be achieved". The forward-looking information contained herein may include, but is not limited to, information concerning the prospective operating results and performance of the Company.

By identifying such information and statements in this manner, the Resulting Issuer is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Resulting Issuer to be materially different from those expressed or implied by such information and statements.

An investment in securities of the Resulting Issuer is speculative and subject to several risks including, without limitation, the risks discussed under the heading "Risk Factors" in the Resulting Issuer's listing application dated July 12, 2018. Although the Resulting Issuer has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

In connection with the forward-looking information and forward-looking statements contained in this press release, the Resulting Issuer has made certain assumptions. Although the Resulting Issuer believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Resulting Issuer does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward- looking information and statements attributable to the Resulting Issuer or persons acting on its behalf is expressly qualified in its entirety by this notice.

Media Contact:

Becky Nye
Director
Montieth & Company
155 E 44th St., New York, NY 10017
bnye@montiethco.com
+1 646.864.3517

Investor Relations:

Miriam Tuerk
Co-Founder and CEO

+1 (855) 733-0119 x200
investors@clearbluetechnologies.com
http://www.clearbluetechnologies.com/en/investors