Ms. Miriam Tuerk reports

CLEAR BLUE TECHNOLOGIES REPORTS RECORD THIRD QUARTER 2023 REVENUE AND ADJUSTED EBTIDA

Clear Blue Technologies International Inc. has released its financial results for the quarter ended Sept. 30, 2023 (Q3 F2023). A complete set of financial statements and management's discussion & analysis (MD&A) has been filed at SEDAR+. All dollar amounts are denominated in Canadian dollars.

Q3 F2023 (fiscal Q3 2023) financial highlights:

• Revenue was $2,273,377, a 404 per cent increase from $451,421 for the quarter ended Sept. 30, 2022 (Q3 2022), and up 202 per cent from $752,325 in the prior quarter (Q2 2023). Revenue was in- line with the company's Oct. 5, 2023, preannouncement.
• Q3 revenue represents a record level of quarterly revenue since Q1 2021, notwithstanding the seasonality in the company's business.
• Recurring revenue was $195,315, a 37-per-cent increase from $142,940 in Q3 2022.
• Gross margin was 37 per cent, up from 30 per cent in Q3 2022.
• Gross profit for Q3 2023 was $850,588 compared with $135,575 for Q3 2022, a 527-per-cent increase.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $33,187 versus $(987,427) in Q3 2022, a 103-per-cent improvement from Q3 2022, and a record in the company's entire operating history.
• As of Sept. 30, 2023, bookings were $2,914,882, an increase of 46 per cent, when compared with $1,991,275 as of Dec. 31, 2022, with delivery anticipated over the next three years in the case of Illumience/EaaS and typically in the next four to six months in the case of production orders. Additionally, the company booked another $417,739 of sales in Q3 2023 that were also delivered in Q3 2023.
• Cash at Sept. 30, 2023, was $1,086,050 versus $853,330 at Dec. 31, 2022.
• As of Sept. 30, 2023, the company has $3,900,304 of available government funding, with $3,337,057 receivable in government grants and $563,247 receivable in the form of a 10-year interest free loan to finance its plans going forward over the next three years.

The third quarter of 2023 saw the company's quarterly performance return to its pre-COVID trajectory of a seasonally stronger second half," said Miriam Tuerk, chief executive officer of Clear Blue. "These results were in line with our Oct. 5 preannouncement and we reported our first quarter of positive EBITDA. We see similar demand building in Q4 2023 and beyond and we have the balance sheet to continue our growth resumption."

Trailing-four-quarter (TFQ) financial highlights:

• TFQ revenue was $3,466,183, a 15-per-cent decrease from $4,090,017 in the corresponding previous period. The current period was impacted by the economic downturn triggered by the macroeconomic events of early 2022.
• TFQ recurring revenue was $751,351, a 2-per-cent increase from $736,969 in the corresponding previous period.
• TFQ gross profit increased 7 per cent to $1,321,021 from $1,238,245 in the comparable period.
• Gross margin percentage increased to 38 per cent, compared with 30 per cent in the same TFQ period of 2022.
• TFQ adjusted EBITDA was $(2,618,881), a 31-per-cent reduction from $(3,792,410) in the previous period.

Q3 F2023 operational highlights

• In the quarter the company shipped 920 power control devices across 18 orders, a quarterly record for units shipped.
• Further to its Sept. 20, 2023, news release, Clear Blue has completed its previously announced amendments to certain of its unsecured convertible debentures in the aggregate principal amount of $4,334,000 and additionally completed its shares for debt transaction with an arm's-length lender.
• Opened a new manufacturing facility in Sweden for the company's eSite product;

Subsequent events

• On Nov. 21, 2023, the company announced an alliance partnership with Watt Renewable. As part of this alliance, Clear Blue received an initial order for 160 systems for a total purchase price of $1.58-million. This order is expected to ship in Q4 2023 and Q1 2024.

Outlook

Management expects Q4 2023 revenue to be between $1.8-million to $2-million, with the low end of this range occurring in the event that some suppliers slip their scheduled shipments from Q4 2023 into Q1 2024. Gross margin, expenses and net income will generally be in line with previous quarters.

Heading into 2024, the company sees several exciting market trends that support continuing strength in the company's sales funnel. Some of the company's existing partners have solid volumes forecasted for next year with supportive financing -- which bodes well for the company's forecasted sales volumes of its Nano-Grid product in 2024. Supporting the company's strongest ever sales funnel is management's cash-centric focus. Revenue growth, net-zero cash burn and positive EBITDA are still the company's objectives for the rest of the year.

Of the $2,914,882 in bookings as at the end of Q3, the company expects to recognize 76 per cent as revenue over the next 12 months. The large order announced with Watt Renewable will now be mostly delivered in Q1 2024 due to timelines of supply chain and the Christmas shutdown. Some of the order will also be delivered in Q4 2023.

Operationally, the company's product line has never been more robust due to the eSite acquisition as well as bringing to market three new products in the last 12 months, which significantly expands the company's addressable market. The sales funnel shows strength in all markets, with all the company's products, and the company expects this to contribute to the company's revenue for the remainder of 2023 and for 2024. The company's Illumient lighting product is seeing solid demand and growth. CBT regularly undertakes detailed design and engineering prior to orders being received, and while annual budgets need to be confirmed by the buyers, the slate of projects for 2024 is quite strong, giving the company comfort that it will see strong growth for the product next year.

eSite-Micro is also going to strongly contribute in 2024 and could contribute over 50 per cent of its total revenue for the year. Clear Blue has eight large customers who have adopted the new eSite-Micro product which integrates eSite's unparallelled power electronics with Clear Blue's industry leading Smart Power management services. As the telecom industry aggressively moves their install base away from diesel generators and toward solar, investments being made are significant and Clear Blue's leadership in Smart Power solar and hybrid systems allows the company to deliver unparallelled performance for these migrations. Indeed, there are some large conversion programs being planned for 2024 within the market and Clear Blue is in a strong position to win a good portion of this business. While nothing is assured at this point, the opportunity is maturing in the company's sales funnel and could have a large impact on 2024 and 2025 revenue.

In summary, management is pleased with the company's progress since the start of fiscal 2023. The remainder of 2023 is expected to deliver solid results, and the company looks forward to showing strong growth into 2024.

Conference call

Clear Blue will host a conference call Thursday at 11 a.m. Eastern Time to review the company's performance and answer questions.

About Clear Blue Technologies International Inc.

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 55 countries, including the United States and Canada.

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