Mr. Chris Johnson reports

CROWN CAPITAL PARTNERS ANNOUNCES Q3 2023 FINANCIAL RESULTS

Crown Capital Partners Inc. today released its financial results for the three and nine months ended Sept. 30, 2023. Crown's complete financial statements and management's discussion and analysis are available on SEDAR+.

Q3 2023 financial and operating highlights

• Network services revenue was $7.8-million, a $300,000 increase from the $7.5-million in Q3 2022, with the commencement of new projects at Community Network Partners being offset by declines in the revenues of WireIE and Galaxy. The network services segment contributed a net loss before income taxes of $(1.1)-million, inclusive of depreciation and amortization expense totalling $700,000 and accrued restructuring costs of $500,000. This compares with net income before income taxes of $1.1-million in Q3 2022. The reduction in profitability in this segment is due to both a continuing contraction of WireIE's business and the wind-down of certain high-margin contracts at Galaxy, with multiple growth initiatives within its Community Network Partners and Galaxy subsidiaries still at early stages of ramping up.
• Distribution services revenue of $8.9-million was consistent on a quarter-over-quarter basis and increased by 28 per cent compared with Q3 2022 due primarily to increased capacity utilization and customer activity levels at facilities that commenced operations in 2022. This segment reported a net loss before income taxes of $(400,000), inclusive of depreciation expense totalling $1.4-million. Capacity utilization was 70 per cent at Sept. 30, 2023, consistent with June 30, 2023, and compared with 39 per cent at Dec. 31, 2022. Crown expects capacity utilization to be higher in Q4 2023 and to increase significantly in 2024 leading to a material increase in the revenue and operating earnings from this segment.
• In Q3 2023, Crown's share of earnings of Crown Partners Fund totalled $200,000 (Q3 2022 -- $100,000), including $10,000 in respect of Crown's general partnership interest as a result of an increase in the accrued performance bonus payable to Crown by the fund and $200,000 in respect of Crown's limited partnership interest. Compared with June 30, 2023, the carrying value of Crown's investment in Crown Partners Fund increased by $100,000 to $24.1-million.
• Crown reported a net loss of $(1.8)-million (32 cents loss per basic share) in Q3 2023, compared with a net loss of $(2.1)-million (38 cents loss per basic share) in Q3 2022.
• Total equity at quarter-end was $46.6-million, down from $50.7-million at the end of 2022, reflecting the net loss attributable to shareholders in the first nine months of 2023. Total equity per share was $8.33 per basic share, compared with $8.98 as at Dec. 31, 2022.
• As at Sept. 30, 2023, the corporation did not satisfy certain financial covenant clauses of its credit agreement with its bank. Accordingly, the bank is contractually entitled to request immediate repayment of the outstanding loan in the amount of $24.5-million and the outstanding balance is presented as a current liability as at Sept. 30, 2023. The corporation's bank has not requested early repayment of the loan. Management is renegotiating the terms of the credit agreement and expects that revised terms will be in place in Q4 2023.

"Q3 2023 was clearly a disappointing quarter for the corporation. The transition of Galaxy's customer base to new low earth orbit satellites has taken longer and has been more competitive than we had anticipated. We still see great potential in this technology and are expecting to make meaningful progress over the next year. Somewhat countering the softness in the satellite division, our fibre projects continue to move along well and our outlook on this division continues to improve. Our distribution services business is also coming along well with profitability increasing at all but one of our facilities. Our focus continues to be on filling our available capacity, and the current pipeline of new customers is strong. Finally, our real estate business continues to make progress on our two residential developments; albeit, the residential market in Ontario remains soft," said Chris Johnson, president and chief executive officer of Crown.

About Crown Capital Partners Inc.

Founded in 2000 within Crown Life Insurance Company, Crown Capital Partners is a capital partner to entrepreneurs and growth businesses mainly operating in the telecommunications infrastructure, distribution services and distributed power markets. The company focuses on growth industries that require a specialized capital partner, and it aims to create long-term value by acting as both a direct investor in operating businesses serving these markets and as a manager of investment funds for institutional partners.

We seek Safe Harbor.