Mr. Peter Londa reports

TANTALUS SYSTEMS HOLDING INC. REPORTS FINANCIAL RESULTS FOR Q2 OF 2023

Tantalus Systems Holding Inc. has released its financial and operating results for the quarter ended June 30, 2023 (Q2).

Financial highlights for Q2 (1):

• Revenue: generated $11.2-million ($15.0-million (Canadian)), representing 24-per-cent growth over the prior-year period and setting a new milestone for revenue generated during the second quarter of a year. Revenue in Q2 from the utility software applications and services segment (software and services) represented 37 per cent of total revenue in the quarter and included the first commercial licence of the C.IQ Connect software platform to an investor-owned utility. Coupled with its first quarter revenue results, the company set a new milestone for revenue generated during the first six months of a year at $21.6-million ($29.2-million (Canadian));
• Annual recurring revenue (ARR) (2): grew to approximately $10.5-million ($14.1-million (Canadian)), representing 17-per-cent growth over the prior-year period. Recurring revenue recognized in the quarter represented 25 per cent of total Q2 revenue;
• Gross profit (2) margin: delivered 56 per cent as compared with 46 per cent from the prior-year period. The gross profit margin for Q2 establishes a new high watermark for gross profit margin during a quarter and was bolstered by strong revenue contributions from software and services;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (2): delivered $300,000 ($400,000 (Canadian)) of positive adjusted EBITDA as compared with negative $1.5-million (negative $1.9-million (Canadian)) for the prior-year period. The company delivered positive adjusted EBITDA while continuing its heavy investment in the commercialization of the TRUSense gateway, a turnkey solution designed to accelerate utilities' modernization of the electric distribution grid;
• Total assets: ended the quarter with $37.0-million ($49.0-million (Canadian)) as compared with $37.4-million ($50.7-million (Canadian)) as of Dec. 31, 2022;
• Sales orders: converted an additional $5.2-million ($6.9-million (Canadian)) in orders from its sales pipeline and increased its user community to 283 utilities through the addition of five new customers in Q2. The company set a new milestone for orders converted during the first six months of the year by securing $22.6-million ($30.4-million (Canadian)) in orders through June 30;
• Fortified balance sheet: closed a six-year term loan for up to $7.0-million from Export Development Canada (EDC) to fortify its balance sheet, which is timely in anticipation of activating field trials of the TRUSense fibre gateway.

"Q2 represented another strong quarter for Tantalus, with a number of important milestones achieved by our team. We are pleased to remain on a favourable trajectory for our shareholders," said Peter Londa, president and chief executive officer of Tantalus. "Our strong financial results put us in an excellent position to continue investing in the development and deployment of innovative solutions, such as our TRUSense gateway, the Congruitive software platform and other data analytics capabilities. We believe these investments in our solutions represent a substantial near- and long-term opportunity for the company."

The company will hold a conference call and webcast to discuss the financial results on Tuesday, Aug. 15, 2023, at 11 a.m. Eastern Time.

Conference call

Participant dial-in (toll-free):1-844-854-4410  

Participant international dial-in:1-412-317-5791  

A webcast will be available.

Replay information

A conference call and webcast replay will be available until Aug. 22, 2023. To access the conference call replay, please see details below.

U.S. toll-free:  1-877-344-7529

International toll:  1-412-317-0088

Canada toll-free:  1-855-669-9658

Replay access code:  6618356

Financial statements and management's discussion and analysis

Please see the company's consolidated financial statements and related MD&A for more details. The financial statements for the three months ended June 30, 2023, and related MD&A have been reviewed and approved by Tantalus's audit committee and board of directors. For a more detailed explanation and analysis, please refer to the MD&A that has been filed on SEDAR+ and is also available on the company's website.

Non-IFRS and other financial measures

This news release refers to the following non-IFRS measures.

EBITDA is income (loss) less interest, income tax, and depreciation and amortization. Management believes that EBITDA is a useful indicator for investors and it is used by management in evaluating the operating performance of the company. Adjusted EBITDA is income (loss) less interest, income tax, depreciation, amortization, stock-based compensation, foreign exchange gain (loss) and other income/expenses not attributable to the operations of the company. Management believes that adjusted EBITDA is a useful indicator for investors and it is used by management in evaluating the operating performance of the company. See the reconciliation of net (loss)/income to adjusted EBITDA for a quantitative reconciliation of adjusted EBITDA to the most directly comparable financial measure.

Gross profit is the company's revenues less cost of sales. Management believes that gross profit is a useful indicator for investors and it is used by management in evaluating the operating performance of the company. See the gross profit reconciliation for a quantitative reconciliation of gross profit to the most directly comparable financial measure. This news release refers to gross profit margin, which is a non-IFRS ratio. Gross profit margin is gross profit expressed as a percentage of the company's revenues. Management believes that gross profit margin is a useful indicator for investors and it is used by management in evaluating the operating performance of the company.

Adjusted working capital is current assets less current liabilities exclusive of the company's bank loan and contingent consideration on the Congruitive acquisition. Management believes adjusted working capital is a useful indicator for investors and it is used by management for evaluating the operating liquidity to the company. See the adjusted working capital reconciliation for a quantitative reconciliation of adjusted working capital to the most directly comparable financial measure.

Recurring revenue comprises the company's revenues that are recurring in nature and attributable to its analytics and other software-as-a-service (SaaS) offering, hosting services, and software maintenance and technical support agreement services. Annual recurring revenue or ARR comprises the company's recurring revenue as expressed on an annualized revenue basis attributable to its customer agreements at a point in time.

Such non-IFRS measures and non-IFRS ratio do not have a standardized meaning under IFRS and may not be comparable with a similar measure disclosed by other issuers.

About Tantalus Systems Holding Inc.

Tantalus is a smart grid technology company that transforms aging one-way grids into future-proofed multidirectional grids that improve the efficiency, reliability and sustainability of utilities and the communities they serve. The company's solutions are purpose-built to allow utilities to restore power quickly after major disruptions, adapt to rapidly shifting consumer expectations and population shifts, innovate new solutions based on the adoption of distributed energy resources, and evolve their grid infrastructure at their own pace without needless cost or complexity. All this gives the company's user community the flexibility they need to get the most value from existing infrastructure investments while planning for future requirements.

(1) Financial information is reported in United States dollars unless otherwise stated and in accordance with IFRS. Where balances are also expressed in Canadian dollars in this news release, an average foreign exchange rate of 0.7447 and 0.7421 for the three and six months ended June 30, 2023 (0.7834 and 0.7866 for three and six months ended June 30, 2022), for income statement items and a foreign exchange rate of 0.7553 as at June 30, 2023 (0.7760 as at June 30, 2022, and 0.7383 as of Sept. 31, 2022), for balance sheet items has been applied.

(2) Non-IFRS and other financial measures.

We seek Safe Harbor.