Mr. Emmanuel Mounouchos reports

AVANTE CORP. ANNOUNCES FINANCIAL RESULTS FOR THE FIRST FISCAL QUARTER ENDED JUNE 30, 2023 AND STOCK OPTION GRANT

Avante Corp. has released its financial results for its first fiscal quarter ended June 30, 2023 (all amounts in Canadian dollars thousands, unless otherwise indicated).

"We are continuing to see positive engagement and interaction with our clients as a result of the new initiatives we have implemented to increase efficiencies and reinstate our superior level of service. Our clients are our best advocates and have been graciously providing a significantly increased number of direct referrals," said Manny Mounouchos, founder, chief executive officer and board chair of Avante. "We continue to actively seek new opportunities to be leaders in the global security market, staying true to the Avante brand and mission."

Added Raj Kapoor, chief financial officer of the company, "We continue to show strong sales performance while creating efficiencies and opportunities as we streamline the company's operations."

Financial highlights for the first fiscal quarter ended June 30, 2023.

Within continuing operations, the company reported year-over-year revenue growth of 18.4 per cent or $843 during the first quarter of fiscal 2024, increasing to $5,410 from $4,568. Gross profit margins within continuing operations declined to 37.7 per cent of revenue, versus 43.7 per cent during the prior-year first quarter, with total gross profit increasing by $44.

The company's recurring monthly revenues (RMR) from continuing operations during the last eight quarters are summarized in this news release. The Avante Security segment delivered RMR of $2,648 during the first quarter of fiscal 2024, up from $2,463 during the prior-year first quarter.

Gross profit margins over the last eight quarters ranged between 37.7 per cent and 45.1 per cent, and were 39.3 per cent on a trailing-12-month basis to June 30, 2023.

Segment results

The Avante Security segment reported adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $691 during the first fiscal quarter ended June 30, 2023, versus $765 during the first fiscal quarter ended June 30, 2022. This decline of $74 was largely due to an increase of reorganization expenses.

The loss in adjusted EBITDA from central corporate costs, net of eliminations, within continuing operations was $182 during the first fiscal quarter ended June 30, 2023. This represented an improvement of $17 versus the negative $199 adjusted EBITDA net of central costs during the first fiscal quarter ended June 30, 2022. The current quarterly period benefits from restructuring implemented in the previous financial year

Liquidity highlights

On June 1, 2022, all remaining financed debt of the company was repaid from proceeds of the sale of Logixx Security. On the same date, the company entered into amended and restated credit facilities with its bank to provide a $2-million revolving credit facility, provided on a demand basis and subject to a customary borrowing base. In January, the company took a small draw on this credit facility and repaid it by June 30, 2023.

On July 7, 2022, the company entered into a definitive loan agreement with affiliates of its largest shareholder. This agreement permits the company to draw term loans, on a non-revolving basis, for up to $10-million at a fixed rate of 5.0 per cent with terms to maturity ending July 7, 2027. Drawings are subject to a minimum senior leverage test and other conditions. A standby fee on the unused portion of the facility of 0.5 per cent is payable annually in arrears. To date, the company has not drawn on this term loan facility.

With cash balances of $9.4-million and access to the senior secured revolver of $2-million and to the $10-million unsecured term loan facility, the company has excess liquidity to more than meet its existing requirements.

Readers should refer to the company's financial statements and MD&A (management's discussion and analysis) in respect of its year ended March 31, 2023, for additional risk factors, accounting policies, detailed financial disclosures, reconciliation of non-IFRS (international financial reporting standards) financial measures to the most directly comparable IFRS financial measures, related party transactions, contingencies and reporting of subsequent events since the year ended March 31, 2023. Such financial statements and MD&A are incorporated by reference into this news release and are filed electronically through SEDAR.

Stock option grant

Avante would also like to announce the grant of stock options to Bruce Bronfman, a director of the company, to purchase up to 100,000 common shares of Avante, effective as of today, subject to the terms and conditions of the company's 10-per-cent rolling stock option plan. The options have been granted to Mr. Bronfman in connection with his joining the board earlier this year, have an exercise price of 88 cents per share and have fully vested upon grant. The options granted have a term of five years from the date of the grant.

About Avante Corp.

Avante provides high-end security services through its wholly owned subsidiary, Avante Security Inc., serving residential customers located in Toronto and Muskoka regions of Ontario, Canada. With an experienced team, a focus on customer service excellence and development of innovative solutions, Avante remains committed to providing its shareholders with exceptional returns.

We seek Safe Harbor.