The Company continues to execute its four-pronged plan: advance co-ventures to create recurring revenue, expand our parts and service business, scale the ride business to reflect demand, and focus our technology development on product innovation and revenue diversification
TORONTO, May 27, 2022 (GLOBE NEWSWIRE) — Dynamic Technologies Group Inc. (TSXV: DTG, OTC:ERILF) ( the “Company” and “our”) today reported its audited consolidated financial results for the quarter ended March 31, 2022. The consolidated financial statements and MD&A have been filed on SEDAR and can be viewed at www.sedar.com or at www.dynamictechgroup.com.
“The acquisition of our 50% interest in the award winning, Skyfly™- Soar America patented flying theatre attraction at the Island in Pigeon Forge, Tennessee was the highlight of the first quarter,” said Guy Nelson, Executive Chairman and CEO. “It demonstrates our technical and creative expertise and has already contributed free cash distributions to the Company, which we view validates our drive towards a recurring revenue business model based on co-ventures. There have been unexpected delays in our re-financing efforts, arising from the shutdown of the City of Shanghai where the lead strategic investor is based, but the lifting of that shutdown appears to be on the horizon, which should get our financing back on track. In the meantime, our senior lender has extended the next principal repayment from May 31, 2022 until the earlier of June 30, 2022 or 10 days after the Shanghai shutdown is lifted. We appreciate their ongoing support and confidence.”
Summary of first quarter consolidated results
- Revenues decreased to $8.6 million in first quarter 2022, down 20% from first quarter 2021.
- EBITDA loss of $0.7 million in first quarter 2022 compared to an EBITDA gain of $0.2 million in first quarter 2021. The change was driven largely by reduced revenues and an elimination of the government subsidy in Q1, 2022 versus Q1 2021.
- Net loss in first quarter 2022 of $3.2 million versus a Net loss of $3.0 million in first quarter 2021.
- Cash generated in operating activities was $4.3 million in Q1 2022 consistent with $4.2 million in Q1 2021 and this was used to reduce our funded debt by the same amount.
- Cash on hand at March 31, 2022 was $0.7 million as compared to $2.2 million at March 31, 2021.
- Contract Backlog was $93.3 million as of March 31, 2022, up 2.9% from December 31, 2021. Currently 69% of the backlog (4 contracts) are on hold because of client and/or pandemic caused delays.
|For the quarter ended March 31
($ millions, except per-share amounts)
|Net loss from continuing operations||(3.2||)||(2.9||)|
Per Share Information (Basic & Diluted)
|Loss per share – continuing operations||(0.02||)||(0.02||)|
|Loss per share – all operations||(0.02||)||(0.02||)|
1 Earnings (loss) before interest, tax, depreciation and amortization (EBITDA) is not defined by IFRS. The definition of EBITDA does not take into account the Company’s share of profit of an associate investment, gains and losses on the disposal of assets, fair value changes in foreign currency forward contracts and non-cash components of stock based compensation. While not IFRS measures, EBITDA is used by management, creditors, analysts, investors and other financial stakeholders to assess the Company’s performance and management from a financial and operational perspective. Readers are cautioned that EBITDA should not be considered to be more meaningful than loss before tax determined in accordance with IFRS.
The Company continues to execute its four-pronged operational plan:
- continue to advance the Company’s development plans for the co-venture business (Dynamic Entertainment)
- continue to aggressively market its parts and service division to its customers as they started the process of reactivating their theme and amusement parks (Dynamic Attractions);
- continue to market our innovative and very talented engineering capability to diversify the Company’s revenue sources beyond the attractions industry and to continue to use its engineer’s knowhow to develop new media-based attraction ride systems for the meta-verse and large theme parks and miniaturize its product line for the smaller parks and tourist locations (Dynamic Structures).
- the restructuring of the Ride Division (Dynamic Attractions) is largely complete, with the ability to scale back up once market demand improves, although we do not expect this to occur until 2023 and after.
Update on Financing
Another accomplishment during the quarter was the repayment of $4.3 million more of our debt. We have been able to reduce our debt level by over $17 million in 2021 and through to the end of March 31, 2022. Our refinancing initiative was moving forward but the pandemic once again affected our Company because the investor group we have been negotiating with are based in China and the lead investor is based in Shanghai. Despite the delay caused by Shanghai being locked down for over six weeks, it appears that Shanghai will be open by mid-June allowing people to leave their residences, employees to return to work and the banks to resume their business activities. Assuming the restrictions are lifted by mid-June we expect to replace our senior lender by the end of June.
The goals of our financing initiative have not changed, which are to improve our working capital in the ride manufacturing division and provide equity and project debt for our co-venture division. We expect the financing initiative will reduce overall interest expense making it much more manageable going forward and change our working capital position from negative to positive in 2022. In the meantime, our senior lenders have been supportive, extending the principal repayment terms of their loan facilities when needed. Our strategic investor’s interest is being driven by the Company’s proprietary IP, ownership of 50% of SkyFly, backlog of co-venture prospects, technical and creative knowhow, proven reputation of creating and delivering innovative, iconic ride systems and the Company’s substantial tax losses to shelter future profits.
Amendment to Senior Loan Agreement
The Company has executed an amendment to its loan agreement with its senior lender to extend the due date of the principal repayment in the amount of USD $10.4 million from May 31, 2022 to the earlier of (i) June 30, 2022, and (ii) 10 business days after the date on which the COVID-19 restrictions imposed by the governmental authorities in Shanghai, China that are currently in effect are lifted which are preventing the strategic investor from initiating international wire transfers.
Update on Co-ventures
The Company continues to be bullish on its ability to penetrate the tourist location, entertainment market by leveraging its world class attraction IP. It is the Company’s view that its co-venture strategy, being pursued by wholly owned subsidiary, Dynamic Entertainment, is well suited to capitalize on the entertainment opportunities in a post-pandemic world as pent-up demand and increased customer savings seek out memorable guest experiences. Guest satisfaction and value will be the key success factors for popular tourist locations that choose to complement their experience with our award winning, world class, media-based attractions.
The Company’s first co-venture, Sky Fly™ – Soar America, opened July 9, 2021 and has continued to enjoy very good reviews and excellent attendance at the gateway to the Smoky Mountains, one of the most popular tourist destinations in America. The attraction itself was awarded the Best New Attraction for 2021 by USA Today’s Readers’ Choice Awards. Replicating SkyFly’s success is the plan for Dynamic Entertainment, our co-venture business unit.
The Company’s pipeline of co-venture prospects is geographically broad and is progressing, despite travel restrictions. Our co-venture offices in Toronto and Orlando have been able to cover North America, UK, and Australia effectively and our office in Shanghai has allowed us to continue to develop our prospects in Asia. We have three senior executives in Asia, and this is helping to continue to advance our prospects in this area.
Update on Ride Business
The Company has continued to focus on reducing and aligning our cost structure in our ride division with the delayed projects in our contract backlog and the slower approach to awarding new ride contracts. The Company has continued to reduce its cost structure significantly throughout 2021 and into the first half of 2022 in response to the reduced backlog and the lower level of sales that are expected because of the almost two years of theme park ride capital expenditure planning time that was lost because of the pandemic.
We have continued to focus on growing of our Ride division’s parts and service group and it continues to get stronger and contribute more to the Company’s bottom line
About Dynamic Technologies Group Inc.
Dynamic is a world leader in the design engineering, production, and commissioning of iconic, media-based attractions and ride systems for the global theme park industry and entertainment destinations. It also applies these same engineering integration and problem solving skills for special projects in diversified industries such as alternative energy and large optical telescopes and enclosures. Dynamic also has commenced an initiative to leverage its world class flying theater products and attraction development capability on a co-venture ownership basis. Dynamic’s common shares are listed on the TSX Venture Exchange under the symbol DTG.
For more information about the Company, visit www.dynamictechgroup.com or contact:
This news release contains forward-looking statements, within the meaning of applicable securities legislation, concerning Dynamic’s business and affairs. In certain cases, forward-looking statements can be identified by the use of words such as ‘‘plans’’, ‘‘expects’’ or ‘‘does not expect’’, ‘‘budget’’, “booked”, ‘‘scheduled’’, “positions”, ‘‘estimates’’, “forecasts’’, ‘‘intends’’, ‘‘anticipates’’, “believes” or variations of such words and phrases or state that certain actions, events or results ‘‘may’’, “may be”, ‘‘could’’, “should”, ‘‘would’’, ‘‘might’’ or ‘‘will’’, ‘‘occur’’ or ‘‘be achieved’’. Such statements include statements with respect to (i) the Company’s ability to execute its co-venture plan, expansion of its parts and service business, ride business restructuring, and R&D diversification plan, (ii) the Company’s view that the cash distributions from its interest in Skyfly™ – Soar America validates its recurring revenue model based on co-ventures; (iii) the Company’s ability to source and close the funding required to refinance its senior debt, implement its co-venture plan, correct its working capital deficiency, and reduce its current debt; (iv) the expectation that the financing initiative will reduce the Company’s overall interest expense and change the Company’s working capital from negative to positive in 2022; (v) the Company’s ability to scale back up once ride procurement market demand improves; (vi) the expectation that ride procurement market demand will improve in 2023 and beyond; (vii) the Company’s view that its co-venture strategy is well suited to capitalize on a post-pandemic world; (viii) the Company’s plan to replicate the success with its investment in Sky Fly™ – Soar America; and (ix) the lower level of sales that are expected because of the almost two years of theme park ride capital expenditure planning time that was lost because of the pandemic. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this news release assume, inter alia, that the conditions for completion of the funding required to implement its co-venture plan and to correct its working capital deficiency, including regulatory approval will be met. Although Dynamic believes these statements to be reasonable, no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. Actual results could differ materially from those anticipated in these forward-looking statements as a result of prevailing economic conditions, and other factors, many of which are beyond the control of the Company. The forward-looking statements contained in this news release represent Dynamic’s expectations as of the date hereof, and are subject to change after such date. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by applicable securities regulations. 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.