For the Three and Six Months Ended June 30, 2022
The Management Discussion and Analysis ("MD&A") of financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes of Omni-Lite Industries Canada Inc. for the three and six months ended June 30, 2022. Omni-Lite Industries Canada Inc. ("Omni-Lite" or the "Company") reports its financial position, results of operations and cash flows in accordance with International Financial Reporting Standards ("IFRS"), as issued by the IASB. The Company's functional currency is in United States ("U.S.") dollars and all amounts in this MD&A are expressed in U.S. dollars. This discussion has been completed as of August 16, 2022.
Non-IFRS measures - certain supplementary measures in this MD&A do not have any standardized meaning as prescribed under IFRS and therefore are considered non-IFRS measures. These measures are described and presented in order to provide shareholders and potential investors with additional information regarding the Corporation's financial results, liquidity and its ability to generate funds to finance its operations. These measures are identified and presented, where appropriate, together with reconciliations to the equivalent IFRS measure. However, they should not be used as an alternative to IFRS because they may not be consistent with calculations of other companies.
Omni-Lite is managed as a single business by its chief operating decision-makers. The Company operates three business segments defined as forged, electronic and investment casting components. Through its wholly owned subsidiaries which include Omni-Lite Industries California Inc., Monzite Corporation, Impellimax Inc. and Designed Precision Castings, Inc. ("DP Cast"), the Company designs, engineers, manufactures, and markets specialized components to a broad spectrum of Fortune 500 customers. Its components are utilized in the products for Boeing, Airbus, Bombardier, Chrysler, Ford, L3Harris Technologies, Lockheed Martin, Raytheon, Pratt and Whitney, the U.S. military, Nike, and Adidas. The requirements and stature of these customers necessitates that the Company operate at a very high level of engineering and production efficiency.
Omni-Lite Industries Canada Inc. is a recognized precision manufacturer of forged investment casting and electronic components with a core mission of utilizing material science research and development for mission critical applications. The Company's specialized, computer-controlled hot and cold forging systems combined with its design and materials science expertise have enabled us to solve our customers' extremely challenging product application needs. In addition, we have the range of equipment and production capacity necessary to respond to a wide range of complex high-volume requirements.
To drive future growth, Omni-Lite is committed to funding the research and development of new products and materials and to apply for patents to protect the intellectual property that pertains to its business. To date, the Company has been granted ten (10) U.S. patents covering innovations in materials, processes, and design.
Omni-Lite Industries Canada Inc. Management Discussion and Analysis For the Three and Six Months Ended June 30, 2022
All figures are in US dollars except as noted.
Results from Operations for the Three and Six Months Ended June 30, 2022
For the fiscal three months ended June 30, 2022, Omni-Lite reported revenue of $2,460,083, an increase of 105% from $1,200,122 in the fiscal period ended June 30, 2021. For the fiscal six months ended June 30, 2022, Omni-Lite reported revenue of $4,840,210, an increase of 96% from $2,469,841 in the fiscal period ended June 30, 2021. The increase in revenue was principally due to the addition of DP Cast in December of 2021 combined with increases in aerospace fasteners and electronic components.
For the three months ended June 30, 2022, cost of goods sold ("COGS") was $2,447,107 as compared to $1,254,064 in the three months ended June 30, 2021, or an increase of 95%. The key drivers of the variance comprised of the inclusion of DP Cast operations that was acquired in late December 2021, as well as a slight increase in labor cost. The Company has begun to see improvements in the prior under absorption of fixed manufacturing costs which it saw throughout 2021 as well as the first fiscal quarter 2022 and is continuing to work towards running its manufacturing operations at optimal utilization of its capacity. For the six months ended June 30, 2022, cost of goods sold ("COGS") was $4,826,408 as compared to $2,491,335 in the six months ended June 30, 2021. COGS in the three months ended June 30, 2022 included non-cash depreciation expense, including lease depreciation of approximately $283,114 as compared to approximately $228,505 in the three months ended June 30, 2021. COGS in the six months ended June 30, 2022 included non-cash depreciation expense, including lease depreciation of approximately $573,151 as compared to approximately $474,691 in the six months ended June 30, 2021.
Omni-Lite Industries Canada Inc. Management Discussion and Analysis For the Three and Six Months Ended June 30, 2022
Overhead expenses for the three months ended June 30, 2022, were $599,059 as compared to $347,958 for the three months ended June 30,2021, an increase of $251,114 or 72%. The majority of the increase is principally due to the acquisition of DP Cast. Stock compensation
expense increased by approximately $12,000. Amortization of intangibles increased approximately $11,000 due to the acquisition of DP Cast. Overhead expenses for the six months ended June 30, 2022, were $1,191,602 as compared to $706,634 for the six months ended June 30,2021, an increase of $484,986.
Research and Product Design ("R&D") Expense
For the three months ended June 30, 2022, R&D expense was $38,688 as compared to $80,867 in the three months ended June 30,2021. For the six months ended June 30, 2022, R&D expense was $61,920 as compared to $130,667 in the six months ended June 30,2021.
Interest income was $20,224 in the three months ended June 30, 2022, compared to $2,656 the year ago fiscal period. Interest expense was $144,728 in the three months ended June 30, 2022, as compared with $26,966 in the three months ended June 30, 2021. All this amount was non- cash interest expense associated with IFRS 16 lease accounting as compared to $13,538 in the three months ended June 30, 2021. In the three months ending June 30, 2021, there was an additional $13,428 of interest expense associated with borrowings under its revolving line of credit facility. Interest income was $22,880 in the six months ended June 30, 2022, compared to $5,313 the year ago fiscal period. Interest expense was $289,033 in the six months ended June 30, 2022, as compared with $47,603 in the three months ended June 30, 2021.
The income tax provision in the three months ended June 30, 2022, was a provision of $59,410 as compared to a credit of $(59,327) in the three months ended June 30, 2021. The income tax provision in the six months ended June 30, 2022, was a provision of $5,654 as compared to a credit of $(85,656) in the six months ended June 30, 2021.
Net loss was $(480,398) in the three months ended June 30, 2022, as compared to net loss of $(447,750) in the three months ended June 30, 2021. Net loss was $(1,183,239) in the six months ended June 30, 2022, as compared to net loss of $(801,611) in the six months ended June 30, 2021.
Omni-Lite Industries Canada Inc. Management Discussion and Analysis For the Three and Six Months Ended June 30, 2022
Basic loss per share was $(0.03) in the three months ended June 30, 2022, as compared to ($0.04) in the three months ended June 30, 2021, based on the weighted average shares outstanding of 15,054,897 compared to 11,333,854 in the three months ended June 30, 2021.
The diluted loss per share was $(0.08) in the six months ended June 30, 2022, compared to ($0.07) in the six months ended June 30, 2021. At June 30, 2022, the diluted weighted average number of shares was 15,045,897 and 2021 (11,333,854). At June 30, 2022, stock options 1,046,000 (676,000 in 2021) and 1,400,000 (1,200,000 in 2021) warrants were excluded in calculating the weighted-average number of diluted common shares outstanding, because the Company was in a net loss position and therefore any exercise would be anti-dilutive.
Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the year. Diluted per share amounts reflect the potential dilution that could occur if options and warrants to issue common shares were exercised. The treasury stock method is used to determine the dilutive effect of stock options and other dilutive instruments, in accordance with standards approved by the Canadian Institute of Chartered Accountants.
The following table summarizes the Company's financial performance over the last eight fiscal quarters. All figures are in US dollars except as noted.
Omni-Lite Industries Canada Inc. Management Discussion and Analysis For the Three and Six Months Ended June 30, 2022
As Omni-Lite's management measures the performance of the Company by certain metrics, including,) Adjusted EBITDA (1) and Adjusted Free Cash Flow (1.) . The calculation of Adjusted EBITDA(1) on a 12-month rolling basis is set out in the following table.
(Recovery) Provision for income tax
Gain on sale of land and building
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Omni-Lite Industries Canada Inc. published this content on 17 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 August 2022 11:23:02 UTC.