Xebec Provides Updated 2020 Guidance

MONTREAL, March 12, 2021 (GLOBE NEWSWIRE) -- Xebec Adsorption Inc. (TSX: XBC) (“Xebec”), a global provider of clean energy solutions, announced today that the Company is in the process of finalizing its financial results for the fourth quarter and year ended December 31, 2020, which will be released on March 25^th, 2021. As a result of extraordinary items in its Cleantech business segment and due to the impact of the Covid-19 pandemic, Xebec no longer expects to achieve its previous full year 2020 revenue guidance of $70 to $80 million. While the financial review remains ongoing, revenues for the full year are expected to be approximately $57 million. Full year 2020 gross margin is expected to be in the range of negative $1.0 million to positive $1.0 million. SG&A expenses in Q4 2020 are expected to be between $15 and $16 million. This increase is mainly due to transaction expenses, provision for bad debt, and an accelerated amortization amount of capitalized R&D expenses. Final figures are subject to completion of the Company’s annual audit.

The difference in revenues is mainly due to the following extraordinary items, all of which occurred within Xebec’s Cleantech business segment:

List of Extraordinary Items		Impact on Revenue
Xebec underwent a detailed review of its fixed price contracts for renewable natural gas (RNG) projects, where revenues are recognized based on the percentage of completion method. As a result of its review, Xebec determined that: Previously incurred expenses represented a lower percentage of total costs than previously estimated, and previously recognized revenue is required to be adjusted to reflect the revised percentage of completion for contracts that remain profitable under Xebec's updated estimates. Some of the contracts previously estimated to be profitable are now projected to result in losses. The percentage of completion method requires that the losses on such contracts be recognized immediately.		$5.6 Million
Cancellation of the sale of two systems for which approximately 50% of the revenue was already recognized based on the percentage of completion method.		$5.4 Million
Reversal of revenue previously recognized based on the percentage of completion method due to the deteriorating financial position of a client where collection for payment became uncertain.		$1.9 Million

Xebec launched and delivered its first fully containerized and standardized BGX Biostream unit for small-scale biogas upgrading applications in 2020. The Company expects that this new product will lead to more predictable cost management and improved gross margins for RNG projects going forward. Xebec continues to see a positive backdrop for the industry as organizations and governments around the world aim to manage organic waste more effectively and decarbonize their natural gas supplies.