H2O Innovation Announces its Third Quarter Results 2007-2008
May 15 2008 - 7:00AM
Marketwired Canada
Management of H2O Innovation ("H2O") today announced the third-quarter results
for 2007-2008.(TSX VENTURE:HEO) During this period, the Group recorded strong
sales growth, particularly in the promising U.S. market, and a gross margin over
20% for the third consecutive quarter.
CONSOLIDATED RESULTS
(Unaudited)
Three-month period Nine-month period
ending March 31 ending March 31
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2007 2006 2007 2006
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CAD CAD CAD CAD
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Sales 2,807,212 2,018,674 7,139,589 5,146,617
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Gross margin 625,131 676,960 1,548,804 1,474,217
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Net loss for the period and
comprehensive results (454,959) (204,176) (2,181,634) (1,154,493)
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Basic and diluted net loss
per share (0.012) (0.008) (0.060) (0.049)
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Note: The "extended results" item corresponds to the variation of
shareholders' equity from operations and other events and
circumstances unrelated to the shareholders. These operations
and events include the unrealized gains and losses following
fluctuations in the fair value of investments available at
the time of sale and the conversion of autonomous foreign
subsidiaries.
Strong sales growth: +39%
The name recognition of the H2O Innovation Group, the recognition of its
know-how in the treatment of drinking water, wastewater and industrial process
water, and the territorial development strategy conducted by the Group within
North America are beginning to show results. Sales are up 39% in the 3rd quarter
ended on March 31, 2008 and 38% over the first nine months of the year, compared
to the same periods in 2007.
70% of these sales come from US contracts, a trend which should accentuate in
the quarters ahead. This performance validates the development strategy adopted
by H2O in the United States, where the demand is exponential.
A gross margin exceeding 20% for the 3rd consecutive quarter
The major cost control efforts initiated since the beginning of 2007-2008
allowed the Group to generate a 22% gross margin in the 3rd quarter and over the
first nine months of the current year.
The gross margin has been maintained at over 20% since the 1st quarter of
2007-2008, particularly due to the better purchasing conditions obtained by H2O
from its suppliers.
The increase in the net loss over the quarter ended March 31 is essentially due
to operating, selling and administration expenses and overhead, and the non-cash
expenditure of CAN$151.116 after the award of stock options to the Company's
directors and key employees and higher depreciation and amortization.
RECENT EVENTS
An enriched wastewater treatment technology portfolio
Last April the Group acquired Wastewater Technology Inc. (WTI), an American
company which owns patented wastewater treatment technologies, including a
membrane bioreactor ("MBR") technology that meets increasingly strict
environmental standards.
On the strength of its multiple achievements (over 70 wastewater treatment
systems installed throughout the United States, Eastern Europe and China) and
its experience and know-how, WTI gives H2O access to new business opportunities
for wastewater treatment in high-growth sectors. Over the past two years, WTI
realized average sales over CAN$2.6 million.
A beefed-up geographic presence in the promising U.S. market
WTI is the second acquisition, with MSI, realized by the Group in the United
States, a particularly promising market for municipal and industrial contracts.
This acquisition also allowed H2O to develop its sales force, already well
established in California and Florida, by the addition of WTI's network of 15
manufacturer's agents and representatives located throughout the United States.
A backlog of CAN$17.4 million - (May 14th, 2008)
On the strength of more extensive geographic coverage and an impressive list of
achievements for North American municipalities, new municipal and industrial
contracts were added to the backlog during the 3rd quarter. Most of them will be
carried out in the United States, a promising market for membrane filtration
technologies.
Seven new contracts with a total value of CAN$5.6 million were obtained in March
and April 2008, validating the relevance of the offer developed by H2O.
These contracts concern :
In Canada :
- The supply of components and the specialized on site services for the
installation of a water treatment system in Alberta, for the company Primewest
Energy Inc.;
- The design and manufacture of a water purification system to be installed in
an oil industry construction camp near Calgary, Alberta;
- The replacement of outdated water treatment facilities of two native
communities in Manitoba;
- The supply of a BiH2Omobile-type mobile wastewater treatment unit to a mining
camp in northern Quebec.
In the United States :
- The design and manufacture of drinking water production units in Arizona;
- The design and manufacture of the Mainland Water Treatment RO Expansion
Project for Currituck County, North Carolina;
- The installation of a low pressure membrane filtration system in the city of
Oxnard, northwest of Los Angeles, California, which will recycle wastewater
using extremely effective membrane technologies. It is worth noting that water
recycling/reuse is currently the fastest growing segment of the industry.
The backlog, on the date of publication of these financial statements (May 14th,
2008), amounts to CAN$17.4M.
On the international level, the Company is pursuing its commercialization
approaches via local partners on promising markets with major seawater
desalinization needs, such as Algeria, Egypt, Morocco, Senegal and Eastern
Europe.
The third quarter financial report is available on the Company web site
(www.h2oinnovation.com) and on Alternext web site (www.alternext.fr). Additional
information on the Company is also available on SEDAR (www.sedar.com).
About H2O
H2O mission is to develop, manufacture and market innovative,
environment-friendly, products intended for drinking water production,
wastewater treatment and industrial processes.
Prospective disclosures
This press release may contain prospective disclosures representing current
expectations of H2O and are subject to certain risks and uncertainties. H2O
rejects any obligation to revise or update the prospective disclosures contained
in this press release.
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