QUEBEC, QUEBEC 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.
The TSX Venture Exchange and the Alternext Exchange assume no
responsibility for the relevance or accuracy of this press
release.
Contacts: H2O Innovation Guy Goulet Chairman of the Board and
CEO 450-227-1150 ggoulet@h2oinnovation.com H2O Innovation Frederic
Dugre President and COO 418-688-0170 fdugre@h2oinnovation.com
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