H2O Innovation (2000) Inc. - (the "Company" or "H2O Innovation")
(TSX VENTURE: HEO) (ALTERNEXT:MNEMO:ALHEO) announces the disclosure
of its results for the year ended June 30, 2008 and the fourth
quarter results for the same year. During the fiscal year
2007-2008, the Company sets a new sales record and reached a
progression of 6.9 points of its gross margin compared to the
previous fiscal year.
CONSOLIDATED RESULTS
3 months ended Fiscal year ended
June 30 June 30
(unaudited results) (audited results)
2008 2007 2008 2007
$CAN $CAN $CAN $CAN
Sales 3,673,947 1,903,995 10,813,536 7,050,612
Gross margin 1,128,182 (211,543) 2,676,986 1,262,674
Net loss (1,452,263) (1,735,005) (3,633,897) (2,889,498)
Basic and diluted
loss per share (0,037) (0,063) (0,100) (0,117)
Strong sales growth: + 53.4%
Sales, totaling $10.8M, for the fiscal year ended June 30, 2008
were up by 53.4% compared to $7.0M for the previous year ended on
June 30, 2007. Sales for the fourth quarter of 2008 reached $3.7M
compared to $2.8M for the previous quarter and $1.9M for the fourth
quarter of fiscal year 2007. As of June 30, 2008 the order backlog
totalized $20.0M compared to $14.0M on June 30, 2007, which
represents a 43.0% increase in one year.
The 53.4% growth in sales for the 2007-2008 fiscal year over the
previous year is due to the completion of municipal contracts. With
its latest acquisitions, Sigma Environmental Solutions Inc.,
Wastewater Technology Inc., and most recently, on July 3, Itasca
Systems Inc. ("Itasca"), H2O Innovation's range of operations now
covers a significant part of North America and the Company's
integration efforts and sharing of knowledge, started several
months earlier, are beginning to bear fruits.
6.9 points increase of its gross margin
For the fiscal year ended June 30, 2008, the Company's gross
margin reached 24.8% of its sales, compared to 17.9% in 2007, which
represents a 6.9 points increase. For 2008 fourth quarter, the
gross margin reached 30.7% compared to 22.3% for the previous
quarter and (11.1%) for the fourth quarter of fiscal year 2007.
Operating expenses
During the fiscal year ended June 30, 2008, operating, selling,
administrative and general expenses reached $4.9M or 44.9% of the
sales compared to $3.5M, or 49.7% of the sales in 2007. For the
2008 fourth quarter, operating expenses, selling, general and
administrative expenses reached $1.7M, or 46.8% of the sales
compared to $1.2M, or 41.6% of the sales for the previous quarter
and $1.0M, or 50.0% for the fourth quarter of fiscal year 2007.
Net Loss
H2O Innovation finished the 2008 fiscal year with net loss of
$3.6M compared to $2.9M for the same period ended June 30, 2007.
This nominal increase of $744,399 for the twelve-month period ended
June 30, 2008 was due to a number of factors, including a complete
reorganization at the senior management level, the integration of
newly acquired companies, and the Company's positioning on new
markets in Western Canada, United-States, and abroad. If non
recurring expenses of about $655,000 are excluded, the Company is
at essentially the same loss level as on June 30, 2007. These non
recurring expenses include a severance pay for an executive
($250,000), a stock-based compensation for past services
($280,000), expenses for acquisitions not completed ($60,000), and
various expenses for restructuring and integrating the new
subsidiaries ($65,000).
RECENT EVENTS
A portfolio completed with industrial water treatment
technologies
On July 3, 2008, the Company completed the acquisition of
Itasca. This third acquisition in the United States will allow H2O
Innovation to more rapidly increase its gross operating margins and
benefit from an industrial customer base in a geographic area that
has yet to be exploited by the Company: the North American Midwest.
This transaction increases annual recurring income tied to
after-sales service, maintenance products, and replacement parts by
$2.3M. Moreover, this transaction adds a 3,400 square meter
production platform, in Minnesota, to the 6,000 square meters
already in Quebec.
Backlog of $21.0M (as at August 26, 2008)
As of August 26, 2008, the latest order backlog of the Company
reached $21.0M compared to $14.0M as of June 30, 2007. This
increase of 50.0% in 14 months is the result of the Company's
strong organic and external (acquisitions) growth. The organic
growth reached $4.0M or 28.5% and the external growth reached $3.0M
or 21.5%.
About 75.0% of the contracts are related to the municipal
market. Therefore, it appeared essential and strategic to
anticipate a diversification of the Company's customer base.
Following this approach, H2O Innovation completed the acquisition
of Itasca on July 3, 2008, in order to rapidly expand the Company's
presence in fast-growing industrial sectors such as energy and
agrifood.
To support its strong growth, H2O Innovation has also recently,
during the first quarter of the new fiscal year, signed two debt
financing agreements for a total of $5.0M.
2009 OBJECTIVES
The Company is now integrating and consolidating its operations
in order to generating a positive working capital. H2O Innovation
has already begun to integrate the most recent subsidiaries
acquired in order to optimize human and material resources. In this
regard, as of the first quarter of 2008-2009 the Company has
already proceeded with the restructuring and reallocation of
certain costs with a view of reducing fixed sales and
administrative costs by $750,000 for the next fiscal year.
Also, for the fiscal year 2009, H2O Innovation's management has
settled four business objectives:
- Reach a sales level that can generate a positive cash flow
- Raise the beneficial growth margin on its sales
- Reduce the percentage of its operating, selling,
administrative and general expenses (percentage of its sales)
- Increasing its backlog
The Financial Annual Report for the fiscal year ended June 30,
2008 can be found on the Company's web site (www.h2oinnovation.com)
and Alternext's web site (www.alternext.fr) Also, additional
information on the Company can be found on SEDAR at
(www.sedar.com)
About H2O Innovation
H2O Innovation's mission is to design, develop, produce and
integrate state-of-the-art, environmental friendly products
dedicated to the production of drinking water, the treatment of
wastewater and industrial processed water, and the reclamation of
water.
Prospective disclosures
This press release may contain prospective disclosures
representing current expectations of H2O Innovation and are subject
to certain risks and uncertainties. H2O Innovation 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 (2000) Inc. Frederic Dugre President
and Chief Executive Officer 418-688-0170 dugre@h2oinnovation.com
H2O Innovation (2000) Inc. Annie Lemieux, CA Chief Financial
Officer 418-688-0170 alemieux@h2oinnovation.com H2O Innovation
(2000) Inc. Stephen Gauthier, CFA Senior Vice-president Corporate
financing and Investors relations 514-515-9930
sgauthier@h2oinnovation.com
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