- Annual sales increase 189% to $31.2 million, up from $10.8
million in 2008.
- Gross margin for the year slightly down at 23.8%, from 24.8%
in 2008.
- Annual EBITDA increases to $1.1 million compared to ($3.0
million) in 2008.
- Major reduction of net loss for the year at ($65,148),
compared to ($3.6 million) in 2008.
- Operating activities generated $1.05 million in cash for the
year compared to a $2.35 million use of cash in 2008 - a
significant reversal.
All amounts in Canadian dollars unless otherwise stated.
H2O Innovation Inc. ("H2O Innovation" or the "Company")(TSX
VENTURE: HEO)(ALTERNEXT: MNEMO:ALHEO) announces today its results
for the fourth quarter and 2009 fiscal year ended June 30, 2009.
During the year, H2O Innovation registered record sales, solid
growth in EBITDA and cash generated from operating activities while
having significantly reduced its net loss to $65,148.
During the fiscal year ended June 30, 2009, the Company's sales
reached $31,215,790, a 189% increase compared to $10,813,536 for
the corresponding fiscal year in 2008. Gross margin was at 23.8%
for the fiscal year 2009, slightly down from 24.8% for the same
period in 2008. EBITDA (earnings before interest, taxes,
depreciation and amortization) for fiscal 2009 was $1,115,441,
compared to a ($3,026,444) loss before interest, taxes,
depreciation and amortization in fiscal 2008. The Company recorded
a net loss of ($65,148) ($0.001 per share) for the 2009 fiscal
year, significantly lower than the net loss of ($3,633,897) ($0.100
per share) recorded in fiscal 2008.
Before the change in operating working capital, operating
activities generated $1,052,194 in cash for the 2009 fiscal year
compared to a $2,347,813 use of cash for the 2008 fiscal year.
"We are satisfied with the financial results of fiscal 2009
given the challenging economic climate that marked most of the
year. This year was a significant one in the history of H2O
Innovation with a first-ever EBITDA, positive cash flows from
operations, and strong growth in sales. We also registered a net
profit for the first two quarters in our history and substantially
reduced the annual net loss by 98% compared to results from the
previous fiscal year. This noteworthy improvement in our results is
a testament to the hard work of our employees, management team, and
Board of Directors, who have rallied around a common strategy and
have always given their all to meet our goals" stated Frederic
Dugre, President and CEO of H2O Innovation.
CONSOLIDATED RESULTS
---------------------------------------------------------------------------
Three-month period Twelve-month period
ending June 30 ending June 30 (audited
(unaudited results) results)
---------------------------------------------------------------------------
2009 2008 2009 2008
---------------------------------------------------------------------------
$CAD $CAD $CAD $CAD
---------------------------------------------------------------------------
Sales 7,322,452 3,673,947 31,215,790 10,813,536
---------------------------------------------------------------------------
Gross margin 1,306,205 1,128,182 7,421,868 2,676,986
---------------------------------------------------------------------------
Gross margin 17.8% 30.7% 23.8% 24.8%
---------------------------------------------------------------------------
EBITDA (1,301,901) (1,228,877) 1,115,441 (3,026,444)
---------------------------------------------------------------------------
Net loss and
comprehensive results (1,067,448) (1,452,263) (65,148) (3,633,897)
---------------------------------------------------------------------------
Basic and diluted net
loss per share (0.022) (0.037) (0.001) (0.100)
---------------------------------------------------------------------------
Cash generated from
operating activities (393,968) (864,171) 1,052,194 ( 2,347,813)
---------------------------------------------------------------------------
ANNUAL HIGHLIGHTS & REVIEW OF KEY DEVELOPMENTS
Better balance of sales between water treatment applications
Over the year, H2O Innovation stepped up its efforts to
diversify and balance its sales of water treatment systems between
applications for drinking water production, water reclamation,
wastewater treatment, and the production of industrial process
water, in particular with the acquisition of Itasca Systems Inc.
("Itasca") in July 2008. This diversification brought a reduction
in the Company's exposure to the risk of overreliance on a single
market segment or application, while better balancing its gross
margin on a yearly basis. Nonetheless, a disproportionally high
level of municipal revenues recognized during the fourth quarter of
fiscal 2009-compared to revenues from industrial projects-has
contributed to the reduction of the quarter's gross margin in
comparison with the same quarter of the previous fiscal year.
Evolution of the business model
Fiscal 2009 has also brought evolution to H2O Innovation's
business model. Through a set of actions that includes the
acquisition of Professional Water Technologies ("PWT") from Vista,
California in June 2009, H2O Innovation has moved from mainly being
a manufacturer of water treatment systems and equipments to being a
more complete water treatment solutions company. With its two lines
of business-Capital Equipment & Systems Sales and After-Sales
Services, Consumables & Maintenance Solutions-H2O Innovation's
business model now enables it to cover the complete life cycle of
membrane filtration and biological wastewater treatment systems.
Management believes that the combination of both business lines
with a sound diversification of markets and applications maximizes
the Company's sales growth potential for the years ahead.
Increased revenues from after-sales, consumables and maintenance
solutions
With the acquisition of PWT late in fiscal 2009, H2O Innovation
has added a unique proprietary product line of specialty chemicals
for membrane pre-treatment and conditioning that significantly
enhances its pre-existing line of after-sales services, consumables
and maintenance solutions. The Company can now count on a growing
stream of revenues from after-sales services, consumables and
maintenance solutions-revenues that are generally recurring in
nature.
A significant presence in North America
In fiscal 2009, the Company recorded for the first time a
majority of its sales in the United States while a minor portion
was recorded in Canada. The Company's increased business presence
in the United States-coupled with its manufacturing capacity in
Ham-Nord (Quebec), Minnesota, and California-have positioned it to
benefit from the municipal infrastructure investment programs set
up by regional and national governments. These programs have only
began to make themselves felt at the end of fiscal 2009 and
Management believes their effects to be more significantly felt in
the 2010 and 2011 fiscal years.
First steps of increased international activities
With the acquisition of PWT came the addition of a distributor
network that extends across Asia, Europe, India, and South America.
With this addition and the first sizeable sales in Algeria and
Egypt, H2O Innovation paved the way this year for operations
outside of North America. For 2010 and beyond, Management
anticipates the Company to continue to grow its international
activities, using potential platforms such as strategic
partnerships or acquisitions, strongly supported by the addition of
quality resources dedicated to international business
development.
"On the strength of these annual financial results-despite
fourth quarter results that are somewhat below our expectations due
to an increasingly challenging economic climate-we can embark on
the 2010 fiscal year with confidence and eagerness to succeed
thanks to our renowned experience and expertise, our strong
foothold in North America and our growing international activities"
concluded Frederic Dugre.
Financial results for the fourth-quarter of 2009
For the three-month period ended June 30, 2009, sales increased
significantly to reach $7,322,452 compared to $3,673,947 for the
same three-month period ended June 30, 2008. 61% of this increase
comes from organic growth; the remaining 39% is related to the
acquisitions of Itasca in July 2008 and PWT in June 2009. Gross
margin for the fourth quarter of fiscal 2009 amounted to 17.8%,
compared to a gross margin of 30.7% for the corresponding quarter
of the previous fiscal year. The decrease in gross margin for the
quarter compared to the corresponding quarter of the previous
fiscal year is caused by a combination of factors including a
non-recurring increase in systems repair and improvement charges
originating from targeted recall of some key parts of specific
wastewater treatment systems delivered prior to the acquisition of
a U.S. subsidiary. This voluntary recall was initiated and
completed during the fourth quarter of fiscal 2009. Secondly, due
to a more sustained impact of the recession on the industrial
sector, a short-term imbalance of municipal vs. industrial revenues
recognized during the quarter has also contributed to the reduction
of the Company's gross margin for the quarter compared to the
corresponding quarter of 2008.
EBITDA for the quarter was ($1,301,901), compared to
($1,228,877) for the same three-month period ended June 30, 2008.
During the quarter, H2O Innovation recorded a net loss of
$1,067,448 ($0.022 per share), compared to a net loss of $1,452,263
($0.037 per share) for the corresponding quarter of 2008. This net
loss for the fourth quarter of fiscal 2009 comes after two
consecutive quarters of net income. The Company's sales backlog
stood at $22.5 M as at June 30, 2009.
Before the change in operating working capital, operating
activities used $393,968 in cash for the three-month period ended
June 30, 2009 compared to an $864,171 use of cash for the
comparable three-month period ended June 30, 2008.
Restatement of 2008 financial statements
In the context of the preparation of the financial statements
for the year ended June 30, 2009, management identified that the
comparative figures presented in the financial statements for the
year ended June 30, 2008 did not recognize liabilities on future
income taxes related to the differences between accounting and
fiscal considerations following the acquisition of Wastewater
Technology Inc., in April 2008.
Consequently, the Company is restating the comparative figures
of the financial statements for the year ended June 30, 2008 and,
as a result of such restatement, the balance sheet of the Company
for said period was modified to account for a future tax liability
of $1,547,208 and an increase of the goodwill associated thereto of
$1,155,878, of patents of $339,839 and distribution network of
$51,491. These adjustments have no impact on the consolidated
statement of operations and consolidated statements of cash
flows.
The annual financial report including Management's Discussion
and Analysis is available on the Company's website
(www.h2oinnovation.com) and on Alternext's site (www.alternext.fr).
Additional information on the Company is also available on SEDAR
(www.sedar.com).
Conference call and webcast
H2O Innovation will hold a conference call today Monday
September 28, 2009 at 10:30 A.M. Eastern to review the financial
results for fiscal 2009. The call will begin by a presentation by
Management which will be followed by a question-and-answer period.
Shareholders, analysts and institutional investors are invited to
participate. The numbers to dial for access are 514-392-1478 in the
Montreal area or the toll-free number 1-866-223-7781 in North
America. Overseas callers dial +1 514-392-1478 for access. Media
representatives and other interested parties may participate in
listen only mode or may listen to the live webcast of the call
accessible through H2O Innovation's website at
www.h2oinnovation.com. The webcast will remain available for replay
on the Company's website for 90 days in the Investors section.
Prospective disclosures
This press release may contain prospective disclosures
representing current expectations of H2O Innovation and are subject
to certain risks and uncertainties. For details of these risks and
uncertainties please refer to the Company's Annual Information Form
dated September 28, 2009 available on SEDAR (www.sedar.com). H2O
Innovation rejects any obligation to revise or update the
prospective disclosures contained in this press release.
About H2O Innovation
Exclusively dedicated to water treatment, H2O Innovation is
establishing itself as a key player in sustainable development and
the field of clean technologies. H2O Innovation designs, develops,
produces, and integrates state-of-the-art custom-built water
treatment systems for the production of drinking water, the
reclamation of water, the treatment of wastewater and industrial
process water in the municipal, commercial, industrial, mining, and
energy markets. Additionally, the Company offers complete operating
and maintenance solutions for membrane filtration and reverse
osmosis systems. H2O Innovation has approximately 100 employees and
eight offices including three manufacturing and assembly plants in
Canada and the United States. Shares of H2O Innovation are listed
on the TSX Venture Exchange (HEO) as well as on the NYSE Euronext
Alternext Exchange (MNEMO: ALHEO).
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) nor the Alternext Exchange accepts responsibility
for the adequacy or accuracy of this release.
Contacts: H2O Innovation Inc. Guillaume Ducharme 418-688-0170
ext. 329 418-688-9259 (FAX) guillaume.ducharme@h2oinnovation.com
www.h2oinnovation.com
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