H2O Innovation Inc. (TSX VENTURE: HEO)(ALTERNEXT: MNEMO:ALHEO)
- Sales increase 51.5% to $8.4 million, up from $5.5 million in
fiscal 2009.
- Gross margin up at 29.8%, from 24.4% in fiscal 2009.
- Operating earnings of $48,320, compared to operating loss of
($390,005) in fiscal 2009.
- EBITDA slightly down at ($72,860) compared to $29,927 in
fiscal 2009 (including the effects of a mostly unrealized foreign
exchange loss).
- Net loss of ($642,688), compared to ($409,271) in fiscal 2009
(including the effects of a mostly unrealized foreign exchange
loss).
- Operating activities used $245,232 in cash for the period
compared to $49,640 in cash generated in fiscal 2009.
H2O Innovation Inc. ("H2O Innovation" or the "Company")(TSX
VENTURE: HEO)(ALTERNEXT: MNEMO:ALHEO), a complete water treatment
solutions company providing custom designed water treatment systems
along with operating and maintenance solutions, announces today its
results for the first quarter of fiscal year 2010. During the
quarter, H2O Innovation registered solid sales while seeing EBITDA
decrease very slightly at ($72,860) (increase at $437,404 when
excluding the effect of a mostly unrealized foreign exchange
loss).
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CONSOLIDATED RESULTS Three-month period ending
(Unaudited) September 30
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2009 2008
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$CAD $CAD
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Sales 8,406,610 5,549,457
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Gross margin 29.8% 24.4%
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Operating earnings (loss) 48,320 (390,005)
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EBITDA (72,860) 29,927
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EBITDA excluding unrealized
foreign exchange loss 437,404 120,041
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Net loss for the period and
comprehensive results (642,688) (409,271)
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Basic and diluted net loss per share (0.012) (0.009)
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Cash generated (used) from (by)
operating activities (245,232) 49,640
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For the three-month period ended September 30, 2009, sales
increased 51.5% to reach $8,406,610 compared to $5,549,457 for the
same three-month period ended September 30, 2008. 69% of this
increase comes from organic growth; the remaining 31% is related to
the acquisition of Professional Water Technologies ("PWT")
concluded in June of the previous fiscal year. Including the effect
of a non-recurring event realized during the quarter, gross margin
amounted to 29.8%, compared to a gross margin of 24.4% for the
corresponding quarter of the previous fiscal year. Operating
earnings for the quarter were $48,320, compared to an operating
loss of ($390,005) for the same period of the previous fiscal year.
EBITDA for the quarter was ($72,860), compared to $29,927 for the
same period ended September 30, 2008. Excluding unrealized foreign
exchange loss, EBITDA for the quarter was $437,404. During the
quarter, H2O Innovation recorded a net loss of ($642,688) ($0.012
per share), compared to a net loss of ($409,271) ($0.009 per share)
for the corresponding quarter of the previous fiscal year. The
sales backlog stood at $22.8 M as at September 30, 2009. The
Company's sales backlog is uniquely comprised of systems and
equipment sales and does not include sales of services or
consumable products.
Before the change in operating working capital, operating
activities used $245,232 in cash for the period ended September 30,
2009 compared to $49,640 in cash generated for the comparable
period ended September 30, 2008.
"Although the results of the first quarter of fiscal 2010 are
somewhat below our expectations due to the economic climate that
both slowed down our system sales and increased the U.S. dollar's
volatility, the Company has remained solidly committed to following
its long term development strategy. As in the previous quarters of
this recession, Management has remained focused on long-term growth
and has taken actions to maximize the Company's results and
generate sustained value for shareholders. One of these actions has
been to accelerate the efforts initiated in fiscal 2009 to increase
the proportion of revenues derived by the sale of services and
consumable products. This proactive and strategic action has been
taken to reduce the business risk of over-reliance on the sale of
equipments and systems-which are somewhat less predictable in
nature-and to maintain a healthy gross margin" stated Frederic
Dugre, President and CEO of H2O Innovation Inc.
RECENT HIGHLIGHTS
Sales of services and consumable products represent a growing
proportion of total sales
For the quarter, sales of services and consumable products
(water additives, membrane cleaners, replacement parts, membranes,
cartridges) amounted to $2,3 M, representing 27% of H2O
Innovation's total sales for the quarter, compared to 18% at 2009
fiscal year end. Management has stated its mid-term objective to
see sales of services and consumable products represent 30% of the
Company's total revenue and actions were undertaken during the
quarter-as in the previous ones-to reach this goal.
Integration of PWT progressing as planned
The first quarter of the 2010 fiscal year was also marked by the
beginning of the integration of PWT, acquired in June 2009.
Management finds the integration to be going along as planned and
to have started to show the first signs of its potential. Already,
PWT's strong brand name and long standing customer relationships,
coupled with H2O Innovation's client base and organizational
support, have helped secure new customers and repeat orders while
cementing existing client relationships. More noticeably during the
period, PWT made promising forays in additional industrial sectors
in Mexico-where it has been active for numerous years-by signing
new customers. It also signed its first contract to supply water
additives for membrane filtration systems in Ecuador, a first in
this market for PWT.
Increasing market presence
The combined presence of H2O Innovation and PWT has made itself
felt more significantly in the global water treatment industry. H2O
Innovation has collected numerous mentions in leading trade
publications during the quarter and, shortly following the
quarter's end, has participated in two of the premiere trade shows
of the industry, WEFTEC.09 in Orlando, Florida and IDA World
Congress 2009 on Desalination and Water Reuse in Dubai, UAE.
"H2O Innovation is committed to progressively increase its
international activities by seeking additional overseas sales of
systems while penetrating new countries with consumable products.
With the addition of PWT's sales-which are mostly international-H2O
Innovation is now recording close to 10% of its sales outside North
America, significantly more than the one percent level recorded in
fiscal 2009. We also remain on the look-out for potential
acquisitions or strategic partnerships" concluded Frederic
Dugre.
The first quarter financial report 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 Tuesday
November 10, 2009 at 10 A.M. (Eastern time) to review the financial
results for the first quarter. The call will begin with a
presentation by Frederic Dugre, President and Chief Executive
Officer of H2O Innovation, and Annie Lemieux, Chief Financial
Officer of H2O Innovation. A question-and-answer period will
follow. A slide presentation intended for simultaneous viewing
during the call will be available this morning on the Financial
Reports and Webcasts page of the Investors section of the Company's
website.
Shareholders, analysts and institutional investors are invited
to participate. The numbers to dial for access are 514-392-1478
(Montreal area) or the North American toll-free number
1-866-225-6564. International participants are invited to dial +1
514-392-1478.
Media representatives and other interested parties may
participate in listen only mode or may listen to the live webcast
of the conference call (audio and slides) 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). For more information about H2O
Innovation, visit the Company's website at
www.h2oinnovation.com
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 1-418-688-0170
ext. 329 guillaume.ducharme@h2oinnovation.com
www.h2oinnovation.com
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