TSX-V: HEO
Alternext: MNEMO: ALHEO
Key highlights
- 40% increase of its revenues to $48.7
million, compared to $34.8
million in fiscal year 2014;
- Adjusted EBITDA: $2,548,092,
compared to $77,155 in fiscal year
2014;
- Net earnings: $272,425 compared
to a net loss of ($1,456,131) in
fiscal year 2014;
- Innovation: addition of differentiators which generated growth
in 2015: SPMCTM, FiberflexTM,
SmartrekTM;
- Project order backlog: new record high of $44 million as of August
31, 2015.
All amounts in Canadian dollars unless otherwise
stated.
QUEBEC CITY, Sept. 22, 2015 /CNW Telbec/ - (TSXV: HEO) –
H2O Innovation Inc.
("H2O Innovation" or the "Corporation") announces
its results for the fourth quarter and 2015 fiscal year ended
June 30, 2015. H2O
Innovation's fiscal year 2015 results showed revenues of
$48.7 M up from $34.8 M for fiscal year 2014, a 40% increase over
last year. Adjusted EBITDA was $2,548,092 compared to $77,155, for fiscal year 2014. For fiscal year
2015, it represents a ratio of 5% adjusted EBITDA over revenues.
Net earnings were at $272,425
compared to a net loss of ($1,456,131) in fiscal year 2014. "This
significant increase in fiscal year 2015 compared to fiscal year
2014 is due to the important growth of revenues derived from water
treatment projects. It demonstrates the scalability of the
Corporation. Indeed, once the Corporation's fixed costs are
covered, the gross profit directly impacts the adjusted EBITDA.
Therefore, volume of revenues coming from project sales matters,
which is fueled by the important project order backlog", stated
Frédéric Dugré, President and Chief Executive Officer of
H2O Innovation.
In fiscal year 2015 revenues from water treatment projects
increased by 61% at $28.4 M compared
with $17.6 M in fiscal year 2014,
which is a direct result of the conversion of the project order
backlog into revenues. On the other end, the 18% organic growth of
the specialty products and services, which are mainly recurrent
revenues by nature, allowed an improvement of the gross profit
margin at 27.9% compared to 26.6% last year. "The increase of
revenues from sales of specialty products and services reached
$20.3 M in fiscal year 2015 compared
with $17.2 M in fiscal year 2014. It
is the result of our steady efforts aimed at increasing the organic
growth associated with our specialty products offering for both
maple syrup production and maintenance of membrane systems. Our
strategic decisions such as the acquisition of Piedmont Pacific
Corporation Inc. in December 2013,
which is now fully integrated, and the start-up during the current
fiscal year of a new venture in the leasing and operating and
maintenance of water treatment systems also contributed to increase
our revenues", added Frédéric Dugré.
This strategy for organic growth of revenues from sales of
specialty products and services is proven to be winning since it
minimizes the impact of revenue volatility associated with revenues
derived from water treatment projects, it reinforces long-term
relationships with our customers and it maintains a higher gross
profit.
|
|
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CONSOLIDATED
RESULTS
Selected financial
data
|
Three-month
periods
ended on June 30,
(Unaudited)
|
Twelve-month
periods
ended on June 30,
(Audited)
|
|
2015
|
2014
|
2015
|
2014
|
|
$
|
$
|
$
|
$
|
Revenues
|
11,670,028
|
7,896,401
|
48,699,860
|
34,831,514
|
Gross profit before
depreciation and amortization
|
3,467,768
|
2,117,494
|
13,566,370
|
9,250,488
|
Gross profit before
depreciation and amortization
|
29.7%
|
26.8%
|
27.9%
|
26.6%
|
Operating
expenses
|
315,025
|
204,718
|
1,030,099
|
859,483
|
Selling
expenses
|
1,271,641
|
1,071,346
|
4,541,164
|
4,042,511
|
Administrative
expenses
|
1,315,396
|
1,100,644
|
4,776,986
|
4,100,167
|
Research and
development expenses – net
|
91,395
|
21,497
|
265,821
|
220,145
|
Net earnings
(loss)
|
(284,023)
|
(269,242)
|
272,425
|
(1,456,131)
|
Basic and diluted
earnings (loss) per share
|
(0.003)
|
(0.002)
|
0.013
|
(0.084)
|
Adjusted
EBITDA
|
420,590
|
(201,458)
|
2,548,092
|
77,155
|
Adjusted
EBITDA
|
3.6%
|
(2.6%)
|
5.2%
|
0.2%
|
As at June 30, 2015, Corporation's
project order backlog stands at $36.5
M compared to $38.3 M as at
June 30, 2014. It increased at
$44 M after the announcement of $7 M of new bookings on
August 31, 2015. Over the last four
quarters, the Corporation was able to maintain the pace and deliver
its large backlog, while it booked new projects, showing that it
can manage growth and higher volume of productivity in water
treatment projects activities. The bookings over revenues ratio of
the Corporation's stood at 0.9 for fiscal year 2015, compared to
2.4 for fiscal year 2014. Investments in sales force, notably with
the addition of new sales resources in United States and investments into innovative
initiatives are paying off.
The Corporation's ratio of selling, operating and administrative
expenses ("SG&A") as a whole over revenues amounted to 21.3%
for fiscal year 2015, down from 25.9% of the previous fiscal year.
This decrease is attributable to a higher level of revenues derived
from water treatment projects sales. Management is still convinced
that focused investments in SG&A expenses are a trigger to
generate higher level of revenues. The objective is to keep the
SG&A ratio to a level of 20% through a tight monitoring of
SG&A expenses and an increase in revenues.
Working capital increased from $7.4 M as at June 30,
2014 (current ratio of 1.71) to $8.4 M as at June 30,
2015 (current ratio of 1.75). The increase is attributable
to the $1.0 M, $0.3 M and 0.03 M $ increase in accounts
receivable, accounts payable and accrued liabilities and costs
incurred in excess of billings respectively, and the decrease of
$0.7 M, $0.08 M and $0.2
M in inventories, billings in excess of costs incurred and
current portion of long-term debt respectively.
The net debt which stood at $4.1 M
as at June 30, 2015 decreased by
nearly $0.1 M compared to
$4.2 M as at June 30, 2014. This decrease is attributable to
the reimbursement of a portion of the long-term debt, but subdued
by a long-term debt contracted to support the remodeling of our
Ham-Nord premises; more
specifically our office, our maple store and showroom.
Equity stood at $26.0 M as at
June 30, 2015, compared with
$22.6 M as at June 30, 2014. As at June
30, 2015 the net debt equity ratio was 0.16 whereas it was
0.19 as at June 30, 2014, showing
that the Corporation is not over leveraged and has improved its
overall financial situation.
Net cash generated by operating activities amounted to
$2,121,544 in fiscal year 2015
compared to ($2,486,316) of net cash
used by operating activities during the previous fiscal year. This
improvement is attributable to the significant net earnings in
fiscal year 2015 compared to a net loss in fiscal year 2014.
Financial results for the fourth quarter of fiscal year
2015
Revenues for the fourth quarter were up by 48 % to $11.7 M from $7.9 M
for the same quarter of the previous fiscal year. The increase is
explained by the increase of $3.4 M
in revenues from water treatment projects.
For the quarter ended June 30,
2015, the gross profit before depreciation and amortization
increased to reach 29.7%, from 26.8% for the same quarter of the
previous fiscal year.
The fourth quarter SG&A expenses were somewhat higher than
the first three quarters of fiscal year 2015. They stand at
$2.9 M in this current quarter
compared to $2.4 M in the fourth
quarter of fiscal year 2014. The increase is mainly due to hiring
to support operations, to the increase of selling expenses related
to high bidding activities, which includes hiring of resources in
our project sales team, and related to commissions recorded for
bookings secured during the quarter.
Adjusted EBITDA for the fourth quarter was $420,590 compared to ($269,242) last fiscal year. As for the net loss
of $284,023 for this quarter, it is
caused by the increase of the SG&A expenses explained in the
previous paragraph.
Strategic outlook for fiscal year 2016
"We begin this fiscal year 2016 with confidence as we are
presenting the best financial performance of our history and an
important projects order backlog to start this coming fiscal year.
The current pipeline of water treatment projects remains very rich
in opportunities which should allow the Corporation to renew its
project order backlog and support its revenue growth. We maintain
strong bidding activities and business development mainly in
Canada and in United States. The Corporation is notably
capturing new bookings in California and Texas where the severe drought and population
increase generate massive investments in water treatment
infrastructures. The business activity in the United States is exceeding the noticeable
slowdown in the Canadian energy market. The strategic investments
we have made in 2014 and 2015 are paying off and they will allow us
to continue towards this direction." stated Frédéric
Dugré.
The Corporation shall also benefit from the growth of revenues
coming from its specialty products and services. In addition to the
growth associated with revenues from the maple syrup production
equipment, the specialty chemical products PWT and Piedmont Pacific
equipment expected in fiscal year 2016, the Corporation will also
benefit from a complete fiscal year of revenues coming from its new
venture in the leasing and operating and maintenance of water
treatment systems, and revenues coming from the success of its
SPMCTM software. The revenues of specialty products and
services are mainly recurrent by nature which stabilizes the gross
profit margin and brings predictability in the business model.
The annual financial report is available on
http://www.h2oinnovation.com and on NYSE Euronext Alternext's
site. Additional information on the Corporation is also available
on SEDAR (www.sedar.com).
Prospective disclosures
Certain statements set forth in this press release regarding the
operations and the activities of H2O Innovation as
well as other communications by the Corporation to the public that
describe more generally management objectives, projections,
estimates, expectations or forecasts may constitute forward-looking
statements within the meaning of securities legislation.
Forward-looking statements concern analysis and other information
based on forecast future results, performance and achievements and
the estimate of amounts that cannot yet be determined.
Forward-looking statements include the use of words such as
"anticipate", "if", "believe", "continue", "could", "estimate",
"expect", "intend", "may", "plan", "potential", "predict",
"project", "should" or "will", and other similar expressions, as
well as those usually used in the future and the conditional,
notably regarding certain assumptions as to the success of a
venture. Those forward-looking statements, based on the current
expectations of management, involve a number of risks and
uncertainties, known and unknown, which may result in actual and
future results, performance and achievements of the Corporation to
be materially different than those indicated. Information about the
risk factors to which the Corporation is exposed is provided in the
Annual Information Form dated September 22,
2015 available on SEDAR (www.sedar.com). Unless required to
do so pursuant to applicable securities legislation,
H2O Innovation assumes no obligation to update or
revise forward-looking statements contained in this press release
or in other communications as a result of new information, future
events and other changes.
About H2O Innovation
H2O Innovation designs and provides state-of-the-art,
custom-built, and integrated water treatment solutions based on
membrane filtration technology to municipal, energy & natural
resources end-users. Also, directly and through its affiliates,
H2O Innovation provides services and products
complementary to its membrane filtration and reverse osmosis
systems. These products consist of a complete line of specialty
chemicals and consumables and a complete line of couplings. For
more, visit 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.
SOURCE H2O Innovation Inc.