TSXV: HEO
Alternext: MNEMO: ALHEO
OTCQX: HEOFF
Key highlights
- 9.3% increase of its revenues to $12.3
M, compared to $11.2 M for the
same period in fiscal year 2015;
- Gross profit before depreciation and amortization at 26.1%,
compared to 27.0% for the same period in fiscal year 2015;
- Adjusted EBITDA1 at $441,669, compared to $900,781 for the same period in fiscal year
2015;
- Net earnings of $52,329, compared
to net earnings of $282,587 for the
same period in fiscal 2015;
- Solid order backlog for water treatment projects stands at
$44.3 M as at November 5,
2015;
- Announced acquisition of Clearlogx, Inc., aimed at
strengthening the business sector dedicated to water treatment
systems.
All amounts in Canadian dollars unless otherwise
stated.
QUEBEC CITY, Nov. 10, 2015 /CNW Telbec/ - (TSXV:
HEO) - H2O Innovation Inc.
("H2O Innovation" or the "Corporation") announces
its results for the first quarter of fiscal year 2016 ended
September 30, 2015. During this quarter, the Corporation's
revenues increased by 9.3% to $12.3
M, up from $11.2 M in the
comparable quarter of the previous fiscal year – generating a gross
profit of 26.1% compared to 27.0% in the first quarter of fiscal
year 2015. The Corporation maintained a positive adjusted EBITDA
for the first quarter ended September 30,
2015. The order backlog for water treatment projects stands
at $44.3 M as at November 5, 2015.
Revenues for the first quarter of fiscal year 2016 totaled
$12.3 M, representing a $1.1 M or 9.3% increase, as compared with
revenues of $11.2 M for the same
quarter of fiscal year 2015. Revenues from water treatment projects
were somewhat stable and reached $7.2
M compared to $7.3 M in the
corresponding period of the previous fiscal year, representing a 1%
decrease. The revenues level maintained during the quarter is a
reflection of the numerous water treatment projects composing our
order backlog, which are reaching different milestones, from
initial design and engineering phases to higher revenue-generating
phases such as manufacturing.
The increase of revenues from projects has been accompanied by
an increase of revenues from sales of specialty products and
services ("SP&S") which reached $5.1 M in this quarter compared with
$3.9 M in the comparable quarter of
the previous fiscal year. "This strong increase of 29.0% in
SP&S revenues is the direct result of investments made during
the last year in our operating and selling functions to support the
growth of this business line", stated Frédéric Dugré, President
and Chief Executive Officer of
H2O Innovation. For the Corporation, it is
still a constant priority to continue to grow the specialty
products and services business.
In this first quarter of fiscal year 2016, the Corporation
generated a 26.1% gross profit before depreciation and
amortization, a lower level than the 27.0% gross profit before
depreciation and amortization generated in the first quarter of
fiscal year 2015. The revenue mix in this quarter shows that
revenues from SP&S still represent a fair proportion of total
revenues compared to the corresponding period of the previous
fiscal year (41.2% in fiscal year 2016 versus 35.1% in fiscal year
2015). However, even though the volume of SP&S sales increased
by additional maple syrup production equipment sales during the
first quarter of fiscal year 2016, the Corporation has recorded
punctually a lower level of sales of specialty chemicals compared
to the corresponding period of the previous fiscal year, creating
pressure on the gross margin.
|
|
CONSOLIDATED
RESULTS
Selected financial
data
|
Three-month
period
ended on September 30,
(Unaudited)
|
|
2015
|
2014
|
|
$
|
$
|
Revenues
|
12,259,328
|
11,219,131
|
Gross profit before
depreciation and amortization
|
3,204,486
|
3,032,951
|
Gross profit before
depreciation and amortization
|
26.1%
|
27.0%
|
Operating
expenses
|
333,980
|
200,486
|
Selling
expenses
|
1,357,733
|
906,289
|
Administrative
expenses
|
1,043,551
|
987,796
|
Research and
development expenses – net
|
84,564
|
39,922
|
Net
earnings
|
52,329
|
282,587
|
Basic and diluted
earnings per share
|
0.003
|
0.014
|
Adjusted
EBITDA
|
441,669
|
900,781
|
The Corporation secured $9.0 M in new bookings for water treatment
projects over the quarter. These new bookings, combined with the
realized revenues from water treatment projects during the quarter,
have brought up the backlog at $38.3 M as at September 30, 2015
compared to $36.1 M as at
September 30, 2014. "We have never been exposed to so many
opportunities of water treatment projects sales. In order to face
this upcoming array of bidding opportunities, we have invested in
SG&A expenses, which proved to be a winning move, as the order
backlog reached $44.3 M as at
November 5, 2015", added Frédéric
Dugré. Our team has demonstrated that we can manage the
execution challenge that comes with such large order backlog and we
are confident that our team is able to achieve even more.
The Corporation's ratio of selling, operating and administrative
expenses ("SG&A") as a whole over revenues amounted to 22.3%
for this quarter, up from 18.7% for the corresponding quarter of
the previous fiscal year. This increase is mostly attributable to
the distributors' event held in August. Management aims to keep the
annual average SG&A ratio around 20% through a tight management
of SG&A expenses and an increase in revenues.
Adjusted EBITDA for the quarter was recorded at $441,669, compared with $900,781 for the same period ended
September 30, 2014. The lower net earnings recorded during the
quarter compared with the net earnings for the corresponding
quarter of the previous fiscal year and the adjustment for the gain
on the purchase price adjustment for the Piedmont's transaction caused the decrease in
adjusted EBITDA.
The net earnings amounted to $52,329 or $0.003 per share for the first quarter of
fiscal 2016 compared with $282,587 or
$0.014 per share for the first
quarter of fiscal 2015. The decrease in net earnings is partly due
to the distributor event, which is held every two years, and to a
higher level of SG&A expenses, aimed to support the constant
growth of the Corporation.
Operating activities used ($227,303) in cash for the period ended
September 30, 2015, compared with $411,225 of cash generated during the
corresponding period ended September 30, 2014. The decline is
mainly attributable to the decrease in net earnings before income
taxes in the first quarter of fiscal year 2016 and to the gain on
purchase price adjustment on the Piedmont's transaction.
The first quarter financial report is available on
www.h2oinnovation.com. 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 for municipal, energy and 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, consumables and couplings. For more information, 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.
__________________________
1 The definition of adjusted earnings before interest,
tax depreciation and amortization (adjusted EBITDA) does not take
into account the Corporation's finance costs – net, stock-based
compensation costs, gain on purchase price adjustment and
unrealized exchange loss. The reader can establish the link between
adjusted EBITDA and net earnings. The definition of adjusted EBITDA
used by the Corporation may differ from those used by other
companies.
SOURCE H2O Innovation Inc.