H2O Innovation Expands Texas O&M Business Platform with Gulf Utility Service, Inc. Acquisition
July 02 2020 - 8:00AM
(TSXV: HEO) – H2O Innovation Inc. (“H2O Innovation” or the
“Corporation”) is proud to announce the acquisition of Gulf Utility
Service, Inc. (“GUS”), a company offering complete operation,
maintenance and management services to water and wastewater
infrastructures for different type of clients such as
municipalities, municipal utility districts (commonly known as MUD)
and public water systems in the State of Texas (United States). The
total purchase price amounts to US$2.750 M (CA$3.713 M),
equivalent to 5 times GUS’ EBITDA on December 31, 2019. A
conference call will be held today at 10:00 a.m. (Eastern Time) to
present the rationale of the acquisition to shareholders and
analysts.
With over 20 years of experience in the operation and
maintenance (“O&M”) sector of water and wastewater treatment
systems, GUS offers its services to approximately 40 municipal and
private customers, servicing more than 10,000 users. These
additional clients and users are added to the Corporation’s O&M
customer base in Texas, totaling now 85 customers. On a combined
basis, we can now count on 110 employees based in Texas to support
our operations and future growth.
“This acquisition consolidates our position as operator of water
and wastewater utilities in Texas and will allow us to capture
synergies and more efficiency in our operations management, more
specifically in the Greater Houston Area. In less than 24 months,
we have grown from virtually no revenue coming from Texas to annual
revenues of CA$25.0 M. Over the years, our Projects’ team has
delivered a total of 12 water and wastewater treatment systems in
Texas, in addition to the recently won project that we announced
last week. The State of Texas is still rich in opportunities that
we intend to capture with the help of our three business pillars:
Projects & Aftermarket, Specialty Products and O&M. With
the acquisition of GUS, we will be operating a total of 275 water
and wastewater infrastructures in North America”, said
Frédéric Dugré, President and Chief Executive Officer of H2O
Innovation.
GUS had revenues of approximately US$5.0 M (CA$6.750 M) in
revenues and earnings of US$0.6 (CA$0.816 M) before interest,
taxes, depreciation, and amortization (“EBITDA”) for the fiscal
year ended on December 31, 2019. H2O Innovation’s management
expects that this acquisition will grow immediately H2O
Innovation’s EBITDA and will also be accretive to its earnings.
The total consideration for this acquisition is US$2.750 M
(CA$3.713 M), of which US$1.875 M (CA$2.531 M) is being
paid at the closing, and the balance not exceeding US$875,000
(CA$1.181 M) will be paid 18 months after closing subject to the
achievement of certain revenue levels by GUS. The Corporation
secured an additional long-term debt of CA$2.1 in order to complete
this acquisition. The remaining portion of the purchase price is
financed from the working capital of the Corporation.
“The addition of GUS to our O&M business pillar will allow
us to make a significant leap forward in operations management. The
methodologies and business processes implemented at GUS over the
years have made it possible to optimize their processes and
eliminate all paper transactions. By implementing those business
processes within our O&M business pillar, we are looking for
synergies and significant operational gains, and in doing so,
maintain closer proximity with our customers. We intend to
implement or replicate these processes over an 18-month horizon”,
added Bill Douglass, Vice President & Managing Director
of the O&M Business Pillar of H2O Innovation.
H2O Innovation Conference Call Frédéric Dugré,
President and Chief Executive Officer and Marc Blanchet, Chief
Financial Officer, will hold a conference call to discuss this
announce in further details at 10:00 a.m. Eastern Time on
Thursday, July 2, 2020.
To access the call, please call 1 (877) 223-4471 or 1 (647)
788-4922, five to ten minutes prior to the start time. Presentation
slides for the conference call will be made available on the
Corporate Presentations page of the Investors section of the
Corporation’s website.
Prospective DisclosuresCertain
statements set forth in this press release regarding the activities
of H2O Innovation 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. 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 the
said forward-looking statements. Information about the risk factors
to which the Company is exposed is provided in the Annual
Information Form dated September 24, 2019 available on SEDAR
(www.sedar.com).
About Gulf Utility Service,
Inc. Gulf Utility Service, Inc. provides
cost-effective water and wastewater management solutions for
different type of clients such as municipalities, municipal utility
districts (MUDs) and public water systems in the State of Texas
(United States). For more information, visit
www.gulfutility.net.
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, industrial, energy and natural resources end-users. The
Corporation’s activities rely on three pillars which are i) water
& wastewater projects, and aftermarket services; ii) specialty
products, including a complete line of specialty chemicals,
consumables and specialized products for the water treatment
industry; and iii) operation and maintenance services for water and
wastewater treatment systems. 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 NYSE Euronext Growth Paris accepts
responsibility for the adequacy or accuracy of this release.
Source: H2O Innovation Inc.
www.h2oinnovation.com Contact: Marc
Blanchet+1 418-688-0170
marc.blanchet@h2oinnovation.com
H2O Innovation (TSXV:HEO)
Historical Stock Chart
From Jun 2024 to Jul 2024
H2O Innovation (TSXV:HEO)
Historical Stock Chart
From Jul 2023 to Jul 2024