(TSXV: HEO) – H2O Innovation Inc. (“H2O Innovation” or the
“Corporation”) is proud to present its first 3-year strategic plan
aligning its long-term vision with key strategic objectives. These
objectives and their progress over time will be regularly
communicated to key stakeholders to ensure proper alignment at all
levels within the framework of the 3‑year strategic plan.
The current Global Water market is estimated at
$842 B for the year 2020. This market is expected to grow annually
between 5 to 14% depending on the sub-market or geography.
Fundamental drivers such as population growth, tightening
regulations, water scarcity, and growing demand from agriculture
and industries are just a few of the multiple factors influencing
this expected growth. These market drivers would add pressure on
existing infrastructure to become leaner and more efficient with
their operations.
To develop the 3-year strategic plan, the
Corporation’s executive team, in collaboration with the business
line managers, has identified specific sub-markets and sub-segments
to determine a current addressable market for H2O Innovation in the
range of $4.5 B. This addressable market is where the Corporation
intends to continue its growth during the next three years, both
organically and through mergers and acquisitions. The Corporation
intends to build out its businesses in a way that will enhance
cross-selling opportunities, maximize customer synergies and
retention, and improve its operational efficiency.
By the end of fiscal year 2023, the current goal
is to expand H2O Innovation’s adjusted EBITDA margin above 11%. To
reach this objective, focus will be put on improving the gross
profit margin, reducing fix costs percentage over revenue, and
completing acquisitions. In three years, it is expected to reach
$175 to 250 M in revenues, depending on the number of
acquisitions completed.
The Corporation is expecting to reduce its cost
of goods sold and improving operational excellence by taking the
following measures: leaner business processes in the acquired
companies, implementation of comprehensive business intelligence
solutions, smart procurement, rebranding & merger of the
O&M business pillar, as announced last week, and pro-active
health & safety practices.
The Corporation should reduce its fix costs
percentage over revenues by leveraging its centralized corporate
support services. New innovative products will be developed and
taken to market through the Corporation’s large distribution
network which will leverage the sales organisation and enable to
increase the gross profit margin.
The pipeline of acquisition targets is rich in
opportunities and is diversified in size as well as company
profile. The Corporation intends to complete between two to four
acquisitions within the next 30 months. Based on its current
situation and on financial forecasts, the Corporation has the
ability and financial capacity to acquire complementary businesses.
The intention is to do it without dilution for the shareholders,
unless it is required to complete a significant transaction in
size, and to remain disciplined in the multiple paid for these
transactions. Most importantly, proper integration will be key to
maximize sales and costs synergies.
“We believe that our first 3-year strategic plan
defines a comprehensive framework which will inspire and guide our
managers to develop solid annual budgets and tactical roadmaps to
achieve our strategic objectives and our financial targets by the
end of fiscal year 2023. But most importantly, this plan will allow
us to create a winning and engaging alignment between our
employees, customers, and shareholders. Through its execution, we
will maintain our focus on long-term goals and respect the need for
short-term wins. Our entrepreneurial motivation, driven by our
fundamental values and our continuous desire to grow the
Corporation will be done with the objective of creating value for
all stakeholders, while preserving our company’s strong culture”,
stated Frédéric Dugré, President and Chief Executive
Officer of H2O
Innovation.
From H2O Innovation’s Mission and Vision
statements, and 10 key strategic objectives come the new Playbook.
The H2O Innovation Playbook centers around creating value, allowing
the Corporation to compete enthusiastically for customers, talent,
and shareholders.
“Our Playbook is comprised of four (4) themes.
First, we must delight our customers, continuously seeking higher
customer satisfaction to build long-term relationships and increase
recurring business. Second, H2O Innovation will retain our
customers and gain new ones by pushing for innovation, challenging
the status-quo, and delivering world-class solutions through our
products and services. Third, by reinventing ourselves and
continuously pursuing improvements in the business process, we must
relentlessly strive for operational excellence. Operational
improvements maximize synergies, better leveraging our cost
structure and global sales organization. Finally, to execute this
plan and reach these ambitious objectives, team engagement is key;
H2O Innovation must create an inspirational and meaningful work
environment where people feel safe and have an opportunity to
develop talents along their chosen career path”, added
Gregory Madden, Chief Strategic Officer at
H2O Innovation.
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 and the estimate of amounts that cannot yet be
determined. Forward-looking statements include the use of the words
such as “anticipate”, “if”, “believe”, “continue”, “could”,
“estimate”, “expect”, “intend”, “may”, “plan”, “potential”,
“predict”, “project”, “should” or “will” and other similar terms as
well as those usually used in the future and the conditional. Those
forward-looking statements involve a number of risks and
uncertainties, which may result in actual and future results 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 23, 2020 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, industrial, energy and natural
resources end-users. The Corporation’s activities rely on three
pillars which are i) water technologies and 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
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