(TSXV: HEO) – H2O Innovation Inc. (“H2O Innovation” or the
“Corporation”), focusing on the growth of the technical,
geographic, and commercial scale of its specialty chemicals
business lines, is proud to announce the acquisition, as of today,
of the remaining 76% of the issued and outstanding shares of
Genesys Membrane Products, S.L. (“GMP”), located in Madrid, Spain,
from arm's length sellers. The Corporation had taken a 24%
ownership stake in GMP through the acquisition of Genesys in the UK
on November 15, 2019.
The valuation of GMP is based on six times
earnings before interest, taxes, depreciation, and amortization
(“EBITDA”). The purchase price will be paid in cash over the next 3
years and will be based on two times the EBITDA of GMP for each
calendar year of 2020, 2021 and 2022, multiplied by 76%. At
closing, the Corporation paid out from its working capital an
initial amount of €1.54 M ($2.40 M), which is subject to certain
adjustments upon receipt of the 2020 audited financial statements.
The earn-out due for 2021 and 2022 will be calculated and paid,
using the same formula once the audited financial statements for
each of those years will be completed.
For the year ending on December 31, 2020, based
on unaudited figures currently available, GMP’s revenues stood at
approximately €5.00 M ($7.75 M). Twenty-four percent (24%) of GMP’s
EBITDA have already been accounted for in the Corporation’s
financial statements as a share of profit in an associate, using
the equity method. As of the closing date, 100% of GMP’s results
will be consolidated in the Corporation on a going-forward basis,
which will increase the Corporation’s EBITDA on proforma basis by
more than 10%.
GMP began as the technical service partner of
Genesys, and over the years it has developed specialized membrane
autopsy capabilities in its Madrid, Spain, laboratory. Its business
also grew through the sale of specialty chemicals, filters, and
complementary products to serve the membrane industry. This unique
expertise is expected to facilitate the technical sales and key
account strategy of the Corporation’s global chemicals business
lines, Genesys® and PWT™.
“The acquisition of GMP should be seen as the
next logical step in our goal of developing the world’s largest
membrane specialty chemicals and associated services supplier sold
through a large distribution network. GMP’s laboratory is globally
recognized as the preeminent membrane autopsy facility in the
industry and will support our Genesys and PWT teams in their sales
efforts going forward. This laboratory has the experience and
expertise of thousands of membrane autopsies performed over the
years,” said Frédéric Dugré, President and Chief
Executive Officer of H2O
Innovation.
GMP’s local presence in Santiago, Chile, through
its wholly owned subsidiary Genesys Membrane Products Latinoamerica
Limitada, also positions the Corporation to better access the Latin
American membrane chemical market, in particular the mining
industry which is a strategic target for the Corporation’s Genmine™
product line. H2O Innovation looks to build on the success of GMP,
which recently won a two-year contract for membrane cleaning
chemicals and site services of approximately US$2.40 M ($3.00 M)
for a large mining customer in Chile.
“We are extremely delighted to become part of
the H2O Innovation family,” said Juan Shang and Javier
Pool, majority owners and co-CEOs of GMP. “Having had the
pleasure of working with the H2O Innovation team for over a year
now, we feel our company cultures are well aligned, and we are
convinced that being under the same roof will accelerate our
growth. Our employees in Spain and Chile are all excited to be
fully a part of this talented global team.”
The addition of GMP is expected to generate more
cross-business synergies, a clear focus of H2O Innovation’s 3-Year
Strategic Plan. Local support of PWT’s distributors in Latin
America and collaboration with Piedmont, the Corporation’s business
line, which is also located in Spain, are two areas where there are
opportunities for their businesses to work efficiently
together.
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 announcement in further
details at 4:15 p.m. Eastern Time on Monday, February 1,
2021.
To access the call, please dial 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 DisclosuresThis
press release contains forward-looking information under applicable
securities law. All information that addresses operations and
activities that H2O Innovation expects to occur in the future is
forward-looking information. Forward-looking statements use such
words as “believe”, “continue”, “estimate”, “expect”, “intend”,
“should” or “will” and other similar terms as well as those usually
used in the future and the conditional. Forward-looking statements
concern analysis and other information based on forecast future
results and the estimate of amounts that cannot yet be determined
and are based on the estimates and opinions of management on the
date the statements are made.
In this press release, such forward-looking
statements include, but are not limited to, the anticipated
benefits of this transaction for H2O Innovation, including the
attractiveness of the transaction from a financial perspective
through a variety of financial metrics; H2O Innovation’s ability to
successfully integrate GMP’s business; H2O Innovation’s and GMP’s
expected financial performance, including for GMP’s financial year
ended on December 31, 2020 as the figures presented herein are
based on unaudited information; the realization and timing of any
potential cost synergies; the expectation that the transaction
would be immediately accretive to H2O Innovation’s, net earnings
before acquisition costs; and the Corporation’s ability to generate
additional revenues coming from the Latin American membrane
chemicals market and the mining industry. Other risk factors are
discussed in the Corporation’s Annual Information Form dated
September 23, 2020 available on SEDAR (www.sedar.com).
Should one or more of these risks or
uncertainties materialize, or should the assumptions underlying
those forward-looking statements prove incorrect, actual results
may vary materially from those described herein. 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 Genesys Genesys is a
UK privately-owned group of companies (including Genesys Membrane
Products, S.L.) specializing in the development and manufacturing
of specialty chemicals dedicated to water treatment as well as
membrane autopsies and laboratory services. Genesys develops,
manufactures and distributes specialty reverse osmosis (RO)
membrane chemicals, antiscalants, cleaners, flocculants and
biocides, and offers, through a large distribution network, a
portfolio of over 35 diversified products with unique formulation
that are manufactured in its facility located in Cheshire, UK. In
addition, Genesys also offers complete laboratory services such as
feed water and pre-treatment tests, membrane autopsies and cleaning
program design. For more information, visit www.genesysro.com.
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.comContact: Marc
Blanchet+1 418-688-0170 marc.blanchet@h2oinnovation.com
1 These figures are based on non-audited financial results.
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