TSXV: HEO
Alternext: MNEMO: ALHEO
OTCQX: HEOFF
Key highlights
- Revenues reached $13.2 M for the
period, compared to $13.7 M for the
same period in fiscal year 2015;
- Net earnings of $174,221,
compared to net earnings of $117,524
for the same period in fiscal year 2015;
- Gross profit margin before depreciation and amortization at
31.3%, compared to 23.2% for the same period of fiscal year
2015;
- Adjusted EBITDA1 at $1,030,502, compared to $685,427 for the same period in fiscal year
2015;
- Solid order backlog for water treatment projects reached new
record-high at $50.8 M as at
January 6, 2016;
- Acquisition of all of the assets of Clearlogx pertaining to its
unique Clearlogx® control technology during the quarter, aimed at
strengthening the business sector dedicated to water treatment
systems.
All amounts in Canadian dollars unless otherwise
stated.
QUEBEC CITY, Feb. 8, 2016 /CNW Telbec/ - (TSXV: HEO) –
H2O Innovation Inc.
("H2O Innovation" or the "Corporation") announces
its results for the second quarter of fiscal year 2016 ended
December 31, 2015. Even though the
Corporation's revenues slightly decreased by 3.8% to $13.2 M, down from $13.7
M in the comparable quarter of the previous fiscal year, the
net earnings and EBITDA increased significantly. "These great
results were fueled by our gross profit margin, which went from
23.2% for the comparable quarter to 31.3% in the second quarter of
fiscal year 2016. It is the result of constant efforts, sound
business mix and gradual addition of new innovations that
differentiates our offering and pushing profit margins up",
stated Frédéric Dugré, President and Chief Executive Officer of
H2O Innovation.
Even though revenues decreased from the comparable period, the
ratio of adjusted EBITDA over revenues increased, from 5% for the
three-month period ended December 31,
2014 to 7.8% for the comparable period ended December 31, 2015. This notable improvement of
our adjusted EBITDA over revenues is fueled by the organic growth
of our specialty products and services ("SP&S") business line
in addition to the sound cost management in our water treatment
projects business line.
The revenues level maintained during the quarter is derived from
to the increase in revenues from SP&S, which reached
$7.3 M compared to $5.0 M in the comparable quarter of the previous
fiscal year, representing an increase of 45.7%. This strong
increase 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. Clearlogx, which assets'
were acquired during the second quarter of fiscal year 2016,
strengthened the increase in SP&S revenues. For the
Corporation, it is still a constant priority to continue to grow
the specialty products and services business.
Revenues from water treatment projects decreased to $5.9 M compared to $8.7
M in the corresponding period of the previous fiscal year,
representing a 32.1% decrease. The decrease in revenues from water
treatment projects despite the increasing backlog is due to the
larger projects composing our order backlog, thus stretching the
revenue recognition over a longer period of time, based on the
different milestones reached.
In this second quarter of fiscal year 2016, the Corporation
generated a 31.3% gross profit before depreciation and
amortization, a higher level than the 23.2% gross profit before
depreciation and amortization generated in the second quarter of
fiscal year 2015. The revenue mix in this quarter shows that
revenues from SP&S represent a fair proportion of total
revenues compared to the corresponding period of the previous
fiscal year (55.0% in fiscal year 2016 versus 36.3% in fiscal year
2015), affecting positively our gross profit. The constant work on
improving the execution and the procurement for our water treatment
projects business line is paying off, supporting the positive
effect on the gross profit.
|
|
|
CONSOLIDATED
RESULTS
Selected financial
data
|
Three-month
period
ended on December 31,
(Unaudited)
|
Six-month
period
ended on December 31,
(Unaudited)
|
|
2015
|
2014
|
2015
|
2014
|
|
$
|
$
|
$
|
$
|
Revenues
|
13,165,590
|
13,689,060
|
25,424,918
|
24,908,191
|
Gross profit before
depreciation and amortization
|
4,126,602
|
3,171,532
|
7,331,088
|
6,204,483
|
Gross profit before
depreciation and amortization
|
31.3%
|
23.2%
|
28.8%
|
24.9%
|
Operating
expenses
|
318,886
|
232,817
|
652,866
|
433,303
|
Selling
expenses
|
1,611,384
|
1,069,354
|
2,969,117
|
1,975,643
|
Administrative
expenses
|
1,188,169
|
1,126,033
|
2,231,720
|
2,113,829
|
Research and
development expenses – net
|
35,610
|
49,502
|
120,174
|
89,424
|
Net
earnings
|
174,221
|
117,524
|
226,550
|
400,111
|
Basic and diluted
earnings per share
|
0.008
|
0.006
|
0.011
|
0.019
|
Adjusted
EBITDA
|
1,030,502
|
685,427
|
1,472,276
|
1,600,802
|
The Corporation secured $9.6 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
and the significant weakening of the Canadian dollar compared to
the US dollar, have brought up the backlog at $43.1 M as at December 31, 2015 compared to $29.6 M as at December 31, 2014 and reached record-high level
at $50.8 M on January 6, 2016. This level of order backlog
gives the Corporation a fairly good perspective over the coming
quarters in terms of volume of revenues. Our team has demonstrated
that it can manage the execution challenge that comes with such
large order backlog and we have structured the organization in
order to achieve even more.
The Corporation's ratio of selling, operating and administrative
expenses ("SG&A") as a whole over revenues amounted to 23.7%
for this quarter, up from 17.7% for the corresponding quarter of
the previous fiscal year. This increase is mostly attributable to
the additions of personnel to support our overall operations and
our continuing growth. 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 $1,030,502, compared with $685,427 for the same period ended
December 31, 2014, representing a ratio of 7.8% of
adjusted EBITDA over revenues for this quarter compared to a ratio
of 5% for the same quarter of the previous fiscal year. This
significant increase in adjusted EBITDA, despite the slight
decrease in revenues, demonstrates our operational efficiency and
the improvement of our business model over the last year. Indeed,
once the Corporation's fixed costs are covered, the gross profit
will directly impact the EBITDA. Therefore, volume of revenues
matters, as well as a sound cost management.
The net earnings amounted to $174,221 or $0.008 per share for the second quarter of
fiscal 2016 compared with $117,524 or
$0.006 per share for the second
quarter of fiscal 2015. The increase in net earnings is the result
of an improved level of gross profit before depreciation and
amortization.
Operating activities generated $128,383 in cash for the three-month period ended
December 31, 2015, compared with
($549,922) of cash used during the
corresponding period ended December 31,
2014. The variation is mainly attributable to the change in
working capital items and the unrealized exchange loss on the
long-term debt contracted during the period.
The second quarter financial report is available on
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
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, unrealized
exchange loss and acquisition costs. 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.