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H2O Innovation reports fiscal 2013 first quarter results - Revenues increase 41%, Company records net earnings

Tuesday, November 13, 2012 8:00 AM

Alternext: MNEMO: ALHEO

  • Revenues of $9.98 million, up by 41% from $7.1 million for the same period in fiscal 2012.
  • Gross profit stable at 24.7%, compared to the same period in fiscal 2012.
  • Adjusted EBITDA1 at $726,693, compared to $332,808 for the same period in fiscal 2012.
  • Operating, selling and administrative expenses at 18.4% of revenues, down compared to 25.8% for the same period in fiscal 2012.
  • Net earnings of $269,696, up compared to a net loss of ($88,216) for the same period in fiscal 2012.
  • Operating activities generated $1,210,214 in net cash, compared to $1,082,533 for the same period in fiscal 2012.
  • Order backlog still above the $20 million mark.

All amounts in Canadian dollars unless otherwise stated.

QUEBEC CITY, Nov. 13, 2012 /CNW Telbec/ - (TSXV: HEO) - H2O Innovation Inc. ("H2O Innovation" or the "Company") announces its results for the first quarter of fiscal year 2013. During this quarter, the Company's revenues increased by 41% to $9.98 M, up from $7.1 M in the comparable quarter of the previous fiscal year. This sound level of revenues enabled the Company to generate net earnings of $269,696 compared to a net loss of ($88,216) for the same period in fiscal 2012. "In this first quarter, the fundamental changes that we initiated over the last months towards an enhanced culture of project execution and management have impacted positively our gross profit. We are more than satisfied with our performance, which is the result of a great team effort. I am grateful to all our employees who have proactively embraced our new culture", stated Frédéric Dugré, President and Chief Executive Officer of H2O Innovation.

The Company's revenues for the first quarter of fiscal 2013 totaled $9.98 M, representing a $2.9 M or 41.2% increase, as compared with revenues of $7.1 M for the same quarter of fiscal 2012. The increase is largely attributable to revenues from water treatment projects which reached $7.0 M compared to $4.3 M in the corresponding period of the previous fiscal year, representing a 63.6% increase. More than half of that $7.0 M revenues come from three projects in the oil & gas sector in Western Canada. This is a direct consequence of the materialisation of the Company's order backlog which remained above the $20 M mark as at September 30, 2012.

The increase of the Company's revenues is also attributable to a lesser extent to the recurring revenues from sales of specialty chemicals and consumables which reached $2.9 M in this quarter compared with $2.8 M in 2012, representing a 6.4% increase. Continued efforts are being deployed to increase the Company's footprint through the addition of new specialty chemical distributors. Moreover, management gave particular attention to maintain service contracts on the Company's installed base while continuing to build relationships with clients of newly commissioned projects.

In this first quarter of fiscal 2013, the Company was able to generate a 24.7% gross profit, a level similar to the first quarter of fiscal year 2012. This is a significant improvement from the 19.4% gross profit realized in the fourth quarter of fiscal year 2012.

Selected financial data
Three-month period
ended on September 30,
  2012 2011
  $ $
Revenues 9,982,894 7,069,768
Gross profit 2,462,571 1,744,081
Gross profit 24.7% 24.7%
Operating expenses 135,772 105,106
Selling expenses 843,154 864,667
Administrative expenses 863,263 855,092
Net earnings (loss) 269,696 (88,216)
Basic and diluted earnings (loss) per share 0.004 (0.001)
Adjusted EBITDA 726,693 332,808

The Company also brought in a solid $6.7 M in new bookings for water treatment projects over the quarter. These new bookings kept the order backlog above the $20 M mark as at September 30, 2012. This represents a significant improvement from $0.9 M level of new bookings recorded in the corresponding quarter of fiscal 2012. The level of new bookings achieved in the first quarter of fiscal 2013 is in line with management's expectations for the current fiscal year.

The Company's ratio of selling, operating and administrative expenses ("SG&A") as a whole over revenues amounted to 18.4% for this quarter, down from 25.8% for the corresponding quarter of the previous fiscal year. This decrease is partially attributable to the increase in volume of business and reflects the Company's efforts to reach profitability and maximize the use of its internal resources. Overall, the Company's SG&A expenses remain in line with its fiscal year 2013 budget.

Adjusted EBITDA for the quarter was recorded at $726,693, compared with $332,808 for the same period ended September 30, 2011. The higher revenues recorded during the quarter compared with the corresponding quarter of the previous fiscal year and the somewhat stable SG&A expenses also contributed to generating solid positive adjusted EBITDA. The Company quickly and strongly returned to positive adjusted EBITDA this quarter after one quarter of negative adjusted EBITDA for the fourth quarter ended June 30, 2012.

The Company's net earnings (loss) was $269,696 or $0.004 per share for the first quarter of fiscal 2013 compared with ($88,216) or ($0.001 per share) for the first quarter of fiscal 2012. This improvement is primarily due to higher revenues which generated a solid gross profit of 24.7% and to a tighter control of the Company's fixed costs.

"We have applied a tight control on project execution notably for procurement and on hours spent on projects. Moreover, we keep challenging SG&A and we are looking for additional savings on recurring expenses", added Frédéric Dugré.

Operating activities generated $1,210,214 in cash for the period ended September 30, 2012, compared with $1,082,533 of cash generated during the corresponding period ended September 30, 2011. The rise is mainly attributable to the improvement in net earnings in the first quarter of fiscal year 2013 as compared with the corresponding period ended September 30, 2011 and to the change in working capital items.

Annual General Meeting of Shareholders
H2O Innovation will hold its Annual General Meeting of Shareholders tomorrow Wednesday, November 14, 2012 at 4 p.m. (Eastern Time) at its headquarters located at 330 St-Vallier Street East, Suite 340, Quebec City (Quebec), Canada.

Philippe Gervais, Chairman of the Board, and Frédéric Dugré, President and Chief Executive Officer, are pleased to invite shareholders and all other interested parties to attend the meeting, during which they will review the results of fiscal 2012 and comment the results of the first quarter of fiscal 2013.

The first quarter financial report is available on www.h2oinnovation.com and on NYSE Euronext Alternext's site. Additional information on the Company 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 Company 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 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 involve a number of risks and uncertainties, which may result in actual and future results of the Company to be materially different than those indicated. Information about the risk factors to which the Company is exposed is provided in the Annual Information Form dated September 25, 2012 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 to municipal, energy & natural resources end-users. H2O Innovation also provides a complete line of specialty chemicals and consumables for membrane filtration and reverse osmosis systems. For more, 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 Company's changes in fair value of contingent considerations, impairment of intangible assets, impairment of goodwill and share of (earnings) loss in a joint venture and stock-based compensation costs. The definition of adjusted EBITDA used by the Company may differ from those used by other companies.  


H2O Innovation Inc.

Marc Blanchet
+1 418-688-0170

(Source: CNW )
(Source: Quotemedia)


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