Alternext: MNEMO: ALHEO
Revenues of $35.9 million, up by 30% compared to $27.6 million in fiscal
Gross profit at 23.0%, down compared to 29.5% in fiscal 2011.
Adjusted EBITDA1 at ($4,538), compared to $325,292 in fiscal 2011.
Operating, selling and administrative expenses at 24.3% of revenues,
down compared to 30.3% in fiscal 2011 due to the year's higher
Net loss of ($8.1 million), down compared to ($1.4 million) in fiscal
2011 due to goodwill impairment.
Operating activities generated $815,699 in net cash, compared to
($1,563,185) of net cash used in fiscal 2011.
Order backlog still above the $20 million mark.
All amounts in Canadian dollars unless otherwise stated.
QUEBEC CITY, Sept. 26, 2012 /CNW Telbec/ - (TSXV: HEO) - H2O Innovation Inc. ("H2O Innovation" or the "Company") announces its results for the 2012
fourth quarter and 2012 fiscal year ended June 30, 2012. H2O Innovation's fiscal 2012 results were marked by record-high revenues,
at $35.9 M, mainly generated by its water treatment systems & equipment
business sector. The Company's revenues increased by $8.3 M in 2012
compared to fiscal 2011, up by nearly 30%. Net cash generated by the
Company's operating activities amounted to $815,699 in fiscal year 2012
compared to ($1,563,185) of net cash used in operating activities
during the previous fiscal year.
"Fiscal 2012 has been a challenging year for us. Our revenues from water
treatment systems and equipment increased by more than 45%, from
$15.6 M in 2011 to $22.7 M in 2012. This increase, which mainly
occurred during the third and fourth quarters of fiscal 2012, was due
to the conversion into revenues of the order backlog's largest projects
that moved from their initial design and engineering phases to the
higher revenue-generating phase. As expected with this high level of
activities, our project and production teams were under a lot of
pressure, which made us realize that we needed to change our approach
from a 'product' culture to a 'project' culture. We have already taken
actions to fundamentally change our culture of project execution and
management", commented Frédéric Dugré, President and Chief Executive Officer of H2O Innovation.
The significant growth in the Company's revenues for 2012 compared to
previous fiscal year is not reflected in gross profit. The Company's
operations in fiscal 2012 generated a deceiving 23.0% gross profit,
compared with 29.5% in 2011. The main factors that affected gross
profit over the year are the different revenues proportion of sales of
specialty chemicals versus sales of water treatment systems (37% in
2012 vs. 43% in 2011); the reallocation of resources completed during
the first quarter of fiscal 2012; and one large project that was
realised in fiscal 2012 and impacted negatively the gross profit by
Selected financial data
ended on June 30,
ended on June 30,
Basic and diluted loss per share
The net loss amounted to ($8,054,860) (or $0.134 per share) for fiscal
2012, compared to ($1,359,380) (or $0.023 per share) in fiscal 2011. Part of the 2012 net loss is due to the goodwill impairment charge and
impairment of intangible assets recorded in the third quarter of fiscal
2012, which amounted to $8.2 M and $0.4 M respectively.
Adjusted EBITDA for fiscal year 2012 was ($4,538) compared to $325,292
for fiscal 2011. The adjusted EBITDA was affected negatively in fiscal
2012 by challenging issues in the project execution affecting
negatively the gross profit derived from manufacturing contracts and by
a nominal increase in operating, selling and administrative expenses,
which proportion nevertheless decreased to 24.3% of total 2012
revenues, from 30.3% in fiscal 2011.
Financial results for the fourth quarter of 2012
Despite a significant revenue increase of 43.0% in the 2012 fourth
quarter compared to the same quarter of the previous fiscal year, the
Company's financial results were impacted by a lower gross profit and
For the quarter ended June 30, 2012 the gross profit was impacted
negatively by two large projects and by the provision for slow moving
and obsolete inventory amounting to $50,000.
The fourth quarter was also affected by termination costs related to the
elimination of top management positions, by an allowance for doubtful
accounts for a distributor of maple syrup production products within
the consumables operations and by additional professional fees related
to the impairment testing.
The fourth quarter net earnings are caused by the tax effects of the
expired warrants recorded in equity and for which the Company reversed
a valuation allowance to use the tax losses carried forward and
exploration expenses against these tax effects.
ANNUAL HIGHLIGHTS AND STRATEGIC OUTLOOK FOR FISCAL 2013
The Company's lower than expected performance brought its management
team in the fourth quarter of fiscal year 2012 to work with a strategic
consulting firm to conduct a review of the Company's general
performance and strategic orientation. The suggestions contained in the
consulting firm's report aimed at realigning the Company's resources to
gain efficiency, accountability and performance in project execution.
The most important change that has occurred since June 30, 2012 is that
the Company's engineering department is now structured according to
each one's expertise. The Company can now rely on an expertise in
electrical & controls, an expertise in mechanical engineering &
systems, and an expertise in process & application. Also, an
independent group of project managers has been created for an improved
client interface, supported by a commissioning group dedicated to the
start-up of systems. A service & after-sales group will continue to
ensure long-term customer support.
"Through these changes we seek to attain 'operational excellence' in the
execution of our projects in order to better answer our clients' needs
and thus position ourselves at the cutting edge of the water treatment
industry as a first-class complete solution provider. We also expect to
improve gross profit on our system sales. We anticipate that this
important reorganization will allow us to reduce our selling, operating
and administrative expenses as well as to increase internal
accountability in each step of project execution in order to achieve
our targeted objectives. We are confident this new structure will lay
solid and enduring foundations and will bring positive achievements",
stated Frédéric Dugré.
The Company also brought in $16.3 M in new bookings for water treatment
systems and equipment over fiscal 2012, which is below expectations.
However, these new bookings maintained the order backlog above the
$20.0 M mark as of June 30, 2012.
"We remain confident to secure new systems sales in this coming fiscal
year as our sales team is very active in bidding activities for
municipal and industrial opportunities. Notably, the recent
commissioning of a few municipal drinking water plants using
ultrafiltration technologies for surface water treatment springboards
our business towards visibility to secure additional similar projects
in both Canada and the United States. Compared to last year, we are
seeing a greater number of municipal opportunities requiring
ultrafiltration. We believe that our 'open source' design approach,
being the interchangeability of the UF membrane modules, gives us an
important advantage towards the competition as it provides greater
operational flexibility and reduced OPEX for the end-users", added Frédéric Dugré.
The Company will also continue to work on a better integration of its
client approach in a single point of responsibility for the design and
operation of systems, based on its hybrid offering of systems and
specialty chemicals and other consumables. As the Company is moving
into 2013 fiscal year, its strategy is to maintain a double-digit
revenue growth for its sales of high-margin specialty chemicals and
consumables, which increased by 10%, from $12.0 M in 2011 to $13.2 M in
Conference call and webcast
H2O Innovation will host a conference call today at 10:00 a.m. (Eastern
Time) to review the results. The call will begin with a presentation by
the management. A question-and-answer period will follow. A slide
presentation intended for simultaneous viewing during the call will be
available before the call this morning on the Financial Reports and
Webcasts page of the Investors section of the Company's website.
Shareholders, analysts and institutional investors are invited to
participate. The North American toll-free number to dial for access is
1 800-711-9538 (North America) and international participants are
invited to dial +1 416-640-5925. The participant passcode is 4644409.
Media representatives and other interested parties may participate in
listen only mode or may listen to the live webcast of the conference
call (audio and slides) accessible through H2O Innovation's website at www.h2oinnovation.com. The webcast will remain available for replay on the Company's website
for 90 days in the Investors section.
The annual 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).
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 provides integrated technological water treatment solutions
based on membrane filtration technology to municipal, energy & mining
end-users. H2O Innovation designs state-of-the-art custom-built water treatment
systems for the production of drinking water and industrial process
water, the reclamation and reuse of water, and the treatment of
wastewater, while providing a complete line of specialty chemicals and
consumables for membrane filtration and reverse osmosis systems. With
more than 110 employees and seven locations in North America, H2O Innovation is also a founding partner of H2O Innovation India, a joint venture based in Mumbai, India. Shares of H2O Innovation are listed on the TSX Venture Exchange (HEO) and the NYSE
Euronext Alternext Exchange (MNEMO: ALHEO). 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, stock-based
compensation costs and share of (earnings) loss in a joint venture. The
definition of adjusted EBITDA used by the Company may differ from those
used by other companies.
SOURCE: H2O INNOVATION INC.
For further information:
H2O Innovation Inc.