Pure Technologies Announces Its Third Quarter 2013 Results

CALGARY, Nov. 7, 2013 /CNW/ - Pure Technologies Ltd. ("Pure" or the "Company") (TSX: PUR) announces its financial performance for the three and nine-month periods ended September 30, 2013.  For the third quarter, the Company recorded revenue of $15.1 million, EBITDA of $3.0 million and a loss of $0.8 million.  This compares to revenue of $13.3 million, EBITDA of $1.8 million and a loss of $0.9 million in the third quarter of 2012.

"We are delighted with the continuing momentum seen in Pure's business as evidenced by third quarter results for 2013," said Jamie Paulson, Chairman. "This quarter has traditionally been Pure's weakest due to seasonal high water usage and other factors. Revenue increased by 14% compared to the third quarter of last year and EBITDA increased by 67%. EBITDA margin remained very strong at 20% of total revenue, notwithstanding a significant equipment sales component which typically generates lower margins than our technical services business. Current backlog is over $50 million not including annual recurring revenue from pipeline monitoring, which is over $6 million and growing as new monitoring contracts are initiated. Lastly, oil pipeline inspections have set a new record during the quarter and this segment is quickly becoming a meaningful contributor to our overall business."

Table of Selected Financial Results:
For further details on the results, please refer to Pure's Management Discussion and Analysis (MD&A) and
Consolidated Financial Statements which are available on the Company's website (www.puretechltd.com).
($000's CAD,
unless otherwise indicated
and per share amounts)
  Three
months
ended
Sept 30,
2013
  Three
months
ended
Sept 30,
2012
  $
Change
  %
Change
  Nine
months
ended
Sept 30,
2013
  Nine
months
ended
Sept 30,
2012
  $
Change
  %
Change
Revenue   15,144   13,341   1,803   14   43,628   42,928   700   2
Cost of sales   3,611   2,434   1,177   48   9,656   9,758   (102)   (1)
Gross profit   11,533   10,907   626   6   33,972   33,170   802   2
Gross margin (%)   76   82           78   77        
Operating Expenses   10,834   12,379   (1,545)   (12)   31,282   32,114   (832)   (3)
EBITDA   2,989   1,791   1,198   67   8,625   8,187   438   5
Profit (loss) for the period   (776)   (922)   146   n/a   268   438   (170)   (39)
  Per share - basic   (0.015)   (0.02)           0.005   0.01        
  Per share - diluted   (0.015)   (0.02)           0.005   0.01        
Total assets   123,861   123,126   735   1   123,861   123,126   735   1

Q3 Financial Highlights

Three months ended September 30, 2013

  • Total revenues increased 14% quarter-over-quarter to $15.1 million.
    • Equipment sales (30% of total) increased by 22% reflecting new pipeline monitoring system sales in the Americas.
    • Inspection services (45% of total) increased by 6%.
    • Consulting revenue (15% of total) increased by 40% due to new work and customers added by Pure Engineering Services.
    • Monitoring and technical support revenue (10% of total) declined by 3%, reflecting the timing of contracts associated with recently installed equipment within the Americas.
  • Total operating expenses decreased 12% quarter-over-quarter to $10.8 million.
    • Marketing expenses (23% of total) increased by 7% due to business development activities internationally and additional personnel in the Americas.
    • Engineering and operations expenses (40% of total) were flat compared to last year.
    • General and administrative expenses (34% of total) decreased by 17%, related to foreign exchange fluctuations and earn-out provisions from a prior acquisition.
    • Research and development expenses (3% of total) have declined 71% related to the capitalization of costs.
  • EBITDA of $3.0 million, up 67%, and a loss of $0.8 million compared to a loss of $0.9 million in the prior quarter. The loss in the quarter is largely due to the balancing of provisional income taxes in 2012 to actual and the disposal of an inactive subsidiary.

  • Working capital at September 30, 2013 was $72.6 million compared to $70.4 million at December 13, 2012.
    • Includes $39.7 million in cash.

Nine months ended September 30, 2013

  • Total revenues increased by 2% over the comparative period to $43.6 million. The comparative period was positively impacted by a deferred equipment shipment (worth $10.7 million); removing this impact, total revenues improved by 35%.
    • Equipment sales (18% of total) decreased by 55% reflecting the prior period equipment shipment.
    • Inspection services (58% of total) increased by 44% due to increased work mostly within the Americas.
    • Consulting revenue (14% of total) increased by 34% due to new work and customers added by Pure Engineering Services.
    • Monitoring and technical support revenue (10% of total) grew by 19%, reflecting new monitoring systems in the Americas, renewals of existing contracts and re-commissioned sites in Libya.
  • Total operating expenses decreased 3% over the comparative period to $31.3 million.
    • Marketing expenses (24% of total) increased by 17% due to business development activities internationally and additional personnel in the Americas.
    • Engineering and operations expenses (41% of total) increased by 12% corresponding to the sharp increase in inspection services revenue and from recruiting efforts.
    • General and administrative expenses (31% of total) declined by 9%, related to the net impact of foreign exchange fluctuations and earn-out provisions from prior acquisitions.
    • Research and development expenses (4% of total) have declined 67% related to the capitalization of costs.
  • EBITDA of $8.6 million, up 5%, and profit of $0.3 million compared to a profit of $0.4 million in the prior nine-month period.

Business, Operations & Outlook

The Company's core Americas market contributed 89% of total revenue for the quarter. Pure completed a number of large projects on water transmission pipelines while they remained in service. This included work in Mexico involving Pure's large-diameter PipeDiver® inspection platform as well as new installations of its fibre-optic monitoring equipment for a key pipeline providing drinking water to Mexico City; Pure now continuously monitors over 100 km of this critical line. In the U.S., the PipeDiver technology was deployed on numerous wastewater pipelines, many which lack redundancy or cannot be easily shutdown. Owners of these failing assets are facing pressure to upgrade their systems by the U.S. Environmental Protection Agency through enforcement action. As a result, the Company expects to see growing use of its technologies and services in this area.

Internationally, Pure sees growing interest in its offerings and particularly the use of the SmartBall® leak detection technology for both water and oil pipelines. The Company completed its largest deployment of this technology for a water customer in Europe, continued work with long-term water loss reduction programs in Australia and New Zealand, and has had numerous successful projects and technology demonstrations in Asia for clients with water and oil pipelines. Furthermore, Pure's cost effective Assess and Address™ program approach, which has been driving business in the Americas, has been viewed favourably in these markets as an alternative to costly replacement strategies.  The introduction of the Company's PureNet™ water asset management platform in emerging economies has attracted a lot of attention and during the quarter Pure completed its first commercial project with this service offering.

The SmartBall technology has been deployed over a record distance within the oil pipeline sector during the recent period. Pure inspected over 3,200 km in the quarter which is up 176% over the second quarter. Furthermore, the length of pipeline inspected during the last three months is greater than what the Company inspected for all of 2012. Pure expects further use of this unique leak detection technology moving ahead within this high growth and high margin market.

Ongoing enhancements to Pure's technology portfolio continue and have greatly contributed to the diversification of its business into areas such as the significant metallic pipe market. Overall, the momentum of the most recent quarter is expected to flow through to the fourth quarter which has historically been the Company's busiest and strongest period.

Conference Call

A teleconference will be held to discuss these results on November 8, 2013, at 10:30 am ET. Presentation slides will be made available on the Company's website prior to the call.

Teleconference: The telephone numbers for the conference are toll-free 1-888-231-8191 (within North America) and 647-427-7450 (Local / International). Please provide the operator with the Conference Call ID or Topic when dialing in to the call.

  • Conference ID: 86443739
  • Topic: Pure Technologies Ltd., 2013 Third Quarter Conference Call
  • A replay will be available approximately two hours after the call and will be available for one week. Access the replay by calling 1-855-859-2056 (toll-free within North America) or 416-849-0833 (Local / International). Use the following Passcode followed by the number sign: 86443739

Webcast & Presentation Slides: Investors will be able to listen to the conference over the Internet as well as access presentation slides (in pdf format) to follow along during the call.

About Pure Technologies Ltd.

Pure Technologies Ltd. is an international asset management technology and services company which has developed patented technologies for inspection, monitoring and management of critical infrastructure around the world. Pure's business model incorporates four distinct but complementary business streams:

  • Sales of proprietary monitoring technologies for pipelines, bridges and structures (SoundPrint®, SoundPrint® AFO);

  • Recurring revenue from data analysis and site maintenance for these technologies, and from technology licensing;

  • Premium technical services including pipeline inspection, leak detection and condition assessment (PureEM™, SmartBall®, Sahara®, PipeDiver®, PureRobotics™, PureMFL™);

  • Specialized engineering services in areas related to asset management, primarily in the area of pipeline condition assessment for water and wastewater infrastructure (Openaka Corp., Price Brothers UK Ltd, and Jason Consultants).

Forward-Looking Statements

This release contains forward-looking statements. Forward-looking statements, without limitation, may contain the words "believes", "expects", "anticipates", "estimates", "intends", "plans", or similar expressions. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions and the Company's actual results could differ materially from those anticipated. Forward-looking statements are based on the opinions and estimates of Management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. In the context of any forward-looking information please refer to risk factors detailed in, as well as other information contained in, the Company's filings with Securities Regulators (www.sedar.com).

® Registered Trademarks, property of Pure Technologies Ltd.

"The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release"

SOURCE: Pure Technologies Ltd.

For further information:

To find out more about Pure Technologies Ltd. (TSX: PUR), visit our website at www.puretechltd.com. Or contact James E. Paulson, Chairman, Karen Keebler, Chief Financial Officer or Paul Moon, Investor Relations at (403) 266-6794 or e-mail to  investor.relations@puretechltd.com.


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