Pure Technologies Ltd. announces results for second quarter ended June 30, 2009



    CALGARY, Aug. 18 /CNW/ - Pure Technologies Ltd., TSX-V: PUR, today
announced financial results for the second quarter and six months ended June
30, 2009.
    Total revenues were $6.8 million for the quarter compared to $5.4 million
in the second quarter of 2008, a 25% increase. Year to date, the Company
reported record revenue of $14.9 million compared to 2008 revenue of $11.4
million. EBITDA rose in the quarter from $446,000 in 2008 to $683,000 in 2009.
EBITDA for the year has risen by 20% from $2.2 million to $2.6 million.
    Due to the weakness of the US dollar during the second quarter, a foreign
exchange loss of $735,000 for the quarter and $594,000 year-to-date was
recorded, resulting in a net quarterly loss of $395,000 and net income of
$1.43 million year to date. The non-cash component of the foreign exchange
loss is 44% for the quarter and 59% year to date.
    Gross margins remained strong at 67% for the quarter and 69% year-to
date, resulting from a favourable product mix and improved operational
efficiencies.
    During the quarter, the Company purchased the assets of PipeEye
International, a provider of long-range robotic specialty inspection services.
The acquisition will allow for P-Wave(R) electromagnetic inspections without
having to dewater pipelines, an important consideration for water agencies,
and to offer other premium inspection services in the water and wastewater
sector.
    Work continued on the Washington Surburban Sanitary Commission (WSSC)
project, with optical fibre monitoring systems delivered in the quarter and
commissioned on 7.1 km of prestressed pipeline. An additional 17 km will be
commissioned in the next quarter. A major SmartBall project in Australia was
also completed in the quarter, and installation and commissioning of the Great
Man Made River Authority (GMRA) Acoustic fibre Optic (AFO) in Libya continued
with a total of 320 km now operational. Recent excavations by GMRA of
deteriorating pipes identified by the AFO system confirmed its accuracy and
sensitivity.
    Looking forward to the second half of the year a slower third quarter is
expected, as is normally the case due to the fact that water utilities in
North America are operating at full capacity and pipelines are unavailable for
inspection. However current indications are for a strong fourth quarter,
although this will depend on the timing of anticipated contract awards. The
working capital position continues to improve, standing at $30.4 million as of
June 30, 2009 compared to $26.6 million a year earlier.
    Current confirmed backlog is in excess of $13.8 million. Pure has also
received verbal confirmation of projects in excess of $8 million which are
subject to the normal contract review process and final documentation. In
addition, annualized monitoring and technical support revenue under contract
is in excess of $4 million.

    Financial Highlights

    Overall, revenues have increased by 25% in the second quarter compared to
the same period in 2008. Year to date revenues have increased by 31%.
Equipment sales have shown an increase of 9% for the quarter while year to
date the increase is 14%. In this quarter, three AFO data acquisition systems
were sold to WSSC. One system was installed while the other two will be
installed in the next quarter. Inspection service revenue was down slightly
from the second quarter of 2008 (8%) and on a year to date basis (6%).
Consulting services for the second quarter of 2009 increased 152% and 216% for
the year to date. The increase for both is due to the inclusion of revenue
from Price Brothers (UK) Ltd. (PBUK) which was acquired in May 2008 and
continued work on the WSSC contract. Revenue from monitoring and technical
support increased by 23% for the quarter and increased 49% year to date. With
the additions to the installed base of AFO and Soundprint systems, this
revenue source continues to increase each year.
    The largest growth in revenue has come from the US market. Increases have
also occurred in the European and Asian markets as well as South America and
Australia. International marketing efforts continue to provide a more diverse
market for the Company.
    Gross profit increased by 40% both for the quarter and on a year to date
basis. Gross margin was 67% in the second quarter of 2009 compared to 60% in
2008. Year to date margin for 2009 is 69% compared to 64% in 2008. All product
lines continue to provide target margins with only slight deviations from
quarter to quarter.
    Marketing and promotion expenses for the quarter have increased by 22%
over the second quarter of 2008 and have increased 36% year to date.
Additional staff was added for the North American market in the latter part of
2008 and early 2009 to service continuing growth in this market. Increased
presence in the international market is a major focus for the Company in 2009.
Initiatives include the establishment of a branch office in Abu Dhabi and
continuing SmartBall demonstrations in various countries for water, wastewater
and hydrocarbon applications.
    Engineering and operations expenses have increased by 184% over the
second quarter of 2008 and 132% year to date. As a percentage of revenue,
these expenses have grown from 7% to 12% year to date. The operations group in
the U.S. has continued to expand as our revenue grows. As well, PBUK expenses
are included for all of 2009 figures while only two months are included in the
2008 figures.
    General and administrative expenses for the quarter have increased 21%.
Year to date expenses have increased by 49%. The year to date increase is due
to inclusion of PBUK. The increase in the current quarter is due to increased
professional fees compared to the previous year.
    Research and development expenses decreased for the quarter by 2%. Year
to date expenses have decreased by 17%. The Company was awarded a research
grant through Arizona State University in 2008. In 2008, the payments were all
deducted from the amounts capitalized, but since no costs were capitalized in
2009, these payments were deducted from the research and development expenses.
In addition, the current research and development projects have reduced
material usage compared to the prior year.
    Depreciation and amortization for 2009 increased by 17% compared to the
second quarter of 2008 and 21% year to date. The rise in depreciation and
amortization expense reflects capitalization of development costs in 2008 as
well as the amortization of intangible assets on the acquisition of PBUK. The
Company changed its accounting estimate of computer hardware for depreciation
purposes from 5 years to 3 years effective June 1, 2009.
    EBITDA for the second quarter increased 53% compared to 2008. Year to
date, EBITDA has increased by 20%. With increased revenue and gross profit,
the Company is showing higher profitability even though the expenses are
growing. As a percentage of revenue, the operating expenses have increased by
5% for the quarter and 6% for the year to date.



    
    2009 Q2 Financial Highlights
    (unaudited)

    Consolidated              Three months ended:           Six months ended:
     Statement of          June 30,      June 30,      June 30,      June 30,
     Operations               2009          2008          2009          2008
    -------------------------------------------------------------------------

      Equipment
       sales          $  3,157,000  $  2,888,000  $  8,599,000  $  7,540,000
      Inspection
       services          1,048,000     1,144,000     1,689,000     1,803,000
      Consulting
       services          1,719,000       682,000     2,934,000       930,000
      Monitoring &
       technical
       support             840,000       680,000     1,706,000     1,149,000
                      ------------  ------------  ------------  ------------
    Total revenue        6,764,000     5,394,000    14,928,000    11,422,000

    Cost of sales        2,233,000     2,149,000     4,676,000     4,125,000

    Marketing            1,016,000       830,000     2,084,000     1,528,000
    Engineering and
     production            935,000       329,000     1,829,000       788,000
    General and
     administrative      1,549,000     1,285,000     3,111,000     2,084,000
    Research and
     development           348,000       355,000       581,000       696,000
    Depreciation and
     amortization          334,000       285,000       650,000       539,000
    Foreign exchange
     (gain) loss           735,000        11,000       594,000      (268,000)
    Interest income        (16,000)      (72,000)      (56,000)     (197,000)
                      ------------  ------------  ------------  ------------

    Income (loss)
     from continuing
     operations
     before tax           (370,000)      222,000     1,459,000     2,127,000

    Income taxes            25,000        13,000        28,000        13,000
                      ------------  ------------  ------------  ------------

    Net income (loss)     (395,000)      209,000     1,431,000     2,114,000

    Income (loss) per
     share - basic    $      (0.01) $       0.01  $       0.04  $       0.07
           - diluted  $      (0.01) $       0.01  $       0.04  $       0.06

    Weighted avg.
     shares
           - basic      33,167,415    32,489,676    33,064,973    32,323,428
           - diluted    33,758,607    33,053,473    33,696,493    32,916,505



                                                         As at         As at
    (unaudited)                                        June 30,      Dec. 31,
    Consolidated Balance Sheet                            2009          2008
    -------------------------------------------------------------------------

    Assets
    Current assets
      Cash and cash equivalents                   $ 17,880,000  $ 20,204,000
      Accounts receivable                           12,531,000     7,458,000
      Inventory                                      1,721,000     1,386,000
      Prepaid expenses                                 450,000       848,000
      Net investment in lease                           87,000        87,000
                                                 ----------------------------
                                                    32,669,000    29,983,000

    Property and equipment                           2,727,000     2,487,000
    Goodwill                                         1,849,000     1,849,000
    Intangible assets                                1,600,000     1,754,000
    Net investment in lease                             86,000       131,000
    Other assets                                             -        28,000
                                                 ----------------------------
                                                  $ 38,931,000  $ 36,232,000

    Liabilities and Equity
    Current liabilities
      Accounts payable                            $  2,013,000  $  2,266,000
      Deposits on sales contracts                      259,000       112,000
                                                 ----------------------------
                                                     2,272,000     2,378,000

    Future income taxes                                173,000       196,000

    Shareholders' equity
      Share capital                                 45,350,000    44,102,000
      Contributed surplus                            1,198,000     1,179,000
      Accumulated other comprehensive
       income (loss)                                    71,000       (59,000)
      Deficit                                      (10,133,000)  (11,564,000)
                                                 ----------------------------
                                                  $ 38,931,000  $ 36,232,000
    

    About Pure Technologies Ltd.

    Pure Technologies Ltd. is an international technology and services
company which has developed patented technologies for inspection, monitoring
and management of critical infrastructure around the world. Pure operates from
its headquarters in Calgary, Canada and through subsidiaries in Maryland, New
Jersey, and the UK. Pure's proprietary product portfolio includes
SoundPrint(R), a continuous acoustic structural monitoring system for
buildings, bridges and structures; SoundPrint(R) AFO, a fiber-optic
distributed acoustic sensing system for monitoring and surveillance of
pipelines; and SmartBall(R), a revolutionary new leak detection technology for
water, wastewater and hydrocarbon pipelines.

    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).

    
    (R) Registered Trademarks, property of Pure Technologies Ltd.

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

    %SEDAR: 00006060E




For further information:

For further information: To find out more about Pure Technologies Ltd.
(TSX-V: PUR), visit our website at www.puretechnologiesltd.com; contact James
E. Paulson, Chairman or Karen Keebler, Chief Financial Officer at (403)
266-6794, or e-mail to: info@puretechnologiesltd.com


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