CALGARY, Aug. 11, 2014 /CNW/ - Pure Technologies Ltd. ("Pure" or the "Company") (TSX: PUR) announces its financial results for the three and six-month periods ended June 30, 2014. For the second quarter, the Company recorded revenue of $20.5 million, adjusted EBITDA of $4.3 million and profit of $0.5 million. This compares to revenue of $16.1 million, adjusted EBITDA of $5.1 million and profit of $2.2 million in the second quarter of 2013.
"We are pleased to report a very active second quarter," said Jack Elliott, President and CEO of Pure. "In addition to strong financial results, we announced over $33 million worth of new, multi-year work while continuing to execute on existing projects worldwide. We also launched an exciting new technology, SmartBall® PWA, further expanding our scope of services for metallic pipelines, and we continued to offer turn-key solutions to water utilities looking to cost effectively manage their pipeline assets. Finally, we strengthened our senior management team to prepare us for the growth we anticipate in the coming years. Based on current visibility, the strong business activity we experienced during the quarter is expected to continue for the balance of the year. Our strong, debt-free balance sheet provides us with substantial flexibility in our future investment decisions."
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).
| ($000s Canadian dollars,
unless otherwise indicated
and per share amounts)
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
|Cost of sales||5,847||2,952||2,895||98||8,574||6,045||2,529||42|
|Gross margin (%)||71||82||74||79|
|Profit (loss) for the period||454||2,203||(1,749)||(79)||1,061||1,044||17||2|
|Per share - basic||0.01||0.04||0.02||0.02|
|Per share - diluted||0.01||0.04||0.02||0.02|
*Adjusted EBITDA is EBITDA before gains or losses on foreign exchange, earn-out provisions related to acquisitions, stock-based payment transactions and one-time management restructuring costs.
Financial Highlights - Three months ended June 30, 2014
- Total revenues grew 27% quarter-over-quarter to $20.5 million.
- Equipment sales (22% of total) increased 165% related to new pipeline monitoring contracts in Canada and the U.S.
- Inspection services (48% of total) decreased 9% primarily related to the timing of international projects where activity is expected to increase in the second half of 2014.
- Consulting services (17% of total) increased 63%, mainly in Australia.
- Monitoring and technical support (13% of total) increased 79% from new licensing contracts with North American oil and gas pipeline operators.
- Total operating expenses were $13.1 million compared to $10.2 million in 2013, an increase of 28%.
- Marketing expenses (23% of total) up 17% due to increased business development activities.
- Engineering and operations expenses (42% of total) up 30% due to the hiring of technical personnel to support increased activity, resulting in higher revenue and work in progress.
- General and administrative expenses (33% of total) are up 31%, almost entirely due to $0.9 million of one-time management restructuring costs.
- Gross margin of 71% compared to 82% for the same period last year due to a high component of pass-through revenue on a project in Australia and the timing and mix of high-margin inspection services in 2013 compared to the current period.
- Adjusted EBITDA of $4.3 million and profit of $0.5 million, compared to adjusted EBITDA of $5.1 million and profit of $2.2 million last year. Profit was impacted by foreign exchange losses as well as the aforementioned one-time management restructuring costs.
- Financial position remains strong, with net working capital at June 30, 2014 of $76.5 million; including $35.2 million in cash.
Financial Highlights - Six months ended June 30, 2014
- Total revenues increased 16% over the prior six-month period to $33.1 million due to the same reasons stated for the three-month period.
- Equipment sales (20% of total) grew 107%.
- Inspection services (50% of total) declined 11%.
- Consulting services (18% of total) increased by 58%.
- Monitoring and technical support (12% of total) increased by 35%.
- Total operating expenses were $24.8 million compared to $21.1 million in 2013, an increase of 18%, due to the same reasons stated for the three-month period.
- Marketing expenses (24% of total) up 21%.
- Engineering and operations expenses (42% of total) up 19%.
- General and administrative expenses (32% of total) up 17%.
- Gross margin of 74% compared to 79% for the same period last year due to the same reasons stated for the three-month period.
- Adjusted EBITDA of $4.8 million and profit of $1.1 million, compared to adjusted EBITDA of $5.6 million and profit of $1.0 million last year.
Business, Operations & Outlook
As at June 30, 2014, project backlog remains high at over $80 million, which does not include yearly recurring revenues of greater than $7 million from pipeline monitoring and technical support. The Company announced over $33 million worth of new, multi-year contracts of which approximately $24 million was for work within North America.
Significant contracts with existing North American customers, encompassing all of Pure's major technologies and services, have been awarded during the quarter. Key clients in North America, including The Regional Municipality of York and Lake Huron Primary Water Supply System, have been proactively assessing their network of water pipelines using the Company's technologies and services; the relationship with these clients have strengthen over time. Elsewhere in the Americas, preparatory work on a number of projects continued which will ultimately see further deployments of the Company's technologies in water pipelines in the coming months.
Internationally, Pure won significant new work in Australia and Qatar, areas where non-revenue water is of particular concern given supply constraints and the high cost of water treatment and transportation in these water-stressed regions. Several opportunities are being pursued abroad for work in both the water and oil and gas sectors.
Technology innovation through Pure's research and development efforts continued during the quarter. The Company introduced the latest enhancement to its highly successful SmartBall inspection platform, called SmartBall PWA, which it believes will have a significant impact on Pure's metallic pipeline inspection business for both water and oil and gas markets.
The strengthening of the Company's senior management team continued during the quarter with the appointment of Geoff Krause as Chief Financial Officer and Nicole Springer as Chief Legal Officer. These changes, combined with the senior appointments announced in the first quarter, will improve operational efficiency and ensure that the Company can take advantage of future growth opportunities with confidence.
The Company's Board of Directors has declared a quarterly dividend of $0.03 per common share ($0.12 per common share annualized), payable on September 15, 2014 to shareholders of record on August 29, 2014.
The Company hereby notifies all shareholders that the dividend payable on September 15, 2014 will be designated as an "eligible dividend" for Canadian income tax purposes pursuant to subsection 89(14) of the Income Tax Act (Canada).
Conference Call and Webcast
A teleconference will be held to discuss these results on August 12, 2014, 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).
- Conference ID: 75714815
- A replay will be available approximately two hours after the call and will be available for two weeks. 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: 75714815
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.
- Links to the webcast and presentation slides will be available approximately 30 minutes prior to the call on Pure's website. Under the "Investors" main menu tab, select "Presentations and Webcasts".
- The webcast will be archived for 90 days.
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.
This News Release contains forward-looking statements, including, without limitation, statements containing the words "should", "believe", "anticipate", "may", "plan", "will", "continue", "intend", "expect", "estimate" and other similar expressions. These statements constitute "forward-looking information" within the meaning of applicable Canadian securities laws. These statements are based on the Company's current expectations, estimates, forecasts and assumptions. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other important factors that could cause the Company's actual performance to be materially different from that projected. Examples of these statements would include those where the Company forecasts the timing of new and existing projects, the success of the Company's new technologies and entering new markets, the Company's ability to generate future cash flows and the timing and amount of future dividend payments. The assumptions, risks and uncertainties that could cause actual results to differ materially from the forward-looking information, include, but are not limited to, market changes, the Company's ability to deliver services in a timely and cost effective manner, technological change, changes in general economic conditions and other risks detailed from time to time in our ongoing filings with the Canadian securities regulatory authorities, including those in the Company's Annual Information Form, which filings can be found at www.sedar.com. Given these assumptions, risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by applicable securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise.
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SOURCE: Pure Technologies Ltd.
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