CALGARY, March 15, 2012 /CNW/ - Pure Technologies Ltd. ("Pure" or the "Company") (TSX: PUR), a world leader in the development and application of technologies for inspection, monitoring and management of physical infrastructure, today reported financial results for the fourth quarter and year ended December 31, 2011 and provided a business update. All figures are in Canadian dollars unless otherwise stated. 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).
Table of Selected Financial Results:
|($000's unless otherwise indicated)|
|Cost of sales||2,828||4,999||-43%||10,477||17,180||-39%|
|Gross margin (%)||81%||70%||76%||64%|
|Profit (loss) for the period||1,372||2,470||(6,876)||2,348|
"Despite challenges related to events in Libya last year, we are very excited about our growth projections," said Jack Elliott, President. "The political climate in Libya is stabilizing and we expect to resume work there in 2012. In the meantime, we have significantly improved our performance in the Americas, and in other regions, securing multi-year work with large municipalities based on prior success and through our expanded engineering services capability. In addition, with the acquisitions made earlier in 2011, we now have a full range of solutions for condition assessment of all types of pipelines, and we have the geographical reach to be able to service our clients in high-growth regions. Current backlog based on existing contracts is over $44 million, providing us with significant revenue and growth visibility. Our past performance is a testament to our financial resources and the versatility of our business model - a solid platform on which we expect to deliver value to all stakeholders."
Fourth Quarter Financial Highlights:
For the fourth quarter, the Company recorded revenue of $14.6 million, EBITDA of $3.9 million and profit of $1.4 million. This compares to revenue of $16.5 million, EBITDA of $2.6 million and profit of $2.5 million in 2010.
- Total revenue declined by 12% quarter-over-quarter to $14.6 million as a result of the loss of Libyan revenue.
- Equipment sales and consulting revenues were reduced by 48% and 33%, respectively, due to the situation in Libya; however, inspection services and monitoring & technical support revenues improved by 7% and 41%, respectively, helping to maintain relatively solid total revenues in the quarter.
- Total operating expenses decreased by 13% quarter-over-quarter to $9.7 million.
- Engineering & operations expense grew 34% due to increased inspection services and marketing expenses grew by 7% due to geographic expansion activities. Research and development expenses increased by 88% due to research grants which were applied to 2010 expenses. General and administrative expenses decreased by $2.8 million, or 46%, capturing the synergies of acquisitions made in the past year.
- Gross margins improved significantly to 81% compared to 70% in the prior period, reflecting the growth in inspection services.
2011 Financial Highlights:
For the year, the Company recorded revenue of $43.1 million, negative EBITDA of $1.7 million and a loss of $6.9 million. This compares to revenue of $48.4 million, EBITDA of $4.7 million and profit of $2.3 million in 2010. Significantly reduced revenue from Libya and greater overall expenses - due to acquisitions and severance expenses - contributed to 2011 performance.
- Total revenue declined by 11% year-over-year to $43.1 million.
- Equipment sales, consulting and monitoring & technical support revenues declined by 62%, 36% and 6%, respectively, all due to the work disruption in Libya. Significantly, inspection services revenue improved by 76% over the year, and currently represents 60% of total revenues.
- Total operating expenses increased by 32% year-over-year to $40.9 million.
- Engineering and operations expense increased by 82% due to significantly higher inspection services revenue. Marketing expenses increased by 12% compared to last year and research and development expenses increased by 34% due to research grants which were applied to 2010 expenses. General and administrative expenses increased by 15% mainly due to restructuring charges.
- Following two key acquisitions in 2010, 2011 was the first full-year integrating core technologies, technical services and business units under the Pure umbrella. The overall impact of restructuring charges and acquisition costs on expenses is expected to be reduced in the coming periods.
- Gross margins improved to 76% compared to 64% in 2010, based on increased inspection services versus equipment sales.
- Working capital at December 31, 2011 was $61.4 million compared to $47.0 million in the prior period.
- $20 million raised in Q2 through a bought deal common share financing.
2011 Business and Operations Highlights:
- Current backlog, based on existing contracts and work expected to be completed within a 12 to 18 month period, is approximately $44.4 million.
- Overall performance was significantly impacted by events in Libya. Full year revenues from this region were expected to contribute approximately 30% of the total while they only accounted for 2%. Substantial growth in the Americas and elsewhere helped to reduce the impact.
- Revenue in Canada ($6.2 million) and the U.S. ($24.9 million) - together representing 72% of 2011 revenues - grew by 164% and 56%, respectively, compared to 2010. This region has seen consistently high growth rates over the last three years.
- Revenue in other countries outside of the Americas and Libya ($10.5 million) - collectively 24% of 2011 revenues - grew by 101% year-over-year.
- Continued expansion of Pure's engineering services, focusing on multi-year programs with long-term clients such as the Miami-Dade Water and Sewer Department and Washington Suburban Sanitary Commission. This successful model is being expanded to other geographical regions.
- Purchased the business and assets of the Inspection Division of Specialized Technical Services Est. ("STS"), an Abu Dhabi-based company involved in inspection and monitoring of water, wastewater and oil & gas pipelines for over 20 years, providing Pure with access to the Gulf Cooperation Council countries.
- Purchased the assets and business of U.S. based Electromechanical Technologies Inc. ("EMTEK"), positioning the Company as an industry leader in condition assessment of metallic water and wastewater pipes.
- Historically, Pure's business has largely come from services related to the prestressed concrete cylinder pipeline market; metallic pipes make up approximately 65% of the overall water pipeline market in North America and represent a significant growth opportunity for the Company.
- Operational milestones expected to expand Pure's addressable markets include: the first successful inspections of pressurized, in-service, large-diameter water and sewer forcemains utilizing PipeDiver®; a successful robotics sewer forcemain inspection despite significant debris build-up; and the first large-scale project utilizing Magnetic Flux Leakage technology to inspect metallic pipe. These successful tests reflect the capability of our technology and are expected to lead to new contracts in the future.
The evolving political climate in Libya continues to be monitored closely by management. Pure has taken steps to secure payment of outstanding receivables and the Company expects that work will resume in 2012 once an agreement is reached regarding the timing of payments. Libya-based customers have indicated that they will honor all existing contracts and outstanding amounts. The Man-Made River Authority in Libya (formerly the Great Man-Made River Authority) has been a major client since 2000, and Pure expects positive relations will continue.
Further growth in the Americas region is expected as the Company has been successful in providing meaningful results to utilities and owners of water and wastewater pipeline infrastructure. Based on the Company's track record and highly scalable business model, momentum is starting to build in other regions as a result.
Geographic and technology diversification are important objectives of Pure's business strategy. As a growth company, Pure will continue to evaluate strategic acquisitions which fit within its scope and expertise and that support the Company's long-term goal of stable and growing profitability.
The ongoing improvements in the Company's technology assets are driven by the challenging nature of aging, global infrastructure, resource usage trends, environmental protection concerns and the budgetary constraints of Pure's customer base. The Company's commitment to invest in sustainable and economically sound solutions has been supported by the Canadian Government with a recent $1 million grant from Sustainable Development Technology Canada to further the development in 2012 of one of Pure's proprietary pipeline inspection tools.
Q4 and Year-end Conference Call
A teleconference will be held to discuss these results on March 16, 2012, 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: 57200996
- Topic: Pure Technologies Ltd., Fourth Quarter & Year-End 2011 Results.
- 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: 57200996.
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 at: http://puretechltd.com/investors/presentations.shtml
- 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 inspection, leak detection and condition assessment (P-Wave®, SmartBall®, Sahara®, PipeDiver®, PureRobotics™);
- 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).
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).
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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 [email protected].