Pure Technologies Ltd. announces results for third quarter ended September
30, 2009

CALGARY, Nov. 9 /CNW/ - Pure Technologies Ltd., TSX-V: PUR, today announced financial results for the third quarter and nine months ended September 30, 2009.

Total revenues were $3.9 million for the quarter compared to $4.7 million in the third quarter of 2008. Year to date, the Company reported revenue of $18.8 million compared to 2008 revenue of $16.1 million, an increase of 16%. Revenue for the third quarter was lower than expected due to the deferral of some AFO system sales to the fourth quarter. EBITDA fell to a loss of $1,217,000 for the quarter with year to date EBITDA of $1,430,000. Expenses remained consistent with the prior two quarters of 2009.

There is continued exposure to foreign exchange losses with $704,000 being recorded for the quarter and $1,298,000 year-to-date. The unrealized component of the foreign exchange loss is 95% for the quarter and 96% year to date.

Gross margins continue to be strong at 67% for the quarter and 68% year-to date.

Our branch office in Abu Dhabi was officially registered during the quarter and we expect to generate projects in the Middle East based out of this office. The acquisition of Jason Consultants was completed towards the end of the quarter, and this acquisition will provide us with increased exposure particularly in the international wastewater sector.

We continue to work on the Washington Suburban Sanitary Commission (WSSC) contract, which is contributing to all four revenue streams. According to a recent press release by WSSC, AFO is planned for all 77 miles of their large diameter prestressed concrete pipes over the next few years.

Our first un-manned robotic P-Wave inspection was completed during the quarter and this technology will continue to expand our product line.

Current indications are for a strong fourth quarter, although this will depend on the timing of anticipated contract awards. Confirmed backlog is in excess of $7 million, and Pure has also received verbal confirmation of projects in excess of $2 million which are subject to the normal contract review process and final documentation. Monitoring and technical support revenue under contract is in excess of $ 4 million annually.

Financial Highlights

Revenues decreased by 18% in the third quarter compared to the same period in 2008, but year to date revenues have increased by 16%. While the third quarter is typically the lowest revenue-generating quarter, work continued on projects that will be delivered in the fourth quarter and in 2010. Equipment sales have shown a decrease of 74% for the quarter while year to date the decrease is 9%. The third quarter of 2008 included the delivery and installation an AFO system while there were no deliveries of AFO systems in the third quarter of 2009. Scheduled deliveries for the third quarter were postponed and are expected to be delivered in the fourth quarter. Revenue recognition of equipment sales is dependent upon the delivery of the equipment making the quarterly revenue somewhat volatile. The year to date revenue is a better indicator of the performance. Inspection service revenue increased from the third quarter of 2008 (111%) and on a year to date basis (14%). SmartBall continues to gain traction in leak detection, and the first use of the robotics equipment purchased from Pipe Eye facilitated an unmanned P-Wave inspection in Montreal. This allows for the inspection to be completed in a depressurized pipe with minimal dewatering versus full dewatering for the manned inspections. Consulting services for the third quarter of 2009 increased 16% and 106% for the year to date. The increase for the third quarter is a result of continued work on the WSSC contract while the year to date increase also takes into account the full year-to-date contribution of Price Brothers UK.

Revenue from monitoring and technical support increased by 80% for the quarter and has increased 59% year to date. With the additions to the installed base of AFO and SoundPrint systems, this revenue source continues to increase each year. Work continues on the installation and commissioning of the systems sold in 2007 and 2008 to Libya.

No revenue or expenses have been recorded from the acquisition of Jason Consultants Ltd. and Jason Consultants LLC due to the timing of the close of the transaction. These companies will begin their contributions in the next quarter.

The largest growth in revenue continues to be in the US market. While the Middle East and Africa revenues have lagged behind those of 2008, current interest for our products in this area suggests that projects will develop in the last quarter of 2009 and into 2010. We continue to develop relationships with parties in Europe and Asia to market our products, especially for SmartBall inspections.

Gross profit decreased by 1% for the quarter and increased by 29% on a year to date basis. Gross margin was 67% in the third quarter of 2009 compared to 56% in 2008. Year to date margin for 2009 is 68% compared to 62% in 2008. All product lines continue to deliver target margins with only slight deviations from quarter to quarter. Our design engineers continue to work on improved processes to ensure that the delivery and installations of our products and technologies are cost efficient to ensure the sustainability of our margins.

Marketing expenses for the quarter have increased by 28% over the third quarter of 2008 and have increased 34% year to date. Increased staffing and increased presence in the international market has caused the increase. This quarter has seen the registration and establishment of a branch office in Abu Dhabi, which will serve as a marketing and operational hub for the Middle Eastern work that we are currently bidding. As a percentage of revenue, marketing expenses have increased to 16% from 14% in 2008, having been impacted by the Abu Dhabi costs. Overall, marketing expenses have been consistent throughout the three quarters of 2009.

Engineering and operations expenses have increased by 56% over the third quarter of 2008 and 99% year to date. As a percentage of revenue, these expenses have grown from 9% to 15% year to date. We have expanded our operations and engineering group over the last year and a half as a result of the rapid expansion in our revenues. Training is a critical component of our operations group and new personnel are trained for 3 to 6 months before they are qualified for projects in the field. Consulting and inspection services are heavily dependent on labor and as we increase these areas of revenue, operation expenses will be affected. As a percentage of revenue, however, these expenses will level off in 2010. As well, PBUK expenses are included for all of 2009 figures while only five months are included in the 2008 figures. Engineering and operations expenses have been consistent throughout the three quarters of 2009.

General and administrative expenses for the quarter have increased 2%. Year to date expenses have increased by 30%. The year to date increase is due to inclusion of PBUK. As a percentage of revenue, these expenses have grown from 22% to 24% year to date. This ratio should decline in the next quarter as has been the case over the prior two quarters in 2009.

Research and development expenses increased for the quarter by 124%. Year to date expenses have increased by 15%. In the third quarter of 2008, $118,000 was capitalized in relation to the oil and gas SmartBall. There has been no corresponding capitalization in 2009. In 2008, grant 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 27% compared to the third quarter of 2008 and 23% 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 third quarter decreased 233% compared to 2008. Year to date, EBITDA has decreased by 22%. In preparing for the increase in forecasted work throughout 2009 and 2010, expenses have increased in the year. With the lower revenues in the third quarter, EBITDA has been significantly affected in the quarterly comparison. On a year to date basis, while there has been a decrease, it is not as dramatic. It is expected that the fourth quarter will be significantly stronger than the third quarter, reversing the trend.

    2009 Q3 Financial Highlights

    Consolidated              Three months ended:        Nine months ended:
    Statement of            September    September    September    September
    Operations               30, 2009     30, 2008     30, 2009     30, 2008

    Equipment sales         $ 680,000  $ 2,610,000  $ 9,279,000 $ 10,151,000
    Inspection services       783,000      372,000    2,472,000    2,175,000
    Consulting services     1,323,000    1,139,000    4,257,000    2,068,000
    Monitoring & technical
     support                1,092,000      607,000    2,799,000    1,756,000
                          ------------ ------------ ------------ ------------
    Total revenue           3,878,000    4,728,000   18,807,000   16,150,000

    Cost of sales           1,268,000    2,091,000    5,945,000    6,216,000

    Marketing                 983,000      768,000    3,066,000    2,295,000
    Engineering and
     operations               922,000      592,000    2,751,000    1,380,000
    General and
     administrative         1,471,000    1,441,000    4,582,000    3,525,000
    Research and
     development              451,000      201,000    1,033,000      898,000
    Depreciation and
     amortization             356,000      281,000    1,006,000      820,000
    Foreign exchange
     (gain) loss              704,000       20,000    1,298,000      248,000
    Interest income           (22,000)     (99,000)     (78,000)    (296,000)
                          ------------ ------------ ------------ ------------

    Income (loss) from
     continuing operations
     before tax            (2,255,000)    (567,000)    (796,000)   1,560,000

    Income taxes               35,000       68,000       63,000       81,000
                               ------       ------       ------       ------

    Net income (loss)      (2,290,000)    (635,000)    (859,000)   1,479,000

    Income (loss) per
     share - basic         $    (0.07)  $    (0.02)  $    (0.03)  $     0.05
           - diluted       $    (0.07)  $    (0.02)  $    (0.03)  $     0.04

    Weighted avg. shares
           - basic         33,426,164   32,678,359   33,186,695   32,442,602
           - diluted       33,426,164   32,678,359   33,186,695   32,938,737

    (unaudited)                                           As at        As at
    Consolidated Balance Sheet                        September     December
                                                       30, 2009     31, 2008

    Current assets
      Cash and cash equivalents                    $ 18,410,000 $ 20,204,000
      Accounts receivable                             8,672,000    7,458,000
      Inventory                                       2,285,000    1,386,000
      Prepaid expenses                                  362,000      848,000
      Net investment in lease                            78,000       87,000
                                                     29,807,000   29,983,000

    Property and equipment                            2,635,000    2,487,000
    Goodwill                                          2,393,000    1,849,000
    Intangible assets                                 1,605,000    1,754,000
    Net investment in lease                              58,000      131,000
    Other assets                                              -       28,000
                                                   $ 36,498,000 $ 36,232,000

    Liabilities and Equity
    Current liabilities
      Accounts payable                             $  1,854,000 $  2,266,000
      Deposits on sales contracts                       146,000      112,000
                                                      2,000,000    2,378,000

    Future income taxes                                 162,000      196,000

    Shareholders' equity
      Share capital                                  45,539,000   44,102,000
      Contributed surplus                             1,321,000    1,179,000
      Accumulated other comprehensive income (loss)    (101,000)     (59,000)
      Deficit                                       (12,423,000) (11,564,000)
                                                   $ 36,498,000 $ 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

SOURCE Pure Technologies Ltd.

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.

Organization Profile

Pure Technologies Ltd.

More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890