Canada NewsWire
CALGARY, Nov. 8, 2016
CALGARY, Nov. 8, 2016 /CNW/ - Pure Technologies Ltd. ("Pure" or the "Company") (TSX: PUR) announced its financial performance for the quarter ended September 30, 2016.
Third Quarter and Year-to-Date Highlights:
"Third quarter revenue of $28.5 million was below our expectations primarily due to scheduling and procurement delays in our International and Canadian regions in our core water business," said Jack Elliott, President and CEO of Pure. "Despite the decline in revenue, adjusted EBITDA for the quarter increased 9% year-over-year, mainly due to strong growth in our oil and gas pipeline integrity business. On a trailing-twelve-month-basis ("TTM"), revenue was up 12% and TTM adjusted EBITDA was up 10% when compared to the same period last year.
"Within our water business (which includes Wachs Water Services), Americas revenue grew 2% year-over-year with adjusted EBITDA growing 10%. Our International revenue fell 60% to $1.7 million, while adjusted EBITDA was relatively unchanged. Although we continue to face scheduling and procurement delays in our core business, we remain the world leader in condition assessment of water and wastewater pressure pipelines and we are growing our opportunity pipeline as utilities adopt our technology-based Assess & AddressTM strategy for proactive infrastructure management. As disclosed in our October 6, 2016 news release, we were recently awarded new, multi-year work by several U.S. water agencies in the amount of $14 million. These awards were made on the basis of our experience, expertise and industry-leading solutions for the management of water pipelines consisting of multiple pipe types and sizes around the world. Furthermore, we are seeing an increase in the number of requests for proposals (RFPs) related to our solutions including the largest RFP of its kind, issued by a major Californian regional water agency. We expect these developments to generate continuing growth for our water business over time.
"Our Wachs Water Services business generated revenue of US$4.1 million, essentially flat year-over-year. WWS has stabilized and returned to profitability in the third quarter. By refocusing on the core business, together with the addition of new sales staff and improved cost control, the outlook for WWS is improving. In fact, bookings, which are a leading indicator of future revenue, are up 28% year-over-year.
"PureHM, our oil and gas pipeline integrity business, continued its strong performance in the third quarter. Revenue increased 23% in the quarter, while adjusted EBITDA increased 32%. PureHM continues to expand its business development activities and introduce new, innovative solutions to help clients manage critical integrity challenges. Pilot projects are being planned to demonstrate the efficacy of these solutions. These opportunities represent significant long-term growth potential within a very large, regulatory-driven, North American addressable market. In addition to new business development, PureHM continues to place a heavy emphasis on recruitment and training to keep pace with anticipated growth.
"As we continue to grow, we will seek out additional cost and efficiency opportunities to better optimize our cost structure and increase profitability. As usual, the fourth quarter is our busiest based on scheduled work and we look forward to closing the year on a high note."
Financial Highlights for the Three and Nine Month Periods Ended September 30, 2016
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).
For the period ended September 30 |
Three |
Three |
Change |
Nine |
Nine |
Change | |||
$ |
% |
$ |
% | ||||||
Revenue |
28,453 |
29,559 |
(1,106) |
(4) |
82,763 |
73,636 |
9,127 |
12 | |
Cost of sales |
6,415 |
8,142 |
(1,727) |
(21) |
17,823 |
19,564 |
(1,741) |
(9) | |
Gross profit |
22,038 |
21,417 |
621 |
3 |
64,940 |
54,072 |
10,868 |
20 | |
Gross margin (%) |
77 |
72 |
- |
78 |
73 |
- | |||
Operating Expenses1 |
21,282 |
20,721 |
561 |
3 |
65,525 |
58,223 |
7,302 |
13 | |
Adjusted EBITDA2 |
4,216 |
3,883 |
333 |
9 |
9,876 |
6,393 |
3,483 |
54 | |
Adjusted EBITDA (%) |
15 |
13 |
12 |
9 |
|||||
Profit (loss) for the period |
895 |
1,076 |
(181) |
(17) |
(596) |
(811) |
215 |
(27) | |
Per share – basic |
0.02 |
0.02 |
(0.01) |
(0.02) |
|||||
Per share – diluted |
0.02 |
0.02 |
(0.01) |
(0.02) |
|||||
Cash Flow from Operations Before Working Capital Changes2 |
4,192 |
3,507 |
685 |
20 |
9,308 |
5,747 |
3,561 |
62 | |
Adjusted Profit (Loss) for the period2 |
931 |
808 |
123 |
15 |
(413) |
(2,638) |
2,225 |
(84) | |
Total assets3 |
139,948 |
147,080 |
(7,132) |
(5) |
139,948 |
147,080 |
(7,132) |
(5) |
1. |
Excludes Libya accounts receivable recovery and loss or gains on asset disposals |
2. |
See Non-GAAP Measures. |
3. |
Comparative figure is as at December 31 |
The Company's total revenue is derived from product groups, each with varying gross margin which, in isolation or in combination, is subject to volatility in part due to contract timing, seasonality and the unique needs of clients. Current sales mix included a high volume of inspection services and was positively impacted by the inclusion of the results of operations from Wachs Water Services ("WWS"), acquired April 1, 2015, which were not included in the first quarter of 2015 revenues.
Offset by:
Outlook
Consistent with prior years, the fourth quarter for the Americas region is expected to be the busiest of the year based upon scheduled work. While current year results have been impacted by procurement delays, particularly in Canada, a large part of this work has now commenced. In addition, and as announced on October 6, 2016, the investment in sales and marketing is beginning to bear fruit with awards of multi-year program work by U.S. water agencies related to the inspection and management of critical water pipelines which, in aggregate, total up to CAD $14 million. This includes a two-year renewal contract with City of Atlanta, GA, for up to $4 million, to provide condition assessment and related services for primarily metallic water distribution and transmission mains. Work starts in the first quarter of 2017. Similar work worth up to $10 million in the aggregate was awarded by agencies in California, Arizona and Texas, with work commencing on all three projects in the fourth quarter and extending into 2017.
While the Americas' results have been negatively impacted by significantly lower than expected WWS activity and related profitability, Pure believes that WWS has stabilized through the addition of new sales staff and a refocusing of the business. Current quarter revenue of US$4.1 million was consistent with the same period of 2015 and bookings, which are the leading indicator of future activity, are up 28% over the same period of last year.
Internationally, Pure continues to see opportunities for growth in its regional markets. International activity has historically been driven by large projects, resulting in inter-quarter and year-over-year volatility. While activity in the fourth quarter is expected to be busier than the third quarter, Pure expects full year revenues from the International division to be lower than 2015 reflecting the aforementioned volatility.
PureHM continues to be the Company's fastest growing business unit. Market acceptance continues to grow for the Spectrum XLI and SmartBall technologies in the oil and gas sector. Fourth quarter activity is expected to remain strong as the division continues to broaden its customer base while also focusing on increasing services provided to existing key customers. Management remains focused on the continued recruitment, training and development of its workforce, a critical component in sustaining these high growth levels.
Conference Call and Webcast
A teleconference and webcast will be held tomorrow morning, November 9, 2016, at 10:30 am EST. Senior Management will speak to the results and provide a financial and business update.
Teleconference: The telephone numbers for the conference are toll-free 1-800-319-4610 (within Canada & USA) and 416-915-3239 (Local / International).
Webcast & Presentation Slides: Investors will be able to listen to the conference over the Internet as well as access supplemental information slides (in pdf format).
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:
Forward-Looking Statements
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 and the success of the Company's new technologies and entering new markets. The assumptions, risks and uncertainties that could cause actual results to differ materially from the forward-looking information, include, but are not limited to the stabilization and growth of the Wachs Water Services business through the addition of senior business development staff, 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.
® 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.
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