CALGARY, Nov. 7, 2017 /CNW/ - Pure Technologies Ltd. ("Pure" or the "Company") (TSX: PUR) announces its financial performance for the quarter ended September 30, 2017.

Third Quarter (Q3) and Nine-Month Period (YTD) Highlights:

• Total revenue up 9% to $30.9 million in Q3 and up 13% to $93.8 million YTD:
• Water Division performance:
• Q3 up 1% at $23.3 million reflecting: an increase in inspection and consulting revenue by $0.8 million offset by $1.2 million of revenue deferrals in the Americas Segment (moved to Q4 driven by client delays and the impact of weather; includes $0.3 million due to Hurricanes Irma and Harvey) and a temporary decline in Wachs Water Services ("WWS") revenue (down 12%) due to timing of program renewals
• YTD, revenue increased 10% to $72.3 million due to higher activity in all segments
• Oil and Gas Division – PureHM – performance:
• Q3 up 40% to $7.6 million due to $2.0 million of E-MAC Corrosion Inc. ("E-MAC") revenue, acquired December 30, 2016, and 4% organic growth; Canada revenue growth was offset by lower than expected U.S. activity
• YTD up 28% to $21.5 million due to $4.2 million of E-MAC revenue and 3% organic growth for the reasons above
• Organic revenue growth of 4% in Q3 and 9% YTD, which excludes revenue from new acquisitions and foreign exchange impacts
• Q3 Gross margin percentage was consistent at 77% compared to last year; YTD margin increased to 79% from 78% last year, due to increased attention to direct project costs, and despite higher subcontractor use and PureHM product sales (lower margin) in the period
• Q3 Adjusted EBITDA up 12% to $4.7 million, with YTD Adjusted EBITDA up 59% to $15.7 million mainly reflecting:
• Lower Q3 Americas Water Adjusted EBITDA offset by improvements in the International Water and WWS Segments
• YTD, the increase is primarily a result of higher revenues and improved performance in the International and WWS segments
• PureHM Q3 Adjusted EBITDA decreased 26%, reflecting a higher cost base following the acquisition of E-MAC and lower than expected utilization rates in the U.S.; YTD, Adjusted EBITDA declined 17% due to the same reasons combined with the impacts of E-MAC integration activities in Q1
• Cash flow from operations before working capital changes up 8% to $4.5 million in Q3 and up 63% to $15.2 million YTD due to the reasons discussed above
• Net loss totalled $0.1 million in Q3 and YTD net income improved to $1.5 million from a $0.6 million loss in 2016. The loss in Q3 reflects lower than expected revenue growth while the YTD increase reflects overall improved operating results
• At the end of the quarter, Pure had $8.3 million of cash, $36.6 million of working capital, and a $10 million undrawn credit facility

"Pure is on track for a record year," said Jack Elliott, President and CEO of the Company. "Our core business remains strong and we continue to benefit from corporate cost efficiencies through thoughtful process improvement. As we move into what we expect will be our busiest quarter of the year, we are well positioned to improve upon our performance to date.

"In our Americas Water business, third quarter revenue was flat relative to last year, as a 5% increase in inspection and consulting activity was offset by the timing of equipment sales. The results reflect approximately $1.2 million of primarily weather related project deferrals from the third quarter to the fourth quarter. This includes the impacts of Hurricanes Irma and Harvey which are expected to defer approximately US$0.9 million of fourth quarter projects into 2018. All of our personnel are safe and accounted for and none of our facilities were impacted. Despite this, we see an uptick in activity in all regions and we are working hard to ensure that we can deliver these projects with the quality and precision that our clients expect.

"In our PureHM Division, growth in Canada, inclusive of the EMAC acquisition, was offset by activity declines in the U.S. Over the next two quarters, the division is focused on developing the organizational structures and processes necessary to increase its overall efficiency and to exploit the large U.S. market opportunity. We are excited to announce the first commercial sale of PureHM's Sentinel^TM fixed pipeline pig tracking equipment on two major pipelines in Canada, expected to be installed in the fourth quarter of 2017. We are confident the successful commissioning of this new product will generate a lot of interest given the cost savings, flexibility and safety benefits this system provides our customers compared to conventional pipeline pig tracking methods."

In addition, the Company announces that Ms. Sara Elford has resigned from the Board of Directors of the Company (the "Board"). With regret, the Board accepted Sara's resignation. The Board and management of the Company wish to thank Sara for her dedication and many valuable contributions to the Company during her tenure and wish her all the best in her future endeavours.

Financial Highlights for the Three and Nine-Month Periods Ended September 30, 2017

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 IR website.

Outlook

In the Americas Water Segment, the impacts of project deferrals in the third quarter resulted in third quarter revenue that was below Pure's expectations.  An additional USD $0.9 million of anticipated fourth quarter activity is expected to be deferred to 2018 due to the impact of hurricanes. Despite these challenges and consistent with prior years, the fourth quarter is expected to be the most active quarter of the year based upon current project scheduling.  Accordingly, given these factors, Pure remains on track to deliver organic growth in this segment in 2017 of between 5 and 15%.

Internationally, Pure continues to pursue projects around the world in select, strategic markets. The Company expects continued growth in business activity in Europe and Africa, which has been consistently growing since 2015 when local business development professionals were put into place.  Leak detection projects in Qatar have resumed in October after the summer break, and further growth is anticipated in the Middle East in 2018 as the Company leverages its early stage partnership with Xylem. The Company is experiencing interest in its solutions in South America, including planned inspections in Costa Rica, having completed leak detection works in Brazil and Chile, and condition assessment projects in Colombia during the year. Finally, through its joint venture in China, Pure Technologies China Ltd ("PTCL"), the Company is working to expand its position as the central government has initiatives in place to reduce non-revenue water in major cities.

The year-to-date results reflect the positive impact of WWS executing on its plans. Bookings, which are the leading indicator of future activity, have increased 14% for the twelve-month period ended September 30, 2017 compared to the twelve-month period ended December 31, 2016. Through these actions and based upon the growth in booked work, Pure continues to expect that WWS will return to pre-acquisition activity levels by 2019, with a corresponding increase in profitability. 

PureHM made progress on its growth strategy in the first nine months of 2017 through the acquisition of E-MAC and organic growth which resulted in 40% revenue growth for the quarter and 28% growth for the nine-month period ended. The fourth quarter of 2017 is expected to remain active, particularly in Canada, but is subject to the risk of inclement weather as the winter season commences. Market penetration and growth remains on track in Canada. Contributing to this continued growth is the first commercial sale and installation of Sentinel fixed pipeline pig tracking equipment on two pipelines in Canada expected in the fourth quarter of 2017 with monitoring services expected to commence shortly thereafter. The U.S. remains a significant high growth opportunity for PureHM with market drivers consistent with the Canadian market.  Management is focused over the next two quarters on developing and implementing the organizational structure necessary to drive increased growth within this region, as well as the division's overall efficiencies, with benefits expected in 2018. 

Conference Call and Webcast

A teleconference and webcast will be held tomorrow morning, Wednesday, November 8, 2017, at 10:30 am EDT. 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).

• Callers should dial-in 10 minutes prior to the scheduled start time and simply ask to join the Pure Technologies Ltd. Conference Call
• A replay will be available approximately two hours after the call for two weeks. Access the replay by calling 1-855-669-9658 (toll-free within Canada & USA). Use the following Passcode followed by the number sign: 1755

Webcast & Information Slides: Investors will be able to listen to the conference over the Internet as well as access supplemental information slides (in pdf format).

• Links to the webcast and slides will be available approximately 30 minutes prior to the call on Pure's IR website under the Events section.
• 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:

• Premium technical services including pipeline inspection, leak detection and condition assessment;
• Specialized engineering services in areas related to asset management, primarily in the area of pipeline condition assessment for water and wastewater infrastructure;
• Sales of proprietary monitoring technologies for pipelines, bridges and structures;
• Recurring revenue from data analysis, site maintenance, and from technology licensing.

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 forecasted growth rates, 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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