Water Intelligence PLC First Half Trading Update (2281W)
July 31 2018 - 2:00AM
UK Regulatory
TIDMWATR
RNS Number : 2281W
Water Intelligence PLC
31 July 2018
Water Intelligence Plc
First Half Trading Update
Water Intelligence plc (AIM: WATR.L) (the "Group" or "Water
Intelligence"), a leading multinational provider of precision,
minimally-invasive leak detection and remediation solutions for
both potable and non-potable water is pleased to provide a trading
update for 1H 2018. Unaudited financial statements are expected to
be released during the week of 10 September.
Strong Trading Growth; Significant Profits Growth
The Group had a very productive first half. Our business model
continues to scale strongly at both top and bottom lines. Sales
grew approximately 39% half year over half year reaching $11.8
million (1H 2017: $8.5 million). Profits before taxes grew
approximately 48% half year over half year reaching $1.25 million
1H 2017: $0.85 million). Both top and bottom lines are comfortably
in-line within expectations for full year 2018. We are on track to
meet the goals set forth in the Chairman's Statement for the 2017
Annual Report released earlier this year: passing $20 million in
annual sales during 2018 and passing $25 million in annualized
sales in the near-term.
Beyond this core financial guidance, two operating points
regarding first half execution are important for this update
because they underscore our focus on creating a sustainable growth
trajectory. Each is discussed below. First, both US and UK
operating subsidiaries share in the strong growth trajectory and
continue to deliver on our stated mission of building a world-class
multinational growth company. The addressable market regarding
problems of water loss from leakage and poor infrastructure is
global. The collaborative evolution of our organizational structure
on both sides of the Atlantic, through American Leak Detection and
Water Intelligence International, puts us in a better position to
sustain a multinational growth strategy. Second, in addition to
strong operating performance during the first half, we also
executed corporate development transactions ranging from a
significant financing to investments in cutting edge technologies.
These transactions will fuel our competitive strategy.
Growth in US and UK Subsidiaries At Both Top and Bottom
Lines
Our core American Leak Detection business (ALD) grew across each
operating line when comparing 1H 2018 to 1H 2017. Overall, sales
reached $10.3 million which represented an increase of 37% (1H
2017: $7.5 million). Meanwhile, profits before tax reached $1.6
million which represented an increase of 23% (1H 2017: $1.3
million). Within the total sales number, each operating line
progressed. Royalty income from franchisees reached $3.31 million
which represented an increase of approximately 4% (1H 2017: $3.17
million). Corporate operated locations reached $4.5 million which
represented an increase of approximately 61% (1H 2017: $2.8
million). Our insurance channel continued to scale, more than
doubling to $2.1 million (1H 2017: $1 million). Parts and equipment
sales in support of these operating lines did lag in the first half
reaching $0.4 million (1H 2017: $0.5 million).
Our newly formed Water Intelligence International (WII)
business, based in the UK, also grew strongly. To date, WII has
focused on municipal sales in the UK, US and Australia; however,
during 1H it has also broadened execution with contracts in Ireland
and Romania. WII sales reached approximately $1.5 million which
represented an increase of approximately 48% (1H 2017: $1 million).
WII profits before tax turned positive after first-year losses due
to additional expenses needed to launch the operation. (1H 2018:
$0.06 million vs. 1H 2017: ($0.04 million)).
1H Corporate Development to Sustain Growth
We are sustaining our growth trajectory with corporate
development activities. We increased our capability to deploy
resources with our March financing which had both equity and debt
components. We increased our overall cash availability by
approximately $7.5 million. Approximately $5.8 million of the total
came from an oversubscribed equity round. We were able to enhance
our investor base through the inclusion of four high quality
institutional investors from both sides of the Atlantic. In
addition, because of the stable growth of our royalty income, we
were able to increase our working capital lines of credit by $1.75
million. Such increase represents not only non-dilutive financing
that benefits our shareholders but also good corporate finance that
produces a more attractive blended cost of capital for our
valuation metrics.
During 1H we have put capital to work with franchise
reacquisitions in Louisville, Kentucky, our largest reacquisition
to date, and Bakersfield, California. Each has strengthened our ALD
corporate operations across the US in support of our franchise
system and national insurance channel. Moreover, each of these
acquisitions is strategically located close to other corporate-run
locations, providing for additional economies of scale.
Furthermore, in 1H we used capital to add technology solutions
to fuel our growth and enhance our brand. In support of ALD, we
created partnerships with Flo Technologies and Tagasuaris. Both
companies use artificial intelligence and their respective
solutions can unlock value for our residential and commercial
customers. Flo's product monitors water use in the home using
algorithms to learn from consumption patterns and to alert
homeowners and ALD operations to the presence of leaks. After
training on the product during 1H, we anticipate the initiation of
sales of the Flo device by ALD to our customers during 2H.
Meanwhile, Tagasauris's solutions focus on video search and
enabling e-commerce. We plan to launch ALD TV and use Tagasauris
technology to sell water-related products. Finally, in support of
WII, we created a partnership with UK-based Reece Innovations. The
partnership will deploy a WII-branded acoustic device that analyses
blockages in municipal sewer pipes. The device can also be combined
with Tagasauris video technology. This new product will supplement
WII's municipal offerings for potable and non-potable water to
include the analysis of "gray" water problems.
Conclusion
The Group is advancing the Water Intelligence brand, with an
emphasis on Intelligence, in bringing high technology solutions to
the global water and wastewater infrastructure market. Strong
demand exists worldwide for the Group's products and services and
the Group seeks to attack the international market with a scalable
business model. The Group's first half performance continues its
upward growth path with the delivery of strong trading results and
the execution of corporate development transactions to sustain such
trading results into the future.
Patrick DeSouza, Executive Chairman of Water Intelligence,
commented: "We are pleased with first half execution. Our growth
strategy and brand development rest on sound fundamentals. Our firm
culture, embodying both franchise and corporate operations, is
being shaped with additional hires for the pursuit of excellence.
We will continue to attack the market opportunity relentlessly and
look forward to reinforcing our trajectory."
Enquiries:
Water Intelligence plc Tel: +1 203 654 5426
Patrick DeSouza, Executive Chairman
finnCap Ltd Tel: +44 (0)207 220
Stuart Andrews / Julian Blunt / Giles 0500
Rolls, corporate finance
Stephen Norcross, corporate broking
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTSDEFWSFASEDW
(END) Dow Jones Newswires
July 31, 2018 02:00 ET (06:00 GMT)
Water Intelligence (LSE:WATR)
Historical Stock Chart
From Mar 2024 to Apr 2024
Water Intelligence (LSE:WATR)
Historical Stock Chart
From Apr 2023 to Apr 2024