Pure Technologies Announces First Quarter 2015 Results

CALGARY, May 11, 2015 /CNW/ - Pure Technologies Ltd. ("Pure" or the "Company") (TSX: PUR) announces its financial performance for the three month period ended March 31, 2015. For the first quarter, the Company recorded revenue of $14.7 million, adjusted EBITDA loss of $2.1 million and a loss of $2.3 million. This compares to revenue of $12.6 million, adjusted EBITDA of $0.6 million and profit of $0.6 million in the first quarter of 2014.

"Pure's financial performance for the first quarter, seasonally our slowest period due to client scheduling and winter weather in North America, was slightly below our expectations," said Jack Elliott, President and CEO of Pure. "Our results were impacted by the timing of projects that were initially planned for the first quarter, but were deferred to future quarters mainly as a result of client driven scheduling. Having said that, a very busy second quarter has already commenced and we expect additional positive impacts on future performance through the acquisition of Wachs Valve and Hydrant Services, LLC ("Wachs Water"), which closed on April 1, 2015, and from PureHM™, our growing oil and gas pipeline inspection business purchased late last year. The significant investments we made starting in 2014, through additional hiring and strategic acquisitions, reflect our confidence in Pure's ability to capitalize and deliver on the growth opportunities we see ahead in 2015 and for the long-term."

Table of Selected Financial Results:
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).

($000s Canadian dollars,  unless otherwise indicated and per share amounts)				Three months ended March 31, 2015			Three months ended March 31, 2014			$ Change			% Change
Revenue				14,666			12,619			2,047			16
Cost of sales				3,958			2,727			1,231			45
Gross profit				10,708			9,892			816			8
Gross margin (%)				73			78						-
Operating Expenses^1				15,883			11,662			4,221			36
Adjusted EBITDA^2				(2,085)			575			(2,660)			(463)
Profit (loss) for the period				(2,304)			607			(2,911)			(480)
	Per share – basic			(0.04)			0.01
	Per share – diluted			(0.04)			0.01
Adjusted Profit for the period^3				(3,886)			77			(3,963)			(5,166)
Total assets^4				129,926			130,989			(1,063)			(1)

1.	Excludes Libya accounts receivable and other provisions.
2.	Adjusted EBITDA is EBITDA before gains or losses on foreign exchange, costs directly attributable to acquisitions, stock-based compensation transactions, and other significant one-time expenses. See Non-GAAP Measures in the MD&A.
3.	Adjusted Profit is Profit (loss) before costs directly attributable to acquisitions, stock-based compensation transactions, and other significant one-time expenses. See Non-GAAP Measures in the MD&A.
4.	Comparative figure is as at December 31.

Financial Highlights - Three months ended March 31, 2015

• Total revenues increased 16% quarter-over-quarter to $14.7 million.
  • Revenues increased due to: revenue contribution from PureHM, Pure's oil and gas pipeline integrity division ($nil in 2014); increased inspection work internationally partially offset by lower consulting work in Australia.  Lower equipment sales in the United States were offset by the sale of AFO equipment to Pure's equity accounted for joint venture investment in China. 
• Gross margin of 73% compared to 78% in the prior period
  • Reflects: PureHM contribution which has a lower gross margin combined with a planned lower margin sale of AFO equipment to Pure's equity accounted for joint venture investment in China.
  • Margin for Pure's core Americas region was consistent with prior periods at 77%.
• Operating expenses for the period were $15.9 million, compared to $11.7 million for the same periods in 2014. 
  • The increase reflects: scaled up resources to support the increase in the Company's expected business growth as demonstrated in the fourth quarter of 2014 and anticipated in future periods; costs attributable to the Wachs Water acquisition; and the adverse impact of a weakening Canadian dollar on US based costs.
  • First quarter operating expenses in total are consistent with the fourth quarter of 2014 and the Company's budget.
• Adjusted EBITDA loss of $2.1 million compared to Adjusted EBITDA of $0.6 million in the same period last year. Loss of $2.3 million compared to profit of $0.6 million in 2014.
  • The loss reflects the impact of the expected slow first quarter on Pure's larger operational base which is required to meet anticipated activity demands for the rest of the year.
• Working capital at March 31, 2015 was $58.3 million compared to $59.4 million at December 31, 2014.

Business, Operations & Outlook

Consistent with prior years and with its annual plan, Pure's activity is impacted by the seasonal nature of its businesses in North America, particularly in the first quarter which was reflected in the current period results.  

Activity in the water and wastewater sector in North America is expected to increase in the second quarter driven by municipal project schedules and improvements in weather. In addition, Pure's results will be positively impacted by the acquisition of Wachs on April 1, 2015.   Integration of the two businesses is underway.  The Company expects that operational and cross selling synergies will begin to be realized in the second half of 2015 as integration progresses. Pure's investment in staff in the latter half of 2014 is expected to provide a sufficient resource base to support this anticipated increase in activity and are in line with its current spending plans. 

Internationally, Pure expects continued growth in its water and wastewater businesses with increased inspection activity in the Middle East and Australia.  In addition, the commissioning of the first ever AFO monitoring system in China in the second quarter is expected to demonstrate the effectiveness of service, leading to future potential opportunities within the region.

In the PureHM business that was acquired in the fourth quarter of 2014, activity is also expected to increase significantly over the seasonally slow first quarter. Historically up to one third of its annual revenues are earned in the second quarter, except in those years where oil and gas pipeline access was inhibited by unusually wet weather. 

Conference Call and Webcast

A teleconference will be held tomorrow morning, May 12, 2015, at 10:30 am ET to discuss these results. 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).

• Conference ID: 24994898
• A replay will be available approximately two hours after the call and will be available for two weeks. 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: 24994898

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 on Pure's website. Under the "Investors" main menu tab, select "Presentations and Webcasts".
• 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;
  
  
• Recurring revenue from data analysis, site maintenance, and from technology licensing;
  
  
• Premium technical services including pipeline inspection, leak detection and condition assessment;
  
  
• Specialized engineering services in asset management, non-revenue water and condition assessment for water and wastewater infrastructure.

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 relating to the benefits expected to be realized from the acquisition of the Wachs Water business, where the Company forecasts the timing of new and existing projects, the success of the Company's new technologies and entering new markets, the Company's ability to generate future cash flows and the timing and amount of future dividend payments.   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 Company's ability to successfully integrate the Wachs Water business into its existing operations, 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.

To find out more about Pure Technologies Ltd. (TSX: PUR), visit our website at www.puretechltd.com or contact Paul Moon, Investor Relations; [phone] or [email protected].

Related Links

http://www.puretechnologiesltd.com