Pure Technologies Ltd. announces results for quarter and year ended December
31, 2009
CALGARY, March 24 /CNW/ - Pure Technologies Ltd., TSX-V: PUR, announces revenues of $31,673,000 for the year ended December 31, 2009, an overall increase of 43% over 2008. EBITDA was $4,503,000, a significant increase of 170% over 2008.
Net income for the year was $1,505,000 resulting in earnings per share of $0.05 on a basic basis compared to income of $2,257,000 in 2008 with earnings per share of $0.07. 2009 earnings included a foreign exchange loss of $1,549,000 compared to a gain in 2008 of $1,414,000.
Net income for the fourth quarter of 2009 was $2,364,000 compared with $778,000 in the last quarter of 2008. In December, the first shipment of a new contract with the Great Man Made River Authority was completed and shipped. Earnings per share on both a basic and diluted basis were $0.07 compared to $0.02 in last quarter of 2008. Total revenue for the quarter was $12,866,000 compared with $6,017,000 in 2008.
Highlights for the year included:
- The award of a multi-year contract from Washington Surburban Sanitary
Commission (WSSC), one of the largest water agencies in the U.S., to
manage a condition assessment program for portions of their large-
diameter water transmission system. WSSC is using Pure's technologies
and services to promote their proactive asset management strategies
to the public, resulting in wide-spread exposure for Pure in the
regional and national media.
- The increasing international recognition of SmartBall(R) as a cost-
efficient and effective leak detection system. We now have four
SmartBall(R) licensees; in the UK, South Africa, the Benelux
countries and, more recently, Japan.
- The acquisition of Jason Consultants, adding increased credibility
and decades of experience to our team.
- The acquisition of the PipeEye robotics assets and expertise in June
2009, resulting in an immediate enhancement of our P-Wave(R)
technology and has given us a foothold in the enormous wastewater
inspection market.
- The opening of our office in Abu Dhabi, providing us with a base for
expansion of our business in the Gulf and surrounding regions.
- The recognition of Pure as one of the world's top twenty sustainable
stocks by a leading financial industry publication.
- The award of the largest contract in the Company's history by the
Great Man-Made River Authority, providing us with the springboard we
need to continue growing in 2010 and beyond.
Based on current visibility, we expect to maintain a high rate of revenue and EBITDA growth through 2010, excluding the impact of any acquisitions that may be completed during the year.
Subsequent to year-end, we successfully completed a $30,100,000 financing. The offering was fully subscribed and has brought new investors from Europe and North America into our shareholders group. With over $60 million in working capital, including over $40 million in cash, we have the resources to take advantage of opportunities to accelerate the growth of our business in the Americas and overseas.
Financial Overview
Revenue for the year increased by $9,506,000 or 43% compared to 2008. The revenue growth has shown dramatic increases since 2005 followed by increased profitability of the Company. 58% of the increase is attributable to deliveries of equipment and technical support services for Great Man-Made River Authority (GMRA). This includes the new contract (awarded in late 2009) that will deliver AFO systems in 2010 and 2011. 7% of the increase is due to the inclusion of a full year of revenue from Price Brothers (UK) Ltd. The remaining increase is attributable to increased activity in the North American market.
Consulting revenues increased by 109% with the execution of the Washington Suburban Sanitary Commission project through our US subsidiary, PureService Inc. as well as the inclusion of a full year of revenue from the acquisition of Price Brothers UK Ltd.. Inspection services showed the only decline in revenue of 6% following a large Cablescan project in 2008 with no corresponding project in 2009. Both P-Wave and SmartBall showed increases in revenue. Focused marketing efforts are being made on the international markets for licensing agreements for the use of SmartBall(R) for both the water and hydrocarbon markets. Three such licenses were awarded during the year.
Recurring monitoring & technical support continues to increase with 50% growth over the past year.
As a percentage of revenue, gross margin for 2009 was 65.1% versus 62.7% in 2008. All product lines continue to deliver target margins with only slight deviations from quarter to quarter. Staff continue to work to improve processes to ensure that the delivery and installations of our products and technologies are cost efficient to ensure the sustainability of margins.
Marketing and promotion expenses have increased 25% in 2009. As in 2008, the international market continued to be a targeted area for the Company with significant contracts resulting for both equipment sales and licensing agreements. In 2009 the Company established a branch office in Abu Dhabi. This office will serve as a marketing and operational centre for the Middle Eastern work that we are currently bidding.
Engineering and operations expenses increased 86% in 2009. As a percentage of revenue, these expenses have grown from 9% to 12%. The Company expanded the operations and engineering group over the last year as a result of the rapid expansion in our revenues. Consulting and inspection services are heavily dependent on labor and as these areas increase, engineering and operation expenses will be affected. However, in 2010 as a percentage of revenue, these expenses will level off. As well, PBUK expenses are included for all of 2009 figures while only five months are included in the 2008 figures.
General and administration expenses increased 23% over 2008. As a percentage of revenue, these expenses have decreased from 25% to 21% during the year and are expected to continue to decrease as a percentage of revenue. The dollar value increase is mainly attributable to changes in compensation throughout the Company.
Research and development expenditures for the year increased by 22%. These expenses can fluctuate from year to year depending upon whether projects underway meet our capitalization policy. In 2009, no development costs were capitalized. Research grants, in the amount of $93,458, were offset against development costs. Comparatively in 2008, SmartBall(R) Oil and Gas expenditures and AFO development costs for wastewater met the capitalization criteria. Staffing levels remained consistent.
Depreciation and amortization increased 25% from 2008. The expense increased between 2007 and 2008 by 51%. The increase over the last two years is due to two factors. The first factor is the amortization related to the acquisition of PBUK and Jason Consultants which included amounts attributable to customer contracts, customer relationships, and employment contracts. Amounts relating to customer contracts and relationships are amortized over 5 years while the employment contracts are amortized over 3 to 4 years. The second factor is increased capitalization in 2007 and 2008 for development costs.
A large portion of the Company's activities are generated through its wholly-owned U.S. subsidiaries. Upon consolidation, the Company is subject to foreign exchange gains or losses due to the use of the temporal method to translate the accounts of one of the US subsidiaries. These gains or losses are recognized in current year earnings or losses. The Company also holds cash and intercompany loans in various currencies. These are subject to revaluation on a monthly basis. In addition, international contracts are or were denominated in U.S. dollars, Euros, and British Pounds. Accordingly, the Company is susceptible to foreign exchange fluctuations due to the monthly revaluations. 80% of the foreign exchange loss for 2009 is attributable to the revaluation of currencies. 90% of the foreign exchange gain for 2008 can be attributed to the revaluation of currencies. The loss of 2009 almost mirrors the gain of 2008 as the main factor was the volatility of the US dollar. The Company does some minor currency hedging activities.
Pure's working capital is strong and at December 31, 2009 was $30,294,000 including $15,565,000 in cash and cash equivalents. Subsequent to an equity financing in February 2010, the cash balance is currently over $40,000,000 with no debt.
The Company currently has a confirmed order backlog in excess of $30 million plus annualized recurring revenues under contract of approximately $4 million. In addition, Pure has received verbal confirmation of awards in excess of $4 million subject to the completion of the normal contract review process and final documentation.
The Company will also file its Annual Information Form and Annual Report on SEDAR.
2009 Financial Highlights
(unaudited) Three months ended: Twelve months ended:
Consolidated Statement Dec. 31, Dec. 31, Dec. 31, Dec. 31,
of Operations 2009 2008 2009 2008
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Equipment sales $ 9,461,000 3,203,000 $18,740,000 $13,354,000
Inspection services 838,000 1,339,000 3,310,000 3,514,000
Consulting services 1,635,000 752,000 5,892,000 2,820,000
Monitoring & technical
support 932,000 723,000 3,731,000 2,479,000
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Total revenue 12,866,000 6,017,000 31,673,000 22,167,000
Cost of sales 5,096,000 2,057,000 11,041,000 8,273,000
Marketing 1,005,000 964,000 4,071,000 3,260,000
Engineering and
operations 1,058,000 671,000 3,809,000 2,051,000
General and
administrative 2,169,000 1,958,000 6,751,000 5,483,000
Research and
development 465,000 328,000 1,498,000 1,225,000
Depreciation and
amortization 428,000 328,000 1,434,000 1,148,000
Write-down of
property and
equipment - 205,000 - 205,000
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Net income from
operations 2,645,000 (494,000) 3,069,000 522,000
Foreign exchange gain
(loss) (251,000) 1,166,000 (1,549,000) 1,414,000
Interest income 7,000 88,000 85,000 384,000
Income taxes 37,000 (18,000) 100,000 63,000
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Net income 2,364,000 778,000 1,505,000 2,257,000
Income per share -
basic $ 0.07 $ 0.02 $ 0.05 $ 0.07
Income per share -
diluted $ 0.07 $ 0.02 $ 0.04 $ 0.07
Weighted avg. shares
- basic 33,477,914 32,857,045 33,261,069 32,546,778
diluted 34,237,141 33,092,601 33,935,273 32,966,902
As at As at
Dec. 31, Dec. 31,
Consolidated Balance Sheet 2009 2008
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(unaudited)
Assets
Current assets
Cash $15,565,000 $20,204,000
Accounts receivable 17,297,000 7,458,000
Inventory 1,475,000 1,386,000
Prepaid expenses 819,000 848,000
Net investment in lease 75,000 87,000
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35,231,000 29,983,000
Property and equipment 2,859,000 2,487,000
Goodwill 1,988,000 1,849,000
Intangible Assets 1,977,000 1,754,000
Net investment in lease 38,000 131,000
Other assets - 28,000
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$42,093,000 $36,232,000
Liabilities and Equity
Current liabilities
Accounts payable $ 4,812,000 $ 2,266,000
Deposits on sales contracts 125,000 112,000
Future income taxes 239,000 196,000
--------------------------
5,176,000 2,574,000
Shareholders' equity
Share capital 45,576,000 44,102,000
Contributed surplus 1,591,000 1,179,000
Warrants - -
Accumulated other comprehensive loss (191,000) (59,000)
Deficit (10,059,000) (11,564,000)
--------------------------
$42,093,000 $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
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: [email protected]
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