Pure Technologies Ltd. announces results for second quarter ended June 30,
2010
CALGARY, Aug. 9 /CNW/ - Pure Technologies Ltd., TSX-V: PUR, today reported total revenues of $12.8 million for the quarter ended June 30, 2010 and net income of $2.9 million. EBITDA for the quarter was $3.2 million.
For the first half of 2010, the Company generated revenues of $18.5 million and EBITDA of $1.9 million compared to $14.9 million and $2.6 million respectively for the corresponding period in 2009. Gross margins for the quarter were 63% compared to 67% in 2009, which was higher than normal due to a few specific projects. Our second quarter results greatly improved over the first quarter as the expected equipment shipment to Libya was completed, and our monitoring program with the Washington Suburban Sanitary Commission (WSSC) continues to generate positive results.
Current confirmed backlog is in excess of $29 million. Pure has also received verbal notification of projects worth more than $4.4 million, which are subject to the normal contract review process and final documentation. Annualized revenue from licenses, monitoring and technical support revenue under contract is currently in excess of $5.2 million.
As we recently announced, we have signed an agreement to purchase The Pressure Pipe Inspection Company (PPIC) with closing expected by August 31, 2010. We expect the highly complementary expertise and technologies resulting from the acquisition of PPIC to allow us to offer one of the most comprehensive suites of proprietary solutions to water and wastewater agencies around the world. Throughout the remainder of the year, we will be working to realize capital and operating efficiencies that we expect will result in cost synergies. We will be taking the necessary steps to ensure the profitability of our business long-term.
Financial Highlights
Overall, revenue increased by 89% in the second quarter compared to the same period in 2009. Year-to-date revenues have increased by 24%. Gross margins were 63% compared to 67% in the second quarter of 2009 and 62% versus 69% year-to-date. Equipment sales have shown an increase of 200% for the quarter and 30% year-to-date; the quarterly increase is due to the June shipment under the Great Man-Made River Authority (GMRA) contract. The next shipment is expected to be completed in September.
Inspection service revenue has shown a decrease of 28% in the quarter and a 1% decrease year-to-date. The quarterly decrease is due to a significant international project in 2009 that was completed in April. SmartBall continues to dominate the leak detection market and is expected to increase throughout the year. Consulting services for the second quarter of 2010 decreased 4% mainly due to foreign exchange. Overall, consulting services have increased by 14% year-to-date due to work with the WSSC and the acquisition of Jason Consultants. Revenue from monitoring and technical support increased by 7% in the quarter and by 35% over 2009. The quarterly increase reflects the new monitoring systems that have been installed over the last year, and the largest contributing factor to the year-to-date increase is SmartBall licenses that commenced in 2010 and the annual renewal fees for these licenses signed in previous years.
Gross profit increased by 77% for the quarter and 11% on a year-to-date basis. Gross margins for the quarter were 63% compared to 67% in 2009, which was higher than normal due to a few specific projects. We also incurred additional expenses in the quarter as a result of implementing enhanced maintenance protocols for monitoring sites which should result in increased long-term operational efficiencies. It is expected that margins will return to historic levels over the balance of the year.
Marketing and promotion expenses for the quarter have increased by 25% over 2009 and 20% year-to-date. These expenses are consistent with the prior quarter and reflect our increased presence in the international market. Engineering and operations expenses have increased by 42% over the second quarter of 2009 and by 37% year-to-date, primarily due to the above-mentioned maintenance protocols for monitoring sites.
General and administrative expenses for the quarter have increased 6% and by 10% year-to-date and are consistent with the prior year overall. Research and development expenses increased by 58% in the quarter and by 88% year-to-date. The increase is due to ongoing efforts to bring new technologies to the Company. Depreciation and amortization for 2010 increased by 39% compared to the second quarter of 2009, reflecting increased asset levels, particularly in the robotics area, as well as the amortization of intangible assets realized on the acquisition of Jason Consultants.
EBITDA has increased 369% for the second quarter while down approximately 29% for the year. While this is a function of both revenue and expenses, it is expected that we will continue to grow EBITDA throughout the remainder of the year with the level of projects scheduled to be completed during the year and continued focus on cost control.
2010 Q2 Financial Highlights
(unaudited)
Consolidated Three months ended: Six months ended:
Statement of June 30, June 30, June 30, June 30,
Operations 2010 2009 2010 2009
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Revenue
Equipment sales 9,490,000 3,157,000 11,210,000 8,599,000
Inspection
services 757,000 1,048,000 1,670,000 1,689,000
Consulting
services 1,649,000 1,719,000 3,336,000 2,934,000
Monitoring and
technical
support 901,000 840,000 2,306,000 1,706,000
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Total Revenue 12,797,000 6,764,000 18,522,000 14,928,000
Cost of sales 4,799,000 2,233,000 7,119,000 4,676,000
Marketing 1,273,000 1,016,000 2,497,000 2,084,000
Engineering and
operations 1,327,000 935,000 2,502,000 1,829,000
General and
administration 1,641,000 1,549,000 3,433,000 3,111,000
Research and
development 552,000 349,000 1,095,000 581,000
Depreciation and
amortization 463,000 333,000 907,000 650,000
Foreign exchange
(gain) loss (135,000) 735,000 (5,000) 594,000
Interest income (24,000) (16,000) (40,000) (56,000)
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Net income (loss)
before income
taxes 2,901,000 (370,000) 1,014,000 1,459,000
Income taxes 70,000 25,000 78,000 28,000
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Net income (loss) 2,831,000 (395,000) 936,000 1,431,000
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Net income (loss)
per share
- basic $ 0.07 $ (0.01) $ 0.02 $ 0.04
- diluted $ 0.07 $ (0.01) $ 0.02 $ 0.04
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Weighted average
number of shares
outstanding
- basic 40,544,547 33,167,415 38,443,017 33,064,973
- diluted 41,438,218 33,758,607 39,358,269 33,696,493
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As at As at
(unaudited) June 30, December 31,
Consolidated Balance Sheet 2010 2009
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Assets
Current assets
Cash $ 37,260,000 $ 15,565,000
Accounts receivable 22,389,000 17,297,000
Inventory 3,082,000 1,475,000
Prepaid expenses 767,000 819,000
Net investment in lease 75,000 75,000
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63,573,000 35,231,000
Property and equipment 2,949,000 2,859,000
Goodwill 1,988,000 1,988,000
Intangible Assets 1,663,000 1,977,000
Net investment in lease 0 38,000
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$ 70,173,000 $ 42,093,000
Liabilities and Equity
Current liabilities
Accounts payable $ 3,420,000 $ 4,812,000
Deposits on sales contracts 75,000 125,000
Future income taxes 199,000 239,000
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3,694,000 5,176,000
Shareholders' equity
Share capital 72,785,000 45,576,000
Contributed surplus 2,102,000 1,591,000
Warrants 993,000 -
Accumulated other comprehensive loss (278,000) (191,000)
Deficit (9,123,000) (10,059,000)
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$ 70,173,000 $ 42,093,000
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, Ohio, 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).
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"The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release"
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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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