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Press release from CNW Group

Pure Technologies Announces Record Second Quarter 2013 Results

Thursday, August 08, 2013

Pure Technologies Announces Record Second Quarter 2013 Results

16:00 EDT Thursday, August 08, 2013

CALGARY, Aug. 8, 2013 /CNW/ - Pure Technologies Ltd. ("Pure" or the "Company") (TSX: PUR) is pleased to announce its financial performance for the three and six-month periods ended June 30, 2013.  For the second quarter, the Company recorded revenue of $16.1 million, EBITDA of $5.1 million and profit of $2.2 million.  This compares to revenue of $9.5 million, negative EBITDA of $1.0 million and a loss of $1.9 million in the second quarter of 2012.

"We are very pleased to report a record second quarter for the Company," said Jamie Paulson, Chairman. "Revenue improved 69% compared to the same quarter last year with EBITDA margin reaching 32%. This performance is due to the dramatic, organic growth of our core Americas market which contributed 83% of total revenue for the quarter. Backlog improved 20% over the previous period and is currently over $54 million, providing the Company with continued growth visibility. In addition, yearly recurring revenue from pipeline monitoring and technical support is over $6 million and is expected to grow as additional monitoring programs are put into place."

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).

                 
($000's CAD, unless otherwise indicated and per share amounts) Three months ended June 30, 2013 Three months ended June 30, 2012 $ Change % Change Six months ended June 30, 2013 Six months ended June 30, 2012 $ Change % Change
Revenue 16,102 9,552 6,550 69 28,484 29,587 (1,103) (4)
Cost of sales 2,952 2,463 489 20 6,045 7,324 (1,279) (17)
Gross profit 13,150 7,089 6,061 85 22,438 22,263 175 1
Gross margin (%) 82 74     79 75    
Operating Expenses 9,858 9,548 310 3 20,448 19,735 713 4
EBITDA 5,132 (994) 6,126 n/a 5,636 6,396 (760) (12)
Profit (loss) for the period 2,203 (1,940) 4,143 n/a 1,044 1,360 (316) (23)
  Per share - basic 0.04 (0.04)     0.02 0.03    
  Per share - diluted 0.04 (0.04)     0.02 0.03    
Total assets 124,473 123,126 1,347 1 124,473 123,126 1,347 1

Q2 Financial Highlights

Three months ended June 30, 2013

  • Total revenuesincreased 69% quarter-over-quarter to $16.1 million from $9.5 million.
  • Equipment sales (10% of total) decreased by 10%
  • Inspection services (67% of total) increased by 138% due to increased work within the Americas.
  • Consulting revenue (13% of total) increased by 22% due to new work and customers added by Pure Engineering Services.
  • Monitoring and technical support revenue (10% of total) grew by 9%, reflecting an increase in monitored pipeline distances within the Americas.
  • Total operating expenses increased 3% quarter-over-quarter to $9.8 million from $9.5 million.
  • Marketing expenses (26% of total) increased by 19% due to business development activities internationally and additional personnel in the Americas.
  • Engineering and operations expenses (43% of total) increased by 20% corresponding to the sharp increase in inspection services revenue and from recruiting efforts.
  • General and administrative expenses (30% of total) increased by 12%, related to foreign exchange fluctuations and earn-out provisions from prior acquisitions.
  • Research and development expenses (1% of total) have declined 94% related to the capitalization of costs as well as the recognition of refundable tax credits.
  • EBITDA of $5.1 million and profit of $2.2 million compared to negative EBITDA of $1.0 million and a loss of $1.9 million in the prior quarter. Quarter-over-quarter performance was impacted by the sharp increase in inspection services delivered within the Americas.
  • Working capital at June 30, 2013 was $73.3 million compared to $70.4 million at December 13, 2012.
  • Includes $37.7 million in cash.

Six months ended June 30, 2013

  • Total revenuesdecreased slightly by 4% over the prior six-month period to $28.5 million from $29.6 million. The prior period was positively impacted by a deferred equipment shipment (worth $10.7 million); removing this impact, total revenues improved by 51%.
  • Equipment sales (11% of total) decreased by 76% reflecting the prior period equipment shipment.
  • Inspection services (65% of total) increased by 65% due to increased work within the Americas.
  • Consulting revenue (13% of total) increased by 30% due to new work and customers added by Pure Engineering Services.
  • Monitoring and technical support revenue (11% of total) grew by 34%, reflecting new monitoring systems in the Americas, renewals of existing contracts and re-commissioned sites in Libya.
  • Total operating expenses increased 4% over the prior six-month period to $20.4 million from $19.7 million.
  • Marketing expenses (24% of total) increased by 22% due to business development activities internationally and additional personnel in the Americas.
  • Engineering and operations expenses (43% of total) increased by 19% corresponding to the sharp increase in inspection services revenue and from recruiting efforts.
  • General and administrative expenses (30% of total) declined by 4%, related to the net impact of foreign exchange fluctuations and earn-out provisions from prior acquisitions period-over-period.
  • Research and development expenses (3% of total) have declined 64% related to the capitalization of costs.
  • EBITDA of $5.6 million and profit of $1.0 million compared to EBITDA of $6.4 million and profit of $1.4 million in the prior six-month period. Period-over-period performance was impacted by the deferred equipment shipment (worth $10.7 million) made in 2012.

Business and Operations Highlights

  • Current revenue backlog of more than $54 million, up 20% quarter-over-quarter.

  • Yearly recurring revenues from pipeline monitoring and technical support approximately $6 million.

  • On-going program work in the Americas and other international regions including Australia; momentum building for Pure's long-term Assess and Address™ engineering services platform.

  • Monitoring over 930 km of large-diameter prestressed concrete water pipes world-wide using Pure's acoustic fibre-optic ("AFO") monitoring technology.
  • Replacement deployment equipment shipped to Libya customer in the quarter; allows for the eventual resumption of additional system installations.
  • Intervened on a potential water main failure for a major U.S. client.
  • Following technical services and the installation of additional AFO monitoring equipment in the second quarter, the Company's systems recently prevented an imminent failure on a major water pipeline - located in Prince George's County, Maryland -  providing drinking water to over 100,000 people.
  • Inspected over 1,100 km of oil and gas pipelines in the quarter utilizing the Company's SmartBall leak detection technology, an increase of 66% compared to the same period last year.
  • High profile pipeline failures continue to drive innovation and usage of Pure's technology.

Outlook

For the Americas region, total revenues are up 70% over the prior quarter. Inspection services revenue, representing 66% of the total, is up by 160% over same period last year. This is a reflection of the growing technical services work the Company provides - utilizing its proprietary condition assessment technologies for water and wastewater pipelines - as part of the long-term programs it has put into place with many customers. The number of these programs within the Americas is expected to continue to grow as more water utilities are realizing the cost-effective benefits of Pure's services as part of a proactive asset management agenda.

Pure's water pipeline monitoring systems have prevented another major failure subsequent to the installation of additional equipment in the second quarter. This intervention has potentially saved millions of dollars, millions of gallons of water, and helped to prevent prolonged service disruption to thousands of water customers. Prior interventions, along with the quick actions of our customers, have helped avoid similar imminent pipeline failures. It is expected that future interventions will generate additional interest for the Company's services and pipeline monitoring capabilities.

The oil and gas industry is quickly adopting the use of the Company's SmartBall® leak detection technology. In the quarter, Pure inspected over 1,100 km of pipeline which is an increase of 66% compared to the same period last year. Continued media coverage of high profile oil and gas pipeline failures is expected to drive technology solutions to this segment. Pure expects further momentum in the oil and gas industry's use of its unique leak detection capabilities moving ahead.

Conference Call

A teleconference will be held to discuss these results on August 9, 2013, at 10:30 am ET. 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). Please provide the operator with the Conference Call ID or Topic when dialing in to the call.

  • Conference ID: 24032981
  • Topic: Pure Technologies Ltd., 2013 Second Quarter Conference Call
  • A replay will be available approximately two hours after the call and will be available for one week. 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: 24032981

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 at: http://puretechltd.com/investors/presentations.shtml
  • 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 (SoundPrint®, SoundPrint® AFO);

  • Recurring revenuefrom data analysis and site maintenance for these technologies, and from technology licensing;

  • Premium technical servicesincluding pipeline inspection, leak detection and condition assessment (PureEM™, SmartBall®, Sahara®, PipeDiver®, PureRobotics™, PureMFL™);

  • Specialized engineering servicesin areas related to asset management, primarily in the area of pipeline condition assessment for water and wastewater infrastructure (Openaka Corp., Price Brothers UK Ltd, and Jason Consultants).

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).

® 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.

For further information:

To find out more about Pure Technologies Ltd. (TSX: PUR), visit our website at www.puretechltd.com. Or contact James E. Paulson, Chairman, Karen Keebler, Chief Financial Officer or Paul Moon, Investor Relations at (403) 266-6794 or e-mail to  investor.relations@puretechltd.com.

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