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CALGARY, March 16 /CNW/ --
CALGARY, March 16 /CNW/ - Pure Technologies Ltd. ("Pure") (TSXV: PUR) is pleased to announce strong financial results for the year ended
December 31, 2010. Revenue for the year was $48.4 million, a 53%
increase over 2009 and EBITDA of $7.1 million increased by 58% over the
previous year. Net income for the year was $5.5 million, an increase
of 263% over 2009. Earnings per share of $0.13, on a fully diluted
basis, more than tripled compared to 2009.
Fourth quarter results were strong with revenue of $16.5 million, versus
$12.9 million in the fourth quarter of 2009. Revenue growth reflects a
significant year-over-year increase in worldwide project activity, as
well as the inclusion of a full quarter of contribution by the recently
acquired Pressure Pipe Inspection Company ("PPIC"). Net income for the
quarter was $3.6 million, compared to $2.4 million for the fourth
quarter of 2009.
"This has been a tremendous year for Pure as we achieved record
financial results and great success in all elements of our business",
said Jack Elliott, President. "With the acquisition of PPIC, we
broadened our global reach and added to our technology and services
portfolio. The acquisition for the partial year generated revenues of
$9.2 million. We also continued to expand our business development
activities and obtained several substantial contracts as well as
advanced our presence in regions including Australia, Hong Kong, the
Philippines, and Mexico."
Highlights for the year included:
-- The PPIC acquisition, which was a significant milestone for
Pure and the international water technology sector. The
integration of the business and resources of PPIC is
essentially complete with sales, marketing, operations and R&D
functions now combined. With this acquisition, we have
accelerated our project delivery capability and research &
development output and we have been successful in securing new
or renewed pipeline monitoring, leak detection and condition
assessment contracts from former clients of PPIC.
-- The establishment of Pure Technologies China Ltd. ("Pure
China"), a joint venture with Balama Prima Engineering Co.
Ltd., a privately-held Hong Kong-based company with business
interests in the infrastructure sector in China. This joint
venture extended our global reach into the Asian market with
Pure China representing Pure's interests in China, Hong Kong,
Taiwan and Macau.
-- The acquisition of Aqua Environmental Pty. Ltd. ("Aqua"), a
privately-held company headquartered in Sydney, Australia which
provides pipeline leak detection and condition assessment
services for Australia and New Zealand. This acquisition
allows Pure to build on the established expertise in the
region, which holds significant opportunity. Following the
acquisition, Aqua signed a substantial three-year contract
award with Yarra Valley Water in Melbourne, Australia for leak
detection services.
-- The significant increase in revenue from leak detection
services. The scarcity of water in many locations has driven
the need to ensure water loss in transmission distribution
networks is minimized. As a result, the demand for leak
detection services including Pure's Sahara® and Smartball®
patented technologies has grown substantially with several
contract and renewal awards.
-- The completion of a $30,100,000 financing. The offering was
fully subscribed and brought new investors from Europe and
North America into our shareholder group.
Financial Overview
Pure generated $16.7 million in revenue growth over 2009, an increase of
53% in total revenue. Revenue growth has shown dramatic increases
since 2005 followed by increased profitability of the Company. All
product groups saw a minimum of 16% growth over 2009, with the majority
of the growth (343%) coming from inspection services. This product
group represents the revenue from both the PPIC and Aqua Environmental
Pty. Ltd. acquisitions completed in the year.
Gross margin was 64.5% which is slightly lower than 2009 at 65.1%.
Expenses as a percentage of revenue increased slightly from 55% to 57%.
This small increase is attributable to the amortization related to the
intangibles recognized within the purchase price allocation of the
acquisitions. Working capital grew by 56%. Earnings increased from
$1.5 million in 2009 to $5.5 million. Overall, the financial results of
the Company continue to strengthen, positioning it to capitalize on its
new markets and technologies.
Geographically, all regions experienced considerable revenue growth.
Mexico has led this growth as a result of the PPIC acquisition combined
with the first installation of an AFO system in the country. The
Middle East/Africa region accounted for approximately $4.0 million of
the increase while business in the U.S. continues to grow and there has
been increased work and interest within Canada. Revenues in Europe
have increased mainly due to SmartBall license agreements that have
been signed or renewed. To date, we have issued nine licenses for
either water or oil pipelines.
Marketing and promotion expenses increased by 44% in 2010, consistent
with 2009 as a percentage of revenue. Acquisitions and the formation
of the joint venture in Hong Kong attributed to 43% of this increase.
Also, additional resources were employed in North America to focus on
the wastewater and power generation markets and coverage of South
America expanded, resulting in favorable contracts that will be
executed in 2011. Marketing efforts of the acquisitions have been fully
integrated into the Company's strategies and expanding business in all
geographical locations will be a focus in 2011.
Engineering and operations expenses increased 72% in 2010. As a
percentage of revenue, these expenses have grown from 12% to 13.5%. The
2010 acquisitions accounted for 40% of the increase while staffing
levels added the remaining amount. As a result of the acquisitions,
additional staff training was undertaken during the latter part of
2010; this will continue into 2011 to ensure that the operations staff
is sufficiently trained in the Company's technologies to adequately
execute the revenue growth.
General and administration expenses increased 42% over 2009. Of the
increase, 54% is attributable to acquisitions and the formation of the
Hong Kong joint venture. The remaining 46% of the increase is due to
the growth of company in terms of required office space, staff, and
third party fees. As a percentage of revenue, general and
administration has remained consistent at 20% for 2010 and 2009.
Significant reductions in G&A have been made in relation to the PPIC
acquisition. These savings will be realized in 2011 and 2012.
Research and development expenditures increased by 36% for the year; 11%
of the increase was due to the acquisition of PPIC. The remaining
increase is due to projects underway that did not meet our
capitalization policy. In 2010, $553,565 in costs were capitalized in
PPIC for the development of PipeDiver™. In 2009, no development costs
were capitalized. Research grants, in the amount of $80,304 were
offset against development costs. Comparatively, in 2009, $93,458 of
research grants were offset against development costs. Integration of
staff from PPIC's research and development function occurred during the
latter part of 2010.
Depreciation and amortization increased 130% from 2009. The expense
increased between 2008 and 2009 by 25%. Over the last two years, this
expense increase has been attributable in part to the amortization
related to intangibles acquired in the acquisitions. For 2010, the
amortization related to the acquisition intangibles was $1,438,944. The
second factor is the actual depreciation on assets acquired during 2010
with the purchase of PPIC and Aqua Environmental which accounts for
$379,944 of the increase.
Pure's working capital at December 31, 2010 was $47.1 million, a 56%
increase over 2009. Of the amount, $14.2 million is in cash and cash
equivalents. The value of outstanding accounts receivable from Libya
currently stands at $24 million. Management expects that these
receivables will be collected and is in regular contact with senior
management of the Great Man-Made River Authority (GMRA). The Company
is closely monitoring developments and updates will be provided to
shareholders as the situation evolves.
2011 Outlook
Looking ahead to 2011, the Company's first quarter results will be
adversely affected by the recent events in Libya. Under our current
contract with GMRA, we had anticipated shipping equipment worth
approximately $10.7 million in March 2011. This shipment will now be
delayed. Furthermore, we had anticipated that revenues of approximately
$2 million related to the provision of technical support for pipeline
monitoring and $5 million related to Price Brothers UK activities would
occur in 2011. Our backlog of over $44 million plus $5 million in
recurring revenue currently includes $12.7 million of this amount;
however all work in Libya will be delayed until conditions are deemed
appropriate for the Company to resume activities.
Although these events will likely affect our business in the short term,
we have pursued a business strategy over the last two years to
diversify our revenues and to make us less dependent on any one
customer. We expect this trend to continue in 2011. Our business in
the Americas has been growing at a rate of approximately 100% per year
over the past two years and we expect that this growth rate will be
maintained in 2011. Our overseas business has begun to generate
meaningful revenues that we expect will contribute to overall growth in
the future as agencies are increasingly faced with the challenge of
addressing deteriorating infrastructure and shrinking capital budgets.
We continue to look for opportunities to grow our business organically
and through strategic acquisitions.
The Company will also file its Annual Information Form and Annual Report
on SEDAR.
2010 Financial
Highlights
(Unaudited)
Consolidated Three months ended Twelve months ended
Statement of
Operations
Dec. 31, 2010 Dec. 31, 2009 Dec. 31, 2010 Dec. 31, 2009
Equipment 5,035,000 9,461,000 21,942,000 18,740,000
sales
Inspection 8,065,000 838,000 14,655,000 3,310,000
services
Consulting 2,012,000 1,635,000 6,860,000 5,892,000
services
Monitoring 1,409,000 932,000 4,895,000 3,731,000
and technical
support
Total Revenue 16,521,000 12,866,000 48,352,000 31,673,000
Cost of sales 4,999,000 5,096,000 17,180,000 11,041,000
Marketing 1,830,000 1,005,000 5,871,000 4,071,000
Engineering 2,246,000 1,058,000 6,532,000 3,809,000
and operations
General and 3,707,000 2,169,000 9,597,000 6,751,000
administration
Research and 247,000 465,000 2,033,000 1,498,000
development
Depreciation 1,549,000 428,000 3,291,000 1,434,000
and
amortization
Foreign (472,000) (251,000) (400,000)
exchange loss (1,549,000)
Interest 32,000 7,000 108,000
income 85,000
Net income 1,503,000 2,401,000 3,554,000 1,605,000
(loss) before
income taxes
Income taxes (2,062,000) 37,000 (1,908,000) 100,000
Net income 3,565,000 2,364,000 5,462,000 1,505,000
(loss)
Net income
(loss) per
share
-- basic $0.09 $0.07 $0.13 $0.05
-- diluted $0.09 $0.07 $0.13 $0.04
Weighted
average number
of shares
outstanding
-- basic 44,545,529 33,477,914 41,020,760 33,261,069
-- diluted 45,505,852 34,237,141 41,948,040 33,935,273
Consolidated Balance Dec. 31, 2010 Dec. 31, 2009
Sheet
(Unaudited)
Assets
Current assets:
Cash and cash 14,173,000 15,565,000
equivalents
Accounts receivable 41,394,000 17,297,000
Inventory 4,313,000 1,475,000
Prepaid expenses 1,203,000 819,000
Net investment in 36,000 75,000
lease
61,119,000 35,231,000
Property and equipment 5,813,000 2,859,000
Goodwill 24,533,000 1,988,000
Intangible assets 11,466,000 1,977,000
Future tax asset 1,251,000 -
Net investment in 38,000
lease -
104,182,000 42,093,000
Liabilities and
Shareholders' Equity
Current liabilities:
Accounts payable and 6,180,000 4,812,000
accrued liabilities
Acquisition holdback 4,250,000 -
payable
Deferred revenue 3,546,000 125,000
13,976,000 4,937,000
Future income taxes 239,000
-
Shareholders' equity:
Share capital 91,360,000 45,576,000
Contributed surplus 2,496,000 1,591,000
Share Purchase 993,000 -
Warrants
Accumulated other (46,000) (191,000)
comprehensive loss
Deficit (4,597,000) (10,059,000)
90,206,000 36,916,000
104,182,000 42,093,000
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 revenue from data analysis and site maintenance for
these technologies, and from technology licensing;
-- Premium technical services including inspection, leak detection
and condition assessment (P-Wave®, SmartBall®, Sahara®,
PipeDiver™, PureRobotics™);
-- Specialized engineering services in 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 Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release"
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/March2011/16/c3600.html
pTo find out more about Pure Technologies Ltd. (TSX-V: PUR), visit our website at a href="http://www.puretechltd.com"www.puretechltd.com/a. Or contact James E. Paulson, Chairman or Karen Keebler, Chief Financial Officer at (403) 266-6794 or e-mail to a href="mailto:info@puretechnologiesltd.com"info@puretechnologiesltd.com/a./p