Water Intelligence Share Discussion Threads

[shanklin] 15/3/2019 08:10

Amazing what one (unjustified IMHO) negative article can do.

[shanklin] 14/3/2019 16:13

Well I certainly would not want to be short WATR based on such poor analysis.

P.S. I find it difficult to believe this misrepresentation is due to incompetence.

[glaws2] 14/3/2019 14:26

Thanks EC - just lowered my opinion of Chris Boxall

[effortless cool] 14/3/2019 14:24

Fundamental Asset Management.





No comment from me on the "respectable" part.

[glaws2] 14/3/2019 13:58

Who are the people behind Investor's Champion - I thought it was a respectable small fund but may have got that wrong ?

[silverfern] 14/3/2019 11:39

I read it and agree with EC. Revenue increases through franchise acquisition, but when they make an acquisition they state the impact on revenue. Funnily enough so does everyone else! And check out the profit figures over the last three years. Ho hum - however, nice to see the success of WATR is getting attention.

[effortless cool] 13/3/2019 19:53

I consider this disgraceful "journalism" from Investor's Champion.

Here's their strapline:

"In a big day of announcements from AIM, two companies have stood out as the worst offenders of a lack of honesty in reporting. We’re fed up of companies using complicated accounting and a range of adjustments to hide terrible figures".

Water Intelligence is one of the companies accused of "a lack of honesty". (The other is Staffline).

The basis of their complaint is that the major driver of WATR's revenue growth is from reacquiring franchisees.

How is this "complicated accounting"? WATR are simply reporting their revenue figures per accounting standards.

How does this involve "a range of adjustments"? There are, in fact, no adjustments made.

How is there any "lack of honesty"? The reacquisition of franchisees is part of a clearly articulated strategy and its implications for revenue are clearly set out in RNSs over the years. Broker forecasts are produced on a consistent basis.

How does it "hide terrible figures"? Both revenue and profits were ahead of expectations, and the results were undeniably excellent.

"Are they deliberately misleading investors"? Perhaps Investor's Chumpion were directing that question at themselves?

[metis20] 13/3/2019 13:41

No different from any other revenue enhancement via acquisitions.

[metis20] 12/3/2019 20:33

TOT - have a look at some of the RNSs concerning Acquisitions to see reasons why WATR has a policy of acquiring franchises - for example, and starting with the first of these -



17th Feb 2015

The Board of Water Intelligence is pleased to announce the acquisition of franchise territory covering Miami, Florida. The territory will be run as a corporate location with 2015 revenue and earnings consolidated directly into Water Intelligence. The location will be joined with our growing corporate operations that are adjacent in Fort Lauderdale to form a regional office.

Executive Chairman Patrick DeSouza commented:
"Our acquisition strategy is two-fold: First, expand corporate presence to accelerate nation-wide growth and second, incorporate select areas already partially developed by our franchisees to grow those locations even faster. We plan to launch additional corporate-run locations during 2015 while maintaining growth in our royalty income. "



6th May 2015

The Board of Water Intelligence is pleased to announce the acquisition of a franchise with territory covering Detroit / Eastern Michigan. The franchise will be run as a corporate location with 2015 revenue and earnings consolidated directly into Water Intelligence. The acquisition comes as the franchisee retires having previously built up a successful business in that region.

The Board considers the franchise sufficiently well developed to be worthy of acquisition and will be joined with a new corporate location to be launched in Chicago during the latter half of 2015 to form a Mid-west U.S. regional hub from which further business in the region can be developed.

Executive Chairman Patrick DeSouza added:
"Coupled with our acquisitions of franchises in Miami and New York earlier this year, we are building critical mass and fueling growth at the Water Intelligence level via corporate store sales while our overall American Leak Detection franchise business continues to grow creating future opportunities for earnings accretive acquisitions."

[the oak tree] 12/3/2019 17:50

Been looking into this one as a potential buy but so far not convinced. Does give you the feeling its being sold to you when reading the financial accounts which is Im afraid a warning sign.

Does anyone know why its listed in the UK rather than the US?

Seams a bit odd as the US revenue is some 10 times that of the UK. Sure its got some international clients now but looking at the numbers its very US lead. The UK part seams to only have started the last 2 years , even though the company been quoted since 2005. Its HQ and board members are in US too.

I also don't like / understand why current franchise owners are selling their companies back to the parent company. If things are so good why not keep it? Sure its nice to cash in at a certain age maybe but they arent being sld for a lot. Plus whey wouldn't someone elese not buy the franchise. Its a worry they don't state the main reason in their accounts.

Anyway good luck to those in this, some of the numbers look good but not for me .....so far.

[silverfern] 12/3/2019 11:25

As per EC's post 301, the statement indicates total underlying sales "Total sales to customers reaches $100 million (implied gross sales by franchisees from which royalty reporting is derived plus direct sales from corporate locations)". THat plus the growth in eps underpins the valuation.

I note this: "As we scale with strong execution, we may consider aiming even higher and putting more resources to work to deliver, even faster, equity value for our shareholders" Wooly words perhaps, but could also mean negotiations going on with other businesses. Reverse takeover for example.

[shanklin] 12/3/2019 09:16

There is an interesting negative comment re WATR at post 11 of

Thoughts welcome albeit I am not too convinced by the comparison with CAKE.

[someuwin] 12/3/2019 08:49

WHIreland...

WATR is a leading and geographically diversified specialist in precision, minimally-invasive leak detection and remediation in both drinking and waste water. Technology-led, the business uses solutions such as infra-red and acoustics and continues to expand its technology offering – a key differentiator against typical support services companies. The business has been a consistent performer with a history of delivering and exceeding expectations, although the share price, latterly, has marked time. WATR has today reported an FY18A PBTA result which is a 14% beat to expectations; and while the rating could be seen as high in the context of Support Services, the valuation should be seen in the light of similar franchise businesses and technology-led companies, reinforced by strong structural growth characteristics (see below). Strong results disclosed this morning show FY sales growing 44%, demonstrating growing momentum and ahead of the already strong Q1-3. No one-off, this continues an accelerating and compounding trend over the past three years, which we expect to be maintained. Insurance channel sales have nearly doubled and this momentum notably shows every sign of carrying on, opening up a very large US market in which WATR remains the only national player. The differentiated model – advanced technology integrated into multiple and efficient delivery channels – offers meaningful opportunities, while selective franchisee reacquisitions are also adding to the growth momentum and optimising the group’s capital structure.


Positive update highlights value This morning’s update highlights the strength of revenue growth in FY2018E, at 44% overall, showing that the momentum continued to accelerate in Q4 after the business posted 40% YoY revenue growth in Qs1-3. Net cash was an upside surprise at $US2.5m (vs. $US0.2m expectation). The shares remain well below their recent highs of 450p and share price targets in the market of 425p previously were based on forecasts prior to this morning’s upgrades.



Corporate stores grew 72% YoY This morning’s update shows Q4 corporate store (self-delivered) growth accelerating from already strong H1 levels (+47%). While abetted by reacquisitions, this level of growth also demonstrates the internal momentum in the business.



Revenue and profit opportunities Growth is both organic (underlying), as the new insurance channels deliver, and proactive, with WATR driving profits on the back of selective acquisitions of its franchisees, while still increasing royalty income. With a massive market to penetrate, as a national organisation, WATR is able to cross-sell effectively. Fundamentals are strong, with US insurers paying out $US13bn for leaks in ’17, while WATR’s royalty stream is effectively perpetual. We expect 24% earnings growth in the coming year before further reacquisitions.



Unique and successful model provides distribution platform WATR operates a successful model bringing together diagnostic technology and service delivery while operating alongside stores where it is its own provider (“corporate221; stores) and a >100 franchise national US network.



Valuation / upside We expect today’s good update to be followed by further encouragement when WATR reports FY2018E in detail; we expect strong proactive and reactive growth and hence share price upside. We expect continued reacquisition news, as well as further commercial partnerships, giving upside to forecasts. In addition we note the strong perpetual royalty stream which underpins a SOTP / DCF-based, fair value estimate of approximately 475p, approximately 50% upside on the current price.

[mad foetus] 12/3/2019 08:07

Got a few, already in profit. No reason why this can't move back towards all time highs imo.

[someuwin] 12/3/2019 07:32

Commenting on the Group's performance, Executive Chairman, Dr. Patrick DeSouza remarked:

"We have delivered another strong year growing all business units and exceeding market expectations; the operative concept is 'sustained growth' which we first articulated in the Chairman's Statement in 2015 and reiterated during each of the last three years. And we have delivered just that with 40%+ compounded annual revenue growth since 2016 and back-to-back years of statutory profits before tax growth averaging above 50%. We remain ambitious reinvesting in technology to provide solutions to both clean and waste water problems. Water and infrastructure solutions are needed globally no matter what the background macroeconomic or political conditions."

[effortless cool] 12/3/2019 07:11

Superb numbers in this morning's q4 trading statement, ahead of my expectations.

Full analysis too follow in due course,

[someuwin] 07/3/2019 09:45

WH Ireland update...

Water Intelligence (WATR) – Corporate – Franchise reacquisition keeps up
pace; growth driver remains powerful

Market Cap £44.2m Share Price 310p

We note the announcement this morning from WATR that it has reacquired its
South Atlanta franchise for $425k. This is another in a stream of positive
reacquisitions, including Ontario last month (which reaches to New York), and the
major Portland and Louisville franchises ($US1m-plus revenues p.a. each) during
the course of last year, among others. South Atlanta represents a further strategic
move for WATR, given its geography and, having generated revenues of $US320k
during 2018, is well placed to support the drive for further strong sales growth by
the business going forward. Note that these franchise acquisitions are selective,
and WATR is familiar with these assets by definition.

On that score, the most recent, Q3, update from the company in December 2018
showed that the business grew in the first three quarters by as much as 40% while
also doubling insurance channel sales (major market opportunity in the US). This
morning’s announcement specifies Tuesday 12th March as the expected date for
its next update, which we anticipate will further build the picture of strong and
sustainable growth.

This morning’s update also highlights new technologies which will further
strengthen its appeal. As a national player, it is able to apply its technologies
consistently across the market, a significant advantage. With the shares trading
at the lower end of the recent range, we see decent upside for the shares.

[someuwin] 07/3/2019 07:12

07 March 2019
Water Intelligence plc
("WATR" or the "Company")

Reacquisition of South Atlanta Franchise

Timing of 2018 Trading and Corporate Updates
Water Intelligence plc (AIM: WATR.L), a leading multinational provider of precision, minimally-invasive leak detection and remediation solutions for both potable and non-potable water is pleased to announce the reacquisition of its American Leak Detection South Atlanta franchise for $425,000.

The reacquisition is strategic for various reasons, all beneficial for reinforcing the Company's growth trajectory and more fully realizing its plan to unlock equity value as previously discussed in our annual reports.

First, South Atlanta is a central area for creating a regional corporate presence to help accelerate development of southeastern franchises, including a couple of large franchises that could still accelerate their growth given the size of regional market. Today's reacquisition follows January's reacquisition of Ontario, Canada to create a similar regional corporate presence in northeast Canada and upstate New York.

Second, the franchise achieved approximately $320,000 of sales during 2018. However, with corporate financial support it is expected that this territory can grow much faster reinforcing the Company's 2019 plan.

Third, there is significant undeveloped territory in southern Georgia as part of the franchise. In terms of the evolution of corporate strategy, now that Water Intelligence has had significant experience in growing corporate locations as well as franchise locations, more options are available to unlock value. Water Intelligence has the opportunity not only to accelerate growth in the developed part of the South Atlanta territory but also to now resell the undeveloped territory as part of a new right-sized franchise. Given the increasing equity value of franchises, especially because of the additional support from established regional corporate hubs, Water Intelligence already has received expressions of interest to purchase any new territory made available.

Finally, the current franchise owner has agreed to stay with American Leak Detection and open a new corporate location given his experience. Water Intelligence is currently reviewing new locations to push further market capture. Much like the Ontario transaction, the Company plans to grow from within and retain experienced managers after reacquisition.

Corporate Development and Administration

New Technologies Update. As noted in previous releases, during 2018 Water Intelligence has invested in certain new technologies to advance its leadership in the market and fuel growth. First, the Company, as planned, introduced its new sewer diagnostic product at the Water and Wastewater Equipment, Treatment and Transport Show February 20-23 in Indianapolis. Given favourable reaction, the Company will be introducing the proprietary tool to the ALD franchise system in Q2 to initiate a new line of service.

Further, as previously announced in December 2017 and January 2018, the Company set up partnerships with Tagasauris and Flo Technologies to introduce artificial intelligence and video e-commerce of products for the water industry and the Company's national insurance customers. Water Intelligence will be introducing its video player in Tokyo during the week of 18 March in collaboration with a major Japanese corporation that is also interested in deploying the video player for its consumer strategy. Water Intelligence will be rolling out its video player during Q2 as well.

2018 Trading Update.
It is anticipated that the 2018 Trading Update will be released on Tuesday, 12 March. The Company's 2018 audit process has begun with the audited results and Annual Report anticipated in early May as typical.

Dr. Patrick DeSouza, Executive Chairman, commented: "The first quarter has been very productive in continuing the strong trajectory that the Company has enjoyed consistently over the last several years. We aim high and deliver. We will provide a detailed update with our 2018 Trading Update. We continue to look forward to a strong 2019 building upon our record and our goal of significant and sustainable multinational growth."

[someuwin] 20/2/2019 15:08

This will be a lot higher later in the year imo.

[zipstuck] 14/2/2019 15:05

Reminder from recent update

Finally, as previously discussed in our Q3 Update, the Company invested during 2018 to develop cutting-edge sewer diagnostic technology to enhance the leadership of its fast-growing WII business. Trials of the product with UK water utilities during Q4 2018 have gone well and commercialization is on schedule. The Company will now be demonstrating its new product and solution offering at the international Water and Wastewater Equipment, Treatment and Transport show (WWETT) in Indianapolis during 20-23 February. The product and service offering will be then introduced throughout the entire ALD franchise system during 2019

[someuwin] 14/2/2019 12:14

WH Ireland

"WATR’s Q3 December update highlighted overall revenue growth in the first three quarters of as much as 40% together with a doubling of insurance channel sales as the business penetrates further the sizeable US market.

Combining consistent royalties and a technology profile, WATR has a highly differentiated business model as the owner / developer of leak detection technology operated by itself and franchisees across the US, where it is the only national player. It has been selectively buying in franchisees for a good price, which has enhanced the company’s growth trajectory; and we expect this to continue.

Underlying growth is fed by insurance and other national channels. In Qs 1-3, the franchise business also grew organically, despite reacquisitions.

A dollar earner, the business is underpinned by strong fundamentals and the fall in the share price flies in the face of trading momentum, consistent delivery and a history of exceeding expectations. We expect this to correct on the back of expected strong newsflow and potential forecast upside."

[essential] 13/2/2019 19:03

This has dropped nearly 25% in a matter of days - overdone?

[silverfern] 11/2/2019 14:23

The Momentum Investors buy and the Momentum Investors sell!

[someuwin] 11/2/2019 10:48

Time to add - imo.