Water Intelligence Share Discussion Threads

[effortless cool] 15/7/2019 20:21

Martin,

I have posted my revenue charts on Stockopedia. Margins are more complicated, so it may take me bit of time to get round to them.

[maywillow] 15/7/2019 13:02

4INTEREST



Hero Labs has secured the investment in a round led by Earthworm Group, with further support from a £300k EU innovation grant and private investors.
Jane Imrie

Published by Correspondent
Jane Imrie
on
15 Jul 2019

Water-saving tech startup secures £2.5m seed funding from environmental investor

A tech startup that aims to prevent water leaks in UK properties has secured £2.5m in seed funding from an environmental fund manager.

Hero Labs has secured the investment in a round led by Earthworm Group, with further support from a £300k EU innovation grant and private investors.

The London-based firm, uses custom-built AI technology to detect leaks in domestic water systems through its flagship product Sonic, has secured the seed funding less than six months after its launch in March.

Earthworm Group, which specialises in environmental and ethical focused investments, will work closely with the London-based startup as part of the investment, with Earthworm’s head of projects and partnerships Will Brocklebank joining the board at Hero Labs.

Krystian Zajac, founder and CEO of Hero Labs, commented: “This funding marks a successful first chapter for Hero Labs. Having Earthworm Group as our leading investor is a great fit for us, as it only invests in businesses who are a force for social good or benefitting the environment.

“Our mission at Hero Labs is to solve real-life problems through tech, and combatting water leaks with Sonic is just the tip of the iceberg. This will allow us to bring even more solutions to consumers and businesses.”

Will Brocklebank, head of projects and partnerships at Earthworm, added: “Earthworm invests in businesses that will bring a positive change for the environment.

“This is why we chose to support Hero Labs, as we believe it is one of the most exciting companies in this space that will have a real impact on reducing water waste in the UK. Hero Labs has a huge potential to grow to address a pressing environmental issue.”

[shanklin] 09/7/2019 15:18

Hi EC, Yes I am on Stockopedia

[effortless cool] 09/7/2019 14:30

Are you on Stockopedia? I can post charts to the thead there.

[shanklin] 09/7/2019 12:08

EC

Thank you for this.

I now realise I am going to have to do work of my own to consider my views on your assumptions :-/

Best Regards, Martin

[effortless cool] 09/7/2019 11:48

Hi Shanklin,

I'll do revenue first and will pick up on margins later.

My 2019 forecasts by segment are shown below, with 2018 in brackets.

Franchise royalty income ............. $6,406k ( $6,265k)
Franchise-related activities ......... $8,200k ( $6,154k)
Corporate-owned stores .............. $13,345k ($10,141k)
International corporate activities ... $3,082k ( $2,908k)

The first of these I am very confident in; franchise royalties show very stable predictable growth and seasonality.

The second may err on the prudent side, in that I am assuming a significant deceleration in growth rate versus recent periods. This segment is very hard to predict due to the sporadic addition of new insurance company clients.

Corporate store revenues are also hard to forecast due to the regular re-acquisition of franchisees. I try to make appropriate direct allowance for these, and don't see the forecasts as prudent or imprudent.

The final forecasts show little growth over 2018, which assumes a continuation of the growth seen in 2018 H2, up just 5% over the prior period. I'm not expecting material growth here, absent further acquisitions.

So, overall, perhaps some conservatism related to insurance company income, but not really otherwise.

[shanklin] 09/7/2019 08:55

Hi EC

What revenue growth and margin assumptions have you built into your model please?

Do you believe you are being pretty conservative?

Thank you, Martin

[shanklin] 08/7/2019 06:55

Thank you EC

[effortless cool] 07/7/2019 20:17

I have finally got my valuation model to where I want it to be, and have updated the header accordingly. The valuation has also been updated to reflect the Tucson franchise reacquisition and the recent fundraising.

[suppersaints] 04/7/2019 07:43

Thanks Shanklin , good post

[shanklin] 04/7/2019 06:06

More Water Intelligence needed?

[effortless cool] 29/6/2019 20:04

To add to silverfern's write-up (for I was that other PI) ...

Business continues to boom. From the AGM statement:
- "... the company ... is on course to pass its next milestone of $30m in sales during 2019". [WH Ireland forecast currently $29.7m]
- "currently, we have a healthy backlog of jobs across the country".

Drivers for future growth:
- Reinvestment. "We will be reinvesting in training more technicians in our proprietary technology to satisfy strong demand ...".
- More B-to-B relationships: "Because of our unique distribution base in 45 states of the US, we anticipate more national accounts later this year and next".
- More reacquisitions. "... this year we have already executed strategic reacquisitions of franchises in Niagara, Canada and South Atlanta, Orlando and Tucson in the United States".
- More franchisees. "... as we create more valuable market for our franchisees through opportunities to exit, we are seeing stronger demand from third parties to buy a franchise. ... we will likely sell more franchises in select areas going forward producing opportunities for high gross margin sales".
- Insuretech. "... our insurance company partners would like our American Leak Detection (ALD) business to help sell and install new technology products geared for monitoring leaks and evidence of water damage".
- Repair work. This emerged from the AGM discussion. The founder of ALD wanted the business to concentrate solely on the detection of leaks. The customer then would get a plumber to effect the repair. Several of the more successful franchisees did not follow this route, and extended the role of their franchise to include repairs. (I must admit, I had assumed that repairs were part of the package for all the franchisees, as it is such a natural extension of the detection work). Water Intelligence (LON:WATR) is now encouraging other franchisees to extend the scope of their work in this way and, indeed, made a loan to one franchisee to buy a plumbing business. There is significant scope to grow franchise revenue through expanding repair work.

I remain a very happy holder.

[silverfern] 29/6/2019 10:59

Hi all, I was at the agm yesterday. Some brief notes -- I am out for the weekend so will reply to any queries Monday.

- PIs attending agms can be viewed as irrelevant or an irritation. I had phoned to check times etc and it was clear I was expected. Moreover the whole agm was pretty much devoted to the questions I, and another PI who attended, asked. Other attendees included WHIreland and Dowgate
- Re-acquiring of franchises: WATR operates out of 150 locations. There is no set rule for re-acquisition ie no specific target numbers, and there will always be a large number of franchisees operating. Many franchisees are themselves valuable assets to the business and are growing at a very fast rate. Agreements tend to be for a ten year period
- The insurance add-on is currently motivating the whole business- such deals energise the offering to the customer and create customer-stick
- The offering to the public sector, as opposed to the general public, is being explored not least through the sewer diagnostic technology that has come on board.
- I asked about how recent profit and revenue growth could be sustained. Pat de Souza was mindful of the need to grow the revenue first – do that and the profit growth follows. And part of enabling that is by creating barriers to market entry through , for example, the insurance tie-ins. Pat is also mindful that cash injections by institutions are dilutive for shareholders.
-Expansion into Asia and Middle East: opportunities are being discussed with key businesses in these territories to expand the offering.
- Governance : we can expect announcements in regard to people coming on board shortly.

I was very grateful for the time and attention given to us and remain a happy investor.

[the grumpy old men] 29/6/2019 09:48

The Daily Telegraph: Profits at Thames Water have plunged after the company was forced to spend record amounts of money to fix leakages.

[texas_caddy] 28/6/2019 10:45

Thanks silverfern

[shanklin] 28/6/2019 10:31

That's very kind of you silverfern

[suppersaints] 28/6/2019 10:16

Cheers Silverfern

[silverfern] 28/6/2019 09:34

Very useful agm. Will provide a brief summary over the weekend

[sarkasm] 18/6/2019 15:19

Josh White
Sharecast News
18 Jun, 2019 15:24
Water Intelligence to work with 'major' US home solutions company
water tap agua fawcet
Water Intelligence
350.00
13:15 18/06/19
3.70%
12.50

Water Intelligence announced the launch of a new business-to-business programme to build on its growing national insurance channel on Tuesday.
FTSE AIM All-Share
939.40
15:15 18/06/19
0.21%
1.94

The AIM-traded firm said its American Leak Detection (ALD) brand would be working with the risk management division of an unnamed Fortune 500 home solutions company, to provide “minimally invasive cause and origin” assessment of water damage arising out of the purchase of home products.

It said the programme was modeled on ALD's successful national insurance channel, which seeked to provide insurance companies and their adjusters with a trusted partner across the United States to pinpoint water leaks and minimise collateral damage claims from residences and businesses.

The launch would extend the same assistance to the major home solutions provider and its customers, Water Intelligence said.

Because of ALD's corporate and franchise locations across the US, it was well-positioned to provide such trusted business-to-business support in a timely fashion to minimise water-related damage, the board explained.

“We appreciate the opportunity to extend our insurance channel structure to adjacent opportunities,”; said Water Intelligence executive chairman Patrick DeSouza.

“Collateral issues arising from water leaks adversely affect various businesses along the water value chain beyond just insurance companies.”

DeSouza said the company was leveraging its national reputation and “significant” installed base of technicians and operations to assist a major company.

“We are delighted to have this opportunity to work with an industry leader in home solutions and we believe that this will be just the beginning of a robust relationship.”

[metis20] 13/6/2019 16:37

From Finals 9 May 2019

"...the selective reacquisition of franchises and conversion into corporate-operated locations continues to unlock shareholder value. As a strategic matter, reacquisitions provide regional corporate support for continued franchisees' growth. As a financial matter, total sales from corporate locations grew 70% to $10.1 million (2017: $5.9 million) as corporate staff executed shoulder-to-shoulder with our franchisees in expanding our common ALD brand. In executing corporate operations, we have been able to grow such locations faster than they were growing before they became corporate operations."

[glaws2] 13/6/2019 11:57

Yes the ownership model is more capital intensive but increases profits to WATR as they not only capture the franchisee margin but allows them to grow it quicker on the corporate side of insurance and sewage work.

TSTL have done the same in the last couple of years - most notably buying their Australian distributor and this has had an extremely positive effect on profits.

[montyville2] 13/6/2019 11:49

I think they are painting a positive picture with the deal paying for itself. The main issue as I see it is that with the ownership model, compared to franchise model, is that the company is responsible for investment and it is therefore more capital intensive, as opposed to the franchise model which is less capital intensive. Overall you need to try to see through the spin. Its not a bad deal, but is being spun as a positive, without recognising the full picture.

The main issue though is that this seems to be a trend as they reported similar reaquisitions last year!

[silverfern] 13/6/2019 11:09

Ok, so no outlay then. You understand the point that paying 0.78 over 5 years when the business is earning 0.15 p.a. equates to no cost to working capital? Pays for itself. A good deal n'est-ce pas?

[the grumpy old men] 13/6/2019 06:52

silverfern
13 Jun '19 - 07:27 - 422 of 422
0 0 0
A small acquisition which is being bought over five years which will be paid for in effect by the annual profits generated. So at no cost.


LOL GOTTA LUV YER LOGIC

WHAT COST

NO COST

SUCH MUCH






For full year 2018, Tucson generated approximately $0.78 million of revenue and $0.15 million of net income. Assets acquired are approximately $0.1 million as of December 31, 2018. The purchase price is $0.7 million in cash to be paid over five years with an additional $0.05 million payable should the territory achieve $0.21m of net income for 2019. Tucson has shown continued growth during 2019 prior to the reacquisition. The transaction is expected to be immediately accretive to earnings and purchase price payments can be made from current cash.


THERE IS ALWAYS A COST WITH OTHER OPPORTUNITIES FOREGONE

BREAKEVEN AT CONSTANT PROFITS $0.15 million of net income. PA X 5