REG - Water Intelligence - Trading Update Q3 2022

Water IntelligenceAnnouncement

17/11/2022 07:00

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RNS Number : 6945G  Water Intelligence PLC  17 November 2022

 

17 November 2022

 

 

Trading Update Q3 2022

 

Water Intelligence plc (AIM: WATR.L) ("Water Intelligence" or the "Group"), a
leading multinational provider of precision, minimally-invasive leak detection
and remediation solutions for both potable and non-potable water, is pleased
to provide a trading update for the nine months ended 30 September 2022.

Overview

The Group continues to perform strongly despite macroeconomic uncertainty.
 Sales, as of the end of Q3 2022, have now surpassed the amount of sales for
full year 2021 (Q3: $54.9 million vs. FY 2021: $54.5 million).

In terms of market capture, network sales (direct corporate sales and indirect
gross sales to third parties from which franchise royalty is derived) have
grown approximately 13%, surpassing $125 million (Q3 2021: $110 million).
 

The Group is on track to be at the upper end of analyst expectations for
revenue and to be in line with expectations with respect to profits for full
year 2022.

Highlights

Financials for 9 months to 30 September 2022

•     Revenue increased by 38% to $54.9 million (Q3 2021: $39.7 million)

•     EBITDA* increased by 13% to $9.7 million (Q3 2021: $8.6 million)

•     Adjusted Profit Before Tax ("PBTA")**  increased by 7% to $7.0
million (Q3 2021: $6.5 million)

*EBITDA and PBTA are adjusted to exclude the 2021 one-time gain of $1.9
million to allow for like-for-like comparisons with Q3 2021

** PBTA is adjusted for non-cash expenses of share-based payments,
amortization and one-time costs

Key Performance Indicators

·    US Corporate-Operated Locations: Revenues grew by 59% to $36.3
million (Q3 2021: $22.8 million)

o    Same store sales grew by 28% to $28.0 million (Q3 2021: $21.9 million)

 

·    International Corporate-Operated Locations: Revenues grew by 18% to
$5.2 million (Q3 2021: $4.4 million)

·    Franchises: Royalty income remained flat at $5.3 million despite a
significant number of franchise reacquisitions in trailing 12 months reducing
pool of franchise royalties

 

·    Franchise-related sales (national accounts; equipment sales;
franchise territory sales) grew by 11% to $8.0 million (Q3 2021: $7.2 million)

·    Balance Sheet strong at 30 September 2022 with cash at $20.1 million
and cash net of bank debt at $4.5 million with amortization of bank debt
spread through 2027 at a blended fixed rate of approximately 4.9% reflecting
different credit facilities

o    Credit availability of $5 million for franchisee reacquisitions under
current bank credit facilities

Corporate Development:

·    Salesforce and related web applications being implemented across all
US locations

·    Annual Franchise Convention hosted between 2-5 November in Nashville,
Tennessee with focus on Salesforce CRM implementation linked to proprietary
product demonstrations

o Video e-commerce

o New Service Offering with Residential Pulse (sewer diagnostic tool)

 

 

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

"The Group continues to successfully execute its growth strategy while
reinvesting for future growth underpinned by:  (i) Salesforce and related
applications such as video e-commerce to enable further scalability and data
security for our customers and national channels; (ii) proprietary new
technology to expand our business lines to meet market demand for solutions to
aging water and wastewater infrastructure; and, most importantly, (iii) new
training centers to provide more trained technicians to meet market demand.

We are proud of our team - both corporate and franchise - for successfully
navigating inflationary pressures during 2022.  Moreover, as we turn towards
2023 and amid recessionary pressures in light of rising interest rates, we
remain in a strong position.  Market demand for water and wastewater
solutions is only increasing in light of scarcity and climate change. We are
an "essential service provider" as designated during the pandemic.  Supported
by a strong balance sheet and attractive fixed rate lines of credit through
2027, we have sufficient resources to support significant market capture.
Coming out of last week's Franchise Convention, our entire Company is
enthusiastic about the prospects for 2023 and aligned in our strategy for
growth."

 

The information communicated in this announcement is inside information for
the purposes of Article 7 of Regulation 596/2014

 

Enquiries:

 

Water Intelligence plc

Patrick DeSouza, Executive Chairman
                           Tel: +1 203 654 5426

Maria McDonald, Director, Communications                Tel:
+1-415-272-2459

 

RBC Capital Markets - Joint Broker
  Tel: +44 (0) 207 653 4000

Jill Li

Daniel Saveski

 

WH Ireland Limited - NOMAD & Joint Broker       Tel: +44 (0) 207 220
1666 (     )

Chris Hardie

Enzo Aliaj

 

Dowgate Capital Ltd - Joint Broker
Tel:  +44 (0) 20 3903 7721

Stephen Norcross

 

 

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