REG - Water Intelligence - Franchise Reacquisition & Investor Conference

Water IntelligenceAnnouncement

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RNS Number : 1466U  Water Intelligence PLC  06 August 2025

 

 

Reacquisition of Middle Georgia Franchise

Presentation at Canaccord Genuity's 45(th) Annual Growth Conference

Water Intelligence plc (AIM: WATR.L) ("Water Intelligence" or "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 an update on two aspects of corporate development: (i) reacquisition
of an ALD franchise in Georgia ("ALDGA") and (ii) presentation of its growth
strategy at Canaccord Genuity's 45(th) Annual Growth Conference August 12-14.

The Group has agreed to acquire ALDGA for an initial payment of $350,000 in
cash. The Group will pay the seller of ALDGA four times the profits generated
by ALDGA in the trailing twelve months from August 1, 2027, in cash less the
initial payment. In the last twelve months, ALDGA generated revenues of
$600,000 and profits of $150,000.

Reacquisition and Recombination for Strategic Value Creation

ALDGA illustrates the success of ALD's reacquisition strategy over time in
terms of value creation and efficient territory development. It also offers a
roadmap to the Group's plan to increase profitability given its ability to
scale across the US. As set forth below, we stated these objectives clearly in
2019 when we announced the original transactions to reconfigure franchise
territory to unlock shareholder value. We are pleased now to report on our
delivery of value for the shareholders from the original investment - a
question that our shareholders have asked us to present.

In March 2019, the Group announced the acquisition of its South Atlanta and
Middle Georgia franchise for $425,000 based on $320,000 of sales and
approximately $75,000 of profits. In April, the Group then sold the Middle
Georgia portion of reacquired territory for $168,750 to create a net purchase
price of $256,250 for the corporate unit and a growth opportunity for a new
franchisee.

Today, both units are growing and well-positioned to scale as a combined
entity. The South Atlanta corporate unit has reached $650,000 in sales and
approximately $225,000 in profits for the last twelve months.  The Middle
Georgia franchise unit has reached approximately $600,000 of sales and
$150,000 of profits for the last twelve months, as well as assets of
approximately $50,000.

We have executed on that original vision of unlocking growth. The Group is
pleased to announce that it is now reacquiring the Middle Georgia franchise
unit from its owner for four times profits based on the trailing twelve months
from August 1, 2027, delivering an accretive result for shareholders.  The
franchise owner - Johnny English - will remain in place as a corporate manager
incentivized to continue his growth trajectory with corporate guidance.  The
newly combined corporate territory will now have critical mass of
approximately $1.25 million in sales and $0.38 million in profits for the last
twelve months.  Quite an improvement from the original franchise unit
pre-2019.

It is useful to underscore that we have been steadfast in our objective to
stimulate growth through right-sizing.  In 2019, we stated as part of the
original franchise announcements: "[From the March announcement] …
Strategically, there is significant undeveloped territory in Georgia.  In
terms of the evolution of corporate strategy … Water Intelligence now 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 …[From the April announcement]
Strategically, the  transactions  can be a model for optimization of franchise
territory across the US enabling more sales coverage in support of our
national channels and incentivizing ever greater collaboration among corporate
and franchise operation towards execution of our growth plan."

Looking ahead, the opportunity to reacquire the franchise today unlocks
further growth synergies from its bigger base of operations throughout the
southeast region of the US.  First, today's combined South Atlanta / Middle
Georgia operation will be part of a regional hub that also includes a recent
franchise reacquisition in February 2025 with $1.55 million in sales and $0.55
million in profits covering other territories in Georgia and South Carolina.
Hence the regional corporate block spanning South Atlanta to South Carolina
will have combined scale of $2.8 million in sales and approximately $0.93
million in profits with all operations more efficiently integrated through
Salesforce. Second, the Group's new southeast regional hub will have the
ability to work closely on execution with ALD's strategic partner StreamLabs,
a Chubb company.  StreamLabs' headquarters is located in Atlanta.

More broadly, today's acquisition follows the guidance, as noted in the
Chairman's Statement to the recent Annual Report, that the Group plans to
further increase profit margins  across the US by combining corporate
locations into regional operations via its "Dallas Template;"  Dallas and
Fort Worth are currently being combined to set up ALD's new national
headquarters.

Canaccord Growth Conference

The Group will be presenting its growth plan, competitive strategy (which
includes its StreamLabs partnership) and updated capital allocation strategy
at the Canaccord Growth Conference in Boston August 12-14. As previously
communicated, Canaccord will be the lead broker for the Group and plans to
initiate research coverage.

Executive Chairman, Dr. Patrick DeSouza commented: "Today's transaction
demonstrates the valuable and scalable water infrastructure platform that we
have created to customize "turn-key" solutions for clients to manage water
proactively:  (i) a comprehensive suite of solutions for failing water
infrastructure from high quality 24/7 monitoring to minimally invasive and
technology driven products and services; (ii) business-to-business national
insurance channels that are demanding our preventive maintenance solutions;
(iii) operating scale across the US and in several countries for delivering
our solutions as first responders; (iv) a data-driven technology backbone via
Salesforce to provide analytic products to reduce risk of water loss and (v)
aftercare for customers leveraging proprietary video technology. Additionally,
we have the ability to add significant shareholder value through the
reacquisition of franchises and operating synergies of regional hubs.

We will communicate our confidence both through our presentation at the
Canaccord Growth Conference and through a video update provided immediately
thereafter."

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part
of UK law by virtue of the European Union (Withdrawal) Act 2018. The
information is disclosed in accordance with the Company's obligations under
Article 17 of the UK MAR. Upon the publication of this announcement, this
inside information is now considered to be in the public domain.

 

 

 

Enquiries:

Water Intelligence plc

Laura Bass, Director, Strategic
Finance
                                   Tel: +1
203 584-8240

Grant Thornton UK LLP - Nominated Adviser
                  Tel: +44 (0)20 7383 5100

Philip Secrett

Harrison Clarke

Ciara Donnelly

Canaccord Genuity Limited - Joint Broker
                       Tel: + 44 (0)207 523 8000

Simon Bridges / Harry Gooden / Elizabeth Halley-Stott

Dowgate Capital Ltd - Joint Broker
                                 Tel: +44 (0)20 3903 7715

Stephen Norcross

 

 

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