2017
Q1 Results
Supplemental Information Slides
May 2, 2017
Forward-Looking Statements
This presentation, and its commentary, may contain forward-looking statements, including, without limitation, statements containing the words
"should", "believe", "anticipate", "may", "plan", "will", "continue", "intend", "expect", "estimate" and other similar expressions. These
statements constitute “forward-looking information” within the meaning of applicable Canadian securities laws. These statements are based on
the Company’s current expectations, estimates, forecasts and assumptions. Forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties and other important factors that could cause the Company’s actual performance to be
materially different from that projected. Examples of these statements would include those where the Company forecasts the timing of new and
existing projects and the success of the Company’s new technologies and entering new markets. The assumptions, risks and uncertainties that
could cause actual results to differ materially from the forward-looking information, include, but are not limited to market changes, the
Company’s ability to deliver services in a timely and cost effective manner, technological change, changes in general economic conditions and
other risks detailed from time to time in our ongoing filings with the Canadian securities regulatory authorities, including those in the Company’s
Annual Information Form, which filings can be found at www.sedar.com. Given these assumptions, risks and uncertainties, readers are
cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by applicable securities laws, the
Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future
events or otherwise. Unless otherwise stated, all dollar amounts are expressed as CAD$.
2
Financial Performance Overview
Q1:
For the 3-mths ended March 31
(000s except per share amounts)
• Total Revenue up 16%
to $29.2 million
Revenue
• Adj. EBITDA up 342% to
$4.9 million
Gross profit
Gross margin (%)
Operating Expenses1
• Improved Net income to
$0.3 million
• Cashflow from
operations before
working capital up 298%
to $4.4 million
Direct costs
Adjusted EBITDA2
Adjusted EBITDA (%)
Net income (loss) for the period
Per share – basic
Per share – diluted
Cash Flow from Operations Before
Working Capital Changes2
Adjusted Net Income (Loss) for the
period2
Total assets
Change
$
%
4,085
16
2017
29,206
2016
25,121
5,355
6,249
(894)
(14)
23,851
82
22,489
18,872
75
21,111
4,979
26
1,378
7
4,900
17
299
1,108
4
(2,458)
3,792
342
2,757
NA
0.01
(0.05)
0.01
(0.05)
4,449
1,119
3,330
298
385
(1,488)
1,873
NA
140,665 143,578
(2,913)
(2)
1. Excludes direct costs and loss or gains on asset disposals, includes depreciation and provisions
2. See Non-GAAP Measures.
3
Q1 Performance Summary
Water Division:
Oil & Gas Division:
• 82% of total revenue
• 18% of total revenue
• Revenue up 18% to $24.0
million
• Revenue up 10% to $5.2
million
• Adj. EBITDA up 117% to $7.0
million
• Adj. EBITDA down 38% to
$0.8 million
• 18% FY Revenue CAGR
(2013 - 2016)
• 73% FY Revenue CAGR
(2013 - 2016)
Consulting and
Inspection:
• 87% of total revenue
• Revenue up 16% to
$25.3 million
• helped push Q1 gross
margin to 82% from 75%
last year
• 32% FY Revenue CAGR
(2013 - 2016)
4
Water Division
Americas Segment
•
•
•
•
•
•
Represents 47% of total Q1 revenue
Revenue consistent quarter-over-quarter; up 3%
excluding foreign exchange impact
Adjusted EBITDA consistent at 24% of revenue
Q1 is a seasonally slow period
Increased activity in US East, offset by weather
impacts in Canada and slightly lower activity in US
West
Higher activity expected overall in Q2 due to
commencement of projects announced subsequent
to YE
5
Water Division
International Segment
•
•
•
•
•
Represents 17% of total Q1 revenue
Revenue up 116% due to completion of major
inspection in Europe and higher overall inspection
and consulting activity
Adjusted EBITDA increased to 61% of revenue
mainly due to increased activity and reduced
operating costs
Historically driven by large projects; moderate
growth expected for remainder of 2017
Xylem partnership (announced April 25, 2017) for
middle and far eastern regions expected to increase
sales while minimizing costs
6
Water Division
Wachs Water Services Segment
•
•
•
•
Represents 18% of total Q1 revenue
Revenue up 22% due to increased productivity and
activity levels following the hiring of new sales
personnel in 2016
Adjusted EBITDA increased to 12% of revenue from
a loss a year ago, due to increased activity and
reduced operating costs
Bookings (leading indicator of future activity) for 12
month ended March 31, 2017 have increased 17%
over 12 months ended December 31, 2016
7
Oil and Gas Division
PureHM Segment
•
•
•
•
•
•
Represents 18% of total Q1 revenue
Revenue up 10% mostly due to E-MAC acquisition
(Dec. 30, 2016)
Q1 (as well as Q4/’16) saw project delays due to
prolonged winter weather and integration impacts
(training)
Adjusted EBITDA decreased to 16% of revenue due
expected reductions in productivity due to weather
and higher staff levels to support spring and
summer activity
PureHM expected to continue to be Pure’s fastest
growing division overall
Q2 and Q3 activity expected to increase significantly
over Q1, with better weather anticipated to increase
both productivity and timing of projects
8
Corporate and Other
General and Administration Expenses
For the period ended
March 31 (000s)
$
change
%
change
(347)
(10)
General and administration
2017
3,028
2016
3,375
Stock based compensation
(377)
(291)
(86)
30
-
(180)
180
-
2,651
2,904
(253)
(9)
Training costs
Adjusted general and
administration
•
•
•
Research and Development (R&D) Expenses
For the period ended
March 31 (000s)
Research and development
Stock based compensation
Net research and development
2017
347
(29)
318
Working capital efficiency
(in millions $CAD except
DSO)
Days sales outstanding
Working capital
Total assets
Total liabilities
Mar 31
2017
Dec 31
2016
94
108
34.5
34.3
140.7
143.6
13.3
15.2
2016
607
(21)
586
$
change
(260)
(8)
(268)
%
change
(43)
38
(46)
•
•
•
Adj. G&A expenses down 9% due to completion of
cost optimization activities, including the
consolidation of certain shared services
As expected, Q1 G&A consistent with Q4/’16
During the quarter, the Company capitalized $1.2
million of development expenditures (2016 - $0.9
million), primarily associated with ongoing
development of existing technologies
R&D initiatives are focused on increasing the
capability and efficiency of its technology platforms
in both the water and oil and gas sectors.
Commercialization of several initiatives expected in
2017
DSO down to 94 from 108 due to higher collection
speed of receivables
$5.7 million cash on hand at March 31, 2017
9
Summary
Water Division
• Higher activity expected in subsequent quarters
from multi-year work awarded in Q4/’16, recent
awards in Canada and an overall increase in
multi-year RFPs
• Investment in sales personnel in the Americas
segment expected to positively impact the year
ahead
• Xylem partnership to expand Pure’s presence
internationally while controlling costs
• WWS continues to recover; Q1 was third
consecutive quarter showing improved revenue
and profitability
Oil and Gas Division – strong growth
to continue
• Q2 and Q3 activity expected to increase
significantly over Q1, with better weather
anticipated to increase both productivity and
timing of projects
• Synergies from E-Mac acquisition; experienced
management team and engineers
• Large addressable market with growing
acceptance of PureHM technologies and
solutions
10
Paul Moon
+1 (403) 537-3244
[email protected]
Director, Investor Relations and Corporate Communications