Assemblée générale annuelle des actionnaires. Annual General Meeting of Shareholders. Novembre November 2012

Transcription

1 Assemblée générale annuelle des actionnaires Novembre 2012 Annual General Meeting of Shareholders November 2012 Pure water player providing integrated technological water treatment solutions to municipal, energy & mining end-users

2 2 1. Ouverture de l assemblée 1. Opening of meeting

3 3 2. Nomination du secrétaire de l assemblée et des scrutateurs 2. Appointment of the secretary of the meeting and of the scrutineers

4 4 3. Avis de convocation à l assemblée et rapport des scrutateurs 3. Notice of meeting & scrutineers report

5 5 4. États financiers et rapport de l auditeur 4. Financial report & auditor s report

6 6 5. Élection des administrateurs 5. Election of Directors

7 7 Élection des administrateurs Election of Directors Élaine C. Phénix Lisa Henthorne John G. Booth Frédéric Dugré André Duquenne Philippe Gervais Richard A. Hoel Laurence E. Gamst

8 8 6. Nomination de l auditeur 6. Appointment of auditor

9 9 7. Varia 7. Varia

10 10 8. Levée de l assemblée 8. Adjournment

11 11 Exposé de la direction Management s Report Frédéric Dugré Président et chef de la direction President and CEO Josée Riverin Vice présidente, finances Vice President, Finance

12 12 FORWARD LOOKING STATEMENTS Certain statements in this presentation may constitute forward-looking statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of H 2 O Innovation, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements reflect management s current expectations regarding future events and operating performance and speak only as of the date of this presentation. These forward-looking statements involve a number of risks and uncertainties. For details of these risks and uncertainties please refer to the Company s Annual Information Form dated September 25, 2012 available on SEDAR ( H 2 O Innovation rejects any obligation to revise or update the prospective disclosures contained in this presentation.

13 Résultats annuels 2012 FY2012 Annual Results 13

14 14 FY2012 REVENUES & GROSS PROFIT Record-high revenues of $35.9 M, up by 30% compared to $27.6 M in FY2011. Gross profit at 23.0%, down compared to 29.5% in FY2011, impacted by: 1. Permanent reallocation of resources from operating expenses to COGS 2.0% 2. Shortfall in project execution 3.5% 3. Business mix 1% Revenues from water treatment projects Revenues from specialty chemicals, consumables & maple products FY2011 $15.6 M or (57%) $12.0 M or (43%) FY2012 $22.7 M or (63%) $13.2 M or (37%) 4. Revenues from water treatment projects are up by 45% compared to FY2011 supported by record-high backlog of $35.3M at the beginning of FY2012; and 5. Revenues from specialty chemicals and consumables are up by 10% supported by new international distributors and increased conversion rate (water treatment projects to aftersales).

15 15 FY2012 EXPENSES & ADJUSTED EBITDA Operating, selling and administrative expenses ( SG&A ) represents 24.3% of revenues, down compared to 30.3% in FY2011 due to the year s higher revenues also impacted by: 1. Severance costs following re-organization in June $175,000; 2. Allowance for doubtful accounts of $254,000 related to receivables from the maple products activities; and 3. Unforeseen professional fees of $175,000 for audit-related services, impairment testing and litigation for a patent. Cash-flows from operating activities generated $0.8 M vs. ($1.6 M) used in FY2011, after change in working capital items. Net loss of ($8.1 M), down compared to ($1.4 M) in FY2011 due to goodwill impairment of $8.2 M and intangible assets impairment of $0.4 M. Adjusted EBITDA 1 at ($4,538), compared to $325,292 in FY The definition of adjusted earnings before interest, tax depreciation and amortization (adjusted EBITDA) does not take into account the Company s changes in fair value of contingent considerations, impairment of intangible assets, impairment of goodwill, share of (earnings) loss in a joint venture and stock-based compensation costs. The definition of adjusted EBITDA used by the Company may differ from those used by other companies.

16 YEAR-END REORGANISATION Hired a strategic management consulting firm to review general performance and strategic orientations (April - May 2012) REACH OPERATIONAL EXCELLENCE (implemented in Q1 - FY2013) Develop and emphasis the project culture; Structure the project execution by disciplines and competencies; Increase accountability at every steps of the project; and Execute our projects in time, in quality & on budget. Executive Systems Sales Engineering Projects & Manufacturing Services & Consumables Finance & Corporate Process & Application Project Management Commissioning & Start-up Mechanical & Systems Manufacturing & Assembly After Sales & Specialty Chemicals Electrical & Controls

17 Résultats T1 Exercice 2013 FY2013 Q1 Results 17

18 18 Q1 FY2013 FINANCIAL HIGHLIGHTS SELECTED FINANCIAL DATA P&L CONSOLIDATED RESULTS Three-month periods ended September 30 (Unaudited) Change $CAD $CAD Sales 9,982,894 7,069, % Gross profit 2,462,571 1,744,687 $717,884 Gross profit 24.7% 24.7% Stable Operating expenses 135, ,106 SG&A / Revenues Selling expenses 843, ,667 is down to 18.4% Administrative expenses 863, ,092 versus 25.8% Net earnings (loss) for the period 269,696 (88,216) $357,912 Basic and diluted net earnings (loss) per share (0.001) $0.005 Adjusted EBITDA 1 726, ,808 $393,885 1 The definition of adjusted earnings before interest, tax depreciation and amortization (adjusted EBITDA) does not take into account the Company s changes in fair value of contingent considerations, impairment of intangible assets, impairment of goodwill, share of (earnings) loss in a joint venture and stock-based compensation costs. The definition of adjusted EBITDA used by the Company may differ from those used by other companies.

19 19 Q1 FY2013: BUSINESS MODEL IS PAYING-OFF Revenues mix in Q1 : Water treatment projects - 70% ($7.0 M) Chemicals, consumables & services 30% ($2.9 M) Synergy between the projects and recurrent revenue : gross profit (24.7%) lumpiness from water treatment equipment projects No extraordinary event impacted the quarter: Balanced mix of municipal and industrial projects (50%-50%) Many projects contributed to revenues growth (+ 41.2%) SG&A remain stable on the look for further savings $6.7 M in new bookings for water treatment projects Backlog for systems remain above $20.0 M

20 20 SUSTAINED GROWTH MOMENTUM 2012 FY 2013 FY Last twelve months Q1 Q2 (a) Q3 (a) Q4 (a) Q1 (Q2, 3, & 4 FY2012 & Q1 FY2013) Previous twelve months (Q1 FY2012 & Q2, 3, & 4 FY2011) Backlog $31.6 M $30.0 M $28.1 M $20.8 M $20.4 M - - Bookings for water treatment projects Revenue from water treatment projects $0.9 M $4.7 M $6.0 M $4.7 M $6.7 M $22.1 M $33.5 M $4.3 M $4.1 M $6.7 M $7.6 M $7.1 M $25.5 M $17.1 M Bookings / Revenue Ratio Revenue from specialty chemicals and consumables (usually recurrent in nature) $2.8 M $3.0 M $3.5 M $3.9 M $2.9 M $13.3 M $12.2 M Priority on new bookings - Bids and sales pipeline remains high On a 12-month basis, revenues of chemicals and consumables have increased by $1.1 M or 9% Addition of new distributors for PWT chemicals Maintained growth momentum with the maple products line Keep increasing conversion rate retention of customers after systems commissioning

21 21 Q1 FY2013 FINANCIAL HIGHLIGHTS SELECTED FINANCIAL DATA FINANCIAL POSITION ASSETS As at Sept. 30, 2012 $ As at June 30, 2012 $ Change Comments Cash and equivalents 924, ,542 $348.2 k Improvement of working capital items Accounts receivable 8,047,481 9,322,380 $1.3 M Cashed receivables that were higher as at June 30, 2012 due to increased invoicing in that specific quarter Inventories 2,731,512 2,250,789 $480.7 k Increase of maple equipment and finished goods in preparation for the maple syrup season Costs incurred in excess of billings 1,919,818 2,154,311 $234 k Projects hit different execution phases in Q than in Q LIABILITIES Bank loans 2,527,360 2,868,394 $341.0 k Improvement of working capital items used to repay bank loans Accounts payable 5,512,366 5,742,007 $229.6 k Faster payment of suppliers Billings in excess of costs incurred 1,341,918 1,634,724 $292.8 k Projects hit different execution phases in Q than in Q4-2012

22 22 Q1 FY2013 FINANCIAL PROGRESSION (in Canadian dollars, except for ratio) Period ended Sept. 30, 2012 Period ended June 30, 2012 Changes Working capital $2,726,770 $2,518,829 $207.9 K Current ratio % Net debt 1 $5,173,242 $6,129,684 $956.4 K Equity $13,586,291 $13,744,227 $158.0 Net debt to equity ratio % 1 Net debt comprises bank overdraft, bank loan and the long-term debt, net of cash and cash equivalents, but excludes the contingent considerations. With reclassification of the long term debt to non-current liabilities, current ratio would have been at 1.37 with waivers Operating activities have generated $1,210,214 in Q1 FY2013 compared to $1,083,533 in Q1 FY % increase over a 12-month period

23 KEY PROJECTS DELIVERED IN THE PAST MONTHS 23

24 24 LARGE SCALE TURNKEY SOLUTION 22 ft x 44 ft prefabricated building Building A: Drinking water plant with NF Building B: Wastewater treatment plant with Bio-Wheel and MBR Assembled and built by H2O Innovation Shipped to site

25 25 LARGE SCALE TURNKEY SOLUTION Devon Energy Alberta, Canada Modular self-framed buildings Drinking water production plant & Wastewater treatment plant

26 TURNKEY SYSTEMS 26

27 27 ULTRAFILTRATION PROJECTS Cree Nation of Wemindji Quebec, Canada 0.4 MGD Ultrafiltration System 0.3 MGD Nanofiltration System Drinking Water SCRWD Emmons County Linton, North Dakota 3.0 MGD Ultrafiltration System Drinking Water

28 28 SITE-BUILT MUNICIPAL DRINKING WATER NF/RO Project: City of East Cherry Creek, CO Flow Rate: 7.3 MGD Applications: Brackish well water Custom design to meet specific project needs

29 29 WE HAVE BUILT A SOLID GROWTH COMPANY Record-high revenues of $35.9M in FY2012, up by 30% Revenues of $9.9 M in Q1 FY2013, up by 41.2 % LTM Revenues stand at $38.8 M Established North American presence with over 550 installations : Municipal: best in serving small & mid-size municipalities; Mining : Strong momentum in Western Canada and Northern Quebec Energy: numerous references in oil & gas, ethanol & power generation. CAGR of 24% / year X10 in 10 years

30 30 CONCLUSION Our business model combining water treatment projects sales and consumables is : Reducing lumpiness ; Stabilizing and increasing our gross profit; Strengthening our integrated offering (DW, WW, WR) by proposing one single point responsibility ; and Increasing our customer retention with specialized products. Sales pipeline is high and well diversified (markets and applications) Continuous efforts to increase speciality chemicals & consumables sales (more distributors, more service technicians, new products) $13.3 M in LTM Right sized the overhead and SG&A to $7.5M / year following re-organization, remain on the look for further savings Focus towards reaching Operational Excellence in project execution impacts are yet to come following re-organization. All of the above will continue to impact positively the gross profit and profitability in order to fuel our growth

31 31 Période de questionsréponses en salle Question-and-answer period on location

32 TSX-V: HEO Alternext: MNEMO: ALHEO H2O Innovation Inc. 330 St-Vallier Street East, Suite 340 Quebec City (Quebec) G1K 9C5 Canada Tel.: Fax: