Water Intelligence PLC AGM Update and Corporate Strategy Direction (7412D)
June 28 2019 - 1:01AM
UK Regulatory
TIDMWATR
RNS Number : 7412D
Water Intelligence PLC
28 June 2019
Water Intelligence plc
("Water Intelligence" or the "Company")
AGM Update and Corporate Strategy Direction
Water Intelligence, (AIM: WATR.L), a leading multinational
provider of precision, minimally-invasive leak detection and
remediation solutions for both potable and non-potable water, is
holding its AGM later today. At this meeting, Dr. Patrick DeSouza,
Executive Chairman, will provide the following business update and
identify the operating priorities for 2H 2019 and 2020. Moreover,
at the AGM, the Company will also announce commercial launches of
its recent technology investments: Project Orca embodying its sewer
diagnostic family of products and Project Contextual Commerce
embodying its AI-enhanced sustainability video channel that will
enable the efficient marketing and sales of commercial
water-related products to viewers and existing customers via an AI
partnership with the US company Tagasauris.
"Timing of 1H Results and Momentum. Water Intelligence will
close its 1H books after its American Leak Detection franchisees
report June royalty numbers at the end of July. We expect 1H
guidance to be issued shortly thereafter. Through May the Company
saw continued momentum of its growth trajectory and is on course to
pass its next milestone of $30 million in sales during 2019 (2018:
$25 million) with profits being in line with expectation, even
after additional reinvestment for accelerated market capture as
outlined below.
Year-to-date performance data and the oversubscribed demand for
the Company's stock issuance in May enable the Board to maintain
its ambitious mindset for reinvesting to grow for the next
five-year period, much as it has done for the Company's last
five-year period. As noted in the Annual Report, from 2014 to 2018,
the Company achieved compounded annual sales growth of 37% and
profits growth of 32%. For 2018, profits before tax growth at 53%
year-over-year [actually] exceeded sales growth of 45%
year-over-year leading the board to plan on increasing reinvestment
amounts budgeted for 2H 2019 and 2020 to fuel faster market
capture. Over the next five-year period, even from our bigger base
of $100 million in total sales to end-users (direct delivery of
corporate sales and indirect delivery from franchisees as measured
by royalty income), we believe that there is significant
opportunity to expand rapidly. Global demand for water
infrastructure solutions is in the tens of billions of dollars and
growing given the ever-increasing cost of water. Our current Key
Performance Indicators (set forth in the Strategic Report to our
Accounts) and several wins during 1H 2019 give the Board confidence
that the Company can maintain a similar momentum both in the near
term and through the five-year period.
First, organic growth from our business-to-business insurance
channel continues to grow rapidly at approximately 80%
year-over-year comparing May 2019 to 2018 thus feeding more jobs to
our franchise and corporate locations. Over the last forty-five
days, we have signed two national customers (one insurance company;
one national home products retailer). These commercial
relationships will kick into gear over the next six months and add
to our sales growth targets. Because of our unique distribution
base in 45 states of the U.S., we anticipate more national accounts
later this year and next. Hence our franchise royalty income
continues to grow reflecting the success of our national channel
structure. Currently, we have a healthy backlog of jobs across the
country. We will be reinvesting in training more technicians in our
proprietary technology to satisfy strong demand everywhere but
especially in the US market.
Second, in terms of franchise reacquisitions and the aggregation
of current revenue and earnings onto our corporate accounts, this
year we have already executed strategic reacquisitions of
franchises in Niagara, Canada and South Atlanta, Orlando and Tucson
in the United States. All these reacquisitions are accretive. The
recent timing of the latter two will have an impact during 2H.
Importantly, as we create a more valuable market for our
franchisees through opportunities for exit, we are seeing stronger
demand from third parties to buy a franchise. We sold a franchise
in middle Georgia during April and have already started receiving
additional royalty income. While selling new franchises has not
been a priority over the last five years, we will likely sell more
franchises in select areas going forward producing opportunities
for high gross margin sales. Corporate store sales and profits
growth after reacquisition continue to be strong.
As noted above, we will also begin to reap the benefit of our
technology investments during 2H. We are pleased to announce that
start of sewer diagnostic projects using Orca technology. One
contract has begun in California; one new contract will begin in
the UK next month. The Orca acoustic technology is proprietary and
has multiple uses ranging from asset surveys where manholes have
been blocked to identification of cracks in a pipe with much more
precision. During 2H we will also launch Project Contextual
Commerce, which is a video channel to advance our participation in
the rapidly growing "Insuretech" market. As noted in the Annual
Report, our insurance company partners would like our American Leak
Detection business to help sell and install new technology products
geared for monitoring leaks and evidence of water damage. With our
customized video channel, ALD can become a full-service partner of
the insurance companies, not only pinpointing and fixing leaks but
also advising and installing products for homeowners that help
limit significant water-related claims. An illustrative example of
such a video channel is currently displayed at
www.waterintelligence.co.uk
The Company is pleased with its momentum and growth trajectory
through this point of Q2. We look for continued growth in 2H. The
previously announced year-to-date wins as outlined above will be
more fully reflected in 2H numbers as they get executed. To be sure
there is still much more to do given the global opportunity
presented by deteriorating water infrastructure. In addition to
what we have achieved thus far during 2019, we hope to add to our
international expansion during 2H."
Enquiries:
Water Intelligence plc
Patrick DeSouza, Executive Chairman Tel: +1 203 654
Adrian Hargrave, VP, Corporate Development 5426
Tel: +44 (0)7775
701 838
WH Ireland Limited - NOMAD and Broker Tel: +44 (0)20
7220 1666
Adrian Hadden
James Sinclair-Ford
Matthew Chan
IFC Advisory Limited Tel: +44(0)20 3934
Graham Herring 6630
Miles Nolan
Zach Cohen
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This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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