Water Intelligence reports on a strong third quarter

Leak detection and remediation solutions provider Water Intelligence provided an update on trading through the end of the third quarter on Wednesday.

The AIM-traded company said its financial results continued as strongly as the board set forth in its interim results for the first half of 2016.

Revenue reportedly exceeded market expectations, and through Q3 it reached the same level as achieved for all of 2015.

Profits before tax also grew, and were in-line with market expectations at period end despite significant investment to drive future profitability.

“We will continue to invest in operations today to fuel even faster 2017 revenue growth so that we may exploit strong US market demand for water and infrastructure solutions,” the board said in a statement.

“Our 2016 transactions, particularly regarding our UK sewer and wastewater company, put us in a better position to harvest such market opportunity.

“Profit margins should also grow during 2017 as a significant amount of 2016 expenses are one-time transactions-related expenses.”

The board described 2016 as a “busy year” as it implemented a three-pronged corporate growth strategy.

It said the first prong saw the franchise system continue to grow organically through the development of national sales channels.

“We are executing in line with our interim results for franchise royalty growth and we now exceed $75m in annualised system-wide sales to end-users.

“We have completed four reacquisitions of franchisees in this period - South New Jersey, Cincinnati, Northwest Arkansas and Sydney - deepening our approach to developing a regional corporate presence from which to grow the existing franchise system.”

Water Intelligence said such reacquisitions also directly added critical mass to revenue and earnings as its corporate stores continue to execute strongly in line with its interim results.

Arkansas and Sydney were closed in Q4 and their results were not included in the trading update, but the board said even without their inclusion, sales from corporate-run operations through Q3 exceeded sales from corporate stores for all of 2015.

“Finally, we acquired a fast growing UK municipal sewer and wastewater company that will be able to layer its solutions onto our franchise system across the US, Australia and Canada and provide water infrastructure solutions.

“This transaction closed in September and only an initial, strong month was included in the Q3 results.”

Since the end of Q3, Water Intelligence said it has completed both a round of equity financing at a price that represented a premium to market and a new, broader bank financing putting the Company in position, as noted above, to accelerate its growth strategy in 2017.

Chairman Patrick DeSouza said the company was encouraged by the results as it accelerated its efforts to build a multinational growth company, providing solutions to meet the strong demand for water and infrastructure solutions.

“Through Q3 we have exceeded our turnover targets twice and expanded our organization to support such growth whilst continuing to be ‘in-line’ with market expectations on profits before tax,” Dr DeSouza explained.

“We appreciate the confidence shown by new investors and a new more robust banking relationship.”