Water Intelligence says 'strong' performance continues

Leak detection and remediation solutions provider Water Intelligence provided a trading statement for the year to 31 December on Thursday, ahead of its final results, to be announced on or around 9 May 2017.

The AIM-traded company said the strong financial performance it outlined in the Q3 trading update on 21 December continued for the remainder of 2016.

Revenue growth exceeded market expectations within all sales channels, including newly acquired UK-based NRW Utilities, with total revenues for the year of $12.2m - up from $8.8m - and adjusted profit before tax in line with market expectations.

During the period, the company said it incurred upfront investment costs intended to drive future profitability, as well as significant one-time costs such as legal fees incurred with the various corporate activities undertaken in 2016.

Those included share capital reorganisation, four franchise re-acquisitions. and the acquisition of NRW Utilities.

Profit margins were expected to grow during 2017 with a full year of trading from the 2016 acquisitions, together with continued organic growth.

Sales for the company’s services - whether delivered by a franchise location or by a corporate location - grew strongly and exceeded $75m.

The board said each segment - franchise and corporate - worked synergistically, and franchise royalties continued to grow at recent historical rates of approximately 6% despite a reduction in the number of franchisees resulting from the company's reacquisition programme.

Corporate stores sales - both current stores and newly acquired stores - grew “strongly”, passing the $4m level.

Parts and equipment sales once again grew in double digits, the board said, representing reinvestment confidence in its plan by franchisees.

The company said it was now growing on both sides of the Atlantic.

“We achieved a lot during 2016 that point to a strong 2017 - sales growth was fed both organically through the development of business to business channels and through buying back selected franchises,” said executive chairman Patrick DeSouza.

“Unlike typical acquisitions, we already knew our candidates - franchisees in strategic regions of the US and Australia and a growing water infrastructure services company in the UK with whom we had subcontracted leak detection work historically.”

Dr DeSouza said 2015 franchisee re-acquisitions performed well.

“Early indications are that our 2016 decisions will reinforce our capabilities to sustain strong growth and build a multinational company that takes advantage of market tailwinds for this sector.”