Présentation PowerPoint

H2O Innovation
Investment opportunity
in a Smart Water player
“Large companies have tried and
failed to bring together the roles of
systems integrator and chemical
supplier. H2O Innovation has used
smart technologies to bridge the
two disciplines, creating a virtuous
circle based on greater
understanding of the customer
experience.”
GWI – Global Water Awards, Feb. 2016
1
TSXV:HEO
Key Drivers Supporting Investment in the Water Sector
Population growth
+2.5b people by 2050
• 70% will live in urban
region putting pressure
on existing
infrastructures
2
Climate change
Water is the visible change
• Rising sea levels
• Droughts
• Lost of productivity
• Urban mining concept
to optimize
consumption
Stringent legislations
Improve water network infrastructure
• Adoption of new filtration
technologies such as membrane
filtration (UF/NF/RO/MBR/FO)
TSXV:HEO
What Water is Used for ?
Transform, Purify, Reuse
Human
consumption
Industries
The solution relies in water
conservation and reuse.
Fresh water is limited and
becomes more
unpredictable.
8%
22%
Irrigation
70%
3
TSXV:HEO
We
design, engineer and fabricate smart water plants and
auxiliary proprietary technologies to increase plants performance
and maximize customer retention.
Through our expertise in membrane
filtration and proprietary technologies
we promote a flexible approach :
4
•
To provide freedom of choice to the
end-user
•
To enhance performance
•
To reduce operating costs
Our Business Pillars
We promote customer’s retention through every steps of our business offering
Water & Wastewater
Projects
•
•
•
•
FiberFlexTM
Bio-WheelTM Bio-BraneTM
FlexMBR
Desal, RO, NF
Flagship
5
Specialty Products
& Services (SP&S)
• Couplings
• SpectraGuardTM
• ProDose XPRTTM
Differentiator
Operation &
Maintenance
• SPMCTM
• ClearlogXTM
Convergence
TSXV:HEO
Our business formula works
Business Mix
Profitability
Growth & Scalability
3 business pillars ;
Gross profit improved
through execution,
innovations and sound
business mix ;
Acquisition platform and
successful integration ;
Leverage 650 references ;
Promote recurring revenues;
Growth of 30% / year over
15 years ;
Multiple sales channels ;
Continuous EBITDA ;
4,0 $
$
$
$
$
$
$
$
SP&S
6
Gross Profit
3,0 $
Projects
2,0 $
25%
20%
(3,0) $
(4,0) $
2015
2014
2013
2012
2011
2010
2009
Q3 - 2016 (LTM)
(2,0) $
2008
(1,0) $
2007
$
2006
Q3 - 2016…
Q2 - 2016…
Q1 - 2016…
2015
2014
2013
2012
2011
2010
2009
2008
2007
-
35%
30%
1,0 $
2006
60,0
50,0
40,0
30,0
20,0
10,0
-
EBITDA
15%
10%
5%
TSXV:HEO
0%
Continuous growth
H2O Innovation at a glance
Quebec City – Headquarters
Manufacturing plants :
• Ham-Nord (QC) : 75,000 ft2
• Minneapolis (MN): 37,000 ft2
• Vista (CA) : 20,000 ft2
Engineering & sales offices :
• Burlington (ON)
• Calgary (AB)
• Bilbao (Spain) NEW
• Strong membrane expertise
• Proprietary products &
innovations
• 180 employees
• Experienced management team
• Multiple sales channels
• > $50 M in revenues
• LTM EBITDA : $3.3 M
7
• 21 outstanding shares
• 35% institutional
TSXV:HEO
• 17% board & management
Projects &
Engineered Solutions
Who do we sell to?
650 + systems installed
65% Municipal - 35% Industrial
100% North America
8
Specialty
Products & Services
Export in 40+ countries, 35 distributors
30% North America
70% Worldwide
TSXV:HEO
1st Business Pillar
Projects and engineering solutions
Expertise in membrane filtration
•
Promote agnostic solutions (freedom of choice for the user)
•
Full spectrum of filtration (MF, UF, NF, RO, MBR)
Commercial
•
Clients : EPC, Municipalities, Utilities, Industries
•
Sales pipeline: >$175 M
•
Sales Backlog: $42.1M - closing rate of 33%
Proprietary technologies provide strong differentiator
•
FiberFlexTM, FlexMBRTM, Bio-BraneTM (patented), Bio-WheelTM (patented)
Addressable market in 2018: (CAPEX only) :
•
9
Canada : $3.5B , USA : $40.0B
TSXV:HEO
1st Business Pillar
Projects and engineered solutions
DRINKING WATER
10
WATER REUSE
WASTEWATER
DELIVERY
APPROACH
TSXV:HEO
2nd Business Pillar
Specialty products & services (SP&S)
Provide auxiliary specialty products necessary to membrane plants
clients & food processing
Commercial :
•
Water utilities, EPC, General Contractors, Municipalities, Industrial plants
•
12 agents/ distributors for Piedmont
•
25 distributors for PWT
•
35 distributors for H2O Maple
Proprietary technologies provide strong differentiator
•
DendrimerTM chemicals, couplings, SPMCTM, ClearlogXTM, SuperConcentratorTM, FRP filter housings
Addressable market in 2018:
11
•
Specialty chemicals for membrane plants : $400 M
•
Couplings & Filter Housings : $250 M
•
Maple production equipment : $100 M
TSXV:HEO
2nd Business Pillar
Specialty products & services
12
TSXV:HEO
Q3 FY2016 – Review & Analysis
Highlights on Financial Statements
Q3 – FY2016 Review
FY2016
Revenues
% rev
$14,199,860
FY2015
% rev
$12,121,641
From projects
$4.8 M
34%
$5.6 M
46%
From SP&S
$9.4 M
66%
$6.5 M
54%
Gross profit
$4,522,640
31.8%
$3,887,460
32.1%
SG&A
$3,325,500
23.4%
$2,923,412
24.1%
Net earnings (loss)
Adjusted EBITDA
14
$646,422
$1,245,324
Record high quarter : adjusted EBITDA grows
faster than revenues
• Revenues increased by $2.1M or 17.1%
• Project backlog remains high at $42 M
• Strong contribution (66%) from SP&S :
 Expansion of sales network
 Development of proprietary products
 Growing contribution of ClearlogX
•
Gross profit margin remained high at 31.8%
driven by SP&S, project execution and
sound procurement.
•
Scalability is demonstrated as EBITDA
progressed to a new high of 8.8% :
 Revenues increased by 17.1% while
EBITDA grew by 38.7% and SG&A by
TSXV:HEO
13.7%.
$150,490
8.8%
$897,846
7.4%
Continuous Improvement
Q3 – FY2016 Review
Three-month periods
ended March 31,
2016
Revenues
2016
2015
Last twelve months
ended March 31,
2016
2015
$14,199,860 $12,121,641 $39,624,778 $37,029,832 $51,294,806
$44,926,233
Gross profit margin
31.8%
32.1%
29.9%
27.3%
29.7%
27.3%
SG&A
23.4%
24.1%
23.2%
20.1%
23.3%
21.9%
$646,422
$150,49
$872,972
$550,601
$588,909
$281,359
$1,245,324
$897,846
$2,717,600
$2,498,648
$3,295,697
$2,261,344
8.8%
7.4%
6.9%
6.7%
6.4%
5.0%
Net earnings
Adjusted EBITDA
Adjusted EBITDA over
Revenues (%)
15
2015
Nine-month periods
ended March 31,
Over the last twelve months (LTM) :
• Revenues increased by 14%
• EBITDA increased by 46% and grew 3 times faster than revenues showing operational
efficiency and scalability – revenues volume matters!
• SG&A expenses are stable at 23%: Investment in product development and sales.
TSXV:HEO
Business Mix : Projects vs SP&S
Q3 – FY2016 Review
60,0 $
SP&S
Projects
50,0 $
$26.6 M or 52% of the
LTM revenues
40,0 $
30,0 $
20,0 $
$24.8 M or 48% of the
LTM revenues
10,0 $
-
$
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q1 2016
(LTM)
Q2 2016
(LTM)
Key drivers :
 Strong product innovation from SP&S
 Expansion of the distribution network
 Hiring of key sales / technical employees
16
Q3 2016
(LTM)
TSXV:HEO
Gross Profit and EBITDA Performance
Q3 – FY2016 Review
4,0 $
35%
EBITDA
Gross Profit
3,0 $
30%
2,0 $
25%
1,0 $
20%
-
$
2006
(1,0) $
(2,0) $
(3,0) $
(4,0)
17 $
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q3 2016
(LTM)
Key drivers :
 Business mix
 Improved project execution and
develop a selective procurement
culture
 Product innovation
15%
10%
5%
0%
 Sales network expansion
 Scalability :
 Revenues increased by
17.1% while EBITDA
increased by 38.7%
TSXV:HEO
Financial Position
Q3 – FY2016 Review
(in Canadian dollars,
except for ratios)
Working capital
Working capital ratio
Net debt1
Equity
Net debt to equity ratio
18
Period ended
March 31, 2016
Period ended
June 30, 2015
$8,703,432
1.55
$8,590,671
$27,469,666
0.31
$8,423,583
1.75
$4,141,826
$26,007,486
0.16
Working capital ratio stands at 1.55 :
• Inventories increased by $0.35 M for large
couplings orders;
• WIP increased by $2.85 M due to project
advancement (T&C, Schedule);
• Receivables increased by $1.95 M due to
growing Piedmont deliveries and projects;
Increased the net debt by $4.4 M, mostly for an
acquisition:
• Secured a $2.7M senior debt for the
acquisition of ClearlogX;
• Used $1.5M in the WIP credit line to support
projects ;
• Keep reducing the high interest rate longterm debt (will be completely reimbursed by
June 30, 2016);
TSXV:HEO
Growth Perspective
$100M
Revenues
$75.0
Projects Revenues
$35.9 M
$24.2
$20.8
$11.7
2012
19
SP&S Revenues
$36.1 M
$22.9
$13.2
$14.1
2013
$4749 M
$36.4 M
$36.0
$18.9
$17.5
2014
$27
$20.5
2015
$50 54 M
$40.0
$50.0
$45.0
New business ?
$28.5
$30.0
$22.0
2016
Projects Backlog
$20.0
…
2018
TSXV:HEO
Take Aways
 Complementary business pillars providing accountability and long-term
customer retention with recurring sales.
 Proven Business model :
 We generate growth – organically and through acquisition (ClearlogX)
 We are a disciplined acquire and integrator
 We scale-up our Earnings and EBITDA faster than our revenues
 We reinvest to fuel growth :
•
Develop proprietary technologies and products
•
Expand sales network
 We can execute our $42 M projects backlog
 We have a project sales pipeline >$150 M
20
Major Industry Recognition
“H2O Innovation has demonstrated in 2015 that a
small company with the right combination of creativity,
entrepreneurialism, and dedication can shake up the
established ways of the global water industry – and thrive.
The rest of the world should take notice.”
GWI – Global Water Awards, April 2016
Winner of the Water Technology Company of the Year
Global Water Award 2016, Abu Dhabi (UAE)
21
TSXV:HEO
H2O Innovation
Unique smart water player
Winner of the Water Tech.
Company of the Year award
at the 2016 GWI
Headquarters
330 rue st-Vallier Est, suite 340
Quebec City, QC
G1K 9C5 Canada
1-418-688-0170
info@h2oinnovation.com
www.h2oinnovation.com
22
TSXV:HEO