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Porvair plc, UK
COMPANY WATCH
H2O Innovation, Canada
Porvair plc, UK
Key Figures (C$ million) Third quarter ended 31.3 2007
2006
Sales
2.0
1.2
Cost of Sales
1.4
0.7
Gross Margin
0.5
0.5
Operating Income//(Loss)
(0.2)
Net Profit/(Loss)
(0.2)
Key Figures* (£ million) Six months ended 31.5 2007
2006
22.9
23.0
(0.1)
Revenue Of Which: Metals Filtration Microfiltration Advanced Materials
9.4 13.3 0.2
9.7 12.8 0.5
(0.1)
Cost of Goods Sold
15.6
15.7
Gross Profit
7.3
7.3
Operating Profit/(Loss) Of Which: Metals Filtration Microfiltration Advanced Materials
1.7
1.3
0.3 2.3 (0.5)
0.0 2.5 (0.8)
Profit before Taxation
1.5
0.9
Profit for the Period
1.0
0.6
Nine months ended 31.3 2007
2006
Sales
5.1
3.1
Cost of Sales
4.0
1.9
Gross Margin
1.2
1.2
Operating Income/(Loss)
(1.3)
(0.5)
Net Profit/(Loss)
(1.2)
(0.5)
* Continuing operations
COMMENT H2O Innovation recorded fiscal 2007 third quarter sales of C$2.019 million, up 69% on the same period in 2006. For the corresponding nine months revenues increased 68% on the year earlier to reach C$5.147 million. The company posted a net loss of C$204 176 for the quarter, a decline of 107% on the 2006 comparator, which was attributed mainly to the accounting entry of share option based remuneration. For the corresponding ninemonth period, the net loss further declined 146% to C$1.2 million. Guy Goulet, H2O Innovation’s president and CEO, said as with the second quarter, H2O Innovation’s results reflected the October 2006 acquisition of Membrane Systems Inc (MSI). The increase in sales for the quarter generated an improvement to H2O Innovation’s gross profit, which grew from C$471 297 to C$534 321. Despite this increase, the company suf-
August 2007
fered a 13% reduction of its gross margin when compared to the corresponding quarter in 2006 due to new, larger US municipal projects having reduced margins compared with previous contracts. Goulet added that the integration of the engineering, purchasing and manufacturing activities of the MSI acquisition should generate a 3 % increase of the gross margin over the coming quarters. Goulet said sales expenses for the latest quarter reached C$281 281, a 65% increase from a year earlier but constant at 14% of sales. He said the increase in sales expenses resulted from the inclusion of MSI costs, as well as the launch of an international marketing campaign aimed specifically towards Egypt and North Africa. Goulet said that the campaign was designed to highlight the firm’s expertise in seawater desalination and its cost efficient manufacturing capabilities to help attract international sales. ■
COMMENT Porvair shook off a slight dip in revenue due to currency fluctuations to post a 70% increase in its net profit for the first six months of 2007, posting earnings of £1.0 million. Sales income was down £0.1 million to £22.9 million for the half-year, although was up 5% when adjusted for a weaker US dollar. Porvair’s UK-based Microfiltration division continued its recent growth, with revenue for the period up 4% to £13.3m (2006: £12.8m). Continued strong demand from the aviation sector helped offset a decline in the export of laboratory filtration plates, although the weaker dollar resulted in a 8% dip in operating profit to £2.3m (2006: £2.5m). Sales in Porvair’s US-based Metals Filtration division were down.3.1% to £9.4 million, although in US dollars revenues were up 8% at US$18.6 million. Porvair’s CEO, Ben
Stocks, said that it was generally the more specialised parts of the division that had grown the most. He said demand for filters and consumables for specialist alloy manufacturers were strong, as were sales for both iron and aluminium foundry filters. The division reported an operating profit of £334 000 (2006: £34 000 loss), which comprised an underlying profit of £583 000 and a restructuring charge of £249 000. “Porvair has delivered profits growth and further progress in key developmental projects,” Stocks said. “The year is progressing well and in line with management’s expectations. Customer demand, particularly for aviation products and US exports, is growing. We are pleased that the restructuring in the Metals Filtration division is improving results which will be supported further by increasing sales of our new filter for high specification metal alloys.” ■
Filtration Industry Analyst
11
H2O Innovation, Canada
Porvair plc, UK
Key Figures (C$ million) Third quarter ended 31.3 2007
2006
Sales
2.0
1.2
Cost of Sales
1.4
0.7
Gross Margin
0.5
0.5
Operating Income//(Loss)
(0.2)
Net Profit/(Loss)
(0.2)
Key Figures* (£ million) Six months ended 31.5 2007
2006
22.9
23.0
(0.1)
Revenue Of Which: Metals Filtration Microfiltration Advanced Materials
9.4 13.3 0.2
9.7 12.8 0.5
(0.1)
Cost of Goods Sold
15.6
15.7
Gross Profit
7.3
7.3
Operating Profit/(Loss) Of Which: Metals Filtration Microfiltration Advanced Materials
1.7
1.3
0.3 2.3 (0.5)
0.0 2.5 (0.8)
Profit before Taxation
1.5
0.9
Profit for the Period
1.0
0.6
Nine months ended 31.3 2007
2006
Sales
5.1
3.1
Cost of Sales
4.0
1.9
Gross Margin
1.2
1.2
Operating Income/(Loss)
(1.3)
(0.5)
Net Profit/(Loss)
(1.2)
(0.5)
* Continuing operations
COMMENT H2O Innovation recorded fiscal 2007 third quarter sales of C$2.019 million, up 69% on the same period in 2006. For the corresponding nine months revenues increased 68% on the year earlier to reach C$5.147 million. The company posted a net loss of C$204 176 for the quarter, a decline of 107% on the 2006 comparator, which was attributed mainly to the accounting entry of share option based remuneration. For the corresponding ninemonth period, the net loss further declined 146% to C$1.2 million. Guy Goulet, H2O Innovation’s president and CEO, said as with the second quarter, H2O Innovation’s results reflected the October 2006 acquisition of Membrane Systems Inc (MSI). The increase in sales for the quarter generated an improvement to H2O Innovation’s gross profit, which grew from C$471 297 to C$534 321. Despite this increase, the company suf-
August 2007
fered a 13% reduction of its gross margin when compared to the corresponding quarter in 2006 due to new, larger US municipal projects having reduced margins compared with previous contracts. Goulet added that the integration of the engineering, purchasing and manufacturing activities of the MSI acquisition should generate a 3 % increase of the gross margin over the coming quarters. Goulet said sales expenses for the latest quarter reached C$281 281, a 65% increase from a year earlier but constant at 14% of sales. He said the increase in sales expenses resulted from the inclusion of MSI costs, as well as the launch of an international marketing campaign aimed specifically towards Egypt and North Africa. Goulet said that the campaign was designed to highlight the firm’s expertise in seawater desalination and its cost efficient manufacturing capabilities to help attract international sales. ■
COMMENT Porvair shook off a slight dip in revenue due to currency fluctuations to post a 70% increase in its net profit for the first six months of 2007, posting earnings of £1.0 million. Sales income was down £0.1 million to £22.9 million for the half-year, although was up 5% when adjusted for a weaker US dollar. Porvair’s UK-based Microfiltration division continued its recent growth, with revenue for the period up 4% to £13.3m (2006: £12.8m). Continued strong demand from the aviation sector helped offset a decline in the export of laboratory filtration plates, although the weaker dollar resulted in a 8% dip in operating profit to £2.3m (2006: £2.5m). Sales in Porvair’s US-based Metals Filtration division were down.3.1% to £9.4 million, although in US dollars revenues were up 8% at US$18.6 million. Porvair’s CEO, Ben
Stocks, said that it was generally the more specialised parts of the division that had grown the most. He said demand for filters and consumables for specialist alloy manufacturers were strong, as were sales for both iron and aluminium foundry filters. The division reported an operating profit of £334 000 (2006: £34 000 loss), which comprised an underlying profit of £583 000 and a restructuring charge of £249 000. “Porvair has delivered profits growth and further progress in key developmental projects,” Stocks said. “The year is progressing well and in line with management’s expectations. Customer demand, particularly for aviation products and US exports, is growing. We are pleased that the restructuring in the Metals Filtration division is improving results which will be supported further by increasing sales of our new filter for high specification metal alloys.” ■
Filtration Industry Analyst
11