Water Intelligence(WATR), a provider of water leak detection and related services, announced its interim results for the period ended 30 June 2023, with results in line and strong profit growth reflecting increasing market demand for water and wastewater solutions globally.
Revenue increased by 9% to $38.7 million. Franchise royalty income grew 2%, franchise-related sales grew 14%, and corporate store sales grew 9%. Despite sales figures all trending in the right direction, Water Intelligence said it continued to battle a sharp rise in interest rates in the period.
Profits and margins grew on all measures, with the company's statutory profit before tax increasing 21% to $4.2 million, compared to the previous year's $3.5 million in the same period. Additionally, statutory EBITDA saw a solid 12% increase, reaching $7.0 million. PBT margin increased to 11%.
Cash at 30 June stood at $18.7 million, with net cash - excluding bank borrowings - of $1.75.
In July, Water Intelligence reacquired its West Covina, California franchise for $1.5 million, aligning with the company's strategy of establishing US corporate hubs for growth. Earlier in February, they also reacquired their Nashville, Tennessee franchise.
Water Intelligence also commercialised four new products in the period, including Pulse, an acoustic tool for sewer line blockage detection, which has since exceeded $0.5 million in sales with UK water companies. The company commercialised LS1, an urban water infrastructure survey device, and IntelliDitch, a liner for water conservation in channels. They also exclusively licensed CreatorSuite 2.0, an AI video ecommerce tool from SEEEN plc, for the water and wastewater sector, boosting lead conversion with video 'end-cards’.
Dr. Patrick DeSouza, Executive Chairman of Water Intelligence, commented: "We continue to deliver strong results while navigating market volatility produced by rising interest rates and inflationary pressures. Profits increased strongly. Margins improved. Our balance sheet remains strong enabling us to make investments for future growth both in terms of more trained technicians, new technology solutions for customers and software infrastructure to enable continuous customer engagement and operating efficiencies. We remain positive about the future as market demand for water infrastructure solutions continues to grow."
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Despite navigating a series of external headwinds, Water Intelligence has managed to grow sales, increase margins, and end the period with a strong balance sheet.
Since commercialising a number of new products, Water Intelligence can expand on its strategy of upselling various solutions for related water and wastewater problems to customers. For example, with its Pulse product, rapid sewer diagnostics is a natural upsell during a visit to a home for water leak detection as most homeowners have insurance or warranty policies for both water damage and sewer blockages.
On top of this, market demand for water and wastewater solutions is only expected to grow over the next decade around the world, as governments and private companies are increasingly recognising the need to upgrade and expand water infrastructure to meet growing demands and address aging systems.
This is mainly being seen in the US and EU, which are both committed to spending tens of billions annually to address problems of aging water and wastewater infrastructure. In the US, the Infrastructure Investment and Jobs Act, signed in November 2022, approves $55 billion for water initiatives over the next five years.
Meanwhile, the European Union is projected to require an estimated €290 billion in additional spending within the next decade to meet water and sanitation requirements outlined in Directives for Drinking Water and Urban Waste Water Treatment, according to the OECD.
In light of the company’s ‘land and expand’ strategy, coupled with increasing demand for water and wastewater solutions, Water Intelligence is in a prime position for long-term growth.
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