H2O Innovation sets out future strategy, as it unveils figures for fiscal year 2016

H2O Innovation grew revenues by 4 per cent to $50.7 million in the year to end of June 2016, thanks to organic growth in speciality products and services.

Gross profit before depreciation and amortisation was 30.7 per cent for the year, up from 27.9 per cent in fiscal 2015, helped by “constant efforts to improve execution and procurement of projects”, and a change in business mix.

Secured contracts for water treatment projects and operations and maintenance stood at $99.7 million as of September 26, 2016. In July, the company completed its acquisition of Utility Partners, the US water and wastewater treatment plant operations and maintenance specialist.

“We now have a platform to capture cross selling opportunities, where the three business pillars of speciality products and services, operations and maintenance, and projects, will feed each other. The focus for fiscal 2017 is to scale up our business model by maximising all our resources and sales forces. Together these three business pillars provide a unique and accountable business model to serve design-build-operate opportunities, a fast growing segment in the water industry,” said Frederic Dugre, president and chief executive.

Revenues from speciality products and services grew by 37 per cent to $27.7 million, and water treatment project revenues fell by 19.3 per cent to $23 million, during fiscal 2016. The growth of speciality products and services reflects investments in sales and product development, and acquisitions of proprietary technologies including Smartrek, Clearlogx, and SPMC.

The performance means that the balance of revenues shifted so that speciality products and services was for the first time the larger chunk of business, a change that the company believes will help to provide greater predictability, to secure long-term relationships, and to maintain high gross profit. Speciality products accounted for 54.7 per cent of total revenues (2015: 41.6 per cent), and water treatment project revenues accounted for 45.3 per cent (2015: 58.4 per cent).

The fall in water treatment project revenues “is not unusual, since revenues from projects varies from quarter to quarter, and depends on the different milestones reached for revenue recognition,” the company said.

For the quarter to end of June 2016, revenues decreased by 5.4 per cent to $11 million, and gross profit before depreciation and amortisation was 33.4 per cent, up from 29.7 per cent in Q4 fiscal 2015.