2017 Q2 Results Supplemental Information Slides August 4, 2017 - - PowerPoint PPT Presentation

2017 Q2 Results

Supplemental Information Slides August 4, 2017

Forward-Looking Statements

This presentation, and its commentary, may contain forward-looking statements, including, without limitation, statements containing the words "should", "believe", "anticipate", "may", "plan", "will", "continue", "intend", "expect", "estimate" and other similar expressions. These statements constitute “forward-looking information” within the meaning of applicable Canadian securities laws. These statements are based on the Company’s current expectations, estimates, forecasts and assumptions. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other important factors that could cause the Company’s actual performance to be materially different from that projected. Examples of these statements would include those where the Company forecasts the timing of new and existing projects and the success of the Company’s new technologies and entering new markets. The assumptions, risks and uncertainties that could cause actual results to differ materially from the forward-looking information, include, but are not limited to market changes, the Company’s ability to deliver services in a timely and cost effective manner, technological change, changes in general economic conditions and

• ther risks detailed from time to time in our ongoing filings with the Canadian securities regulatory authorities, including those in the Company’s

Annual Information Form, which filings can be found at www.sedar.com. Given these assumptions, risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by applicable securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise. Unless otherwise stated, all dollar amounts are expressed as CAD$.

2

Financial Performance Overview

3

• 1. Excludes direct costs and loss or gains on asset disposals, includes depreciation
• 2. See Non-GAAP Measures

3.Comparative figure is as at December 31 .

Q2:

• Total Revenue up

16% to $33.7 million

• Adj. EBITDA up

34% to $6.1 million YTD:

• Total Revenue up

16% to $62.9 million

• Adj. EBITDA up

94% to $11.0 million

For the period ended June 30 (000s except per shr and %) Three months 2017 Three months 2016 Change Six months 2017 Six months 2016 Change $ % $ % Revenue 33,740 29,189 4,551 16 62,946 54,310 8,636 16 Direct costs 7,370 5,159 2,211 43 12,725 11,408 1,317 12 Gross Profit2 26,370 24,030 2,340 10 50,221 42,902 7,319 17 Gross margin (%) 78 82 80 79 Operating Expenses1 23,962 23,132 830 4 46,451 44,243 2,208 5 Adjusted EBITDA2 6,101 4,552 1,549 34 11,001 5,660 5,341 94 Adjusted EBITDA2 (%) 18 16 17 10 Net income (loss) for the period 1,311 967 344 36 1,610 (1,491) 3,101 na Per share – basic 0.02 0.02 0.03 (0.03) Per share – diluted 0.02 0.02 0.03 (0.03) Cash Flow from Operations Before Working Capital Changes2 6,170 3,997 2,173 54 10,619 5,116 5,503 108 Adjusted Income (Loss) for the period2 1,501 141 1,360 965 1,886 (1,347) 3,233 na Total assets3 143,935 143,578 357

• 143,935

143,578 357

Q2 & H1 Performance Summary

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Q2:

• 74% of total revenue
• Revenue up 11% to $25.0 million
• Adj. EBITDA up 40% to $6.5 million

YTD:

• 78% of total revenue
• Revenue up 14% to $49.0 million
• Adj. EBITDA up 71% to $13.5 million
• 18% FY Revenue CAGR (2013 - 2016)

Q2:

• 26% of total revenue
• Revenue up 30% to $8.7 million
• Adj. EBITDA consistent at $2.8 million

YTD:

• 22% of total revenue
• Revenue up 22% to $13.9 million
• Adj. EBITDA down 13% to $3.6 million
• 73% FY Revenue CAGR (2013 - 2016)

Water Division Oil & Gas Division

Water Division

Americas Segment

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• Q2 revenue up 12% and Adj. EBITDA up 20%
• Driven by increased inspection and consulting

activity and projects previously delayed

• H1 revenue up 6% and Adj. EBITDA up 12%, in line

with expectations

• H2 activity expected to increase based on new

clients and current scheduling

Water Division

International Segment

6

• Q2 revenue down 14% and Adj. EBITDA down 6%
• Segment driven by large projects leading to inter-

quarter volatility

• H1 revenue up 35% and Adj. EBITDA up 137% due

to high Q1 activity and cost controls

• Moderate growth expected for 2017; Xylem

partnership expected to increase sales in 2018

Water Division

Wachs Water Services Segment

7

• Q2 revenue up 32% and Adj. EBITDA increased by

$1.2M

• Both periods reflect increased productivity and

higher sales

• H1 revenue up 27% and Adj. EBITDA increased by

$2.4M

• Significant progress made towards returning to pre-

acquisition revenue levels by 2019

Oil and Gas Division

PureHM Segment

8

• Q2 revenue up 30% (incl. $1.4M from E-MAC) and
• Adj. EBITDA flat compared to prior year
• Reflects lower than expected U.S. activity
• H1 revenue up 22% (incl. $2.1M from E-MAC) and
• Adj. EBITDA down 13%, in line with expectations
• H2 traditionally busiest for E-MAC; growing

acceptance of PureHM technologies and solutions

Corporate and Other

9

General and Administration Expenses Research and Development (R&D) Expenses

• Adj. G&A expenses down 3% for Q2

and 6% YTD due to completion of cost

• ptimization activities, ERP

implementation

• G&A levels expected to be similar for

H2

• R&D expenses increased in Q2 and

YTD reflecting a lower proportion of capitalized development costs compared to 2016, which is variable based on project mix and time spent on

• perations during busier periods
• R&D initiatives are focused on

increasing the capability and efficiency

• f its technology platforms in both the

water and oil and gas sectors

• DSO consistent with YE at 108 days
• $5.8 million cash on hand at June 30,

2017

Working capital efficiency For the period ended June 30 Three months 2017 Three months 2016 Change Six months 2017 Six months 2016 Change $ % $ % General and administration 3,097 3,315 (218) (7) 6,125 6,690 (565) (8) Stock based compensation (453) (499) 46 (9) (830) (790) (40) 5 Training costs

• (100)

100

• (280)

280

• Adjusted general and

administration1 2,644 2,716 (72) (3) 5,295 5,620 (325) (6) For the period ended June 30 Three months 2017 Three months 2016 Change Six months 2017 Six months 2016 Change $ % $ % Research & development 546 186 360 194 893 793 100 13 Stock based compensation (47) (37) (10) 27 (76) (58) (18) 31 Net research & development1 499 149 350 235 817 735 82 11

Summary

• Higher activity expected for back half of 2017

from new client activity and current project scheduling in the Americas

• Investment in sales personnel in the Americas

expected to positively impact the year ahead

• Ongoing and new work Internationally, including

the first condition assessment project in SE Asia

• Xylem partnership to expand presence

internationally while controlling costs

• Continued WWS progress; Q2 was fourth

consecutive quarter showing improved revenue and profitability

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• First half consistent with expectations with

increasing activity expected for back half of 2017

• E-MAC integration complete; second half of year

is traditionally the busiest

• Additional $1.5M investment to support continued

growth in remote pig tracking business in 2018

• Large addressable market with growing

acceptance of PureHM technologies and solutions

Water Division Oil & Gas Division

Paul Moon

+1 (403) 537-3244 Paul.Moon@puretechltd.com Director, Investor Relations and Corporate Communications