2017 Q3 Results Supplemental Information Slides November 8, 2017 - - PowerPoint PPT Presentation

2017 Q3 Results

Supplemental Information Slides November 8, 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$.

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Financial Performance Overview

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• 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 .

Q3 TTM:

• Total Revenue up

11% to $126.1 million

• Adj. EBITDA up 24%

to $20.9 million Q3:

• Total Revenue up 9%

to $30.9 million

• Adj. EBITDA up 12%

to $4.7 million YTD:

• Total Revenue up

13% to $93.8 million

• Adj. EBITDA up 59%

to $15.7 million

For the period ended

• Sept. 30 (000s except per

shr and %) Three months 2017 Three months 2016 Change Nine months 2017 Nine months 2016 Change $ % $ % Revenue 30,881 28,453 2,428 9 93,827 82,763 11,064 13 Direct costs 6,968 6,415 553 9 19,693 17,823 1,870 10 Gross Profit2 23,913 22,038 1,875 9 74,134 64,940 9,194 14 Gross margin (%) 77 77 79 78 Operating Expenses1 23,053 21,282 1,771 8 69,504 65,525 3,979 6 Adjusted EBITDA2 4,704 4,216 488 12 15,705 9,876 5,829 59 Adjusted EBITDA2 (%) 15 15 17 12 Net income (loss) for the period (97) 895 (992) na 1,513 (596) 2,109 na Per share – basic (0.00) 0.02 0.03 (0.01) Per share – diluted (0.00) 0.02 0.03 (0.01) Cash Flow from Operations Before Working Capital Changes2 4,536 4,192 344 8 15,155 9,308 5,847 63 Adjusted Income (Loss) for the period2 401 931 (530) (57) 2,287 (413) 2,700 na Total assets3 143,166 143,578 (412) (0) 143,166 143,578 (412) (0)

Q3 & YTD Performance Summary

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Q3:

• 75% of total revenue
• Revenue up 1% to $23.3 million
• Adj. EBITDA up 12% to $5.9 million

YTD:

• 77% of total revenue
• Revenue up 10% to $72.3 million
• Adj. EBITDA up 47% to $19.4 million

Q3:

• 25% of total revenue
• Revenue up 40% to $7.6 million
• Adj. EBITDA down 26% to $1.6 million

YTD:

• 23% of total revenue
• Revenue up 28% to $21.5 million
• Adj. EBITDA down 17% to $5.2 million

Water Division Oil & Gas Division

Water Division

Americas Segment

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• Q3 revenue flat and Adj. EBITDA down 16%
• Lower lumpy equipment sales, ~$1.2M of projects

moved to Q4 due to weather related events

• YTD revenue up 3% and flat Adj. EBITDA
• Q4 historically the busiest period based on project

scheduling; FY organic growth of 5-15% expected

Water Division

International Segment

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• Q3 revenue up 64% and Adj. EBITDA up by $1.3M

due to project mix and cost controls

• Growth driven by Mexico monitoring contract and

new SE Asia customer

• YTD revenue up 42% and Adj. EBITDA up 260%

due to Q3 projects, higher activity in Australia and South America and cost controls

Water Division

Wachs Water Services Segment

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• Q3 revenue down 12% to $4.7M from expected

delay in the start of 2 recurring programs

• Adj. EBITDA increased 22% to $0.8M on better

project margin and cost controls

• YTD revenue up 12% to $15.7M and Adj. EBITDA

increased 1,575% to $2.7M

• Significant progress made towards returning to pre-

acquisition revenue levels by 2019

Oil and Gas Division

PureHM Segment

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• Q3 revenue up 40% (incl. $2M from E-MAC) and
• Adj. EBITDA down 26% to $1.6M
• Reflects lower than expected U.S. activity
• YTD revenue up 28% (incl. $4.2M from E-MAC) and
• Adj. EBITDA down 17% to $5.2M
• Focus on org. structure and internal processes

underway to better capitalize on US market opportunity

Corporate and Other

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

• Adj. G&A expenses down 16% for Q3

and 9% YTD due to completion of cost

• ptimization activities, ERP

implementation

• G&A levels expected to be similar for

Q4, subject to bonus revision changes which are adjusted for corporate performance

• Net R&D expenses increased in Q3

and YTD reflecting a lower proportion

• f 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 105 days compared to 108 at YE
• $8.3M cash on hand at Sept 30, 2017

Working capital efficiency For the period ended

• Sept. 30

Three months 2017 Three months 2016 Change Nine months 2017 Nine months 2016 Change $ % $ % General and administration 3,138 3,390 (252) (7) 9,263 10,080 (817) (8) Stock based compensation (622) (384) (238) 62 (1,452) (1,174) (278) 24 Training costs

• (280)

280

• Adjusted general and

administration1 2,516 3,006 (490) (16) 7,811 8,626 (815) (9) For the period ended

• Sept. 30

Three months 2017 Three months 2016 Change Nine months 2017 Nine months 2016 Change $ % $ % Research & development 415 342 73 21 1,308 1,135 173 15 Stock based compensation (45) (40) (5) 13 (121) (97) (24) 25 Net research & development1 370 302 68 23 1,187 1,038 149 14

• 1. See Non-GAAP Measures

Summary

• ~$1.2M of projects deferred to Q4 due to weather

events

• Busiest quarter underway (Q4); core Americas

Segment remains on track to deliver organic growth of between 5 to 15% for the year based

• n current scheduling
• Ongoing and new work Internationally, including

business activity growth in Europe, Africa, South America and China

• Xylem partnership to expand presence

internationally while controlling costs

• Continued WWS progress, moving towards pre-

acquisition levels

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• PureHM making progress on its growth strategy

through the E-MAC acquisition and organic growth

• Market penetration and growth remains on track

in Canada; additional opportunities with first commercial sale of SentinelTM pig tracking equipment on pipelines, to be installed in Q4

• Focus on org. structure and internal process

improvements underway

• 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