WATR9 Nov 2017 20:17
Q3 Trading Update; American Leak Detection Annual Convention
Water Intelligence plc (AIM: WATR.L), a leading provider of precision, minimally-invasive leak detection and remediation solutions is pleased to provide a trading update for the year through September 30. This update reaffirms the first half guidance that the growth of the business is continuing to accelerate. Sales are 50% higher than were achieved over the comparable period in 2016. Further, this update is communicated coincident with the start of the Annual Convention for the Group's core American Leak Detection business ("ALD"). At this year's Convention, ALD's next five-year plan will be launched with ambitious targets. That plan, outlined below, builds on the last five-year plan that saw ALD's System-wide sales by franchisees grow by more than 35% and pass $85 million. Such franchisee sales provide the recurring royalty-income foundation upon which the Group's sales are derived. The ALD franchise system, spanning the US, Australia and Canada, is also the strategic foundation for the expansion of the Group's fast-growing UK-based municipal sewer and wastewater business - Water Intelligence International.
Trading Update. Through Q3, Group sales reached $13.27 million which is 50% higher than the comparable period in 2016 (Q3 2016: $8.85 million). Moreover, this result at Q3 is already approximately 10% higher than full year 2016 Group sales of $12.18 million. To put the Group's acceleration in broader perspective, the Q3 result is almost double the full year 2014 Group sales of $6.82 million. While the Group's sales still mostly reflect the core ALD business, during Q3 the Group achieved a business plan milestone with Water Intelligence International passing $1 million in sales (Q3 2017: $1.05 million; Q3 2016: Nil).
All components of the American Leak Detection business have continued strongly despite historic anomalous circumstances of severe flooding from hurricanes in Florida and Texas and wildfires in California. These disasters limited available workdays during which ALD could generate additional revenue and earnings. Through Q3, franchise royalty income still grew 7.5% to $4.62 million (Q3 2016: $4.30 million). Such faster than historic growth levels is largely attributable to ALD's corporate strategy of focusing on national accounts such as insurance, property management and pools. Corporate-operated stores grew 62% to $4.99 million (Q3:$3.09 million). Product and equipment sales grew 11% to $0.8 million reflecting the continued commitment among our franchisees toward growth. (Q3 2016: $0.72 million).
Profits before taxes remain in-line with expectations as the Group continues to reinvest for accelerated growth. During the course of Q3, the Group increased spending for its Sydney operations putting in senior management and hiring additional staff to guide the growth of both corporate and ALD franchise operations in Australia. The Grou
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