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Clearford Announces Results for the Third Quarter of Fiscal 2018 and Gears Up for Expected Growth in 2019

Ottawa, Ontario – (November 14, 2018) – Clearford Water Systems Inc. (“Clearford” or the “Company”), (TSX-V:CLI), today released results for its three months and nine months periods ended September 30, 2018. The unaudited consolidated financial statements are presented in accordance with IFRS (all figures in Canadian dollars).

Revenue for the quarter was $1,609,508, up from $910,697 in the same quarter last year. The operating loss before net financing costs for the quarter was $1,389,517, compared with $307,790 for the same quarter last year. Net financing costs for the quarter were $1,386,517, compared with $806,641 for the same quarter last year. Overall, the net loss for the quarter was $2,775,934 ($0.03 per share), compared with $1,114,431 ($0.01 per share) for the same quarter last year.

For the nine months ended September 30, 2018, revenue was $4,910,934 (compared with $2,720,196 for the same period last year) and the operating loss was $4,509,663 (compared with $1,470,472 for the same period last year). Net financing costs were $3,639,520, compared with $2,372,321 for the same period last year. The net loss for the nine-month period ended September 30, 2018 was $8,149,183 ($0.08 per share), compared with $3,842,793 ($0.04 per share) for the same period last year.

UV Pure Technologies Inc. (UV Pure) segmented revenues for the three- and nine-month periods ended September 30, 2018 were $673,628 and $2,179,551, respectively, compared with $863,353 and $2,593,364 for the corresponding periods last year. The decrease relates primarily to the delay in the launch of its next-generation product, which is expected to be completed in the fourth quarter of 2018 and to be in full production starting in the first quarter of 2019.

The cost of revenue for the quarter increased to $1,072,990 compared with $477,931 in the same quarter last year. The increase was related primarily to the addition of Clearford Koester Canada Inc. and its subsidiary Clearford Waterworks Inc. at the end of fiscal 2017. Additionally, the cost of revenue increased at UV Pure based on supply shortages and supply chain management as it begins to transition from its second-generation product to its third-generation product.

Sales and marketing costs increased to $367,491 and $1,074,349 for the three- and nine-month periods ended September 30, 2018, respectively. During the corresponding three- and nine-month periods last year, these costs were $293,925 and $959,230, respectively. This increase reflects additional resources and travel costs required with the addition of Clearford Koester Canada Inc.

Costs of engineering, research and development decreased to $164,824 and $547,570 for the three- and nine-month periods ended September 30, 2018, respectively. During the corresponding three-month and nine-month periods last year, these costs were $206,905 and $618,349, respectively. This decrease relates primarily to a reduction in R&D and engineering staff at Clearford and UV Pure, which was partially offset by staff added at Clearford Koester Canada Inc.

General and administration costs increased to $1,378,827 and $3,859,980 for the three- and nine-month periods ended September 30, 2018, respectively. During the corresponding three- and nine-month periods last year, these costs were $489,080 and $1,648,511 respectively. The increase relates primarily to the addition of Clearford Koester Canada Inc. and incremental resources required to continue to execute the Company’s long-term business plan.

Kevin Loiselle, President and CEO of Clearford, confirmed that the Company continues to focus on executing its previously announced business plan. While the integration of acquired companies has taken longer than initially planned, he noted that it is now nearly complete. Mr. Loiselle explained: “The strategic business plan is working and there is a real sense that the Company has turned a corner, with the fourth quarter of 2018 marking a new beginning for Clearford and significant revenue growth starting in 2019.”

Mr. Loiselle also indicated that Clearford expects a strong finish to the year. “Revenue in the first three quarters of 2018 was up compared to the same period last year, and we anticipate a strong fourth quarter with revenue forecast between $2.2 and $2.6 million,” he commented. The revised revenue forecast for the 2018 fiscal year is $7.2 to $7.5 million. This is down from an earlier 2018 revenue forecast of $10 million issued on November 29, 2017, with the decline largely due to two projects being fully delayed into 2019.

“We have signed contract backlog of $3.0 million in projects for Clearford Koester Canada and recurring O&M and utility revenue streams of $2.2 million for a total backlog of $5.2 million for fiscal 2019. With this starting point we expect total revenues for the 2019 fiscal year to grow by at least 50 to 100 percent over 2018 revenues. This includes steady growth from the Company’s Waterworks and UV Pure subsidiaries,” added Mr. Loiselle. Qualified water and wastewater infrastructure-related development projects and utility model projects will continue to have access to the $100 million Project Finance Facility from Vancouver-based Sustainable Water Investments Inc. through Clearford’s Pay-for-Performance (P4P®) delivery model.

Clearford ended the September 30, 2018 quarter with unrestricted cash of $1,419,201, compared with $1,217,373 on December 31, 2017. The Company’s quarterly unaudited consolidated financial statements and MD&A are available at www.SEDAR.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

About Clearford Water Systems Inc.

Clearford Water Systems Inc. is a provider of unified water management solutions for the design, deployment, financing and operation of water infrastructure systems. The Company’s technology-based water solutions include Clearford One® wastewater infrastructure systems, Clearford M-brane™ packaged treatment solutions, and a full range of UV Pure® water disinfection products. For more information, visit www.clearford.com.

Forward-Looking Statements

This news release contains certain statements that constitute forward-looking statements as they relate to the Company and its management. Forward-looking statements are not historical facts but represent management’s current expectation of future events, and can be identified by words such as “believe,” “expects,” “will,” “intends,” “plans,” “projects,” “anticipates,” “estimates,” “continues,” and similar expressions. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that they will prove to be correct.

By their nature, forward-looking statements include assumptions and are subject to inherent risks and uncertainties that could cause actual future results, conditions, actions or events to differ materially from those in the forward-looking statements. If and when forward-looking statements are set out in this news release, Clearford will also set out the material risk factors or assumptions used to develop the forward-looking statements. Except as expressly required by applicable securities law, the Company assumes no obligation to update or revise any forward-looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: industry cyclicality; the ability to secure third-party agreements; successful integration of Clearford’s system with third-party technology; competition; reduction in demand for products; collection from customers; relationships with suppliers; product liability; intellectual property; reliance on key personnel; environmental factors; interest rates; uninsured and underinsured losses; operating hazards; risks of future legal proceedings; income tax matters; credit facilities; availability and terms of financing; distribution of securities; restrictions on potential growth; effect of market interest rates on price of securities; and potential dilution.

For more information contact:

Kevin Loiselle, President & CEO
Clearford Water Systems Inc.
Phone: (613) 599-6474 ext. 303
www.clearford.com

About Clearford Water Systems Inc.
Clearford Water Systems Inc. (TSX-V: CLI) is a provider of unified water management solutions for the design, build, finance, operation and maintenance of water and wastewater infrastructure systems. The Company’s technology-based water solutions include Clearford One® wastewater infrastructure systems, Clearford M-brane™ packaged treatment solutions, and a full range of UV Pure® water disinfection products. Clearford is the winner of the Frost & Sullivan 2017 Enabling Technology Leadership Award for Global Decentralized Water & Wastewater Treatment. For more information on Clearford Water Systems, please visit www.clearford.com.

Forward Looking Statements
This news release contains certain statements that constitute forward-looking statements as they relate to the Company and its management. Forward-looking statements are not historical facts but represent management’s current expectation of future events, and can be identified by words such as “believe”, “expects”, “will”, “intends”, “plans”, “projects”, “anticipates”, “estimates”, “continues” and similar expressions. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that they will prove to be correct.

By their nature, forward-looking statements include assumptions and are subject to inherent risks and uncertainties that could cause actual future results, conditions, actions or events to differ materially from those in the forward-looking statements. If and when forward-looking statements are set out in this news release, Clearford will also set out the material risk factors or assumptions used to develop the forward-looking statements. Except as expressly required by applicable securities law, the Company assumes no obligation to update or revise any forward looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: industry cyclicality; the ability to secure third party agreements; successful integration of Clearford’s system with third party technology; competition; reduction in demand for products; collection from customers; relationships with suppliers; product liability; intellectual property; reliance on key personnel; environmental; interest rates; uninsured and underinsured losses; operating hazards; risks of future legal proceedings; income tax matters; credit facilities; availability and terms of financing; distribution of securities; restrictions on potential growth; effect of market interest rates on price of securities; and potential dilution.

For more information contact:
Kevin Loiselle, President & CEO
Clearford Water Systems Inc.
Phone: 613 599 6474 ext. 303
www.clearford.com

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