Clearford Announces Results for the third quarter of fiscal 2016
Ottawa, Ontario – (November 9, 2016) – Clearford Water Systems Inc. (“Clearford” or the “Company”), (TSX-V:CLI), a TSX Venture 50 Company, today released results for its three and nine months ended September 30, 2016. The unaudited consolidated financial statements are presented in accordance with IFRS (all figures in Canadian dollars).
Revenue for the quarter was $1,071,773 compared with $766,938 for the prior year’s quarter. Operating loss before net financing costs were $707,235 for the quarter compared with $1,252,990 for the prior year’s quarter. Net financing costs for the quarter were $715,636 compared with $586,450 for the prior year’s quarter, with net loss for the quarter of $1,422,871 or $0.02 per share compared with $1,839,440 or $0.02 per share for the prior year’s quarter.
For the nine months ended September 30, 2016 revenue was $3,033,563 compared with $2,329,000 in the prior year and our operating loss was $2,464,145 compared to $2,882,147 in the prior year. Net financing costs were $1,998,312 compared to $1,809,060 in the prior year. The net loss for the nine month period was $4,462,457 compared to $4,691,207 in the prior year period.
UV Pure segmented revenues for the three and nine months ended September 30, 2016 were $811,653 and $2,448,063 compared to $695,980 and $2,124,840 in the prior year representing a 16.6% and 15.2% increase in sales respectively.
Costs of revenues increased to $627,623 during the quarter from $470,338 in the prior year’s quarter due to completion of Clearford OneTM project implementations in Ontario and India in the first half of the year and the substantial completion of Phase 2 of the Clearford OneTM project implementation in Colombia during the third quarter of the year. Additionally, cost of revenues increased at UV Pure based on revenue increases and its product and channel revenue mix which reduced its overall gross margin for the nine month period to 45% from 47% in the prior year comparable period.
Sales and marketing costs decreased to $334,499 and $1,149,329 from $484,382 and $1,188,584 in the prior year’s three and nine month periods respectively reflecting a reduction in salaries and consulting fees and international travel costs as sales efforts for Clearford OneTM were focused on the Ontario market partially offset by additional stock compensation expense and the addition of new sales resources and new marketing initiatives in UV Pure.
Costs of engineering and research and development decreased to $215,853 and $643,738 from $231,941 and $673,070 in the prior year’s three and nine months periods respectively reflecting a decrease in spending on the Clearford OneTM System, and salaries and benefits within Clearford, and additional capitalized development costs for new product development in the UV Pure segment partially offset by additional stock compensation expense.
General and administration costs decreased to $602,267 and $1,858,526 from $860,537 and $2,135,347 in the prior year’s three and nine months period respectively. The decrease relates primarily to a reduction in short-term financing costs and reduction in general office expenses including rent, partially offset by additional employee costs, legal fees and stock compensation expense in Clearford and additional employee related costs in UV Pure.
Kevin Loiselle, President and CEO of Clearford, expressed enthusiasm for the future of Clearford: “We are very pleased with our progress in the quarter as we continue to establish Clearford One™ as a world class sanitation solution. Clearford One™ systems are now in operation in Ontario, Colombia and India. These sites provide the key proof of concept for customers and will support strong sales growth of our product in the Americas and South Asian markets. We are particularly pleased with the response to our P4P™ financing model in Ontario” said Mr. Loiselle.
“Ontario municipalities spend approximately $1 billion a year in capital expenditures on wastewater collection and treatment systems. We believe the Clearford One™ System with its smaller footprint and lower capital costs, will be very well received by the smaller municipalities in Ontario who need to ensure that their capital investments are not only affordable to build, but are capable of being operated on a long-term basis without creating undue burden for their ratepayers”, he said.
“With our first Clearford One™ system in India now operational, our subsidiary Clearford India Pvt. Ltd. has a full demonstration site of our technology. Clearford was pleased to lead this project that resulted in the first open defecation free village in the Indian state of Gujarat. We believe the operational system in Gujarat will lead to additional contract signings in India”, he concluded.
Mr. Loiselle also added that, “the strong growth in sales in UV Pure is very encouraging and reflects the competitive strength of our patented Crossfire™ technology. The next generation of UV Pure disinfection systems, currently in development, should enhance UV Pure’s technological lead in UV treatment of water and wastewater and lead to expanded market share in this $1 billion dollar global market.”
Clearford ended the September 30, 2016 quarter with unrestricted cash of $490,965 compared with $585,885 on December 31, 2015. The Company’s quarterly unaudited consolidated financial statements and MD&A are available at www.SEDAR.com.
As previously announced, the Company entered into a new US$5.25 million 10 year loan for working capital and project financing requirements during its second quarter. The loan bears 9.75% interest payable annually with principal repayment required at the end of the 10 year term. As of the date of this release the Company has received US$1,990,000 (C$2,616,889) of this funding.
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. (TSX-V: CLI) is a provider of unified water management and sanitation systems based on Clearford One™. Clearford One™ is a proprietary system comprised of ClearDigest™ smart digester, ClearConvey™ small bore sewer, and ClearRecover™ final treatment facility. For more information on Clearford Water Systems, please visit www.clearford.com.
About UV Pure Technologies Inc.
UV Pure Technologies manufactures technically advanced UV water purification systems. The Company has won an Artemis Top 50 Clean Tech Company award, two Frost and Sullivan Best Practices awards, a Canadian Drinking Water Association award for innovation, and is a Going Green Global Top 200 company.
There are currently over 15,000 UV Pure systems in residential, commercial, industrial, public and municipal applications, with flow rates up to 1 million gallons per day. An aerospace version of UV Pure’s system is being used by Boeing to purify water on its new 787 Dreamliner.
UV Pure’s patented Crossfire Technology® is dramatically advantaged compared to conventional UV systems. Lamps are mounted in air surrounded by elliptical reflectors providing more effective deactivation of pathogens, facilitating easy lamp changes and visual quartz inspection. They are self-cleaning, smart – with multiple sensors and on-board diagnostics guiding maintenance, engineered to be fail-safe, virtually maintenance free, and are plug-in ready for remote monitoring. For more information on UV Pure Technologies, please visit www.uvpure.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