Water Intelligence Strong revenue growth at 45% reaching $25.5 million

Water Intelligence

Water Intelligence (LON:WATR), a leading multinational provider of precision, minimally-invasive leak detection and remediation solutions for both potable and non-potable water, today presented its full, audited results for the year ended 31 December 2018.

Copies of the Annual Report will be made available to view on the Company’s website.

Results Highlights

· Revenue growth once again strong at 45% year-over-year reaching $25.5 million (2017: $17.6 million)

o Total System-wide sales (franchisee gross sales and corporate-operated sales) pass $100 million

· Profit before tax growth exceeds revenue growth at 53% year-over-year reaching $1.8 million (2017: $1.1 million)

o Profit before tax adjusted for non-core costs (non-recurring, amortization, and share-based payments) grows 44% to $2.5 million (2017: $1.7 million)

· Sustained growth and acceleration of financial performance

o 2016-18 CAGRs: Revenue 45%; PBT 51%

o 2014-18 CAGRs: Revenue 37%; PBT 32%

· Core business units – American Leak Detection (ALD) and UK-based Water Intelligence International (WII) both grow strongly establishing a Group distribution platform for a broad matrix of residential, commercial and municipal/water utility solutions to address both clean water and wastewater problems

o ALD revenue grows 45% to $22.6 million (2017: $15.5 million)

§ Royalty income from franchisees grows in absolute terms by 5.7% to $6.3 million (2017: $5.9 million) despite additional franchise reacquisitions

§ Corporate-operated sales grow 70% year-over-year to $10.1 million (2017: $5.9 million)

· Organic growth from corporate locations held since January 1, 2017 of 34%

· Corporate locations profit margins triple (2018: 12%; 2017: 4%) driving the Group’s increase in PBT while reinvesting for sales growth

o WII revenue grows 39% to $2.9 million for 2018 (2017: $2.1 million)

§ Maiden PBT of $0.03 million (2017: $(0.16) million)

· Water Intelligence balance sheet strong with net cash: +$2.6 million

Operational and Post-Period Highlights

· Technology reinvestment for initial deployment during 2019 to support future growth: (i) sewer diagnostic tool (“Orca”) advancing WII’s water utility offerings and (ii) AI-driven video display to enable contextual commerce of consumer products from the video supporting ALD’s growing business-to-business insurance channel and advancing ALD’s penetration of the “Insuretech” product market

· Confirmation of new Board Member, Bobby Knell, who was the former owner of the highly successful Dallas franchise and has been Managing Director in charge of franchise relations for the last five years

· January to April 2019 starts fast on all fronts: (i) another major US insurance company win; (ii) franchise sale; (iii) corporate-operated organic growth and (iv) three more franchise reacquisitions to fuel 2019-2020 growth; On track to meet market expectations

Dr. Patrick DeSouza, Executive Chairman of Water Intelligence, commented: “We have an exciting opportunity ahead providing solutions for infrastructure problems affecting the world’s most precious resource. Global market demand for environmental solutions, especially water-related, as evidenced by initiatives such as the Green New Deal, is growing irrespective of local political and economic conditions; this is good news for the Company and its investors. In three important ways, we have created the operating foundation to scale our business and seize the opportunity: (i) sustained, multi-year, high octane financial performance to gain critical mass as a Company; (ii) an emerging distribution platform with a broad set of offerings to customers on both sides of the Atlantic through our American Leak Detection and UK-based Water Intelligence International subsidiaries; and (iii) reinvestment in new technologies for the fast emerging “Insuretech” and sewer and wastewater markets that advance our profile as a leading technology company in the water infrastructure space. Our leadership team, both corporate and franchise, are unified and on a mission to build a world-class company.”

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