H2O Innovation announces two acquisitions in the Northeastern United States

All amounts are in Canadian dollars, unless otherwise indicated.

QUEBEC, Dec. 15 2021 (GLOBE NEWSWIRE) – (TSXV: HEO) – H2O Innovation Inc. (“H2O Innovation ”or the“ Company ”) is proud to announce that this morning it has completed all documents relating to the acquisition of JCO, Inc. (“ JCO ”) and Environmental Consultants, LLC (“ EC ”, and with JCO, the “Targets”) of arm’s length third parties. Each of the targets provides full operations, maintenance and management (“O&M”) services to municipal and industrial water and wastewater customers in the same region, the Hudson Valley region in New York State.

The acquisition of targets, which were owned and operated separately, completes H2O Innovation in the Northeastern United States and consolidates its position in the North American O&M market. With over 70 years of combined experience, H2O Innovation, JCO and EC are positioned as significant players in the O&M sector in New York State with a total of nearly 200 clients.

JCO and EC both operate significant industrial facilities which will increase H’s industrial customer base2The O&M activity of O Innovation. Industrial sectors are often more complex to deal with and could lead to H2O The WTS innovation activity to offer value-added membrane solutions that could ultimately reduce operating costs for customers. It is expected that this consolidation will foster synergies as the customers currently served by H2O Innovation, JCO and EC will be offered value-added services which should potentially generate new business opportunities, given the global breadth of the Company’s technology, operational expertise and after-sales support. In addition, JCO and EC collectively operate many membrane factories that can benefit from H’s specialty chemicals.2Innovation; which specialty chemicals allow the membrane water treatment plant to run longer without cleaning, helping to reduce operating expenses.

“These two O&M acquisitions are aligned with our three-year strategic plan. They will not only allow us to expand our O&M platform in New York State, which is the 4e Most populous state in the United States with 19.3 million people1, but also to provide a unique opportunity to deploy our expertise in membrane processes and our related specialized products to multiple municipal and industrial customers throughout the Hudson Valley region. We anticipate multiple commercial synergies between our different businesses, including JCO and EC, which will help solidify customer loyalty, and therefore recurring income. In addition, we welcome with open arms an experienced team of around 120 employees within the H2O Innovation family bringing the total number of employees to nearly 915. Financially, the two transactions should be immediately accretive for H2O Innovation net profit and EBITDA. On a pro forma basis, these acquisitions bring the Company closer to its EBITDA objective set in the three-year Strategic Plan ”, said Frédéric Dugré, President and CEO of H2Innovation.

The purchase price of these acquisitions, which cannot be disclosed for competitive reasons, will be settled by cash on hand, the recently amended credit facility and by the issuance of a total of 1,107,733 H2O Common shares of Innovation, priced at $ 2.375 per share. A contingent consideration is payable twelve (12) months after closing, subject to the achievement of certain revenue objectives by each of the targets. The ordinary shares issued are subject to a statutory resale restriction until April 15, 2022. Transactions are concluded with minimal dilution for the shareholders, and the shares of H2O Innovation were issued to facilitate the onboarding of vendors and create alignment with the Company’s business plan, which is to maximize sales synergies and leverage the sales organization.

For the twelve month period ending September 30, 2021, the targets generated a total of US $ 13.5M ($ 17.0M)2 revenues with, on a consolidated basis, net income of US $ 1.1 million ($ 1.3 million) and adjusted EBITDA3 of US $ 2.6M ($ 3.3M).

“I have never been so proud to offer our customers and staff an incredible opportunity to be part of something bigger. Our small family business has spent over 30 years growing, learning and serving our local communities and environment. We are all now fortunate to benefit from the vision that H2O Innovation brings to the Hudson Valley. H2The philosophy of O Innovation, focused on the growth of the individual and the level of customer service, is what allows the culture of our new family to remain strong ”, said Roy Rysinger, vice president of JCO, Inc.

“I am really excited about the future opportunities for our employees that will be created when we join H2The O Innovation family. I am also excited about the improved services and processing technologies for our customers that H2O Innovation will bring to the Hudson Valley. H2O The core values ​​and culture of Innovation are well aligned with the ideology and values ​​on which Environmental Consultants has been built over time: focusing on employees is an investment in the company ”, added Steven Mance, vice president of Environmental Consultants, LLC.

H2O Innovation conference call
Frédéric Dugré, President and Chief Executive Officer, and Marc Blanchet, Chief Financial Officer, will hold a conference call with investors to discuss in more detail the acquisition of the targets at 8:45 a.m. Eastern Time on Wednesday 15 December 2021.

To access the call, please dial 1-888-440-2131 or 438-803-0534, five to ten minutes before the start time. Slides of the conference call presentations will be available on the Corporate Presentations page of the Investors section of the Company’s website.

Forward-looking disclosures
Certain statements in this press release concerning the operations and activities of H2O Innovation and the Company’s other communications to the public which more generally describe management objectives, projections, estimates, expectations or forecasts may constitute forward-looking statements within the meaning of securities legislation. Forward-looking statements relate to analysis and other information based on forecasts of future results, performance and achievements and the estimation of amounts that cannot yet be determined.

These forward-looking statements, based on management’s current expectations, involve a number of risks and uncertainties, known and unknown, which may cause actual and future results, performance and achievements of the Company to differ materially from these statements. prospective. -forward-looking statements, such as the Company’s ability to: (i) profitably manage additional businesses, (ii) successfully integrate these new businesses without substantial expenses, delays or other operational or financial difficulties, (iii) achieve expected revenues and profits, and (iv) generate synergies and cross-selling opportunities. Information on the risk factors to which the Company is exposed is provided in the Annual Information Form dated September 27, 2021 available on SEDAR (www.sedar.com).

About H2Innovation
Innovation is in our name, and that’s what drives the organization. H2O Innovation is a comprehensive water solutions company focused on providing cutting-edge technologies and services to its customers. The Company’s activities are based on three pillars: (i) Water Technologies & Services (WTS) applies membrane technologies and engineering expertise to provide equipment and services to municipal and industrial water, wastewater customers and water reuse, (ii) Specialty Products (SP) is a collection of companies that manufacture and supply a full line of specialty chemicals, consumables and engineered products for the global treatment industry of water, and (iii) Operation & Maintenance (O&M) provides contractual operations and associated services for water and wastewater treatment systems. Through innovation, we strive to simplify water. For more information, visit www.h2oinnovation.com.

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

Source:
H2O Innovation inc.
www.h2oinnovation.com

Contact:
Marc Blanchet
+1 418-688-0170
[email protected]


1
As indicated by the site https://www.statista.com.
2 Exchange rate: 1.2642
3 Adjusted EBITDA is a non-IFRS financial measure and is used by the Company to measure performance. EBITDA is earnings before financial expenses – net, income taxes, depreciation and amortization. The definition of Adjusted EBITDA excludes expenses otherwise considered in net income under generally accepted accounting principles, namely unrealized exchange losses (gains), changes in the fair value of contingent consideration and compensation costs based on actions. These items are non-cash items and have no impact on the operational and financial performance of the Company. Management has also chosen to exclude acquisition and integration costs, as they are not directly related to operations. The definition of Adjusted EBITDA may differ from those used by other companies.


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