Minimally invasive water leak detection services provider Water Intelligence (WATR:AIM) increased first quarter revenues by 44% to $16.5 million and adjusted pre-tax profit by 16% to $2.1 million.
However, one-off costs of around $400,000 related to salesforce training and implementation and flooding conditions in Australia, which limited service delivery, resulted in a 17% drop in reported pre-tax profit to $1.4 million.
The hit to profit took the shine off the strong sales development with the shares dropping 8.5% to 700p.
The shares are around 45% below the peaks achieved in August 2021, reflecting the de-rating of growth companies seen over the last few months as interest rates have risen.
Executive chairman Patrick DeSousa commented: ‘Our strategic plan for the last decade has been and continues to be focused on creating a world-class growth company that provides solutions to water loss from deteriorating infrastructure - residential, commercial, municipal.’
INVESTING FOR GROWTH
In November 2021 the company raised $12.5 million of new capital to accelerate its growth plans. In line with those plans the firm said it had hired and trained more than 60 managers and technicians in the first quarter to 31 March 2022 ahead of a ‘much busier Q2 and Q3 summer season’.
Water Intelligence has also established a new training centre in Seattle to train more leak detection specialists and opened ‘greenfield’ locations in Texas and New York.
The company continues to reacquire its American Leak Detection division’s franchises with the Fort Worth, Texas franchise reacquired on 26 January 2022 for $7.7 million.
To support future reacquisitions the company said it has agreed a $17 million credit extension with M&T bank at a fixed rate of 5.5% with repayment through 2027.
The company’s strategy is to establish regional hubs that have scale to fuel growth in nearby corporate and franchised operations.
At 31 March 2022, Water Intelligence had net cash of $10 million and undrawn debt facilities of $8 million.
