BluMetric Environmental : Transcript

CORPORATE PARTICIPANTS

Vivian Karaiskos

BluMetric Environmental Inc. - Chief Financial Officer

Scott MacFabe

BluMetric Environmental Inc. - Chief Executive Officer

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PRESENTATION

Operator

Good morning, ladies and gentlemen, and welcome to the BluMetric Environmental Inc. Fiscal Year 2023 Q2 Conference Call. At this time, all lines are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session.

If at any time during this call you need assistance, please press *, 0 for the Operator. This call is being recorded on Friday, May 26, 2023.

I would now like to turn the conference over to Vivian Karaiskos. Please go ahead. Vivian Karaiskos - Chief Financial Officer, BluMetric Environmental Inc.

Thank you, Operator. Good morning and welcome, everyone, to BluMetric Environmental's quarterly earnings conference call. This call will cover BluMetric's financial and operating results for the fiscal second quarter ended March 31, 2023.

Following our prepared remarks, we will open the conference call to a question-and-answer

session.

Our call today will be led by Scott MacFabe, BluMetric's Chief Executive Officer, along with myself, Vivian Karaiskos, the Company's Chief Financial Officer.

Before we begin with our formal remarks, I would like to remind everyone that some of the statements on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, financial projections or other statements of the Company's plans, objectives, expectations, or intentions. These matters involve certain risks and uncertainties. The Company's actual results may differ significantly from those projected or suggested in any forward-looking statements, due to a variety of factors which are discussed in detail in our regulatory filings.

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There may also be references to certain non-IFRS measures, such as EBITDA, backlog, working capital, free cash flow, and net cash. These non-IFRS measures are not recognized measures under International Financial Reporting Standards and do not have a standardized meaning prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other companies. Please see our disclosures for further information and reconciliations of these non-IFRS measures.

I will now hand the call over to Scott MacFabe. Please go ahead, Scott. Scott MacFabe - Chief Executive Officer, BluMetric Environmental Inc.

Good morning, everyone, and welcome to our second quarter 2023 earnings call for BluMetric Environmental. We appreciate you taking the time to join us today on our call.

First, I always like to start off by acknowledging the continued hard work our talented and diverse team puts in. They're the ones that allow us to successfully deliver solutions to our clients' most complicated environmental and business challenges. At the same time, we really appreciate the continued support from you, our shareholders, and would like to thank you for your continued support and confidence in BluMetric Environmental.

After my overview of the second quarter, our CFO, Vivian Karaiskos, will go over our financial results in more detail.

We continued into the year showcasing the stability of our business, while we continued making meaningful progress and investments into our growth strategy. This was shown with revenues remaining relatively consistent with comparable quarters.

In addition, we made it a priority to continue to hire essential personnel throughout the quarter to support our project execution and sales force.

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Most notably, I'm excited to announce a three-year, $11.7 million contract that we have just signed with Rheinmetall. We've been talking about our water cleantech strategy for quite some time now, and this contract showcases this strategy.

The scope of the contract is to develop and deliver small, portable water purification systems as part of a contract awarded by the Canadian Armed Forces. These units, named, the Advanced Sub-Unit Water Purification System, or ASUWPS, will significantly enhance the Canadian Armed Forces' mission support capabilities by enabling water purification at the sub-unit level.

In preparation for this contract and future prospects, we've made investments in expanding our production facility and developing a prototype.

Overall, we're seeing the benefits from the diversity of our solutions in markets.

Revenues in the commercial and government markets remained relatively consistent, compared with revenues from the same quarter last year.

Revenue from the mining market witnessed an approximately 50 percent increase for both the quarter and year to date, when compared to similar periods in the year prior. This growth is primarily driven by a contract for a water treatment system at a mine site.

On the other hand, revenue from the military market decreased, due to completion of contracts and a longer sales and procurement cycle required for new contracts in this market.

Second quarter 2023 revenue came in at $7.4 million, a slight decrease of 10 percent compared to Q2 2022. The smaller top line reflects the project mix, which included smaller contracts this quarter.

EBITDA decreased to $317,000, and which decreased about 32 percent from Q2 2022.

At this point, we see the current gross margin level stabilizing and are working to increase then as we get more operating leverage from the investments in the growth that we're completing.

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