SEAIR REPORTS RECORD FIRST QUARTER REVENUE AND PROFIT
Edmonton, Alberta, January 29, 2007. SEAIR Inc . (SDS:TSX Venture Exchange) announces the release of its unaudited interim financial statements for the 3 months ending November 30, 2006.
Seair's consolidated sales and financial performance is summarized as follows:
Quarter Ending |
|||
| 30-Nov-06 | 30-Nov-05 | Change | |
| Revenue | $719,099 | $91,679 | 684% |
| Gross profit | 477,251 | 73,272 | 551% |
| Net income | 184,256 | 11,884 | 1450% |
| Basic income per share | 0.01 | 0.00 | |
Harold Kinasewich, Seair President and CEO, states "We are delighted to report our best quarter in company history, whether measured by revenue or profits. Seair now has a solid foundation of sustainable business, upon which we intend to pursue several more growth-oriented opportunities."
Net income for the quarter ending November 30, 2006 was $184,256, an increase of $172,372 (or 1450%) over the first quarter of fiscal 2006. Sequentially net income was $216,696 higher than the $32,440 net loss reported in the quarter ending August 31, 2006.
Revenue for the quarter ending November 30, 2006 was $719,099, or 684% higher than the corresponding quarter in fiscal 2006. This increase is directly attributable to waste water treatment growth originating with Seair's acquisition of Septic. As a result of this acquisition Seair is a direct participant in the waste water treatment industry. Revenue is derived primarily from rentals of portable water treatment systems that utilize Seair's proprietary diffusion technology.
Sequentially, Seair's revenue increased $385,320 from the quarter ending August 31, 2006. Seair has invested significantly to enhance the existing Septic portable waste water treatment rental fleet with Seair technology, as well as adding new units to expand the fleet size. These investments and growth, coupled with the natural seasonality of Septic's business, are the primary factors leading to strong sequential revenue growth.
Gross profit for the quarter ending November 30, 2006 was $477,251 (66% of revenue) compared to $73,272 (80% of revenue) in the quarter ending November 30, 2005. This 551% increase in gross margin was directly attributable to the overall increase in business and revenue. Sequentially gross profit increased by $147,400, or 45%. The sequential gross margin percentage declined from 99% to 66%. The 99% gross profit rate for the quarter ending August 31, 2006 was unusually high because most of the retrofit work was done with existing Seair inventory. The 66% gross profit rate is considered to be more typical of ongoing operations.
Total first quarter operating expenses increased by $231,607 from fiscal 2006 to fiscal 2007. This 377% increase compares to a 684% increase in revenue and a 551% increase in gross margin. Seair continues to focus intently on cost control even though revenue and cash flow have dramatically increased.
Salaries and benefits of $183,229 in the quarter were $146,876 higher than the corresponding quarter in fiscal 2006 and $60,420 higher than in the quarter ending August 31, 20065. Seair has had to increase its workforce to keep up with production and deployment demand. Similarly, office and shop expense increased $40,291 and $60,670 on a year-over-year and sequential basis, respectively. Seair is building and deploying new units as fast as working capital permits, which results in the higher shop costs.
A significant portion of equipment purchases sourced from third parties is denominated in U.S. dollars. Changes in exchange rates gave rise to a $56,972 gain on foreign exchange in the quarter ending November 30, 2006. Seair does not presently hedge its foreign currency positions, receivables or obligations.
Overall, although costs have increased as Seair has expanded its scope of business, those costs increases have been significantly smaller than the resulting revenue gains.
Working capital at November 30, 2006 was $25,282, down from $263,158 at August 31, 2006 and up $53,270 from working capital of negative $27,988 at November 30, 2005. As much working capital as possible has been directed towards expanding the waste water treatment rental fleet. Additional working capital will be required to maintain the pace of expansion. Strengthened working capital will enable Seair to systematically build market position in selected industries, optimize margins and terms of business and aggressively pursue new opportunities when warranted.
Total capital expenditures for the quarter ending November 30, 2006 were $872,078 (compared to $0 for the quarter ending November 30, 2005), virtually all of which went directly into expanding the fleet of portable waste water treatment units. Seair intends to continue to increase the number of portable waste water treatment plants available for rent/lease and, accordingly, capital expenditures are remain well above historical levels. Fleet expansion and technology augmentation are top priorities at Seair.
Further details with respect to SEAIR's first quarter results, including the complete financial statements, will be available at www.sedar.com.
About SEAIR
SEAIR is a leading developer of proprietary diffusion and sterilization technologies. These patent-pending technologies allow for the efficient diffusion of gases into a liquid, thereby facilitating numerous applications in a wide variety of industries, including waste water treatment, pulp and paper, food processing, aquaculture, agriculture/horticulture, sterilization, golf course irrigation and pond treatment, animal enhancement and oil and gas. SEAIR's primary focus is developing and selling equipment that diffuses gases, such as oxygen, ozone or carbon dioxide, into a liquid, resulting in a supersaturate solution. The major difference between SEAIR and other diffusion technologies is SEAIR's ability to achieve extremely small bubble size, which in turn allows for the mass transfer of gas to fluid. The result is a stable condition where gases remain in solution for extended periods of time, leading to increased productivity and lower operating costs. SEAIR provides diffusion-enhanced portable wastewater treatment plants through its subsidiary, Seair Septic.
Parties interested in obtaining further information or receiving news releases and corporate documents from SEAIR may e-mail such request to seair@telus.net visit our SEAIR web site at: www.seair.ca .
FOR FURTHER INFORMATION PLEASE CONTACT:
Harold Kinasewich
SEAIR Inc.
T: 780 477 7188
F: 780 477 6622
This news release may contain certain forward-looking statements that reflect the current views and/or expectations of SEAIR INC. with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary.
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