SEAIR SECOND QUARTER SHOWS CONTINUED RECORD REVENUE AND PROFIT GROWTH
Edmonton, Alberta, March 29, 2007. SEAIR Inc . (SDS:TSX Venture Exchange) announces the release of its unaudited interim financial statements for the quarter and 6 months ending February 28, 2007.
Seair's consolidated sales and financial performance is summarized as follows:
Quarter Ending |
6 Months Ending |
|||||
| 28-Feb-07 | 28-Feb-06 | Change | 28-Feb-07 | 28-Feb-06 | Change | |
| Revenue | $1,687,202 | $128,083 | 1217% | $2,406,301 | $219,762 | 995% |
| Gross profit | 1,393,141 | 57,863 | 2308% | 1,988,989 | 131.135 | 1417% |
| Net income | 693,215 | (43,860) | 1681% | 877,471 | (31.946) | 2847% |
| Basic income per share | 0.03 | (0.00) | 0.04 | (0.04) | ||
Harold Kinasewich, Seair President and CEO, states "With two consecutive quarters of record revenue and profitability, it is clear to us that customers are increasingly realizing that Seair has the most effective and affordable water treatment solution on the market. Our success in treating waste water at remote camps, being one of the most challenging environments imaginable, is opening all manner of new doors. We not only look forward to expanding our presence in the remote camp application, but also anticipate continued success entering a number of new markets with our proprietary solutions."
Net income for the quarter ending February 28, 2007 was $693,215, an increase of $737,045 (or 1682%) over the second quarter of fiscal 2006. Sequentially net income was $558,870 higher than the previous record quarterly net income of $184,256 reported in the quarter ending November 30, 2006.
Revenue for the quarter ending February 28, 2007 was $1,687,202, or 1217% 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 $968,103 (or 135%) from the quarter ending November 30, 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. Seair intends to continue expanding the size of the rental fleet., These investments and growth, coupled with the natural seasonality of Septic's business, are the primary factors leading to strong sequential revenue growth.
Gross margin for the quarter ending February 28, 2007 was $1,393,141 (83% of revenue) compared to $57,863 (45% of revenue) in the quarter ending February 28, 2006. This increase in gross margin was directly attributable to the overall increase in business and revenue. Sequentially gross margin increased by $170,810, or 139%. The rental business model, where Seair retains the risk and benefits of asset ownership, provides the Company with a recurring revenue stream at relatively high gross margins.
Total second quarter operating expenses increased by $598,233 from fiscal 2006 to fiscal 2007. This 588% increase compares to a 1217% increase in revenue and a 2308% increase in gross margin. Seair continues to focus intently on cost control even though revenue and cash flow have dramatically increased. Sequentially operating expenses increased by 70% ($288,334) compared to a revenue increase of 135% and gross margin increase of 139%. Second quarter operating expenses include $80,000 of stock-based compensation stemming from 220,000 stock options issued in the quarter, which is not an item directly tied to revenue levels.
Salaries and benefits of $296,234 in the quarter were $261,727 higher than the corresponding quarter in fiscal 2006 and $57,304 higher than in the quarter ending November 30, 2006. An additional $80,000 of salaries is included in cost of sales for each of the first two quarters of fiscal 2007. Seair has had to increase its workforce to keep up with production and deployment demand. Similarly, office and shop expense increased $19,618 and $4,820 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.
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.
Seair's revenue of $2,406,301 for the six months ending February 28, 2007 represent a 995% improvement over the corresponding period in fiscal 2006. This increase is due to the acquisition and operation of Septic, including the investment and deployment of an expanded fleet of portable waste water treatment units. Gross margins have also increased in conjunction with higher sales levels. For the six months ending February 28, 2007 the gross margin was $1,988,989 versus $131,135 for the equivalent portion of fiscal 2006. This $1,857,854 improvement (or 1417%) is Seair's foundation for overall improved financial results.
Operating expenses increased by 582% (from $163,081 for the six months ending February 28, 2006 to $1,111,518 for the six months ending February 28, 2007) compared to the revenue increase of 995%. Seair management continues to strongly emphasize cost control, though it is important to recognize that sales expenses are expected to increase as Septic seeks deeper market penetration in the oilfield sewage treatment sector on the strength of the diffusion-enhanced portable treatment units.
The year-over-year six month net income increased $909,417, or 2847%.
Working capital at February 28, 2007 was $76,137, up from $25,282 at November 30, 2006 but down from $263,158 at August 31, 2006. Seair has directed as much working capital as possible 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 February 28, 2007 were $1,600,405 (compared to $0 for the quarter ending February 28, 2006), virtually all of which went directly into expanding the fleet of portable waste water treatment units. Total capital expenditures for the six months ending February 28, 2007 were $2,657,366 compared to $0 for the first six months of fiscal 2006. Fleet expansion and technology augmentation are top priorities at Seair.
Further details with respect to SEAIR's second 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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