Strategic Reacquisition of
Dallas, Texas Franchise
Water Intelligence plc (AIM: WATR.L) ("Water
Intelligence" or "Group"), a leading multinational provider of
precision, minimally-invasive leak detection and remediation
solutions for both potable and non-potable water is
pleased to announce the strategic reacquisition of its franchise in
Dallas, Texas within the Group's core American Leak Detection
("ALD") subsidiary.
Key
terms of the Acquisition
The transaction involves
consideration of both cash and stock options. $12 million in
cash is spread through 2027 and based on performance of $2.3
million in adjusted profits for 2027. $5 million was paid at
Closing based on a trailing twelve months pro forma of $6 million
in sales and $1.0 million in adjusted profits and $0.3 million in
total assets. $2.5 million is scheduled to be paid in 2025 based on
a pro forma with increasing profit before tax. Options for
200,000 ordinary shares are issued in amounts and at exercise
prices as follows: 100,000 at $6.25 per share; 35,000 at $7.50 per
share; 35,000 at $8.75 per share; and 30,000 at $10.00 per share
respectively and vest over 4 years. The purchase price includes all
assets required to conduct operations, including trucks and
equipment. The transaction is accretive for the Group's
shareholders.
Strategic rationale for the Acquisition Including Appointment
of CEO for ALD
Today's transaction is strategic for
the Group. First, and most importantly, Will Knell, owner of
the Dallas franchise is appointed CEO of ALD, the Group's core
subsidiary representing approximately 85% of the Group's revenues.
Mr. Knell has significant experience in operations and is well
respected among the franchise System having previously been awarded
Franchisee of the Year. The Dallas franchise represents the
single largest location in terms of sales in the entire franchise
System and is fast growing. Second, strategically there are
significant operating synergies between the Dallas location and
ALD's neighboring corporate-operated location in Fort Worth, Texas.
Integration of both operations will create cost
savings. Moreover, in terms of future revenue growth and
scale, the Dallas-Fort Worth metroplex is expected to rival New
York and Los Angeles in size and concentration of disposable income
by 2030. Third, the Group plans to move the headquarters of
ALD to Dallas during 2025 and to build a training center similar to
the one the Group opened in Bridgeport, Connecticut during
Q3. The centrality of the Dallas / Fort Worth location in the
United States will enable the Group to accelerate its strategic
growth plan organically and with its national partners especially
insurance companies and technology product
companies.
2025 and Capital Allocation Plan
The Group has sufficient resources
on hand to execute its growth plan; moreover, the Group remains
under-levered enabling it to apply more capital to accretive
opportunities that may emerge. With today's acquisition, the
Group has strengthened its management team and execution
capabilities to advance more rapidly both organic growth and
additional acquisitions for 2025 pursuant to its previously
announced capital allocation plan.
Executive
Chairman, Dr. Patrick DeSouza commented: "When
we provided our Interim Update in September, we indicated that we
were confident about the future and that our Next 50 Initiative would put an
accelerated growth plan in place. Today's announcement reinforces
that message because beyond the strategic nature of the Dallas
reacquisition, we are advancing the execution leadership of the
Group in a significant way.
Congratulations to Will Knell who is an
outstanding leader and a perfect fit for the future of the
Group. Our entire franchise System, representing over $100
million in gross sales to customers is excited by the appointment
of Will and an updated growth plan that we will be unveiling prior
to year-end. Will's appointment and the move of ALD's
headquarters to Dallas is a great way to kick-off our Next 50 Initiative named after our fiftieth
anniversary celebration of the establishment of ALD two weeks ago
at the Group's annual convention."
Will
Knell, CEO of American Leak Detection added: "I truly appreciate the
confidence that the Board, management and our franchise System have
in me. On previous occasions, including most recently at our
fiftieth anniversary celebration of American Leak Detection, I have
met with some of our institutional and individual investors and
welcome their support and the opportunity that our team has to
deliver for our shareholders.
Our Dallas franchise operation and
the neighboring corporate-operated location in Fort Worth have
served as a model testing site for the various technology
investments that the Group has made ranging from Salesforce to
LeakVue. Leveraging
our strong results and our operating experience as "super-users",
we expect to help the Group scale with these investments and
realize gains in organic growth in 2025 and
beyond.
It is very exciting to help the
Group transform water infrastructure services as a platform or "one
stop shop" across the United States and, along with my colleagues
in the UK, Ireland, Canada and Australia."
The information
contained within this announcement is deemed to constitute inside
information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is
part of UK law by virtue of the European Union (Withdrawal) Act
2018. The information is disclosed in accordance with the
Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
Enquiries:
Water
Intelligence plc
Laura Bass, Director, Strategic
Finance
Tel: +1 203 584-8240
Grant Thornton UK LLP - Nominated Adviser
Tel: +44 (0) 20 7383
5100
Philip Secrett
Harrison Clarke
Ciara Donnelly
RBC
Capital Markets - Joint Broker
Tel: +44 (0)20 7653 4000
Jill Li
Elizabeth Evans
Daniel Saveski
Dowgate Capital Ltd - Joint Broker
Tel: +44 (0)20 3903 7715
Stephen Norcross