ZENON REPORTS FOURTH-QUARTER RESULTS
12:34 Thursday, March 9, 2000
BURLINGTON, ONTARIO--ZENON Environmental Inc. (TSE: ZEN, ZEN.A) today announced fourth-quarter results
for the three months ended December 31, 1999.
Financial Highlights
For the three and twelve months ended December 31, 1999:
Three months Twelve months
1999 1998 1999 1998
----------------------------------------
($000s)
Revenue 32,370 29,716 98,755 77,211
Net Income 703 2,147 2,464 4,789
Net Income/Share 0.03 0.10 0.11 0.23
reflects 2-for-1 stock split
Revenue growth for the year ended December 31, 1999 rose 28% to $98,755,000 from $77,211,000 in 1998, while net
income for the year dropped from $4,789,000 or $0.23 per share to $2,464,000 or $0.11 per share. Included in net
income is a provision for loss of $1.1 million on a debenture loan due from an unrelated strategic partner. As negotiations
are ongoing and the final outcome is uncertain, management felt it prudent to fully provide for this possible loss. Total
revenue for the fourth quarter was up 9% to $32,370,000 from $29,716,000 for the same period last year. Net income of
$703,000 or $0.03 per share, fell from $2,147,000 or $0.10 per share for the three-month period.
Gross profit margin for the three-month period ended December 31, 1999 rose to 35% from 33% for the same period in
the previous year. Selling, general and administrative expenses for 1999 are 25% of revenue for the quarter, up from 22%
in 1998. Year-over-year, SG&A increased by 0.5% of revenue to 27%. This is due in part to the additional investment in
staffing made to enhance the sales, bidding and design capabilities in the Municipal Division, allowing the company to
respond to the increasing potential in this market sector. SG&A is also affected by one-time costs incurred in the
downsizing of the Middle East office.
"Although results for the year are less than expected, the 28% revenue growth in 1999 is representative of the increasing
acceptance of our technology. In order to increase our technological edge and take advantage of the worldwide burgeoning
market potential, certain investments were made throughout the course of the quarter, as well as the year. These include
investments in our technology and production capability, along with investment in our sales, design and bidding abilities,"
stated Dr. Andrew Benedek, Chairman and Chief Executive Officer.
"Contract bidding activity continued throughout the quarter and the year at an accelerating pace, as the company pursued
not only a larger number of contracts, but also contracts of significantly greater value. In the fourth quarter, ZENON
secured two drinking water contracts, one in Auckland, New Zealand, and the other in Massachusetts, U.S.A. As well, a
number of smaller, yet equally important, industrial contracts were obtained," added Dr. Benedek.
European operations continued to perform well overall, showing improvement over the same quarter a year ago. The newly
opened office in the United Kingdom also secured contracts to treat municipal wastewater and to recycle industrial
wastewater. These jobs represent a breakthrough entry into this large water market.
New bookings for the company's Municipal operation have increased significantly over the year and, as a result, the
backlog is up 30% for ZeeWeed(R)-based systems.
As of March 20, 2000, ZENON will be relocating to the newly built headquarters in Oakville, Ontario. Situated on 150
acres of undeveloped land, this custom designed facility will showcase ZENON's innovative membrane technologies. At
the heart of this development will be the leading edge ZeeWeed(R) immersed membrane technology, which will purify the
on-site drinking water, and recycle both the domestic and industrial wastewater, as the facility is not connected to a sewer
grid.
This move will consolidate Systems Manufacturing, Research, Municipal and Industrial Divisions under one roof, allowing
ZENON to provide exceptional customer service. As of March 20, the new address will be:
3239 Dundas Street West
Oakville, Ontario L6J 4Z3 CANADA
Telephone: (905) 465-3030 Facsimile: (905) 465-3050
ZENON is a world leader in providing advanced membrane products and services for water purification, wastewater
treatment and water recycling. The ZENON group of companies operates from six locations in North America, six in
Europe, and one in each of Asia, Latin America, and the Middle East.
ZENON's products and services are marketed for a variety of industrial, institutional, and government applications through
ZENON's offices and representatives located throughout the world. Additional information is available at the company's
web site www.zenonenv.com.
ZENON Environmental Inc.
Consolidated Statements of Earnings (Unaudited)
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For the Three Months For the Three Months
Ended December 31, Ended December 31,
1999 1998
($ 000's) ($ 000's)
Revenue 32,370 29,716
Cost of sales and services 20,941 19,856
--------- ---------
Gross profit 11,429 9,860
--------- ---------
Expenses
Selling, general and
administrative 8,190 6,462
Amortization 1,572 1,395
Net interest (118) (102)
--------- ---------
9,644 7,755
--------- ---------
Operating income before
the following 1,785 2,105
Write-down in carying
value of investment 1,088 -
--------- ---------
Operating income before
income taxes 697 2,105
Provision for income taxes (6) (42)
--------- ---------
Net income 703 2,147
--------- ---------
--------- ---------
Net income per common share: 0.03 0.10
For the Year For the Year
Ended December 31, Ended December 31,
1999 1998
($ 000's) ($ 000's)
Revenue 98,755 77,211
Cost of sales and services 63,608 47,267
--------- ---------
Gross profit 35,147 29,944
--------- ---------
Expenses
Selling, general and
administrative 26,622 20,452
Amortization 4,904 4,372
Net interest (20) 295
--------- ---------
31,506 25,119
--------- ---------
Operating income before
the following 3,641 4,825
Write-down in carying
value of investment 1,088 -
--------- ---------
Operating income before
income taxes 2,553 4,825
Provision for income taxes 89 36
--------- ---------
Net income 2,464 4,789
--------- ---------
--------- ---------
Net income per common share: 0.11 0.23
Reflects Stock split 2 for 1
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