BluMetric Environmental Inc. (BLM) Earnings Call Transcript & Summary

[Audio Gap] nominee who is standing for election as a director for the first time at this meeting. Virginia Schweitzer, legal counsel of Fasken. So before we call this meeting to order, I'll make some brief comments on BluMetric's fiscal year 2021 performance, and some goal statements for 2022. Those who have registered to participate on the team's platform can follow along with the presentation. And if you are participating by phone, a copy of the presentation will be posted to our website after the meeting. Before the presentation begins, I will ask Corporate Secretary to read the customary caution with respect to forward-looking statements.

While the information contained herein is believed to be accurate and reliable, BluMetric Environmental Inc. and its predecessor companies and their respective agents, advisers, directors, officers, employees and shareholders, make no representations or warranties expressed or implied as to the accuracy or completeness of such information and expressly disclaim any and all liability that may be based on such information or errors or emissions thereof. The forward-looking statements contained herein, such as statements relating to COVID-19 pandemic, the future anticipated direction of the industry, plans for future expansion, various business development activities, planned capital expenditures, future funding sources, anticipated sales growth and potential contracts involve important risks and uncertainties that could significantly affect anticipated results in the future. And accordingly, such results may vary materially from those expressed in any forward-looking statements made by or on behalf of BluMetric. There can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in this presentation. Please refer to the company's management discussion and analysis posted at www.sedar.com for a complete list of the company's risks and uncertainties. BluMetric Environmental undertakes no obligation to update forward-looking statements and circumstances or management's estimates or opinions should change, except as required by applicable securities laws. For more information, please refer to the company's documentation posted at www.sedar.com.

Thank you, Vivian. So to start our presentation, I'd like to show you a short video that is prepared for us by the TSXV, highlighting our recent award as a TSXV 50 company. It's an excellent opportunity for us to discuss our results going forward, so please join us as we launch the short video. I'd like to start the presentation by recapping the vision for the firm. At BluMetric, we deliver sustainable solutions to complex environmental issues. The background of the company in terms of being publicly traded was established in 2012 and listed on the TSX Venture Exchange under the ticker symbol BLM. We have a phenomenal team. It's comprised of interdisciplinary sciences, engineering, industrial hygienists, environmental auditors, project managers, water systems, specialty trades, financial management specialists and support staff. There's incredible diversity to be able to solve complex problems. We just mentioned our recent award, the TSX Venture Top 50 winner. The Top 50, there are 5 categories, 10 firms chosen from -- for each category. So we are a top 10 firm within our category for cleantech. This year, again, we are a top defense company on -- as defined by CDR, the defense review, definitely related to our military market and supply of water cleantech. Just a quick look at the industry at large, tremendous opportunity balance for us in our market. We look at a CAGR of over 45% between now and 2026, all specifically related to trends that we participate in. The rising incidents and awareness of natural disasters, health hazards environmental deterioration due to industrial activities, helping our clients secure stringent regulations to keep them in compliance, water demand, security, treatment, they all constitute the prime growth drivers in the global markets that we participate in. Also, the increasing need for water reuse, wastewater recycling, all driving services and systems that we participate in and provide. To discuss some of our financial highlights. We're very proud of our record revenue of $35.5 million, a gross margin of 27% and record net earnings of $3.7 million, all driving our earnings per share up 550% to $0.13 in fiscal year '21. Key highlights, strategic and ESG, environmental, social and governance. Last year, this year, we continue to invest in cleantech. We see a tremendous demand and interest in our military-grade water systems that we'll discuss further in the presentation, but the demand is there for a military-grade mobile water treatment units to be able to address world conditions today. We've invested in a new website. We've worked steadily through the year to improve our digital presence as committed, and that new website will be launched next Monday. So feel free to dial in and take a look at our new website. Also on that website will be a link to this presentation. So we're delighted to have that work done. We think it's a better reflection of our current business and our future ambitions. Also, we're evaluating IR firms. It's become very clear to us that with the growing interest in the firm, it is a requirement for us to do a better job of communicating with existing and future investors in the firm. We're looking for a company that has a footprint both in Canada and the States and abroad, if needed. To ESG, we're delighted to report we're 50% male and female distribution within our organization. We think we're 1 of 1 in that regard. Very important to how we operate, the gravity to the firm and how we hire and the culture of the company and how we perform and generate solutions for our clients. Very strong governance. I want to thank our Board of Directors who have their hand on the business in a governance position to make sure that there's accountability, advice and direction and vision in the firm. I'd also like to mention the Helmets to Hardhats program. This really relates to our military markets, where we do realize that our clients prefer to work with consultants who understand their markets because they've worked in them. And so we're delighted when those are interested in retiring from the armed services -- armed to come to our firm and be part of our team. A little bit more on our financial results. Definitely a good year with our revenue up 24%, $35.5 million. Our gross margin elevated 24% to 27%. Our adjusted EBITDA, up to $5.3 million, 88%, all producing an excellent net cash position of positive $2.793 million versus debt of $215,000 last year. So an excellent outcome that puts us in an excellent position for this new fiscal year. About our revenue breakdown. We play in 4 key markets: Mining, Commercial and Industrial, Military and Government. The distribution of revenue production in 2021 was 37% Commercial Industrial, 21% Military, 27% Government and 15% Mining. We saw excellent growth in Commercial and Industrial space at 54%, 36% in the Government market, 5% Military and a decline of 12% in mining. We'll discuss the mining market because that is a very important market for us, and we've made heavily invested in that last year and this year. Short discussion on the market trends, what we're currently experiencing and what we see going forward. In Mining, we say, we have a strong team. We have heavily invested in our team. We have new market sector leadership. We've definitely grown our skillset and our portfolio of new clients. So we expect to see some really nice diversification within that market because the demand is most definitely there. So our client list is growing. There's tremendous activity building within that sector, especially in Canada, both in exploration and operation. We have an excellent position in terms of water management and treatment systems, on-site, and we work very closely with our indigenous partners to deliver those solutions. It's a very key aspect of our success. In the Commercial and Industrial space, that's really our historical aspect of the business. We do a lot of work in contaminated sites, brownfield developments, global support services, potable water treatment systems, all key to the growth and development within the Commercial and Industrial space, mostly within Canada. In our Government market, really, these are multiyear contracts. Again, with remediation focus, environmental remediation focus, waste management and again with key digital partners. Our Military market really is founded on multiyear design and build opportunities for our water cleantech. We're working with and working with partners for production as opportunities grow and international opportunities really on the basis of extensive interest in our technology. The world condition today, the idea of needing to have military-grade water, mission-ready water in this world of uncertainty we live in is really key. So we see a strong opportunity built there in that market going forward. A couple of highlights of a few jobs that we're working on and clients we're working with to highlight the kind of work we do in each market. This is a shot from a mining client up in Shepherdsville Labrador, really the kind of services that we're operating -- or we're offering there really site operations, water treatment, wastewater treatment, civil hydraulic, hydrological, hydrogeological and generic and engineering services. So really a broadband of services to a client that really sees a great opportunity as their market grows. We're there to support them. This is a shot of the typical brownfield site we're working on in Toronto. Our Toronto operations has a long history of taking impacted properties and turning them into usable and developable spaces. It's key hallmark of the service that we provide there and that continues. So urban impacted properties right from site assessment to eventual record of site condition through remediation is a key aspect of our business. For the government work, really it highlights our agility and our ability to serve in places that are very difficult to get to with a high respect of what it takes to be able to deliver in those environments. We support federal liability reduction program where we're working in remote sites to deal with whatever is left to clean up, following remote activities, well-contaminated site assessments, hazardous material classification, remedial options and cost estimates and then action plan development. The military market, we have worked and continue to work quite a while with the Royal Canadian Navy. Drinking water treatment really is a hallmark of the service that we provide with 28 systems built, installed and supported with 6 in our current pipeline. We also provide early water separators, chloride -- or chlorine, dosing and field support services. And the field support services here definitely the Helmets to Hardhats program. So if you're a real Canadian Navy boat and you're drinking more potable water, the chances are it's been run through a system that we have designed, built, installed and help them operate. Very topical involvement we've had with the military is up in Culvert. In December, you probably have seen on the news -- top news, that the water supply was heavily impacted in Culvert with diesel fuel, knocked the system out. In these areas in high remote areas, they generate their electricity, their power is using diesel generation -- or diesel power generation. So in response to the impact to the water supply, the knocked out the entire water supply for Culvert, the military was mobilized and the systems you see in front of it are the systems that we have developed for them. So we have provided for and through the military, our cleantech water tech for potable water, and that system -- those systems provided the entire community with clean water supply for 2 months as they evaluated and repaired the issues up in the Culvert. Very, very proud of our team, very proud of our technology, and very grateful to participate on this with the military who executed flawlessly on this side. Just a summary slide on our priorities for growth in 2022 or beyond. Our future is definitely built on decades of success. This firm has deep roots and a broad base of experience that has produced exceptional results over the years, so that will continue. We will continue to focus on our organic growth. That organic growth really is built on our culture and the gravity to a firm like BluMetric where we continue to grow with what we feel are some of the best practitioners in our business. Strategic growth through accretive acquisitions. We're currently looking at potential opportunities to merge with firms that share our ambitions, share our goals, share, most importantly, our culture to continue our growth. Continued investment in innovation and development for water and wastewater management. As I spoke a little earlier on, we really see a demand with the world condition for scalable mobile water treatment units, both clean water, portable water and wastewater. We continue to grow our team of professionals and deepen our expertise to continue to provide innovative solutions to our clients and also most importantly, broaden our shareholder base. We think we're best kept secret and we need to get the word out. With that, I'd like to thank all of our shareholders. We look forward to our continued success in 2022. And with that, we will now open the floor to any questions from shareholders. We apologize, we're unable to take questions over the conference line or via Teams, however, for our shareholders listening in or on the Teams platform, if you have any questions please e-mail them to [email protected], and we will do our best to respond. When sending your questions. Please identify your name and indicate if you are a shareholder. Lydia?

Thank you, Scott. So I'm Lydia Renton, I'm a shareholder, and I'm going to be reading a message from the undersigned 13 shareholders. So firstly, I'd like to thank you for the opportunity again to address the BluMetric Board of Directors and all the shareholders present, mostly virtually under the continued pandemic-related circumstances. This will be the sixth AGM that a group of shareholders, all of whom are currently employees of BluMetric, provide a formal message to the Board, and it is our intention to continue to do so. We start by stating that we appreciate how the Board, our CEO and the executive team has shown exceptional leadership and support through the second year of the COVID-19 pandemic, especially for their commitment to be a fully vaccinated organization. It speaks to our values in keeping the health and well-being of our staff as the absolute highest priority. We recognize the positive impact of regular town hall meetings, updates to the staff on the progress of the business, the addition of new experienced staff, strategic financial decisions to support new business initiatives and other efforts to support employee health and overall well-being of the organization. This demonstrates the strength of everyone involved across all levels of the organization. Well done. We again express our appreciation to our executive team, led by Scott, and to the Board for their work over the past year. The 2020, 2021 financial results were unprecedented and reflect the effort of everyone in the organization. We're proud to have been chosen as one of the TSX Venture Top 50 for 2022. This past year showed a solid rise in steadying of the BluMetric stock price to a level that better reflects its value and we trusted under the Board's continued direction and oversight, it will sustain the upward trend. We believe this trend is in part a result of the Board working effectively with management. We warmly welcome the addition of Wanda Richardson to the Board and the move towards gender equity of the Board. It is a step in the right direction to reflect the organization's exemplary employee gender equity and diversity of roughly 50-50. It is our wish that this continue to be addressed. There is strength and difference as our employees will readily attest. We applaud the efforts to encourage mentorship, the introduction of the Emeritus program, initiatives to develop partnerships with First Nations, and seeking to address clean water issues in remote northern communities. We salute the addition of a recruitment specialist that has helped a great deal and we encourage the executive team to promote and facilitate quarterly succession planning and to prioritize the strategic integration of new employees so that their full potential can be realized in the shorter period as possible. We're committed to continuing our efforts together with Scott, the executive and the Board towards these goals. As employees, we stand united with Scott to support him in our collective vision as he leads us into the fifth year of this mandate. However, we also recognize that there is still much to do in other ways as well. As a priority, the stress endured by employees during the last 2 years due to the pandemic has had a significant impact on mental health and physical health. We feel that the employee well-being should be at the top of this year's list of priorities. Our workforce is the key to BluMetric's success. While we are aware of the significant challenges that exist in attracting new quality, top-notch candidate, we must recognize that the significant focus must be placed on retaining our excellent staff within the organization. And finally, we appreciate and confirm Ian Murray McDonald as our Employee Shareholder Board Representative for the next year. And this has been signed by myself, Lydia Renton, Tiffany Svensson, André D’Astous, Yannick Lanthier, Andrea Jenney, François Richard, Leon Geisberg, Paul Bandler, [indiscernible], José Tranchemontagne, Wayne Ingham [indiscernible] and Rich Schmidt. Thank you, everyone.

Thank you, Lydia. Much appreciated. I think you'll find that your statement is aligned with our ambitions for our people. So I now call the order of this Annual Meeting of the Shareholders of BluMetric. At today's meeting, holders of common shares are entitled to be present, in person or by proxy, and to vote. I will be acting as Chair of this meeting, and Vivian Karaiskos will act as Corporate Secretary. Roxanne Parsaud of Compushare is appointed as scrutineer for the meeting. I now table the statutory declaration of Computershare Investor Services Inc., our transfer agent, certifying the due mailing of meeting materials. I directed a copy of the statutory declaration and copies of those documents be kept by the Corporate Secretary as part of the records of the meeting. I'm advised by the Corporate Secretary that there is a quorum present. As notice has been duly provided and a quorum of shareholders is present, I declare the meeting to be regularly called and properly constituted for the transaction of business. The Canada Business Corporations Act and a lot of the corporation entitle any shareholder or proxy holder present in person at this meeting to request to vote by ballot rather than show of hands. I will ask the Corporate Secretary to read the scrutineer's report on attendance and voting by proxy.

There is 1 shareholder in person representing 1,411,150 shares; 65 shareholders by proxy, representing 10,617,544 shares; 66 shareholders holding 12,028,694 shares. The total issued and outstanding shares as at the record date is 29,435,683 for a percentage of outstanding shares represented at the meeting of 40.8%.

Thank you. A copy of the financial statements of the corporation for the year ended September 30, 2021, were delivered to those who requested a copy. Copies of the financial statements and the MD&A as well as the auditor's report on the financial statements are available on SEDAR. Are there any questions on the financial statements? None heard. Certain shareholders and proxy holders have volunteered to move and second resolutions were required. While this procedure will facilitate the handling of formal matters, it should not discourage any shareholder from speaking on any matter before the meeting. Please indicate if you have a question. And once I recognize you, please give your name and state whether you are a shareholder or proxy holder. The first item of business is to proceed with the election of directors for the ensuing year or until their successors are elected or appointed.

Deb Lalonde, shareholder. I nominate the following persons: Jeffrey Talley, Ian Mor McDonald, Wanda Richardson, Ian Murray McDonald and Scott MacFabe. I move that the persons who have been nominated for election as directors are elected directors of the corporation for the ensuing year or until their successors are elected or appointed.

I am Lydia Renton, shareholder, second the motion.

I now put the motion to the meeting. Many of you have voted by proxy. For those present in person, all those in favor of the motion, please signify by raising your hand. [Voting]

Any contrary? [Voting]

None seen. Carried. I declare those nominated to have been elected as directors to the corporation for the ensuing year or until the successors are elected or appointed. The second item of business is the appointment of our auditors.

I, Deb Lalonde, shareholder, move that MNP LLP Chartered Accountants be appointed auditors of the corporation at the remuneration to be fixed by the Board of Directors. The Board of Directors being hereby authorized to fix such remuneration.

I, Lydia Renton, shareholder, second the motion.

Again, many of you have voted by proxy. For those present in person, all those in favor of the motion, please signify by raising your hand. [Voting]

Contrary, if any? [Voting]

None noted. I declare the motion carried. The third item of business is the amendments to the corporation's amended and restated stock option plan 2022. As more fully described in the management proxy circular, including the full text of the plan.

I, Deb Lalonde, shareholder, moves that the option plan resolution as set forth in the corporation's management proxy circular be approved.

I, Lydia Renton, second the motion.

The motion has been made and seconded. Is there any discussion? Again, many of you have voted by proxy. For those present in person, all those in favor of the motion, please signify by raising your hand. [Voting]

Contrary, if any? [Voting]

None noted. I declare the motion carried. This concludes the formal business of the meeting. As there is no further business to be brought before the meeting. I declare the meeting to be concluded. I wish to thank you all for participating in our AGM, and we look forward to hearing from you in the near future. Thank you.