Fluence swimming in cash but pours cold water on ambitious revenue target
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Fluence says it has a solid backlog of projects underway, but has cautioned that its revenue ambition for calendar 2017 could be under threat.
The global water services company (ASX:FLC) reported cash reserves of $US45.1 million ($58.6 million) following its creation from the merger of RWL Water and locally-listed Emefcy in July, and brought in $US7.7 million.
It planned to spend $37 million this quarter but indicated that a 2017 revenue target of $US90 million might slip.
“As timing of actual contract deployment cannot always be predicted with certainty, there is the possibility that revenue recognition on several existing signed contracts may shift into early 2018,” it said.
“The financial close and disbursement on the executed contract for the large 30-year San Quintin Mexico BOT project may not occur until early 2018. As a result, recognition of the initial $US14 million of revenues, which were included in our July revenue estimate may shift into early 2018.”
“The company still anticipates reaching EBITDA breakeven by 2019 on a run rate basis and being profitable on a quarterly basis in 2019.”
Fluence shares have slid since the merger. They gained 1c on Monday and fell back slightly to 64.5c today.
Terra Capital’s Matthew Langsford said the quarterly report looked good.
“They’re getting orders, they’ve got lots of cash, they continue to commercialise products,” he told Stockhead.
“But no one is aware of the stock… It’s not being channeled to investors in the right forums.”
Fluence was beginning to change its strategy to get in front of more institutional investors though, Mr Langsford said.
Fluence has completed projects in 11 countries including China.
There’s a pilot for wastewater treatment plant retrofit technology SUBRE in Israel, a deal with French construction and engineering business VINCI for a water purification plant on the Indian Ocean island of Mayotte, and a $US1.7 million contract with leading Ecuadorian fish processing company Irotop.
The deal to design and build a water treatment plant for an African country is expected to lead to construction in the second quarter of 2018 and start bringing in some of the anticipated $US100 million in revenue.
“We remain confident in the total revenue projected to be generated by these projects, since the Mexico BOT plant and others in our backlog are urgently needed by the customers, with no real alternatives available.”