PURE TECHNOLOGIES LTD.

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TSX
:
PUR

PURE TECHNOLOGIES LTD.

Redefining Infrastructure Renewal

Investor Presentation


Nov. 2013

1

This presentation contains forward
-
looking statements relating to expected
future performance. Such statements are based on current views and
assumptions that are subject to uncertainties which are difficult to predict,
including expected operating results, successful implementation of our growth
opportunities, industry conditions, availability of financing alternatives, debt
service and future capital needs. Please refer to Pure Technologies continuous
disclosure documents as these identify factors which may cause actual results
to differ materially from any forward
-
looking statements.


This presentation also contains references to certain financial measures that
do not have any standardized meaning prescribed by
International Financial
Reporting Standards (“IFRS”) and
may not be comparable to similar measures
presented by other corporations or entities. These financial measures are
identified and defined in Pure’s continuous disclosure documents.

Unless
otherwise stated, all dollar amounts are expressed as CAD$.

Forward
-
Looking Statements

2

Mission & Vision

3

About Pure

Pure

Technologies

Ltd
.

(“Pure”)

is

the

world

leader

in

the

development

and

application

of

innovative

technologies

for

inspection,

monitoring

and

management

of

physical

infrastructure
.

From

monitoring

the

health

of

large

bridges

and

structures,

to

protecting

water,

wastewater

and

oil

&

gas

pipelines,

our

technologies

and

expertise

are

being

used

around

the

world

to

help

manage

deterioration

and

reduce

loss
.

Mission

To

enhance

shareholder

value

through

the

development

and

application

of

innovative

technologies

aimed

to

extend

and

improve

the

service

life

and

operating

performance

of

physical

infrastructure

assets
.

Vision

To

remain

a

global

leader

in

the

development

and

application

of

leading
-
edge

technologies

for

physical

infrastructure

management
.

Trading Symbol

TSX: PUR

Shares outstanding

51.1M

Market

capitalization

~$300
M

Working capital (Jun

30/13
)

$73M

(
$40M in cash)

Directors & Officers Ownership

~15% (issued

and outstanding)


T
hemes
: Sustainability, CleanTech, Water, Infrastructure


High gross margins


Strong R&D capabilities


Low capex requirements


Recurring revenue stream


Experienced management


Approx
.
260
employees


4

Investment Profile

Q3 Financial Performance

5

* Includes $10.7M
deferred equipment
shipment


Three month revenue up 14%; nine month revenue up 35%
not including deferred equipment shipment in 2012


Q3 EBITDA margin 20% versus 13% last year


Three months

Nine months

($000’s except %)

2013

2012

2013

2012*

Revenue

15,144

13,341

43,628

42,928

EBITDA

2,989

1,791

8,625

8,187

EBITDA margin

20%

13%

20%

19%

Profit (loss) for
the period

(776)

(922)

268

438

Gross Margin

76%

82%

78%

77%

Americas Region
-

Q3 Performance

6


This major region contributed 89% to total revenue


Revenue up 31% year
-
to
-
date


Inspection services revenue up 41%; Consulting revenue up 38%


Three months

Nine months

Product Group

($000’s except %)

2013

2012

2013

2012

Equip. Sales

4,337

3,777

6,918

5,982

Inspection

5,630

5,326

20,538

14,525

Consulting

2,239

1,613

5,814

4,218

Monitoring / Tech.
Support

1,204

1,289

3,290

3,201

Total

13,410

12,005

36,560

27,926

International Regions
-

Q3 Performance

7


Three month revenue up 30%; nine month revenue up 64%*


Africa & Other

Three months

Africa & Other

Nine months

Product Group

($000’s)

2013

2012

2013

2012*

Equip. Sales

143

(
98)

754

234

Inspection

1,195

1,104

4,850

3,140

Consulting

56

28

151

250

Monitoring / Tech.
Support

340

302

1,312

678

Total

1,734

1,336

7,067

4,302

* Excludes $10.7M
deferred equipment
shipment

Strong Track Record

Revenue Diversification

8

CAGR 32%

* Libya disruption

Full Year 2012

Stock Performance

Pure vs. S&P/TSX Composite and Small Cap

9

As
the building booms
converge on the
remaining useful life of
pipelines
-

considerable spending
will be required to
upgrade the systems



The Challenges

N
orth America
-

Aging
Water Infrastructure

10

America’s Infrastructure Report Card

www.infrastructurereportcard.org

11

12

Pipeline Failures Around the World

The Challenges

U.S
. Infrastructure Report Card

13

Infrastructure Type

Grade

Aviation

D

Bridges

C+

Dams

D

Drinking Water

D

Energy

D+

Hazardous Waste

D

Inland Waterways

D
-

Levees

D
-

Ports

C

Public Parks

/ Recreation

C
-

Rail

C+

Roads

D

Schools

D

Solid

Waste

B
-

Transit

D

Wastewater

D


Infrastructure G.P.A.: D+



Estimated USD$3.6
t
rillion
needed by 2020 to achieve B
grade



Water
and wastewater are
reported as some of the worst
categories



Note: Each category was evaluated on the basis of
capacity, funding, future need, operation and
maintenance, public safety and resilience

Source: ASCE


2013 Report Card for America’s Infrastructure

What Pure Does

Business Model

Premium
Technical
Services

Monitoring
Equipment
Sales

Recurring
Revenues

Specialized
Engineering

14


Inspection and/or leak
detection of water,
wastewater and oil and
gas pipelines


Condition assessment


Asset management


Pipeline condition
a
ssessment; water &
wastewater


Proprietary monitoring
technologies for
pipelines, bridges

and
structures


Monitoring, site
maintenance and
technical support


Technology licensing


Technology Portfolio

15

Technology
Driven Asset Management

16

Video of
Pure’s

technologies:
http://puretechltd.com/media_center/videos/index.shtml

MOVING

AWAY FROM

MOVING TOWARDS


Large Capital Works Projects


Extending service life of assets through
active management

North American Utility Trends

18

19

Replace or Manage?

Financial Considerations for Selective Renewal

Addressable Market

Water Network


North America

Cast Iron,

40
%

Ductile Iron,
21.9%

Steel,

4
%

Non
-
ferrous,
31.9%

PCCP,
2.7
%

Over 862,000

Miles
Installed

20

Source: State of Technology Review Report


US EPA, 2009


PCCP represents 2.7% of
the total


Pure’s

growth has
historically come from
services related to PCCP;
significant opportunities
continue to exist


Metallic pipes (cast,
ductile iron and steel)
represent 66% of the total


Over 20 times larger than
PCCP market; Pure has
expanded its offerings into
this large market

21

Metallic Pipe Inspection

Recent California Inspection Utilizing the Most Advanced Technology

www.puretechltd.com/services/electromagnetics/magnetic_flux_leakage.shtml

22

SoundPrint
® AFO

Recurring Revenue
-

Water Pipeline Structural Monitoring

* As at end of October, 2013

23

SmartBall
® In
-
Line Inspection System

Growing Deployment for Oil Pipeline Leak Detection

Summary


Geared for Growth


Strong third quarter performance


Busy fourth quarter; historically
Pure’s

busiest period


Growing backlog


Current backlog >$50 million


Recurring revenues ~$6 million/year


Balance sheet strength; $40 million in cash


Continued Americas growth with improving
international markets


Unique
PureNet
™ asset management solution


Robust and scalable business model:


Low CAPEX


High margins


Growing recurring revenue streams

24


APPENDIX


25

Top Ten Shareholders

26


Directors and Officers currently own or control ~15% of
issued and outstanding common shares

Source: TSX
InfoSuite



Nov/13; does not include entities who are not required
to file their holdings

Owner Name

% O/S

Current Position

Emerald Technology Ventures AG


5.26

2,685,633

Pictet

Funds (Europe) S.A. JUNK


5.07

2,588,129

GCIC Ltd.


4.03

2,059,600

Awm Investment Company Inc


3.66

1,869,300

AGF Investments


3.25

1,660,989

Pembroke Private Wealth Management


3.02

1,543,100

KBC Asset Management Ltd.


2.48

1,265,762

Calvert Investment Management, Inc.


1.98

1,011,580

Picton Mahoney Asset Management


1.55

793,266

AXA Isle of Man Limited


1.46

744,408

Total


31.75

16,221,767

Brief History


1997



Pure goes public, raising funds to expand
SoundPrint
® for continuous
pipeline monitoring in the international water/wastewater industry


2000



Pure signs its first contract with the Great Man
-
Made River Project in Libya,
one of the world’s largest water pipeline networks


2002



C
ommercializes P
-
Wave® for the electromagnetic testing of large
-
diameter
pre
-
stressed cylinder concrete pipe


2004



B
ranches into the oil & gas pipeline industry with
SoundPrint

AFO


2005



Develops SmartBall® for leak detection within pipelines over long distances


2005 to 2009


Acquires
Openaka

Corp., PBUK, Jason Consultants and Pipe Eye
International; opened several international offices to extend global reach of
technologies, technical and engineering services


2010



Acquires its only direct competitor, PPIC, as well as Aqua Environmental,
expanding service to Australia and New Zealand; JV in China established


2011



Acquires inspection division of STS, based in Abu Dhabi, and EMTEK, a
developer of advanced pipeline inspection technologies


Today

Pure is a
world leader
in its field

27

28

Milestones

Rapid Growth Through Technology
-
Enabled Engineering Solutions

29

Global Footprint

A Direct Presence in High
-
Growth Markets

Intellectual Property

Regions

Technology *

Trademarks

Americas

Europe

Asia

Australia

Africa/Middle
East


䕬散瑲潭慧湥瑩c

i湳灥c瑩潮o潦o
c潮捲et攠灩灥汩湥猠


卭S牴䉡ll敡欠摥t散瑩潮of潲o潩l,
gas, water and wastewater
pipelines


Te瑨敲敤 l敡欠摥t散瑩潮of潲owat敲e
慮a w慳tewat敲e灩灥汩湥s


Acoustic fiber optic monitoring for
pipelines, structures & bridges


Pi灥 w慬a 慳獥獳浥m琠畳i湧
慣潵o瑩cs


䵡杮e瑩c 晬畸fl敡k慧攠e散桮潬潧礠
for inspection of metal pipelines

SoundPrint®

SoundPrint® AFO

SmartBall
®

Sahara®

PipeDiver
®

PureRobotics


EMTEK™

PureEM


PureMFL



30

* Patented or patent pending in multiple jurisdictions

$5,545,770

$13,473,732

$14,651,054

$25,725,000

$693,221

$1,224,885

$1,127,004

$1,353,947

9

11

17

22

$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
2010
2011
2012
2013 (Estimated)
Total Program Revenue
Average Program Revenue
No. of Programs
31

Growing
Program

Revenues

Pure Engineering Services

Three months

Nine months

Product
Group

($000’s except %)

2013

2012

$
change

%
change

2013

2012

$
change

%
change

Equip. Sales

4,480

3,679

801

22

7,672

16,916

(9,244)

(55)

Inspection

6,825

6,430

395

6

25,388

17,665

7,723

44

Consulting

2,295

1,641

654

40

5,965

4,468

1,497

34

Monitoring /
Tech.
Support

1,544

1,591

(47)

(3)

4,603

3,879

724

19

Total

15,144

13,341

1,803

14

43,628

42,928

700

2

Revenue by Product Group

32

Three months

Nine months

($000’s except %)

2013

2012

$
change

%
change

2013

2012

$
change

%
change

Revenue

15,144

13,341

1,803

14

43,628

42,928

700

2

Cost of sales

3,611

2,434

1,177

48

9,657

9,758

(101)

(1)

Gross profit

11,533

10,907

626

6

33,971

33,170

801

2

Gross margin
(Gross profit as a
% of revenue)

76

82





78

77





Gross Margin

33

Three months

Nine months

($000’s except %)

2013

2012

$
change

%
change

2013

2012

$
change

%
change

Marketing

2,492

2,326

166

7

7,388

6,326

1,062

17

Engineering &
operations

4,291

4,299

(8)

0

13,000

11,597

1,403

12

General &
administrative

3,677

4,444

(767)

(17)

9,777

10,795

(1,018)

(9)

Research &
development

375

1,310

(935)

(71)

1,116

3,396

(2,280)

(67)

Total

10,834

12,379

(1,545)

(12)

31,282

32,114

(832)

(3)

Operating Expenses

34

EBITDA

35

Three months

Nine months

($000’s)

2013

2012

2013

2012

Profit (loss) for the period

(776)

(923)

268

438

Depreciation & amortization

1,489

1,584

4,622

4,725

Foreign currency (gain) loss

411

1,040

(243)

894

Finance income

314

(567)

212

(539)

Earn
-
out provision

110

355

713

714

Stock
-
based payments

280

283

843

797

Income tax expense
(recovery)

1,161

19

2,210

1,158

EBITDA

2,989

1,791

8,625

8,187

Capital Resources

36

($000’s)


Three months
Sept. 30, 2013

Three months
Sept. 30, 2012

Opening cash

37,750

29,679

Cash provided (used)
by operations

2,426

(596)

Cash provided by
financing

413

274

Cash provided (used)
by investing

(1,032)

(1,654)

Foreign exchange
impact on cash

121

258

Closing cash

39,678

27,961

38

Tucson Intervention

Acoustic
Fibre
-
Optic Monitoring

Click
here
for
Information



39

Mexico Inspection

PipeDiver
® Electromagnetic Inspection

Click
here
for Information



The Challenges

Water Infrastructure Inefficiency

40

Billed Metered Consumption
Billed Unmetered Consumption
Unbilled Metered Consumption
Unbilled Unmetered
Consumption
Unauthorized Consumption
Customer Metering Inaccuracies
Leakage on Transmission and/or
Distribution Mains
Leakage on Overflows at Utility's
Storage Tanks
Leakage on Service Connections
up to point of Customer Metering
Revenue
Water
Non-
Revenue
Water
(NRW)
System
Input
Volume
Authorized
Consumption
Water Losses
Billed Authorized
Consumption
Unbilled Authorized
Consumption
Apparent Losses
Real Losses
USD$14.6
Bln

per year lost
by utilities
from NRW

40% of transported water in developing countries is lost through
physical leaks; 20% in North America

Source: International Water Assoc. & World Bank
















The Challenges

Funding in the U.S.


ASCE (
2013)
gives U.S
. drinking water
infrastructure a
“poor” grade


AWWA (2012) estimates $1 trillion
needed over 25 years for the most
urgent repairs


Shrinking
state and municipal
budgets


“The need will double from roughly $13
billion a year today to almost $30 billion
(in 2010 dollars) annually by the 2040s,
and the cost will be met primarily through
higher water bills and local
fees.”
(AWWA
2012)

41

The Opportunities

Critical Infrastructure Management

Water & Wastewater Sector:


Change in emphasis: away from capital works
projects towards proactive
asset management;
Municipal utility enterprise funding models
(segregated revenue) provide protected funding for
infrastructure
maintenance

Power Sector:


Aging underground infrastructure a critical concern
for power generation sector


Regulatory pressures driving change in nuclear
power industry


Shutdowns are costly

Resource Sector:


Water critical to mining
and oil & gas industries


Time is money


minimal down
-
time through
proactive pipeline
management


42

Water Utility Drivers

Costs, Budgets and Return on Investment


Average cost of a large diameter pipe failure is $1.8
million


In many cases pipelines can be managed for 1


5 % of
replacement costs


Municipalities
cannot afford to replace
all their
transmission
mains


Shrinking State and Municipal budgets


Multiyear programs provide improved cost/benefit


Attractive
ROI = fix only what needs to be fixed


43

Infrastructure Drivers

Population Growth & Water Use

44

Total world population
(billions)

Source: World Bank; Environment Canada

US EPA Consent Decrees

Driving Further Business for Pure in the Wastewater Sector

45

2012 Global
Capex
*

$130 billion


10% per year growth

New Build

$104 billion

80% of
Capex

Rehabilitation

$26 billion

20% of
Capex

Estimated Pure
A
ddressable Market (asset
management services, large
-
diameter leak

detection, condition assessment)

$4.5 billion



10% per year growth

10% Market Penetration

$450 million



Source: Global Water Intelligence*, Company Research

46

Pure’s

Addressable Market

Source: Global Water Intelligence

47

Water Infrastructure Market

Global

Water tariffs per m3, 2008 (incl. wastewater)

Source: IBM , 2009:Water: A Global Innovation Outlook Report, Emerald Technology Ventures

48

Current “Value” of Water

Tariffs are Rising Worldwide


Expensive assets (2/3 of costs) and low tariffs


>75% of asset value is buried

Source: Global Water Intelligence, Global Water Market 2008, Emerald technology Ventures


49

Water

The Most Capital
-
Intensive Utility Service

Non
-
Revenue Water

Global Distribution

Region

Marginal
cost of water
per m
3


Average
tariff per
m
3


Cost of
physical
losses

Lost revenue
from
commercial
losses

Total cost of
NRW

Estimated Value, Billions of US$/
yr

Developed
countries

$0.30


$1.00

$2.90

$2.40

$5.30

Eurasia

$0.30

$0.50

$2.00

$1.50

$3.50

Developing
countries

$0.20

$0.25

$3.20

$2.60

$5.80

Total

$8.10

$6.50

$14.60

50

Source: World Bank

Pipeline Inventory

Natural Gas, Crude, Petroleum Products

51

0
400,000
800,000
Germany
China
Argentina
Iran
Australia
Mexico
Algeria
Canada
Russia
USA
Km
Source: CIA World
Factbook
, 22 August 2006 via
NationMaster

The “Smart Water Networks” Landscape

Pure is Well Placed to Leverage Its Unique Value Proposition

52