Roger Woeller is the first to admit the past eight months haven’t all been smooth sailing for BluMetric Environmental.
© Cole Burston
Paul Boulay, left, and Dana Gannon work at BluMetric’s Carp Road facility.
By David Sali
But the firm’s affable chief corporate development officer says growing pains are to be expected for the Ottawa-based company, which was known as Seprotech Systems before a reverse takeover by the Wesa Group late last year.
“It gets bumpy sometimes,” said Mr. Woeller, referring to BluMetric’s dip into the red in the latest quarter, when the firm posted a loss of $773,000 compared with a profit of $9,000 in the same quarter last year.
“Integrating companies is not an easy thing. We’re getting there.”
Looking relaxed and confident during a recent interview at BluMetric’s Carp Road headquarters, Mr. Woeller said he sees plenty of good news on the horizon. Revenues were up significantly in the last quarter, to $7.3 million from $5.8 million, and the company pins many of its increased expenses on the byproducts of growth – more hiring, one-time costs associated with a debenture that recently closed and an amortization increase arising from the merger.
“That’s just symptomatic of, call it, digestion,” he said.
While Wesa was the much bigger partner in last year’s merger, to say it swallowed up its much smaller counterpart wouldn’t really be fair.
The professional services division, which still accounts for about two-thirds of the firm’s revenues, was Wesa’s domain, dealing with areas such as water protection planning, environmental assessments, hazardous waste management and occupational health and safety training.
But the wastewater treatment technology side has been making major gains this year, winning contracts in New York and Peru valued at more than $1 million each earlier this year.
BluMetric sells its industrial and commercial water and wastewater treatment systems to all levels of Canadian government, foreign governments and industries. It has done work in more than 60 countries from China to England, and maintains offices across Canada and one in El Salvador.
It’s the international nature of BluMetric’s projects that really intrigues analysts such as Khurram Malik of Toronto’s Jacob Securities, who has given the firm a speculative buy recommendation.
“For them to be in markets like the Middle East and the Caribbean, that’s a big positive because you can have quite a bit of growth over there for a small company,” said Mr. Malik, noting the boom in water infrastructure spending in developing countries. “The company has some great services and technology and solutions that can address that.”
Meanwhile, the company’s professional services division continues to renew deals with clients such as the Canadian navy – which agreed to a contract in December 2012 worth up to $11.5 million – that “keep the lights on” by providing a steady revenue stream, Mr. Malik said.
Canadian water stocks tend to be younger and less stable than those in the United States, he said, but BluMetric “is a little more stable because they’ve got the professional service side of the business which has your more predictable steady-as-you-go cash flow … and you’ve got the high-growth, choppy stuff on the water side. When you marry those two things together, it gives you an interesting risk-reward profile that really doesn’t exist in other water stocks, at least in the Canadian context.”
He called the merger of Wesa and Seprotech a “natural fit” because the companies already had a close relationship and had worked together on jobs in the past. Still, he’s waiting for BluMetric to post a couple of profitable quarters before giving the company’s stock his full endorsement.
“Until they do that, it’s hard to sort of jump on the bandwagon,” he said. “We are in a bit of a show-me state.”
BluMetric initially projected revenues at $30 million for this year. The actual numbers will likely be somewhat lower, Mr. Woeller said recently, partly due to a late spring that put off work normally reserved for warmer weather.
Nonetheless, he said the company is on track to at least double and possibly triple its current revenue numbers over the next three to five years through a combination of acquisitions and organic growth.
“(Wesa) in essence grew at that rate,” Mr. Woeller said, pointing to its rise from $6 million in revenues in 2000 to about $25 million today. “We’ve already shown that’s feasible.”
Next up, the company hopes to expand its Carp Road operations by purchasing about 2.6 acres next door. It plans to consolidate its current operations, now spread out in six offices across the region, and build a 10,000- to 15,000-square-foot assembly plant for wastewater treatment units behind its headquarters.
The “clean-tech campus,” as Mr. Woeller calls it, would be home to about 100 of BluMetric’s 190 employees.
“We’ve got something to offer the world here,” he said proudly. “We can be incredibly marketable.”