BluMetric Announces Acquisition of U.S.-Based Gemini Water to Expand CleanTech Portfolio and Geographic Footprint

Rhea-AI Summary

BluMetric Environmental Inc. (TSXV: BLM) has announced the acquisition of U.S.-based Gemini Water, for US$5.05 million. This strategic move expands BluMetric's cleantech water portfolio and marks its entry into the Caribbean and U.S. water markets. The purchase includes an initial payment of US$3.0 million and the issuance of 2,352,500 common shares, with the remaining balance to be paid through an earn-out over three years.

Gemini Water, founded in 2015, specializes in large-scale desalination and wastewater treatment systems. It has 7 million gallons per day (GPD) of treatment capacity across 22 locations. For the year ending June 30, 2024, Gemini's unaudited revenues were approximately US$7.3 million with EBITDA margins exceeding 10%. The acquisition is expected to diversify BluMetric's customer base, share expertise, and establish a U.S. manufacturing presence.

Positive

• Expansion into Caribbean and U.S. water markets, covering a population almost ten times the size of Canada's
• Acquisition of Gemini Water with US$7.3 million in annual revenue and EBITDA margins exceeding 10%
• Addition of 7 million GPD treatment capacity across 22 locations
• Ongoing contract in St. Kitts and Nevis worth US$9.3 million, expected to complete by end of 2025
• Diversification of customer base and potential for shorter sales cycles
• Opportunity to establish manufacturing presence in the U.S. for BluMetric's military technologies

Negative

• Initial cash outlay of US$3.0 million from working capital and operating line
• Issuance of 2,352,500 common shares, potentially diluting existing shareholders
• Remaining balance of US$1.05 million to be paid as earn-out, contingent on performance targets

Ottawa, Ontario--(Newsfile Corp. - September 24, 2024) - BluMetric Environmental Inc. (TSXV: BLM) ("BluMetric" or "the Company"), a full-service environmental consulting and engineering cleantech firm, announced its acquisition of U.S.-based Gemini Water, LLC ("Gemini Water"), marking the Company's cleantech water portfolio expansion and entry into the Caribbean and U.S. water markets (the "Acquisition").

Under the terms of the membership interest purchase agreement executed September 23, 2024, BluMetric acquired 100% of the membership interest in Gemini Water from GSWS Holdco Inc. (the "Vendor") in exchange for a purchase price of US$5.05 million (the "Purchase Price"). At closing, the Company paid out from its working capital and operating line, an initial amount of US$3.0 million (CA$4.1 million) and issued 2,352,500 Common Shares in the Capital of the Company to the Vendor (the "Closing Equity Consideration"). The remaining balance of US$1.05 million will be paid through an earn-out over the next three years in equal amounts which are contingent on revenue growth, gross margin, and EBITDA generation targets. The Vendor is also entitled to additional earn out of US$50,000 on each US$1.0 million annual revenue growth in excess of US$7.0 million annual revenue for up to US$3.0 million.

Founded in 2015 in Gainesville, Florida, Gemini Water designs, builds, installs, and commissions large-scale desalination and wastewater treatment systems using membrane-based technologies. Gemini Water systems have 7 million gallons per day (GPD) of potable and wastewater treatment capacity across 22 locations in the Caribbean and Texas.

"Today we progress our long-term growth strategy by expanding our cleantech product line and geographic footprint into the U.S. and Caribbean markets," said Scott MacFabe, CEO of BluMetric. "This acquisition improves our market accessibility by covering a combined population almost ten times the size of Canada's in regions that are significantly more water stressed. Gemini Water has developed an impressive solution for managing water shortages within complementary customer verticals from private developments, and government infrastructure to the leisure market supporting resorts and international cruise lines."

For the twelve-month period ending June 30, 2024, based on unaudited figures currently available, Gemini's revenues stood at approximately US$7.3 million (CA$9.8 million) with historic EBITDA margins¹ exceeding 10%. In addition, Gemini Water is currently in St. Kitts and Nevis to design, build, and install a two million gallons per day (GPD) desalination plant. There is a remaining balance of US$9.3 million (CA$12.5 million) on the contract, and the project is expected to be completed by the end of calendar year 2025. The Company is not assuming any long-term debt of Gemini on Closing.

BluMetric believes the strategic nature of this acquisition provides the following:

• Ability to diversify its cleantech customer base into new industrial and commercial applications
• Backfill the longer sales cycles observed in the Military segment with the shorter sales cycles in Gemini Water's client base
• Share know-how and proprietary expertise to mutually strengthen both companies' service offerings
• Jump start the establishment of a manufacturing presence in the U.S. to take advantage of potential American demand for BluMetric's military technologies
• Leverage financial and personnel resources to help Gemini Water execute on its accelerating order backlog

The acquisition of Gemini is an arm's length transaction, and the issuance of the Closing Equity Consideration will not result in the creation of a new Insider. No finder's fee was payable by the Company.

Pursuant to the Company's Board compensation policy, BluMetric has granted options of 150,000 common shares to an Executive of the Company. These options are granted effective September 24, 2024, vest over two years, and are exercisable into common shares of BluMetric at a price equivalent to the 5-day VWAP of $0.60 per share for a period of seven years.

About BluMetric Environmental Inc.

BluMetric Environmental Inc. is a publicly traded environmental consulting and engineering company with expertise across professional and trade disciplines and technologies that allow for the design, fabrication and delivery of sustainable solutions to environmental and water challenges. BluMetric has more than 200 employees operating in ten offices and over 45 years of expertise. Headquartered in Ottawa, Ontario, BluMetric's team of industry experts serves Commercial and Industrial, Military, Mining and Government clients.

For more information, visit www.blumetric.ca or please contact:

Scott MacFabe, CEO
BluMetric Environmental Inc.
Tel: 1-877-487-8436 x242
Email: smacfabe@blumetric.ca

Dan Hilton, CFO
BluMetric Environmental Inc.
Tel: 1-877-487-8436 x550
Email: dhilton@blumetric.ca

Brandon Chow, Principal & Founder
Panolia Investor Relations Inc.
Tel: 1-647-598-8815
Email: brandon@panoliair.com

Forward-Looking Statements

Some of the statements in this press release, including those relating to the Company's quarterly and annual results, future products, opportunities and cost initiatives, strategies, and other statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", or similar expressions, are forward-looking statements within the meaning of applicable Canadian securities laws. Forward-looking statements include, without limitation, the information concerning possible or assumed future results of operations of the Company. These statements are not historical facts but instead represent only the Company's expectations, estimates, and projections regarding future events. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. We caution readers of this news release not to place undue reliance on our forward-looking statements as a number of factors could cause actual results or conditions to differ materially from current expectations. Please refer to the risks set forth in the Company's most recent annual MD&A and the Company's continuous disclosure documents that can be found on SEDAR+ at www.sedarplus.ca. The Company does not intend, and disclaims any obligation, except as required by law, to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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¹ Non-IFRS Measure

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/224322

FAQ

What is the value of BluMetric's acquisition of Gemini Water?

BluMetric acquired Gemini Water for a total purchase price of US$5.05 million, with an initial payment of US$3.0 million and 2,352,500 common shares issued at closing.

How will the acquisition of Gemini Water impact BluMetric's market presence?

The acquisition expands BluMetric's cleantech water portfolio and marks its entry into the Caribbean and U.S. water markets, covering a population almost ten times the size of Canada's in more water-stressed regions.

What are Gemini Water's key financial figures mentioned in the press release?

For the year ending June 30, 2024, Gemini Water's unaudited revenues were approximately US$7.3 million (CA$9.8 million) with EBITDA margins exceeding 10%.

What is the significance of Gemini Water's ongoing project in St. Kitts and Nevis?

Gemini Water is working on a two million GPD desalination plant in St. Kitts and Nevis, with a remaining contract balance of US$9.3 million, expected to be completed by the end of 2025.

How does BluMetric plan to leverage the acquisition of Gemini Water?

BluMetric aims to diversify its customer base, share expertise, establish a U.S. manufacturing presence for its military technologies, and leverage resources to help Gemini Water execute its accelerating order backlog.