Fluence Corporation Limited (ASX: FLC) is engaged in providing a complete spectrum of services related to the water cycle from early-stage evaluation to support and optimise water-related assets. The group also provides other recurring revenue solutions.
The company today, 30th April 2019, reported its quarterly business update and quarterly cashflow report for the quarter ended 31 March 2019. Among the key developments of the company in Q1 2019, the group has commercially launched Submerged Membrane Aerated Biofilm Reactor (SUBRE) with sales to two new housing developments in Jamaica.
The company is focused primarily on the Chinese market. In Q1 2019, the value of new orders secured was higher than the revenue recognised during all of 2018. The company is well positioned to participate in the planned improvement of China’s rural wastewater treatment quality based on the established sales and manufacturing facilities.
In Q1 2019, Fluence received a bulk order for 40 Aspiral™ units, which will be deployed at toll stations, parking lots and service areas across the highway system in Hubei Province and will be used to treat wastewater to Class 1A standards. This is the third order received under the existing partnership agreement with Hubei ITEST and adds on the December 2018 order for 35 units.
Independent testing on the Stanford Aspiral™ demonstration plant provided the company with the successful results from validated compliance of Fluence’s MABR technology with California Title 22 for wastewater reuse.
The key strategic focus of the company is to capitalise on the recurring revenue opportunities. The group initiated the building of the recurring revenue base, with secured run-rate annual recurring revenue of US$14.7 million at 31 March 2019, out of which US$1.7 million has been contributed by the Bahamas, US$3 million by Peru and US$10 million by the San Quintin.
The company made its first drawdown of US$2 million on the US$50 million Generate Capital nonrecourse debt facility in April 2019 and will use the funds in financing its first seawater desalination plant in the Bahamas.
As per the cash flow report, the cash and cash equivalents stood at US$24.3 million at 31 March 2019. An additional US$3.5 million of cash inflow was expected in Q1, which was related to the first disbursement of funds from the North American Development Bank as the provider for the debt facility for the San Quintin project. These funds are expected to be collected in Q2 2019.
The net cash used from operating activities during the quarter was US$14.7 million versus forecasted usage of US$10.1 million for Q1 2019. The group revealed a US$5 million delay in the collection from customers anticipated in the Q4 2018 4C filing and is expected to be fully collected in the second quarter of 2019. The operating expenses were in line with the estimate previously provided.
On the price-performance front, at market close on 30th April 2019, the stock of Fluence Corporation Limited was trading at $0.465, with a market capitalisation of 260.63 million. The stock has generated a significant YTD return of 59.02%, with returns of 25.97%, 29.33% and -3.96% over the past six months, three months and one-month period, respectively. Its 52-week high price stands at $0.585, and 52-week low price stands at $0.290, with an average trading volume of ~1.04 million.