OAKVILLE, Ontario, March 12, 2004 -- ZENON finished 2003, a record setting year, by nearly doubling profit to $12.5 million from $6.4 million in 2002.
The country lived up to its stated goal of increasing profit at a higher rate than revenue and increasing revenue in the range of 20%-30% per year.
Revenue for the year came in at $183.6 million, a 26% increase over 2002.
"Our results for 2003 are an indication of our continuing growth, as we work to achieve $1 billion in revenue by 2010," said Andrew Benedek, Chairman and CEO of ZENON.
"In 2003, virtually every aspect of our key deliverables was met or exceeded. Our bookings for the year were a record setting $243 million, which resulted in the highest year-end backlog in the company's history of $221 million, representing a 35% growth over 2002."
The company has been consistently increasing its backlog for the last four years. Backlog is a critical benchmark for ZENON's growth in that it is a reflection of future revenue, as no order becomes backlog unless a firm purchase order is received.
The company estimates that in any given year, approximately 70%-80% of the order backlog will generate revenue for the following year. In addition to this, ZENON also has in excess of $100 million in orders for which it has either been selected, or is currently working on the engineering phase of a potentially larger project.
Combine this with other substantial awards that the company is awaiting notification on, and this number expands to approximately $150 million. One factor that has accelerated the growth in backlog is the increasing number of larger orders the company has been winning. 2003 was very significant for ZENON in that it marked the entry into the use of its ZeeWeed technology for significantly larger plants.
ZENON achieved this in both the drinking water and wastewater segments. The end of the year saw the start of commissioning on the largest ultrafiltration drinking water plant in Singapore, treating 72 million gallons of water per day.
Since this time, ZENON has also won the contract to provide its ZeeWeed® 1000 technology for an even larger drinking water plant to be built in Mississauga (Peel Region), Ontario.
Upon completion in 2006, this plant will treat 80 million gallons of drinking water per day. On the wastewater side, commissioning also began on the world's largest MBR (membrane bioreactor) in Germany that will treat 12 million gallons of wastewater per day.
In addition to this, North America's largest MBR is also being commissioned in Traverse City, Michigan, treating 7 million gallons of wastewater per day. During the quarter, ZENON received a purchase order to expand the MBR plant in Cauley Creek, Georgia from 2.5 to 5 million gallons of treated wastewater per day.
"The trend is now clear," continued Benedek. "Our ongoing technological innovation is in keeping with our objective of decreasing the cost factor for treating a gallon of water. At the same time, we're improving the quality of our products and decreasing the space required. For example, our latest generation of ZeeWeed® 500 product can treat three times the amount of water of our earlier versions in a third the space. We are working hard to make it more and more cost effective for the larger water treatment plants to adopt our technology."
According to Benedek, as standards increase, whether for drinking or waste water, the decreasing cost of the technology will ensure that ZENON expands its market share.
"It won't be long before you start seeing ZeeWeed® plants that will be treating in excess of 100 million gallons of drinking water per day," concluded Benedek.
ZENON's bookings for the quarter and the year have been largely North American based. Although the company has been winning projects in Europe, such as the largest MBR plant for a petrochemical Company being built in Italy, activity in the municipal sector has been slower.
As countries prepare to join the European Union, significant infrastructure changes will have to be made in order for them to meet the standards of entry into the Union.
ZENON's strong presence throughout Europe, in particular Eastern Europe, holds promise for the company's future outlook in this region. In light of this potential, Mr. Benedek has been mandated by the company's board to replicate ZENON's North American success in Europe.
He will be focusing on increasing ZENON's market share in this geographical sector over the coming year. MANAGEMENT'S DISCUSSION AND ANALYSIS The following is a discussion of the consolidated financial condition and results of operations of ZENON Environmental Inc. for the period ended December 31, 2003.
ZENON provides world class technologies that provide advanced membrane products and services for water purification, wastewater treatment and water reuse to municipalities and industries worldwide.
The 2003 recipient of the prestigious Stockholm Industry Water Award, ZENON was selected because of the company's innovative approaches to the development of water and wastewater process technologies along with its contributions to environmental improvement. ZENON has also been selected as one of Canada's Top 100 Employers for the fourth consecutive year.
An S&P/TSX Composite Company, ZENON Environmental Inc. trades under the symbols ZEN and ZEN.A. Additional information is available at the company's web site www.zenon.com.
