The Fluence Corporation Ltd (ASX: FLC) share price has gained 25% in the past week, and they may rise even further this year.
In 2017, water treatment providers Emefcy and RWL merged to create Fluence Corporation. As a combined company, Fluence is attempting to solve the world’s water issues through the use of its desalination technology. Fluence is aiming to become the global leader in both centralised and decentralised water and wastewater treatment.
Business Outlook
Fluence has had a positive start to 2019 with multiple new business deals being announced. These deals include:
- Signing a contract with the Ivory Coast government to build a centralised desalination plant which will supply drinking water to its largest city, Abidjan.
- A joint venture to design and construct a seawater desalination plant in Egypt which will serve 250,000 people.
- A further 40 decentralised treatment units ordered through their partnership with ITEST in China.
The Ivory Coast deal is seen as a major contract win for Fluence Corporation as it will add significant value to the company and also open up opportunities for similar deals with governments looking to solve their water issues.
Fluence Corporation’s decentralised system allows small communities, shopping centres, mining camps, etc. to have their own water treatment facility.
This is a huge benefit to developers as they do not have to build infrastructure to access a centralised water facility, instead, they have their own decentralised facility on site.
Fluence’s Financial Outlook
Revenue increased by 82% in 2018. This was boosted by a record quarterly revenue of $43.7 million in Q4 2018, an increase of 73% when compared to the corresponding quarter in 2017.
Fluence had a reported US$38.7 million in cash and US$0.7 million in debt at the end of 2018. It recently announced a drawdown of US$2 million in debt to fund a desalination plant project in the Bahamas.
Fluence expects to become EBITDA positive by Q4 2019; however, this could occur earlier due to the new Ivory Coast deal (Click here to learn what EBITDA means).
Management
Henry Charabee, Fluence’s Managing Director and CEO has said:
“Our leading range of Smart Products Solutions, growing backlog on recurring revenue, and technical expertise position us well for future growth. Accordingly, for FY2019, we are providing guidance on Smart Products Solutions revenue, and we reaffirm our intention to be sustainably EBITDA profitable by the fourth quarter of 2019.”
Is It A Buy?
Fluence is a company to watch in the future. For ethical investors, this company could provide solid returns while attempting to solve the water issues of many developing countries. If the predictions of EBITDA positive by the end of the year are correct, this will have a positive effect on its share price.
Fluence is currently in a strong financial position with minimal debt on its balance sheet. For growth investors, Fluence is a stock to keep your eye on after its strong 2018 performance and predicted profitability in the near term.
If you’re looking for two other solid ASX growth shares, click the link below to access our free ASX investing report.
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Disclosure: At the time of publishing, Jack does not have a financial interest in Fluence.
