Basin Water, Inc. (Nasdaq:BWTR) has reported financial results for the quarter ended June 30, 2007. For the second quarter of 2007, revenues of $6.4 million increased $1.4 million when compared to revenues of $5.0 million in the second quarter of 2006, a 28% increase. System sales revenues were $5.2 million for the second quarter of 2007, compared to $4.2 million in the same period in 2006.
As anticipated, the increase in system sales revenue this quarter was due primarily to a third party financing arrangement whereby Basin Water sold 10 water treatment systems of various capacities which had previously been placed with customers. The Company will continue to operate and maintain these systems for its customers. Operating contract revenues for the second quarter of 2007 were $1.2 million, an increase of $0.4 million over the second quarter of 2006.
Gross profit decreased by $1.4 million during the second quarter of 2007 to breakeven compared to a $1.4 million gross profit during the second quarter of 2006. The gross profit earned on the sale of the 10 treatment systems was offset by the costs incurred by the continued focus on correcting internal legacy projects and the high level of field service labor and engineering overhead costs incurred in the second quarter, and unabsorbed manufacturing overhead costs.
During the second quarter of 2007, selling, general and administrative (SG&A) expense increased to $2.4 million compared to $1.4 million in the second quarter of 2006, an increase of $1.0 million. The increase in SG&A expense was primarily attributable to an increase of $0.3 million in public company expense, accounting fees and director’s fees, an increase of $0.3 million in outside selling, marketing and promotion expenses, an increase of $0.2 million in personnel related costs associated with Basin Water’s growth, and an increase of $0.2 million in stock-based compensation expense in 2007, among other expenses.
The Company reported interest income of $0.7 million in the second quarter of 2007 compared to $0.4 million of interest income in the second quarter of 2006. Interest expense for the second quarter of 2007 was nominal, compared to $2.3 million expense in the second quarter 2006. The prior quarter included the costs associated with the repayment of debt at the time of the Company’s public offering including the write-off of debt related warrants and loan acquisition costs.
For the second quarter of 2007, the Company reported a net loss of $1.8 million compared to a net loss of $2.0 million in the second quarter of 2006.
Six Month Results
For the six months ended June 30, 2007 compared with June 30, 2006: revenues were $8.0 million compared to $8.7 million, loss from operations was $5.3 million versus $0.2 million and net loss was $3.9 million compared to $2.4 million.
As of June 30, 2007, the Company had a cash balance of $48.4 million and other current assets of $11.7 million, for total current assets of $60.1 million and current liabilities of $4.4 million, resulting in net working capital of $55.7 million.
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