H2O Innovation forms internal COVID-19 intervention team

H2O Innovation presented an update on the current status of the Corporation's activities surrounding COVID-19. First, a supply chain risk assessment was carried out for the various business lines of the Corporation, but more particularly for Piedmont because of the international nature of its business. As a first step, let's recall that Piedmont designs, manufactures and distributes flexible couplings and filter housings made of fiberglass, each representing 50% of its revenues. These filter housings are manufactured by a partner in Tunisia, and no significant delays have been recorded in connection with the current pandemic. Piedmont experienced minor delays in the manufacturing of flexible couplings made in China due to temporary closure of the foundry from January 23 to March 2. Operations have since resumed at 100% capacity. Piedmont maintains its delivery targets for June 30, 2020. On the PWT side, the specialty chemicals distributor in China continues its operations. Annual sales should not be significantly impacted because of the nature of its customers, mostly food & beverage plants, as well as municipal drinking water plants in China. In order to offset a higher demand for specialty chemicals and possible delays in the supply of raw materials, PWT and Genesys teams have voluntarily increased the levels of inventories, enabling them to ensure the supply of their products until the end of June 2020. H2O Innovation's 675 employees are located in Canada, the United States, Spain and United Kingdom. The majority of these employees are working in offices or plants with minimal staffing levels, which minimize exposure and transmission of the virus. Also, more than 50% of all other employees are widely dispersed in the field for the operation and maintenance of water and wastewater treatment systems, essential community services. In order to ensure the services offered to O&M customers, we have implemented preventive and contingency plans specific to the nature of O&M activities. The maple business line, specializing in the manufacturing of equipment and products for maple syrup production, is aimed at producers and not restauranteurs of sugar shacks. The measures taken by the Quebec government to close establishments offering catering services should not affect the equipment sales, since it is not the Corporation's target clientele. Finally, the company has created an internal COVID-19 intervention team which is meeting daily to ensure continuous communication to all stakeholders.