EuroSite Power Reports Second Quarter 2017 Financial Performance
In addition to continuing to build a positive cash position we have also closed new orders including two additional OSU contracts plus a capital sale project for a 410kW solution, our first such deal. We also commissioned a further system and strengthened our team.
Revenue and Gross Profit growth continues to deliver positive EBITDA cash flow
WALTHAM, Mass., Aug. 15, 2017 -- EuroSite Power Inc. (OTCPK: EUSP, the "Company") an On-Site Utility solutions provider, offering clean electricity, heat, hot water and cooling solutions to healthcare, hospitality, housing and leisure centers in the United Kingdom (UK) and Europe, reported second quarter revenues increased to $793,658 compared to $640,437 for the second quarter in 2016, an improvement of 24%. Gross margin excluding depreciation also improved to 42.9% producing a gross profit excluding depreciation of $340,592, up from the 34.4% and $220,071 reported for the same period in 2016. Together this enabled the Company’s UK subsidiary to achieve a positive operating EBITDA cash flow for the second quarter running.
“The second quarter saw the UK operation consolidate the performance achieved in the first quarter” said Paul Hamblyn, Managing Director. “In addition to continuing to build a positive cash position we have also closed new orders including two additional OSU contracts plus a capital sale project for a 410kW solution, our first such deal. We also commissioned a further system and strengthened our team.”
Commenting on the Company’s results Dr. Elias Samaras, Chief Executive Officer said “We continue to meet the goals we set ourselves for 2017. The measures taken last year to help improve margin together with bringing into operation the two larger systems at Doncaster Dome and Celtic Manor are now bearing fruit. The UK operating subsidiary continued its cash positive performance while the reduction in US corporate costs, resulting from deregistering our stock and other changes, all contributed to delivering a positive Non-GAAP adjusted EBITDA on consolidation of $45,627. To arrive at the start of the third quarter with a positive position means the outlook is good”.
Revenue growth, positive cash flow and eradication of convertible debt
Revenue increased by 24% to $793,658 (£619,915) for the second quarter as compared to $640,437 (£446,718) for quarter ended June 30, 2016. At functional GBP level revenues increased 39%, continuing the growth reported in the first quarter this year
The Company achieved an adjusted Non-GAAP EBITDA cash flow for the second quarter of 2017 of $45,627 compared to a loss of $246,890 for the same period in 2016
UK operating subsidiary achieved a positive EBITDA cash flow for the quarter totalling £77,269 ($98,758) compared to a negative cash flow of £80,476 ($102,856) in Q2 2016. This represents a swing of 196% or £157,745 ($201,614)
Repaid in full the final outstanding $300,000 convertible debenture
Financial and operational performance
Gross profit including depreciation for Q2 2017 increased to $187,012 compared to $103,345 for the same period in 2016, an improvement of 81%
Gross margin including depreciation improved to 23.6% for the period, compared with 16.1% for the same period of 2016, an increase of 7.5 percentage points
Gross profit excluding depreciation for the second quarter 2017 increased to $340,592 compared to $220,071 in the comparable prior year period, a 55% improvement
Gross margin excluding depreciation improved for Q2 2017 to 42.9% as compared to 34.4% in the same period of 2016, an 8.5 percentage point improvement
GAAP diluted loss per share (EPS) was $0.002 for the second quarter of 2017 as compared to a loss of $0.01 for the same period in 2016
Liquidity and cash position at June 30, 2017 remains strong at $3,876,949
Total energy production increased by 35% to 12,714 MWh for the period ended June 30, 2017 as compared to the same period in 2016
Total energy production for the first half of 2017 was 26,052 MWh a 34% improvement on the same period last year and equating to 68% of the entire energy production achieved during the whole of 2016
Decommissioned the 100kW system at Dunstable Leisure Center following the customer’s decision to redevelop the site and terminate the contract
Operational fleet capacity at June 30, 2017 was 34 systems at 31 sites totalling 3,934kW. This compares to 31 systems at 29 sites totalling 3,178kW at the end of June 2016
Current contracted backlog 8 systems, 1,139kW
New business development
Closed two On-Ste Utility agreements with Medway Council for systems at their Strood and Medway Park Leisure Centers. This will add a further 195kW to our fleet and generate around $3,169,575 (£2,479,910) of revenue through the lifetime of the contracts
Awarded contract by Guildford Borough Council to design, install and maintain a 410kW CHP system in England’s largest sport complex, Guildford Spectrum. This is our first capital sale project valued at $602,207 (£471,174)
New Head of Business Development started June 1, 2017
Expanded target sectors to include manufacturing and are developing new sales channels with both sales agents and strategic partners
Seeking partners to broaden offer and enhance cross selling opportunities to both new and existing customers
Management continue to have confidence in increased energy production, revenue growth and gross profit as a result of increased fleet size and improved availability
Underlying energy price changes are likely to help sustain improved gross margin
Weaker third quarter EBITDA cash flows expected due to impact of lower thermal demand during the summer
Outlook for fourth quarter now looks stronger due to performance to date and planned operational dates for newly won contracts
Management now more confident of UK operating company achieving a positive cash flow for the year
Brexit remains a risk both in terms of general business confidence and inflationary pressure
Acquisition strategy continues to identify targets
The Company will also be providing regular monthly updates to investors. Starting in September and published on around the 20th of each month these regular updates will provide investors with a snapshot of the Company’s activities.
The Company now files its financial statements under the Alternative Reporting Standard (ARS). Quarterly financial reports are prepared in accordance with US GAAP, are generally provided within 45 days of period end (90 days for fiscal year end results) and are reported to maintain the OTC Pink Limited Information tier.
Following corporate reorganisation and de-registration of the Company’s common stock, with effect from January 1, 2017 foreign exchange gains/losses are reported in the cumulative translation adjustment (CTA) account on the Company’s balance sheet.
Fiscal year end financial reports for the operating company, EuroSite Power Limited are audited by a PCAOB registered firm and the Company provides current information for the purposes of SEC Rules 144(c)(2) and 10b-5 using the OTC Disclosure & News Service.
EuroSite Power sells the energy produced from an onsite energy system to an individual property as an alternative to the outright sale of energy equipment. On-Site Utility solution customers only pay for the energy produced by the system and receive a guaranteed discount rate on the price of the energy. All system capital, installation, operating expenses and support are paid by EuroSite Power.
About EuroSite Power
The Company provides institutional, commercial and small industrial facilities with clean, reliable power, cooling, heat and hot water at lower costs than charged by conventional energy suppliers – without any capital or start-up costs to the energy user. More information can be found at www.eurositepower.co.uk.
This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. Important factors could cause actual results to differ materially from those indicated by such forward-looking statements, as disclosed on the Company’s website and in financial statements held by OTC markets for the fiscal year ended December 31, 2016. This press release does not constitute an offer to buy or sell securities by the Company, its subsidiaries or any associated party and is meant purely for informational purposes. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
Dr Elias Samaras is the founder, president and managing director of Digital Security Technologies S.A. He was also the founder and president of Plefsis Information Systems S.A. and City Messengers. Elias holds a Master of Science degree from MIT, a Doctor of Philosophy from Columbia University in New York, where he was also a professor for several years and an OPM from Harvard Business School.
Chief Operating Officer
Paul Hamblyn is Chief Operating Officer of EuroSite Power Ltd with responsibility for strategic and new business development of the business.Paul is highly experienced in the energy sector having built an enviable track record prior to joining EuroSite Power. This includes strategic level roles with Corona Energy and the ENER-G Group including 3 years as the Managing Director of ENER-G Efficiency.A leading expert on UK carbon regulation Paul is a regular speaker at major conferences including those organised by the Major Energy Users Council, the Local Government Association and the Westminster Energy Forum. He is also a formerCouncil Member of the Energy Services and Technology Association (ESTA). Paul is a CIBSE accredited Low Carbon Consultant and Energy Assessor as well as principal author of the award-winning CRC Toolkit developed for the London Energy Project.
UK General Manger
Chris Marsland is UK General Manger of EuroSite Power Ltd. He leads the UK operational company and directs its operational and administrative functions. Prior to joining Eurosite Power, Chris built up years of sector expertise in senior positions including the role of Technical Director at Centrica Business Solutions, formerly ENER-G Combined Power Limited. He also Chaired the Association for Decentralised Energy Commercial Forum and is an Association Board Member. Chris earned a first-class bachelor’s degree in electronic engineering and is both a Chartered Engineer and Fellow of the Institute of Engineering & Technology.
Financial Controller & Company Secretary
Laura Chambers is EuroSite Power Ltd’s Financial Controller and Company Secretary. An experienced finance professional, Laura has undertaken financial planning and analysis roles at number of blue-chip businesses including Astra Zeneca. She also spent 7 years at Kellogg’s European Finance Services Centre (EFSC). Qualified as a Chartered Accountant at KPMG’s Manchester office, Laura brings strong organisational skills and broad finance experience to the team.
Head of Operations
Stephen Butler is EuroSite Power Ltd’s Head of Operations. Having joined the company in 2012 as Chief Engineer, Stephen has moved through the business into his current role. With an impressive resume that includes senior mechanical engineering roles at Thames Water and ENER-G Combined Heat and Power Ltd, Stephen brings strong operational, project management and technical experience to the team. He is a Technician Member of the Institution of Engineering and Technology (TMIET).
UK Sales Manager
Martin Evans is our UK Sales Manager. A well-known and seasoned energy sector specialist, he brings a wealth of commercial experience - from start-ups to corporate level engagement – to our team. With a career spanning over 30 years, he has spent much of his career in technology led businesses and manufacturing including aviation and automotive. Martin’s previous roles at cutting-edge low carbon businesses including Grid Beyond, WEMS International and EnergyQuote JHA have given him a unique insight into the challenges faced by many of the UK’s most intensive energy users. He has also amassed over 15 years direct experience in commercial asset finance. Martin studied Applied Chemistry at the University of Manchester.
Mark Brown is our Account Manager. An experienced energy sector professional - particularly in the fields of CHP and renewable technologies - Mark has worked in engineering and technical roles for over 20 years. This includes 11 years at Cogenco UK (now fully integrated into Veolia’s CHP business). A great communicator with a positive approach to creative problem solving and troubleshooting, Mark is a key member of our customer-facing team. He holds qualifications from the Institute of Leadership and Management.
Jacques de Saussure
Non-Executive Chairman of the Board
Jacques de Saussure was Senior Managing Partner of the Pictet Group from 2010 until June 2016 after being elected partner of Pictet in 1987. Founded in Geneva in 1805, Pictet Group is one of Europe’s leading independent wealth and asset managers with EUR 437 billion of assets under management and custody as of 31 December 2015. Jacques is a member of the board of the Swiss Bankers Association and has also served as Vice Chairman of the Swiss Stock Exchange, which merged into SIX group in 2008, where he remained member of the board until 2010. Jacques holds a Master’s degree from MIT’s Sloan School of Management.
Dr Ahmed F. Ghoniem
Dr. Ahmed F. Ghoniem has been a member of our Board of Directors since January 2011. He is the Ronald C. Crane Professor of Mechanical Engineering at the Massachusetts Institute of Technology (MIT). He is also the director of the Center for 21st Century Energy and the head of Energy Science and Engineering at MIT, where he plays a leadership role in many energy-related activities, initiatives and programs. Ahmed holds a Ph.D. in Mechanical Engineering from the University of California, Berkeley, and an M.S. and B.S. in Mechanical Engineering from Cairo University.
Joan Giacinti is the founder and Chief Executive Officer of Sofratesa Group with headquarters in Santo Domingo, Dominican Republic. Joan is also a founder of Aerodom, a concessionaire chosen by the Dominican government to develop, operate and manage airports in the Dominican Republic, which in 2008 was acquired by Advent International. He is the President of the Caribbean region of the French Trade Councils, “Conseillers du Commerce Exterieur” and the President for the Americas of the Forum Francophone des Affaires (FFA). He is also decorated with the Ordre national du Mérite by the President of the French Republic. Joan is a graduate from the École des Hautes Études Commerciales de Paris (HEC).
Marcel Cassard joined Deutsche Bank in 1997 where he is now a member of the Global Markets Executive Committee and Global Head of Fixed Income and Economics Research. Marcel also heads the Bank’s Global Macro Strategy Group, which advises the Board and clients on broad market risks and global economic and financial developments. Previously, Marcel spent five years at the International Monetary Fund. Previous to that, he was an Economist at the Council of Economics Advisers in the Executive Office of the U.S. President. Marcel holds a PhD in Economics from Columbia University.
Mr. Stelios Zavvos
Stelios Zavvos is the Founder and CEO of Zeus Capital Management, a private equity group. With over 35 years of corporate, finance and real estate experience, Stelios is also the Founder and CEO of Continental American Capital, an investment group that focused on real estate investment and financing in the USA. He has served as a Member of the Board of Directors of the NASDAQ listed Star Bulk Carriers Corp, serving on the Board’s Audit Committee. He has also held executive positions in blue-chip companies such as Citibank, Johnson & Johnson and Procter & Gamble. SteliosZavvos holds an MBA from Harvard Business School and an MSc in Civil Engineering.