EuroSite Power Reports Third Quarter 2017 Financial Performance
UK operation continues to deliver positive EBITDA cash flow
“The steps we took earlier this year to diversify our offer paid dividends in the third quarter as we saw strong revenue growth off the back of recent turnkey project wins. At the same time, we continued to enjoy underlying growth in energy revenue because of our larger operating fleet."
MACCLESFIELD, UK, Nov. 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 third quarter revenues increased to $736,474 compared to $459,114 for the third quarter in 2016, an improvement of 60%. Gross profit excluding depreciation and impairment for the third quarter 2017 also increased to $285,261 compared to $150,603 for the same period last year, driven both by the improvement in revenue and, gross margin excluding depreciation which increased from 32.8% for the third quarter 2016 to 38.7% for the same quarter this year. Operating EBITDA cash flow at the Company’s UK subsidiary was also positive for the third quarter 2017.
“Despite the challenges normally associated with lower energy demand throughout the summer months the UK operating company still managed to deliver a cash positive position.” said Elias Samaras, Chief Executive Officer, when commenting on the Company’s results. “The consolidated results for the first nine months of the year now show a slight negative cash position but with the winter months ahead and some recent sales successes I am confident we can achieve our primary goal of being cash positive for the year”.
Speaking about the third quarter results Paul Hamblyn, Managing Director of the UK operating company added “The steps we took earlier this year to diversify our offer paid dividends in the third quarter as we saw strong revenue growth off the back of recent turnkey project wins. At the same time, we continued to enjoy underlying growth in energy revenue because of our larger operating fleet. Importantly our business development activity also scored success with two new contract wins”.
Strong revenue growth, positive operating cash flow and additional new contract wins
Total revenue increased by 60% to $736,474 (£562,675) for the third quarter 2017 as compared to $459,114 (£349,615) for the same period last year
Energy revenue increased by 40.8% to $646,590 (£494,003) for the quarter ending September 30, 2017 as compared to $459,114 (£349,615) for the third quarter 2016
Turnkey revenue increased 100% to $85,957 ($65,672) for the third quarter of 2017 because of preliminary works being completed on two turnkey projects
UK operating subsidiary achieved a positive EBITDA cash flow for the quarter totalling £3,890 ($5,092) compared to a negative cash flow of £128,046 ($168,150) in Q3 2016. This represents a swing of 103% or £131,936 ($173,242). Overall the cumulative EBITDA cash position for the first 9 months of 2017 is £130,023 ($170,185) compared to a loss of £253,789 ($333,278) in 2016
The Company achieved an adjusted Non-GAAP EBITDA loss for the nine month period to September 30, 2017 of $14,630 compared to a loss of $846,818 for the same period in 2016
Liquidity and cash position at September 30, 2017 continues to remain strong at $3,914,995
GAAP diluted loss per share (EPS) was $0.00 for the third quarter of 2017 as compared to a loss of $0.01 for the same period in 2016
The Company secured orders for a 100kW turnkey project for the Salt Ayre Leisure Centre in Lancaster and a further On-Site Utility solution for the Celtic Manor Resort in Newport
Financial and operational performance
Overall gross profit including depreciation for Q3 2017 increased to $129,313 compared to $38,842 for the same period in 2016, an improvement of 233%
Overall gross margin including depreciation improved to 17.6% for the period, compared with 8.5% for the same period of 2016, an increase of 9.1 percentage points
Overall gross profit excluding depreciation and impairment for the third quarter 2017 increased to $285,261 compared to $150,603 in the comparable prior year period, an 89% improvement
Overall gross margin excluding depreciation and impairment improved for Q3 2017 to 38.7% as compared to 32.8% in the same period of 2016, a 5.9 percentage point improvement
Gross margin excluding depreciation on energy revenue increased from 32.8% for the third quarter 2016 to 41.1% for the same period this year
Income statement includes a $20,401 impairment charge related to termination of the Dunstable Leisure Centre contract.A further impairment charge of at least $20,401 will appear in the fourth quarter results with the CHP unit being returned to inventory to provide spares
Total energy production increased by 33% to 10,009 MWh for the period ended September 30, 2017 as compared to the same period in 2016
Total energy production for the first nine month of 2017 was 36,061 MWh a 34% improvement on the same period last year. This represents 95% of the entire energy production achieved during the whole of 2016
Brought into operation the 70kW system at Newmarket Leisure Centre, the third system under contract to Abbeycroft Leisure
Operational fleet capacity at September 30, 2017 was 34 systems at 32 sites totalling 3,903kW. This compares to 32 systems at 30 sites totalling 3,509kW at the end of September 2016
Temporarily decommissioned the 101kW solution installed at Wentworth Clubhouse while the building undergoes refurbishment. This system will remain off until April 2018 with the decommissioned period being added to the overall contract duration
Current contracted backlog 9 systems, 1,295kW
Successfully trialled new, more robust engine for the Company’s fleet of Tecogen CHP units. Manufactured by Origin Engines and sourced in cooperation with Tecogen, these new engines are specifically engineered for industrial use and will be rolled out across the Company’s fleet as part of our normal planned replacement programme
Agreed with TEDOM to replace under warranty the Liebherr engine at The Dome, Doncaster with a new MAN engine in order to improve long-term reliability and enhance energy production
New business development
Closed new On-Ste Utility agreement with the Celtic Manor Resort for a 125kW system to be installed at their main Golf Clubhouse. Once installed this will bring total capacity at the resort to 525kW and generate an additional $1,833,309 (£1,400,670) of revenue through the lifetime of the contract
Awarded contract by Unify Group to design, install and maintain the first of a number of schemes currently under negotiation. This 101kW CHP system will be installed at the Salt Ayre Lesire Centre in Lancaster and represents the Company’s second turnkey project valued at $242,896 (£185,576)
Sales pipeline continues to grow including a number within new sectors such as manufacturing and tertiary education
Outlook and risks
Overall outlook for fourth quarter remains strong due to financial and operational performance to date
The outlook for the performance of the operational fleet remains good but new start-ups are expected to slow due to extended equipment lead times and delays in achieving construction approvals for some projects
Turnkey project gross margin could come under pressure as resourcing constraints may require increased outsourcing to maintain delivery programmes
Overall the management continue to be confident of the UK operating company achieving a positive cash flow throughout 2017
UK government Enhanced Capital Allowance tax incentive expected to net £119,565 ($156,496) for year ending 2016 and further £32,126 ($42,049) for 2015 once tax returns have been filed prior to year-end
Further operational savings expected as a result of filing a Foreign Certificate of Withdrawal to the Commonwealth of Massachusetts. The Company continues to be incorporated in Delaware
Brexit remains a risk both in terms of general business confidence and inflationary pressure
In preliminary discussions to form a Joint Venture to exploit new opportunities in both Cyprus and Greece
Acquisition strategy continues to identify targets
The Company also aims to provide regular updates to investors. Normally published on around the 20th of each month these regular updates provide investors with a snapshot of the Company’s activities together with and news.
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.
Source: EuroSIte Power Inc.
For further information: Dr Elias Samaras
Chief Executive Officer
+44 (0)844 693 2848
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.