MACCLESFIELD, UK, May 15, 2018 -- 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 first quarter revenues increased 58.7% to $ 1,318,454 compared to $830,849 for the first quarter 2017. Adjusted Non-GAAP EBITDA for the period ending March 31, 2018 was a positive $99,206, an increase of 1,375% year on year when compared to the $6,722 generated in the same period in 2017. Significantly the Company’s UK subsidiary delivered a net profit of £12,669 ($17,755) for the quarter compared to a net loss of £62,780 ($87,986), an improvement of 120% and the first time a profit has been reported.

“Moving to profitability is a major milestone for the UK business” explained Paul Hamblyn, Managing Director of the UK operating company. “Last year saw us achieve the critical mass needed to deliver positive cashflow and with new systems having come online and improved performance from the existing fleet we have been able to deliver a small but important profit.”

Speaking about the quarter’s results Dr. Elias Samaras, Chief Executive Officer said “Our key aim for 2018 was to be profitable, at least at the operational level. To have achieved this in the first quarter is great news but management need to remain vigilant as the warmer summer months traditionally squeeze margin and margin on the new turnkey project revenue stream has proven to be less than our traditional OSU business. Overall I am pleased with our progress and look forward to reporting greater progress in the months to come.”  

The Company also announced that it had withdrawn from negotiations to acquire another UK based energy service company. Dr. Samaras explained “Investors know that we have been pursuing a key acquisition target over the past year, but in the end the intended transaction was not possible to conclude. The Board and management will now focus on growing the UK business organically while supporting the new Blue Grid Gas & Power joint venture in Greece, which appears to be a more promising alternative.”

HEADLINES
UK net profit, strong revenue growth and continued positive operating cash flow

• UK subsidiary delivered a net profit of £12,669 ($17,755) for the first quarter 2018 compared to a net loss of £62,780 ($87,986), an improvement of 120% year on year and the first time a profit has been reported

• Total revenue increased 58.7% to $ 1,318,454 (£947,732) for the first quarter 2018 compared to $830,849 (£672,065) for the first quarter 2017, the result of both a 25.1% increase in energy revenue and new turnkey revenue

• Overall gross profit including depreciation for the first quarter of 2018 increased to $305,337 compared to $199,623 in 2017, an improvement of 53.0%

• Overall gross margin including depreciation decreased to 23.2% for Q1 2018, compared to 24% for Q1 2017

• Overall gross margin excluding depreciation for the first quarter of 2018 increased to $447,856 compared to $332,242 in 2017, an improvement of 34.8%

• Overall gross margin excluding depreciation decreased to 34.0% for Q1 2018 compared to 40% for Q1 2017, the result of lower margin turnkey projects

• UK operating subsidiary achieved a positive EBITDA cash flow for the first quarter 2018 totalling £123,037 ($172,436) compared to £48,864 ($68,483) in 2017. This represents an increase of 151.7%  

• The Company achieved a positive adjusted Non-GAAP EBITDA for the first quarter 2018 of $99,206 compared to £6,722 in Q1 2017, an increase of 1375%

Additional financial headlines

• Energy revenue increased to $1,036,556 (£745,098) for the first quarter 2018 compared to $828,893 (£672,065) for the same period last year, an increase of 25.1%

• Gross margin excluding depreciation on energy revenue increased from 39.8% for the period ending March 31, 2017 to 44.5% for the same period in 2018, primarily due to lower maintenance costs as more Tedom units exit their warranty period allowing them to be maintained in-house

• Total revenue generated by new turnkey projects was $281,898 in Q1 2018, but increased costs incurred on one project resulted in a $13,837 gross loss on turnkey projects. As this project is yet to be completed further losses are considered likely

• An additional Capital Contribution totalling €500,000 ($616,241) was made to the Company’s joint venture, FCN Energy Logistics Limited to provide working capital for Blue Grid Gas & Power. This contribution was matched by our JV partners, Tamarindo Navigation S.A.

• Liquidity and cash position at March 31, 2018 remained strong at $2,820,360

• GAAP diluted loss per share (EPS) for the first quarter 2018 was $0.002 as compared to a loss of $0.003 in 2017

Operational performance

• Total energy production increased by 5.3% to 14,047,471 kWh for quarter ended March 31, 2018 as compared to the same period in 2017

• A single 70kW system at Strood Leisure Center was brought into operation during the first quarter 2018. In addition, the 101kW turnkey solution at Salt Ayre Leisure Centre was also handed over to the client

• The 410kW system at Guildford Spectrum was also commissioned during the quarter but a fault with the alternator lead to handover being delayed until Q2. The alternator has now been changed by the manufacturer under warranty

• Operational energy fleet capacity at March 31, 2018 was 36 systems at 33 sites totalling 4,074kW. This compares to 35 systems at 32 sites totalling 4,034kW at the end of March 2017

• Contracted backlog at March 31, 2018 - 7 systems, 1,124kW. This includes the 410kW turnkey project at Guildford Spectrum

New business, strategic development and outlook

• Closed 15-year Maintenance and Service Agreement to cover the new system at Salt Ayre Leisure Centre

• The sales pipeline includes a number of larger solutions and multi-site opportunities as well as opportunities to develop a more diversified offer including technologies such as battery storage and trigeneration including absorption chilling and CHP systems

• No new orders were closed during the quarter but since the quarter closed Heads of Terms have been agreed for two new projects and the sales pipeline includes a number of turnkey projects that management expect to close through the second quarter

• The Company will be exhibiting at both the Edie.live and Sports & Leisure Forum event during the second quarter 2018

• The Blue Grid Gas & Power joint venture has identified and issued proposals for 3 projects in the Thessaloniki region of Greece. In addition, the company’s application for a natural gas sales permit has been submitted to the relevant authorities

• Management’s principal objective remains to deliver profitability at the UK operating company level in 2018

• Recent announcements relating to proposed changes to the charging structure for electricity transmission and distribution costs plus changes to the CRC Energy Efficiency Scheme and Climate Change Levy have the potential to impact both revenue and margin of the Company’s OSU fleet

• Management consider the overall outlook for financial performance in 2018 as good although it also highlights that risks remain in the form of future energy price changes and a narrowing spark spread, or unexpected equipment failures

Future News Releases

News provided all financial results and news are only published on the Company’s website (http://investors.eurositepower.co.uk/news-releases). 

Anyone wishing to receive notice of a news release should subscribe to the email alerts service provided within the Company’s investors pages (http://investors.eurositepower.co.uk/email-alerts).

Alternative Reporting Standard

The Company now files its financial statements under the Alternative Reporting Standard (ARS). Financial reports, which 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 at least 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. Financial statements for EuroSite Power Limited are prepared in accordance with UK GAAP, and consequently differences in accounting treatment and presentation may arise.

On-Site Utility

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.

FORWARD-LOOKING STATEMENTS

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, 2017. 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.