MACCLESFIELD, UK, August 14, 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 second quarter revenues increased 20% to $ 952,418 compared to $ 793,658 for the second quarter 2017. Adjusted Non-GAAP EBITDA for the period ending June 30, 2018 was a positive $ 10,973. Gross Profit for the second quarter 2018 increased by 30.7% to $ 244,474 when compared to $ 187,012 for the same period in 2017. Significantly the Company’s UK subsidiary has delivered positive EBITDA each month of 2018. Recent investment into its joint venture operation, Blue Grid Gas & Power has resulted in its first contract being secured to provide a fully-funded 350kW Combined Cooling, Heating and Power (CCHP) solution for the Genesis Hospital in Thessaloniki, Greece. This is the first project secured by the Company outside of the United Kingdom.
Speaking about the quarter’s results Dr. Elias Samaras, Chief Executive Officer said “Growth continues in terms of both revenue and gross profit. Importantly the Company has also turned an important corner by becoming consistently cash positive, of course profitability remains the aim for the year”. Commenting further on the Company’s strategic objectives Dr. Samaras continued, “Fundamentally we have a good business, a strong team of people to work with and a strong Board and shareholders group which needs to be bold in looking for and grabbing larger opportunities than it has traditionally looked for. Management has now turned its focus on achieving organic growth both within the UK and across Europe and I believe we are now getting into a new era. We no longer limit ourselves to CHP installations and OSU projects. We will focus on a wider spectrum, such as Energy and Asset Management, Energy Efficiency Services and the use of modern Information Technology methods, such as AI and smart monitoring to deliver deep value to our customers”.
Discussing the quarter’s results UK Managing Director, Paul Hamblyn said “While our OSU fleet continues to see continued growth in terms of both revenue and gross profit, new turnkey sales have been delayed although specific opportunities haven’t been lost. Additional losses incurred by one project also dragged down performance in the quarter. That’s said, Gross Margin excluding depreciation for the OSU fleet grew from 43.5% to 45.2% and performance of both TEDOM and Tecogen units has outperformed expectations, especially given the unseasonably hot weather experienced during May and June”. Mr Hamblyn added, “Importantly our sales pipeline has improved as new business development initiatives have started to take affect and the outlook for our order book looks strong”.
Continued revenue growth, increased gross profit and continued positive operating cash flow
- Total revenue increased 20.0% to $952,418 (£700,010) for the second quarter 2018 compared to $793,658 (£619,915) for the second quarter 2017
- Overall gross profit including depreciation for Q2 2018 increased to $244,474 compared to $187,012 in Q2 2017, an improvement of 30.7%
- Overall gross margin including depreciation decreased to 25.7% for Q2 2018, compared to 23.6% for Q2 2017 and an improvement over the 23.2% reported in the first quarter this year
- Overall gross margin excluding depreciation for the second quarter of 2018 increased to $386,166 compared to $340,592 in 2017, an improvement of 13.4%
- Overall gross margin excluding depreciation decreased to 40.5% for Q2 2018 compared to 42.9% for Q2 2017, the result of losses incurred on the Guildford Spectrum project
- UK operating subsidiary achieved a positive EBITDA cash flow for the second quarter 2018 totalling £67,986 ($89,796) compared to £77,269 ($100,411) in 2017. This represents a decrease of 12.0%
- The Company achieved a positive adjusted Non-GAAP EBITDA for the second quarter 2018 of $10,973 compared to $45,627 in Q2 2017
Additional financial headlines
- The loss from operations in the second quarter 2018 was $421,450 compared to a loss from operations in the same period last year of $193,194. This included exceptional items associated with aborted acquisition costs and ongoing litigation cost. Adjusted for these exceptional items the loss from operation was $140,030, an improvement of $53,164 over the prior year (27.5%).
- Aborted acquisition costs totalled $241,364 and are reported within General and Administrative expenses for the quarter. In addition, a further $40,056 of litigation expenses were incurred in the quarter. Both expenses are considered as exceptional items
- Gross margin excluding depreciation on energy revenue improved from 43.5% for the period ending June 30, 2017 to 45.2% for the same period in 2018. This continues the upward trend seen on previous quarters and is primarily due to lower maintenance costs as more TEDOM units exit their warranty period and a slightly increased spark spread
- The Guildford Spectrum project continues to incur losses although, the project is nearing completion and management expect final revenue and costs to be booked during the third quarter
- Liquidity and cash position at June 30, 2018 remained strong at $2,491,765
- GAAP diluted loss per share (EPS) for the second quarter 2018 was $0.005 as compared to a loss of $0.002 in 2017
- Total energy production increased by 5.7% to 13,438,997 kWh for quarter ended June 30, 2018 as compared to the same period in 2017
- A single 125kW system at Celtic Manor Clubhouse was brought into operation during the second quarter 2018.
- Operational energy fleet capacity at June 30, 2018 was 37 systems at 34 sites totalling 4,199kW. This compares to 34 systems at 31 sites totalling 3,934kW at the end of June 2017
- Contracted backlog at June 30, 2018 - 6 systems, 999kW. This includes the 410kW turnkey project at Guildford Spectru
New business and strategic development
- Heads of Terms were signed for two On-Site Utility solutions (OSU) and a single 200kW turnkey project during the quarter. These two OSU solutions were for a 350kW system for the Ricoh Arena, home of Wasps Rugby Union Football Club and a 70kW system for Dunstable Leisure Centre. Since the quarter closed a 15-year OSU agreement has been signed for Dunstable Leisure Centre and the system is currently scheduled to become operation early in Q4 2018
- A Heads of Terms was signed with Celtic Manor Resort to provide a 750kW battery storage solution to work alongside the existing CHP solution to provide enhanced security of supply and to take advantage of grid and market derived income available from National Grid
- The Blue Grid Gas and Power joint venture closed a 15-year agreement for with Genesis Hospital in Thessaloniki, Greece. This is a fully funded 350kW Combined Cooling, Heating and Power solution that will sell electricity back to the grid using a feed-in tariff and heat and cooling to the hospital
- Internationally a number of other major projects have been identified including other large scale CCHP opportunities within Greece and the Company is also working with a major soft-drinks manufacturer to explore on-site generation solutions for plants located in up to 28 countries
- The UK sales pipeline now includes over 35 live qualified opportunities including a number of multi-site and larger system projects to be sold as either On-Site Utility solutions or turnkey contracts
- Strategically the Company aims to close contracts or Heads of Terms for projects outside the UK by year-end. In addition, management is working on diversifying it offer to include both other energy efficiency storage and other forms of on-site generation, such as battery storage solutions
- The Company exhibited at both the Edie.live and Sports & Leisure Forum events during the quarter generating numerous leads. A live case study event is planned at Celtic Manor Resort for October this year
- Management’s principal objective remains to deliver profitability at the UK operating company level in 2018
- 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.
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, 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.
For further information: Dr Elias Samaras Chief Executive Officer +44 844 693 2848 firstname.lastname@example.org