MACCLESFIELD, UK, November 13, 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 third quarter revenues increased 4.1% to $767,020 compared to $ 736,474 for the third quarter 2017. Underlying this result was a 17.5% increase in energy revenue which saw third quarter energy revenue total $ 759,730 compared to $ 646,590 for the same period in 2017. Gross Profit for the third quarter 2018 increased by 71.7% to $ 221,981 when compared to $ 129,313 for the same period in 2017, the result of gross margin increasing from 17.6% for third quarter 2017 to 28.9% for third quarter 2018. Significantly the Company’s UK subsidiary has now reported positive EBITDA in each of the 12 months ending September 30, 2018.

Commenting on the quarter’s results UK Managing Director, Paul Hamblyn said, “The fact the UK has now achieved positive EBITDA for 12 months straight demonstrates that we have turned a corner”. Mr Hamblyn added, “The OSU fleet continues to outperform the prior year, despite an unseasonably hot summer doing its best to depress the need for heat. In particular, the improved reliability of the Tecogen fleet helped boost performance compared to last year and with winter approaching we can reasonably expect to see continued improvement in OSU fleet performance”.

Commenting on the Company’s strategic objectives Dr. Elias Samaras, Chief Executive Officer said, “Progress to broaden the spectrum of our offer has begun. In addition, management has focus on organic growth both within the UK and across Europe such that our pipeline is improving with many exciting opportunities giving rise to optimism for 2019”. Dr Samaras went on to say, “The UK operation’s solid third quarter performance helped ensure that for the first time the Company’s non-GAAP EBITDA was positive for the 9 months to the end of September”.

HEADLINES
Energy revenues grow alongside increased gross profit and positive operating cash flow

• Energy revenues increased 17.5% to $759,730 (£583,241) for the third quarter 2018 compared to $646,590 (£497,003) for the same period last year

• Total revenue increased 4.1% to $767,200 (£588,837) for the third quarter 2018 compared to $736,474 (£562,675) for the third quarter 2017

• Overall gross profit including depreciation for Q3 2018 increased to $221,981 compared to $129,313 in Q3 2017, an improvement of 71.7%

• Overall gross margin including depreciation increased to 28.9% for Q3 2018, compared to 17.6% for Q3 2017. This continues the upward trend seen in both the first and second quarters of 2018

• Overall gross margin excluding depreciation for the third quarter of 2018 increased to $361,661 compared to $264,860 in 2017, an improvement of 36.5%

• Overall gross margin excluding depreciation increased to 47.2% for Q3 2018 compared to 36.0% for Q3 2017

• UK operating subsidiary achieved a positive EBITDA cash flow for the third quarter 2018 totalling £40,179 ($52,366) compared to £3,890 ($5,214) in 2017. This represents an increase of 932%

• UK operating subsidiary delivered positive EBITDA cash flow for each month of the third quarter 2018 meaning that the subsidiary has now achieved positive EBIDA cash flow for each of the 12 months to September 30, 2018

• The Company achieved a negative adjusted Non-GAAP EBITDA for the third quarter 2018 of $19,944 compared to negative $55,626 in Q3 2017. For the 9 months to September 30, 2018 adjusted Non-GAAP EBITDA was positive $90,235 compared to a negative $14,630 for the 9-month period ending September 30, 2017

Additional financial headlines

• The loss from operations in the third quarter 2018 was $199,663 compared to a loss from operations in the same period last year of $283,637, an improvement of 29.6%

• Ongoing litigation against the Company was withdrawn by the plaintiff during the quarter. This was achieved without the need for settlement with the other party

• Liquidity and cash position at September 30, 2018 remained strong at $2,525,343

• GAAP diluted loss per share (EPS) for the third quarter 2018 was $0.003 as compared to a loss of $0.0036 in 2017

Operational performance

• Total energy production increased by 34.4% to 13,458,424 kWh for quarter ended September 30, 2018 as compared to the same period in 2017

• Operational energy fleet capacity at September 30, 2018 was 37 systems at 34 sites totalling 4,199kW. In addition, the single 101kW system at Wentworth Clubhouse remains offline while the client completes long-term refurbishment works. Current operating fleet capacity compares to 35 systems at 32 sites totalling 4,004kW at the end of September 2017.

• Contracted backlog at September 30, 2018 - 8 systems, 1,275kW. This includes the 410kW turnkey project at Guildford Spectrum which achieved practical completion on October 31, 2018

  New business and strategic development

• Signed a 15-year OSU agreement for a 70kW system to be installed at Dunstable Leisure Centre. This was signed with an existing customer and is the second system contracted to this customer

• A further 15-year OSU agreement for a 350kW system was closed after the quarter ended. Full details are to be announced by the Company as part of a separate press release

• Secured an order to supply a turnkey 200kW TEDOM system for the Centre for Environment, Fisheries and Aquaculture Science laboratory in Weymouth, Dorset. This contract is valued at £ 438,788 ($571,872) and was secured from a new customer, Breathe Energy following a competitive tender process. The system is expected to be operational in early 2019 and a long-term operation and maintenance agreement is expected to follow

• Sales pipeline continues to grow both internationally and within the UK. Current opportunities include 3 large-scale trigeneration systems in Russia and a number of multi-site leisure centre operators in the UK

  Outlook and risks

• Management consider the overall outlook for financial performance for the remainder of 2018 to be good although it highlights that risks remain in the form of the final losses associated with the Guildford Spectrum project exceeding current forecasts and the possibility of current projects being delayed for reasons beyond the management’s control e.g. planning consent, equipment lead-times etc. Overall, management’s principal objective remains to deliver profitability at the UK operating company level in 2018.

• The recent announcement by UK government to end the Enhance Capital Allowance scheme currently enjoyed by good quality CHP scheme will impact cash flow after the scheme ends in April 2020

• Analysis by the management has concluded that the decision to end the CRC Energy Efficiency Scheme and transfer the carbon tax burden to the Climate Change Levy will have a positive impact on both revenues and margin

• Proposed changes to the charging structure for electricity transmission and distribution costs have the potential to impact both revenue and margin of the Company’s OSU fleet

• Management consider the overall outlook for financial performance for 2019 to be good although it highlights that risks remain in the form of the future success of its business development activity, 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.

For further information: Dr Elias Samaras Chief Executive Officer +44 844 693 2848 elias.samaras@eurositepower.co.uk