EuroSite Power Announces Second Quarter 2023 Financial and Operational Performance
DERBY, UK, August 11, 2023 -- 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 net profits of $129,197 for the second quarter of 2023 and net profits for the first half of the year of $219,288. This followed a 39.7% increase in revenues from $1,312,692 in the second quarter of 2022 to $1,833,394 in the same period this year. Gross profits also increased from $412,320 in Q2 last year to $632,889 this year, a rise of 53.5%. Overall, for the first half of 2023 the Company has seen revenues rise 32.1% with a corresponding increase in gross profits, the result of gross margin remaining stable at 31.3% compared to 31.1% in the same period last year. The net profitable position in the second quarter of 2023 follows a profitable first quarter, the first time the Company has achieved back-to-back quarterly profits.
“The higher electricity and gas tariffs first seen in the second half of last year have continued into 2023” said Paul Hamblyn, Chief Operating Officer and Managing Director of the UK operating company. He continued “These higher prices have continued, and although there are signs of prices beginning to soften the longer-term picture suggests these historically higher prices are likely to continue. As a result, the fleet is delivering good financial performance and it’s particularly pleasing to see that we have successfully managed to protect our gross margin against the pressure of the rising cost of gas.”
The Company also announced it had reorganised in sales activity to be able to focus on its renewables division, changes that include recruitment of a Sales Director for its UK company.
Commenting on the Company’s second quarter results and plans for the future, Dr Elias Samaras, Chief Executive Officer said, “The goal for 2023 was to deliver profits beyond the UK operating company and so to be able to report two straight quarters of profitability is good news indeed. While these results provide a great foundation for the year we are also investing in the future, and our recent decision to reorganise our sales team and bring onboard a Sales Director with the skills and knowledge to grow our renewables division is a sign of things to come”.
HEADLINES
Profitability supported by increased revenue and improved gross margin
- Second quarter net profit of $129,197 in 2023 as compared to a net loss of $37,216 in the second quarter of 2022, an improvement of 447%
- Net profit for the first half of 2023 increased 1,641% to $219,288 as compared to a net loss of $14,232 in the same period last year
- Second quarter Non-GAAP adjusted EBITDA increased to $321,013 compared to $159,970 in the second quarter of 2022
- Non-GAAP adjusted EBITDA for the six months to June 30, 2023 was $604,059, an increase of 42.4% as compared to the $424,433 reported for the same period last year
- Total revenue increased 39.7% from $1,312,692 in the second quarter of 2022 to $1,833,394 in the same period this year, while total revenues for the first half of 2023 increased 32.1% to $3,831,131 as compared to $2,901,030 in 2022
- Overall gross margin including depreciation in the second quarter 2023 increased to 34.5.% from 31.4% in the same quarter last year, while gross margin excluding depreciation and impairment remained reasonably stable at 44.2% for Q2 2023 compared to 44.9% for Q2 2022
- Liquidity and cash position at June 30, 2023 remained strong at $ $2,426,513, up 12.1% on the cash held at June 30, 2022
- As per the Company’s recent announcement, its cash reserves have been further boosted by Euro 620,000 ($683,478) following the sale of its remaining interest in Blue Grid Gas & Power S.A. This currently remains held in Euro and is therefore, subject to currency risk
- Q2 2023 GAAP diluted net gain per share (EPS) was $0.0016, an improvement of 447% over the $0.0005 loss per share reported in Q2 2022
Operational performance
- Total energy production increased by 16.4% to 10,876,457 kWh for the quarter ending June 30, 2023 as compared 9,343,904 kWh for the same period in 2022. Overall, energy production is up 9.4% in 2023 compared to 2022, the result of improved fleet reliability
- Operational fleet capacity at June 30, 2023 was 46 systems at 43 sites totalling 5,810kWe, unchanged from the same quarter of 2023.
- The Company completed its first roof mounted solar PV installation during the second quarter and is now using this installation to achieve MCS accreditation. MCS certified low-carbon energy technologies and contractors including heat pumps, solar, biomass, wind and battery storage.
- UK General Manager and statutory director of the UK operating company, Chris Marsland retired from his role in June. While he continues to provide support to the operation as a consultant, it is expected that this will reduce over time as new staff are recruited to support the renewables division
Business and strategic development
- The Company signed four new contracts with an existing customer to replace existing aged Tecogen CHP units with new high efficiency equipment sourced from TEDOM. The customer, Roko Health Clubs has committed to new 10-year On Site Utility agreements that will deliver both increased revenues and higher gross margin. Construction of the first project at Roko York has already begun and the system is expected to be operational through the third quarter
- A further project began construction in the second quarter. This is a new 100kW CHP solution for the Mercure St Helens Hotel and is expected to complete during the latter part of this year
- The Company’s management are to recruit a Sales Director, with a specific remit to establish and grow the new renewables division. This required restructuring of its sales activity during the second quarter and resulted in the CHP business development role being made redundant. In addition, the hours of other support staff were also reduced while recruitment of a new Sales Director is completed. A separate announcement will be made when the Sales Director has been appointed
- Attika Holdings Limited, a subsidiary of Aquilla Energy Efficiency Trust informed the Company of its intention not to fund future projects under the terms of the Master Receivable Agreement signed with the company last year. While this will not affect any operational projects funded by Attika Holdings it does mean that funding for the four projects secured with Roko Health Clubs is now in doubt. Management are seeking alternative funding to allow these projects to proceed
- As announced on July 31, 2023 the Company sold its remaining shares in Cyprus based Annova Enterprises Company Limited (“Annova”), and ultimately its remaining interest in Blue Grid Gas & Power S.A. This was the result of a pre-existing options agreement held by one of the other investment partners in Annova . The proceeds from the sale were Euro 620,000 ($683,478)
Outlook and risks
- Retail electricity and gas prices have softened in the UK market, but simultaneous reduction in the level of financial support provided to businesses by UK Government resulted in only minimal change to the price paid by the Company’s customers. As a result, the tariffs charged for the Company’s energy generation remains high compared to historic norms. Management considers that little will change in the short-term and long-term projections indicate prices are unlikely to reduce dramatically, although this risk remains
- Inflation continues to impact both labor and material costs with continuing increases being seen across the supply chain. Management continue to work with suppliers to minimise these impacts
- The interest rate environment has restricted the availability and price of project funding. Attika Holdings Limited have withdrawn from the agreement and Close Brothers have added criteria that make funding a project more difficult. Management is seeking alternate funders but expect the cost of future funding to be higher
- Parts shortages continue to extend downtime in the event of a unit failure. This is particularly the case for those sites equipped with Tecogen product
- Overall the Company continues to report that the outlook for 2023 appears good with increased revenue and gross profits
- Other risks remain in the form of the impact of reducing grid electricity carbon emissions on future sales, a shift in policy or regulation from the government relating to energy, unexpected equipment failures, economic and geopolitical issues
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, 2022. 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.
Investor contact:
Dr Elias Samaras
elias.samaras@eurositepower.co.uk
+44 (0)800 028 8001