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EuroSite Power Reports 2016 Financial and Operational Performance

2017-04-01 00:13
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WALTHAM, Massachusetts, April 1, 2017 /PRNewswire/ -- 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 a full year Gross profit of $287,355 for 2016 compared to a loss of $115,804 in 2015, an improvement of 348%. Total revenues increased to $2,476,186 for 2016 compared to $2,198,721 for 2015, an increase of 12.6%. Gross margin excluding depreciation improved by over 11.9 percentage points compared with 2015, to a strong 36.4%.

Commenting on the 2016 full year results Dr. Elias Samaras, Chief Executive Officer said "Our focus for 2016 was to improve gross margin and to implement our 'four pillar' strategy. We delivered these key objectives while also securing additional investment, all but eradicating debt and creating a platform for strategic expansion. Now fully independent and with an enhanced board, the recent decision to deregister our common stock further positions us for growth." He added, "While revenue grew strongly our new business activity was weak and will be a focus for 2017. Overall 2016 was a busy year for the team, but the foundations are now laid and EuroSite Power enters 2017 a stronger company with encouraging underlying momentum and positioned ready to deliver longer-term growth."

HEADLINES
Improved margin and implemented "four pillars"

  • Gross margin excluding depreciation improved for the year ended December 31, 2016 to 36.4% as compared to 24.5% in 2015
  • Project finance facilities executed with both Macquarie Energy Finance and Societe Generale Equipment Finance
  • Hired and factory trained our in-house maintenance and operations team
  • Formed collaboration with TEDOM to sell On Site Utility solutions through their European dealer network
  • Secured first gas supply contracts in cooperation with Corona Energy
  • Fully separated from American DG Energy and operating independently

Financial and operational performance

  • Adjusted Non-GAAP EBITDA loss increased to $1,165,534 compared to a loss of $994,041 in 2015. This includes a $254,000 expense caused by foreign exchange variation following the fall in the value of the Pound after the Brexit vote in June 2016. Further adjusted to remove this expense the full-year 2016 Non-GAAP EBITDA loss was $971,534 compared to a loss of $994,041 in 2015.
  • Overall gross margin improved to 11.6% for the year of 2016, compared with a loss of 5.3%, an increase of 16.9 percentage points and an improvement of over 300%
  • Revenue increased by 12.6% to $2,476,186 (£1,822,073) for the year ended December 31, 2016 as compared to $2,198,721 (£1,464,541) for the year ended December 31, 2015. At functional GBP level revenues increased 24.4%.
  • GAAP diluted loss per share (EPS) was $0.03 for the year of 2016 as compared to a loss of $0.02 in 2015
  • The Company's management raised over $7 million in a series of private placements during the year
  • A portion of the private placement funds were used to repay the $2 million related party loan
  • After converting $2.1 million of the $2.4 million 4% Senior Convertible Debt, the Company is left with a small amount of debt of $300,000 as of December 31, 2016
  • Net loss includes one off debt conversion expense of $233,572
  • The operations team successfully delivered first Societe Generale funded project
  • Our total energy production increased by 32% to 38,073MWh for the year ended December 31, 2016 as compared to 2015
  • An additional 781kW of production was brought into operation during 2016
  • New On Site Utility contracts totalling 801kW were secured during the year of 2016

Outlook and 2017 targets – positive EBITDA, strategic growth and focus on new sales

  • UK operation was EBITDA cash flow positive for January & February 2017
  • Cost reductions expected from deregistration aimed at delivering positive EBITDA cash flows
  • Management has continued confidence in increased energy production and revenue growth, for example, January 2017 energy production was 23% higher than the same period in the prior year
  • Celtic Manor's 400kW system was commissioned late January 2017, bringing our operating fleet to 35 systems totalling 4,034kW
  • Strategic growth through acquisition is aimed at boosting both capacity and capability
  • Restructured business development includes staff recruitment and a focus on projects larger than 200kW, multi-site customers and more complex systems up to 2MW
  • Management plans to introduce alternate On Site Utility models and capital sale solutions to broaden market appeal while also aiming to secure our first continental European project

The changes and achievements during 2016 mean EuroSite Power enters 2017 an independent and arguably stronger company. With an operating fleet capable of delivering positive cash flows there is encouraging underlying momentum and the Company's primary target for the year is to achieve a positive EBITDA cash flow position.

Relative to 2016, the Company reports that there are however, a number of factors that could affect 2017 earnings. At a positive level these include the Company's larger operating fleet, its increasing use of larger electrically efficient TEDOM equipment and the positive effect of more units being maintained in-house. Less favourably there is some uncertainty around changes to the retail price spark spread through 2017 and the Company reports that any adverse pricing will likely adversely impact margins through the year.

Strategically, acquisitions remain a priority for the Company. While certain transactions proved unsuccessful in 2016 the Company has started the year with clear targets already in sight. These targets align the Company's overall aims of adding both capacity and capability to its existing operation.

Management recognises the weak performance of its new business development activity through 2016 together with the need to turn this situation around. Restructuring is already underway with the aim of creating a new business development team focused on larger systems. 

Alternative Reporting Standard

The Company now files its financial statements under the Alternative Reporting Standard (ARS). Fiscal year end financial reports for the functional 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.

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, 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.

 

EUROSITE POWER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS 
(Unaudited)






December 31,


December 31,


2016


2015

ASSETS




Current assets:




Cash and cash equivalents

$  3,734,526


$   587,819

Accounts receivable

270,199


303,782

Value added and other tax receivable

9,280


(5,297)

UK energy tax incentives receivable

227,536


369,485

Inventory

158,833


137,093

Other current assets

233,351


57,152

Total current assets

4,633,725


1,450,034

Property and equipment, net

8,233,773


7,516,262

Other assets, long-term

8,143


11,004

TOTAL ASSETS

$12,875,641


$8,977,300





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$     388,616


$   313,293

Accrued expenses and other current liabilities

213,492


286,814

Due to related party

38,811


98,979

Note payable - bank, short-term

69,933


-

Total current liabilities

710,852


699,086

Long-term liabilities:




Convertible debentures

305,017


1,585,264

Convertible debentures Due to related parties

-


951,158

Note payable - bank

252,271


-

Note payable - related party

-


2,000,000

Total liabilities

1,268,140


5,235,508





Stockholders' equity:




Common Stock, $0.001 par value; 100,000,000 shares authorized; 82,265,056 and 65,747,100 issued and outstanding at December 31, 2016 and 2015, respectively

82,265


65,747

Additional paid-in capital

22,243,742


12,224,064

Accumulated deficit

(10,718,506)


(8,548,019)

Total stockholders' equity

11,607,501


3,741,792

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$12,875,641


$8,977,300

 

EUROSITE POWER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31,
(Unaudited)




2016


2015

Revenues




Energy revenues

$  2,474,447


$  2,144,248

Turnkey and other revenues

1,739


54,473


2,476,186


2,198,721

Cost of sales




Fuel, maintenance and installation

1,577,326


1,661,880

Site impairments

158,264


246,935

Depreciation expense

453,241


405,710


2,188,831


2,314,525

Gross profit (loss)

287,355


(115,804)

Operating expenses




General and administrative

1,496,818


884,021

Selling

535,421


478,808

Engineering

407,799


248,957


2,440,038


1,611,786

Loss from operations

(2,152,683)


(1,727,590)

Other income (expense)




Interest income

9,615


5,530

Interest expense, net of debt premium amortization

(36,209)


(42,238)

Debt conversion expense

(224,782)


-






(251,376)


(36,708)

Loss before income taxes

(2,404,059)


(1,764,298)

Benefit for income taxes

233,572


380,176

Net loss

$ (2,170,487)


$ (1,384,122)





Net loss per share - basic and diluted 

$          (0.03)


$          (0.02)

Weighted-average shares outstanding - basic and diluted

75,788,055


65,757,100





Non-GAAP financial disclosure




Loss from operations

$ (2,152,683)


$ (1,727,590)

Depreciation expense

458,825


409,555

Site Impairments

158,264


246,935

Stock based compensation

370,060


77,059

Adjusted EBITDA

$ (1,165,534)


$    (994,041)

 

EUROSITE POWER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
(Unaudited)




2016


2015

CASH FLOWS FROM OPERATING ACTIVITIES:




Net loss

$ (2,170,487)


$ (1,384,122)

Adjustments to reconcile net loss to net cash used in operating activities:




      Non cash debt conversion expense

224,782


-

      Depreciation

458,825


409,555

      Non cash interest expense

11,000


-

      Non-cash site impairments

-


246,935

      Amortization of convertible debt premium

(47,141)


(96,288)

      Stock-based compensation 

370,060


77,059

Changes in operating assets and liabilities




(Increase) decrease in: 




Accounts receivable

33,583


(151,118)

Value added and other tax receivable

(14,577)


77,499

Accrued UK energy tax incentives

141,949


279,432

Inventory

(21,740)


(37,168)

Prepaid and other current assets

(176,199)


(23,497)

Other assets, long term 

2,861


5,760

Increase (decrease) in: 




Accounts payable

75,323


74,205

Due to related party

(60,168)


-

Accrued expenses and other current liabilities

(73,322)


156,562

Note payable - bank

69,933


-

Net cash used in operating activities

(1,175,318)


(365,186)





CASH FLOWS FROM INVESTING ACTIVITIES:




Purchases of property and equipment

(1,176,336)


(1,823,847)

Net cash used in investing activities

(1,176,336)


(1,823,847)





CASH FLOWS FROM FINANCING ACTIVITIES: 




Proceeds from sale of Common Stock net of costs

7,246,090


-

Payments on note payable - related party

(2,000,000)


(1,000,000)

Proceeds from loan payable - bank

252,271


-

Net cash provided by (used in) financing activities

5,498,361


(1,000,000)





Net increase (decrease) in cash and cash equivalents

3,146,707


(3,189,033)

Cash and cash equivalents, beginning of the period

587,819


3,776,852

Cash and cash equivalents, end of the period

$  3,734,526


$     587,819





Supplemental disclosures of cash flows information:




       Interest Paid

$        89,764


$     141,770

       Taxes Paid

$                  -


$       12,170

Non-cash investing and financing activities:




       Common Stock exchanged for convertibles debentures, non-cash

$   2,420,046


$                 -

       Conversion of convertibles to common shares, non-cash 

$  (2,100,000)


$                 -


 

Investor Contact:

Media Contact:

Dr Elias Samaras 

Paul Hamblyn

EuroSite Power Inc.

EuroSite Power Inc.

+44 844 693 2848

+44 7920.859540

elias.samaras@eurositepower.co.uk 

paul.hamblyn@eurositepower.co.uk

 

Source: EuroSite Power Inc.

Related stocks: OTC-PINK:EUSP OtherOTC:EUSP

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