Fiscal 2007 Results/HighlightsHighlights of F2007 include:
- Highest revenues ever recorded $ 26.1 million );
- Delivered all systems sold to SK Engineering & Construction;
- Improved potential from the portfolio of quotations;
- Generated high level of activity in the Middle-East with several
successful field trials;
- Successful commissioning and start-up of the Triton Platform systems;
- Built an efficient RPA cartridges manufacturing plant;
- Strengthened our international sales team; and
- Successfully implemented the M&A strategy and concluded a very
promising and accretive acquisition (conditional to TSX and
shareholder approval).
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"Over the last few years, we have been focused on implementing our strategic growth plan by developing our produced water expertise, improving our sales and distribution activities and securing the necessary funds to set the pace for future growth," said M. Ferland, CEO of TORR Canada. "2007 has truly been a milestone year for us. We have completed delivery of our biggest system ever sold and expect increased interest as this unit becomes a reference in its market.
These successes, combined with our recently announced acquisition of Pure Group are positioning TORR Canada to be a global leader in upstream process technologies."
Financial Results
...Revenues were $26,055,117 for the year ended June 30th 2007 compared to $3,232,270 in 2006. Most revenues were generated by the delivery of seven systems to SK Engineering & Construction. Other revenues came from services rendered to Expro in Angola, the sale of RPA cartridges to Wood Group for the platform Triton located in the North Sea and by field trials mainly in Western Canada and the Middle-East.
.... It is important to note that TCI recorded a 10% warranty provision ($2,561,841) during the year related to the SK project.
...The Company now recognizes revenue from the design, fabrication and delivery of TORR(TM) systems under contract accounting using the completed contract method. The company changed to this method during the third quarter to more appropriately reflect the production type nature of the arrangements to deliver TORR(TM) systems.
....The gross loss was $2,439,680 for the year ended June 30th 2007 compared to a gross profit of $315,685 in 2006. The gross margin for the year was negatively impacted by a warranty provision of $2,561,841 related to the delivery of the systems to SK Engineering. To the extent the provision is not used, TCI will progressively reverse it some time within the next 18 months.
....During 2007, TCI delivered seven water treatment systems to SK Engineering & Construction. Year 2007 net loss was $7.9M. There are many reasons explaining this loss: (i) TCI has provisioned $2.5M for warranty on the SKEC contract; (ii) it has significantly invested in engineering to optimize the systems as it was its very first contract integrating other systems with the TORR; (iii) it also has significantly invested in project engineering to supervise the overall management of the SKEC project to ensure the respect of delivery and quality of the systems; and (iv) finally, rather than establishing a large sales force in Kuwait and South Korea, TCI dealt with agents who opened these markets and worked a long time before getting the contract with SKEC.
...The new RPA(R) cartridge plant has been producing at an optimal speed since the beginning of October 2006. The production capacity is up to 30,000 cartridges per year. This new plant enables TCI to reduce unit cost of fabrication and increase fabrication capacity to meet expected demand, while insuring better quality control.
... TCI also started manufacturing RPA(R) plastic cartridges. This will again significantly decrease unit costs.
.... During the year, TCI signed with several agents in the Middle-East and Malaysia, hired a sales expert in Houston to cover the Gulf of Mexico and an experienced process engineer who will soon be relocated in the Middle-East.
... Both the TORR(TM) and RPA(R) technologies are ready to be deployed, but TCI will continue its R&D program in order to keep its technological edge, develop its intellectual property portfolio, and expand the conditions under which the technology can perform in light of increasing potential markets.
..During the year, TCI engineers designed a 120,000BPD TORR(TM) system. This will enable TCI to quote on very large systems and benefit from lower costs.
...TORR Canada Inc. had $19M of cash and equivalents as at the end of June 30th 2007.
All in all, a very good year for a company which is in transition from R & D to commercialization of its new products.
Revenue growth was superb and that should continue in F2008 , as the PURE acquisition will not only drive growth but also open up new sales opportunities.
Production efficiencies will also continue to improve in F2008, due the reasons stated above and due to consolidation of admin G & A costs, once PURE is fully integrated.
The cash situation remains strong at $19 million and that will have been significantly enhanced since Q4/07 by the exercise of o/s warrants at $0.65.........CC later today