Second Quarter Results!Alter NRG reports second quarter 2011 activities and financial results
TSX -NRG
OTCQX - ANRGF
CALGARY, Aug. 12, 2011 /CNW/ - (TSX - NRG); (OTCQX - ANRGF) - Alter NRG Corp., ("Alter NRG" or the "Corporation") is pleased toreport on its corporate activities and financial results for the threemonth period and six months ended June 30, 2011.
Q2 HIGHLIGHTS
Alter NRG provides clean and renewable energy solutions that areeconomically viable and environmentally sustainable. Alter NRG hasseen significant growth in revenues and continues to build its industryleadership position. The Corporation's vision is to commercializegrowth technologies through developing economically viable andenvironmentally sustainable alternative energy projects. Our mission isto be the supplier of choice for clean energy solutions in markets withthe greatest opportunities. We market and sell our technology throughtwo wholly owned subsidiaries, Westinghouse Plasma Corp. ("WestinghousePlasma") and Clean Energy Developments Corp. ("CleanEnergy").
Westinghouse Plasma - the industry leading plasma gasification technology that providesclean and renewable energy solutions by converting all types of wasteand biomass into high value energy - like electricity, ethanol orsyngas for industrial use. With plasma systems in operation for 20years and converting waste into energy since 2002, this technology iscommercially proven and has lower emissions than conventional energytechnologies.
Clean Energy - the Canadian industry leading geoexchange company that providesheating and cooling for homes and commercial buildings using energyfrom the earth. This is a solution that is used extensively in Europeas it reduces the use of fossil fuels for heating and cooling by up to80%. In a highly fragmented Canadian market, CleanEnergy providescomplete design and build solutions for commercial projects and alsoequipment sales through its dealer network across Canada.
Fox Creek Coal Assets ("Fox Creek") - Alter NRG has acquired one of the largest contiguous deposits of surfacemineable coal, available in Western Canada (847 million tonnes). Withexisting infrastructure and access to rail and ports, the Fox CreekCoal can help fulfill the increasing demand for coal in Asia.
Overall Results
Alter NRG is pleased to be presenting highlights for its second quarterof 2011 as revenues have increased and operating expenses havedecreased. The quarter ended June 30, 2011 was very successful withrevenue growth of 92% or $1.6 million over the same three month periodand growth of 66% or $2.3 million over the same six month period endingJune 30, 2010. Combined profit margins remain above 30% for both thethree and six month periods ended June 30, 2011 and operating expenseshave declined, as compared to June 30, 2010, by $1.1 million or 22% forthe three months ended and $1.8 million or 17% for the six months endedJune 30, 2011. The Plasma business contributed $1.5 million of therevenue growth and CleanEnergy contributed
.8 million of the revenuegrowth for the six months ended June 30, 2011.
The Westinghouse Plasma business continues to grow as the second quarter revenues wereengineering and testing revenues that occur in advance of the largerequipment sales. The Plasma business accomplished a number ofimportant strategic milestones that are illustrative of the largersales pipeline that continues to mature.
- Revenue for the three months ended June 30, 2011 were $1.2 million which is an increase of 215% over the June 30, 2010 quarter.
- Continued to support over 22 projects located worldwide which are in the engineering stage of project development with a total sales value of over $500 million upon successful development. The Westinghouse Plasma technology has been selected in a total of over 60 proposed projects being advanced worldwide that are in active project development by numerous industry leading companies.
- Air Products, a US based Fortune 500 company, received the regulatory approval for their Tees Valley project in Northern England which will take 950 tonnes per day of processed household waste and convert it into 49 MW of electricity, enough to power over 50,000 homes. The project is expected to begin construction in late 2011 and represents approximately a US$25 million sale depending upon final scope.
- Continued to provide syngas to Coskata, Inc. (Coskata) at the Westinghouse Plasma Centre in Pennsylvania. Coskata has a proprietary syngas to ethanol conversion technology that is using the Westinghouse Plasma technology to create syngas from biomass and waste. The Coskata technology has been chosen for a waste to ethanol project in Australia that is being advanced and is expected to be a $50 million technology sale upon successful development.
- Announced a $1.9 million sale of plasma torches for use in an industrial application. The torches began manufacturing and are expected to be delivered in Q4 of 2011. This is one of several potential plasma torch orders, which represents shorter sales cycles, the Company is actively pursuing.
- Finalized the detailed engineering for the construction of a demonstration facility by Wuhan Kaidi ("Kaidi") in the Wuhan province of China. Upon successful demonstration, Kaidi has up to 150 biomass-to-energy projects which they expect to develop in the Central China market over the next 10 years using the Westinghouse Plasma technology. The revenue to Westinghouse Plasma is expected to be US$3 to US$10 million per facility.
- Advanced the detailed engineering and construction of a second demonstration facility in Shanghai which will be integrated with an existing incinerator to take the incinerator ash as well as other harder to handle feedstocks. Upon successful demonstration, the revenue to Westinghouse Plasma is expected to be US$5 to US$10 million per additional facility and they have targeted 13 current incinerators around Shanghai as targets.
- Advanced the second phase of engineering on a project in Minnesota being developed by the Koochiching Development Authority. The proposed project which is to be located in Koochiching County in Northern Minnesota is called the Renewable Energy Clean Air Project. This results in an approximate US$12 million dollar technology sale which is expected in 2012 as well as site licenses and engineering revenues in late 2011.
- Signed a license agreement in Australia and New Zealand with Moltoni Energy for $5.75 million payable in increments over 5 years. Moltoni Energy is a private development company with experience in both waste and large power facilities and have a dozen planned energy from waste projects in the region. Testing is expected to start in August 2011.
- Began the regulatory process for the Dufferin County energy from waste project in Ontario, Canada, an approximate 6.5 MW facility.
CleanEnergy continues to complete a number of large projects including municipal,commercial and residential projects and focus on building brand andreputation through strategic partnerships and the dealer network.During the three months ended June 30, 2011, CleanEnergy achieved thefollowing:
- Sales of $2.2 million for the quarter which is an increase in sales of 57% over the first quarter of 2010. CleanEnergy has executed on larger scale projects in the second quarter of 2011 and successfully positioned itself to be the industry leading commercial geoexchange company focused on larger jobs from
.5 million to $4.5 million and growing. Our strengthening reputation has expanded the backlog of sales to over $7.0 million with a strong pipeline of opportunities.
- Announced that CleanEnergy was awarded the Calgary Airport geoexchange installation contract for a total of $4.5 million in revenue which will begin in Q4 of 2011. The Calgary Airport Authority has begun a major development project at YYC, including building a new runway and doubling the size of the Air Terminal Building with the addition of a new concourse, which will be the new home for International and U.S. flights. YYC has chosen to incorporate geoexchange as part of its sustainable design principles that are expected to reduce the carbon footprint by 4,900 tonnes per year, which is equivalent to taking 1,200 cars off the road permanently.
- Continued construction on a geoexchange installation in Truro, Nova Scotia for $2.05 million to complete the Central Nova Scotia Civic Centre for all geoexchange aspects of the building including, making ice for the rink, heating the pool and heating and cooling the buildings. This facility will feature a NHL-sized ice surface with seating for 3,200 spectators. It will also be home to an indoor aquatic centre, an exercise track, a fitness centre and space for events like concerts, tradeshows and community gatherings.
- Continued construction on a state of the art mental hospital in Ontario for $1.5 million. Mental Health Centre Penetanguishene aims to achieve Leadership in Energy and Environmental Design (LEED®) Gold certification for the design and construction of the new facility. CleanEnergy's geoexchange system will help the Health Centre achieve the necessary points to reach a LEED® Gold certification.
- Secured a $450,000 purchase order to provide geoexchange heating and cooling solutions for a 72 unit senior's affordable living complex in London, Ontario. This work will be initiated in mid 2012.
- Completed $825,000 of the installation of a geoexchange solution which provides the complete heating, cooling and ice making for a hockey rink and sports complex in Fredericton, New Brunswick.
- Added a tier one Canadian bank as a partner to provide financing for the complete geoexchange system for commercial and municipal customers.
- Expanded our dealer network across Canada to 115 dealers to which CleanEnergy distributes the WaterFurnace manufactured GeoStar branded heat pumps exclusively in Western and Central Canada. The dealer network sells geoexchange solutions to the residential market.
Fox Creek
- Announced the heating content of the Fox Creek coal would be 4,944 kcal/kg (8,900 Btu/lb) on a washed basis, which is similar quality to the North American Powder River Basin coal. The Fox Creek coal asset is 847 million tonnes of measured and indicated coal resource located near Fox Creek, Alberta. This is one of the largest exportable thermal coal resources in the developed world. Recently, thermal coal demand internationally, particularly in Asia, has increased, which has resulted in higher thermal coal prices. The Fox Creek Coal has access to rail lines and a port that are expected to have capacity to take the coal to export markets.
Corporate
In March 2011, the Corporation announced its intent to pursue strategicalternatives to maximize shareholder value going forward, which mayinclude the sale on non-core assets, technology or the Corporation as awhole. The Corporation has engaged strategic advisors to assist withthis process and management announced on June 27, 2011 that it hadreceived expressions of interest, which are preliminary andnon-binding, for all of the Corporation's major assets, as well as theCorporation as a whole. Management will continue to identify accretivetransactions and negotiate these to definitive agreements over thecoming quarter.
The Corporation has not set a definitive timetable for final completionof its exploration of strategic alternatives, and may not make furtherpublic announcements with respect to the same other than as required byapplicable securities laws.
The Corporation remains focused on decreasing expenses and has achievedsome success this far in 2011. Expenses for the three months endedJune 30, 2011 decreased by 22% to $4.0 million as compared to $5.1million in the same period of 2010. The expenses have been decreasedthrough focus and efficiencies and a reduction in the number ofemployees. Management believes they have built a strong team of peoplefocused on attaining revenue and cost reduction goals for 2011 and2012.
During the quarter the following were achieved:
- Sold non-core assets for cash proceeds of $2.1 million.
- Filed regulatory documents related to a $20 million Committed Equity Facility provided by Haverstock Master Fund. The 24-month agreement enables the Company to receive in aggregate $20 million through an initial $1,000,000 drawdown and up to $500,000 per drawdown subsequently. Timing of any drawdown is at Alter NRG's sole discretion and the Company is also able to set a minimum price for each drawdown.
- Announced the option to invest in up to 25% of Air Products Tees Valley Renewable Energy Facility. Due to timing, this option is no longer being pursued by Alter NRG although Alter NRG retains its rights to invest in all future projects.
For more information on the Corporation's activities please visitwww.alternrg.com or www.sedar.com to view Alter NRG's 2011 SecondQuarter Report.
CEO'S MESSAGE
Much of this quarter has been spent focused on the strategic processthat began back in March of this year. Throughout the quarter we've hadthe opportunity to review the preliminary, non-binding proposals thathave been submitted for our individual assets as well as the company asa whole and are pleased to see that this process will provideshareholders with meaningful options. That said, a lot of work remainsbefore a transaction is complete and in times like this it can be easyto lose sight of the forest for the trees.
Consensus on the best path forward can be hard to achieve and in theenergy sector it seems we are particularly prone to long debatedominated by complicated technical, financial and regulatory issues.Despite this, while we have been looking at strategic alternatives forthe company we have been presented with a repeated theme - ourWestinghouse Plasma technology is being recognized as the world leaderin waste to energy and our geoexchange company (operated asCleanEnergy) is the Canadian leader in the commercial geoexchangemarket. This recognition is a good reminder to all of us to considerthe broader perspective.
We have made noteworthy advancements in our plasma technology and inbuilding our pipeline. Large customers have invested significant moneyin projects with lengthy sales cycles further validating theWestinghouse Plasma technology and demonstrating faith in the Company.With Air Products' Tees Valley project moving quickly ahead, we areoptimistic that we will see a gasifier sale in Q4 - a significantmilestone following the detailed engineering completed in 2010 for theproject which will take household waste and convert it into 49megawatts of electricity. A strong balance sheet is essential in orderfor the Company to maintain its leadership position and to further theadoption of our technology, making this strategic process we areengaged in crucial to our success.
Our repositioning of the geoexchange business to focus on commercialbuilding markets has resulted in the migration of our dealings to muchlarger jobs. To reach our strategic goal, we are actively bidding on$20 million of additional projects. We have remained committed to thepriority we set for CleanEnergy in 2011. Delivering sustainable,predictable performance improvement both operationally and financiallyhas allowed the Company to secure the single largest contract in itshistory - a $4.5 million geoexchange installation at the CalgaryInternational Airport. The installation is expected to begin in the Q42011 and is expected to finish in Q1 2013. We are confident that ourresults will continue to improve.
Despite the recent success in CleanEnergy in both sales and execution,management recognized that it has taken longer than expected to realizethe value of the business and has taken an impairment of the goodwillthis quarter of $7.25 million. Management remains committed andresolved to continue building our leadership position and maximizingvalue in this exciting growth business.
As a company, we strive to do the right thing - always. Our stakeholdersexpect this of us, and we know that nothing is more important to oursuccess. In a changing landscape we will continue to meet ourresponsibility to evolve this company and owe thanks to our Board ofDirectors for their guidance and to our shareholders for theirpatience. Einstein said that "when a man sits with a pretty girl for anhour, it seems like a minute. But let him sit on a hot stove for aminute - and it's longer than any hour. That's relativity." Sometimesthe process of doing the right thing feels like sitting on a hot stove,so we encourage you to remember the broader perspective, while we worktowards a common vision and continue working to overcome the short-termobstacles because we really have only one choice for the future, andthat is to continue moving forward.
SELECT FINANCIAL RESULTS ($)
| Balance Sheet |
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June 30, 2011 |
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December 31, 2010 |
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| Total assets |
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$ 70,887,442 |
|
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$ 87,187,305 |
| Total liabilities |
|
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21,537,844 |
|
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23,854,469 |
| Total equity |
|
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49,349,598 |
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63,332,836 |
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| Income Statement |
Three months ended |
Six months ended |
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June 30, 2011 |
June 30, 2010 |
June 30, 2011 |
June 30, 2010 |
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| Sales |
$ 3,372,764 |
$ 1,757,815 |
$ 5,795,510 |
$ 3,477,862 |
| Operating loss |
(2,796,157) |
(4,557,410) |
(6,900,261) |
(9,637,305) |
| Impairment of goodwill |
7,250,000 |
- |
7,250,000 |
- |
| Loss |
(9,887,776) |
(4,338,233) |
(13,820,655) |
(9,118,260) |
| Loss per share - basic and fully diluted |
(0.16) |
(0.07) |
(0.22) |
(0.15) |