ThermoEnergy Corporation (OTCBB: TMEN), a technologies company engaged
in the development and sale of wastewater treatment technologies, today
reported revenue of $2.8 million for the fiscal year ended December 31,
2013.
Mr. James F. Wood, Chairman and Chief Executive Officer of ThermoEnergy,
stated: "2013 was a year of progress for ThermoEnergy. We worked to
refocus the Company on its core competency – the manufacture and sale of
systems that treat and recover chemicals, metals and nutrients from
industrial wastewaters. I am confident this effort led to a number of
increased opportunities and proposals throughout the latter half of
2013. Oil and gas is a sustainable market and major focus for the
Company’s technology. However, based on the infancy of our offering to
this segment, achieving scale is taking longer than expected. Recent
field pilots and third-party laboratory tests have substantiated our CAST®
technology’s ability to treat produced water from conventional and
unconventional hydrocarbon sources and provide a cost-effective
solutions for treating and recovering these waters. Additional
information on the technology and our successful pilot studies is
available on the Company’s website at www.thermoenergy.com.”
Mr. Wood continued, “We have made significant efforts in managing our
costs and continue to seek improvements in operations to improve our
margins and reduce our manufacturing lead-times, which currently take
anywhere from 16 to 24 weeks to build. Our technology is differentiated
from competitive wastewater technologies in that CAST®
technology produces a clean distillate. The potential recovery of
potable water for agricultural and livestock uses in drought-stressed
areas such as West Texas and California’s Central Valley continues to
provide opportunities for the Company, and we believe ThermoEnergy’s
technologies will become more valuable as global water shortages
continue driven by climate changes and population growth.“
Operational and Financial Highlights:
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Full year revenues of $2.8 million with 96% derived from new business
and service opportunities.
-
Commissioned two ARP systems for removal and recovery of concentrated
ammonia in wastewater.
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Booked two additional CAST® systems for recovery of glycol
and metal finishing and negotiated the completion and payment of two
additional systems previously unfinished. These four systems are
expected to ship during the second and third quarters of 2014.
-
Received third party scientific and economic validation supporting the
benefits and return on investment generated by the Company’s
introduction of CAST® technologies in the oil and gas
market.
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Achieved cost savings of $2.7 million based on efforts undertaken to
reduce spending on non-core business activities.
-
Built and delivered UPA’s bench scale unit to demonstrate Pressurized
Oxy-Combustion (POXC®) using domestic coals.
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Expanded the sales and marketing organization to better develop top
line opportunities across all industrial markets: oil and gas, glycol,
chemical, metal and nutrient recycling.
-
Finalized the NYCDEP contract, resulting in a non-cash gain on
contract termination of approximately $4.9 million.
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Reduced outstanding debt by $1.7 million through the pay down and
conversion of $5.7 million in debt during the first half of 2013,
offset by a $4 million non-dilutive note in the fourth quarter.
Financial Results for the Three-Month Period Ended
December 31, 2013:
For the three-month period ended December 31, 2013 the Company recorded
revenue of $191,000 compared to $1,351,000 in the fourth quarter of
2012. Going forward, revenue on orders in backlog will be recognized
only when shipped. Revenue in the quarter was derived from service
contracts and spare parts orders. Revenue in the fourth quarter of 2012
was derived mainly from our contract with the NYCDEP.
Gross loss for the fourth quarter of 2013 was ($174,000), driven mainly
by unabsorbed manufacturing costs.
General and administrative expense for the fourth quarter of 2013 was
$757,000, a decrease of $43,000 (5%) compared to the fourth quarter of
2012. The Company was able to recognize its targeted cost reduction
efforts and maintain lower legal and financing expenses than the fourth
quarter of 2012.
Engineering expense for the fourth quarter of 2013 was $18,000, a
decrease of $80,000 (82%) compared to the fourth quarter of 2012. The
decrease is attributable to increased utilization of our engineering
resources and reduced non-cash stock expense during the period.
Sales and marketing expense for the fourth quarter of 2013 was $466,000,
a decrease of $201,000 (30%) compared to the fourth quarter of 2012. The
decrease was due to a reduction in non-core international business
development efforts and reduced unbillable pre-sale expenses, partially
offset by the continued increase in spending on domestic sales and
marketing activities.
The Company reported a net loss for the three-month period ended
December 31, 2013 of $1.314 million, ($0.01 per basic share), compared
to a loss of $1.436 million ($0.01 per basic share) for the same period
in 2012.
Financial Results for the Year Ended December 31,
2013:
For the year ended December 31, 2013 the Company recorded revenue of
$2,812,000 compared to revenues of $6,971,000 in 2012. Revenue in 2013
was derived mainly by the Company’s first two projects utilizing its
Ammonia Recovery Process (“ARP”) technology and work related to the
subcontract with Unity Power Alliance’s DOE Grant. Equipment revenues
were supported by continued growth in service revenues from our historic
customer base. Revenue in 2012 were derived primarily from our contract
with the NYCDEP.
Gross loss for the fiscal year ended December 31, 2013 was $501,000
compared to a profit of $173,000 in 2012. The gross loss is attributed
to lower margins on the initial ARP project as well as higher
unallocated overhead costs during the period. In 2012, the Company
benefited from the continued construction of the NYCDEP contract. As
reported last quarter, full year margin degradation was impacted by cost
overruns of $275,000, which were driven by engineering and product
design changes by our joint venture partner on UPA.
General and administrative expense totaled $3,179,000 in 2013, a
decrease of $1,572,000 (33%) compared to 2012. The decrease is
attributable to significantly lower professional and consulting expenses
in 2013 from continuing efforts to reduce our cost structure, as well as
significantly lower non-cash stock option expenses.
Engineering expense totaled $454,000 in 2013, which is consistent with
spending in 2012. Our engineering team was not as fully utilized
throughout the first half of 2013 compared to 2012 due to the
cancellation of the NYCDEP contract and the timing of project activity.
Engineering costs directly related to our projects are charged to cost
of sales. The reduced utilization of our engineering team was offset by
lower headcount and non-cash stock option expense in 2013.
Selling expense totaled $1,727,000 in 2013, a decrease of approximately
$1.1 million (40%) compared to 2012. This decrease is attributed to a
reduction in non-core business development efforts and reduced
unbillable pre-sale expenses. These declines were offset by continued
expenditures incurred to strengthen the field sales team, trade and
promotion activities, and pilot testing of our TurboFrac®
technologies in the unconventional oil shale market.
The Company recorded a non-cash gain of $4,878,000 related to the
termination of its contract with the NYCDEP in 2013. This gain
represents the amount by which our billings to the NYCDEP contract
exceeded revenues recognized. We did not record any such gains in 2012.
Additional income of $2,357,000 was earned in 2013 related to the net
change in fair value on our derivative instruments compared to
$1,637,000 in 2012. Income in both years relates primarily to the
passage of time and the decrease in our stock price. The increased
income in 2013 is due to an increase in the number of underlying
derivative instruments in 2013 compared to 2012.
The Company recorded derivative expense of $567,000 in 2012 related to
the initial valuation of derivative liabilities. This expense did not
repeat in 2013.
Due to our 50% ownership in UPA, the Company absorbed its proportional
share of the costs necessary to complete the cost-sharing arrangement
with the Department of Energy. This resulted in a loss of $298,000 in
2013 compared to $8,000 in 2012.
Interest expense was $2,663,000 in 2013 compared to $529,000 in 2012.
This increase is due to amortization of debt discounts recognized on our
December 2011 Bridge Notes and our November 2012 Bridge Notes in 2013.
The Company had cash on hand at December 31, 2013 of $2.5 million.
Please see the Company's Form 10-K filed with the SEC on March 31, 2014
for additional details.
About ThermoEnergy
Founded in 1988, ThermoEnergy is a diversified technologies company
engaged in the worldwide development, sales and commercialization of
patented and/or proprietary municipal and industrial wastewater
treatment and power generation technologies. Additional information on
the Company and its technologies can be found on its website at www.thermoenergy.com.
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