Business Activity at All-Time Record Levels at Thermodynetics
WINDSOR, Conn.--Feb. 7, 2005--Thermodynetics, Inc. (TDYN: OTCBB):Net sales for the three (and nine) months ended December 31, 2004 totaled $5.8 ($17.2) million compared to $4.6 ($11.8) million for the comparable quarter of the prior year, respectively. Pre-tax income was $178,000 for the latest quarter ($157,000 prior year) ended December 31. For the nine months in fiscal 2005, pre-tax income was $720,000 compared to $449,000 in fiscal 2004.
Shipments at Vulcan Industries increased dramatically during the current quarter as a large 5-year program to provide tubing for automobile exhaust systems moved toward full production; the parts will be used in a variety of trucks and sport utility vehicles. Another automotive program is expected to be at full production during the final quarter of fiscal year 2005. In order to support the new business received since the August 2003 acquisition, personnel were added in production, technical and quality control areas.
Turbotec Products continues to register record levels of shipments due largely to the strong housing market augmented by marine air conditioning applications and commercial/industrial building HVAC needs. The October-December quarter generally experiences reduced demand for heating and air conditioning products as many customers operate limited plant schedules and also reduce inventories as the year-end approaches.
Turbotec recently developed the capability to produce special purpose enhanced surface tubing in titanium, an offering that is unique to the markets it serves. This new product will be featured in trade shows and print advertising during the coming months. Initial reception has been very strong with orders and/or inquiries from many current and prospective customers.
Turbotec has also developed a line of heat exchangers that use plastic shell casings (as contrasted with steel or copper) for its coaxial coils. The plastic shells allow for maximum heat transfer and protection from highly erosive and corrosive environments at a substantial cost reduction. Initial response to these products has been extremely favorable from swimming pool and spa heat pump manufacturers.
The percentage decline in gross profit margins relative to net sales reflect Vulcan's automotive applications that have higher percentage direct costs than Turbotec's heat exchanger product mix. As shipments related to automotive applications have increased significantly in the current quarter, the consolidated gross margin percentage has declined reflecting this product mix. Automotive shipments are expected to increase in future periods. Further, the cost of metals (principally steel, copper, stainless steel and nickel) has risen sharply during the current year to their highest levels in the past six years. Although the effect of these cost increases are shared with customers, the impact is a net reduction of gross margin, and it is uncertain when the market will experience cost relief.
During the current year, the Company renewed and expanded the credit facilities with its bank. Availability under the revolving lines of credit at both subsidiaries was increased and a separate line of credit for capital expenditures was established. These higher borrowing levels are intended to enable the Company to fund the increased production levels for its new products and programs.
FORWARD LOOKING STATEMENTS
This report contains certain forward-looking statements regarding the Company, its business prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause the Company's actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: the Company's ability to successfully and timely develop and finance new projects, the impact of competition on the Company's revenues, changes in unit prices, and supply and demand for the Company's tubing product lines in the markets served.
When used, words such as "believes," "anticipates," "expects," "continue", "may", "plan", "predict", "should", "will", "intends" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by the Company in this report, news releases, and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect the Company's business.
Three Months Ended Nine Months Ended
December 31, December 31,
2004 2003 2004 2003
Net Sales $ 5,828,028 $ 4,600,963 $17,204,885 $ 11,786,101
Operating Income $ 346,046 $ 266,611 $ 1,133,120 $ 856,466
Income Before
Income Taxes $ 178,402 $ 156,801 $ 719,679 $ 449,179
Net Income $ 130,902 $ 136,801 $ 547,679 $ 349,179
Weighted Shares
Outstanding-
Basic
and Diluted 19,731,093 18,271,178 19,714,122 18,242,051
Earnings Per Share-
Basic
and diluted $.01 $.01 $.03 $.02
Thermodynetics, Inc. through its Turbotec Products subsidiary is a world leader in enhanced heat transfer technology and through Vulcan Industries is a qualified supplier of fabricated tubing to the automotive and other industries. Turbotec's enhanced surface tubing produced at Turbotec provides higher energy efficiencies for applications in the biomedical, aerospace, automotive, boiler, marine, food and beverage and residential/commercial heating and cooling industries. Vulcan's state of the art bending, sizing, cutting and shaping capabilities make it a preferred supplier to Tier 1 automotive suppliers. The Company's tubing products support a wide array of automotive component and heat transfer needs, including surface-enhanced tubing, single and double wall coaxial condenser and evaporator coils and heat recovery systems.