Titan Energy Worldwide, Inc. (OTCQB: TEWI), a leader in distributed power generation products and intelligent energy management services, today announced that it has released financial statements for the 1st quarter of 2014. The Company's complete financial statements are available at www.sec.gov.
For the quarter ending March 31, 2014, the Company reports sales revenues of $4,749,389, an increase of approximately 2% over the same quarter last year. The Company has two main business segments: equipment and service sales. Equipment sales were $2,972,514, an increase of 6% over sales results in the same quarter in 2013. Service sales were $1,776,875, down 4% from 2013. The loss in service sales was due primarily to the extreme winter weather that the Midwest area experienced January through March of 2014. Below zero temperatures limited the number of hours Titan technicians could work for safety reasons. This created a significant decrease in overall sales.
The Company posted a loss of $679,211 for the quarter compared to a loss of $279,559 in the same quarter of 2013. This is the Company's first losing quarter since the first quarter of 2013. The loss in this quarter was attributed to the extreme winter weather. Service costs increased significantly due to missed work days, reduced hours to minimize technician exposure to cold and the need to have multiple technicians on each job for safety reasons. A second factor was the requirement to rebid a contract with a major retail company in the first quarter. During this rebidding process, Titan was required to adopt new, reduced pricing measures before being able to renegotiate its rates with its vendors. As a result, margins on service work for this customer decreased significantly for a period of about five months. Together, these factors reduced service margins, leading to losses in net income.
"As with many companies, Titan's overall performance suffered due to the extreme cold and winter weather this year. While the weather created opportunities for us, as more customers needed service on their onsite power systems, we had to balance our service activities with safety concerns for our employees. As a result, we had fewer work days, reduced work hours, and reduced productivity of technicians -- all of which resulted in significantly reduced margins and increased losses. The positive side to this experience is that Titan has implemented new staffing and dispatching procedures that we believe will help mitigate the impact of a similar situation in the future," stated Jeffrey Flannery, Chief Executive Officer of Titan Energy Worldwide.
"With regard to the rebidding on our national retail contract, we were told that the retailer would no longer sign exclusive, one-vendor contracts. Titan won back 80% of the service contract, and we consider this a huge win for the Company, and a strong indication of this customer's confidence in our abilities. We were also awarded a preventive maintenance agreement from this same customer worth nearly $800,000 per year which more than makes up for the loss of territory. Once we were formally awarded the new contact, we were then able to renegotiate pricing with our vendors and are now seeing margins equal to or stronger than in 2013.
"As for the future performance of Titan, there are a number of very positive indicators. We have record equipment orders for both our Midwest and New York operations which points to strong future revenue months. Orders for Midwest are up 26% in the first five months of 2014 compared to the first five months of 2013. For the New York operation, orders are up more than 50% compared to 2013. We have a record level of service contacts in the Midwest and are experiencing our highest levels of work load in the Company's history. The value of service contracts in the New York region is more than double the value of its 2013 contracts. I fully expect we will post another record year in service sales.
"While we view the events of last winter as an aberration, we know that weather can be extreme and unpredictable. We have learned some valuable lessons from the winter of 2013-2014 which have resulted in changes in how we manage our staff and resources during times like that. So I feel we are now better prepared to meet those challenges in the future and I do not believe we will be impacted as severely should similar events happen in the future," added Flannery.
About Titan Energy Worldwide, Inc.
Since its founding, Titan Energy Worldwide has been dedicated to helping companies meet their power generation and energy management needs. To date we have focused on providing thousands of customers with the most advanced power generation equipment to enable their operations to continue uninterrupted during times of power failures or disasters. We have also established a professional service team that helps customers to maintain and manage their power generations assets. From emergency and backup power technologies, to demand response programs and Smart Grid applications, Titan Energy is setting a path for the future in energy management. For more information, please visit the company's website at: www.titanenergy.com.
Investors are cautioned that certain statements contained in this document as well as some statements in periodic press releases and some oral statements of TEWI officials are "Forward-Looking Statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "believes," "anticipates," "intends," "plans," "expects," and similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future TEWI actions, which may be provided by management, are also forward-looking statements as defined by the Act. Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements and to vary significantly from reporting period to reporting period. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual future results will not be different from the expectations expressed in this report. These statements are not guarantees of future performance and TEWI has no specific intention to update these statements.
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