MONTREAL, October 3rd, 2012 - Sofame has come a long way in 2012, and in the the fiscal year which ended on September 30th. The 12-month results will be audited before being released to the public in January. It is safe to say that Sofame continues to close new orders, as demonstrated by the $475,000 new order from an international pharmaceuticals manufacturer in September, and we are delivering existing contracts, such as the McGill University Healthcare Center in Montreal, profitably, and at low overhead costs.
Sofame achieved four critical objectives in 2012 compared to any period in the last seven years; Sofame has a confirmed order book, low overhead costs, gross margins over 30% and consistent cash flow (about 20% of revenues). As announced in September, at the end of Q3, revenues were $ 1,480,176 compared to $1,388,834 in 2011. Gross Profit after nine months was $ 620,332 (41.9%) versus $112,520 (8.1%) a year earlier. Operating Expenses after nine months were $411,567 (27.8%) compared to $ 557,635 (40.2%) in 2011, and Net Earnings were $91,364 (6.2%) compared to a loss of ($ 551,843) (-39.7%) in 2011.
EBITDA after nine months in 2012 was $ 414,152 versus a negative (- $ 251,344) as of June 30, 2011. This may not be a large number in objective terms, but it represents a dramatic improvement in performance for Sofame. Cash flow from operating activities after nine months this year was $307,943 versus a deficit of ($345,015) in the prior year. This means that the Company generated 20.8% of cash from revenues of $ 1,480,176. That is why $740,337 of certain current debts were converted to shares in the quarter at $0.05 cents per share.
Sofame's value proposition - the value of energy efficiency - is dependent upon what customers are paying for their fuel. Natural gas is increasing in popularity due to expansion of the distribution networks in North America and to its low price, as often cited in the media. Natural gas prices rose to $13 per dekatherm in 2007, then declined about 80% to $3 in 2008. In late 2012, natural gas prices are stabilizing at $3 after hitting a low of $2 and then recovering.
The good news for Sofame is that, despite the lowest natural gas prices in years, 7 orders with a combined value of $2.42 million were booked between August 2011 and September 2012. Sofame finished the third quarter with a $955,000 confirmed order backlog. Even with low natural gas prices, Sofame is targeting large boiler and heating applications, which offer payback on the total project, including installation, within 2 to 3 years.
According to John Gocek, Sofame's President & CEO, "Sofame's turn-around in 2012 has attracted the attention of the financial community. We are presently in three separate negotiations to refinance the bridge loan and other short term obligations with long-term debt at a reasonable interest rate. Sofame has, since its press release of July 3rd, received encouragement from investors to pursue a plan to acquire profitable companies manufacturing and selling complementary products in the same HVAC sector as Sofame. The refinancing of short-term liabilities by long-term debt, and the active pursuit of acquisitions, are priorities in the new fiscal year which begins on October 1, 2012."
By maintaining its agility in the face of adversity, Sofame has managed to remain a fully-reporting public company, and a profitable clean-tech, green business, selling custom engineered systems offering attractive payback on investment, as well as environmental benefits, such as lower carbon emissions and even lower water consumption, to end-users who value such results.
Sofame is on the right track, and we appreciate your support and interest in Sofame as a part of your ethical investment strategy in the months ahead.