Sofame Reports 6.7% Net Profit Margin for 2012
MONTREAL, February 1, 2013 -Sofame Technologies Inc. (TSXV: SDW) (OTC: SFMGF) has reported net sales of $1,802,080 for the 2012 fiscal year ended September 30th, and a net profit of $119,974 (6.7%) for the year. Sofame is a leading manufacturer of environmentally efficient and cost effective heat recovery systems for traditional fossil-fuel fired equipment, CO2 and NOx reduction technologies, and 50,000,000 BTU/Hr DIRECT-CONTACT water heaters.
According to John Gocek, Sofame's President & CEO, "Sofame's operations are now running smoothly. Marketing in the United States will accelerate since we have installed projects in New York, New Jersey, Illinois, Michigan, Delaware, Colorado, North Carolina and Maine. With the support of investors in New York, we are using the public company to pursue complementary acquisitions of profitable companies in the HVAC industry. The Board's goal in 2013 is to increase Sofame's annual revenues, net profits and cash flow."
2012 Net Sales of $ 1,802,080 compared to $ 2,520,639 in 2011, a decrease of 28.5%
2012 Gross Profit of $ 368,820 (20.5%) compared to a Gross Loss of ($ 131,722) (-5.2%) in 2011
Seven orders totalling $ 2.4 million were received between August 2011 and September 30, 2012
Two orders were received in 2011, and one was for a large NOx reduction system at a university
OpEx declined 39.3% in 2012 to $ 515,428 (28.6%) compared to $ 849,058 (33.7%) in 2011
Net Earnings in 2012 were $ 119,974 (6.7%) compared to a Net Loss of ($ 935,103) (-37.1%) in 2011
EBITDA in 2012 was $ 581,319 versus negative (- $ 504,590) in 2011
Note: These are the financial highlights only. Management`s Discussion and Analysis, the consolidated financial statements, cash flows, and notes thereto of Sofame Technologies Inc. are available at www.sedar.com.
Comments on the Year Ended September 30, 2012
During 2012 Sofame's order book reflected a marked improvement in demand for the Company's custom engineered industrial energy efficiency products. Sofame continued to close new orders, deliver existing contracts and operate with low overhead costs. Sofame undertook extensive cost reductions over the last three years, and began a program of outsourcing in 2011. The new business model allowed the company to cut overhead, incur costs only when contracts are in production, and pursue more projects simultaneously.
These results are better than expected compared to the past several years of history. Over the last three years, Sofame has adapted to challenging market conditions which included low natural gas prices due to fracking supplies, tight capital investment budgets at end-users, and an absence of bank financing in the normal course of business. In the latter half of 2012, well head gas prices recovered to about $3.25/DT. Two-year payback on energy efficiency investments has become the norm for Sofame's industrial water heating solutions.
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Sofame 2013 Business Plan Snapshot
Sofame stabilized its operations in 2012, and demonstrated a financial recovery. After consuming cash while the company developed products, pursued research, filed patents and developed the market for several years, Sofame is now totally focused on commercializing its industrial energy efficiency know-how. Strong interest has been expressed by consulting engineers, and major industrial and institutional natural gas consumers, in repeating proven results from over 330 Sofame projects in North America, Europe and Mexico.
The target market of potential customers is large, and includes hospitals, universities, cogen plants using gas-fired turbines, food processing plants, breweries, bottling facilities, industrial laundries, pulp and paper, cardboard recycling, cement, mining, tar sands, textile manufacturing etc. Sofame's challenge was to deliver these projects with low overhead, and generate a profit for shareholders. This has been achieved.
While the new business model using outsourced manufacturing has been successful, the Board of Directors is positioning the company to do more. The Chairman's message, which was repeated in a press release on November 27, 2012, stated that a letter of intent has been received. A firm in New York is offering to fund three acquisitions which have been in negotiations for over a year. The type of funding is mainly in the form of debt, in order to minimize dilution of existing shareholders.
The goal of the Board for 2013 is to conclude the targeted acquisitions.
Short-Term Refinancing Objectives
In the on-going course of business, management believes that refinancing current liabilities will help the company to sustain profitable sales growth and low operating costs, and present a lower overall risk profile. Positive progress in these areas is expected to help the company achieve its medium-term corporate growth strategy to deliver improved returns on shareholder investments.
After reporting its 2012 earnings last week, the Company is continuing efforts to close a private placement of common voting shares at $0.02 cents as announced in several press releases. Accredited investors, in the meaning of US and Canadian securities laws, who desire further information should contact their licensed stock brokers.
The Company is in discussions with several asset-based lenders in the United States and Canada concerning refinancing, by means of a secured term loan, the existing $250,000 bridge loan and other current liabilities, government payables and trade accounts payable.
Safe Harbour Statement
Certain statements contained in this presentation, other than statements of fact that are independently verifiable at the date hereof, may constitute forward-looking statements.
Such statements, based as they are on the current expectations of management, inherently involve numerous risks and uncertainties, known and unknown, many of which are beyond the control of Sofame Technologies Inc. ("Sofame").
Such risks include, but are not limited to, the impact of general economic conditions, general conditions in the boiler and heater industry, changes in the regulatory environment in the jurisdictions in which Sofame does business, stock market volatility, changes to the competitive environment, and other risks included in Sofame's public filings.
Consequently, actual future results may differ materially from the anticipated results expressed in the forward-looking statements. The reader should not place undue reliance on the forward-looking statements included in this presentation.
These statements speak only as of the date made and Sofame is under no obligation and disavows any intention to update or revise such statements as a result of any event, circumstances or otherwise.
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