SOURCE: Titan Energy Worldwide

Titan Energy Worldwide

December 01, 2011 12:07 ET

Titan Energy Worldwide CEO Releases Shareholder Letter

MINNEAPOLIS, MN--(Marketwire - Dec 1, 2011) - Titan Energy Worldwide, Inc. (OTCBB: TEWIE), a leader in distributed power generation products and intelligent energy management services, released today the following shareholder letter from company CEO, Jeffrey Flannery:

Dear Shareholder -

2011 has been a challenging year for Titan Energy. During the course of the year we made what we believe to be the right decisions and have worked hard toward a stronger and a more successful 2012.

OVER THE LAST YEAR, WE HAVE DECREASED EXPENSES SIGNIFICANTLY, WHILE INCREASING SERVICE SALES TO THE HIGHEST LEVEL IN THE COMPANY'S HISTORY

Customer demand for Titan's service program across many markets is strong and our ability to continue making inroads into these markets will be one of our primary initiatives for 2012. At $4.7 million for 2011, up 30% over 2010, service revenues now account for 36% of the company's overall sales. As the graph below illustrates, service sales have increased more than 30% in service sales for each of the last three years. Service sales provide gross margins of more than 50%, substantial returns on recurring revenues that, we believe, will be one of the driving forces for becoming cash flow positive.

While growing the more profitable aspects of our operations, we have reduced our expenses by more than $1 million during the last year. We reduced corporate overhead by more than 30% and streamlined operations at every level of the company. At the same time, we have increased our higher margin service sales and raised our overall sales margins. As a result of these measures, we have cut our operating losses significantly and believe we are now capable of posting EBITDA positive results in 2012.

The vital need for Titan's products and services has been continually highlighted: summer heat waves, autumn, hurricanes, and winter snowstorms are stressing our electrical utility grid from coast to coast resulting in grid failures, black outs and higher prices for electrical energy. While service of onsite power generation is a competitive market, we believe that there are few companies that combine the experience, technology and nationwide reach of Titan Energy. Our dedication to superior customer service is one reason we have been able to take customers from our competitors and win large national accounts.

TITAN HAS ESTABLISHED ONE OF THE FINEST, MOST ADVANCED SERVICE ORGANIZATIONS IN THE UNITED STATES FOR ONSITE POWER GENERATION

As onsite power generation becomes more vital to businesses that cannot afford to have their operations interrupted by grid failure, these companies are realizing the benefit of having a better, more advanced service program to protect and support their emergency power assets. This is what Titan Energy offers: the highest level of onsite power maintenance for companies of any size.

National companies are also seeing the benefit of having a single service provider manage generators at facilities located through the United States. This year we were awarded a service contract for one of the largest retailers in the country, the first time a single company was awarded a multiyear contract for generator service by this retailer. This account and other national contracts are now contributing significantly to Titan's service revenues and we expect this growth to increase even more rapidly in 2012 and 2013.

The role of onsite power generators can play a large role for utilities and grid operators through demand response programs. Titan's superior control and management programs can help make generators more reliable and efficient in these important energy management programs nationwide. In 2012, we expect to gain more contracts in these demand response programs which often pay high margin revenues with little investment from Titan.

We are also optimistic that equipment sales will rebound in 2012. In the Midwest, we see strong indications that these sales will increase significantly next year: Mike Marcinek, our Omaha based salesperson surpassed $3 million in bookings for 2011, a company record. While we expect to end the year in $6 million in sales out of our Midwest offices, we are also expecting to reach $7 million in booking (new purchase orders) for 2012. We anticipate that our national service accounts to begin contributing new equipment sales in 2012 in addition to the service contracts.

GROWTH THROUGH PARTNERSHIPS

We are actively exploring a number of potential partnerships that could help expand our services and sales in the future. We are looking to establish service arrangements with engine manufacturers and utility providers in northern Minnesota, with the goal of opening a satellite office which would help us support our current client base, including Verizon, in that part of the state. We have recently entered into an arrangement with a New York based demand response company and have identified more than 10 megawatts of generators at Titan customer sites that may be eligible for these programs in Manhattan. These are high margin contracts that can be acquired for relatively little expense. We plan to enroll the first of these generators in December of this year.

What are our goals for 2012 and beyond?

  • First and foremost to achieve a positive cash flow. And that goal seems to be within our grasp. We believe that future growth of higher margin service sales combined with continuing fiscal controls could get us there.
  • Increase our national accounts by building off the solid foundation we have developed to service customers throughout the United States.
  • Expand our Midwest service operations in Northern MN, Iowa and Nebraska.
  • Improve and expand our service offerings in Florida.
  • Begin our participation in demand response programs in New York and related areas.

All in all, Titan looks to end 2011 as a stronger, more efficient company that has established a prudent course for future growth with a goal of profitability. While we expect to see growth in all areas of the company's operations, we especially expect strong growth in our service offerings and an expansion of our service program through the United States. With this growth and the corresponding strengthening of the company's bottom line, we believe that the market valuation for Titan will improve as the successful results of our efforts become clear.

Finally, to answer a question many have asked me, our ticker symbol was recently issued the letter "E" and so to access our trading activity you need to enter the symbol "TEWIE." Normally this is issued to companies which fail to submit their filings on time. We submitted our third quarter Form 10Q on time, however, we chose to file without including a review by our independent auditor. The reason for this was that as we approached year-end, we wanted to apply available cash to pay down our vendors so as to facilitate new shipments and to support our service partners across the United States as activity on our national account business has increased significantly. At the same time, we wanted our shareholders and investors to have timely access to our Company's financial information. In our filing we clearly stated that we had not provided this independent review and that we would amend this filing as soon as that review was completed. We believed we had more time that we were subsequently given to correct this and file the amended financials. We were however then notified that our quarterly filing was incomplete and that we have until December 19, 2011 to submit the amended filing and review in order to remain in compliance.

In the meantime, we are pushing forward, growing our business and continuing to follow strict fiscal policies so as to reach our objectives in 2012.

On behalf of everyone at Titan Energy, have a Wonderful Holiday Season!

Jeffrey Flannery
Chief Executive Officer

About Titan Energy Worldwide, Inc.

Titan Energy Worldwide is a provider of onsite power generation, energy management and energy efficiency products and services that help support and improve the performance of our nation's electrical utility grid. We operate in an area of the overall electrical utility infrastructure called Distributed Generation, whereby we specialize in the deployment of power generation equipment at the consumer's facility and the integration of that equipment through monitoring and communication systems with the needs of the utility's electrical grid. These onsite power generation systems support a customer's critical operations during times of power failure and serve as demand response systems that work to reduce energy usage and decrease demand on the electrical grid during peak periods. When managed with the proper intelligent monitoring systems and controls, Distributed Generation offers a vital and significant contribution to the development of the nation's Smart Grid. We contribute the tools and resources to produce immediate and long term improvements in the performance and stability in the energy production and transmission segments of the electrical grid and reduce the need for new power plants. From emergency and back-up 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.

Forward-Looking Statements

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.

Contact Information

  • For more information about Titan Energy Worldwide please contact:
    Jeffrey Flannery
    Titan Energy Worldwide, Inc.
    619-988-5869
    Email Contact