March 26, 2013
Titan Energy Worldwide, Inc.
(OTC: TEWI), a leader in distributed power generation products and intelligent energy management services, today announced that it has released the following letter to its shareholders.
Dear Shareholder of Titan Energy:
The need for backup power is as strong as it has ever been. Our national power grid is being overtaxed, natural disasters seem to be striking with ever increasing frequency and unrelenting devastation. Titan Energy is poised in the center of this opportunity. With our ability to respond quickly in times of emergency, to find the right solution and to be an effective power partner to our customers, we have established a solid reputation for excellence and a growing national brand that is beginning to rival companies many times our size.
Titan Energy began as a small regional distributor of generators in the Midwest. Along the way we have leveraged our technological expertise and our industry relationships to build a highly skilled network that now allows us to operate on a national scale. And today we have an opportunity to become a true national player in the ever-growing energy marketplace.
2012 was a strong turnaround year for Titan Energy. Overall sales increased 36% year over year. Growth in our service business was more than 50%. We advanced from a negative
million in adjusted EBITDA in 2011 to a positive
in adjusted EBITDA in 2012. Based on our current backlog, we are on course to do
in overall sales in 2013, an increase of more than 25% over the
we achieved in 2012. We expect to surpass this current projection as new potential opportunities are realized. I believe we have a very good shot at ending the year profitable, and as a company we are committed to that goal.
Several factors point in Titan Energy's favor as we head into 2013.
Financial Results for 2012.
- The number of storms that have hit the country in the past few years is exposing the weakness in our aging grid and highlighting the need for companies to deploy their own onsite power resources. Titan's ability to responds to the needs not only of our customers but to other companies in the areas hit by Hurricane Sally for example, have created many new opportunities for us in the Northeast and other regions.
- We are beginning to see clear signs that new construction is on the rise. With new business centers, hotels and healthcare facilities, there will be the need for new onsite power systems.
- The power equipment we sell is better and more sophisticated. Generac Power Systems ( www.generac.com), our generator manufacturer in the Midwest, has shown significant improvements in the capabilities, reliability and over all acceptance of its brand among customers for industrial and commercial onsite power generators.
- C&I generators are becoming more technically advanced while being deployed in more demanding situations than in years past. These onsite power systems require a highly skilled service provider such as Titan Energy to best maintain and operate them. Titan has led the industry in developing the latest monitoring, auditing and other automated solutions which greatly improve our ability to manage and maintain these power systems, lower costs for our customers, improve our profitability and create greater customer retention.
We will be publishing our 2012 Annual report (Form 10K) in the next few weeks. A turnaround year, Titan Energy ended 2012 with a very strong fourth quarter. We saw two
months in service buoyed largely by growth in our national accounts business. Total sales revenues grew 36%, with equipment sales growing by 28% and service revenues by 51% over 2011.
Combined with a 5% decrease in general and administrative expenses and 60% decrease in corporate expenses, these strong revenue numbers helped us generate a positive adjusted EBITDA of nearly
for the year. This represents a turnaround of nearly
1st Quarter 2013.
The first quarter of 2013 is not quite finished, but we can project sales revenues that will be 40% higher compared to the 1
q of 2012 with greatly reduced losses. The first quarter is historically our most difficult quarter as cold winter conditions in the Midwest can push out new equipment installations and some of the our larger national accounts do not complete their budgetary process or release new work orders until March or later. Still we demonstrated not only strong growth but continued improvement in our bottom line.
Titan sales of generators increased more than 36% in 2012. We believe a significant reason for this increase is due to the greater awareness businesses have acquired on the need for backup power after the last series of devastating storms. At the same time, we believe the line of generators we represent in the Midwest, Generac, is gaining stronger acceptance among commercial and industrial contractors in our territories.
I personally believe we have the finest and most dedicated service department in the U.S. and service continues to be the strongest performing segment of our business. With margins that are in the 50% to 70% range, the increase in our service business accounts for the majority of our drive towards profitability. In 2013, we are looking to increase service sales significantly in the Midwest, as well as in the Southeast and Northeast. The Northeast in particular is a tremendous market for Titan Energy and our service center in that area has shown 100% growth since 2011 with even greater potential ahead of us.
The EPA, through a ruling called RICE NESHAP, now requires many generators enrolled in peak shaving or demand response programs to be mechanically modified so as to lower their emissions. Titan has received more than
in purchase orders to date for the modification of generators in the Midwest and we believe that this business will continue for us through 2013. RICE NESHAP also requires these same generators to be monitored and report their equipment's performance. Titan has been successful in placing its own proprietary monitoring system on many of these installations thereby creating ongoing recurring revenues and providing us with the opportunity to be the service partner for these customers as well.
. National accounts revenues grew from
to more than
in 2012. We are projecting national account sales to surpass
in 2013 based on our currently contracted customers. We now service more than 2,000 generators nationwide and have multiyear contracts with one of the major retailers in the nation and one of the largest owners of data centers. We are actively seeking to expand this base of national customers, focusing on the retail, property management and health care markets.
I am confident that Titan's monitoring system for onsite power generators is the most robust and advanced in the market. Having completed the beta test on this system, this service is now operating with several clients utilizing a robust, commercial grade cloud-based service. Teamed with our 24/7 call center, we are now ready to begin taking on additional commercial clients including a number of our Fortune 500 service customers.
One unique aspect of our platform is that it is capable of monitoring the EPA's required emissions modifications that were imposed recently through RICE NESHAP in addition to the functions of the generator itself. Titan is one of the few companies to offer this valuable product for the tens of thousands of generators enrolled in peak shaving programs that must meet both the EPAS requirements as well as maintain their service schedules so as to perform during peak shave events.