EXHIBIT 99.1
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Contact: Robert A. Lerman
860-683-2005
NEWS RELEASE OTCBB: TDYT
November 1, 2006
THERMODYNETICS ESTIMATES SECOND QUARTER REVENUE INCREASE TO RECORD LEVELS
WHILE OPERATING MARGINS RETRACT DUE TO METAL COSTS
THERMODYNETICS EMBARKS ON SEARCH FOR SUITABLE ACQUISITION
WINDSOR, CT - Wednesday, November 1, 2006 - Thermodynetics, Inc. (TDYT: OTCBB)
We will be releasing financial results on or about November 7th, the date
of our Annual Shareholders' Meeting. In the meantime, we estimate that net sales
of the Company's Turbotec subsidiary for the three and six months ended
September 30, 2006 increased significantly over the prior year period and will
represent a record in any three or six month period.
The increase in sales is due largely to sales of condenser/evaporator
coils for the housing market augmented by increased sales of enhanced tubing
used in commercial boiler applications. Although there has been some weakening
in residential construction during the past few months, the overall demand has
remained at higher levels than in prior years. A good portion of the increased
sales figures also relate to the pass through of the increased metals costs.
Turbotec's special purpose enhanced surface tubing in titanium is unique to the
swimming pool heat pump system market and a large part of this market niche has
been captured. Turbotec is currently investigating other applications for its
surface enhanced titanium tubing.
Cost of sales are expected to be higher by several percentage points in
the fiscal periods ended September 30, 2006 vs. 2007, thereby reducing profit
margins. The cost of metals (principally copper and nickel) has risen sharply
during the past two years to record levels, and more significantly, in the few
months since the London IPO; copper prices have moderated toward the end of the
current quarter, while nickel continues to rise unabatedly. The net impact has
been a significant reduction in gross margin and a higher inventory carrying
value. To combat the eroding margin, Turbotec's management is planning on
several initiatives related to sharing costs and increasing prices. Turbotec has
also begun a widespread training program for their employees to improve
efficiencies on the production floor.
Operating costs also will be higher as personnel were added in customer
service, product engineering and other support functions to support the growth
in sales and new product development. Further staff additions in marketing and
engineering are planned as Turbotec continues to expand its product development
in heat reclamation and titanium based heat exchangers. Interest expense
decreased significantly in both current year periods compared to the prior year
as the May 2006 London public offering of Turbotec was used to retire debt.
Income from continuing operations will be positive in both the 3 and 6
month periods. The operations of a former manufacturing subsidiary, Vulcan
Industries, ceased in September 2005 and Vulcan will be reflected as a
discontinued operation in the financial statements.
At September 30, 2006 working capital will be reported in excess of $4
million compared to a negative $1.68 million at March 31, 2006, which was a
result of the May 2006 offering. Aggregate debt related to continuing operations
at September 30, 2006 was also reduced some $3.5 million since March 31, 2006.
The Company has initiated a search for a suitable acquisition and has
begun to circulate its ideal acquisition criteria which include a) a business in
metals manufacturing, b) having a proprietary product or service, engineering
oriented, c) with net revenues of $6 - $60 million and positive cash flow, d)
continuing management and established sales force, and e) an OEM customer base
with growing market, international preferred. A summary description of a
suitable candidate should be forwarded to Robert A. Lerman, President and CEO.
FORWARD LOOKING STATEMENTS
This report contains certain forward-looking statements regarding the
Company, its business prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause the Company's actual business, prospects and results of operations to
differ materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation: the Company's ability to successfully and timely develop and
finance new projects, the impact of competition on the Company's subsidiary's
revenues, changes in unit prices, and supply and demand for the Company's tubing
product lines in the markets served.
When used, words such as "believes," "anticipates," "expects," "continue",
"may", "plan", "predict", "should", "will", "intends" and similar expressions
are intended to identify forward-looking statements, but are not the exclusive
means of identifying forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date of this report. The Company undertakes no obligation to revise any
forward-looking statements in order to reflect events or circumstances that may
subsequently arise. Readers are urged to carefully review and consider the
various disclosures made by the Company in this report, news releases, and other
reports filed with the Securities and Exchange Commission that attempt to advise
interested parties of the risks and factors that may affect the Company's
business.
ABOUT THERMODYNETICS
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Through its Turbotec Products, Plc subsidiary, Thermodynetics manufactures
high performance, high quality heat exchangers, fabricated metal components and
flexible connector products for heat transfer, transportation, and plumbing
applications. The Company markets its tubing products to customers in the space
conditioning, refrigeration, automotive, biomedical, plumbing, appliance, water
heating and aerospace industries. Turbotec is quoted on AIM (a market operated
by the London Stock Exchange) under the symbol TRBO. Thermodynetics also owns a
nominal interest in a private Belgium company that is engaged in the
nutraceutical industry by providing natural, bioactive chemical compounds that
have health promoting, disease preventing or medicinal properties. A small
investment was recently made in a US company that offers a specialized approach
to the RFID (radio frequency identification) industry, with an orientation to
medical facilities.