Exhibit 99.
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/FOR IMMEDIATE RELEASE/
Contact: Robert A. Lerman
NEWS RELEASE 860-683-2005 Windsor, CT
OTCBB: TDYT
August 11, 2005
Thermodynetics' Sales Increased 44% in First Fiscal Quarter ending
June 2005 vs. 2004; Storm Severely Impacts Michigan Facility
THERMODYNETICS, INC., Windsor, CT (TDYT:OTCBB) August 11, 2005
Net sales for the three months ended June 30, 2005 increased by
$2,477,000, or 44% over the prior year. Sales of heat transfer products
increased 8% over fiscal 2005, while sales of automotive products increased 153%
during the same period. Consolidated total revenues of $8.1 million represented
a record level of shipments for the Company for any three-month period.
The increase in sales in the heat transfer segment is due largely to
the strong housing market augmented by marine air conditioning applications and
commercial/industrial building HVAC needs. The Company has recently developed
the capability to produce special purpose enhanced surface tubing in titanium,
an offering that is unique to the markets it is now serving. Favorable response
to this product from swimming pool and spa heat pump manufacturers also
generated significant sales during the current period.
Automotive product segment shipments increased dramatically during the
current quarter compared to fiscal 2005 as a program for automotive exhaust
system tubing moved into full production during the latter stages of the prior
fiscal year. In early June a major storm in Lower Michigan caused a multi week
disruption that severely impacted the ability of the Company's Vulcan Industries
subsidiary to meet manufacturing commitments. The revenue shortfall eventually
caused the subsidiary and parent companies to agree with its lenders to sell
certain production equipment to a major customer. The subsidiary continues to
operate the equipment for the benefit of the customer and is billing the
customer for such services. The loss of this business would severely impact the
ability of the subsidiary to continue to service its other customers as the
overhead of the facility may make such operations economically unfeasible.
Cost of sales to produce heat transfer products in the current year
increased 2% from 74% of net sales in the first quarter of fiscal 2005. The cost
of metals (principally steel, copper, stainless steel and nickel) has risen
sharply to their highest levels in the past six years. Although the effects of
these cost increases are shared with customers, the impact is a net reduction of
gross margin. Personnel were added in customer service, engineering and other
support functions at both operating subsidiaries in fiscal 2006. The Company
plans on further additions to its marketing and engineering staff in the heat
transfer segment.
As a result of the decline in gross margin, coupled with the increase
in operating expenses, income from operations as a percentage of net sales for
the heat transfer segment decreased from 11% of sales in fiscal 2005 to 7% in
the current period. The automotive segment suffered from a prolonged
interruption of operations and incurred significant unplanned expenses in
addition to the loss of business described above. This contributed to a large
loss from this segment's operations in the first fiscal quarter; however, the
heat transfer segment's performance was more than adequate to overcome this
shortfall.
At June 30, 2005 consolidated working capital remained negative while
improving by $338,000 from March 31, 2005. The Company's access to credit for
operations is expected to be adequate for heat transfer products in the coming
year while funding of capital expenditure programs will be explored with its
bank during the coming months. The automotive segment is currently experiencing
extremely tight credit availability as its funding resources were severely taxed
by the significant start-up expenses and have been further strained by the
recent interruption of business; substantial additional financing will be
necessary to fund Vulcan's on- going operating requirements. Management has
developed a plan to reduce its liabilities through negotiations with its secured
and unsecured creditors. The successful implementation of this plan, together
with the anticipated cash flow from the heat transfer segment, should allow the
Company to deal with the adverse effects and conditions.
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 revenues, and
changes in unit prices, supply and demand for the Company's tubing product line
especially in applications serving the commercial, industrial and residential
construction industries.
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.
Three Months Ended June 30,
(in 000's)
2005 2004
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Net Sales $ 8,102 $ 5,635
Operating Income $ 235 $ 388
Income Before Income Taxes. $ 97 $ 266
Net Income $ 57 $ 206
Weighted Shares Outstanding-Basic 3,969,108 3,645,236
Weighted Shares Outstanding-Diluted 3,969,108 3,645,236
Earnings Per Share-Basic $ .01 $ .06
Earnings Per Share-Diluted $ .01 $ .06
Thermodynetics, Inc. has been engaged in the manufacture of high performance,
high quality metal tubing and tubing assemblies to the heat transfer and other
industries since 1972. The Company is a world leader in enhanced heat transfer
technology. These products are marketed worldwide for applications in the space
conditioning, refrigeration, biomedical, aerospace, boiler, marine, food and
beverage, plumbing, water heating and ice making industries.