Thermodynetics Posts Mixed Results | Although sales soared, profits soured from one year ago
Windsor-based Thermodynetics logged major gains in sales in the third quarter of its fiscal year, but a decline in net earnings after one-time charges, according to its recent financial report.
For the three-month period ended Dec. 31, the company had net income of $113,000, or 3 cents per share. That was a major decline from the same point in the previous fiscal year, when the company posted net profits of $370,000, or 9 cents per share.
Overall sales soared to $6.4 million, or 11.2 percent ahead of the same point a year ago when the company logged net sales of $5.76 million.
For the first nine months of the year Thermodynetics also posted a major drop in net profits that totaled $559,000, or 14 cents per share. That was a sharp drop from the same point a year ago, when Thermodynetics posted net profits of $3.19 million, or 79 cents per share.
Sales in the first nine months of the fiscal year jumped by 20.5 percent to $20.87 million, up from $17.31 million at the same point a year ago.
One-Time Gains
In comments accompanying the financial report, Chief Executive Officer Robert A. Lerman said that a pair of major one-time gains in the comparable 2006 periods inflated the year-ago results. In May 2006, the sale of the securities of Turbotec Products Plc in England resulted in a one-time gain of $2.66 million, and in the third quarter of 2006, the company refinanced debt netting $606,000.
Apart from the one-time factors, net profits in the third quarter would have been up 188 percent, and for the full nine months would have been up 103 percent.
Earnings also were affected by costs related to a lawsuit filed by the company in England against its majority-owned Turbotec subsidiary regarding Turbotec’s non-payment of dividends to Thermodynetics.
The disagreement centers on the interpretation of clauses in the relationship agreement between Turbotec and Thermodynetics that address payment terms of administration fees and Turbotec’s dividend distributions, Lerman said in a January announcement of the lawsuit.
According to Lerman, Turbotec has sought to reduce the dividends payable to Thermodynetics previously by purporting to re-classify administration fees as “prepaid dividends.” As a result, Turbotec reported higher earnings to the British market in London by not paying those administrative fees.
“The outcome of that case could affect the operating results of Turbotec if it loses the case,” Lerman said in comments accompanying its financial report.
“Based on the results through the first nine months, Turbotec’s directors anticipate delivering full year results generally in line with market expectations,” he said. “However the ongoing uncertainty in the subprime mortgage sector and the increasing inventory of unsold homes may retard their pace of growth in the fourth quarter and fiscal 2009.”
Thermodynetics, founded in 1972, makes metal tubing.
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