It was on Monday that Titan Energy Worldwide, Inc. (OTCQB: TEWI) announced that they had released preliminary financial information for the year 2012 but that press release triggered little reaction from investors as the company’s share price eventually closed the day at 0.0100 after opening at 0.0080. The disinterest from investors carried into Tuesday and then through Wednesday as that share price never bounced higher than 0.0138, eventually closing yesterday’s session at 0.0090. Now on Thursday shares of TEWI have spiked as high as 0.0550 and even more staggering is the company’s trading volume which has already eclipsed the 23.5 million mark in early action, this after failing to cross the 100,000 mark yesterday.
Considering that TEWI, a company engaged in the management and sale of power generation equipment and energy management solutions to industrial, commercial, and institutional customers worldwide, announced the release of their preliminary financial information for 2012 on Monday yet activity didn’t pick up until today is a pretty strong indicator that Thursday’s surge has been triggered by events that have little to do with where TEWI is as a company or really where they are heading.
For their part TEW is rather optimistic about their future as company CEO Jeffrey Flannery stated in Monday’s press release “2012 was the year that Titan Energy emerged as a significant national participant in the growing emergency and backup power industry.”
Flannery went on to say “We are stronger financially having posted a number of profitable months in 2012 and a positive EBITDA for the year. Equipment sales are at an all-time high. We have greatly increased our national service business with major retail and data center companies. Our advanced monitoring and asset management technologies, which are now being deployed, will be a market differentiator for our Company in the near future.”
That release went on to point out growth in total revenues during 2012 compared to 2011, a result of impressive percentage growth in equipment sales and service sales; couple revenue growth with a decrease in total operating expenses by 11% and it would appear that TEWI was heading in the right direction.
Of course simply looking at revenue growth as an indicator of a company’s future can be dangerous as it doesn’t tell the whole story and while TEWI reported a 36% increase in 2012 from 2011 the company failed to mention anything about their net loss for the year.
An investor would have to go back to TEWI’s November quarterly filing to get any information about the company’s losses and in that filing they reported a net loss of $1.1 million for the nine month period ended September 30, 2012. What seems to be preventing TEWI from benefiting from their revenue growth is their cost of sales, a figure that stood at $10.8 million for that reported nine-month period compared to $14.4 million in total sales. When that $3.6 million in profit gets chewed up by operating expenses and other expenses it leaves the company at a loss.
What may catch an investor’s eye is the fact that TEWI hasn’t effectively reigned in their cost of sales; for the same nine month period in 2011 they reported sales of $10.6 million while their cost of sales stood at $7.7 million, leaving them a profit of $2.9 million. Essentially their cost of sales as a percentage of their sales is the same.
Another notable figure in that filing is that while TEWI reported $9.7 million in Power Distribution sales compared to $7 million in the same period one year earlier their net loss in that area jumped to $392,000 compared to $208,000 in 2011. If Power Distribution is driving their revenues they can’t afford for it to be the area that is causing the most losses.
There is also the matter of an accumulated deficit that stood at $34.5 million at September 30, 2012, a figure that has almost certainly grown since that time.
As it stands right now TEWI is trading around the 0.0290 mark, well above their 50-day moving average of 0.0078 and their 200-day moving average of 0.0153 but because today’s activity has seemingly come out of the blue it is hard to trust the spike.