SHARC International Systems Inc.
(CSE: SHRC) (FSE: IWIA) (OTCQB: INTWF)
("SHARC Energy" or
the “Company”) announces it has filed financial results
for the year ended December 31, 2023. All figures are in Canadian
Dollars and in accordance with IFRS unless otherwise stated.
Fourth Quarter and Year-end Financial
Highlights:
- As of April 29, 2024, the Company
has a Sales Pipeline1 of 16.9 million (M) and Sales Order
Backlog2 of $3.1M. This
represents a $2.3M increase or 288% growth in Sales Order
Backlog. Sales Pipeline saw a marginal decrease of 5%
since November 28, 2023, disclosure reflecting the deliberate
efforts by the Company to refill the pipeline once projects convert
to the order book. The combined pipeline showed an aggregate growth
of 8% or $1.4M from the previous disclosure on November 28, 2023.
Entering 2024, the $3.1M Sales Order Backlog, which
historically converts to revenue within an average of 12 months
from disclosure, marking a historic milestone for the Company. This
figure represents a 15% improvement compared to the previous
highest revenue year in Company history, recorded in the 2021
fiscal year.
- Working capital is $2.5M, which
includes $1.2M of cash, as of December 31, 2023. The Company no
longer holds any debt, except for standard operating payables and
liabilities, due to the 100% conversion to equity of $3.95M in
maturing convertible debt during the year ended December 31, 2023
(“YE 2023”). The leadership team is
currently in discussions with multiple working capital facility
lenders to utilize the expanding Sales Order Backlog as a strategic
tool to facilitate the funding required for the Company's ongoing
growth initiatives.
- During the three months ended
December 31, 2023 (“Q4 2023”), the Company
reported revenues of $(0.1M), a loss of $0.6M and an Adjusted
EBITDA3 loss of $0.9M. In the same period in the prior year
(“Q4 2022”) the company reported revenue of $0.8M
and an Adjusted EBITDA loss of $0.7M, however the loss improved 53%
from $1.3M in comparison.
- During YE 2023, the Company
reported revenues of $1.6M, a loss of $3.9M and an Adjusted EBITDA
loss of $2.4M. Revenue decreased 18% versus year-end 2022
(“YE 2022”) of $1.9M, the loss improved 19% versus
YE 2022 of $4.8M and Adjusted EBITDA loss improved 7% versus 2022
comparative of $2.6M.
- Gross margin for YE 2023 improved
to 43% compared to 29% for YE 2022. The improvement can be
attributed to a shift to a supply and service revenue mix versus
general contracting in 2022. Sales mix and gross margin in 2023 is
reflective of what management expects going forward.
Hanspaul Pannu, CFO and COO of SHARC Energy,
said, “We entered 2023 poised for what we anticipated to be the
most prosperous revenue year in the Company's history. While we
acknowledge that our pipeline is susceptible to external factors
like fluctuating interest rates and construction delays, which are
beyond our direct influence, we remain optimistic. With the ongoing
expansion and maturation of our pipeline, we foresee a gradual
mitigation of these risks and a corresponding smoothing out of
revenue volatility."
Pannu added, "We now enter into 2024 with a
Sales Order Backlog, or expected revenue, of $3.1M, which is
roughly $500,000 shy of the Company's total revenue reported in the
2022 and 2023 fiscal years combined. This represents a 15% increase
from the largest revenue year reported in the Company's history in
2021. There are several projects indicating signs of conversion
from Sales Pipeline to Sales Order Backlog which would further grow
the Company's order book and revenue in 2024. These positive
forward-looking signals indicate the Company's pipeline has reached
a maturity where its Sales Pipeline to Sales Order Backlog
conversion rate is accelerating. The Company continues to increase
the overall pipeline with a strong outlook and opportunity to
accelerate growth.”
Pannu concluded, “As we continue to balance our
working capital and our Sales Pipeline, the Company is now able to
leverage its accelerating conversion to Sales Order Backlog to gain
access to working capital facilities that will support the growth
of SHARC Energy in the near and long term. Securing these solutions
will provide the Company with necessary balance sheet flexibility
while reducing the reliance on equity investment. SHARC Energy is
currently in the process of reviewing and soliciting term sheets
from lenders."
Lynn Mueller, CEO and Chairman of the Company,
says, “To augment the growing pipeline and support sustainable
long-term growth for shareholders, we hired Michael Albertson, a
40-year veteran to our executive team as the President of SHARC
Energy US. Michael comes with extensive industry experience and a
proven track record. The addition of Michael has already begun to
pay off, highlighted by the continued growth of our pipeline.
Michael has brought credibility to SHARC Energy that is
immeasurable as we continue to grow and see new opportunities.”
Michael Albertson, President of SHARC Energy US,
said, "It has been less than a year since I have joined SHARC
Energy, and I am continuously amazed by the response to our
Wastewater Energy Transfer (“WET”) technology and
the value proposition it provides. The outlook for the WET industry
remains staggeringly positive. The team has established strong
relationships and in-roads while working through some exciting
opportunities within adjacent sectors to multi-family residential,
including correctional facilities, Thermal Energy Networks
(“TEN”) also commonly referred to as district
energy, and the Geo-exchange industry. We expect to secure our
first correctional facility installation this year and we
anticipate this to be a significant growth opportunity going
forward.”
“TEN solutions for decarbonization of thermal
energy loads continue to grow in awareness and acceptance in North
America with SHARC learning of projects being planned across the
continent. In the Greater Vancouver, British Columbia region alone,
there are several municipal or utility supported TENs ranging in
size and scale, similar to the False Creek Neighborhood Energy
Utility or leləm̓ projects, in different stages of development that
will increase SHARC Energy's local footprint over the next few
years. In the United States, legislation allowing or mandating
utilities to develop thermal energy network demonstration projects
or pilots have been passed in four states including the State of
New York, where the Company has installations in progress, projects
in design and a growing list of leads looking to implement WET
TENs,” added Albertson.
Albertson continued, “We continue to educate and
bring awareness within the Geo-exchange industry of the value
proposition of using WET technology as a standalone or hybrid
system with positive progress to date. The underlying principle
remains the same, leveraging the earth or wastewater as a thermal
medium allowing for heating, cooling, and hot water. The
geo-exchange industry understands the why behind our WET technology
and is in an incredible position to leverage it for their projects.
I remain humbled to have this opportunity of bringing attention to
our WET technology!”
YE 2024 Highlights and Subsequent Events
-
Appointment of Michael Albertson as SHARC US
President. The Company announced the strategic addition of
40+ year industry veteran Michael Albertson to its executive team
as the President of SHARC US. Albertson, with his extensive
experience and proven track record as a renewable thermal energy
expert with a focus on Thermal Energy Networks (“TENs”) and
district energy networks, is set to play a pivotal role in driving
the Company's growth and revenue generation.
-
Appointment of Peter Busby to the Board of
Directors. The Company announced the addition of renowned
sustainable architect, Peter Busby to the Board of Directors. Mr.
Busby is a principal at Perkins & Will, a global design
practice founded in 1935, with over 28 offices and more than 2,500
employees. The Company will leverage Mr. Busby’s expertise to
better engage with architects worldwide and grow awareness of SHARC
Energy within the industry and drive lead generation for its
products.
-
Appointment of Dermot Sweeny to the Board of
Directors. Mr. Sweeny was appointed to
the Board of Directors on October 17, 2023. Mr. Sweeny’s firm,
Sweeny & Co, has achieved numerous awards from reputable
institutions, like the Canadian Green Building Council and the
Urban Land Institute, for their sustainable building designs. This
strategic appointment highlights SHARC Energy’s ongoing commitment
to creating significant value for our shareholders by bringing
together industry experts who passionately embrace our vision of
advancing sustainability.
- False
Creek Neighbourhood Energy Utility (“NEU”)
Expansion. During Q4 2022, the Company
commenced work on the supply and maintenance agreement with the
City of Vancouver for the provision and maintenance of five SHARC
systems for the False Creek NEU Expansion. This project is expected
to increase the capacity of the current 3.2MW WET system to 9.8MW,
making it the largest operating WET project in North America upon
completion, with an additional carbon emission reduction of an
estimated 4,400 tonnes per year. The major components of the SHARC
WET systems have been delivered to site. The final milestones for
the supply contract, including commissioning and field testing of
the SHARC WET systems, are anticipated to complete in Q3/Q4
2024.
- Purchase order received for
Whitney Young retrofit featured in NYSERDA Empire Building
Challenge. The Company has received a purchase order for a
SHARC 660 WET system for the Whitney Young Manor recapitalization
project in Yonkers, New York. The Whitney Young Manor will undergo
a $22 million renovation, with nearly $12 million allocated to the
project’s decarbonization effort, inclusive of all energy
efficiency measures. The retrofit project will showcase how to
leverage a recapitalization opportunity to comprehensively retrofit
energy systems and modernize an affordable housing complex. The
system shipped in Q1 2024.
- Purchase
Order Received for Phase 1 of transformative $1.2B development to
create 2,400 affordable homes, a medical clinic, and retail in
Brooklyn, New York. The Company has completed the final
submittal process with its New York State representative HIGHMARK
and has received a purchase order for a SHARC 660 WET system to be
included in the first phase of a transformative $1.2 billion
redevelopment in Brooklyn’s East New York neighborhood led by Apex
Building Company, L+M Development Partners, RiseBoro Community
Partnership, and Services for the Underserved. The system shipped
Q1 2024.
- PIRAHNA’s
reach expands into California. The Company received a
purchase order for four (4) PIRANHA T15 WET systems for a 26-storey
mixed-use development in Berkeley, California. This project marks
the largest individual PIRANHA project in the Company’s history to
date and marks the continued expansion of the Company into
California. These units are expected to ship in Q3/Q4 2024.
- Snowmass
Base Village, Colorado installs PIRANHA.
A PIRANHA T15 WET system will be installed in Aura’s 21
slope-side residences, powered 100% by renewable energy resources
within the residential building. Aura’s team is led by East West
Partners, a developer of high-end mountain resort communities, and
supported by SHARC Energy’s Colorado distributor, LONG Building
Technologies. This unit shipped Q2 2023.
- PIRANHAs in Canada’s
Capital. HTS Ontario, a
representative of SHARC Energy products, has been selected to
supply two PIRANHA T15 WET systems to be installed in Ottawa. This
deal is a key milestone as it marks the beginning of HTS’s growing
SHARC Energy pipeline turning over and it validates the Company’s
strategy to support and leverage its representative network to help
grow awareness and sales for its products in key markets. These
units shipped in Q1 2023.
-
Partnership with Subterra
Renewables. The Company and Subterra
Capital Partners Inc., a leading full-service geothermal drilling
provider with a proprietary Energy-as-a-Service
(“EaaS”) model known as
Aura™, announced on April 27,
2023, a $200M strategic partnership to revolutionize the renewable
thermal energy transfer landscape across North America. By
combining SHARC Energy's innovative WET technology with Subterra's
geothermal exchange systems, the partnership aims to bring
unparalleled solutions to the market, capturing a greater share for
both companies.
- PIRANHA
receives North American Certification.
The PIRANHA WET system has successfully completed testing in
compliance with CSA/UL Standards 60335-2-40, and NSF 5. The PIRANHA
series will now bear the Electrical Testing Laboratories
(“ETL”) listed mark indicating to distributors and
customers that the product is compliant to North American standards
and provides a pathway for the PIRANHA series to gain compliance in
key North American markets requiring state approval.
- $3.98M raised
through security exercises. In 2023 to the date of
the MD&A, the Company raised gross proceeds of $3.77M through
the exercise of warrants and $0.21M through the exercise of
debenture warrants.
- Conversion of
Convertible Debt Face Value of $3.95M. In 2023, the Company
converted $3.95M of convertible debt. This represents 100% of
convertible debt previously held on the balance sheet resulting in
the Company becoming debt-free outside of standard operating
payables and liabilities.
For complete financial information for the year
ended December 31, 2023, please see the Audited Annual Financial
Statements and Management Discussion and Analysis
(“MD&A”) filed on SEDAR at www.sedar.com.
About SHARC Energy
SHARC International Systems Inc. is a world
leader in energy recovery from the wastewater we send down the
drain every day. SHARC Energy's systems recycle thermal energy from
wastewater, generating one of the most energy-efficient and
economical systems for heating, cooling & hot water production
for commercial, residential, and industrial buildings.
SHARC Energy is publicly traded in
Canada (CSE: SHRC), the United States (OTCQB: INTWF) and Germany
(Frankfurt: IWIA) and you can find out more on our SEDAR
profile.
Learn more about SHARC Energy: Website |
Investor Page | LinkedIn | YouTube | PIRANHA | SHARC
ON BEHALF OF THE BOARD
Lynn MuellerChairman and Chief Executive
Officer
For investor inquiries, please contact: |
For media inquiries, please contact: |
Hanspaul Pannu |
Mike Tanyi |
Chief Financial Officer |
Director of Marketing &
IT |
SHARC Energy |
SHARC Energy |
Telephone: (604) 475-7710 ext.
4 |
Telephone:
604.475.7710 Ext.109 |
Email:
hanspaul.pannu@sharcenergy.com |
Email:
mike.tanyi@sharcenergy.com |
The Canadian Securities Exchange does not accept
responsibility for the adequacy or accuracy of this release.
Forward-Looking
Statements
Certain statements contained in this news
release may constitute forward-looking information. Forward-looking
information is often, but not always, identified using words such
as “anticipate”, “plan”, “estimate”, “expect”, “may”, “will”,
“intend”, “should”, and similar expressions. Forward-looking
information involves known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
information. SHARC Energy’s actual results could differ
materially from those anticipated in this forward-looking
information because of regulatory decisions, competitive factors in
the industries in which the Company operates, prevailing economic
conditions, and other factors, many of which are beyond the control
of the Company. SHARC Energy believes that the
expectations reflected in the forward-looking information are
reasonable, but no assurance can be given that these expectations
will prove to be correct and such forward-looking information
should not be unduly relied upon. Any forward-looking information
contained in this news release represents the Company’s
expectations as of the date hereof and is subject to change after
such date. The Company disclaims any intention or obligation to
update or revise any forward-looking information whether because of
new information, future events or otherwise, except as required by
applicable securities legislation.
1 Sales Pipeline is a Non-IFRS measure. Please see discussion of
Alternative Performance Measures and Non-IFRS Measures in the Year
End 2023 MD&A.2 Sales Order Backlog is a non-IFRS measure.
Please see discussion of Alternative Performance Measures and
Non-IFRS Measures in the Year End 2023 MD&A.3 Adjusted EBITDA
is a non-IFRS measure. Please see discussion of Alternative
Performance Measures and Non-IFRS Measures in the Year end 2023
MD&A.