September 30, 1998
Letter to Shareholders
THERMAL CONTROL TECHNOLOGIES CORP ("TCT-Y")
- Letter to Shareholders
Dear Shareholder,
Thank you for your continued support of Thermal Control Technologies Corp. (TCT). With the weakness that the small cap markets are currently experiencing, Management and Directors (we hold approximately 25 percent of the outstanding shares) would like all shareholders to know that we feel the price movements along with all of the other shareholders of TCT.
The following is a brief summary of recent developments and activities that the TCT Management Team has been focusing upon. These activities will bring continued increases in both aftermarket and OEM sales, the development of new products and ultimately shareholder value.
OPERATIONS
TCT has been working very hard at expanding both its sales and distribution network and the range of products offered. We currently offer Class 8 heavy-duty truck Charge Air Coolers to the aftermarket. Covering over 60 models of trucks on the road today. There are an additional 5 CAC models coming on stream starting in September and continuing through the Fall which will allow us to supply a further 13 models.
On the OEM side of things TCT is a supplier to Road King of Monterrey, Mexico and also supplies Finning (Canada) of Edmonton, Alberta and Foremost Industries of Calgary, Alberta.
The manufacturing facility in Prescott, Arizona is completed, with some minor landscaping and interior finishing to be completed. The new facility not only offers more capacity to assemble CACs, but will in the future allow us to manufacture the cores for our CACs and radiators on site. The ability to manufacture these components will further reduce the costs of manufactured goods sold by approximately 25 percent. This in-house ability will not only allow TCT to increase profitability, but we will also be able to increase our revenues through product diversification. The proceeds from the $5,000,000 tax-exempt bond will be used to purchase the required manufacturing equipment.
SALES & MARKETING
The TCT sales team has worked very hard to expand its sales and distribution network. There are now 169 aftermarket distributors throughout Canada, the United States and Mexico. While the growth in this area has been noteworthy, the marketplace is by no means saturated.
Sales are the key to TCT's success and the sales team has been expanding, with the most notable additions in Canada being Edward (Ed) Maenck and Charles (Chuck) Doherty. Ed's previous role was Regional Fleet Manager in charge of 1800 vehicles. He has held various senior sales and operations management (including the Vice-President level) positions for over 30 years within the transportation industry including two heavy-duty Truck Manufacturers and possesses extensive
contacts in the Service Departments throughout his territory. Chuck has been involved in the transportation and heavy-duty equipment industry for over 25 years and has also held senior roles up to and including the Vice-President level in sales, but has also spent time as an industrial equipment operator and owner-operator of a fuel delivery company.
The U.S. sales team has expanded to 8 members with Cole Melton dedicated to the specialty market. Cole brings with him 21 years of experience in sales, fabrication, design and troubleshooting of radiators and custom cooling systems. Prior to joining TCT Cole was based out of Dallas TX. from which he covered the territories of Midwestern USA and Alaska with the focus on oilfield and mining applications. Over his career he has built strong business relationships with some of the largest mining and petroleum producers in the world.
While TCT has had two Test Vans operating in the U.S., the Test Van is new to Canada. Its main purpose is to support the Company in its goal of educating the end user in the features and benefits of TCT CACs so that when it comes time for replacement or when a new truck is ordered, TCT products are requested. After our inside sales people set up appointments with Fleets and Dealers our technician is sent to the destination for free inspections of CACs while they are still on the truck. As the awareness level of our product and the benefits of a leak free CAC increase, we will realize an expanding market share. TCT will be adding a second Test Van in Canada this fall.
FISCAL 1998 YEAR END RESULTS
1998 was another outstanding year for TCT. Our growth was nothing short of spectacular with revenues being 366 percent of fiscal 1997. A few key points are return on equity 19.52 percent, book value per share of $.58 and working capital at $1,322,483.
QUARTER ENDING JUNE 30, 1998
The first quarter of fiscal 1999 was yet another quarter that exceeded our goals. We were looking for a 30 percent growth in revenue and TCT exceeded that target by 10 percent. As well, the return on equity was 4.88 percent, working capital was $1,049,805, and $.55 per share in book value vs. $.41 for the first quarter FY1998.
INVESTMENT AND FINANCING ACTIVITIES
August 18th Thermal Control Technologies announced that it had engaged the services of Piper Jaffray Inc. to act as our Investment Banker for the tax-exempt bond issue. Piper Jaffray was chosen because as TCT grows they will have the ability to provide Market Making activities on NASDAQ and offer U.S. Investment Banking Advisory Services. They are a full service Brokerage House which employ 1100 Brokers operating out of 91 offices.
TCT is still featured regularly in the Buy Low Sell High newsletter as an undervalued stock. In addition to this coverage, Global Securities has produced a research report which rates TCT as a buy, giving it a target of $2.70 by the middle of 1999. The Institutional interest TCT has started to receive has been very encouraging and remains a major focus for corporate communications.
As the Company continues to develop, we are looking for continuous increases in shareholder value and increased recognition in both the Institutional and Retail Investment community.
Thank you again for your continued support and if you have any further questions please contact our Corporate Communications department at 1-800-230-6061.
TEL: (403) 543-1300 Blaine Maller, President & CEO FAX: (403) 543-1313 INTERNET: tct.ca E-MAIL: info@tct.ca |
