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TSTA - Shareholder Equity $5.86m at June 30 '09 vs $4.35m a year ago

Wednesday, September 30, 2009

Latest Earnings: Released on Sept 24 '09 revenues for FY 2009 were up 80% at $25.4m vs $14.2m prior year, income before taxes was up 210% at $2.18m vs a loss of ($978,000), net income after taxes was up 84% at $1.55m vs a loss of ($622,000), and net inc per sh was $.10 vs a loss of ($.04).

Core Business: TurboSonic Technologies, Inc. (OTCBB:TSTA) designs and supplies air pollution control technologies to industrial customers worldwide. Their proprietary technology is designed to address a wide variety of air pollution control problems for industries including pulp and paper, wood products, metallurgical (non-ferrous and iron and steel), cement and mineral processing , ethanol and biofuel production, industrial/medical and municipal solid waste (MSW) incineration, petrochemical, textiles and power generation

Buy Proposition: Turbosonic posted a record year in revenues for FY 2009. It is my opinion that the company has now embarked on a path that will transform TSTA from a small player in this sector into a much more formidable company with record revenues and profits in the years to come. There are a number of factors converging at present that will propel TSTA to keep posting new records on the top and bottom line.

They include:

• Government bodies worldwide are increasing the pace of regulatory change in emissions controls for all kinds of industries. Mature industrial countries are turning more and more to tighter regulations of emissions to achieve their goals in reference to climate change. Emerging industrial countries are taking part in global agreements like the Kyoto Accords that require them to follow the same route. The velocity of the regulatory changes will only quicken going forward as will the resulting demand for the equipment and technology Turbosonic sells worldwide as a solutions provider to these complex problems.
• There is an international grassroots uproar for tighter environmental controls and a multi-generational demand for answers to the dangers now on our doorstep caused by ‘global warming'. It is this type of global pressure that has finally forced industries and governments everywhere to respond to the growing perils of 'climate change' and ‘global warming'. The clamor to respond to the public pressure for environmental clean up by virtue of fewer emissions spewed into our atmosphere will not abate but rather accelerate, thus intensifying the pressure on governments globally to tighten their restrictions on emissions and in some cases ban certain emissions altogether.
• There are negotiations now taking place that include countries that did not sign onto the initial Kyoto Accords (for example the USA) that eventually will add even more demand for carbon credits. TSTA's technologies, including CO2 sequestration, will bring TSTA into the carbon credits area as a player. And some of the large systems they sell will allow that customer to generate carbon credits as well. Even now carbon credit trading is a multi billion dollar market and depending on the outcome of negotiations now underway it is likely that the carbon credits market will continue to grow, adding additional fuel to the fire that will benefit TSTA's numbers.

Conclusion: According to The McIlvaine Company, a recognized independent market consulting firm with expertise in the air pollution control industry, the world market for air pollution control systems, products and services is forecast to grow from $65 billion in 2004 to $250 billion by 2015. That is a staggering increase and that is why I have assembled a whole host of stocks in this sector, my favorite being TSTA.

Turbosonic just delivered a record year and it is my opinion based on the factors above that they will continue to generate record numbers year after year. The global confluence of micro and macro trends in regulation, the rapid growth of carbon credits market, the populist push for a cleaner, greener environment…all of these elements are going to continue to push for the solutions TSTA provides. Their line up of products and technology match up almost perfectly with the environmental requirements that are going to have to be met going forward. And those requirements are only going to get tougher and tougher…..increasing the needs that will have to be met by companies like Turbosonic who have the worldwide reach and experience to rapidly grow with the ever increasing demands for a cleaner, greener planet. In short for now and many years to come Turbosonic will be in a ‘perfect storm' set of conditions and circumstances that should return significant capital gains to investors buying the stock here at this level.

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