WINDSOR, Conn.--(BUSINESS WIRE)--June 25, 2004--Thermodynetics, Inc. (OTCBB:TDYN - News):
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Sales increased 48% to a record $16.5 million in fiscal 2004 reflecting the acquisition of Vulcan Industries and a 13% increase in net revenues from the Company's Turbotec Products subsidiary. Net income for the year ended March 31, 2004 was the same as in fiscal year 2003 while operating income increased 25% and pre-tax income increased 31%. Results for fiscal 2004 include the operations of Vulcan for the period August 2003 through March 2004.

In August 2003, the Company acquired Vulcan Industries, a manufacturer of fabricated metal tubing components serving principally the automotive, furniture and appliance industries.

During the second half of fiscal 2004, the Company's Turbotec Products subsidiary began to experience an increase in demand for its tubing products used in water source heat pump systems. Residential applications remained strong for much of the year, while activity relating to commercial and industrial products increased significantly during the third and fourth fiscal quarters as did demand for marine air conditioning and swimming pool heat pump applications. Turbotec continued to expand its market base in tubing applications as the demand for surface enhanced tubing used in commercial boiler applications and automotive related tubing assemblies exhibited sustained growth. Sales to these markets are expected to continue to increase.

Vulcan is currently in the final stages of product development of exhaust system tubing components for a major automobile manufacturer. Vulcan's revenue base is expected to be in excess of $8 million in fiscal 2005 as this multi-year program is scheduled to be phased into full production during the latter months of calendar 2004.

Gross profit margins declined slightly in 2004 vs. 2003 (26% vs. 28% of net sales). The commodity prices of metals, principally copper and nickel, rose sharply to their highest levels in the past six years while producers of steel tubing instituted pricing surcharges during the year. Current indications are for continued material cost pressures extending through calendar 2004.

The Vulcan acquisition introduced the Company to new automotive markets for its tubing products that tend to feature large volume requirements having higher direct costs as a percentage of selling price than the Company's historical product mix. Coaxial coil applications have higher engineering and value added content, thereby generating higher contribution margins. Direct labor unit costs and manufacturing overhead expenses remained flat as slightly higher labor rates and employee related expenses were largely offset by improvements in manufacturing efficiency and productivity.

During the current year the Company made additions to staffing in sales application engineering, customer support and quality engineering functions and plans to add to its marketing and engineering staffs in fiscal 2005.

Interest expense increased as a result of debt obligations incurred in conjunction with the Vulcan acquisition. In addition, machinery, equipment and other costs aggregating in excess of $2 million related to Vulcan's large multi-year supply agreement, were financed through other borrowings.

Income before income taxes increased by more than 31% compared to the prior year while net income in fiscal 2004 was essentially the same as that for 2003. The current year provision for federal income taxes was 31% of pre-tax income vs. 12% in fiscal 2003. As of March 31, 2004, the Company had approximately $1.2 million in net operating losses and research and development tax credits available to offset future profits for federal tax purposes. Pre-tax income is expected to exhibit further improvement in fiscal 2005 as sales volumes from both the Turbotec Products and Vulcan subsidiaries are projected to continue to increase.

Considerations regarding Forward-Looking Disclosures.

This press release contains certain forward-looking statements regarding the Company, its business prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause the Company's actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: the Company's ability to successfully and timely develop and finance new projects, the impact of competition on the Company's revenues, and changes in unit prices, supply and demand for the Company's tubing products in the different markets it serves. When used, words such as "believes", "anticipates", "expects", "continue", "may", "plan", "predict", "should", "will", "intends" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by the Company in this report, news releases, and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect the Company's business.

Year Ended March 31,
2004 2003
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Net Sales $16,503,591 $11,151,667
Operating Income $ 950,905 $ 757,990
Income Before Income Taxes $ 424,836 $ 322,932
Net Income $ 294,836 $ 284,932
Weighted Shares Outstanding-Basic 18,385,085 18,035,173
Weighted Shares Outstanding-Diluted 18,385,085 18,035,173
Earnings (Loss) Per Share-Basic $ .02 $ .02
Earnings (Loss) Per Share-Diluted $ .02 $ .02

Thermodynetics, Inc. is a manufacturer of high performance, high quality heat exchangers, fabricated metal components and flexible connector products for heat transfer, transportation, and plumbing applications. The Company markets its products in the United States, Canada and abroad to customers in the space conditioning, refrigeration, automotive, food processing, marine, biomedical, plumbing, appliance, water heating, ice making and aerospace industries.

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Contact:
Thermodynetics, Inc.
Robert A. Lerman, 860-683-2005

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Source: Thermodynetics, Inc.

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Due Da Due......But Be Quick About It!!!!!

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Due Da Due......But Be Quick About It!!!!!