SOURCE: Active Power

Active Power

February 18, 2014 07:30 ET

Active Power Reports Fourth Quarter and Year End 2013 Results

AUSTIN, TX--(Marketwired - Feb 18, 2014) - Active Power (NASDAQ: ACPW), manufacturer of uninterruptible power supply (UPS) systems and modular infrastructure solutions (MIS), reported results for the fourth quarter and full year ended Dec. 31, 2013.

Q4 2013 and Full Year Financial Highlights

  • Full year 2013 revenue was $61.7 million compared to $76.3 million in 2012.

  • Fourth quarter 2013 revenue increased $772,000 from the previous quarter to $13.9 million.

  • Annual service revenue increased $3.3 million or 23% to $17.5 million compared to 2012, marking the 10th consecutive year service revenue has increased.

Operational Highlights

  • Booked and shipped a large UPS order to IT partner IO, a global leader in software-defined data centers, for deployment at a world-class university's high performance computing center on the east coast.

  • Appointed Jay Powers as CFO and vice president of Finance, bringing to the company more than 30 years of broad and deep experience at both domestic and international organizations in a variety of industries including manufacturing, power quality, and energy storage.

  • Appointed Randall J. Adleman as vice president of Global Sales and Marketing, bringing to Active Power more than two decades of sales and marketing leadership in the power quality, energy storage, and enterprise software sectors.

Q4 and Full Year 2013 Financial Results
Revenue in the fourth quarter of 2013 increased to $13.9 million from $13.2 million in the previous quarter and declined from $15.2 million in the fourth quarter of 2012. The increase and decline was primarily attributed to variations in MIS revenue. For the full year, total revenue was $61.7 million compared to $76.3 million in 2012. The decline was due to a 36% decrease in UPS sales and a 19% decrease in MIS sales, partially offset by a 23% increase in service revenue. The decrease in UPS sales was due to a large deal that represented more than 10% of total revenue in 2012 which was not repeated in 2013.

Gross margin in the fourth quarter of 2013 was 30.0%, flat from the previous quarter and compared to 39.5% in the fourth quarter of 2012. The decrease in gross margin compared to the fourth quarter of 2012 was primarily due to strong margins on ancillary products in the 2012 period and higher unabsorbed production costs in 2013. For the full year, gross margin was 31.4% compared to 32.4% in 2012.

Operating expenses were $8.0 million in the fourth quarter of 2013, compared to $6.9 million in the previous quarter and $6.3 million in the fourth quarter of 2012. The sequential increase was due to unexpected expenses including severance, CEO transition costs, stock-based compensation, relocation, and legal fees, partially offset by a reduction of bad debt expense and lower product development expenses. The increase from the year-ago quarter was due to many of the same items noted above. 

For the full year, operating expenses increased to $27.0 million from $26.4 million in 2012. This increase was driven by higher product development expenses from investment in our next generation UPS product line, severance, relocation related to executive transitions, stock-based compensation, and legal fees, partially offset by lower recruiting and contract labor expenses and depreciation.

Net loss in the fourth quarter of 2013 was $4.1 million or $(0.21) per share, compared to a net loss of $3.1 million or $(0.16) per share in the previous quarter and net loss of $0.4 million or $(0.02) per share in the fourth quarter of 2012. The increase in net loss from the previous quarter and the fourth quarter of 2012 was primarily due to the items noted above. For the full year, net loss was $8.4 million or $(0.44) per share compared to a loss of $1.9 million or $(0.10) per share in 2012.

Adjusted EBITDA for the fourth quarter of 2013 was a negative $3.0 million compared to a negative $2.3 million in the previous quarter and a positive $0.5 million in the fourth quarter of 2012. For the full year, adjusted EBITDA was a negative $5.1 million compared to a positive $1.3 million in 2012. The adjusted EBITDA decrease in the periods is primarily due to higher net losses in the period. See "About Presentation of Adjusted EBITDA" below for our definition of adjusted EBITDA, a non-GAAP financial metric, and an important discussion about the use of this metric and its reconciliation to GAAP net loss, the most directly comparable GAAP financial measure.

Cash and cash equivalents totaled $12.3 million at Dec. 31, 2013, compared to $14.3 million in the previous quarter and $13.5 million at Dec. 31, 2012.

Management Commentary
"While it was a challenging year due to setbacks in China and executive transitions, we believe we exited the year in a strong position to grow the business," said Mark A. Ascolese, president and CEO of Active Power. "We have a new leadership team in place, a streamlined organization to strengthen sales productivity, a new focus on bookings, and our first CleanSource HD products were shipped in the fourth quarter of 2013."

"Our core foundational technology is the flywheel and its associated power electronics which we believe is still our most distinct competitive advantage and the basis of our current product offerings. Going forward, we view this technology as an enabler in our sales, marketing, and product development efforts and will use it as a template to ensure we do not stray from what we do best. Our priorities align with this strategy and are aimed at driving more consistent and predictable sales performance, leveraging the products and solutions we have available now to grow the business, and positioning the organization as an mission critical energy storage company."

Conference Call and Webcast
Active Power will host a conference call today, Tuesday, Feb. 18, 2014, at 8:30 a.m. (ET) to discuss its fourth quarter and year end 2013 results. Interested parties can dial into the conference call at the time of the event at (888) 312-9849. For callers outside the U.S. and Canada, please dial (719) 457-2666.

To listen to the live webcast, click here. A replay of the webcast will be available via Active Power's investor relations website at http://ir.activepower.com.

About Active Power
Founded in 1992, Active Power (NASDAQ: ACPW) designs and manufactures uninterruptible power supply (UPS) systems and modular infrastructure solutions that enable data centers and other mission critical operations to remain 'on' 24 hours a day, seven days a week. The combined benefits of its products' power density, reliability, and total cost of ownership are unmatched in the market and enable the world's leading companies to achieve their most forward thinking data center designs. The company's products and solutions are built with pride in Austin, Texas, at a state-of-the-art, ISO 9001:2008 registered manufacturing and test facility. Global customers are served via Austin and three regional operations centers located in the United Kingdom, Germany, and China, that support the deployment of systems in more than 50 countries. For more information, visit www.activepower.com.

Cautionary Note Regarding Forward-Looking Statements
This release contains forward-looking statements that involve risks and uncertainties, including statements relating to exiting the year in a strong position to grow the business; strengthen sales productivity; focus on bookings; our most distinct competitive advantage; this technology as an enabler in our sales, marketing, and product development efforts and will use it as a template to ensure we do not stray from what we do best; driving more consistent and predictable sales performance; leveraging the products and solutions we have available now to grow the business; and positioning the organization as an mission critical energy storage company.

Such forward-looking statements and all other statements that may be made in this news release that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Factors that could cause the actual results to differ materially from the results predicted include, among others, our dependence on our relationships with Hewlett Packard, Caterpillar, other original equipment manufacturers (OEM), other strategic IT partners, and on our distributors; our increased emphasis on larger and more complex system solutions; the success of our product development efforts and our ability to manufacture and deliver products in a timely manner; the level of acceptance of our current and future products in the market; the deferral or cancellation of sales commitments as a result of general economic conditions or uncertainty; risks related to our international operations; our ability to borrow under our credit agreement or raise capital as needed to support the business; and product performance and quality issues.

For more information on the risk factors that could cause actual results to differ from these forward looking statements, please refer to Active Power filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2012, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K filed since then. Active Power assumes no obligation to update any forward-looking statements or information which are in effect as of their respective dates.

   
   
   
Active Power, Inc.  
Condensed Consolidated Statement of Operations  
(in thousands, except per share amounts)  
                         
    Three Months Ended December 31,     Twelve Months Ended December 31,  
    (unaudited)     (unaudited)        
    2013     2012     2013     2012  
                                 
                                 
Revenues:                                
  Product revenue   $ 9,300     $ 11,497     $ 44,158     $ 62,031  
  Service and other revenue     4,626       3,750       17,541       14,284  
    Total revenue     13,926       15,247       61,699       76,315  
                                 
Cost of goods sold:                                
  Cost of product revenue     7,452       6,902       32,825       42,510  
  Cost of service and other revenue     2,298       2,325       9,478       9,091  
    Total cost of goods sold     9,750       9,227       42,303       51,601  
Gross profit     4,176       6,020       19,396       24,714  
                                 
Operating expenses:                                
  Research and development     1,850       1,395       7,430       5,440  
  Selling and marketing     3,348       3,248       12,032       14,139  
  General and administrative     2,792       1,686       7,551       6,861  
    Total operating expenses     7,990       6,329       27,013       26,440  
Loss from Operations     (3,814 )     (309 )     (7,617 )     (1,726 )
                                 
Interest expense, net     (88 )     (81 )     (370 )     (327 )
Other income (expense), net     (225 )     (28 )     (364 )     131  
                                 
Net Loss   $ (4,127 )   $ (418 )   $ (8,351 )   $ (1,922 )
                                 
Net Loss per share, basic and diluted   $ (0.21 )   $ (0.02 )   $ (0.44 )   $ (0.10 )
                                 
Shares used in computing net loss per share, basic and diluted     19,398       19,134       19,193       18,584  
                                 
                                 
   
   
   
Active Power, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands)  
    December 31, 2013     December 31, 2012  
   
    (unaudited)        
                 
                 
ASSETS                
                 
Current assets:                
  Cash and cash equivalents   $ 12,261     $ 13,524  
  Restricted cash     520       -  
  Accounts receivable, net of allowance for doubtful accounts of $313 and $488 at December 31, 2013 and December 31, 2012, respectively    
9,075
     
17,862
 
  Inventories, net     12,020       11,079  
  Prepaid expenses and other     680       567  
    Total current assets   $ 34,556     $ 43,032  
Property and equipment, net     3,056       2,458  
Deposits and other     295       309  
    Total assets   $ 37,907     $ 45,799  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Current liabilities:                
  Accounts payable   $ 2,993     $ 4,036  
  Accrued expenses     5,583       4,948  
  Deferred revenue     2,749       4,568  
  Revolving line of credit     5,535       5,535  
    Total current liabilities   $ 16,860     $ 19,087  
Long-term liabilities     741       713  
Stockholders' equity                
  Preferred stock - $0.001 par value; 2,000 shares authorized     -       -  
  Common stock - $0.001 par value; 30,000 shares authorized; 19,452 and 19,171issued and 19,388 and 19,125 outstanding at December 31, 2013 and 2012, respectively     19       19  
  Treasury stock     (215 )     (144 )
  Additional paid-in capital     290,964       288,619  
  Accumulated deficit     (271,168 )     (262,817 )
  Other accumulated comprehensive income     706       322  
    Total stockholders' equity   $ 20,306     $ 25,999  
    Total liabilities and stockholders' equity   $ 37,907     $ 45,799  
 
 
Active Power, Inc.
Supplemental Information
                                         
Revenue by Product   3 Months Ended     12 Months Ended  
      December 31,     December 31,  
               
    2013   % of total     2012   % of total     2013   % of total     2012   % of total  
UPS   $ 5,889   42 %   $ 6,811   44 %   $ 22,620   37 %   $ 35,366   46 %
MIS     3,411   25 %     4,686   31 %     21,538   35 %     26,665   35 %
  Total Product Revenue     9,300   67 %     11,497   75 %     44,158   72 %     62,031   81 %
Service     4,626   33 %     3,750   25 %     17,541   28 %     14,284   19 %
  Total Revenue   $ 13,926   100 %   $ 15,247   100 %   $ 61,699   100 %   $ 76,315   100 %
                                                 
Revenue by Geography                                                
                                                 
Americas   $ 11,278   81 %   $ 11,632   76 %   $ 50,365   82 %   $ 48,190   63 %
EMEA     1,448   10 %     2,338   16 %     6,941   11 %     21,917   29 %
Asia     1,200   9 %     1,277   8 %     4,393   7 %     6,208   8 %
  Total Revenue   $ 13,926   100 %   $ 15,247   100 %   $ 61,699   100 %   $ 76,315   100 %
                                                 
                         
                         
Adjusted EBITDA  
(Thousands)  
                         
    Three     Twelve  
    Months Ended     Months Ended  
    December 31,     December 31,  
    2013     2012     2013     2012  
Net Income (Loss)   $ (4,127 )   $ (418 )   $ (8,351 )   $ (1,922 )
  Interest Expense     88       81       370       327  
  Depreciation Expense     280       327       1,084       1,282  
  Stock Based Compensation     784       279       1,700       1,410  
  Impairment of Long-Lived Assets     (3 )     218       99       218  
Adjusted EBITDA   $ (2,978 )   $ 487     $ (5,098 )   $ 1,315  
                                 
                                 
                                 

About Presentation of Adjusted EBITDA
Beginning with the reporting of results for the fourth quarter of 2012, the company began to report the measure of adjusted EBITDA. Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income, operating income or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. The company defines adjusted EBITDA as net loss before impairment of long-lived assets, depreciation, interest, and non-cash stock based compensation. Other companies (including competitors) may define adjusted EBITDA differently. The company presents adjusted EBITDA because management believes it is to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management also uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Active Power Inc. nor is it intended to be predictive of potential future results. Investors should not consider adjusted EBITDA in isolation or as a substitute for analysis of the company's results as reported under GAAP.

SOURCE: Active Power, Inc.