SOURCE: Active Power

Active Power

July 28, 2015 07:30 ET

Active Power Reports Second Quarter 2015 Results

Revenue Increases 42% in First Six Months of 2015 Versus Prior Year Period; Turnaround Strategy Yields Improved Results

AUSTIN, TX--(Marketwired - Jul 28, 2015) - Active Power (NASDAQ: ACPW), a manufacturer of flywheel uninterruptible power supply (UPS) systems and modular infrastructure solutions (MIS), reported results for the second quarter and six months ended June 30, 2015.

Highlights

  • Total revenue increased 42% or $8.9 million for the first six months ended June 30, 2015, compared to the first six months of 2014

  • Bookings increased 22% to $36.5 million for the first six months ended June 30, 2015, compared to $30.0 million in the first six months of 2014

  • Increased bookings for large CleanSource® HD UPS orders to be shipped to Europe and the U.S. over the next several quarters

  • Gross margin was 32.7% for the first six months ended June 30, 2015, compared to 23.0% in the first six months of 2014

  • Reduced net loss to $1.8 million in the first six months ended June 30, 2015 compared to a net loss of $8.3 million in the first six months of 2014

  • Improved adjusted EBITDA to a loss of $462,000 in the first six months ended June 30, 2015, compared to a loss of $6.9 million in the first six months of 2014, and recorded $402,000 of adjusted EBITDA in the second quarter of 2015

  • Introduced Extended Runtime option for CleanSource HD UPS product, providing customers up to 30 minutes of additional UPS runtime

  • Settled stockholder class action complaint and derivative actions in May 2015 with settlement fully covered by insurance proceeds

Management Commentary
"The initial plan we put in place more than 20 months ago with a focus on bookings and backlog coupled with a balanced approach to sales execution and expense management continues to yield steady improvement," said Mark A. Ascolese, president and CEO, at Active Power. "We reduced our operating expense in the second quarter of 2015 while revenue increased on both a sequential and annual basis. Bookings also increased more than 20% in the first six months of 2015 to $36.5 million compared to the same period in 2014."

"With an opportunities pipeline that continues to grow, a stronger operating platform in place, and end markets that are increasingly receptive to our proprietary energy efficient solutions, we will remain focused on bookings, backlog, expense control, and cash management for the balance of the year."

Financial Results
Revenue in the second quarter of 2015 was $16.9 million, an increase of $6.7 million or 66% compared to $10.2 million in the year-ago period, and an increase of $3.8 million or 29% from $13.1 million in the previous quarter. For the six months ended June 30, 2015, revenue was $30.0 million, an increase of $8.9 million or 42% compared to $21.1 million in the first six months of 2014. The increases in revenue were driven by higher product sales, specifically stronger MIS sales, in the second quarter of 2015.

Gross margin in the second quarter of 2015 was 32.6% compared to 18.9% in the year-ago period and 32.8% in the previous quarter. For the six months ended June 30, 2015, gross margin was 32.7% compared to 23.0% in the first six months of 2014. The increases in gross margin were the result of a favorable mix of products within UPS and MIS product sales. Products shipped in the quarter contained a higher than normal amount of proprietary content with higher margins. The increases are also attributable to continued improvement in manufacturing absorption.

Operating expenses in the second quarter of 2015 were $5.7 million compared to $6.2 million in the year-ago period and $5.8 million in the previous quarter. For the six months ended June 30, 2015, operating expenses were $11.4 million compared to $12.8 million in the first six months of 2014. The decreases in operating expenses were due to lower spending on materials and services for product development and management's efforts to focus on productivity improvement and disciplined spending.

Net loss in the second quarter of 2015 was $0.3 million or $(0.01) per share compared to a net loss of $4.4 million or $(0.19) per share in the year-ago period and a net loss of $1.6 million or $(0.07) per share in the previous quarter. The decrease in net loss from the year-ago quarter was due to higher revenue, higher gross margin, and lower operating expenses in the second quarter of 2015. The decrease in net loss from the previous quarter was due to higher revenue in the period. For the six months ended June 30, 2015, net loss was $1.8 million or $(0.08) per share compared to a net loss of $8.3 million or $(0.38) per share in the first six months of 2014. The decrease in net loss from the previous six months was due to higher revenue, higher gross margin, and lower operating expenses.

Adjusted EBITDA in the second quarter of 2015 was $402,000 compared to a loss of $3.8 million in the year-ago period and a loss of $864,000 in the previous quarter. For the six months ended June 30, 2015, adjusted EBITDA loss was $462,000 compared to a loss of $6.9 million in the first six months of 2014. An EBITDA reconciliation is provided below. The improvements in adjusted EBITDA were primarily due to increased revenue and lower net loss in the second quarter of 2015.

Cash and cash equivalents totaled $10.6 million at June 30, 2015, compared to $14.8 million at December 31, 2014, and $16.2 million at June 30, 2014. Of the $539,000 of restricted cash held at June 30, 2015, $500,000 is expected to be returned to cash and cash equivalents in the third quarter of 2015 upon expiration of the underlying letter of credit.

Bookings and Backlog
Bookings in the second quarter of 2015 were $17.3 million compared to bookings of $16.0 million in the year-ago period and $19.2 million in the previous quarter. Second quarter orders of $17.3 million results in a book-to-bill ratio of 1.03. The dollar amount of backlog was $33.3 million at June 30, 2015. Of the total backlog, $7.2 million, primarily associated with long-term service contracts, is not expected to be filled in the following 12 months.

Bookings amounts represent anticipated revenue from product orders received during the period that are believed to be firm and from service contracts. Backlog represents the amount of anticipated revenue from prior bookings at the end of the period. Please refer to the Supplemental Information following the Condensed Consolidated Balance Sheets for more detail regarding bookings.

Conference Call and Webcast
Active Power will host a conference call today, Tuesday, July 28, 2015, at 8:30 a.m. (ET) to discuss its second quarter 2015 results. Interested parties can dial into the conference call at the time of the event at (888) 505-4369. For callers outside the U.S. and Canada, please dial (719) 325-2452.

For parties wanting to listen live via the web, a webcast button is located on Active Power's investor relations website at http://ir.activepower.com. A replay of the webcast will be available via Active Power's investor relations website.

About Active Power
Founded in 1992, Active Power (NASDAQ: ACPW) designs and manufactures flywheel 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.

Active Power and CleanSource are registered trademarks of Active Power, Inc. Driven by Motion and the Active Power logo are trademarks of Active Power, Inc.

Non-GAAP Financial Measure
This press release includes information about adjusted EBITDA, which is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles ("GAAP"). At the end of the following tables, Active Power has provided a reconciliation of historical adjusted EBITDA to GAAP net loss, the most directly comparable GAAP financial measure, under the heading "Reconciliation of Net Loss to Adjusted EBITDA." Active Power encourages investors to review this reconciliation in conjunction with our presentation of adjusted EBITDA. See "About Presentation of Adjusted EBITDA" at the end of the following tables for our definition of adjusted EBITDA and for an important discussion about the use of this metric.

Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by references to future periods, and include statements we make regarding anticipated:

  • bookings and backlog;
  • expense control; and
  • cash management.

Actual results and the outcomes of future events could differ materially from those expressed or implied by these forward-looking statements because of a number of risks and uncertainties, including, but not limited to: the possibility backlog may not result in revenue; the deferral or cancellation of sales commitments as a result of general economic conditions or uncertainty; financial results that may vary significantly from quarter to quarter due to seasonality and volatility in customer demand; an increase in sales of our MIS products may materially increase the amount of working capital required to fund our operations; risks related to our international operations; our dependence on our relationships with Caterpillar, Hewlett Packard, other original equipment manufacturers (OEM), other strategic IT partners, and on our distributors; product performance and quality issues; our underutilized manufacturing capacity and lack of experience manufacturing our products in large quantities; the level of acceptance of our current and future products; significant competition; intellectual property claims; and our continued ability to borrow under our credit agreement or raise capital as needed to support the business.

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, 2014, 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.

   
   
Active Power, Inc.  
Condensed Consolidated Statement of Operations  
(in thousands, except per share amounts)  
                         
    Three Months Ended June 30,     Six Months Ended June 30,  
    (unaudited)     (unaudited)  
    2015     2014     2015     2014  
                                 
Revenues:                                
  Product revenue   $ 12,905     $ 7,484     $ 22,453     $ 14,941  
  Service and other revenue     3,950       2,670       7,531       6,151  
    Total revenue     16,855       10,154       29,984       21,092  
                                 
Cost of goods sold:                                
  Cost of product revenue     9,089       6,352       16,060       12,257  
  Cost of service and other revenue     2,268       1,887       4,119       3,992  
    Total cost of goods sold     11,357       8,239       20,179       16,249  
Gross profit     5,498       1,915       9,805       4,843  
                                 
Operating expenses:                                
  Research and development     1,430       1,600       2,946       3,680  
  Selling and marketing     2,715       3,152       5,421       6,040  
  General and administrative     1,524       1,469       3,082       3,075  
    Total operating expenses     5,669       6,221       11,449       12,795  
Loss from Operations     (171 )     (4,306 )     (1,644 )     (7,952 )
                                 
Interest expense, net     (78 )     (106 )     (157 )     (207 )
Other income (expense), net     (9 )     (1 )     (16 )     (128 )
                                 
Net Loss   $ (258 )   $ (4,413 )   $ (1,817 )   $ (8,287 )
                                 
Net Loss per share, basic and diluted   $ (0.01 )   $ (0.19 )   $ (0.08 )   $ (0.38 )
                                 
Shares used in computing net loss per share, basic and diluted     23,133       23,114       23,131       21,851  
                                 
                                 
                                 
Active Power, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands, except par value)  
   
    June 30, 2015     December 31, 2014  
    (unaudited)        
                 
ASSETS                
                 
Current assets:                
  Cash and cash equivalents   $ 10,566     $ 14,824  
  Restricted cash     539       40  
  Accounts receivable, net of allowance for doubtful accounts of $262 and $212 at June 30, 2015 and December 31, 2014, respectively     16,016       11,222  
  Inventories, net     7,423       6,845  
  Prepaid expenses and other     605       800  
    Total current assets     35,149       33,731  
Property and equipment, net     1,923       2,076  
Deposits and other     283       291  
    Total assets   $ 37,355     $ 36,098  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Current liabilities:                
  Accounts payable   $ 5,487     $ 4,044  
  Accrued expenses     4,532       4,134  
  Deferred revenue     3,550       2,771  
  Revolving line of credit     5,535       5,535  
    Total current liabilities     19,104       16,484  
Long-term liabilities     670       821  
Commitments and contingencies                
Stockholders' equity                
  Preferred stock - $0.001 par value; 2,000 shares authorized     -       -  
  Common stock - $0.001 par value; 40,000 shares authorized; 23,167 and 23,162 issued and 23,107 and 23,094 outstanding at June 30, 2015 and December 31, 2014, respectively     23       23  
  Treasury stock     (237 )     (231 )
  Additional paid-in capital     303,341       302,667  
  Accumulated deficit     (285,812 )     (283,995 )
  Other accumulated comprehensive income     266       329  
    Total stockholders' equity     17,581       18,793  
    Total liabilities and stockholders' equity   $ 37,355     $ 36,098  
                     
                     
                     
Active Power, Inc.
Supplemental Information (in thousands)
 
Revenue by Product Three Months Ended     Six Months Ended  
  June 30, 2015   % of total     June 30, 2014   % of total     March 31, 2015   % of total     June 30, 2015   % of total     June 30, 2014   % of total  
                                                           
UPS $ 8,838   53 %   $ 6,159   61 %   $ 7,177   55 %   $ 16,015   53 %   $ 12,795   61 %
MIS   4,067   24 %     1,325   13 %     2,371   18 %     6,438   22 %     2,146   10 %
  Total Product Revenue   12,905   77 %     7,484   74 %     9,548   73 %     22,453   75 %     14,941   71 %
Service   3,950   23 %     2,670   26 %     3,581   27 %     7,531   25 %     6,151   29 %
  Total Revenue $ 16,855   100 %   $ 10,154   100 %   $ 13,129   100 %   $ 29,984   100 %   $ 21,092   100 %
                                                           
Revenue by Geography                                                          
                                                           
Americas $ 11,582   69 %   $ 6,078   60 %   $ 9,863   75 %   $ 21,445   71 %   $ 13,983   66 %
EMEA   4,991   29 %     3,513   35 %     3,024   23 %     8,015   27 %     5,661   27 %
Asia   282   2 %     563   5 %     242   2 %     524   2 %     1,448   7 %
  Total Revenue $ 16,855   100 %   $ 10,154   100 %   $ 13,129   100 %   $ 29,984   100 %   $ 21,092   100 %
                                                           
                                                           
                                                           
Active Power, Inc.
Supplemental Information (in thousands)
                   
Total Bookings Three Months Ended
  June 30,
 2014
  September 30, 2014   December 31, 2014   March 31,
2015
  June 30,
2015
                             
Bookings $ 15,963   $ 13,580   $ 18,500   $ 19,171   $ 17,322
Book to Bill Ratio   1.57     1.07     1.21     1.46     1.03
                             
                             
Reconciliation of Net Loss to Adjusted EBITDA  
(Thousands)  
                             
  Three Months Ended     Six Months Ended  
  June 30,     June 30,     March 31,     June 30,     June 30,  
  2015     2014     2015     2015     2014  
                                       
Net Loss $ (258 )   $ (4,413 )   $ (1,559 )   $ (1,817 )   $ (8,287 )
  Interest Expense   78       106       79       157       207  
  Depreciation Expense   231       306       293       524       620  
  Stock Based Compensation   351       219       323       674       552  
  Impairment of Long-Lived Assets   -       (19 )     -       -       (19 )
Adjusted EBITDA $ 402     $ (3,801 )   $ (864 )   $ (462 )   $ (6,927 )
                                       

About Presentation of Adjusted EBITDA
Adjusted EBITDA is not a financial measure calculated and presented in accordance with 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 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.