SOURCE: Northern Power Systems Corp.

Northern Power Systems AG

August 05, 2014 16:30 ET

Northern Power Systems Announces Q2 2014 Financial Results

Strong Revenue Growth; Substantially Reduced EBITDA Losses

BARRE, VT--(Marketwired - August 05, 2014) -

Second Quarter 2014 Highlights:

  • Expanded quarterly revenues to $13.8 million from $4.3 million in the prior year period; revenue expansion driven by strong continued demand for the Company's distributed class turbines.
  • Reduced quarterly net loss to $2.2 million from $2.8 million in the prior year period, and quarterly non-GAAP EBITDA loss to $1.3 million from $3.0 million in the prior year quarter; driven by sales into higher wind regimes and production cost control.
  • Completed prototype of next generation distributed class turbine which will offer improved performance and economic returns.
  • Concluded capital raise of $22.3 million in April, supporting strategic plans for global expansion in sales of Northern Power's offerings.

Northern Power Systems Corp. (TSX: NPS), a next generation renewable energy technology company, today announced financial results for its three and six month periods ended June 30, 2014.

"Our second quarter financial results demonstrated continued strong year-over-year revenue growth. With our next generation distributed turbine ready for the market and our capital raise concluded, we are planning our targeted expansion strategy to enter new regions and market sectors," said Troy Patton, president and chief executive officer. "We also continue to be very pleased with the scope of our strategic partnership with WEG Industries. WEG's production and delivery of 2MW turbines leveraging our licensed technology platform continues on pace to fill its current Brazilian orders of greater than 150 MW. The 3.3MW turbine now under development supported by Northern Power should add to a strong portfolio of offerings for WEG's commercialization of our permanent magnet/direct drive technology in this rapidly expanding market."

"Our significant reductions in quarterly net loss and non-GAAP EBITDA loss, at 22 percent and 58 percent year-over-year, respectively, are demonstrating our path toward break-even," commented Ciel Caldwell, chief financial officer. "We are optimistic in our continued progress of tracking to profitability."

Consolidated Financial Metrics:

  • Revenue for the second quarter of fiscal year 2014 grew to $13.8 million, a 220 percent increase over revenue of $4.3 million reported in the prior year period.
  • Order backlog at June 30, 2014 was $41 million, a 21 percent increase over backlog of $34 million at June 30, 2013.
  • Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the second quarter was 16 percent, up from a gross margin loss of 1 percent in the prior year period.
  • GAAP net loss for the second quarter was $2.2 million, representing a 22 percent decrease compared to a $2.8 million loss in the prior year period.
  • Non-GAAP adjusted EBITDA loss for the second quarter was $1.3 million, representing a 58 percent decrease compared to a non-GAAP adjusted EBITDA loss of $3.0 million, in the prior year period.
  • Cash used in operations in the second quarter was $6.9 million, representing a 244 percent increase compared to a $2.0 million usage of cash for operations in the prior year period.
  • Debt at June 30, 2014 was $0 as compared to $12.5 million at December 31, 2013.

Webcast and conference call reminder

In conjunction with this announcement Northern Power Systems' management will present prepared remarks and participate in a question and answer session at 5:00 p.m. EDT on August 5, 2014. Those who wish to view the presentation should visit the "Investors" section of the Northern Power Systems' website at http://www.ir.northernpower.com/events-and-presentations.aspx. The live call can be accessed domestically at +1-877-317-6789 and internationally at +1-412-317-6789. Participants should ask to be joined to the Northern Power Systems call.

About non-GAAP financial measures

To supplement Northern Power Systems' consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), Northern Power Systems has used a non-GAAP financial measure, specifically non-GAAP adjusted EBITDA. Non-GAAP adjusted EBITDA is defined as net income/(loss), excluding share-based compensation expense, amortization of acquisition-related intangibles, depreciation of property, plant and equipment, interest expense, tax charges, and certain other non-cash charges, as applicable.

The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on non-GAAP adjusted EBITDA, please see the table captioned "Reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net loss" included at the end of this release. The table has more details on the GAAP financial measure that is most directly comparable to non-GAAP adjusted EBITDA and the related reconciliation between these financial measures.

Northern Power Systems' management believes that this non-GAAP financial measure provides meaningful supplemental information in assessing our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, which could be non-cash charges or discrete cash charges that are infrequent in nature. This non-GAAP financial measure also has facilitated management's internal comparisons to Northern Power Systems' historical performance and our competitors' operating results, as well as reflects measurements which are used by creditors and other third parties in assessing our performance.

About Northern Power Systems

Northern Power Systems designs, manufactures, and sells wind turbines, and provides engineering development services and technology licenses for energy applications, into the global marketplace from its US headquarters and European offices.

* Northern Power Systems has almost 40 years' experience in technologies and products generating renewable energy.

* Northern Power Systems currently manufactures the NPS™ 60 and NPS™ 100 turbines. With over 5 million run time hours across its global fleet, Northern Power wind turbines provide customers with clean, cost effective, reliable renewable energy.

* Patented next generation permanent magnet/direct drive (PM/DD) technology uses fewer moving parts, delivers higher energy capture, and provides increased reliability due to reduced maintenance and downtime.

* Northern Power Systems offers comprehensive in-house development services, including systems level engineering, advanced drivetrains, power electronics, PM machine design, and remote monitoring systems to the energy industry.

* Some of the world's largest manufacturers license the company's next generation technology and IP for their utility and distributed wind products and markets.

To learn more about Northern Power Systems, please visit www.northernpower.com.

Notice regarding forward-looking statements:

This release includes forward-looking statements regarding Northern Power Systems Corp. and its business, which may include, but is not limited to, anticipated use of proceeds from capital transactions, expansion into new markets, and execution of the company's growth strategy. Often, but not always, forward-looking statements can be identified by the use of words such as "plans," "is expected," "expects," "scheduled," "intends," "contemplates," "anticipates," "believes," "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of Northern Power Systems Corp. The forward-looking events and circumstances discussed in this release may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, including risks regarding the wind power industry, performance and acceptance of the company's products, economic factors, competition, the equity markets generally and many other factors beyond the control of Northern Power Systems Corp. Although Northern Power Systems Corp. has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Northern Power Systems Corp. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

 
 
NORTHERN POWER SYSTEMS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013 - INCLUDING RESULTS OF THE PREDECESSOR COMPANY WIND POWER HOLDINGS, INC. AS APPLICABLE
(All amounts in thousands, except share and per share amounts)
  For the three months ended    For the six months ended  
  June 30, 2014    June 30, 2013    June 30, 2014    June 30, 2013  
            
REVENUES:                       
 Net revenue $13,770    $4,306    $27,526    $5,984  
COSTS OF REVENUE AND OPERATING EXPENSES:                       
 Cost of revenues  11,574     4,364     24,140     6,208  
 Sales and marketing  898     755     1,678     1,328  
 Research and development  1,077     1,006     2,216     2,011  
 General and administrative  2,393     1,540     4,569     3,052  
  Total costs of revenue and operating expenses  15,942     7,665     32,603     12,599  
 Loss from operations  (2,172 )   (3,359 )   (5,077 )   (6,615 )
 Change in fair value of warrants  -     724     -     661  
 Interest income  5     -     5     -  
 Interest expense  (37 )   (111 )   (277 )   (129 )
 Other income/(expense)  67     (4 )   102     (25 )
 Loss before provision for income taxes  (2,137 )   (2,750 )   (5,247 )   (6,108 )
 Provision for income taxes  15     3     29     29  
                
NET LOSS  (2,152 )   (2,753 )   (5,276 )   (6,137 )
                
 Foreign currency translation  (88 )   -     (88 )   -  
                        
COMPREHENSIVE LOSS $(2,064 )  $(2,753 )  $(5,188 )  $(6,137 )
                        
Net loss applicable to common shareholders $(2,152 )  $(3,801 )  $(5,276 )  $(8,708 )
Net loss per common share                       
 Basic and diluted $(0.10 )  $(13.22 )  $(0.31 )  $(57.29 )
Weighted average number of common shares outstanding                       
 Basic and diluted  21,088,589     287,413     16,964,388     151,995  
 
 
NORTHERN POWER SYSTEMS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
AS OF JUNE 30, 2014 AND DECEMBER 31, 2013 - FOR THE PREDECESSOR COMPANY WIND POWER HOLDINGS, INC.
(All amounts in thousands)
  June 30,    December 31,  
ASSETS 2014    2013  
            
CURRENT ASSETS:           
 Cash and cash equivalents $15,394    $4,534  
 Accounts receivable  3,535     1,175  
 Unbilled revenue  2,724     786  
 Inventories - net  13,568     11,682  
 Other current assets  2,579     2,808  
  Total current assets  37,800     20,985  
 Property, plant and equipment - net  1,538     1,414  
 Asset held for sale  -     1,300  
 Intangible assets - net  416     509  
 Goodwill  722     722  
 Other assets  731     2,615  
  Total Assets $41,207    $27,545  
            
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)           
            
CURRENT LIABILITIES:           
 Current portion of long-term debt $-    $141  
 Senior secured convertible notes  -     12,107  
 Accounts payable  3,315     2,148  
 Accrued expenses  5,668     4,365  
 Deferred revenue  6,772     4,221  
 Customer deposits  6,440     10,917  
 Other current liabilities  717     3,327  
  Total current liabilities  22,912     37,226  
            
 Deferred revenue, less current portion  1,491     1,163  
 Other long-term liability  289     558  
  Total Liabilities  24,692     38,947  
STOCKHOLDERS' EQUITY (DEFICIENCY):           
Common stock  165,505     128  
Additional paid-in capital  7,532     139,804  
Accumulated other comprehensive income  88     -  
Accumulated deficit  (156,610 )   (151,334 )
            
  Total Stockholders' Equity (Deficiency)  16,515     (11,402 )
            
Total Liabilities and Stockholders' Equity (Deficiency) $41,207    $27,545  
            
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
NORTHERN POWER SYSTEMS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013 - INCLUDING RESULTS OF THE PREDECESSOR COMPANY WIND POWER HOLDINGS, INC. AS APPLICABLE
(All amounts in thousands)
  For the three months ended    For the six months ended  
  June 30, 2014    June 30, 2013    June 30, 2014   June 30, 2013  
OPERATING ACTIVITIES:                       
 Net loss $(2,152 )  $(2,753 )  $(5,276 ) $ (6,137 )
Adjustments to reconcile net loss to net cash used in operating activities:                       
 Change in fair value of warrants  -     (724 )   -     (661 )
 Provision for inventory obsolescence  -     -     93     48  
 Provision for doubtful accounts  (25 )   -     (88 )   1  
 Stock-based compensation expense  454     57     602     179  
 Depreciation and amortization  391     310     569     537  
 Noncash restructure charges  -     (31 )   -     19  
 Deferred income taxes  -     4     3     7  
                        
Changes in operating assets and liabilities:                       
 Accounts receivable and unbilled revenue  (587 )   435     (4,209 )   356  
 Other current and noncurrent assets  296     115     184     408  
 Inventories  (1,136 )   105     (1,979 )   (1,338 )
 Accounts payable  (1,024 )   53     1,167     (4 )
 Accrued expenses  (674 )   252     1,416     386  
 Customer deposits  (3,313 )   (335 )   (4,477 )   1,018  
 Other liabilities  880     508     2,821     (258 )
                        
  Net cash used in operating activities  (6,890 )   (2,004 )   (9,174 )   (5,439 )
                        
INVESTING ACTIVITIES:                       
 Proceeds from sale of property  1,300     -     1,300     -  
 Purchases of property and equipment  (405 )   (18 )   (600 )   (71 )
                        
  Net cash provided (used) by investing activities  895     (18 )   700     (71 )
                        
FINANCING ACTIVITIES:                       
 Proceeds equity financing  19,662     -     19,662     -  
 Proceeds from exercise of stock options  25     -     25     -  
 Proceeds from issuance of convertible notes  -     4,525     -     4,525  
 Proceeds from borrowings of short-term debt  -     (750 )   -     -  
 Debt principal payments  (382 )   (32 )   (441 )   (62 )
  Net cash provided by financing activities  19,305     3,743     19,246     4,463  
                        
Effect of exchange rate change on cash  88     -     88     -  
                        
Change in cash and cash equivalents  13,398     1,721     10,860     (1,047 )
 Cash and cash equivalents - Beginning of the Period  1,996     1,688     4,534     4,456  
 Cash and cash equivalents - End of the Period $15,394    $3,409    $15,394   $ 3,409  
 
 
NORTHERN POWER SYSTEMS CORP.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP ADJUSTED EBITDA NET LOSS (unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013 - FOR THE PREDECESSOR COMPANY WIND POWER HOLDINGS, INC.
(All amounts in thousands)
 
  For the three months ended    For the six months ended  
  June 30, 2014    June 30, 2013    June 30, 2014    June 30, 2013  
                        
NET LOSS $(2,152 )  $(2,753 )  $(5,276 )  $(6,137 )
Interest expense  37     111     277     129  
Provision for income taxes  15     3     29     29  
Depreciation and amortization  391     310     569     537  
Stock compensation expense  454     57     602     179  
Fair value of warrants classified as liability  -     (724 )   -     (661 )
Non-GAAP adjusted EBITDA net loss $(1,255 )  $(2,996 )  $(3,799 )  $(5,924 )
                

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