SOURCE: ZBB Energy Corporation

ZBB Energy Corporation

May 15, 2014 16:03 ET

ZBB Energy Corporation Reports Third Quarter Fiscal Year 2014 Break-Even Earnings per Share

MILWAUKEE, WI--(Marketwired - May 15, 2014) -  ZBB Energy Corporation (NYSE MKT: ZBB), a leading developer of intelligent, renewable energy power platforms and hybrid vehicle control systems, today announced its financial results for its third fiscal quarter ended March 31, 2014.

Third Quarter Highlights

During the third quarter of fiscal year 2014, the Company's major accomplishments included:

  • Completed a secondary offering of 6,325,000 shares of common stock at $2.25 per share for net cash proceeds of $13.1 million.
  • Achieved the initial milestone of the joint development agreement with Lotte Chemical, and received $3 million in one-time upfront license fees for the quarter.
  • Tested and shipped equipment to Ergon Energy in Australia. Ergon has successfully completed their lab testing and will place the equipment in the field over the coming weeks as part of their field trial to determine suitability. 

Subsequent to the end of the third quarter of fiscal year 2014, the Company:

  • Hired a sales manager for the state of Hawaii.
  • Advanced to the RFQ stage for the Imperial Irrigation District's 40-megawatt energy storage project. 

"The completion of our secondary offering and the initiation of the Lotte Chemical project strengthened our balance sheet this quarter and enhanced our financial capacity to more aggressively pursue the multiple sales opportunities in our markets," said Eric C. Apfelbach, President and Chief Executive Officer. "To prepare for these opportunities, we are actively working to add staff in our sales and technical areas, including our recent hire of a sales manager for Hawaii." 

"Additionally, ZBB and Lotte are working towards an agreement that would enable Lotte to purchase from ZBB the "chassis" frame, internal componentry and power electronics for ZBB EnerStore® flow batteries, whereby Lotte will source the electrolyte and manufacture the stacks to be placed in the chassis frame provided by ZBB. This combined global manufacturing strategy will give us the lowest possible costs and enable us to ramp quickly to meet the large demand that is being indicated by the RFQ activity." 

"We believe our products are the right fit for the multi-billion dollar energy storage proposals in California, New York, Province of Ontario and South Korea." continued Mr. Apfelbach. "We expect additional energy storage proposals going forward, including in China, which we believe over time has the potential to be a $40 billion market opportunity."

Financial results for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013 included:

  • Product sales decreased 59% to $822,318 from $2,019,191.
  • Engineering and development revenues increased 650% to $750,000 from $100,000.
  • License revenues were $3,000,000.
  • Product gross margin was 33.0% compared to 12.8% in the prior year quarter.
  • Net loss to common stockholders improved to $67,945 compared to $2,824,313.
  • Loss per share improved to ($0.00) from ($0.18).

Financial results for the nine month period ending March 31, 2014 compared to the nine months ended March 31, 2013:

  • Product sales decreased 58% to $2,652,896 from $6,372,336.
  • Engineering and development revenues increased 200% to $950,000 from $318,183.
  • Product gross margin was 36.0% compared to 13.4% in the prior year period.
  • Net loss to common stockholders improved to $4,901,204 compared to $8,790,560.
  • Loss per share improved to ($0.27) from ($0.57).

Financial Position

The Company's backlog as of March 31, 2014 was approximately $5.2 million. $3.25 million of our backlog relates to provisions of the Lotte Amended License and Research and Development Agreements. The Company ended the third quarter of fiscal 2014 with total assets of $23.5 million, including $13.4 million in cash and $583,000 in accounts receivable.

"I expect our order flow to remain uneven in the near-term. We will continue to work with our partners, including Lotte Chemical and Cummins Crosspoint, to extend our relationships and secure additional business. In addition, the recently announced plan by the U.S. Department of Energy to offer up to $4 billion in loan guarantees for renewable energy projects could rejuvenate interest and orders in the domestic market," Mr. Apfelbach concluded.

Conference call - May 15, 2014 - 4:30 p.m. Eastern Time (3:30 p.m. CT)

The Company will hold a conference call on Thursday, May 15, 2014 at 4:30 p.m. Eastern Time (3:30 p.m. Central Time) to discuss results for its third fiscal quarter ended March 31, 2014. To participate in the call, please dial 1-888-539-3612 for domestic callers and 1-719-457-0820 for international callers. The participant passcode is 3851779.

The call will be available for replay at 1-888-203-1112 for domestic callers, and 1-719-457-0820, for international callers. The replay passcode is 3851779. The conference call will also be available for replay via the investor relations section of the Company's website at www.zbbenergy.com.

   
   
ZBB ENERGY CORPORATION  
Condensed Consolidated Statements of Operations  
   
    Three months ended     Nine months ended  
 March 31,  March 31,
    2014     2013     2014     2013  
Revenues                                
  Product sales   $ 822,318     $ 2,019,191     $ 2,652,896     $ 6,372,336  
  Engineering and development     750,000       100,000       950,000       318,183  
  License     3,000,000       -       3,000,000       -  
    Total Revenues     4,572,318       2,119,191       6,602,896       6,690,519  
                                 
Costs and Expenses                                
  Cost of product sales     546,904       1,761,762       1,698,762       5,519,360  
  Cost of engineering and development     65,560       62,118       109,196       107,183  
  Advanced engineering and development     1,095,589       1,293,147       3,400,318       3,828,686  
  Selling, general, and administrative     2,667,569       1,439,235       5,221,065       4,731,209  
  Depreciation and amortization     200,646       338,041       886,405       1,022,503  
    Total Costs and Expenses     4,576,267       4,895,303       11,315,744       15,208,941  
                                 
Income (Loss) from Operations     (3,949 )     (2,776,112 )     (4,712,849 )     (8,518,422 )
                                 
Other Income (Expense)                                
  Equity in loss of investee company     (55,428 )     (118,442 )     (303,910 )     (651,555 )
  Interest income     1,435       913       2,944       1,896  
  Interest expense     (27,153 )     (40,829 )     (124,668 )     (134,039 )
  Other income (expense)     -       (45,000 )     896       (45,000 )
    Total Other Income (Expense)     (81,146 )     (203,358 )     (424,738 )     (828,698 )
                                 
Income (Loss) before provision (benefit) for Income Taxes     (85,096 )     (2,979,470 )     (5,137,587 )     (9,346,939 )
                                 
Provision (benefit) for Income Taxes     (38,598 )     (36,715 )     (86,848 )     (110,866 )
  Net loss     (46,497 )     (2,942,755 )     (5,050,739 )     (9,236,074 )
  Net loss attributable to noncontrolling interest     55,428       118,442       303,910       445,514  
Net Income (Loss) Attributable to ZBB Energy Corporation     8,931       (2,824,313 )     (4,746,829 )     (8,790,560 )
Preferred Stock Dividend     (76,876 )     -       (154,375 )     -  
Net Loss Attributable to Common Shareholders   $ (67,945 )   $ (2,824,313 )   $ (4,901,204 )   $ (8,790,560 )
                                 
Net Loss per share                                
  Basic and diluted   $ (0.00 )   $ (0.18 )   $ (0.27 )   $ (0.57 )
                                 
Weighted average shares-basic and diluted     18,690,642       15,693,149       18,045,685       15,555,891  
                                 
                                 
                                 
ZBB ENERGY CORPORATION  
Condensed Consolidated Balance Sheets  
   
    March 31, 2014        
    (Unaudited)     June 30, 2013  
Assets                
Current assets:                
  Cash and cash equivalents   $ 13,393,266     $ 1,096,621  
  Restricted cash on deposit     69,713       60,000  
  Accounts receivable, net     583,020       446,925  
  Inventories     1,748,607       2,459,776  
  Prepaid expenses and other current assets     261,323       224,542  
  Refundable income tax credit     93,976       137,228  
    Total current assets     16,149,904       4,425,092  
Long-term assets:                
  Property, plant and equipment, net     4,526,730       5,179,707  
  Investment in investee company     2,000,219       2,304,122  
  Intangible assets, net     -       411,073  
  Goodwill     803,079       803,079  
    Total assets   $ 23,479,932     $ 13,123,073  
                 
Liabilities and Equity                
Current liabilities:                
  Bank loans and notes payable   $ 348,701     $ 885,786  
  Accounts payable     633,145       570,932  
  Accrued expenses     1,461,447       785,532  
  Customer deposits     1,202,295       2,194,262  
  Accrued compensation and benefits     194,048       164,437  
    Total current liabilities     3,839,635       4,600,949  
Long-term liabilities:                
  Bank loans and notes payable     2,133,709       2,395,802  
    Total liabilities     5,973,345       6,996,751  
                 
Equity                
  Series B redeemable convertible preferred stock ($0.01 par value, $1,000 face value) 10,000,000 authorized, 2,750 and 0 shares issued and outstanding, preference in liquidation of $5,641,510 as of March 31, 2014     28       -  
  Common stock ($0.01 par value); 150,000,000 authorized, 25,257,700 and 17,707,341 shares issued and outstanding as of March 31, 2014 and June 30, 2013 respectively     960,891       885,389  
  Additional paid-in capital     101,823,820       85,464,055  
  Accumulated deficit     (85,679,653 )     (80,932,824 )
  Accumulated other comprehensive loss     (1,598,710 )     (1,594,418 )
    Total ZBB Energy Corporation Equity     15,506,376       3,822,202  
  Noncontrolling interest     2,000,211       2,304,120  
    Total equity     17,506,587       6,126,322  
    Total liabilities and equity   $ 23,479,932     $ 13,123,073  
                 
                 
                 
ZBB Energy Corporation  
Condensed Consolidated Statements of Cash Flows  
   
    Nine months ended March 31,  
    2014     2013  
Cash flows from operating activities                
Net loss   $ (5,050,739 )   $ (9,236,074 )
Adjustments to reconcile net loss to net cash used in operating activities:                
  Depreciation of property, plant and equipment     580,379       552,079  
  Amortization of intangible assets     411,073       549,532  
  Stock-based compensation     450,796       570,604  
  Equity in loss of investee company     303,910       651,555  
  Amortization of discounts and debt issuance costs on notes payable     14,566       -  
  Purchase price adjustment     -       45,000  
Changes in assets and liabilities                
  Accounts receivable     (136,095 )     (605,430 )
  Inventories     823,670       (121,558 )
  Prepaids and other current assets     (51,346 )     1,831  
  Refundable income taxes     43,253       (118,682 )
  Accounts payable     62,213       48,340  
  Accrued compensation and benefits     29,610       (87,710 )
  Accrued expenses     715,707       (417,946 )
  Customer deposits     (991,967 )     (174,644 )
Net cash used in operating activities     (2,794,971 )     (8,343,103 )
Cash flows from investing activities                
  Expenditures for property and equipment     (39,907 )     (106,479 )
  Investment in investee company     -       -  
  Deposits of restricted cash     (9,713 )     (60,000 )
Net cash used in investing activities     (49,620 )     (166,479 )
Cash flows from financing activities                
  Repayments of bank loans and notes payable     (843,262 )     (877,312 )
  Proceeds from issuance of preferred stock and warrants     3,000,000       -  
  Preferred stock issuance costs     (96,967 )     -  
  Proceeds from issuance of common stock     14,231,250       4,244,689  
  Common stock issuance costs     (1,149,786 )     (177,606 )
  Proceeds from noncontrolling interest     -       5,500  
Net cash provided by financing activities     15,141,235       3,195,271  
Effect of exchange rate changes on cash and cash equivalents     -       776  
Net increase (decrease) in cash and cash equivalents     12,296,645       (5,313,535 )
Cash and cash equivalents - beginning of period     1,096,621       7,823,217  
                 
Cash and cash equivalents - end of period   $ 13,393,266     $ 2,509,683  
                 
Cash paid for interest   $ 137,763     $ 121,539  
Cash received from foreign income tax credit     133,996       -  
                 
                 

About ZBB Energy Corporation

ZBB Energy Corporation (NYSE MKT: ZBB) designs, develops, licenses and manufactures advanced energy storage and power electronics systems, as well as engineered custom and semi-custom products targeted at the growing global need for distributed renewable energy, energy efficiency, power quality, and grid modernization. ZBB's portfolio includes integrated power management platforms that combine advanced power and energy controls plus energy storage to optimize renewable energy sources and conventional power inputs for grid connected and off-grid applications. ZBB's innovative platforms solve a wide range of electrical system challenges in global markets for utility, governmental, commercial, industrial and residential customers. In addition, the platforms ensure optimal efficiencies today, while offering the flexibility to adapt and scale to future requirements. ZBB's corporate offices, engineering and development, and production facilities are located in Menomonee Falls, WI, USA with a research facility also located in Perth, Western Australia. ZBB has a joint venture with Meineng Energy, a provider of leading-edge energy storage systems and solutions to the greater China market. For more information, visit: www.zbbenergy.com.

Safe Harbor Statement

Certain statements made in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended that are intended to be covered by the "safe harbor" created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "could," "seek," "intend," "plan," "estimate," "anticipate" or other comparable terms. Forward-looking statements in this press release may address the following subjects among others: statements regarding the sufficiency of our capital resources, expected operating losses, expected revenues, expected expenses and our expectations concerning our business strategy. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including those risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our most recently filed Annual Report on Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q. We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.