Quantum Technologies Reports 2012 Fourth Quarter and Annual Financial Results

Quantum Technologies Reports 2012 Fourth Quarter and Annual Financial Results

- Natural gas tank and system sales increase 126% in calendar 2012

PR Newswire

LAKE FOREST, Calif., March 28, 2013

LAKE FOREST, Calif., March 28, 2013 /PRNewswire/ -- Quantum Fuel Systems
Technologies Worldwide, Inc. (Nasdaq: QTWW), a global leader in natural gas
storage systems, integration and vehicle technologies, today reported its
results for the fourth quarter and calendar year 2012. Conference call
information is provided below.

2012 Fourth Quarter and Annual Operating Results Overview

Total revenue from continuing operations was $5.6 million in the fourth
quarter of 2012 as compared to $9.8 million in the fourth quarter of 2011, and
was $22.7 million in calendar 2012 as compared to $33.9 million in calendar
2011.

Product revenues from our ultra-lightweight compressed natural gas (CNG) fuel
storage tanks and systems for CNG powered vehicles increased by $1.3 million
or 100% during the fourth quarter of 2012 and increased by $6.3 million, or
126% in calendar 2012 as compared to similar periods in calendar 2011. The
improved revenues from CNG product sales partially offset the reduction
experienced in calendar 2012 in revenues from component shipments and
engineering services provided to Fisker Automotive.

During calendar year 2012, we received $19.1 million in new purchase orders
for our CNG fuel storage tanks and systems, as compared to $5.8 million of new
purchase orders received during calendar 2011, representing a 231% increase in
the current year period. As of December 31, 2012, our backlog for CNG fuel
storage tanks and systems was $10.3 million.

Our consolidated operating loss from continuing operations amounted to $1.8
million in the fourth quarter of 2012 compared to a loss of $20.1 million in
the fourth quarter of 2011 and amounted to a loss of $14.4 million in calendar
2012 compared to a loss of $28.0 million in calendar 2011. After excluding
the impact of one-time charges and gains discussed below, the operating loss
in the second half of 2012 reflects a 29% improvement over the operating loss
in the first half of 2012. The operating loss in calendar 2011 included an
$18.0 million charge as of December 31, 2011 for the impairment of goodwill.

We used $1.3 million and $12.5 million of cash for our consolidated operating
activities in the fourth quarter of 2012 and calendar 2012, respectively,
which represent improvements over the levels of cash used for operating
activities in the comparable prior year periods of $1.8 million and $12.9
million, respectively.

"We're very proud to report a record year of shipments and new orders received
for our CNG fuel storage tanks and systems in calendar 2012, and, given that
in 2013 we have already received $9.4 million in new orders for our CNG
storage systems, we see this trend continuing in 2013," said Brian Olson,
Quantum's President and Chief Executive Officer. Mr. Olson continued, "We
believe we have made tremendous strides in refocusing the Company over the
past year to effectively leverage our core technologies and expertise to
capitalize on the expanding natural gas industry and are beginning to see
positive results from those efforts. During the last 6 months of calendar
2012, we experienced a significant decrease in our operating loss as compared
to the first 6 months of 2012. This improvement is reflective of growing CNG
product sales with strong margins and a renewed focus on cost containment.
Characteristics that we expect will frame 2013 for Quantum."

Fuel Storage & Vehicle Systems Segment

All revenues from continuing operations are generated by our Fuel Storage &
Vehicle Systems segment, which was previously referred to as our Electric
Drive & Fuel Systems segment.

Product revenue for this segment was $2.6 million in the fourth quarter of
2012 compared to $6.0 million in the fourth quarter of 2011, and was $14.5
million in calendar 2012 compared to $17.2 million in calendar 2011. The
fourth quarter revenue in 2012 was substantially all related to shipments of
our CNG storage systems. Included in calendar year 2012 revenue was $11.3
million in revenue generated from shipments of CNG storage systems and $3.0
million in revenue generated from shipments of component parts to Fisker
Automotive for the Fisker Karma vehicle. The Fisker Karma vehicle has not
been in production since approximately July 2012 for reasons unrelated to us
or the components we supply, including the hybrid control software that we
developed and license to Fisker Automotive.

As a result of the significant increase in new purchase orders for our CNG
storage systems and our expectations for continued growth, we have implemented
a plan to expand tank manufacturing capacity. The planned capacity expansion,
anticipated to be completed in 2013, is designed to double our current
production capacity by setting up state-of-the art manufacturing lines at a
60,000 sq. ft. building adjacent to our existing 30,000 sq. ft. factory in
Lake Forest, California. The scheduled expansion is expected to provide
additional capacity starting in the first half of calendar 2013 with continued
incremental capacity coming on-line throughout calendar 2013.

Contract revenue for this segment was $3.0 million in the fourth quarter of
2012 as compared to $3.8 million in the fourth quarter of 2011 and was $8.2
million in calendar 2012 as compared to $16.7 million in calendar 2011.
Contract revenue is derived primarily from system development, application
engineering and qualification testing of our products and systems under funded
contracts with OEMs and other customers. The higher contract revenue in 2011
was mainly due to the level of pre-production engineering services that we
provided to Fisker Automotive during calendar 2011 prior to and just after its
launch of the Fisker Karma vehicle. Although we continued to provide
engineering services to Fisker Automotive under existing contracts in 2012 and
into the beginning of 2013 to develop advanced features for the Fisker Karma
vehicle, the levels of activity in calendar 2012 declined significantly
compared to the levels in calendar 2011.

This segment had an operating loss of $1.3 million and $6.6 million in the
fourth quarter and calendar year 2012, respectively, compared to an operating
loss of $17.9 million and $17.0 million in the fourth quarter and calendar
year 2011, respectively.

The operating results of this segment include expenses associated with our
internally funded engineering programs. The expenses for these programs
amounted to $2.6 million in the fourth quarter of 2012, as compared to $2.0
million in the fourth quarter of 2011, and amounted to $9.4 million in
calendar 2012, as compared to $6.1 million in calendar 2011. Our internally
funded research effort includes hybrid control strategies and proprietary
software designed to precisely control hybrid propulsion and vehicle
performance along with CNG and hydrogen storage, injection and regulation
programs. The increase during the calendar 2012 period was primarily due to
increased engineering activities related to our F-150 PHEV program which
represented $0.9 million and $3.4 million of our internally funded engineering
expenses in the fourth quarter and calendar year 2012, respectively. We
suspended our efforts on the F-150 PHEV program in November 2012 and do not
expect to resume efforts on this program until internal funding and supply
chain issues can be resolved. 

Included in the prior year fourth quarter and calendar 2011 was a goodwill
impairment charge of $18.0 million.

Corporate Segment

Corporate expenses were $0.5 million and $7.8 million for the fourth quarter
and calendar 2012, respectively, as compared to $2.2 million and $11.0 million
for the fourth quarter and calendar 2011, respectively. Corporate expenses
consist primarily of personnel costs, share-based compensation costs, and
related general and administrative costs for executive, finance, legal, human
resources, investor relations and our board of directors.

After excluding the impact of the significant non-recurring charges and gains
associated with the segment that are discussed below, overall Corporate
segment expenses declined 31% and 15%, respectively, in the fourth quarter
and calendar 2012 as compared to the same periods in 2011.

The decrease in corporate expenses in the fourth quarter of the current year
is mainly attributable to a gain recognized in 2012 of $1.1 million associated
with a partial reversal of a $1.7 million facility exit charge initially
recognized in June 2011 upon commencement of a sublease arrangement on a
facility in Lake Forest, California. The sublease was amended in October 2012
which allowed us to reoccupy the facility for the remaining term of the lease
and necessitated a reversal of substantially all of the remaining balance of
the facility exit obligation. We also realized savings from lower executive
wages and benefits along with other cost-cutting initiatives implemented in
calendar 2012. 

Corporate expenses in calendar 2012 also include a net charge of $1.0 million
associated with separation agreements executed in connection with the May 10,
2012 resignations of our former President and Chief Executive Officer and our
former Executive Chairman of the Board. 

Renewable Energy Segment – held for sale

Effective August 9, 2012, we committed to a formal plan to sell our wholly
owned subsidiary, Schneider Power Inc. (Schneider Power) and initiated steps
to locate a buyer. Schneider Power, an operator and developer of wind farms,
represents the entire operations of our Renewable Energy business segment. As
a result of our intent to sell the business, the historical activities and
balances of the Renewable Energy business segment are reported as discontinued
operations held for sale in the accompanying condensed consolidated financial
information presented herein.

The results from the operations of the Renewable Energy segment, classified as
discontinued operations held for sale, net of taxes, was net earnings of $0.5
million in the fourth quarter of 2012 and a net loss of $1.0 million in
calendar 2012, respectively, as compared to a net loss of $8.1 million in the
fourth quarter of 2011 and $11.0 million in calendar 2011, respectively.

The net earnings or loss reported for discontinued operations held for sale
includes the recognition of $1.6 million of revenue from energy sales in
calendar 2012 as compared to $0.3 million in calendar 2011. Energy sales in
2012 include activities of the 10.0 megawatt Zephyr Wind Farm (Zephyr), which
Schneider Power acquired on April20, 2012. Zephyr began generating revenues
under its power purchase agreement beginning on its official commercial
operation date of May15, 2012. The net loss reported for discontinued
operations held for sale in calendar 2012 includes operating expenses of $1.8
million as compared to operating expenses of $11.2 million in calendar 2011.
Included in operating expenses in calendar 2011 were total impairment charges
of $8.5 million related to goodwill, an intangible asset associated with
Schneider Power's development project pipeline and the abandonment of the
Spring Bay wind farm construction project. Interest expense on long-term
project financing obligations was $1.1 million in calendar 2012 and $0.1
million in calendar 2011. Schneider Power also recognized an income tax
benefit of $0.4 million in calendar 2012. 

Other Asset Disposals

Quantum Solar Energy, Inc (Quantum Solar), our majority owned subsidiary, was
established in 2008 with the intent to develop a solar panel distribution and
manufacturing operation in Irvine, California. Due to changes in market
conditions within the global solar industry that have occurred since the
establishment of Quantum Solar, manufacturing operations have not commenced to
date for Quantum Solar nor do we expect them to commence in the future. Due
to these market conditions and other considerations, the asset groups
associated with the planned manufacturing operations of Quantum Solar have
been disposed of by abandonment and, as a result, the historical activities
and asset balances are reported as discontinued operations.

Effective as of December 31, 2012, we abandoned and fully impaired certain
assets consisting of prepayments made in prior years to our German affiliate,
Asola, related to a cell supply agreement associated with Quantum Solar's
anticipated manufacturing operations. We recognized total charges in the
fourth quarter of 2012 of $4.3 million in connection with this impairment, of
which $3.9 million related to the carrying value of the prepayments and $0.4
million related to accumulated other comprehensive losses associated with
foreign currency translation. The fourth quarter impairment charge, along
with historical impairments related to solar manufacturing equipment deposits
recorded in previous periods ($0.9 million in July 2011, $0.7 million in
December 2011 and $0.5 million in June 2012) are now classified as
discontinued operations. 

Non-Reporting Segment Results

Interest Expense.  Interest expense of our continuing operations, net of
interest income, amounted to $0.8 million and $5.5 million in the fourth
quarter of 2012 and in calendar 2012, respectively, as compared to $2.9
million and $5.2 million in the fourth quarter of 2011 and in calendar 2011,
respectively. Interest expense represents both cash payments based on stated
contractual rates and non-cash imputed rates associated with equity-linked
characteristics (e.g. warrants and debt principal conversion features),
accelerated maturities and/or other contractual provisions of the debt
securities. Included in the 2012 interest expense are non-cash amounts of
$0.4 million in the fourth quarter and $4.6 million in the full calendar year,
respectively.

Fair Value Adjustments of Derivative Instruments. Our consolidated financial
statements include fair value adjustments for the bifurcation of the
derivative liabilities associated with embedded features contained within
certain debt obligations and warrant contracts. Fair value adjustments of
derivative instruments, which represent non-cash unrealized gains or losses,
amounted to a net gain of less than $0.2 million in the fourth quarter of 2012
as compared to a net gain of $3.0 million in the fourth quarter of 2011, and
amounted to a gain of $0.4 million in calendar 2012 as compared to a net gain
of $9.6 million in calendar 2011.

Gain or Loss on Modification of Debt and Derivative Instruments. We recognized
an overall gain of $0.6 million in the current year in connection with the
exchange of certain existing convertible notes with new nonconvertible bridge
notes in June and July of 2012, as compared to a loss of $4.1 million in the
prior year in connection with debt modifications that occurred in January and
August 2011.

Gain (Loss) on Settlement of Debt and Derivative Instruments. During the
months of February and March 2012, wesettled a total of $1.3 million of
principal due under a promissory note by the issuance of shares of our common
stock. As a result of the in-kind debt settlements, we recognized a net charge
of $0.1 million in the current year, which represented the difference between
the fair values of the shares issued and the debt settled. During the prior
year from January 2011 thru August 2011, we recognized a net loss of $1.3
million primarily attributed to settlements of debt and derivative instruments
with shares of our common stock.

Impairment of Investment in and Advances to Affiliates. Our German affiliate,
Asola, has experienced recurring losses and declining year-over-year revenues
in 2012. In addition, European-based solar manufacturers continue to
experience significant competition from Chinese-based manufacturers that is
eroding opportunities for Asola to remain competitive or be a viable
enterprise without a significant restructuring of its operations. These
continuing trends along with other indicators that emerged during 2012
indicate that a potential "other-than-temporary" decline in value may have
occurred and, as a result, we performed a preliminary assessment of the
recoverability of our investment in and advances to Asola during the third
quarter of 2012. Based on our assessment, the carrying value exceeded the fair
value and, as a result, we recognized an initial estimated impairment charge
of $5.0 million. During the fourth quarter of 2012, Asola experienced
additional losses and the probability of insolvency increased. On January 23,
2013, Asola filed an application for self-administered insolvency under German
law, which the local court granted on January 29, 2013. As a result of these
conditions, we recognized an additional impairment of $0.5 million effective
as of December 31, 2012 to write-off the remaining carrying value of our
investments in Asola and the accumulated foreign currency translation related
to our investments in Asola.

Equity in Losses of Affiliates. We recognized losses of $1.8 million in
calendar 2011 and $0.8 million in calendar 2012, representing the net equity
in earnings or losses of our affiliates that we account for under the equity
method of accounting. The losses in 2011 and 2012 are primarily associated
with our equity share of the operating losses of Asola.

Consolidated Net Loss

Our consolidated net loss for the fourth quarter of 2012 was $6.6 million,
compared to a net loss of $29.6 million in the fourth quarter of 2011, and our
consolidated net loss in calendar 2012 was $30.9 million, compared to a net
loss of $43.0 million in calendar 2011.



Quantum Fuel Systems Technologies Worldwide, Inc.
Condensed Consolidated Financial Information
                     Three Months Ended            Twelve Months Ended
                     December 31,                  December 31,
                     2011 (1)        2012          2011 (1)       2012
                     (Unaudited)     (Unaudited)   (Unaudited)
Statements of
Operations:
Revenue:
 Net product sales  $  5,998,618  $            $             $ 
                                     2,602,523    17,183,108    14,526,031
 Contract revenue    3,818,026       3,016,610     16,726,877     8,186,040
       Total         9,816,644       5,619,133     33,909,985     22,712,071
       revenue
Costs and
expenses:
 Cost of product     4,641,365       2,010,930     12,395,266     10,757,138
 sales
 Research and        4,159,467       3,948,194     16,497,960     14,558,634
 development
 Selling, general
 and                 3,088,924       1,445,414     14,993,210     11,814,812
 administrative
 Goodwill            18,000,000      -             18,000,000     -
 impairment
       Total costs
       and           29,889,756      7,404,538     61,886,436     37,130,584
       expenses
Operating loss      (20,073,112)    (1,785,405)   (27,976,451)   (14,418,513)
 Interest expense,   (2,943,326)     (822,861)     (5,248,081)    (5,496,149)
 net
 Fair value
 adjustments of      3,035,000       238,000       9,625,000      372,000
 derivative
 instruments, net
 Gain (loss) on
 modification of
 debt and            (9,000)         -             (4,072,942)    649,786
 derivative
 instruments, net
 Loss on settlement
 of debt and         -               -             (1,273,351)    (95,450)
 derivative
 instruments, net
 Impairment of
 investment in and   -               (484,557)     (58,572)       (5,447,592)
 advances to
 affiliates
 Equity in income
 (losses) of         (809,578)       1,026         (1,756,350)    (771,427)
 affiliates, net
 Other               -               -             -              26,467
Loss from
operations before    (20,800,016)    (2,853,797)   (30,760,747)   (25,180,878)
income taxes
 Income tax benefit  -               (800)         334,445        (4,000)
 (expense)
Loss from
continuing           (20,800,016)    (2,854,597)   (30,426,302)   (25,184,878)
operations
Loss from
discontinued         (8,750,665)     (3,771,199)   (12,575,465)   (5,729,008)
operations, net of
taxes
Net loss                             $             $              $
attributable to      $(29,550,681)   (6,625,796)  (43,001,767)  (30,913,886)
stockholders
Per share data -
basic and diluted:
 Loss from           $          $        $        $     
 continuing          (1.20)          (0.06)        (2.18)         (0.59)
 operations
 Loss from
 discontinued        (0.51)          (0.08)        (0.90)         (0.13)
 operations
Net loss             $          $        $        $     
attributable to      (1.71)          (0.14)        (3.08)         (0.72)
stockholders
Weighted average
shares outstanding
-
 basic and diluted   17,285,217      47,811,117    13,945,716     43,135,376
Cash Flow
Information (2):
 Net cash used in                    $             $              $
 operating           $ (1,765,513)  (1,308,475)  (12,900,288)  (12,470,129)
 activities
 Net cash used in    $             $           $           $ 
 investing           (289,997)       (352,190)     (273,838)      (4,916,938)
 activities
 Net cash provided                   $            $             $ 
 by financing        $  3,193,486  1,118,690    15,181,472    15,596,657
 activities
       The 2011 three and twelve month periods are shown for comparative
 (1)   purposes and have been prepared on a pro forma and unaudited basis and
       include certain estimates.
 (2)   The cash flow information includes Schneider Power for all periods
       presented.

                                            December 31,      December 31,
                                            2011              2012
Balance Sheet Information:
 Continuing Operations:
  Cash and cash equivalents                 $  3,723,128    $  1,435,658
  Working capital (deficit)                 $ (1,878,737)    $ (8,387,625)
  Total assets                              $ 36,208,022     $ 27,034,902
  Derivative instruments:
  Current                                   $    953,000   $    600,000
  Non-current                               543,000           -
  Total                                     $  1,496,000    $    600,000
  Debt obligations, current & non-current:
  Principal & accrued interest              $ 11,598,783     $ 13,564,903
  Debt discounts                            (4,033,591)       (1,504,353)
  Total                                     $  7,565,192    $ 12,060,550
 Discontinued Operations:
  Cash and cash equivalents                 $     75,053  $    578,080
  Total assets                              $ 10,228,727     $ 34,226,458
  Total liabilities                         $  2,332,608    $ 26,908,713
 Total stockholders' equity                 $ 25,573,412     $ 14,222,681
 Shares issued and outstanding:
  Preferred stock; $0.001 par value        -                 -
  Series B common stock; $0.02 par value    49,998            49,998
  Common stock; $0.02 par value             26,617,369        47,761,119
  Total                                     26,667,367        47,811,117



Financial Results Call Scheduled:

Thursday, March 28, 2013 1:30 p.m. Pacific time (04:30 p.m. Eastern time). If
you are interested in participating in the financial results conference call,
please call the following number approximately ten minutes prior to the
starting time: 800-207-9287 or (706) 679-1155 Conference ID # 26120148. An
operator will request your name and organization.You will then be placed on
hold until the call begins.

For those of you unable to join us for the earnings call, a playback of the
call will be available via telephone approximately three hours after the call
untilApril 4, 2013 at 11:45 p.m. Pacific Time. The number for this service
is: 855-859-2056.

The call will also be available on the Company's Investor Relations web page
approximately two hours after the call at:

http://www.qtww.com/about/investor_information/conference_calls/index.php

For assistance, please call Bonnie Poyer at (949) 399-4536.

About Quantum:

Quantum Fuel Systems Technologies Worldwide, Inc. is a leader in the
development and production of natural gas fuel storage and system
technologies, alternative fuel vehicles, and advanced vehicle propulsion
systems. Quantum's portfolio of technologies includes natural gas and hydrogen
storage and metering systems, electronic and software controls, hybrid
electric drive systems, and other alternative fuel technologies and solutions
that enable fuel efficient, low emission natural gas and hybrid, plug-in
hybrid electric and fuel cell vehicles. Quantum's powertrain engineering,
system integration, vehicle manufacturing, and assembly capabilities provide
fast-to-market solutions to support the production of natural gas, plug-in
hybrid, hydrogen-powered hybrid, fuel cell, and specialty vehicles, as well as
modular, transportable hydrogen refueling stations.

Quantum's customer base includes automotive OEMs, fleets, aerospace industry,
military and other governmental agencies, and other strategic alliance
partners. Quantum's wholly owned subsidiary, Schneider Power Inc., complements
Quantum's renewable energy presence through the development and ownership of
wind and solar farms.

Quantum is headquartered in Lake Forest, California, and has operations and
affiliations in the USA, Canada, Germany and India.

Forward Looking Statements:

This press release contains forward looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. All statements included
in this report, other than those that are historical, are forward-looking
statements and can generally be identified by words such as "may," "could,"
"will," "should," "assume," "expect," "anticipate," "plan," "intend,"
"believe," "predict," "estimate," "forecast," "outlook," "potential," or
"continue," or the negative of these terms, and other comparable
terminology.Various risks and other factors could cause actual results, and
actual events that occur, to differ materially from those contemplated by the
forward looking statements.The risk factors include the ability of the
customer and Quantum to fulfill their obligations under the new orders. The
Company undertakes no obligation to update the information in this press
release to reflect events or circumstances after the date hereof or to reflect
the occurrence of anticipated or unanticipated events.

More information can be found about the products and services of Quantum at
http://www.qtww.com/ or you may contact:

Brion D. Tanous
Principal, CleanTech IR, Inc.
Email: btanous@cleantech-ir.com
310-541-6824

SOURCE Quantum Fuel Systems Technologies Worldwide, Inc.

Website: http://www.qtww.com
 
Press spacebar to pause and continue. Press esc to stop.