Quantum Technologies Reports 2013 Second Quarter Financial Results

      Quantum Technologies Reports 2013 Second Quarter Financial Results

- Company reports record levels of natural gas tank and system revenues and
significant improvement in results from continuing operating activities

PR Newswire

LAKE FOREST, Calif., Aug. 14, 2013

LAKE FOREST, Calif., Aug. 14, 2013 /PRNewswire/ -- Quantum Fuel Systems
Technologies Worldwide, Inc. (Nasdaq: QTWW), a global leader in natural gas
storage systems, integration and vehicle system technologies, today reported
its results for the second quarter 2013. Conference call information is
provided below.

Second Quarter 2013 Highlights:

  oRecord shipments of CNG tank units, more than doubling the comparable
    prior year period
  oRecord levels of natural gas tank and system revenues achieved in the
    quarter, increasing 77% over the corresponding prior year period
  oOperating loss of continuing operations decreased 56% compared to the
    corresponding prior year period
  o$2.9 million in awards of new programs for development of natural gas
    storage systems for truck and passenger vehicles anticipated to positively
    impact second half of 2013 and accelerate growth of future product sales
  oNet cash used for consolidated operating activities reduced to $1.5
    million for the quarter
  oOrder backlog of $14.6 million at June 30, 2013 for products associated
    with natural gas tanks and systems
  oManufacturing capacity added during quarter; targeted 12,000 unit annual
    capacity in fourth quarter on plan
  oAgreement executed to reduce future facility costs by $2.3 million
  oSale and monetization of Schneider Power assets progressing

2013 Second Quarter Operating Results Overview

Product revenues recognized in the second quarter from the Company's
lightweight compressed natural gas (CNG) fuel storage tanks and systems
amounted to $4.7 million, which represented record quarterly revenue levels
for CNG related product sales and an increase of $2.0 million, or 77%,
compared to CNG related product revenues in the corresponding period in the
prior year. Further, the number of tanks shipped during the second quarter
exceeded 1,200 units, which was more than double the number of units shipped
in the prior year quarter. The Company's backlog for CNG fuel storage tank and
system products was $14.6 million as of June 30, 2013.

Overall revenues from continuing operations reached $6.1 million in the second
quarter of 2013, an increase of $0.7 million over the same period in 2012 and
a sequential increase of $1.7 million over the first quarter of 2013.

During the second quarter of 2013, the Company received $2.9 million in awards
of new engineering development contracts.

The overall operating loss from continuing operations was $2.4 million in the
second quarter of 2013 compared to an operating loss of $5.4 million in the
second quarter of 2012, representing a 56% improvement.

The Company used $1.5 million of cash for its consolidated operating
activities in the second quarter of 2013, a $3.8 million improvement over the
level of cash used for operating activities in the comparable prior year
period.

"We are very pleased with the foundation that we have built to date and the
continued expansion and development of our natural gas focused business," said
Brian Olson, Quantum's President and Chief Executive Officer. Mr. Olson
continued, "We continue to add and expand customer programs and are focused on
leveraging this foundation and fostering relationships with key partners to
maximize the opportunities in front of the Company."

Fuel Storage & Vehicle Systems Segment

All revenues from continuing operations are generated by the Fuel Storage &
Vehicle Systems segment.

Product revenue for this segment was $4.7 million in the second quarter of
2013 as compared to $4.2 million in the second quarter of 2012. The second
quarter revenue in 2013 was substantially all related to shipments of CNG
storage tanks and systems. In the second quarter of the prior year, $2.7
million was generated from shipments of CNG storage tanks and systems and $1.4
million was 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 and, as a result, there have not been
any product shipments in 2013.

Overall product gross profit as a percentage of product revenue was 27% in the
second quarter of 2013 as compared to 21% in the same period in the prior
year.

As a result of the Company's expectations for continued growth of its CNG
storage systems, it has implemented a plan to expand tank manufacturing
capacity. The planned capacity expansion is designed to increase annualized
capacity levels from approximately 4,000 units at the beginning of 2013 to
approximately 12,000 units in the fourth quarter of 2013 by setting up
state-of-the art manufacturing lines at a 60,000 sq. ft. building adjacent to
its existing 30,000 sq. ft. factory in Lake Forest, California. The Company is
now utilizing additional equipment installed in the initial phases of the
expansion in its current manufacturing operations and expects to continue
adding additional capacity throughout the remainder of 2013.

Contract revenue for this segment was $1.3 million in the second quarter of
2013, representing an increase of $0.1 million over the second quarter of 2012
and a sequential increase of $0.4 million compared to the first quarter of
2013. Contract revenue is derived primarily from system development,
application engineering and qualification testing of products and systems
under funded contracts with OEMs and other customers. The Company has recently
added significant new engineering development programs with new customers
associated with natural gas trucks and passenger vehicles. Activities under
these new programs began to be reflected in the second quarter of 2013 and the
Company expects increasing levels of activities under these new programs will
boost its contract revenues for the remainder of 2013 and accelerate growth of
future product sales. These programs include provisions that provide for the
Company to become the production intent supplier of fuel storage systems for
certain customers should these programs go to production and provided we can
meet certain conditions. These new programs in 2013 have offset the declines
related to engineering services that were previously provided in 2012 to
Fisker Automotive associated with the Fisker Karma program and to General
Motors associated with hydrogen tank development program that have since been
completed or cancelled.

The operating results of this segment include expenses associated with
internally funded engineering programs. The expenses for these programs
amounted to $1.5 million in the second quarter of 2013, as compared to $2.3
million in the second quarter of 2012. Internally funded research in 2013
primarily includes efforts to advance CNG storage technologies by integrating
and testing lighter materials, and developing different size storage vessels
to add to the Company's existing product families. The decrease in expense
during the second quarter of 2013 was primarily due to the suspension of
activities associated with the Ford F-150 plug-in hybrid electric vehicle
(PHEV) program in late calendar 2012, which represented $0.8 million of
internally funded costs for the prior year second quarter of 2012, that was
partially offset by increased activities in the second quarter of 2013 related
to development of CNG storage technologies.

This segment had an operating loss of $0.7 million in the second quarter in
2013 as compared to an operating loss of $2.2 million in the second quarter of
2012.

Corporate Segment

Corporate expenses were $1.7 million in the second quarter of 2013 as compared
to $3.2 million for the same period in the prior year. 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.

Corporate expenses were lower in the second quarter of 2013 as compared to
2012 primarily due to the elimination of certain executive officer positions,
lower salary levels and other cost reductions implemented over the past twelve
months. The prior year results also included a charge of $1.0 million
primarily associated with separation agreements for certain executive
officers.

On June 5, 2013, the Company announced that it had executed an amendment to an
existing long-term lease agreement with regard to its former corporate
headquarters located in Irvine, California, that pulled forward the lease
expiration date by 21 months to January 31, 2014. The amendment is expected
to result in cost savings of $2.3 million in scheduled rent and other
obligations.

Renewable Energy Segment – held for sale

As previously announced, the Company has committed to a formal plan to sell
its renewable energy business segment conducted by its wholly owned
subsidiary, Schneider Power Inc. (Schneider Power), and initiated steps to
locate buyers for the business operations. Schneider Power, an operator and
developer of wind farms, represents the entire operations of our Renewable
Energy business segment. As a result of the 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, were net losses of $0.7
million in both the second quarters of 2013 and 2012.

The net loss reported for discontinued operations held for sale includes the
recognition of $0.7 million of revenue from energy sales in the second quarter
of 2013 as compared to $0.2 million in the same period of 2012. Energy sales
in the second quarter of 2013 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 the second quarter of 2013 includes
operating expenses of $0.4 million as compared to operating expenses of $0.6
million in the same period in 2012. Also included in expenses in the second
quarter of 2013 were total impairment charges of $0.8 million, which related
to goodwill associated with Zephyr and intangible assets associated with
Schneider Power's development project pipeline. Interest expense on long-term
project financing obligations was $0.4 million in the second quarter of 2013
as compared to $0.2 million in the second quarter of 2012. 

On May 14, 2013, it was announced that Schneider Power had closed on the sale
of its 1.6 Megawatt (MW) Providence Bay operational wind farm for a purchase
price of CAD 406,000 and the assumption of approximately CAD 1.1 million of
bank debt and certain other project related liabilities.

On May 29, 2013, it was announced that Schneider Power had signed a formal
asset purchase agreement with an unrelated third party for the sale of the
10.0 MW Trout Creek wind farm development project and certain other Schneider
Power development projects. The sale of the Trout Creek Project will occur in
two phases. The closing of the first phase, expected to be completed in the
coming weeks, will provide Schneider Power with cash proceeds of CAD 1.0
million. The closing of the second phase, expected to be completed in 18 to
24 months and subject to the project achieving commercial operation, will
provide Schneider Power with additional cash proceeds of CAD 1.1 million.

In addition, the Company is actively pursuing the sale of Schneider Power's
operational 10.0 MW Zephyr wind farm and the remaining development projects.

Non-Reporting Segment Results

Interest Expense.  Interest expense of continuing operations, net of interest
income, amounted to $1.7 million in the second quarter of 2013 as compared to
$0.7 million in the second quarter of 2012. 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 second
quarters of 2013 and 2012 are non-cash interest costs of $1.3 million and $0.5
million, respectively. Non-cash interest expense in the second quarter of
2013 primarily related to the imputed interest costs associated with bridge
notes and certain warrants sold to investors in June and July 2012 and in
January 2013. The January 2013 bridge notes were fully repaid on July 1,
2013; thus, non-cash interest expense is expected to be significantly lower in
the third quarter of 2013. 

Fair Value Adjustments of Derivative Instruments. The consolidated financial
statements include fair value adjustments for the bifurcation of the
derivative liabilities associated with embedded features contained within
certain warrant contracts. Fair value adjustments of derivative instruments,
which represent non-cash unrealized gains or losses, amounted to a net gain of
$0.2 million in the second quarter of 2013 as compared to a net gain of less
than $0.1 million in the second quarter of 2012.

Consolidated Net Loss

The consolidated net loss for the second quarter of 2013 was $4.6 million,
compared to a net loss of $7.1 million in the second quarter of 2012.

Financial Tables

The Company's condensed consolidated financial information for the three and
six month periods ended June 30, 2012 and 2013 is as follows:

                        Three Months Ended         Six Months Ended
                        June 30,                   June 30,
                        2012          2013         2012           2013
                        (Unaudited)   (Unaudited)  (Unaudited)    (Unaudited)
Statements of
Operations:
Revenue:
 Net product sales     $            $           $             $ 
                        4,162,761    4,729,181   7,708,502     8,234,276
 Contract revenue       1,253,118     1,349,723    3,612,681      2,251,885
       Total revenue   5,415,879     6,078,904    11,321,183     10,486,161
Costs and expenses:
 Cost of product        3,282,175     3,460,368    5,789,054      6,064,244
 sales
 Research and           3,398,806     2,304,016    7,340,075      4,658,516
 development
 Selling, general and   4,142,967     2,695,303    7,635,458      6,023,910
 administrative
       Total costs and  10,823,948    8,459,687    20,764,587     16,746,670
       expenses
Operating loss         (5,408,069)   (2,380,783)  (9,443,404)    (6,260,509)
 Interest expense, net  (662,910)     (1,681,848)  (3,908,137)    (3,077,281)
 Fair value
 adjustments of         20,000        197,000      126,000        284,000
 derivative
 instruments, net
 Gain on modification
 of debt and            348,328       -            348,328        -
 derivative
 instruments, net
 Loss on settlement of
 debt and derivative    -             -            (95,450)       -
 instruments, net
 Equity in losses of    (228,296)     -            (349,886)      (5,998)
 affiliates, net
 Other                  26,467        -            26,467         -
Loss from continuing
operations before       (5,904,480)   (3,865,631)  (13,296,082)   (9,059,788)
income taxes
 Income tax expense     (3,200)       -            (3,200)        (1,600)
Loss from continuing    (5,907,680)   (3,865,631)  (13,299,282)   (9,061,388)
operations
Loss from discontinued
operations, net of      (1,158,561)   (698,437)    (1,581,849)    (2,406,600)
taxes
Net loss attributable   $             $           $              $
to stockholders         (7,066,241)  (4,564,068)  (14,881,131)   (11,467,988)
Per share data - basic
and diluted:
 Loss from continuing   $        $       $         $     
 operations             (0.50)        (0.29)      (1.39)        (0.71)
 Loss from
 discontinued           (0.10)        (0.05)       (0.16)         (0.19)
 operations
Net loss attributable   $        $       $         $     
to stockholders         (0.60)        (0.34)      (1.55)        (0.90)
Weighted average
shares outstanding -    11,827,848    13,444,293   9,601,844      12,770,465
basic and diluted
Cash Flow Information
(1):
 Net cash used in       $             $           $             $ 
 operating activities   (5,343,751)  (1,497,342)  (7,845,900)    (3,616,856)
 Net cash used in       $             $         $             $ 
 investing activities   (3,880,461)  (58,498)    (4,098,934)    (1,303,824)
 Net cash provided by   $            $           $ 13,722,393  $ 
 financing activities   4,087,293    3,516,060                  6,410,513
 (1)   The cash flow information includes Schneider Power for the periods
       presented.





                                      December 31,         June 30,
                                      2012                 2013
Balance Sheet Information:                                 (Unaudited)
 Continuing Operations:
  Cash and cash equivalents           $    1,435,658    $    3,092,255
  Working capital (deficit)           $   (8,387,625)    $  (12,452,757)
  Total assets                        $   27,034,902     $   29,724,280
  Derivative instruments, classified  $     600,000   $    2,625,000
  as current
  Debt obligations, current &
  non-current:
  Principal & accrued interest        $   13,564,903     $   14,237,606
  Debt discounts                      (1,504,353)          (590,712)
   Total                            $   12,060,550     $   13,646,894
 Discontinued Operations:
  Cash and cash equivalents           $      578,080  $      347,464
  Total assets                        $   34,226,458     $   27,395,826
  Total liabilities                   $   26,908,713     $   24,327,177
 Total stockholders' equity           $   14,222,681     $    6,299,061
 Shares issued and outstanding:
  Preferred stock; $0.001 par value  -                    -
  Series B common stock; $0.02 par    12,499               12,499
  value
  Common stock; $0.02 par value       11,940,183           14,191,344
   Total                            11,952,682           14,203,843

Financial Results Call Scheduled:

Wednesday, August 14, 2013 1:30 p.m. Pacific time (4:30 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 # 27556845. 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 the earnings call, a playback of the call will
be available via telephone approximately three hours after the call. The
number for this service is: 855-859-2056 or 404-537-3406 using Conference ID
27556845. The playback will be available until11:45 p.m. Pacific Time on
August 30, 2013.

The call will also be available on the Company's Investor Relations web page
approximately two days 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
innovation, development and production of natural gas fuel storage systems and
the integration of vehicle system technologies including engine and vehicle
control systems and drivetrains. Quantum produces one of the most innovative,
advanced, and light-weight compressed natural gas storage tanks in the world
and supplies these tanks, in addition to fully-integrated natural gas storage
systems, to truck and automotive OEMs and aftermarket and OEM truck
integrators. Quantum provides low emission and fast-to-market solutions to
support the integration and production of natural gas fuel and storage
systems, hybrid, fuel cell, and specialty vehicles, as well as modular,
transportable hydrogen refueling stations. Quantum is headquartered in Lake
Forest, California, and has operations and affiliations in the United States,
Canada, 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.Examples of forward looking statement included in this release
include whether our new engineering programs will result in growth of our
product sales, whether our CNG sales will grow to the level we anticipate, and
whether we will be able to complete the planned expansion of our manufacturing
capacity by the end of calendar 2013 and, if we do, whether it will result in
the output we anticipate, whether we will be a production supplier under our
production-intent development programs, when the two closing phases for the
sale of the Trout Creek wind farm development project will occur, if at all,
and the amount of proceeds we will realize upon each closing, and the actual
amount of savings resulting from the lease amendment for the Irvine facility.
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 relating to the forward-looking
statements contained in this release include the ability of the customer and
Quantum to fulfill their obligations under the new and existing orders and
contracts, whether we can raise sufficient capital to fund our expected growth
in operations including the planned expansion of our manufacturing capacity,
whether our customers decide to take the production-intent development
programs into production and whether we meet the conditions required of us in
order to be a production supplier, whether all the closing conditions related
to the sale of the Trout Creek wind farm can be satisfied or waived, whether
the buyer of the Trout Creek wind farm is able to bring the project to
commercial operation, and whether we can sell the remaining Schneider Power
assets on terms acceptable to us, if at all. For a complete description of
all risk factors affecting our business, you are encouraged to review the Risk
Factors section of our periodic reports filed with the Securities and Exchange
Commission. Except as otherwise required by law, the Company undertakes no
obligation to update the information in this 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.