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Active Power Reports Third Quarter 2013 Results


Active Power Reports Third Quarter 2013 Results

AUSTIN, TX -- (Marketwired) -- 11/18/13 -- Active Power (NASDAQ: ACPW), manufacturer of uninterruptible power supply (UPS) systems and modular infrastructure solutions (MIS), reported results for the third quarter ended Sept. 30, 2013.

Q3 2013 Highlights


 
--  UPS sales increased $3.7 million to $6.5 million compared to the
    previous quarter, but decreased $8.3 million compared to the third
    quarter of 2012.
    
    
--  Service revenue increased $321,000 to $5.1 million compared to the
    previous quarter and increased $2.2 million or 73% compared to the
    third quarter of 2012.
    
    
--  Gross margin decreased to 30.0% compared to 34.3% in the previous
    quarter, but improved compared to 28.6% in the third quarter of 2012.
    
    
--  Deployed second set of two PowerHouse(TM) systems to support
    expansion of two modular data centers for global manufacturer of oil
    and gas drilling products, now totaling nearly three megawatts of
    power infrastructure installed onsite.
    
    
--  Shipped multiple CleanSource(R) UPS systems totaling more than
    three megawatts of total rated UPS capacity to one of the largest
    pharmaceutical companies in the world to support their new drug
    manufacturing facility in the eastern U.S.
    
    
--  Appointed Mark A. Ascolese as company's new president and CEO,
    bringing to the company extensive experience serving a variety of
    mission critical markets including the energy storage and data center
    markets.

Restatement

On November 4, 2013, the audit committee of the board of directors of Active Power concluded, in consultation with management and after discussion with the company's independent registered public accounting firm, that the company would restate its quarterly interim financial statements for the periods ending March 31, 2013, and June 30, 2013. For information regarding the restatement, please refer to the company's Form 8-K filed on November 7, 2013, and the company's amended quarterly reports on Form 10-Q/As for the periods ending March 31, 2013, and June 30, 2013, filed on November 18, 2013, with the Securities and Exchange Commission.

Financial Results Rev enue in the third quarter of 2013 was $13.2 million compared to $20.2 million in the previous quarter and $19.6 million in the third quarter of 2012. The sequential decrease was due primarily to lower MIS revenue while the decrease from the year-ago quarter was primarily attributed to a decrease in UPS revenue. For the first nine months ended Sept. 30, 2013, revenue totaled $47.8 million compared to $61.1 million in the same period in 2012.

Gross margin in the third quarter of 2013 was 30.0% compared to 34.3% in the previous quarter and 28.6% in the third quarter of 2012. The sequential decrease in gross margin was due to higher margin shipments of MIS products in the second quarter of 2013. The increase in gross margin from the year-ago quarter was primarily due to higher service sales in the third quarter of 2013 compared to the third quarter of 2012. For the nine months ended Sept. 30, 2013, gross margin was 31.9% compared to 30.6% in the same period in 2012.

Net loss in the third quarter of 2013 was $3.1 million or $(0.16) per share, compared to a net income of $0.3 million or $0.02 per share in the previous quarter and net loss of $0.8 million or $(0.04) per share in the third quarter of 2012. The change from net income to net loss from the previous quarter and the increase in net loss from the third quarter of 2012 was primarily due to the impact of lower revenue in the quarter compared to the two comparable quarters. For the nine months ended Sept. 30, 2013, net loss was $4.2 million or $(0.22) per share, compared to a net loss of $1.5 million or $(0.08) per share in the same period in 2012.

Adjusted EBITDA for the third quarter of 2013 was a negative $2.3 million compared to a positive $1.1 million in the previous quarter and a negative $0.1 million in the third quarter of 2012. For the nine months ended Sept. 30, 2013, adjusted EBITDA was a negative $2.1 million compared to a positive $0.9 million in the same period in 2012. The adjusted EBITDA decrease in the periods is primarily due to lower revenue and higher depreciation expense. See "About Presentation of Adjusted EBITDA" below for the definition of adjusted EBITDA, a non-GAAP financial metric, and an important discussion about the use of this metric and its reconciliation to GAAP net income, the most directly comparable GAAP financial measure.

Cash and cash equivalents were $14.3 million at Sept. 30, 2013, compared to $14.5 million in the previous quarter and $13.5 million at Dec. 31, 2012.

Management Commentary "The third quarter was challenging with overall product revenues down compared to the third quarter of 2012," said Mark A. Ascolese, president and CEO of Active Power. "However, our service business continued to grow and improved 73 percent or by $2.2 million compared to the same period in 2012."

"As we exit the year and enter 2014, we will focus on driving more consistent performance and predictability throughout the business through the addition of our CSHD product line and sales performance management. We will also leverage and enhance the unique flywheel technology we have in place to grow product revenue and expand into new and relevant markets where our products can immediately solve customers' problems."

Change to Guidance Practice Active Power does not plan to provide quarterly or annual guidance due to continued variability in the business. However, the company plans to continue to provide commentary on industry trends that affect its business and impact its growth prospects.

Conference Call and Webcast Active Power will host a conference call today, Monday, Nov. 18, 2013, at 5:00 p.m. (ET) to discuss its third quarter 2013 results. Interested parties can dial into the conference call at the time of the event at (888) 427-9411. For callers outside the U.S. and Canada, please dial (719) 325-2429.

To listen to the live webcast, click here. A replay of the webcast will be available via Active Power's investor relations website at http://ir.activepower.com.

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

Cautionary Note Regarding Forward-Looking Statements This release contains forward-looking statements that involve risks and uncertainties, including statements relating to focus on driving more consistent performance and predictability throughout the business; and plans to leverage and enhance the unique flywheel technology we have in place to grow product revenue and expand into new and relevant markets.

Such forward-looking statements and all other statements that may be made in this news release that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Factors that could cause the actual results to differ materially from the results predicted include, among others, our dependence on our relationships with Hewlett Packard, Caterpillar, other original equipment manufacturers (OEM), other strategic IT partners, and on our distributors; our increased emphasis on larger and more complex system solutions; the success of our product development efforts and our ability to manufacture and deliver products in a timely manner; the level of acceptance of our current and future products in the market; the deferral or cancellation of sales commitments as a result of general economic conditions or uncertainty; risks related to our international operations; and product performance and quality issues.

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, 2012, 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 which are in effect as of their respective dates.


 
                                                                            
                             Active Power, Inc.                             
   Condensed Consolidated Statement of Operations and Comprehensive Loss    
            (in thousands, except per share amounts; unaudited)             
                                                                            
                                     Three Months Ended   Nine Months Ended 
                                        September 30,       September 30,   
                                     ------------------  ------------------ 
                                       2013      2012      2013      2012   
                                     --------  --------  --------  -------- 
                                                                            
                                                                            
Revenues:                                                                   
  Product revenue                    $  8,023  $ 16,647  $ 34,858  $ 50,534 
  Service and other revenue             5,131  $  2,964    12,915    10,534 
                                     --------  --------  --------  -------- 
    Total revenue                      13,154    19,611    47,773    61,068 
                                                                            
Cost of goods sold:                                                         
  Cost of product revenue               6,784    12,254    25,373    35,608 
  Cost of service and other revenue     2,426     1,742     7,180     6,766 
                                     --------  --------  --------  -------- 
    Total cost of goods sold            9,210    13,996    32,553    42,374 
                                     --------  --------  --------  -------- 
Gross profit                            3,944     5,615    15,220    18,694 
                                                                            
Operating expenses:                                                         
  Research and development              2,149     1,325     5,580     4,045 
  Selling and marketing                 2,714     3,447     8,684    10,891 
  General and administrative            2,046     1,691     4,759     5,175 
                                     --------  --------  --------  -------- 
    Total operating expenses            6,909     6,463    19,023    20,111 
                                     --------  --------  --------  -------- 
Income (Loss) from Operations          (2,965)     (848)   (3,803)   (1,417)
                                                                            
Interest expense, net                    (118)      (80)     (282)     (246)
Other income (expense), net               (52)       81      (139)      159 
                                     --------  --------  --------  -------- 
                                                                            
Net Income (Loss)                    $ (3,135) $   (847) $ (4,224) $ (1,504)
                                     ========  ========  ========  ======== 
Net Income (Loss) per share, basic   $  (0.16) $  (0.04) $  (0.22) $  (0.08)
                                                                            
Shares used in computing net loss                                           
 per share, basic                      19,337    19,115    19,188    18,399 
                                                                            
Comprehensive loss:                                                         
  Net Loss                           $ (3,135) $   (847) $ (4,224) $ (1,504)
  Translation gain (loss) on                                                
   subisidiaries denominated in                                             
   foreign currencies                     238       211        39       (99)
                                     --------  --------  --------  -------- 
Comprehensive loss:                  $ (2,897) $   (636) $ (4,185) $ (1,603)
                                     --------  --------  --------  -------- 
                                                                            
                                                                            
                                                                            
                             Active Power, Inc.                             
                   Condensed Consolidated Balance Sheets                    
                               (in thousands)                               
                                                                            
                                               September 30,   December 31, 
                                                    2013           2012     
                                               -------------  ------------- 
                                                (unaudited)                 
                                                                            
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash and cash equivalents                    $      14,252  $      13,524 
  Restricted cash                                        511              - 
  Accounts receivable, net of allowance for                                 
   doubtful accounts of $838 and $488 at                                    
   September 30, 2013 and December 31, 2012,                                
   respectively                                        8,713         17,862 
  Inventories, net                                    13,244         11,079
 
  Prepaid expenses and other                           2,390            567 
                                               -------------  ------------- 
    Total current assets                       $      39,110  $      43,032 
Property and equipment, net                            2,859          2,458 
Deposits and other                                       294            309 
                                               -------------  ------------- 
    Total assets                               $      42,263  $      45,799 
                                               =============  ============= 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Accounts payable                             $       4,461  $       4,036 
  Accrued expenses                                     5,134          4,948 
  Deferred revenue                                     3,064          4,568 
  Revolving line of credit                             5,535          5,535 
                                               -------------  ------------- 
    Total current liabilities                  $      18,194  $      19,087 
Long-term liabilities                                    737            713 
Stockholders' equity                                                        
  Preferred stock - $0.001 par value; 2,000                                 
   shares authorized                                       -              - 
  Common stock - $0.001 par value; 30,000                                   
   shares authorized; 19,421 and 19,171 issued                              
   and 19,362 and 19,125 outstanding at                                     
   September 30, 2013 and December 31, 2012,                                
   respectively                                           19             19 
  Treasury stock                                        (200)          (144)
  Additional paid-in capital                         290,193        288,619 
  Accumulated deficit                               (267,041)      (262,817)
  Other accumulated comprehensive income                 361            322 
                                               -------------  ------------- 
    Total stockholders' equity                        23,332         25,999 
                                               -------------  ------------- 
    Total liabilities and stockholders' equity $      42,263  $      45,799 
                                               -------------  ------------- 
                                                                            
                                                                            
                                                                            
                             Active Power, Inc.                             
                          Supplemental Information                          
                                                                            
Revenue by                                                                  
 Product                3 Months Ended                9 Months Ended        
                         September 30,                 September 30,        
                          % of           % of           % of           % of 
                    2013 total     2012 total     2013 total     2012 total 
                 ------- -----  ------- -----  ------- -----  ------- ----- 
UPS              $ 6,495    49% $14,783    75% $16,731    35% $28,551    47%
MIS                1,528    12%   1,864    10%  18,127    38%  21,983    36%
                 ------- -----  ------- -----  ------- -----  ------- ----- 
  Total Product                                                             
   Revenue         8,023    61%  16,647    85%  34,858    73%  50,534    83%
Service            5,131    39%   2,964    15%  12,915    27%  10,534    17%
                 ------- -----  ------- -----  ------- -----  ------- ----- 
  Total Revenue  $13,154   100% $19,611   100% $47,773   100% $61,068   100%
                 ======= =====  ======= =====  ======= =====  ======= ===== 
                                                                            
Revenue by                                                                  
 Geography                                                                  
                                                                            
Americas         $ 8,522    65% $ 7,973    41% $39,087    82% $36,557    60%
Asia               2,914    22%   2,177    11%   3,193     7%   4,931     8%
EMEA               1,718    13%   9,461    48%   5,493    11%  19,580    32%
                 ------- -----  ------- -----  ------- -----  ------- ----- 
  Total Revenue  $13,154   100% $19,611   100% $47,773   100% $61,068   100%
                 ======= =====  ======= =====  ======= =====  ======= ===== 
                                                                            
                                                                            
                                                                            
                              Adjusted EBITDA                               
                                (Thousands)                                 
                                                                            
                                            Three               Nine        
                                        Months Ended        Months Ended    
                                        September 30,       September 30,   
                                       2013      2012      2013      2012   
                                     --------  --------  --------  -------- 
Net Income (Loss)                    $ (3,135) $   (847) $ (4,224) $ (1,504)
  Interest Expense                        118        80       282       246 
  Depreciation Expense                    245       308       804       955 
  Stock Based Compensation                388       358       916     1,131 
  Impairment of Long-Lived Assets         132         4       102        31 
                                     --------  --------  --------  -------- 
Adjusted EBITDA                      $ (2,252) $    (97) $ (2,120) $    859 
                                     --------  --------  --------  -------- 

About Presentation of Adjusted EBITDA Beginning with the reporting of results for the fourth quarter of 2012, the company began to report the measure of adjusted EBITDA. Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (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 is 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 predi ctive 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.

Media Contact: Lee Higgins Senior Public Relations Manager 512-656-9435 lhiggins@activepower.com

Investor Contact: Ron Both Liolios Group, Inc. 949-574-3860 acpw@liolios.com

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