Active Power Reports Fourth Quarter and Year End 2013 Results

Active Power Reports Fourth Quarter and Year End 2013 Results 
AUSTIN, TX -- (Marketwired) -- 02/18/14 --  Active Power (NASDAQ:
ACPW), manufacturer of uninterruptible power supply (UPS) systems and
modular infrastructure solutions (MIS), reported results for the
fourth quarter and full year ended Dec. 31, 2013. 
Q4 2013 and Full Year Financial Highlights 


 
--  Full year 2013 revenue was $61.7 million compared to $76.3 million in
    2012.
    
    
--  Fourth quarter 2013 revenue increased $772,000 from the previous
    quarter to $13.9 million.
    
    
--  Annual service revenue increased $3.3 million or 23% to $17.5 million
    compared to 2012, marking the 10th consecutive year service revenue
    has increased.

  
Operational Highlights 


 
--  Booked and shipped a large UPS order to IT partner IO, a global leader
    in software-defined data centers, for deployment at a world-class
    university's high performance computing center on the east coast.
    
    
--  Appointed Jay Powers as CFO and vice president of Finance, bringing to
    the company more than 30 years of broad and deep experience at both
    domestic and international organizations in a variety of industries
    including manufacturing, power quality, and energy storage.
    
    
--  Appointed Randall J. Adleman as vice president of Global Sales and
    Marketing, bringing to Active Power more than two decades of sales and
    marketing leadership in the power quality, energy storage, and
    enterprise software sectors.

  
Q4 and Full Year 2013 Financial Results 
 Revenue in the fourth quarter
of 2013 increased to $13.9 million from $13.2 million in the previous
quarter and declined from $15.2 million in the fourth quarter of
2012. The increase and decline was primarily attributed to variations
in MIS revenue. For the full year, total revenue was $61.7 million
compared to $76.3 million in 2012. The decline was due to a 36%
decrease in UPS sales and a 19% decrease in MIS sales, partially
offset by a 23% increase in service revenue. The decrease in UPS
sales was due to a large deal that represented more than 10% of total
revenue in 2012 which was not repeated in 2013. 
Gross margin in the fourth quarter of 2013 was 30.0%, flat from the
previous quarter and compared to 39.5% in the fourth quarter of 2012.
The decrease in gross margin compared to the fourth quarter of 2012
was primarily due to strong margins on ancillary products in the 2012
period and higher unabsorbed production costs in 2013. For the full
year, gross margin was 31.4% compared to 32.4% in 2012.  
Operating expenses were $8.0 million in the fourth quarter of 2013,
compared to $6.9 million in the previous quarter and $6.3 million in
the fourth quarter of 2012. The sequential increase was due to
unexpected expenses including severance, CEO transition costs,
stock-based compensation, relocation, and legal fees, partially
offset by a reduction of bad debt expense and lower product
development expenses. The increase from the year-ago quarter was due
to many of the same items noted above.  
For the full year, operating expenses increased to $27.0 million from
$26.4 million in 2012. This increase was driven by higher product
development expenses from investment in our next generation UPS
product line, severance, relocation related to executive transitions,
stock-based compensation, and legal fees, partially offset by lower
recruiting and contract labor expenses and depreciation.  
Net loss in the fourth quarter of 2013 was $4.1 million or $(0.21)
per share, compared to a net loss of $3.1 million or $(0.16) per
share in the previous quarter and net loss of $0.4 million or $(0.02)
per share in the fourth quarter of 2012. The increase in net loss
from the previous quarter and the fourth quarter of 2012 was
primarily due to the items noted above. For the full year, net loss
was $8.4 million or $(0.44) per share compared to a loss of $1.9
million or $(0.10) per share in 2012. 
Adjusted EBITDA for the fourth quarter of 2013 was a negative $3.0
million compared to a negative $2.3 million in the previous quarter
and a positive $0.5 million in the fourth quarter of 2012. For the
full year, adjusted EBITDA was a negative $5.1 million compared to a
positive $1.3 million in 2012. The adjusted EBITDA decrease in the
periods is primarily due to higher net losses in the period. See
"About Presentation of Adjusted EBITDA" below for our 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 loss, the most directly comparable GAAP financial measure. 
Cash and cash equivalents totaled $12.3 million at Dec. 31, 2013,
compared to $14.3 million in the previous quarter and $13.5 million
at Dec. 31, 2012.  
Management Commentary 
 "While it was a challenging year due to
setbacks in China and executive transitions, we believe we exited the
year in a strong position to grow the business," said Mark A.
Ascolese, president and CEO of Active Power. "We have a new
leadership team in place, a streamlined organization to strengthen
sales productivity, a new focus on bookings, and our first
CleanSource HD products were shipped in the fourth quarter of 2013." 
"Our core foundational technology is the flywheel and its associated
power electronics which we believe is still our most distinct
competitive advantage and the basis of our current product offerings.
Going forward, we view this technology as an enabler in our sales,
marketing, and product development efforts and will use it as a
template to ensure we do not stray from what we do best. Our
priorities align with this strategy and are aimed at driving more
consistent and predictable sales performance, leveraging the products
and solutions we have available now to grow the business, and
positioning the organization as an mission critical energy storage
company."  
Conference Call and Webcast
 Active Power will host a conference call
today, Tuesday, Feb. 18, 2014, at 8:30 a.m. (ET) to discuss its
fourth quarter and year end 2013 results. Interested parties can dial
into the conference call at the time of the event at (888) 312-9849.
For callers outside the U.S. and Canada, please dial (719) 457-2666. 
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 exiting the year in a
strong position to grow the business; strengthen sales productivity;
focus on bookings; our most distinct competitive advantage; this
technology as an enabler in our sales, marketing, and product
development efforts and will use it as a template to ensure we do not
stray from what we do best; driving more consistent and predictable
sales performance; leveraging the products and solutions we have
available now to grow the business; and positioning the organization
as an mission critical energy storage company. 
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; our
ability to borrow under our credit agreement or raise capital as
needed to support the business; 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               
                  (in thousands, except per share amounts)                  
                                                                            
                                Three Months Ended     Twelve Months Ended  
                                   December 31,           December 31,      
                                    (unaudited)      (unaudited)            
                               --------------------  -----------  --------- 
                                  2013       2012        2013        2012   
                               ---------  ---------  -----------  --------- 
                                                                            
                                                                            
Revenues:                                                                   
  Product revenue              $   9,300  $  11,497  $    44,158  $  62,031 
  Service and other revenue        4,626      3,750       17,541     14,284 
                               ---------  ---------  -----------  --------- 
    Total revenue                 13,926     15,247       61,699     76,315 
                                                                            
Cost of goods sold:                                                         
  Cost of product revenue          7,452      6,902       32,825     42,510 
  Cost of service and other                                                 
   revenue                         2,298      2,325        9,478      9,091 
                               ---------  ---------  -----------  --------- 
    Total cost of goods sold       9,750      9,227       42,303     51,601 
                               ---------  ---------  -----------  --------- 
Gross profit                       4,176      6,020       19,396     24,714 
                                                                            
Operating expenses:                                                         
  Research and development         1,850      1,395        7,430      5,440 
  Selling and marketing            3,348      3,248       12,032     14,139 
  General and administrative       2,792      1,686        7,551      6,861 
                               ---------  ---------  -----------  --------- 
    Total operating expenses       7,990      6,329       27,013     26,440 
                               ---------  ---------  -----------  --------- 
Loss from Operations              (3,814)      (309)      (7,617)    (1,726)
                                                                            
Interest expense, net                (88)       (81)        (370)      (327)
Other income (expense), net         (225)       (28)        (364)       131 
                               ---------  ---------  -----------  --------- 
                                                                            
Net Loss                       $  (4,127) $    (418) $    (8,351) $  (1,922)
                               =========  =========  ===========  ========= 
                                                                            
Net Loss per share, basic and                                               
 diluted                       $   (0.21) $   (0.02) $     (0.44) $   (0.10)
                                                                            
Shares used in computing net                                                
 loss per share, basic and                                                  
 diluted                          19,398     19,134       19,193     18,584 
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                             Active Power, Inc.                             
                   Condensed Consolidated Balance Sheets                    
                               (in thousands)                               
                                                December 31,   December 31, 
                                                    2013           2012     
                                                                            
                                                (unaudited)                 
                                               -------------  ------------- 
                                                                            
                                                                            
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash and cash equivalents                    $      12,261  $      13,524 
  Restricted cash                                        520              - 
  Accounts receivable, net of allowance for                                 
   doubtful accounts of $313 and $488 at                                    
   December 31, 2013 and December 31, 2012,                                 
   respectively                                        9,075         17,862 
  Inventories, net                                    12,020         11,079 
  Prepaid expenses and other                             680            567 
                                               -------------  ------------- 
    Total current assets                       $      34,556  $      43,032 
Property and equipment, net                            3,056          2,458 
Deposits and other                                       295            309 
                                               -------------  ------------- 
    Total assets                               $      37,907  $      45,799 
                                               =============  ============= 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Accounts payable                             $       2,993  $       4,036 
  Accrued expenses                                     5,583          4,948 
  Deferred revenue                                     2,749          4,568 
  Revolving line of credit                             5,535          5,535 
                                               -------------  ------------- 
    Total current liabilities                  $      16,860  $      19,087 
Long-term liabilities                                    741            713 
Stockholders' equity                                                        
  Preferred stock - $0.001 par value; 2,000                                 
   shares authorized                                       -              - 
  Common stock - $0.001 par value; 30,000                                   
   shares authorized; 19,452 and 19,171issued                               
   and 19,388 and 19,125 outstanding at                                     
   December 31, 2013 and 2012, respectively               19             19 
  Treasury stock                                        (215)          (144)
  Additional paid-in capital                         290,964        288,619 
  Accumulated deficit                               (271,168)      (262,817)
  Other accumulated comprehensive income                 706            322 
                                               -------------  ------------- 
    Total stockholders' equity                 $      20,306  $      25,999 
                                               -------------  ------------- 
    Total liabilities and stockholders' equity $      37,907  $      45,799 
                                               =============  ============= 
                                                                            
                                                                            
                             Active Power, Inc.                             
                          Supplemental Information                          
                                                                            
Revenue by Product                               3 Months Ended             
                                                   December 31,             
                                                                            
                                                 % of                % of   
                                        2013     total      2012     total  
                                     --------- --------  --------- -------- 
UPS                                  $   5,889       42% $   6,811       44%
MIS                                      3,411       25%     4,686       31%
                                     --------- --------  --------- -------- 
  Total Product Revenue                  9,300       67%    11,497       75%
Service                                  4,626       33%     3,750       25%
                                     --------- --------  --------- -------- 
  Total Revenue                      $  13,926      100% $  15,247      100%
                                     ========= ========  ========= ======== 
                                                                            
Revenue by Geography                                                        
                                                                            
Americas                             $  11,278       81% $  11,632       76%
EMEA                                     1,448       10%     2,338       16%
Asia                                     1,200        9%     1,277        8%
                                     --------- --------  --------- -------- 
  Total Revenue                      $  13,926      100% $  15,247      100%
                                     ========= ========  ========= ======== 
                                                                            
 
                                                                            
Revenue by Product                               12 Months Ended            
                                                  December 31,              
                                                                            
                                                 % of                % of   
                                        2013     total      2012     total  
                                     --------- --------  --------- -------- 
UPS                                  $  22,620       37% $  35,366       46%
MIS                                     21,538       35%    26,665       35%
                                     --------- --------  --------- -------- 
  Total Product Revenue                 44,158       72%    62,031       81%
Service                                 17,541       28%    14,284       19%
                                     --------- --------  --------- -------- 
  Total Revenue                      $  61,699      100% $  76,315      100%
                                     ========= ========  ========= ======== 
                                                                            
Revenue by Geography                                                        
                                                                            
Americas                             $  50,365       82% $  48,190       63%
EMEA                                     6,941       11%    21,917       29%
Asia                                     4,393        7%     6,208        8%
                                     --------- --------  --------- -------- 
  Total Revenue                      $  61,699      100% $  76,315      100%
                                     ========= ========  ========= ======== 
                                                                            
                                                                            
                                                                            
                              Adjusted EBITDA                               
                                (Thousands)                                 
                                                                            
                                         Three                Twelve        
                                     Months Ended          Months Ended     
           
                          December 31,          December 31,     
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
Net Income (Loss)                $  (4,127) $    (418) $  (8,351) $  (1,922)
  Interest Expense                      88         81        370        327 
  Depreciation Expense                 280        327      1,084      1,282 
  Stock Based Compensation             784        279      1,700      1,410 
  Impairment of Long-Lived                                                  
   Assets                               (3)       218         99        218 
                                 ---------  ---------  ---------  --------- 
Adjusted EBITDA                  $  (2,978) $     487  $  (5,098) $   1,315 
                                 =========  =========  =========  ========= 

 
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 predictive 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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