Quantum Technologies Reports First Quarter 2014 Financial Results

      Quantum Technologies Reports First Quarter 2014 Financial Results

- Overall revenues up 82% and loss from operations narrowed by 59% compared to
the corresponding prior year quarter

PR Newswire

LAKE FOREST, Calif., May 13, 2014

LAKE FOREST, Calif., May 13, 2014 /PRNewswire/ --Quantum Fuel Systems
Technologies Worldwide, Inc. (Nasdaq: QTWW), a global leader in compressed
natural gas (CNG) storage systems, integration and vehicle system
technologies, today reported its results for the first quarter of 2014.
Conference call information is provided below.

First Quarter 2014 Highlights:

  oTotal revenues, primarily from CNG products and engineering services, 82%
    higher year over year
  o59% improvement in operating loss from continuing operations compared to
    the corresponding prior year period
  oShipments of new product offerings initiated, including:

       oInnovative light-weight Back-of-Cab CNG fuel storage module storing
         up to 123 Diesel Gallon Equivalents (DGE)
       oNext generation of rail mounted storage systems for medium and heavy
         duty applications
       oCollar mount tanks incorporating light-weight Q-Lite® tank design
       oLighter weight tanks for several product offerings based on
         alternative materials

  oContinuation of significant levels of engineering design and development
    activities associated with a CNG fuel storage system for heavy duty truck
    aftermarket program
  oStrengthened balance sheet and liquidity with completion of public
    offering in February 2014 that resulted in net proceeds of $15.3 million
  oExpansion of tank manufacturing and assembly capacity on track

First Quarter 2014 Operating Results Overview

Total revenues from continuing operations amounted to $8.0 million,
representing an increase of $3.6 million over the same period in 2013, an 82%
improvement.

Product sales recognized in the first quarter totaled $4.8 million and
primarily related to sales of CNG fuel storage tanks and systems. The
Company's backlog for products associated with CNG fuel storage tanks and
systems increased to $14.9 million at March 31, 2014.

The Company reported an operating loss from continuing operations of $1.6
million in the first quarter of 2014 compared to an operating loss of $3.9
million in the first quarter of 2013, representing a $2.3 million, or 59%,
improvement from the prior year.

"We were pleased to drive revenue growth and improve our operating performance
during the quarter compared to the prior year, and at the same time strengthen
our balance sheet. The quarter was also marked by several product
introductions, including our innovative Back-of-Cab storage system that fully
leverages our integration expertise and continues to provide the foundation
for growth," stated Brian Olson, President and CEO of Quantum. Mr. Olson
continued, "our new OEM-level storage systems, which have generated initial
orders and received a lot of interest within the industry since their roll
out, demonstrate that we are well positioned to leverage our core strengths of
integrating our advanced tank technologies with our innovative complete fuel
storage module systems to deliver value to the market."

Fuel Storage & Vehicle Systems Segment

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

Product revenue for this segment amounted to $4.8 million in the first quarter
of 2014, as compared to $3.5 million in the first quarter of 2013. Included
in 2014 product revenue is $4.3 million related to shipments of CNG storage
tanks and packaged systems and $0.5 million related to hydrogen components and
systems. Product gross margin was 24% in the first quarter of 2014, as
compared to 26% in the same period in the prior year.

Contract services revenue for this segment was $3.1 million in the first
quarter of 2014, representing an increase of $2.2 million over 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 increase in contract services revenue is primarily due to higher levels of
engineering services related to CNG fuel storage system integration and next
generation storage technologies programs, partially offset by a decrease in
engineering activities associated with hydrogen programs. CNG related
engineering activities in the first quarter of 2014 primarily consisted of
engineering services provided to ZHRO Solutions under agreements that
initially began in the second quarter of 2013 related to our design,
development and validation of a complete packaged CNG fuel storage and
delivery system for use in the aftermarket for heavy and medium-duty diesel
trucks that will be converted to run on a dedicated CNG injection/engine
conversion system developed by ZHRO. The Company also continued to perform
development and certification activities during the first quarter of 2014 for
the General Motors Impala CNG bi-fuel program.

Costs of contract services represent costs associated with customer funded
engineering development programs. Contract services gross margin was 40% in
the first quarter of 2014, as compared to 36% in the same period in the prior
year.

The operating results of this segment include research and development
expenses associated with internally funded engineering development programs.
The expenses for these programs amounted to $1.5 million in the first quarter
of 2014, as compared to $1.8 million in the first quarter of 2013. Internally
funded research and development in 2014 primarily relates to efforts to
advance CNG storage technologies by integrating and testing next generation
materials, tank mounting fixtures and other innovations to enhance the
Company's existing product portfolio. Operating expenses of the current year
period also benefited from the closure of an underutilized facility located in
Irvine, California, that was effective as of January 31, 2014.

This segment reported operating income of less than $0.1 million for the first
quarter in 2014, as compared to an operating loss of $1.9 million reported for
the first quarter of 2013.

Corporate Segment

Corporate expenses were $1.7 million in the first quarter of 2014, as compared
to $2.0 million for the same period in the prior year. The 15% decrease in
corporate expenses in the first quarter of 2014 is mainly attributable to
certain cost reduction initiatives implemented over the past twelve months.

Renewable Energy Segment – held for sale

As previously announced, the Company is in the process of selling the assets
of its wholly owned subsidiary, Schneider Power Inc. (Schneider Power), and is
actively pursuing buyers for the remaining business operations. Schneider
Power, an operator of the 10 megawatt Zephyr Wind Farm and holder of interests
in certain renewable energy projects, represents the entire operations of the
Company's Renewable Energy business segment. As a result of the Company's
intent to sell the remaining assets of 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 Renewable Energy segment reported a net loss after taxes of $0.1 million
in the first quarter of 2014, as compared to net loss after taxes of $1.7
million in the first quarter of 2013.

The net loss reported for discontinued operations includes the recognition of
$0.9 million of revenue from energy sales in the first quarters of both 2014
and 2013, and includes operating expenses in the first quarter of 2014 of $0.6
million, as compared to operating expenses of $2.2 million in the same period
in 2013. The decrease in net loss from discontinued operations during the
first quarter of 2014 as compared to the prior year period was primarily due
to a $1.3 million decrease in the amount of impairment charges taken in the
current year quarter compared to the prior year quarter. The prior year
impairments amounted to a total of $1.7 million, of which $1.0 million was
related to goodwill associated with the Zephyr Wind Farm and $0.7 million was
related to intangible assets associated with Schneider Power's development
project pipeline. Interest expense on long-term project financing obligations
was $0.3 million in the first quarter of 2014, as compared to $0.4 million in
the first quarter of 2013.

Non-Reporting Segment Results

Interest Expense.  Interest expense of continuing operations, net of interest
income, amounted to $0.8 million in the first quarter of 2014, as compared to
$1.4 million in the first quarter of 2013. 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 first quarters
of 2014 and 2013 are non-cash interest costs of $0.6 million and $0.9 million,
respectively. Non-cash interest expense in the first quarter of 2014
primarily related to the imputed interest costs associated with convertible
notes issued in September 2013.

Fair Value Adjustments of Derivative Instruments. Derivative instruments
consisted of embedded features contained within certain warrant contracts.
Fair value adjustments of derivative instruments represent non-cash unrealized
gains or losses. The share price of our common stock represents the primary
underlying variable that impacts the value of the derivative instruments. The
charges recognized during the first quarter of 2014 of $0.7 million were
primarily due to the increase in our closing share price that increased the
fair value of the derivative instrument liabilities during the period ($7.80
share price at December 31, 2013 and increasing to $9.68 at March 31, 2014).

Consolidated Net Loss

The consolidated net loss for the first quarter of 2014 was $3.2 million,
compared to a net loss of $6.9 million in the first quarter of 2013. The $3.7
million decrease in net loss was primarily attributed to the $2.2 million
improvement in operating loss of continuing operations and the $1.7 million
improvement in losses of discontinued operations.

Balance Sheet and Liquidity

The Company had cash and cash equivalents of $16.4 million on hand for its
continuing operations as of March 31, 2014, which takes into account $15.3
million of net cash proceeds from the closing of a public offering on February
20, 2014 and $4.8 million in cash proceeds from warrant exercises during the
first quarter. The Company used a portion of these proceeds in February 2014
to fully pay down the outstanding balance under a revolving line of credit
that it has with a financial institution, which had a balance of $3.8 million
as of December 31, 2013.

Financial Tables

The Company's consolidated financial information for the three month periods
ended March 31, 2014 and 2013 is as follows:

Quantum Fuel Systems Technologies Worldwide, Inc.
Condensed Consolidated Financial Information
                                     Three Months Ended
                                     March 31,
                                     2014               2013
Statements of Operations:
Revenues:
  Net product sales                 $  4,818,430      $  3,505,095
  Contract services                  3,136,443          902,162
        Total revenues              7,954,873          4,407,257
Costs of revenues:
  Cost of product sales             3,657,804          2,603,876
  Cost of contract services          1,874,938          579,098
        Total costs of revenues      5,532,742          3,182,974
        Gross margin                 2,422,131          1,224,283
Operating expenses:
  Research and development          1,500,221          1,775,402
  Selling, general and               2,555,455          3,328,607
  administrative
        Total operating expenses    4,055,676          5,104,009
Operating loss                       (1,633,545)        (3,879,726)
Other income (expense):
  Interest expense, net              (776,121)          (1,395,433)
  Fair value adjustments of          (739,920)          87,000
  derivative instruments, net
  Other, net                         -                  (5,998)
Loss from continuing operations      (3,149,586)        (5,194,157)
before income taxes
  Income tax expense                 (1,600)            (1,600)
Loss from continuing operations      (3,151,186)        (5,195,757)
Loss from discontinued operations,   (51,047)           (1,708,163)
net of taxes
Net loss attributable to             $ (3,202,233)      $ (6,903,920)
stockholders
Per share data - basic and diluted:
  Loss from continuing operations    $     (0.16)  $      (0.43)
  Loss from discontinued operations  -                  (0.14)
Net loss attributable to             $     (0.16)  $      (0.57)
stockholders
Weighted average shares outstanding
-
  Basic and diluted                  20,144,062         12,089,151
Cash Flow Information (1):
  Net cash used in operating         $ (3,577,077)      $ (2,119,514)
  activities
  Net cash used in investing         $ (2,521,589)      $ (1,245,326)
  activities
  Net cash provided by financing     $ 16,030,853       $  2,894,453
  activities
  (1)   The cash flow information includes Schneider Power for the periods
        presented.
                                     March 31,          December 31,
                                     2014               2013
Balance Sheet Information:
  Continuing operations:
        Cash and cash equivalents    $ 16,417,373       $  6,254,359
        Working capital              $ 18,921,145       $  3,499,175
        Total assets                 $ 50,254,907       $ 39,645,800
        Derivative instruments       $  2,767,000      $  2,415,000
        Debt obligations, current &
        non-current:
        Principal and accrued        $ 12,885,302       $ 17,412,016
        interest
        Debt discounts               (5,224,373)        (5,671,145)
        Total                        $  7,660,929      $ 11,740,871
  Discontinued Operations:
        Cash and cash equivalents    $   515,376     $    777,622
        Total assets                 $ 24,816,804       $ 26,358,472
        Total liabilities            $ 21,783,731       $ 23,415,110
  Total stockholders' equity         $ 34,790,532       $ 16,979,592
  Shares issued and outstanding:
        Preferred stock; $0.001 par  -                  -
        value
        Series B stock; $0.02 par    -                  -
        value
        Common stock; $0.02 par      22,964,708         18,875,253
        value

Financial Results Call Scheduled:

Tuesday, May 13, 2014 at 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 # 94586699. 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 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 #
94586699. The playback will be available until11:45 p.m. Pacific Time on May
28, 2014.

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

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 and applicable Canadian
securities legislation. 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
statements include statements regarding our expectation for continued growth
in the demand for our CNG products and services, our planned expansion of
manufacturing capacity, our belief that new engineering contracts and new
product offerings will contribute to the future growth of product sales, and
our intention to sell Schneider Power's remaining assets. Various risks and
other factors, such as the continued relationship with our key customers and
suppliers, the cost of natural gas, the accuracy of the assumptions used in
our business plan, our customer's decision on whether to produce the products
currently in development, whether we can satisfy the conditions required in
order for us to become the production supplier under programs currently in
development and whether we can find a buyer for the Schneider Power assets on
terms acceptable to us, if at all, could cause actual results, and actual
events that occur, to differ materially from those contemplated by the forward
looking statements. For a complete description of all risk factors affecting
our business, you are encouraged to review the Risk Factors section of our
Annual Report on Form 10-K for the year ended December 31, 2013 filed with the
Securities and Exchange Commission. Additional information will be set forth
in the Risk Factors section of our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2014 to be 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 about the products and services of Quantum can be found at
http://www.qtww.com/or you may contact:

Quantum Investor Relations
Phone: 949-399-4555
Email: ir@qtww.com

2014 Quantum Fuel Systems Technologies Worldwide, Inc.
Advanced Technology Center
25242 Arctic Ocean Drive, Lake Forest, CA 92630
Phone 949-399-4500 Fax 949-399-4600



SOURCE Quantum Fuel Systems Technologies Worldwide, Inc.

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