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8-K - ACTIVE POWER INC 8-K 11-18-2013 - P10 Industries, Inc.form8k.htm

Exhibit 99.1
 


DRAFT – NOT FOR RELEASE

Active Power Reports Third Quarter 2013 Results

AUSTIN, Texas (Nov. 18, 2013) – 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™ 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® 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
Revenue 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.

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

Active Power, Inc.
Condensed Consolidated Statement of Operations
(in thousands, except per share amounts; unaudited)

 
 
Three Months Ended
September 30,
   
Nine Months Ended
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
 

Active Power, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

 
 
Three Months Ended
 
 
 
 
September 30,
2013
   
December 31,
2012
 
 
 
   
 
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,
 
 
 
2013
   
% of total
   
2012
   
% of total
   
2013
   
% of total
   
2012
   
% of 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 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.