21.12.2006: Meldung: Quantum Fuel Systems Technologies Worldwide, Inc.: Fiscal 2007 Second Quarter Financial Results
IRVINE, Calif., Dec. 18 / Quantum Fuel Systems Technologies Worldwide, Inc., a leading designer, manufacturer and integrator of packaged fuel systems and accessories for specialty vehicles and applications including hydrogen fuel cell, hybrid, and alternative fuel vehicles, today reported results for its fiscal 2007 second quarter ended October 31, 2006. Conference call information is provided below.
Second Quarter ended October 31, 2006
Consolidated net revenue declined to $36.6 million in the second quarter of fiscal 2007 compared to $63.2 million in the second quarter of fiscal 2006. The decrease in consolidated net revenue is the result of a $27.0 million decrease in revenues within the Tecstar Automotive Group"s segment. Net revenues within the Quantum Fuel System segment increased from $4.8 million in the second quarter of fiscal 2006 to $5.2 million in the second quarter of fiscal 2007.
The Company"s consolidated net loss increased from $3.0 million in the second quarter of fiscal 2006 to $89.3 million in the second quarter of fiscal 2007. The increase was primarily due to a $72.3 million impairment loss on goodwill related to the acquisition of the Tecstar Automotive Group and operating losses incurred in the Tecstar Automotive Group segment mostly as a result of lower product sales resulting from downtime at Tecstar"s Texas and Canadian facilities as General Motors transitions from the 800 to 900 series full-sized trucks and SUVs. Tecstar"s Louisiana facility was also idle during the quarter, but is now back in regular production with a GM mid-size pickup program. The Company also realized higher corporate administrative expenses primarily related to stock option compensation expenses under the adoption of 123R during fiscal 2007. The compensation expense related to the adoption of 123R was $0.9 million and depreciation and amortization expense during the second quarter was $3.0 million.
Quantum Fuel Systems operating segment revenues during the second quarter of fiscal 2007 were $5.2 million, representing a 10% increase over the prior year"s second quarter, which was $4.8 million. This increase is primarily due to higher product sales of hydrogen fuel storage and natural gas systems. This segment"s operating loss increased from $3.3 million for the second quarter of fiscal 2006 to $3.8 million for second quarter of fiscal 2007.
Revenues for the Tecstar Automotive Group operating segment for the second quarter of fiscal 2007 were $31.4 million compared to $58.4 million in the second quarter of fiscal 2006. Product sales for the Tecstar Automotive Group segment totaled $30.0 million during the second quarter of fiscal 2007, consisting of $15.2 million in automotive assembly revenues, $12.3 million in automotive OEM accessory parts revenues, and other product sales of $2.5 million. In comparison, product sales for the Tecstar Automotive Group segment totaled $55.2 million during the second quarter of fiscal 2006, consisting of $33.6 million in automotive assembly revenues, $20.3 million in automotive OEM accessory parts revenues, and other product sales of $1.3 million. Contract revenue for the Tecstar Automotive Group was $1.5 million in the second quarter of fiscal 2007 compared to $3.2 million for the second quarter of fiscal 2006.
Impairment of Goodwill
Under SFAS No. 142, goodwill and other indefinite-lived intangibles must be tested for impairment annually or in interim periods if events indicate possible impairment. In connection with the preparation of the second quarter financial results, the Company performed an impairment test which resulted in the Company recording an estimated non-cash charge of $72.3 million for the impairment of purchased intangibles associated with the merger of Tecstar Automotive Group and the acquisition of Empire Coach Enterprises, which is included in the TAG business segment. This charge is recorded as an operating expense in the condensed consolidated statement of operations for the three months and six months ended October 31, 2006.
The Company recognized certain factors or indicators of possible impairment at the end of the second quarter, primarily related to a sustained decrease in the Company"s market capitalization below the carrying value of the Company"s net equity and delays in the Tecstar Automotive Group"s recovery because of industry conditions and the transition of new model year programs. With the assistance of an independent consultant, the Company recently completed the first step of the goodwill impairment test and determined that the book value of the Company, including goodwill, exceeds its fair value. The fair value was estimated using a combination of a discounted cash flow approach and market approach.
The second step of the goodwill impairment test, the measurement of the potential impairment loss, is not yet complete. However, the Company has concluded that it is probable that a goodwill impairment loss has occurred and recorded an estimated impairment charge of $72.3 million, representing all the goodwill related to the Tecstar merger and acquisition of Empire. The Company expects to complete the second step prior to the end of the fiscal 2007 third quarter and will record any adjustments to the estimated impairment loss at that time.
The fundamental strategic platform for the Tecstar acquisition remains in place today. Tecstar continues to provide the Company with a stronger operational base with OEM-level assembly facilities, including quality processes, production and tooling capabilities, and a second-stage vehicle assembly operation that can be used for future fuel cell, hybrid and alternative fuel vehicle assembly programs and other specialty vehicle programs. Waning second-stage programs are being replaced with new models, however, specific discussion of those models must be withheld pending public announcements by the OEMs. Military engineering programs using both Quantum Fuel Systems and Tecstar expertise are launching simultaneously, but again cannot be disclosed in detail until public announcement.
Six-month Period Ending October 31, 2006
For the six month period ended October 31, 2006, consolidated net revenue decreased $31.4 million from $110.5 million in fiscal 2006 to $79.1 million in fiscal 2007. This decrease in consolidated revenue is a result of lower revenues within the Tecstar Automotive Group"s operations, partially offset by a slight increase in revenues for the Quantum Fuel System segment. Product sales for the Tecstar Automotive Group segment decreased $32.0 million, or 33%, from $96.5 million in the first half of fiscal 2006 to $64.5 million in the first half of fiscal 2007 as a result of the expiration of certain second stage contracts and changeovers in vehicle platforms by General Motors that have occurred since the second half of fiscal 2006. For the six-month period, Quantum Fuel System segment revenues increased 35%, from $9.1 million in fiscal 2006 to $12.3 million in fiscal 2007. Product sales for the Quantum Fuel System segment increased $4.3 million, or 105%, from $4.0 million in the first half of fiscal 2006 to $8.3 million in the first half of fiscal 2007. Due to the higher revenue base, the Quantum Fuel System segment operating loss decreased from $7.5 million for the first half of fiscal 2006 to $6.8 million for first half of fiscal 2007. The Company"s consolidated net loss increased from $11.2 million in the first half of fiscal 2006 to $102.8 million in the first half of fiscal 2007, which includes the $72.3 million impairment loss on goodwill.
Alan P. Niedzwiecki, President and CEO, stated, "The Company"s operating performance during the quarter was negatively impacted by the impairment charge, lower than expected Tecstar revenues and gross margins due to product mix and underutilization of our Tecstar facilities due to transitional delays in the upstart of new programs with our OEM customer base. Although we are disappointed with the overall operating performance, the Quantum Fuel System and technology driven revenue base has been very strong during the first six months of fiscal 2007 and we continue to see opportunities emerge in hydrogen fuel cell vehicles, hybrids and other platforms, especially in international markets.
"We have reduced our variable cost structure and continue to make changes to the operating model based on cost rationalization, while at the same time not losing focus on future business opportunities. The outlook for future revenue streams from Tecstar is encouraging and we anticipate higher revenues from Tecstar toward the end of fiscal 2007 which will allow that operating segment to improve its operating performance in the second half of fiscal 2007 and continued improvement in fiscal 2008."
Mr. Niedzwiecki added, "Despite recent cost reductions, we continue to make significant investments in our hydrogen and battery control system technologies and other emerging technologies to maintain our position as leading manufacturer and integrator of packaged fuel systems for hydrogen fuel cell, hybrid, and alternative fuel vehicles. We are excited about participating in GM"s recently announced Chevrolet Equinox Fuel Cell vehicle program. We anticipate delivering hydrogen fuel storage systems for this program starting in the second half of fiscal 2007. The delivery of these vehicles will be the largest fleet of hydrogen fuel cell vehicles equipped with range-extending 10,000 psi hydrogen storage systems."
Quantum is a leader in powertrain engineering, system integration, and manufacturing of packaged fuel systems and accessories for specialty vehicles and applications, including fuel cells, hybrids, alternative fuels, hydrogen refueling, new body styles, mid-cycle vehicle product enhancements, and high performance engines and drive trains for OEMs and consumers of specialty equipment parts and accessories. Quantum also designs and manufactures hybrid and fuel cell vehicles.
Quantum has product commercialization alliances with General Motors, AM General, Sumitomo, and IMPCO. Quantum"s customer base includes General Motors, Toyota, Opel, Hyundai, Suzuki, Ford, DaimlerChrysler, Sunline, Yamaha, AeroVironment, and the U.S. Army.
More information can be found about Quantum"s products and services at www.qtww.com.
Quantum is a member of the Russell 2000® and Russell 3000® indexes.
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Source: Quantum Fuel Systems Technologies Worldwide, Inc.