Active Power: Q4 & Full Year 2015 Results
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Active Power (NASDAQ: ACPW), a manufacturer of flywheel energy storage products and modular infrastructure solutions (MIS) for mission critical and renewable applications worldwide, reported results for the fourth quarter and full year ended December 31, 2015.
Total revenue in 2015 increased $8.3 million or 17% to $57.4 million compared to total revenue in 2014
Double digit annual growth in uninterruptible power supply (UPS) and MIS
Backlog at December 31, 2015, was $30.8 million compared to $26.7 million at December 31, 2014, an improvement of $4.1 million or 15%
Gross margin was 29% in 2015 compared to 26% in 2014
Operating expenses decreased $1.8 million or 7% in 2015 compared to 2014; expenses down seven of the last nine quarters
Adjusted EBITDA improved to a loss of $3.7 million in 2015 compared to a loss of $10.1 million in 2014
Fourth Quarter and Full Year 2015 Financial Results
Revenue in the fourth quarter of 2015 was $12.5 million compared to $15.4 million in the year-ago period and $14.9 million in the previous quarter. The decrease in revenue from both periods is due to lower product and service sales. For the full year, total revenue was $57.4 million compared to $49.1 million in 2014. The change in total revenue is attributable to higher product sales, primarily by the increase in MIS business that was driven by a large order from an IT channel partner, and stronger demand for the company's flywheel UPS solutions.
Gross margin in the fourth quarter of 2015 was 25% compared to 26% in the year-ago period and 26% in the previous quarter. The modest decrease in gross margin from both periods is primarily related to under absorption of fixed overhead costs in manufacturing and lower volume of service revenue which contains a higher margin. For the full year, gross margin was 29% compared to 26% in 2014. The increase in gross margin is related to higher margin MIS along with improvements in manufacturing absorption on increased production in 2015.
Operating expenses in the fourth quarter of 2015 were $5.9 million compared to $6.0 million in the year-ago period and $5.6 million in the previous quarter. The increase in operating expenses from the prior quarter is primarily due to the recovery of a previously reserved receivable. For the full year, operating expenses decreased to $22.9 million from $24.7 million in 2014. The decrease was primarily due to lower spending on materials and services for product development, lower commissions and management's efforts to focus on productivity improvements and disciplined spending, partially offset by increased expense for management incentive plan accruals.
Net loss in the fourth quarter of 2015 was $2.9 million or $(0.13) per share compared to a net loss of $2.0 million or $(0.09) per share in the year-ago period and a net loss of $1.7 million or $(0.08) per share in the previous quarter. The increase in net loss from both periods is primarily due to lower revenue in the fourth quarter of 2015. For the full year, net loss was $6.5 million or $(0.28) per share compared to a net loss of $12.8 million or $(0.57) per share in 2014. The decrease in net loss from 2014 to 2015 was due to an increase in revenue and gross margin and lower operating expenses.
Adjusted EBITDA in the fourth quarter of 2015 was a loss of $2.2 million compared to a loss of $1.3 million in the year-ago period and a loss of $1.0 million in the previous quarter. The decrease in adjusted EBITDA from both periods is primarily due to lower revenues resulting in a higher net loss in the fourth quarter of 2015. For the full year, adjusted EBITDA was a negative $3.7 million compared to a negative $10.1 million in 2014. An EBITDA reconciliation is provided below.
Cash and cash equivalents totaled $12.3 million at December 31, 2015, compared to $10.6 million at September 30, 2015, and $14.8 million at December 31, 2014.
Bookings and Backlog
Bookings in the fourth quarter of 2015 were $8.0 million compared to bookings of $18.5 million in the year-ago period and $17.0 million in the previous quarter. On a cumulative year-to-date basis through December 31, 2015, bookings were $61.5 million resulting in a book-to-bill ratio of 1.07. The dollar amount of backlog was approximately $30.8 million at December 31, 2015. Of the total backlog at December 31, 2015, approximately $9.4 million is not expected to be filled in the following 12 months which includes both long-term service contracts and UPS product orders.
Bookings amounts represent anticipated revenue from product orders received during the period that are believed to be firm and from signed contracts for service work. Backlog represents the amount of anticipated revenue from prior bookings at the end of the period. Please refer to the Supplemental Information following the Condensed Consolidated Balance Sheets for more detail regarding bookings.
"We are pleased to have delivered the strongest overall annual performance for Active Power over a three year period," said Mark A. Ascolese, president and CEO, at Active Power. "Our improved financial results and operating metrics achieved in 2015 demonstrate the steady progress we made as we continue to focus on increasing bookings and backlog, improving our operational efficiencies and controlling cost. We achieved double digit annual growth in UPS and MIS while reducing expenses and improving gross margin. Our backlog also improved 15 percent in 2015 over 2014."
"The overall lengthening of sales cycles coupled with soft market conditions resulted in lower bookings in the fourth quarter of 2015. We have seen delays for orders being awarded and schedule changes to defer delivery. We remain vigilant in our expense management initiatives in light of these market conditions."
"While revenue and earnings in the fourth quarter of 2015 were lower than in prior periods, we demonstrated the depth of our fundamental, long-term planning. We entered 2016 with a higher backlog, a lower cost base and a growing opportunities pipeline bolstered by a higher number of large project opportunities as compared to the past three years. Near-term challenges notwithstanding, we look forward to 2016 being another year of improved performance."
About Active Power
Active Power (NASDAQ: ACPW) designs and manufactures flywheel uninterruptible power supply (UPS) systems, modular infrastructure solutions (MIS), and energy storage products for mission critical and renewable applications worldwide. The company's products deliver an unmatched combination of total cost of ownership, reliability and sustainability for leading organizations around the world. 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.