Quantum: Q4 and Year End Financial Results
Quantum Fuel Systems Technologies Worldwide, Inc., a leader in the development and production of advanced propulsion systems, energy storage technologies, alternative fuel vehicles and applications including hybrid, plug-in hybrid, hydrogen, and alternative fuel vehicles and an emerging portfolio in the development and ownership of renewable energy farms, today reported results for the fourth quarter of fiscal 2010. Conference call information is provided below.
Fourth Quarter and Fiscal 2010 Operating Results
Revenues decreased $3.8 million, from $6.2 million in the fourth quarter of fiscal 2009 to $2.4 million in the fourth quarter of fiscal 2010, and decreased $13.7 million, from $23.3 million in fiscal 2009 to $9.6 million in fiscal 2010. The decrease in revenue for the fourth quarter and twelve months of fiscal 2010 is primarily related to automotive OEM customer delays. The Company's overall operating loss increased $0.9 million, from $4.3 million in the fourth quarter of fiscal 2009 to $5.2 million in the fourth quarter of fiscal 2010 and decreased $4.6 million, from $25.1 million in fiscal 2009 to $20.5 million in fiscal 2010.
Contract revenue for the Fuel Systems segment decreased $4.1 million, from $6.1 million in the fourth quarter of fiscal 2009 to $2.0 million in the fourth quarter of fiscal 2010. The decrease was primarily related to customer delays on development programs and the completion in fiscal year 2009 of fuel cell development programs, partially offset by expanded hybrid vehicle development programs and aerospace programs.
Operating loss for the Fuel Systems segment increased $1.3 million, from $1.9 million in the fourth quarter of fiscal 2009 to $3.2 million in the fourth quarter of fiscal 2010, and decreased $3.5 million, from $14.4 million in fiscal 2009 to $10.9 million in fiscal 2010. The increase in operating loss for the fourth quarter was primarily due to the lower revenue base and the write-off of deposits on undelivered product from the Company's affiliate, Advanced Lithium Power. The decrease in operating loss for fiscal 2010 was primarily due to the amortization and impairment of the intangible asset related to the Company's strategic alliance with General Motors that was written off in the third quarter of fiscal 2009.
Operating loss for the Renewable Energy segment (Schneider Power) was $0.1 million during the fourth quarter of fiscal 2010. The Company closed its acquisition of Schneider Power on April 16, 2010 and Schneider is included in the financial statements for the abbreviated period.
Corporate segment expenses decreased $0.5 million in the fourth quarter of fiscal 2010 from $2.4 million in the fourth quarter of fiscal 2009 to $1.9 million in the fourth quarter of fiscal 2010, and decreased $1.2 million in fiscal 2010 from $10.7 million in fiscal 2009 to $9.5 million in fiscal 2010. The decrease was primarily related to lower share-based compensation expense and other administrative costs. Corporate segment expenses reflect the general and administrative expenses that indirectly support the Company's Fuel Systems and Renewable Energy operating segments and anticipated future operating segments and consist primarily of personnel costs, share-based compensation costs, and related general and administrative costs for executive, finance, legal, human resources, investor relations and the board of directors. The share-based compensation expense was $0.9 million and depreciation and amortization expense was $1.3 million in fiscal 2010. Cash used from operations during fiscal 2010 was $14.7 million.
The financial statements include fair value adjustments for the bifurcation of the derivative liabilities associated with conversion features contained within the Company's convertible notes and term note debt instruments and the derivative liabilities associated with certain common stock purchase warrants. Fair value adjustments of derivative instruments, which represent non-cash unrealized gains or losses, amounted to a loss of $10.6 million in fiscal 2010, compared to a gain of $27.7 million in fiscal 2009. The share price of our common stock, along with the underlying volatility of the stock, represents the primary variables that impact the value of the derivative instruments. Additional factors that impact the value of the derivative instruments include our credit rating, discount rates, and stated interest rates. The gain in fiscal 2009 and the loss in fiscal 2010 were primarily attributable to the volatility in our share price during these periods that materially changed the fair value of the derivative instrument liabilities as of the balance sheet dates. Due to the volatile nature of our share price, we expect that we will continue to recognize gains or losses on our derivative instruments each period and that the amount of such gains or losses could be material.
Also reflected in the financial statements for fiscal 2010 is a loss on modification of debt and derivative instruments of $14.7 million resulting from (i) extending the stated maturity dates and fixing the conversion price on the Company's three convertible notes, (ii) extending the expiration date of the $10.0 million lender commitment from August 31, 2009 to March 31, 2011, and (iii) issuing a new debt instrument in satisfaction of a fee negotiated with the our lender to obtain the lender's consent to our acquisition of Schneider Power, as required by our Credit Agreement.
The Company recognized $1.1 million in equity in earnings for fiscal 2010, representing the Company's equity share in earnings of its affiliate, Asola.
The Company reported net loss of $5.5 million, or $0.04 a share, in the fourth quarter of fiscal 2010, compared to a net loss of $3.2 million, or $0.03 a share, in the fourth quarter of fiscal 2009. The Company's net loss increased from $28.0 million, or $0.30 a share, in fiscal 2009 to $46.3 million, or $0.36 a share, in fiscal 2010.
Alan P. Niedzwiecki, President and CEO, stated, "Our revenue base and operating performance during the fiscal year was obviously impacted by strong economic headwinds and impacted by the turmoil in the global automotive OEM industry. We were recently awarded a long-term supply agreement with Fisker Automotive for the Karma series of vehicles and we expect these vehicles to be in production by the end of this calendar year. Fisker Automotive just recently closed on their DOE loan and has now established a defined production timeline." Mr. Niedzwiecki continued, "We completed the acquisition of Schneider Power during the fourth quarter and the addition of Schneider's renewable energy portfolio and capabilities enhances Quantum's profile as a diverse alternative energy company. The business combination merges Schneider Power's wind and solar power development capabilities and project pipeline with Quantum's leading alternative fuel and solar power technologies to create a fully integrated renewable energy company."
Quantum Fuel Systems Technologies Worldwide, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended
Statements of Operations
Net product sales
Contract revenue from affiliate
Contract revenue from non-affiliates
Costs and expenses:
Cost of product sales
Research and development
Selling, general and administrative
Amortization and impairment of intangible assets
Total costs and expenses
Interest expense, net
Fair value adjustments of derivative instruments
Loss on modification of debt and derivative instruments
Gain (loss) on settlement of debt and derivative instruments, net
Equity in earnings (losses) of affiliate, net
Other income (expense), net
Loss from operations before income tax expense
Income tax expense
Net loss per share - basic and diluted
Weighted average shares outstanding -
basic and diluted
Cash Flow Information:
Depreciation and amortization
Net cash used in operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Balance Sheet Information:
Cash and cash equivalents
Working capital (deficit)
Long-term debt, less current portion
Financial Results Call Scheduled:
Monday, July 12, 2010 1:30 p.m. Pacific time (4:30 p.m. Eastern time)
Conference Call Number: (706) 643-3625; Conference ID # 87054535
Participants should call this number 5 to 10 minutes prior to the starting time. An operator will check your name and organization and ask you to wait until the call begins.
For those of you unable to join us at this time, a playback of this call will be available via telephone approximately two hours after the call until July 19, 2010 at 1:30 p.m. Pacific time. The number for this service is (706) 645-9291. The call will also be available on the Company's Investor Relations web page:
For assistance, please call Elaine Lovre at (206) 315-8242.
Quantum Fuel Systems Technologies Worldwide, Inc., a fully integrated alternative energy company, is a leader in the development and production of advanced propulsion systems, energy storage technologies, and alternative fuel vehicles. Quantum's wholly owned subsidiary, Schneider Power Inc., complements Quantum's emerging renewable energy presence through the development and ownership of wind and solar farms. Quantum's portfolio of technologies includes electronic controls, hybrid electric drive systems, hydrogen storage and metering systems, and alternative fuel technologies that enable fuel efficient, low emission hybrid, plug-in hybrid electric, fuel cell, and natural gas vehicles. Quantum's powertrain engineering, system integration, vehicle manufacturing, and assembly capabilities provide fast-to-market solutions to support the production of hybrid and plug-in hybrid, hydrogen-powered hybrid, fuel cell, alternative fuel, and specialty vehicles, as well as modular, transportable hydrogen refueling stations. Quantum's customer base includes automotive OEMs, dealer networks, fleets, aerospace industry, military and other government entities, and other strategic alliance partners.
More information can be found about Quantum's products and services at www.qtww.com.
All statements included in this Press Release, other than statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. Examples of forward-looking statements include, but are not limited to, statements regarding our expectation that we will be able to raise a sufficient level of debt or equity capital to fund our operations, our belief that our current operating plan will allow us to achieve profitability, our expectations of future revenue, expenses, gross margin and operating profit (loss), the level of growth in the hybrid, plug-in hybrid and fuel cell and alternative fuel industries, when our Q-Drive powertrain architecture and other products and technologies will be commercialized, our plans to develop new lower cost technologies, when the Fisker Karma will go to production, the number of vehicles that Fisker Automotive expects to sell, our belief that we will be a supplier to Fisker Automotive on a long-term basis, our belief that we have sufficient liquidity to fund operations through at least April 30, 2011, our intentions to commission a solar manufacturing facility in southern California, our expectation that the US government will continue to support the advancement of alternative fuel technologies through loans, grants and tax credits, our belief that we have a competitive advantage over our competitors, our intentions to support the growth of our subsidiary, Schneider Power, Inc., and our German affiliate, Asola, our intentions to establish joint development programs and strategic alliances with leaders in the alternative energy industry, our relationship with General Motors and the impact such relationship will have on our ability to develop our products, the impact that new accounting pronouncements will have on our financial statements, and the effect that an adverse result in Asola's dispute with its solar cell supplier would have on our financial statements.
Forward-looking statements generally 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. Although we believe the expectations and intentions reflected in our forward-looking statements are reasonable, we cannot assure you that these expectations and intentions will prove to be correct. Various risks and other factors, including those identified in this prospectus under the "Risk Factors" section in our Annual Report on Form 10-K and those included in our other public filings, could cause actual results, and actual events that occur, to differ materially from those contemplated by the forward looking statements.
Many of the risk factors are beyond our ability to control or predict. You should not unduly rely on any of our forward-looking statements. These statements are made only as of this Annual Report. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future events or developments. All subsequent written and oral forward-looking statements attributable to us and persons acting on our behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this prospectus.
For more information regarding Quantum, please contact:
Brion D. Tanous
Principal, CleanTech IR, Inc.
17872 Cartwright Road, Irvine, CA 92614
Phone 949-399-4500 Fax 949-399-4600