Active Power, Inc. Q2 2010 Earnings Call Transcript

Active Power, Inc. Q2 2010 Earnings Call Transcript
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Active Power, Inc. (ACPW)

Q2 2010 Earnings Call Transcript

July 27, 2010 5:00 pm ET

Executives

Jim Clishem – President & CEO

John Penver – CFO and VP of Finance

Analysts

Dilip Warrier – Thomas Weisel Partners

Walter Nasdeo – Ardour Capital

Matthew Couth [ph]

Brian Kowalchyk – Patara Capital Management

Presentation

Operator

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Previous Statements by ACPW
» Active Power Inc. Q1 2010 Earnings Call Transcript
» Active Power Inc. Q4 2009 Earnings Call Transcript
» Active Power Inc. Q3 2009 Earnings Call Transcript

Good morning everyone. Thank you for participating in today’s conference call to discuss Active Power’s financial results for the second quarter ended June 30, 2010. With us today is Mr. Jim Clishem, President and Chief Executive Officer of Active Power; and Mr. John Penver, the company’s Chief Financial Officer. Following their remarks, we will open up the call for questions.

Before I continue, I would like to take a moment to read the company’s Safe Harbor statement. The company’s management on this call may make forward-looking statements that involve risks and uncertainties including statements relating to Active Power’s current expectations of operating results for the third quarter of 2010, its future operating results and its customers current intentions. Any forward-looking statements and all other statements that may be made during this call are not historical facts are subject to a number of different 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, the deferral or cancellation of sales commitments as a general result of general economic conditions or uncertainties, 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’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the ended December 31, 2009 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. I would now like to remind everyone that this call will be available for replay via online until August 10, 2010 via Active Power’s website at

www.activepower.com

.

I would now like to turn the call over to the President and Chief Executive Officer of Active Power, Mr. Jim Clishem. Sir, please go ahead.

Jim Clishem

Good morning and thank you everyone for joining us today. Earlier today, we issued a press release announcing our second quarter 2010 results. Revenue for the second quarter of 2010 totaled $16 million, an increase of 44% from the first quarter of 2010, and an increase of 142% compared to the second quarter of 2009. The second quarter 2010 revenue is the second highest quarterly revenue achieved in the company’s history. For the six months ended June 30, 2010, our revenues were a record $27.2 million, increasing 53% from the previous year.

As expected, this significant revenue increase drove improvement in margins and reduction in our operating losses. It’s worth mentioning here a few highlights from the quarter. First, a record $24 million in orders received during the quarter. 27% gross margins this quarter compared to 26% in the prior quarter and 22% in the second quarter of 2009.

We also had a 1.5 million net loss compared to a net loss of 3.5 million in the same quarter of 2009, which represents a 57% reduction. 4.8 million in revenues from the EMEA region for this quarter, and it was an increase of 494% compared to the second quarter of 2009. We also had a $2.3 million decrease in cash used in operation, which amounted to 93% reduction compared to the first-half of 2009.

At this time, I would like to turn the call over to our Chief Financial Officer, John Penver, who will take us through the financial details for the quarter. I will then come back to discuss some of the market trends we are seeing, and how we’re capitalizing on these trends along with our outlook for the third quarter. We will then open the call to your questions. So John?

John Penver

Thank you, Jim. Good morning everyone and thank you for joining us today. As Jim mentioned, our revenue for the second quarter was $16 million. This was a sequential increase of 44% from the first quarter, and an increase of 142% compared to the second quarter of 2009. On a year-to-date basis, our revenue is $27.2 million, which is 53% higher than the $17.8 million we had in the first-half of 2009. This is substantial revenue growth under either measure.

This increase in revenue was predominantly in our American and EMEA market this quarter. We had substantial PowerHouse revenues, particularly in EMEA and very strong UPS sales in North America this quarter. Total EMEA revenues for the first half of $6 million were up substantially from $2.5 million into 2009. Our Americas revenue in the first half was $18 million, which was up 30% compared to 2009, and Asian market revenues were up 108% in the first half compared to the prior year.

Some of these fluctuations are much more pronounced if we actually compare the second quarter of 2010 to the second quarter of 2009, due to the low base of revenue we had in 2009. On a net basis, EMEA revenues increased by 494%, and the Americas revenues increased by 115% on a year-over-year basis compared to the second quarter of 2009.

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