Active Power, Inc. (
Q1 2011 Earnings Call Transcript
April 26, 2011 10:00 am ET
Jim Clishem – CEO & President
Vice President, Finance
Dilip Warrier – Stifel Nicolaus
Matthew Crews – Noble Financial
Walter Nasdeo [ph]
Chris McDougall [ph]
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Good morning, everyone. Thank you for participating in today’s conference call to discuss Active Power’s financial results for the first quarter ended March 31, 2011. 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 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 second quarter of 2011 and fiscal 2011, its future operating results, and its customers current intentions.
Any forward-looking statements and all other statements that maybe made during this call 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 material from the results predicted include among others, the deferral or cancellation of sales commitments as a result of the 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 filings with the Securities and Exchange Commission including its Annual Report on Form 10-K for the year-ended December 31, 2010, 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 online until May 10, 2011 via Active Power’s Web site 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.
Thank you. Good morning and thank you everyone for joining us today. Earlier today, we issued a press release announcing our first quarter 2011 results. We started off 2011 with the highest level of revenue for the first quarter ever.
Our revenues of $17.3 million or 56% higher than our first quarter a year ago, although lower by
10% from the prior quarter as expected reflecting the traditional seasonality of the UPS business.
The strong revenue increase compared to the previous year drove improvements in gross operating and net margins and resulting in a 59% reduction and net loss compared to the prior year.
Our results did swing back to an operating loss of a $0.01 per share this quarter, again reflecting the seasonality of our business; however we remain confident we will achieve profitability on an annualized basis for 2011.
We have experienced strong order flows so far this year from all of our major markets. Demand for our continuous power solution products in particular appears to be increasing and the size of some potential orders also appears to be growing.
During the quarter we start to work on a number of projects for second quarter delivery. Increases and changes in working capital resulted in a net $1.6 million reduction in our cash and investments compared to year-end. I’m comfortable that we’ve sufficient liquidity to continue growing our business throughout the year.
To provide additional perspective, I would like to share a few other highlights from the quarter.
Our business in EMEA was up substantially from the prior year with 547% revenue growth. In fact, our revenues from EMEA in the first quarter were equal to 62% of the total 2010 annual revenue from EMEA driven by some substantial orders in the UK market.
Our sales channels all showed growth compared to the prior year with OEM sales growing by 94% compared to the same year ago quarter and our IT channel business increasing by 76%. Our direct sales increased by 36%.
Also strategic solutions selling generated $6.2 million in revenues from PowerHouse and continuous infrastructure solutions which was up 279% compared to 2010.
And finally, our service and other revenues increased by 50% compared to the same year ago quarter.
Now, I’d 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 our optimism about
2011 trends related to key products and market that support this optimism and a few significant points from our business strategy moving ahead. We’ll then open the calls to your questions. John?
Thank you, Jim. Good morning, everyone, and thank you for joining us on the call today. As Jim mentioned, our revenue for the first quarter of 2011 was $17.3 million decreasing sequentially due to seasonality by 10%, and increasing by 56% compared to the first quarter of 2010. This is our highest first quarter revenues we have had and a strong start to 2011.
Revenue in this quarter included $6.2 million for PowerHouse and continuous infrastructure solutions, demonstrating continuing acceptance of our solutions and technologies in the critical power and infrastructure markets.