Ener1, Inc. Q1 2010 Earnings Call Transcript

Ener1, Inc. Q1 2010 Earnings Call Transcript
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Ener1, Inc. (HEV)

Q1 2010 Earnings Call Transcript

May 10, 2010 5:00 pm ET

Executives

Rachel Carroll – VP, Corporate Communications

Jerry Herlihy – CFO

Charles Gassenheimer – Chairman and CEO

Rick Stanley – President, EnerDel, Inc.

Robert Kamischke – Chief Financial Officer, EnerDel, Inc.

Jeff Seidel – Chief Strategy Officer

Analyst

s

Dan Galves – Deutsche Bank

Steve Milunovich – Merrill Lynch

Dilip Warrier – Thomas Weisel

Paul Clegg – Jefferies & Co.

Matthew Crews – Noble Financial Group

Chris McDougall – Treaty Oak Capital

Presentation

Operator

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Good afternoon, and welcome to Ener1's 2010 first quarter earnings conference call. Today's call is being recorded. If you have any objections, you may disconnect at this time. Your lines are being placed on listen-only mode until the question-and-answer session – segment of today's conference call.

I would now like to turn the call over to Rachel Carroll, VP of Corporate Communications for Ener1, Inc.

Rachel Carroll

Great,

thank you. Good afternoon, and welcome to the Ener1 management call to discuss first quarter results for 2010. Joining me on the call today is Charles Gassenheimer, Chairman and CEO of Ener1; Jerry Herlihy, CFO of Ener1; Jeff Seidel Chief Strategy Officer for Ener1; Rick Stanley, President of EnerDel, Ener1’s lithium-ion battery subsidiary; and Robert Kamischke, CFO, Controller of EnerDel.

Prior to the call, I would briefly like to remind listeners that certain statements made on this call constitute forward-looking statements that are based on management's expectations, estimates, projections, and assumptions. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors.

I will now turn the call over to Jerry Herlihy who will discuss the financial highlights during the quarter.

Jerry Herlihy

Net sales for the quarter were $11 million compared to $8.2 million in the first quarter of 2009. Excluded from sales are approximately $1.1 million of intercompany cell sales that is deferred into the cells sold to third parties. Net loss was 15.3 million in the first quarter 2010 compared to 7.3 million in the first quarter of 2009.

Research and development expenses increased $3.6 million as we increased our engineering activities for current and prospective customers. Other income or expense declined $3.5 million primarily related to a decline in derivative gains stocks – common stocks, warrants an increase in non-cash interest expense.

Basic net loss per share was $0.12 in the 2010 first quarter compared to $0.06 in the 2009 quarter. Quarterly diluted loss per share was $0.13 in 2010 compared to $0.08 in the prior year. Weighted diluted shares outstanding were 125 million in the first quarter of 2010 compared to 113.5 million in the prior year quarter.

During the quarter we recorded the first 19 million or 118.5 million in grants from the Department of Energy under the automotive battery manufacturing initiatives. 6.6 million was received by the quarter end and the remainder was $19 million was received in April. The grants related to the purchase of equipment are capitalized in our financial statements and amortized into income for the life of the equipments. The amortization will be reported in future financial statements as a reduction of operating expenses.

With the help of the DOE grant funding our investment in property and equipment increased $37.5 million since year-end. Ener1’s total assets are 237 million at March 31, shareholders equity is 110 million.

I will now hand the call over to Charles Gassenheimer Chairman and CEO who will begin with the customer update for the quarter.

Charles Gassenheimer

Thanks Jerry. The last two months have been productive as EnerDel ramped its manufacturing facility to begin commercial production for THINK. THINK is an important launch customer for EnerDel and has seen tremendous traction in Europe expanding coverage to new geographies and capitalizing on its early leadership position.

THINK has over 30 million miles of accumulated mileage data, well above the industry average and has the first fully vehicle homologated vehicle to meet the new stringent consumer electronic standards in Europe. For municipal and corporate police as well as every day consumers THINK is the first only battery electric vehicle available for purchase today.

On a planned production timetable this gives THINK a considerable head-start over its peers. Ener1 has been heavily involved in the restructuring of THINK over the past 18 months. The THINK EnerDel partnership is a powerful combination allowing both companies to launch volume production months ahead of the competition.

The drive train business that we developed with THINK has also seen considerable traction particularly in Asia where THINK and EnerDel are involved in four projects with EnerDel’s key investor ITOCHU Corporation. With the latest and final investment round, THINK now has a fully-funded business plan allowing it to accelerate its product plan, increasing right-hand drive which is critical for the UK and Japanese markets as well as maximizing its early need advantage.

To help steer and more closely align both companies through the following months, I have assumed the Chairman’s position in THINK. The obvious advantage in doing this is to bring to bear Ener1’s additional resources to facilitate and most importantly accelerate THINK’s market entry not just in Europe and Asia but in the United States also.

The Volvo relationship continues to make considerable stride. And I am pleased to announce that after a successful initial development phase, EnerDel was selected as the exclusive supplier for the C30 Pure Electric Vehicle platform. This is a considerable achievement for us on many fronts.

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