SatCon Posts Revenue for Fiscal 2001 Second Quarter
CAMBRIDGE, Mass.--May 1, 2001--SatCon Technology Corporation(R) , a leader in power and energy management products, today announced financial results for its fiscal 2001 second quarter and six-month period ended March 31, 2001.Revenue for the second quarter rose 53% to $11.5 million compared with $7.5 million in the same period last year. Revenue for the six months ended March 31, 2001 increased 74% to $21.0 million compared with $12.1 million for the first six months ended March 31, 2000.
"Our strong revenue results for the second quarter further underscore the growing demand for our enabling products for the power and energy management marketplace," said David Eisenhaure, president and chief executive officer of SatCon. "Each of our operating segments produced robust revenue increases, reflecting sales growth throughout our product lines. Revenue from power quality products, electronics, RF semiconductor products, magnetic levitated motor systems and engineering contracts all increased."
For the quarter, Electronics Products segment revenue increased 97% to $3.3 million bolstered by continued growth of the radio frequency (RF) semiconductor product line. Motion Control Products segment revenue rose 33% to $5.2 million as shipments of the MagLev system and deliveries of machine tool motors have remained strong. Research and Development segment revenue increased 55% to $3.0 million.
A comparison of operating segment revenue for the three and six months ended March 31, 2001 follows:
(In $000's)
Three months ended Six months ended
March 31, March 31,
2001 2000 2001 2000
Electronics Products $ 3,346 $ 1,701 $ 5,941 $ 3,510
Motion Control Products 5,158 3,885 9,986 5,238
Research and Development 3,032 1,958 5,103 3,353
Total Revenue $11,536 $ 7,544 $21,030 $12,101
Excluding the write-off of $1.3 million of public offerings costs, the pro-forma operating loss for the second quarter was $2.5 million, or $.18 per share, as compared to an operating loss of $2.0 million, or $.16 per share, in the second quarter of 2000. Net loss for the second quarter was $6.4 million, or $.46 per share, and includes $2.6 million of non-cash equity losses and warrant write-downs of SatCon's positions in Beacon Power and Mechanical Technology compared with $5.0 million, or $.40 per share, in the second quarter of last year. Net loss for the first six months of fiscal 2001 was $10.4 million, or $.75 per share, and includes $4.4 million of non-cash equity losses and warrant write-downs of SatCon's positions in Beacon Power and Mechanical Technology versus $8.1 million, or $.70 per share, in the prior year period.
The company had $7.2 million of cash on hand at March 31, 2001 as compared to $8.8 million at September 30,2000. For the first six months of 2001, operating activities used $1.9 million, capital expenditures used $1.0 million and $1.2 million was raised from capital lease financing.
For the second quarter, gross margin as a percentage of product revenue improved to $1.7 million, or 20.4%, compared with $0.8 million, or 13.5%, in the comparable quarter of last year. Gross margin on research and development revenue of approximately 25% was also improved significantly compared with approximately 16% in the prior year quarter.
Eisenhaure continued: "We continued to improve our gross margins as a result of increased production volume, economies of scale and cost control. While more engineering resources this quarter were allocated to product development programs such as our StarSine MegaPower 2.0 MW uninterruptible power supply (UPS) system for the power quality market and our power conversion systems for the alternative energy markets, we believe these investments will prove prudent as these products have the potential to generate revenue."
Driven by the communication and computational needs of today's digital economy, a new market is emerging for SatCon's power and energy management products. This new "Digital Power" market has been made possible by faster and more powerful Digital Power chips - the semiconductors that drive everything from high-speed computers and communications to industrial automation to new distributed power generation systems. It is used in automobiles, wireless base stations, routers, factory floors and data centers. It is electricity the way it is used today and the way it will be generated tomorrow. It is digital, distributed and smart electricity. There are three basic elements of Digital Power systems; namely generation, storage and control. SatCon has primarily focused its proprietary product development on the control element, and has been developing and commercializing control systems and their semiconductor components and software since its inception. Today, SatCon offers a variety of Digital Power products from controls and semiconductor components to complete power systems that meet the needs of the Digital Power marketplace.
One approach to meeting the needs of the Digital Power market is distributed power generation for which SatCon is building the next generation of enabling products, including its PowerGate and MegaVerter power converters and GridLink utility interface. "We are continuing to commercialize our PowerGate(TM) and MegaVerter(TM) power converters and GridLink(TM) utility interface," said Eisenhaure. "We have coupled PowerGate(TM), GridLink(TM) and our CellPack(TM) 48 energy storage unit into a fully rack mountable system with plug and play capability and have units integrated and under test at several manufacturer facilities. For all of these systems, we have made measurable progress in reducing manufacturing costs and producing a product that is fully functional and meets specifications." Eisenhaure also said the company has completed the manufacture of a 250 kW MegaVerter power conversion product for Fuel Cell Energy's stationary fuel cell. SatCon has also entered into a cooperative development program with ALLIED Utility Network and ZeTek Power to provide the power conversion electronics, network software and controls for a modular zero-emission, alkaline fuel cell power generation system that can provide peak power of up to 5MW for ALLIED's utility grid network.
This quarter, addressing the growing market need for power quality systems due to grid reliability problems, the company introduced the StarSine MegaPower(TM) 2.0MW uninterruptible power supply (UPS) product that is designed to provide seamless backup power, conditioning and power correction for applications such as data server farms and key manufacturing operations. SatCon also plans to introduce other products for this market in the 250kw-1MW power range. We have met with a number of interested customers who see the benefits of our 2.0MW UPS system," said Eisenhaure. "Our current plan is to complete the manufacturing and installation of our first units by the end of this calendar year. With power shortages expected to continue in California and elsewhere, we believe this product should provide us with a revenue opportunity." The system includes a diesel generator and a flywheel and power conversion electronics manufactured by SatCon.
Bolstering its Electronics Products segment, the company said it continued to see revenue growth from its RF (radio frequency) semiconductor products. SatCon is expanding on this base of products and is developing innovative new standard and custom RF products for the communications market. The company is developing a high-speed (1.9 gigahertz) power amplifier for telecommunications base stations for one of the largest worldwide telecommunications corporations and an even higher speed (5.6 gigahertz) amplifier that will serve as the backbone of wireless local area network bridge applications for a leading U.S. communications network equipment manufacturer.
In the company's Motion Control product segment, shipments of the MagLev system to Applied Materials and deliveries to Haas Automation for machine tool motors have remained strong. The company developed and delivered a new actuator, designed for both new and retrofit applications, to Speedline for use in automatic dispensing equipment for semiconductor manufacturing. In addition, the company has delivered a dozen motors of various sizes for use as auxiliary motors in fuel cell vehicles. Finally, SatCon has orders for two other compressor drive motors for fuel cell vehicles and a thruster motor for underwater applications for the Navy.
"During the quarter, at the National Design and Engineering Show in Chicago, we gained excellent exposure and attracted several new business leads, particularly for our MagLev systems in both rotating and linear applications," said Eisenhaure. "Planning for increased demand in this product line, we are currently in the process of final fit-out at our new 65,000 square foot facility in Worcester, Massachusetts, and expect to move the Magmotor offices and manufacturing operations to the new facility by the end of May."
SatCon has a legacy of successful product development using government and commercial funds from outside the company, evidenced by many of its Digital Power products developed at its Technology Center. SatCon is currently developing several modular power electronics programs that it expects to transition to future commercial products. Under a $2.7 million contract with the Navy, the company is developing 50kW power modules for motor drives and stackable power converters for the Navy's new all-electric ship. In addition, SatCon is developing low cost power modules for automobiles under a $10 million in Department of Energy program.
"In the second quarter, we made technological and system integration advances that are already influencing the characteristics of our Digital Power products," said Eisenhaure. "These programs are furthering the technology development that we believe will be the next generation of high power Digital Power electronics."
"As we look to the future," concluded Eisenhaure, "we will continue our strategy to drive toward revenue growth and profitability through the introduction of enabling and proprietary products, increasing sales and marketing, growing our capabilities through acquisitions and adding unique production capabilities and using government and outside funds to leverage our product investments."
SatCon Technology Corporation
Consolidated Statements of Operations
($ in thousands, except per share data)
(Unaudited)
Three months ended Six months ended
March 31, March 31,
2001 2000 2001 2000
Product revenue $ 8,504 $ 5,648 $ 15,927 $ 8,810
Funded research
and development
revenue 3,032 1,896 5,103 3,291
Total revenue 11,536 7,544 21,030 12,101
Operating
expenses:
Cost of
product
revenue 6,773 4,886 12,858 7,887
Research and
development
expenses:
Funded
research
and
development
expenses 2,282 1,598 3,722 2,693
Unfunded
research
and
development
expenses 1,429 295 2,742 924
Total research
and development
expenses 3,711 1,893 6,464 3,617
Selling, general
and administrative
expenses 3,256 2,420 5,938 4,453
Write-off of
public offering
costs 1,326 -- 1,326 --
Amortization of
intangibles 323 329 645 572
Total operating
expenses 15,389 9,528 27,231 16,529
Operating loss (3,853) (1,984) (6,201) (4,428)
Unrealized loss on
Warrants (787) -- (992) --
Interest income/
(expense), net 113 99 227 130
Net loss before
loss from Beacon
Power Corporation
and cumulative
effect of
accounting
change (4,527) (1,885) (6,966) (4,298)
Loss from Beacon
Power Corporation (1,845) (148) (2,394) (712)
Net loss before
cumulative effect
of accounting
change ($ 6,372) ($ 2,033) ($ 9,360) ($ 5,010)
Cumulative effect
of
unrealized loss
on MTI Warrants -- -- (1,022) --
Net loss ($ 6,372) ($ 2,033) ($10,382) ($ 5,010)
Accretion of
redeemable
convertible
preferred stock
discount -- (2,950) -- (3,106)
Net loss
attributable to
common
stockholders ($ 6,372) ($ 4,983) ($10,382) ($ 8,116)
Earnings per share,
basic and diluted:
Net loss before
cumulative effect
of accounting change ($ 0.46) ($ 0.40) ($ 0.68) ($ 0.70)
Cumulative effect
of accounting change $ 0.00 $ 0.00 ($ 0.07) $ 0.00
Net loss attributable
to common stockholders ($ 0.46) ($ 0.40) ($ 0.75) ($ 0.70)
Shares used for
computing basic and
diluted EPS 13,870 12,398 13,849 11,596
SatCon Technology Corporation
($ in thousands)
March September
31, 30,
Consolidated Balance Sheets as of: 2001 2000
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,173 $ 8,814
Accounts receivable, net 7,938 7,496
Unbilled contract costs, net 354 825
Inventory 9,519 8,002
Prepaid expenses and other
current assets 563 615
Total current assets 25,547 25,752
Property and equipment 10,867 9,861
Accumulated depreciation (4,121) (3,604)
Property and equipment, net 6,746 6,257
Intangibles 11,161 11,142
Accumulated amortization (2,713) (2,062)
Intangibles, net 8,448 9,080
Investment in Beacon Power Corporation 8,423 --
Warrant to purchase Beacon Power common stock 758 --
Warrant to purchase MTI common stock 724 2,474
Other long-term assets 192 925
Total assets $ 50,838 $ 44,488
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 5,374 $ 3,076
Accrued expenses 2,804 2,744
Deferred revenue 2,069 1,525
Current portion of long-term debt 380 17
Total current liabilities 10,627 7,362
Long-term liabilities, net of current portion 1,079 214
Contingent obligation to Class D
shareholders of Beacon Power -- 5,794
Contingent obligation to warrant holders 1,440 --
Stockholders' equity:
Common stock; $.01 par value,
25,000,000 shares authorized;
13,889,836 and 13,841,185
shares issued in 2001 and 2000 139 138
Additional paid-in capital 88,186 72,499
Accumulated deficit and other
comprehensive loss (50,633) (41,269)
Treasury stock, at cost; none and
44,500 shares in 2001 and 2000 -- (250)
Total stockholders' equity 37,692 31,118
Total liabilities and
stockholders' equity $ 50,838 $ 44,488