Quantum Technologies Reports Fiscal 2008 First Quarter Financial Results
IRVINE, Calif., Sept. 14 -- Quantum Fuel Systems Technologies Worldwide, Inc. , a leading designer, manufacturer and integrator of packaged fuel systems and accessories for specialty vehicles and applications including hydrogen fuel cell, hybrid, and alternative fuel vehicles, today reported results for its fiscal 2008 first quarter ended July 31, 2007. Conference call information is provided below.
First Quarter ended July 31, 2007
Consolidated net revenue declined $11.5 million to $30.4 million in the first quarter of fiscal 2008 compared to $41.9 million in the first quarter of fiscal 2007. The decrease in consolidated net revenue is the result of an $8.0 million decrease in revenues within the Tecstar Automotive Group segment and a $3.5 million decrease within the Quantum Fuel System segment.
The Company's consolidated operating loss increased from $12.5 million in the first quarter of fiscal 2007 to $70.8 million in the first quarter of fiscal 2008. The operating loss includes $58.9 million in write-downs related to impairment of tangible and intangible assets in connection with a possible transaction involving the Tecstar Automotive segment based on reducing the book value of the segment to its fair value. Absent the impairment charge, all three operating segments -- Tecstar, Quantum and Corporate -- reported an improvement in operating loss compared to the first quarter in fiscal 2007. The improvement for both Tecstar and Quantum was directly related to continued cost reduction measures, partially offset by the lower revenue base.
Compensation expense related to the adoption of Statement of Financial Accounting Standards (SFAS) No.123(R), "Share-Based Payment," was $0.9 million and depreciation and amortization expense during the first quarter was $2.9 million.
Revenues for the Tecstar Automotive Group operating segment for the first quarter of fiscal 2008 were $26.9 million compared to $34.9 million in the first quarter of fiscal 2007. Product sales for the Tecstar Automotive Group segment totaled $25.0 million during the first quarter of fiscal 2008, consisting of $13.7 million in automotive assembly revenues, $7.9 million in automotive OEM accessory parts revenues, and other product sales of $3.4 million. In comparison, product sales for the Tecstar Automotive Group segment totaled $33.9 million during the first quarter of fiscal 2007, consisting of $17.6 million in automotive assembly revenues, $12.8 million in automotive OEM accessory parts revenues, and other product sales of $3.5 million. Contract revenue for the Tecstar Automotive Group was $1.9 million in the first quarter of fiscal 2008 compared to $1.0 million for the first quarter of fiscal 2007, an increase primarily related to engineering services provided to Force Protection, Inc. for assistance in Force Protection's Mine Resistant Ambush Protection (MRAP) armored vehicle programs with the U.S. military. Tecstar's operating loss increased from $5.4 million to $64.0 million, including the $58.9 million impairment charge discussed above.
Quantum Fuel Systems operating segment revenues during the first quarter of fiscal 2008 were $3.5 million compared to $7.1 million in the prior year's first quarter. This decrease was primarily due to the end of the General Motors' North American natural gas pick-up truck program in November 2006. Product sales during the first quarter of fiscal 2008 primarily consisted of hydrogen fuel storage systems to be used in General Motors' fuel cell vehicle program and sales of hydrogen-fueled Toyota Prius hybrid vehicles. Despite lower revenues, this segment's operating loss decreased from $3.0 million for the first quarter of fiscal 2007 to $2.9 million for first quarter of fiscal 2008.
Possible Transaction of Tecstar Automotive Group
Management engaged a financial advisor to perform an assessment of strategic options for the Tecstar subsidiary and to solicit offers in the open market for a sale of the subsidiary. Based upon the results of this assessment and indications of interest, the Company determined that the net assets of the Tecstar Automotive Group segment were impaired in the amount of approximately $58.9 million. In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the balance of all goodwill and intangible assets of the segment have been written-off in addition to a $9.6 million estimated impairment charge recognized for property and equipment for the period ended July 31, 2007.
As a result of the impairment of all intangible assets of the Tecstar Automotive segment as of July 31, 2007, the deferred tax liability associated with this segment was eliminated with a corresponding tax benefit recognized in the amount of $4.9 million.
The Company's net loss increased from $13.4 million, or $0.23 a share, in the first quarter of fiscal 2007 to $66.8 million, or $0.94 a share, in the first quarter of fiscal 2008.
Alan P. Niedzwiecki, President and CEO, stated, "The Company's operating performance was obviously impacted by the impairment charges related to indications of interest for Tecstar. We did see improvement on the cost structure and continue to evaluate the Company's costs as it relates to future strategic and business opportunities."
Mr. Niedzwiecki continued, "Quantum has made recent announcements regarding new programs and joint venture relationships for development of specialty vehicles, including arrangements with Ford Motor Company, Force Protection and Fisker Coachbuild. We anticipate recognizing meaningful revenue streams from these opportunities in fiscal 2008. We also expect higher levels of Quantum Fuel System product sales for the remainder of fiscal 2008 as we increase production of hydrogen fuel storage systems under our purchase order with General Motors and anticipated higher sales of hydrogen hybrid vehicles. Additionally, we expect contract revenues to be higher in fiscal 2008 compared to fiscal 2007 as a result of new hydrogen development programs with our OEM customers and expanding military programs."
Quantum Fuel Systems Technologies Worldwide, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended
July 31,
2006 2007
Revenue:
Net product sales $38,437,273 $26,505,133
Contract revenue 3,506,126 3,931,102
Total revenue 41,943,399 30,436,235
Costs and expenses:
Cost of product sales 36,879,668 25,804,558
Research and development 5,658,503 5,082,554
Selling, general and
administrative 10,781,957 10,363,819
Amortization of intangibles 1,134,183 1,117,340
Impairment of long-lived assets - 58,900,000
Total costs and expenses 54,454,311 101,268,271
Operating loss (12,510,912) (70,832,036)
Interest expense, net (961,350) (1,316,936)
Minority interest in losses of
subsidiaries 286,145 373,622
Other income (expense), net 14,160 (12,692)
Loss from continuing operations
before income taxes (13,171,957) (71,788,042)
Income tax benefit 121,439 4,942,472
Net loss from continuing operations (13,050,518) (66,845,570)
Loss from discontinued operations (374,995) -
Net loss $(13,425,513) $(66,845,570)
Net loss per share - basic and
diluted $(0.23) $(0.94)
Number of shares used in per share
calculation - basic and diluted 57,655,500 71,351,281
Cash Flow Information:
Depreciation and amortization $2,989,143 $2,854,330
Cash provided by (used in)
operating activities 923,753 (12,697,033)
Capital expenditures (3,242,677) (405,916)
April 30, July 31,
2007 2007
Balance Sheet Information:
Cash and cash equivalents $4,018,986 $4,951,644
Restricted cash and marketable
securities 1,000,000 1,000,000
Property & equipment, net 18,700,342 7,715,307
Goodwill & intangibles, net 89,268,715 38,890,872
Total assets 167,543,370 106,234,374
Current liabilities 39,122,518 36,150,425
Long-term debt 45,704,394 40,525,416
Working capital 17,336,729 20,491,248
About Quantum
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 portfolio of technologies includes advanced lithium-ion battery systems, 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 alternative fuel 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.
Quantum has product commercialization alliances with General Motors, AM General, and Sumitomo. Quantum's customer base includes General Motors, Toyota, Opel, Hyundai, Suzuki, Ford, DaimlerChrysler, Sunline, Yamaha, AeroVironment, Lockheed Martin and the U.S. Army.
More information can be found about Quantum's products and services at http://www.qtww.com/.