SatCon Technology Announces Q4 and Year-End Financial Results
29 December 1999
SatCon Technology Announces Fourth Quarter and Year-End Financial Results; New Acquisitions and Product Developments Position SatCon for Future Growth
CAMBRIDGE, Mass.--Dec. 29, 1999--SatCon Technology Corporation(R) (Nasdaq NM:SATC), today announced financial results for its fiscal year and fourth quarter ended September 30, 1999. Revenues for the quarter increased, and we've made investments in new products that, combined with our recent acquisitions, will position SatCon for future growth and increased revenues in 2000.Total revenue for the quarter ended September 30, 1999 was $4.0 million versus $3.8 million for the same quarter last year. The net loss for the quarter ended September 30, 1999 was $2.5 million or $0.27 per share versus a net loss of $1.6 million or $0.17 per share for the prior year. Of the $2.5 million net loss, $1.0 million was operational losses, $500,000 was a recognition of investments made in Beacon in prior quarters, $300,000 was to complete inventory write-downs initiated in the third quarter, and $700,000 was charges related to various financings. The $1.0 million operational loss was attributed to two product developments, one at FMI and one at the Technology Center. Total revenue for both the years ended September 30, 1999 and 1998 was $15.5 million. The net loss for the year ended September 30, 1999 was $12.3 million or $1.35 per share, which included the $9.4 million of adjustments that were taken in the third quarter, versus a net loss of $4.3 million or $0.48 per share for the prior year.
At the Technology Center, both resources and costs were invested in the continued development of a smaller, lighter, lower cost version of a power inverter for fuel cell power generation for Plug Power . SatCon's power inverters convert the fuel cell's DC electricity into useable AC electricity. The units, which SatCon is developing for Plug Power, are for residential fuel cell systems that will enable homeowners and small businesses to free themselves from the utility grid by providing on-site power generation using alternative fuels such as natural gas and propane. There are 70 million homes in the United States that are connected to, or built near, natural gas lines and many millions more that already use home delivery of propane. That's a potentially large market of electricity consumers that might rather be independent of the utility grid, its high costs and increasing unreliability, especially with the growing number of personal computers, e-commerce, and Internet communication that requires reliable power. The international market is even larger, particularly with developing third world nations for which local on-site power generation will be far less expensive than establishing a widespread utility grid.
At FMI, resources and costs were invested in the development of a new high frequency communications amplifier for one of the world's largest cellular telephone manufacturers. Recently, the federal government further restricted the use of Beryllium Oxide (BeO), which is hazardous to people's health. BeO is a commonly used material for electronic circuits. This new FMI customer became aware of FMI's proprietary process for building components with Aluminum Nitride as an alternative to BeO and requested that FMI design and manufacture some Aluminum Nitride components for their amplifier circuits. FMI built the products and performed life tests at FMI. The products were then successfully tested to meet the very tight product performance and reliability requirements. The parts have subsequently been qualified as the only Aluminum Nitride parts to successfully meet these requirements and FMI is anticipating orders in early 2000.
Magmotor had a very successful last quarter and year-end, increasing revenues for the year by 75% from $1.6 million to $2.8 million, and have opened up some new markets in machine tools and automotive applications. SatCon's ISAM MagLev system, which is built by Magmotor, was also named by Applied Materials as the enabling technology for their new Centura Rapid Thermal Processing system. The on-going management of Ling Electronics has been transitioned to Magmotor, and Ling recently introduced a new product line of power inverters based on a combination of Ling's power amplifiers and some SatCon power electronics and control technology. Ling was also successful in securing $1.8 million in new orders for its existing products.
In addition, SatCon secured a private placement during the last quarter of $8.0 million. The funds are being used to support the growth of SatCon's manufacturing base, particularly with SatCon's expansion into the power inverters business, and to better position SatCon for continued growth and future opportunities. SatCon also worked throughout the fourth quarter to secure the investment by Mechanical Technology into SatCon, which was concluded following the quarter and year-end. Although not included in the year-end financial results, this investment provided SatCon with an immediate $2.5 million and an additional $4.5 million on January 31, 2000. The funds will also be used to position SatCon to take advantage of its recent new product development efforts.
During the first quarter of fiscal year 1999, SatCon acquired Lighthouse Software and Inductive Components, whose integration into the Technology Center and Magmotor have increased SatCon's presence in the machine tool market. This resulted in several new orders at Magmotor and contributed to its fourth quarter success. In the second quarter, SatCon acquired HyComp, a microcircuits manufacturer which operates under Film Microelectronics and whose added manufacturing capability was instrumental in securing the recent satellite communications electronics order for FMI. In addition, efforts expended in the fourth quarter of 1998 lead to the recent acquisitions of Ling Electronics and SatCon Electronic Power Products (formerly the Power Electronics Products Business Unit of Northrop Grumman), who both recently announced the introduction of new products for the power generation market. The combination of Magmotor and Ling gives SatCon an international sales, distribution and service network. SatCon believes that this power generation market will be a hundred billion dollar market within the very near future.
"This has been a milestone year for SatCon," said David Eisenhaure, President and Chief Executive Officer. "We introduced several new products for our traditional markets and entered into some new markets as well. We've also taken significant steps for future growth through acquisitions that enhance our manufacturing capability, while providing us with additional revenue."
"Over the past year, we have had some significant new product developments which will benefit greatly from our recent acquisitions," continued Eisenhaure. "In particular, at the Tech Center, we have been working to deliver our power inverters for fuel cell power generation systems. And with the addition of our new SatCon Electronic Power Products in Maryland, formerly Northrop Grumman's Power Products Group, we are now positioned to be the leader in power electronics for fuel cell and micro-turbine power inverters."
"The market opportunity for alternative energy sources for residential and commercial applications is enormous. Whether its fuel cells, micro-turbines or other alternative power generation methods, they all have a common need. They all produce DC power and need to have it converted to AC to be useable. We believe that we are currently positioned to be the leader in this marketplace."
"Recently, we introduced a line of products out of SatCon Electronic Power Products. The product is a Line Power Unit that converts high frequency AC Power from a micro-turbine to useable residential or commercial power. It can seamlessly interface directly on or off the grid, providing computer grade electricity, and is ideal for handling the highly variable and unbalanced load requirements of industrial and large commercial applications, such as factories, apartment complexes, shopping malls, or large-scale Internet service providers."
"SatCon Electronic Power Products also built several hundred drivetrains for Chrysler's Epic Minivan. These drivetrains, which consist of a motor, controller and power inverter, are still on the road today. Combining the Power Electronics Products Division's experience in power inverters for hybrid electric vehicles, and micro-turbine power generation with that of our power electronics group in Cambridge, will position us to expand our customer base and enhance our competitive position in the power electronics field."
"Over at FMI, we introduced several telecommunications products this past year including the uplink for the Mobil SpeedPass. This product line is gathering much interest from electronics manufacturers, who are building satellite uplink products that need to handle high-speed data transfers, such as Internet, television and wireless voice and data. Our aluminum nitride products are also meeting with good initial success as power resistors for Nokia and Ericsson mobile phones and we are in discussions with other major electronics manufacturers for new parts for similar products. The HyComp acquisition also provides us with additional manufacturing capability for some of the opportunities we are developing including components for the power inverters for fuel cell cars and power generation systems."
"Beacon is experiencing continued success with their Bell Atlantic tests. In fact, in the last quarter they shipped new production representative flywheels to Bell Atlantic. These shipments are part of a planned expansion of field-testing, which is expected to increase to several hundred units next year. The units have an improved damping system, which is designed to increase the life and reliability of the flywheel. The units have been operating for several weeks now and are gathering valuable information on the performance of the production representative design."
SatCon Technology Corporation manufactures and sells power and energy management products for telecommunications, silicon wafer manufacturing, factory automation, aircraft, satellites and automotive applications. SatCon has six operating divisions: Film Microelectronics, Inc. designs and manufactures microelectronic circuits and interconnect products. Magmotor manufactures motors and magnetic suspension systems. Ling Electronics manufactures test equipment, power products, amplifiers and controllers. Beacon Power manufactures flywheel energy storage devices. SatCon Electronic Power Products manufactures power converters for microturbines, and the Technology Center is responsible for new technology and product development.
Statements made in this document that are not historical facts or which apply prospectively are forward-looking statements that involve risks and uncertainties. It is important to note that the Company's actual circumstances could differ materially from those implied by such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's filings, including but not limited to the 10-K and 10-Q. Copies of those filings are available from the Company and the SEC.
SatCon Technology Corporation Consolidated Statement of Operations
(unaudited)
Three months ended Year ended
9/30/99 9/30/98 9/30/99 9/30/98
Revenue $3,998,983 $3,821,075 $15,477,881 $15,485,923
Operating Expenses $6,031,739 $4,098,781 $25,255,198 $16,415,390
Operating Income
(loss) ($2,032,756) ($277,706) ($9,777,317) ($929,467)
Net Income (loss) ($2,536,887) ($1,556,925) ($12,358,865) ($4,305,501)
Earnings (loss)
per common share ($0.27) ($0.17) ($1.35) ($0.48)
Shares Outstanding
(weighted average) 9,487,982 9,007,999 9,176,849 8,956,671