SatCon Technology Announces Second Quarter 2000 Results
3 May 2000
SatCon Technology Corporation Announces Second Quarter 2000 Results; Revenues Increase by 106% to $7.5 Million
CAMBRIDGE, Mass.--May 3, 2000--SatCon Technology Corporation(R) (Nasdaq NM:SATC), a leader in power and energy management products targeting the distributed power market, today announced second quarter financial results for the period ended March 31, 2000. Revenues for the second quarter increased by $3.8 million, or 106%, to $7.5 million versus $3.7 million in the second quarter of fiscal 1999. Revenues for the first six months of 2000 increased by $4.7 million, or 64%, to $12.1 million versus $7.4 million in 1999.The net loss for the quarter was $1.9 million versus $1.2 million in the second quarter of 1999. The net loss per share attributable to common stockholders for the quarter was $.39 versus $.14 per share in the second quarter of 1999. Net loss for the first six months of fiscal 2000 was $4.4 million versus $2.6 million for the prior year. The net loss per share attributable to common stockholders for the first six months of 2000 was $.65 versus $.29 in 1999. During the second quarter, Brown Simpson elected to convert their redeemable preferred stock into 1,025,641 shares of common stock, which resulted in the accretion of a $2.9 million unamortized discount on the redeemable preferred stock, or a $.24 charge against earnings for the write-off. Excluding this discount accretion, the net loss per share for the second quarter of 2000 would have been $.15.
For all periods presented, we have reclassified from cost of revenue to research and development all costs related to funded research and development contracts. We believe that this reclassification clearly identifies our investment in research and development regardless of whether the program is funded by SatCon or a third party. A breakdown of revenue by operating segment is as follows:
(In $000's)
Three months ended Six months ended
March 31, March 31,
2000 1999 2000 1999
Electronics Products $ 1,682 $ 1,270 $ 3,509 $ 2,489
Motion Control Products 3,904 502 5,239 1,277
Contract Research
and Development 1,958 1,889 3,353 3,621
Total Revenue $ 7,544 $ 3,661 $12,101 $ 7,387
David Eisenhaure, our President and Chief Executive Officer, said, "We were pleased to see our revenues double in the second quarter. In our Electronics Products segment, second quarter revenues for Film Microelectronics (FMI) increased by $412,000, or 34%, to $1.7 million. In our Motion Control Products segment, second quarter revenues for the Magmotor division increased by $735,000, or 145%, and the inclusion of revenues from the Ling Electronics acquisition contributed $2.7 million to the increase. Contract research and development revenues from the Technology Center increased slightly. For the first six months of fiscal 2000, our revenue increased by $4.7 million, or 63%, to $12.1 million. Revenues at FMI increased by $1.0 million and the Ling Electronics acquisition contributed $3.4 million to the increase in six month revenues."
Eisenhaure continued, "The net loss of $1.9 million for the second quarter primarily represents our continuing investment in the development and commercialization of our power conversion products for the distributed power generation market. We are making progress in developing our power converter products for fuel cell power generation systems. Our power converter products convert DC power generated by fuel cells or microturbines into clean, useable AC power. Distributed power generation systems using fuel cells convert natural gas or propane into electricity, allowing homeowners and commercial buildings to generate high quality, reliable electricity independent of the utility grid. Distributed power generation systems help to prevent power disruptions, or spikes, and provide computer quality electricity that will not be subject to outages like those on the utility grid. Most of the major fuel cell manufacturers are currently evaluating our power conversion products for their fuel cell systems."
"We have begun the process of installing automated equipment at our Advanced Fuel Cell Power Products Division in Marlborough, MA for the manufacturing of our power conversion products. We have set up assembly areas for power electronics manufacturing. We anticipate having the initial capability of manufacturing 25,000 power converter systems per year and expanding our capacity as demands increase."
"This past quarter we introduced our MicroGrid(TM) line of fuel cell controllers and software. The new line of digital controllers and software can integrate into any fuel cell power generation system from small residential systems to larger commercial and industrial systems. With some software modifications, it can also be integrated into fuel cell hybrid-electric vehicles. We also introduced the MegaVerter(TM) modular power inverter aimed at the higher power commercial and industrial range of fuel cell power generation systems. We will be installing our MegaVerter(TM) with a MicroGrid(TM) controller into the system that FuelCell Energy, Inc. is operating at their Danbury, CT facility as part of our collaborative agreement with FuelCell Energy to install and demonstrate a high efficiency, 250kW, grid-connected fuel cell power generation system. In addition, Magmotor, working together with the Technology Center, has developed special high performance motors for fuel cells and has delivered compressor motors for a fuel cell hybrid electric vehicle that are being evaluated by a major U.S. automotive manufacturer."
"At Magmotor, we saw a 145% increase in second quarter revenues over the same period in fiscal 1999. This is attributable to an increase in the Inductive Components portion of Magmotor's business. SatCon purchased Inductive Components last year and we are beginning to see positive results from that acquisition. Inductive Components is the value added supplier portion of Magmotor, where motors are modified with gearboxes, pulleys, harnesses and encoders and sold into the semiconductor and factory automation markets. We are also realizing the benefits of a national sales representative firm that has increased our visibility as a national motor supplier. MagMotor has received an increased level of orders for its Integrated Suspension and Motor (ISAM) system and we are seeing increased interest from other manufacturers that would represent new applications for our MagLev system."
"At FMI, the increased manufacturing capacity created by the acquisition of HyComp has contributed to our ability to significantly increase our thin film sales. We are targeting the growing demand in the wireless communications market for radio frequency (RF) products and have introduced a new line of Aluminum Nitride RF Termination Products targeted to wireless communications that includes our power resistors for cellular telephones. We also introduced a new product line targeted at high-speed wireless data transmission. The Microwave Products line includes our high-speed RF satellite uplink amplifiers. Both of these product lines experienced increased sales during the last quarter. We have also made progress in developing a high power density, low cost power conversion module for an alternative energy vehicle that is being partially funded under our $10 million Department of Energy program. This development work is being performed both at FMI and the Technology Center and we expect that this will result in power conversion products for fuel cells that are smaller and less expensive to manufacture."
"Our Beacon Power affiliate, has had continued success with their flywheel energy storage system field-test units. They have received their first production order, worth $1.5 million, for 100 of Beacon Power's flywheel energy storage systems from TLER Associates in Mexico. These systems will be Beacon's first flywheel energy storage systems to be installed in an actual residential community. The systems will be used to provide back-up power for the telephone system for 15,000 new homes. These homes are part of a planned 100,000 home build by TLER."
"Beacon's flywheel energy storage systems are designed to be a replacement for batteries. They can operate more reliably, require less maintenance and are longer lived; they can be remotely monitored and are also more environmentally friendly. With its continuing success in demonstrating reliable operation, Beacon is gaining both national and international recognition with electric utilities, telephone and cable television service providers and on-site power generation manufacturers."
SatCon Technology Corporation manufactures and sells power and energy management products for distributed power generation, telecommunications, silicon wafer manufacturing, factory automation, aircraft, satellites and automotive applications. SatCon has three operating segments that contain six divisions. Under the Electronics Products segment, Advanced Fuel Cell Power Products manufactures and sells power conversion products for fuel cell and other power generation systems and Film Microelectronics, Inc. designs and manufactures standard and custom microelectronic circuits and interconnect products. Under the Motion Control Products segment, Magmotor manufactures standard and custom high-performance motors and magnetic suspension systems and Ling Electronics manufactures shaker vibration test equipment, power converters, amplifiers and controllers. Under the Contract Research and Development segment, SatCon Electronic Power Products performs contract research and development for power electronics and the Technology Center is responsible for new technology and product development. Our affiliate, Beacon Power Corporation, is developing flywheel energy storage systems for uninterruptible power and power quality management. For further information, please visit the SatCon website at http://www.satcon.com.
Statements made in this document that are not historical facts or which apply prospectively are forward-looking statements that involve risks and uncertainties. Among the important factors that could cause the Company's actual circumstances, or results, to differ materially from those implied by such forward-looking statements include market conditions, the failure of the Department of Energy to fully fund its $10 million award, developments in the Company's business and industry and difficulties in developing technology enhancements. 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 Statements of Operations (unaudited)
Three months ended Six months ended
March 31, March 31,
2000 1999 2000 1999
Product revenue $5,648,570 $1,772,226 $8,810,075 $3,766,753
Contract research &
development
revenue 1,895,857 1,889,994 3,290,759 3,620,566
Total revenue 7,544,427 3,662,220 12,100,834 7,387,319
Cost of revenue 4,885,985 1,915,144 7,887,163 3,438,821
Gross margin 2,658,442 1,747,076 4,213,671 3,948,498
Operating expenses:
Research and
development
expenses 1,892,822 1,465,434 3,616,017 2,894,375
Selling, general
and administrative 2,420,168 1,028,748 4,452,704 2,018,328
Goodwill
amortization 328,955 94,035 571,563 171,793
Total operating
expenses 4,641,945 2,588,217 8,640,284 5,084,496
Operating loss (1,983,503) (841,141) (4,426,613) (1,135,998)
Loss from
investment
in Beacon
Power
Corporation -- (424,173) (130,504) (1,488,183)
Interest income/
(expenses), net 99,194 34,123 129,626 (5,490)
Net loss before
income taxes ($1,884,309)($1,231,191) ($4,427,491) ($2,629,671)
Provisions for
income taxes -- -- -- --
Net loss ($1,884,309)($1,231,191) ($4,427,491) ($2,629,671)
Accretion of
redeemable
convertible
preferred
stock discount (2,949,944) -- (3,105,888) --
Net loss
attributable
to common
stockholders ($4,834,253)($1,231,191) ($7,533,379) ($2,629,671)
Basic and diluted
loss per share:
Net loss ($0.39) ($0.14) ($0.65) ($0.29)
Shares used
for computing
basic and
diluted EPS 12,398,497 9,059,082 11,595,763 9,019,666
SatCon Technology Corporation
Consolidated Balance Sheets as of: March 31, September 30,
2000 1999
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $9,746,244 $2,533,072
Accounts receivable, net 6,623,053 2,799,143
Unbilled contract costs, net 1,255,581 1,462,201
Inventory 7,613,256 3,697,972
Loan to Beacon Power Corporation 300,000 --
Prepaid expenses and
other current assets 535,771 349,070
Total current assets 26,073,905 10,841,458
Property and equipment, net 4,585,628 3,260,632
Intangibles, net 9,732,692 3,194,609
Other long-term assets 219,771 103,675
Total assets $40,611,996 $17,400,374
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $1,443,741 $1,563,605
Accrued expenses 2,587,131 1,213,941
Accrued loss from investment
in Beacon Power Corp. -- 202,829
Current portion of long-term debt 16,848 16,226
Total current liabilities 4,047,720 2,996,601
Long-term liabilities 55,337 63,606
Redeemable convertible preferred stock -- 4,894,112
Stockholders equity:
Common stock; $0.01 par value,
25,000,000 shares
authorized; 13,665,382 and
9,617,009 issued
as of March 31, 2000 and
September 30, 1999 136,654 96,170
Additional paid-in capital 68,115,159 37,074,161
Shares held in escrow,
at market; 42,860 shares (1,117,039) (428,600)
Amounts receivable from
exercise of stock options (700,001) (1,816,667)
Retained deficit (29,676,130) (25,229,305)
Treasury stock, at cost; 44,500 shares (249,704) (249,704)
Total stockholders' equity 36,508,939 9,446,055
Total liabilities and
stockholders' equity $40,611,996 $17,400,374