TIDMPFLM
RNS Number : 2410M
PowerFilm, Inc
22 August 2013
PowerFilm, Inc.
PowerFilm Reports 2013 First Half Results
22 August 2013, LONDON, UK and AMES, IOWA - PowerFilm(R) , Inc.
(AIM: PFLM), ("PowerFilm" or "the Company"), the developer and
manufacturer of thin flexible solar panels, today announces its
preliminary results for the six months ended 30 June 2013.
Financial Highlights
-- Revenue of $3.3 million for the first half 2013 (first half 2012: $4.3 million).
-- Gross Margin of 4.7% for the first half 2013 (first half 2012: 20.7%).
-- Net Loss of $ 0.97 million for the first half 2013 (first
half 2012: net loss of $0.66 million).
-- $12.5 million of cash and cash equivalents, certificates of
deposit, restricted cash, restricted certificates of deposit, and
restricted investment securities at 30 June 2013 (30 June 2012:
$13.2 million).
Operational Highlights
-- Consumer market strategic partner Bushnell(R) 's launch of
several products for recharging smartphones, tablets, and other
consumer electronics is progressing well and is including follow-on
orders for PowerFilm's custom solar panels that are integrated into
the final product. The Bushnell relationship with high-profile
outdoorsman Bear Grylls has generated strong publicity and market
interest in the product line.
-- Market conditions, costs, and technical factors have led
PowerFilm to decide not to pursue actively its Building Integrated
Photovoltaics (BIPV) program. The Company is holding discussions
with its strategic partner Serge Ferrari(R) regarding the on-going
relationship between the parties. PowerFilm has concluded that it
is better to focus its resources on more specialized markets where
the specific advantages of low weight, flexibility, and durability
are most important.
-- Sales of the foldable charger line to the military remain
solid, especially for the larger 90 and 120 Watt chargers.
-- The Company is making good progress on its $2.2 million
development contract from the US Army to reduce the cost and to
increase the power output from PowerFilm's PowerShade(TM) solar
field shelter.
For further information, please contact:
PowerFilm, Inc. +1 (515) 292 7606
Frank Jeffrey, CEO
Mike Coon
Nomura Code Securities Limited, Nominated Advisor +44 (0) 20 7776 1200
Juliet Thompson, Giles Balleny
A copy of this announcement will be available on the PowerFilm
website at http://www.powerfilmsolar.com. The common shares of
PowerFilm, Inc. are traded on the AIM Market of the London Stock
Exchange and are not registered under the US Securities Act 1933,
as amended. Such shares may not be offered or sold to residents of
the United States or to persons acting on their behalf, or to other
persons who are "United States Persons" within the meaning of
Regulation S as promulgated under the Securities Act of 1933,
unless such shares have been registered under the Securities Act or
there is an available exemption from registration.
Financial Review
For the first half of 2013 PowerFilm achieved $3,316,298 in
revenue. The Company's gross profit for the period was $154,400
resulting in a 4.7% gross margin. There was a net loss of $972,289
for the first half of 2013.
The following is a comparison of the financial results for the
first half of 2013 compared to the first half of 2012:
In the first half of 2013 revenues decreased 22.8% to $3,316,298
from $4,298,320 in the first half of 2012. Product sales revenues
decreased in the first half of 2013 by 21.7% to $2,858,312 from
$3,649,994 in the first half of 2012, which were impacted by a
shortfall in distributor revenue versus first half a year ago, as
well as a delay of 2013 first half shipments for two large
customers to the second half of 2013. Contract revenue decreased to
$457,986 from $648,326 for the first half of 2012, a 29.4%
decrease. First half 2012 contract revenue was relatively more due
to the completion of a larger government contract. Our current
government contract has a lower proportion of revenue in first half
2013 compared to expected revenue recognition in second half 2013
and first quarter 2014 due to contract structure.
An income tax benefit of $515,000 was booked for the first half
2013 compared to a $445,000 income tax benefit that was booked in
the first half of 2012. Net loss for the first half 2013 was
$972,289 compared to a net loss of $655,847 for the first half of
2012 due to lower revenues. Gross margins showed a change from
20.7% at half year for 2012 to 4.7% at half year 2013 due to the
combination of lower revenues and a number of fixed production
costs which include higher equipment depreciation for machines
placed in service at the end of 2012 and manufacturing building
overhead.
The Company continued to have a development contract in place
with the U.S. Army throughout the first half of 2013, which will
continue through the second half of 2013. While actual R&D and
engineering expenditures increased in this period, the majority is
related to R&D contract work funded by the US Army and the
Company has reduced the internally funded component. Engineering
expenses on new production machines decreased significantly in the
first half of 2013 as efforts were put toward the R&D contract.
These changes combined to decrease the Research and Development
line in the financial statements to $577,959 for first half 2013
compared to $775,204 for the first half of 2012.
Sales, general, and administrative expenses decreased to
$971,422 for the first half of 2013 compared to $1,222,206 for the
first half of 2012, a 20.5% decrease as the Company continues its
efforts to drive down costs.
PowerFilm's balance sheet continues to have a strong position at
30 June 2013, which includes cash and cash equivalents of
$4,190,207, certificates of deposit of $3,354,264 ($2,326,961 short
term and $1,027,303 long term), $1,000,000 of restricted U.S.
government agency backed debt securities and $4,000,000 of
restricted certificates of deposit ($3,500,000 short term and
$500,000 long term). The securities had a contractual maturity date
of greater than 5 years as of 30 June 2013. The aggregation of all
these accounts total $12,544,471.
The $4,000,000 of restricted certificates of deposit and the
$1,000,000 of U.S. government agency backed debt securities are
contractually required to be maintained as a compensating balance
at the bank that issued the letter of credit on the Company's
industrial revenue bonds for PowerFilm's manufacturing facility.
The minimum compensating balance of certificates of deposit and/or
securities was reduced in 2013 from $5.5 million to $5 million.
The financial statements of PowerFilm are prepared on the basis
of US Generally Accepted Accounting Principles (US GAAP).
Financial Statements PowerFilm, Inc.
Statements of Operations
Mid-Years 2013, 2012, Full-Year
2012
Unaudited Unaudited Audited
6 months 6 months 12 months
ending ending ending
30-Jun-13 30-Jun-12 31-Dec-12
--------------------------------------- ------------ ------------ ------------
Operating Revenues:
Product Sales $2,858,312 $3,649,994 $9,301,052
Development Contracts 457,986 648,326 1,032,874
------------ ------------
3,316,298 4,298,320 10,333,926
Cost of Revenues 3,161,898 3,410,742 7,543,605
------------ ------------
Gross Profit 154,400 887,578 2,790,321
------------ ------------ ------------
Operating Expenses:
Research and development 577,959 775,204 1,565,916
Selling, general, and administrative 971,422 1,222,206 2,356,316
------------ ------------
1,549,381 1,997,410 3,922,232
------------ ------------ ------------
Operating (loss) (1,394,981) (1,109,832) (1,131,911)
------------ ------------ ------------
Other income (expense):
Interest/Dividend income 50,800 71,471 157,967
Interest (expense) (113,869) (67,172) (206,753)
Other income (loss) (28,239) 4,686 26,895
------------ ------------
(91,308) 8,985 ( 21,891)
------------ ------------ ------------
(Loss) before income tax (benefit) (1,486,289) (1,100,847) (1,153,802)
Income tax (benefit) (514,000) (445,000) (452,000)
------------ ------------
Net (loss) $ (972,289) $ (655,847) $ (701,802)
Less: Net loss attributable to
the noncontrolling interest 0 0 3,766
------------ ------------ ------------
Net (loss) attributable to PowerFilm,
Inc. and Subsidiary $ (972,289) $ (655,847) $ (698,036)
Basic and diluted (loss) per share $ (0.03) $ (0.02) $ (0.02)
PowerFilm Inc.
Balance Sheets
Mid-Years 2013, 2012 Unaudited Unaudited
30-Jun-13 30-Jun-12
-------------------------------- --------------- ----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents, net
of restricted cash $4,190,207 $7,671,271
Short-term certificates of
deposit 2,326,961 0
Accounts receivable, net 1,140,856 1,673,047
Inventories 4,278,423 3,954,098
Prepaid Expenses 306,932 292,166
Income Tax Receivable 0 45,760
Deferred Income Taxes 182,000 106,000
--------------- ----------------
Total current assets 12,425,379 13,742,342
--------------- ----------------
RESTRICTED INVESTMENT
SECURITIES 1,000,000 5,000,000
--------------- ----------------
RESTRICTED CERTIFICATES OF
DEPOSIT 4,000,000 500,000
--------------- ----------------
LONG-TERM CERTIFICATES OF
DEPOSIT 1,027,303 0
--------------- ----------------
PROPERTY AND EQUIPMENT
Machinery and equipment 12,417,338 9,932,062
Leasehold improvements 272,276 272,276
Equipment construction in
progress 3,326,657 5,585,087
Land/Building 6,032,257 6,032,257
--------------- ----------------
22,048,528 21,821,682
Less accumulated depreciation (6,739,193) (5,586,505)
15,309,335 16,235,177
--------------- ----------------
OTHER ASSETS 135,137 177,021
--------------- ----------------
DEFERRED INCOME TAXES 1,096,000 778,716
--------------- ----------------
TOTAL ASSETS $34,993,154 $36,433,256
=============== ================
LIABILITIES & STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Current maturities of long term
debt $ 250,000 $ 250,000
Trade accounts payable 199,517 227,635
Other payables and accrued
expenses 827,071 1,144,247
Total Current Liabilities 1,276,588 1,621,882
--------------- ----------------
LONG-TERM LIABILITIES
Revenue bonds payable, less
current maturities 3,500,000 3,750,000
Total Long-Term Liabilities 3,500,000 3,750,000
--------------- ----------------
STOCKHOLDERS' EQUITY
Non-controlling interest in
subsidiary 0 3,766
Common stock 381,518 381,518
Additional paid in capital 32,714,613 32,697,967
Retained (deficit) (2,088,359) (1,073,882)
Treasury Stock (453,420) (452,740)
Accumulated other comprehensive
(loss) (337,786) (495,255)
--------------- ----------------
30,216,566 31,061,374
--------------- ----------------
TOTAL LIABILITIES &
STOCKHOLDERS'
EQUITY $34,993,154 $36,433,256
=============== ================
PowerFilm, Inc.
Statements of Cash Flows
Mid-Years 2013, 2012, Full-Year 2012
Unaudited Unaudited Audited
6 months 6 months 12 months
ending ending ending
30-Jun-13 30-Jun-12 31-Dec-12
-------------------------------------------- -------------- -------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (972,289) $ (655,848) $ (701,802)
Adjustments to reconcile net (loss)
to net cash (used in)
operating activities:
Depreciation and amortization 544,452 544,242 1,061,268
Provision for doubtful accounts 0 0 (23,145)
Deferred Income taxes (515,000) (445,000) (405,000)
Stock-based compensation expense 4,077 16,142 28,057
Changes in working capital components:
Accounts receivable 1,363,086 1,348,319 540,569
Inventories (463,940) (892,839) (753,224)
Prepaid expenses 58,810 (24,151) (97,727)
Income tax receivable 41,087 0 4,673
Trade Accounts payable 124,848 (34,252) (187,217)
Other payables and accrued expenses (301,167) (228,664) (5,691)
Net cash (used in) operating activities (116,036) (372,051) (539,239)
-------------- -------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (40,963) (353,887) (439,867)
Purchase of restricted securities
held-to-maturity 0 (1,000,000) (2,000,000)
Proceeds from calls of restricted
securities
held-to-maturity 0 1,000,000 6,000,000
Purchase of restricted certificates
of deposit (29,842) 0 (4,000,000)
(Increase) decrease of certificates
of deposit 0 0 (3,324,422)
(Increase) decrease in restricted cash 1,093,159 525,311 (67,848)
(Increase) decrease in other assets (5,428) (1,615) 37,206
Decrease in cash and short-term investments
held for property
and equipment construction 0 6,850,000 6,850,000
Net cash provided by investing activities 1,016,926 7,019,809 3,055,069
-------------- -------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (125,000) (125,000) (250,000)
Proceeds from issuance (repurchase)
of common stock, net (26) 0 0
-------------- -------------- ------------
Net cash (used in) financing activities (125,026) (125,000) (250,000)
-------------- -------------- ------------
Net Increase in cash and cash equivalents 775,864 6,522,758 2,265,830
CASH AND CASH EQUIVALENTS
Beginning 3,414,343 1,148,513 1,148,513
-------------- -------------- ------------
Ending 4,190,207 7,671,271 3,414,343
============== ============== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION, cash payments for:
Interest, net of capitalized $113,869 $92,574 $ 218,315
Income taxes 0 0 (52,000)
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING
ACTIVITIES
Gain (loss) on interest rate swap
agreement,
net of tax $127,700 $ (22,694) $ 12,825
Restricted shares awarded from treasury
shares, net of forfeitures (2,625) 9,872 9,793
Operational Review
Competitive Landscape and Position
The turbulence and uncertainly in the solar market globally
continued in the first half of 2013 but PowerFilm has continued to
push forward. Price pressures continue as most solar companies
focus on market share instead of profitability. However, the market
now appears to be acknowledging that the PV product is not a
commodity and that long-term variability of product quality
represents a significant risk. PowerFilm continues to believe that
its positioning as a developer, manufacturer, and supplier of
high-quality solar panels custom engineered to solve customer power
problems is a differentiated position in the market.
Sales and Marketing
PowerFilm markets and sells a full line of differentiated
standard and custom engineered solar products to diverse markets.
The Company sells both modules to other businesses, as well as
finished solar products ready out of the box for end-users.
Custom Engineering
PowerFilm custom engineers products for customers with diverse
power needs in a variety of application markets. The custom
engineering takes many forms, ranging from variation of form factor
to encapsulation, to fastening, to electrical termination and
connection. In some cases the PowerFilm engineering group works
with customers to optimize the overall power system: solar panel
power generation, power storage, and application power use. As a
result, the Company is able to provide customers with
differentiated optimized solutions that are not generically
available in the market.
Military and Government
The military market continues to be an important one for
PowerFilm. The Company supplies the military market with products
ranging from small chargers for smartphones and AA battery
recharging, to larger foldable solar chargers up to 120 Watts that
can be packed easily in a rucksack and combined for larger power
generation needs. PowerFilm also supplies the solar quad product of
approximately 200 Watts, and the PowerShade solar field shelter in
the multi-kilowatt power range. In addition, the Company supplies
custom panels to a variety of defense contractors for specific
power needs.
PowerFilm continues to receive positive product responses from
various areas of the military. The unpredictable dynamics of the
ongoing federal government budget process make product volume
uptake and timing projections challenging.
Bushnell Outdoor Products
As was previously announced in May, PowerFilm's strategic
partner Bushnell Outdoors launched its new line of POWERSYNC(TM)
custom solar products. After two years of intensive development by
both companies, five products integrating custom PowerFilm solar
panels are now available for sale from Bushnell.
The five Bushnell products incorporate PowerFilm's ultra thin,
ultra durable solar material, and are sufficiently rugged to
withstand wear and tear in an outdoor environment. One of the solar
products being released by Bushnell is also being incorporated into
Bushnell's Bear Grylls product line collection.
These products are being sold on the Bushnell website under
their PowerSync line of products as well as being distributed
nationally through major outdoor retail chains such as LL Bean and
REI, and through major retailers such as Cabela's, Academy, Dick's
Sporting Goods, and Gander Mountain. The products have received
significant media interest from outdoor magazines as well
mainstream media. Bushnell continues to place follow-on product
orders to PowerFilm for the re-stocking of the sales pipeline to
replenish store inventories given strong customer uptake. The
products are already available in retail stores in Canada and
further international sales distribution is planned.
Building Integrated
Market conditions, costs, and technical factors have led
PowerFilm to put its Building Integrated Photovoltaics (BIPV)
program on hold. The Company is in discussions with its BIPV
strategic partner, Serge Ferrari, about the future of its
agreement. The impact of low-cost crystalline modules from China
and the large oversupply of panels worldwide have caused price
disruptions in the BIPV sector which has put all players at extreme
risk. PowerFilm has concluded that it is better to focus its
resources on more specialized markets where the specific advantages
of low weight, flexibility, and durability are most important.
As part of this change, PowerFilm will put on hold all BIPV
related market efforts, demo projects, and certification efforts.
PowerFilm will continue technology development of related modules
to the extent that they have applications in other markets and
offer these modules into the OEM market if they fit a specific
customer's needs. In particular, there appear to be applications
for the modules developed under these programs in the
transportation sector.
PowerFilm Brand Foldable and Rollable Solar Chargers
PowerFilm also supplies its own branded line of foldable and
rollable solar chargers to meet targeted power needs of various
markets. Our consumer products business slowed in the first half of
2013 due to pricing pressures.
Original Equipment Manufacturer (OEM) Custom Panels
The Company engineers and supplies custom solar panels optimized
to meet the specific power needs of diverse OEM customers in a wide
array of applications. In the first half of 2013 we redesigned the
custom panel for one of our largest OEM customers. OEM sales in the
first half were lower than projected yet are expected to regain
momentum and growth with the new improved design.
Marine
PowerFilm partners Hobie and Torqeedo in the marine space
continue to order additional solar panels as they build their
positions in the marine market. Also, PowerFilm sells its own line
of ready-to-use chargers to the West Marine national retail
chain.
Manufacturing Improvements
Manufacturing improvements continued in the first half of 2013
in the areas of outdoor testing, auto-testing and production
machine efficiencies. Results of these improvement efforts are
paying off in terms of improved on-time delivery rates (from 62% in
2009 to over 90% in first half 2013) and reduced customer defects
(defect rate dropped to all-time low in June of 2013).
Research and Development
The Company is making good progress on its $2.2 million
development contract from the US Army. The development contract is
for research and development to reduce the cost and to increase the
power output from PowerFilm's PowerShade solar field shelter. A new
module design and a significant modification of the PowerShade
design have been completed which should allow us to provide nearly
twice the amount of power delivered by the tent. Progress is also
being made on automation for reducing manufacturing cost and
technology advancements which will increase device performance.
Phicot, Inc. Subsidiary: Roll to Roll Flexible Electronics
As was previously announced in the Company's 2012 Annual Report,
the flexible electronics process using the self aligned imprint
lithography system shows great promise; however, there are still
major technological barriers to commercial implementation.
PowerFilm does not have the resources to pursue this independently
and our partner in development, HP, is dropping their program.
PowerFilm has now stopped its roll to roll flexible electronics
development program.
Outlook
In the context of a highly unpredictable global economy and
price-pressured solar industry, it is challenging to predict the
future. PowerFilm has taken difficult but necessary steps to
re-focus on those product applications and markets in which the
Company's custom engineered product solutions are differentiated,
valued, provide strong gross margin, and sufficient volume. Much
has been achieved in the program for reducing Company spending and
this will continue. We are deploying our cash conservatively while
the markets remain uncertain and are constantly working to make
improvements to be well positioned when external conditions
improve.
PowerFilm and PowerShade are trademarks of PowerFilm, Inc.
Bushnell and PowerSync are trademarks of Bushnell Outdoor
Products.
Serge Ferrari is a trademark of Serge Ferrari.
Forward-looking Statements
This release includes forward-looking statements which are based
on certain assumptions and reflect management's current
expectations as contemplated under the Safe Harbor provisions of
the U.S. Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to a number of risks and
uncertainties that could cause actual results or events to differ
materially from current expectations. Some of these factors
include: uncertainty as to whether our strategies, partnerships and
business plans will yield the expected benefits; general global
economic conditions; general industry and market conditions and
growth rates; increasing competition; the ability to identify,
develop and achieve commercial success for new products, services
and technologies; changes in technology; changes in laws and
regulations, including government incentive programs; intellectual
property rights; our ability to secure and maintain strategic
relationships, including key supply relationships; the availability
and cost of capital; the availability of, and our ability to
retain, key personnel; and the failure of the Company to
effectively integrate acquisitions. Additional factors are
discussed in our public disclosure materials from time to time. We
disclaim any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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