MILWAUKEE, Nov. 10, 2016 /PRNewswire/ -- EnSync, Inc.
(NYSE MKT: ESNC), dba EnSync Energy Systems, a leading
developer of innovative energy management systems for the utility,
commercial, industrial and multi-tenant building markets, today
announced first quarter fiscal year 2017 results, ended
September 30, 2016.
Recent Highlights
- Revenue during the first quarter of fiscal 2017 was
$7.7 million compared to $0.3 million in the year ago period;
- Growth in revenue during the first quarter was driven by the
sale of multiple power purchase agreements (PPAs) to American
Electric Power subsidiary, AEP OnSite Partners;
- Completed shipment of the system at the Open Access Technology
International, Inc. (OATI) South Campus;
- Successfully commissioned the 500kWh Lotte Chemical utility
battery, concluding the R&D agreement, and securing a total of
$2,425,000 in payments. The
final $175,000 installment will be
recognized as revenue in Q2 of fiscal 2017;
- In September 2016, the Company's
Matrix Energy Management platform was selected to manage Solar
Power International's Smart Energy Microgrid Pavilion at the SPI
Las Vegas Conference;
- Received a purchase order for a Matrix Energy Management system
from a major global energy management solutions provider;
- Successfully demonstrated our Supply Response on Demand
capability at the Intersolar North America Conference in
San Francisco in July, a major
step forward in enabling the "Internet of Energy";
- Signed two additional PPA projects in Hawaii as part of the second tranche during
the first quarter. Tranche 2 now consists of four PPA
projects;
- Backlog for PPA projects, components and systems at the end of
fiscal Q1 2017 stood at approximately $5.6
million;
- Cash balance at the end of September
2016 increased to $19.9
million compared to $17.2
million at the end of June
2016; and
- Continued focus on operational efficiencies has resulted in a
reduction in engineering development, selling, general and
administrative costs from $3.9
million in the first quarter of fiscal 2016 to less than
$3.6 million in the current
quarter.
Management Discussion
"The first quarter of fiscal 2017 was transformational for
EnSync and the industry as a whole as we completed the first ever
sale of PPA agreements for PV plus storage for the commercial and
industrial (C and I) market in a behind the grid setting,"
commented Brad Hansen, President and
Chief Executive Officer of EnSync Energy Systems. "Our systems
design expertise, intellectual property, and innovative business
model has positioned us perfectly to take advantage of a market
environment driven by a global, national and local shifting of the
energy production mix from carbon emitting sources to renewable
sources, and by increasingly favorable economics for solar energy,
energy storage, and combined solar plus storage systems. We
are pleased with this transformative industry achievement and look
forward to further capitalizing on the opportunity into the
future."
Fred Vaske, Chief Administrative
Officer of EnSync Energy Systems, commented, "With the completed
sale of all Tranche 1 projects behind us, as well as our success in
closing four additional PPA contracts for Tranche 2, we remain
optimistic that the Solar + Storage PPA model is an effective
approach to providing customers with the economic and performance
benefits derived from a distributed energy resource while allowing
investors to provide the necessary upfront capital in exchange for
attractive economic returns. Our experience with the sale process
that led up to the AEP purchase demonstrated to us that there are
many sophisticated and experienced investors with solar track
records who recognize the value proposition created by the addition
of storage and control systems, and who are actively looking for
investment opportunities into this new type of asset. Given the
typical 20-year term of a PPA, these investors demand
well-structured projects which have credit-worthy customers, are
well and thoroughly contracted, and which are appropriately modeled
for both power and cash flows. As we bring our next project
Tranches to the investor market for sale, we believe there is an
active marketplace, including many buyers who were interested and
considered the Tranche 1 portfolio."
Mr. Hansen concluded, "For the remainder of the fiscal year, we
are targeting the closure of two additional tranches of PPA
projects, with each tranche representing between $10 and $20 million. We are bullish on this
business and are anticipating significant decreases in cost inputs
compared to those in our first tranche, driven by decreased EPC
costs, lower project origination expenses, competitive bidding on
solar panels, in house management of the installation and
commissioning of storage components, improvement in battery and
power electronic pricing, and overall standardization of contracts.
This confluence of strong demand, decreased costs, and our overall
experience sets the stage for improved financial performance on a
go forward basis."
First Quarter Financial Results
Total revenue for the first quarter which ended September 30, 2016 was $7.7 million compared to $0.3 million in the first quarter of fiscal
2016. Revenue growth in the quarter was primarily driven by
the sale of multiple power purchase agreements (PPAs) to American
Electric Power subsidiary, AEP OnSite Partners.
Total cost of products sold during the first quarter was
$7.8 million. As previously
discussed, the Company incurred certain non-recurring and start-up
costs associated with the initial sale of its PPA projects.
Engineering and development costs increased by $0.9 million during the first quarter compared to
the year ago period, while advanced engineering and development
costs decreased by $0.7 million
primarily associated with timing incurred under the Lotte R&D
agreement. Selling, General and Administrative costs totaled
$2.6 million in the first quarter of
fiscal 2017, compared to $2.2 million
during the first quarter of fiscal 2016.
Net loss attributable to common shareholders was $(4.7) million, or $(0.10) per basic and diluted share, for the
first quarter of fiscal 2017, compared to $(3.8) million, or $(0.08) per basic and diluted share, in the year
ago first quarter.
Backlog for PPA projects, components and systems at the end of
fiscal Q1 2017 stood at approximately $5.6
million.
Conference Call Information
Date: Thursday, November 10,
2016
Time: 4:30 p.m. ET (3:30 p.m. CT)
Domestic participant dial in #: 844-861-5498 or
412-317-6580
Participant passcode #: 10095678
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. A webcast replay of the call will be available later
on the same day via the investor relations section of the Company's
web site at www.ensync.com for 90 days.
Domestic replay #: 877-344-7529 or 412-317-0088
Replay passcode #: 10095678
About EnSync Energy Systems
EnSync, Inc. (NYSE MKT: ESNC), dba EnSync Energy Systems, is
enabling the future of electricity with advanced energy management
systems critical to a global economy becoming increasingly reliant
upon the expansion of renewable energy. Whether part of the grid
power transmission and distribution network, or behind the meter in
commercial, industrial and multi-tenant buildings, EnSync
technology brings differentiated power control and energy storage
solutions to electricity-challenged environments. Our technologies
also serve as the system level intelligence in microgrid
applications, by seamlessly integrating multiple generation and
storage assets to deliver power in remote and community level
environments not served by the grid, or areas electing to use the
grid secondary to microgrid assets. In 2015, EnSync incorporated
power purchase agreements (PPAs) into its portfolio of offerings,
enabling electricity savings for customers and providing a stable
financial yield for investors. EnSync is a global corporation, with
a joint venture in AnHui, China at
Meineng Energy, as well as a strategic partnership with Solar
Power, Inc. (SPI). For more information, visit: www.ensync.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended, that are intended to be covered by the "safe
harbor" created by those sections. Forward-looking
statements, which are based on certain assumptions and describe our
future plans, strategies and expectations, can generally be
identified by the use of forward-looking terms such as "believe,"
"expect," "may," "will," "should," "could," "seek," "intend,"
"plan," "estimate," "anticipate" or other comparable terms.
All statements other than statements of historical facts included
in this press release regarding our strategies, prospects,
financial condition, operations, costs, plans and objectives are
forward-looking statements. Examples of forward-looking statements
include, among others, statements we make regarding expected future
operating results, expectations concerning our PPA strategy, the
anticipated results of our product development efforts and other
expectations regarding our business strategy. Forward-looking
statements are neither historical facts nor assurances of future
performance. Instead, they are based only on our current beliefs,
expectations and assumptions regarding the future of our business,
future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions. Because
forward-looking statements relate to the future, they are subject
to inherent uncertainties, risks and changes in circumstances that
are difficult to predict and many of which are outside of our
control. Our actual results and financial condition may differ
materially from those indicated in the forward-looking statements.
Therefore, you should not rely on any of these forward-looking
statements. Important factors that could cause our actual results
and financial condition to differ materially from those indicated
in the forward-looking statements include, among others, the risks
and uncertainties described in the Risk Factors and in Management's
Discussion and Analysis of Financial Condition and Results of
Operations sections of our most recent Annual Report on Form 10-K
and our subsequently filed Quarterly Report(s) on Form 10-Q. We
undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to
time, whether as a result of new information, future developments
or otherwise.
Investor Relations Contact:
Lytham Partners,
LLC
Robert Blum, Joseph Diaz, or Joe Dorame
(602) 889-9700
EnSync Media Contact:
Michelle Montague
(262) 735-5676
EnSync,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
Three months
ended September 30,
|
|
2016
|
|
2015
|
Revenues
|
|
|
|
Product
sales
|
$
7,656,561
|
|
$
150,536
|
Engineering and
development
|
-
|
|
122,440
|
Total
revenues
|
7,656,561
|
|
272,976
|
|
|
|
|
Costs and
expenses
|
|
|
|
Cost of product
sales
|
7,766,143
|
|
(13,835)
|
Cost of engineering
and development
|
937,725
|
|
54,147
|
Advanced engineering
and development
|
1,001,328
|
|
1,671,442
|
Selling, general, and
administrative
|
2,552,451
|
|
2,226,974
|
Depreciation and
amortization
|
154,357
|
|
178,590
|
Total costs and
expenses
|
12,412,004
|
|
4,117,318
|
|
|
|
|
Loss from
operations
|
(4,755,443)
|
|
(3,844,342)
|
|
|
|
|
Other income
(expense)
|
|
|
|
Equity in gain (loss)
of investee company
|
23,655
|
|
(47,708)
|
Interest
income
|
11,358
|
|
4,616
|
Interest
expense
|
(12,997)
|
|
(15,130)
|
Other
income
|
8,432
|
|
76,437
|
Total other
income
|
30,448
|
|
18,215
|
|
|
|
|
Loss before expense
(benefit) for income taxes
|
(4,724,995)
|
|
(3,826,127)
|
|
|
|
|
Expense (benefit) for
income taxes
|
-
|
|
-
|
Net loss
|
(4,724,995)
|
|
(3,826,127)
|
Net loss attributable
to noncontrolling interest
|
82,273
|
|
68,716
|
Net loss
attributable to EnSync, Inc.
|
(4,642,722)
|
|
(3,757,411)
|
Preferred stock
dividend
|
(75,445)
|
|
(76,521)
|
Net loss
attributable to common shareholders
|
$
(4,718,167)
|
|
$
(3,833,932)
|
|
|
|
|
Net loss per
share
|
|
|
|
Basic and
diluted
|
$
(0.10)
|
|
$
(0.08)
|
|
|
|
|
Weighted average
shares - basic and diluted
|
47,753,604
|
|
45,998,899
|
EnSync,
Inc.
|
Condensed
Consolidated Balance Sheets
|
|
|
(Unaudited)
|
|
|
|
September
30, 2016
|
|
June 30,
2016
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
19,923,178
|
|
$
17,189,089
|
Accounts receivable,
net
|
433,282
|
|
172,633
|
Inventories,
net
|
1,797,287
|
|
1,869,942
|
Prepaid expenses and
other current assets
|
541,599
|
|
600,591
|
Customer intangible
assets
|
76,293
|
|
76,293
|
Note
receivable
|
174,164
|
|
171,140
|
Deferred PPA project
costs
|
516,017
|
|
5,690,307
|
Deferred customer
project costs
|
115,536
|
|
419,765
|
Project
assets
|
674,836
|
|
1,190,853
|
Total current
assets
|
24,252,192
|
|
27,380,613
|
Long-term
assets:
|
|
|
|
Property, plant and
equipment, net
|
3,744,130
|
|
3,889,106
|
Investment in
investee company
|
2,189,281
|
|
2,165,626
|
Goodwill
|
809,363
|
|
809,363
|
Right of use
assets-operating leases
|
116,903
|
|
27,264
|
Total
assets
|
$
31,111,869
|
|
$
34,271,972
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Current maturities of
long-term debt
|
$
334,762
|
|
$
332,707
|
Accounts
payable
|
449,684
|
|
569,226
|
Accrued
expenses
|
1,106,679
|
|
501,031
|
Customer
deposits
|
397,769
|
|
201,352
|
Accrued compensation
and benefits
|
323,982
|
|
257,087
|
Total current
liabilities
|
2,612,876
|
|
1,861,403
|
Long-term
liabilities:
|
|
|
|
Long-term debt, net
of current maturities
|
973,429
|
|
1,057,720
|
Deferred
revenue
|
13,712,638
|
|
13,290,000
|
Other long-term
liabilities
|
227,442
|
|
25,789
|
Total
liabilities
|
17,526,385
|
|
16,234,912
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Series B redeemable convertible preferred stock
($0.01 par value, $1,000 face value) 3,000 shares authorized
and issued, 2,300 shares outstanding, preference in liquidation
of$5,393,243 and $5,317,800 as of September 30, 2016 and June 30,
2016, respectively
|
23
|
|
23
|
Series C convertible preferred stock ($0.01 par
value, $1,000 face value), 28,048 shares authorized, issued,
and outstanding, preference in liquidation of$8,192,241and
$12,719,260 as of September 30, 2016 and June 30, 2016,
respectively
|
280
|
|
280
|
Common stock ($0.01 par value); 300,000,000
authorized, 47,824,821 and 47,752,821 shares issued and
outstanding as of September 30, 2016 and June 30, 2016,
respectively
|
1,186,563
|
|
1,185,843
|
Additional paid-in
capital
|
137,857,166
|
|
137,585,233
|
Accumulated
deficit
|
(125,192,830)
|
|
(120,550,108)
|
Accumulated other
comprehensive loss
|
(1,584,817)
|
|
(1,585,583)
|
Total EnSync, Inc.
equity
|
12,266,385
|
|
16,635,688
|
Noncontrolling
interest
|
1,319,099
|
|
1,401,372
|
Total
equity
|
13,585,484
|
|
18,037,060
|
Total liabilities
and equity
|
$
31,111,869
|
|
$
34,271,972
|
EnSync,
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
Three months ended
September 30,
|
|
2016
|
|
2015
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
(4,724,995)
|
|
$
(3,826,127)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation of
property, plant and equipment
|
156,464
|
|
208,290
|
Amortization of
customer intangible assets
|
-
|
|
6,000
|
Stock-based
compensation, net
|
272,653
|
|
156,792
|
Equity in (gain) loss
of investee company
|
(23,655)
|
|
47,708
|
Provision for
inventory reserve
|
140,690
|
|
-
|
Gain on sale of
property and equipment
|
(8,432)
|
|
-
|
Interest accreted on
note receivable
|
(3,024)
|
|
(3,025)
|
Gain on bargain
purchase
|
-
|
|
(76,437)
|
Changes in assets and
liabilities
|
|
|
|
Accounts
receivable
|
(264,078)
|
|
(21,926)
|
Inventories
|
(68,035)
|
|
(1,085,700)
|
Prepaids and other
current assets
|
60,441
|
|
(392,407)
|
Deferred PPA project
costs
|
5,174,290
|
|
-
|
Deferred customer
project costs
|
304,229
|
|
(137,124)
|
Project
assets
|
516,017
|
|
(2,198,770)
|
Accounts
payable
|
(119,542)
|
|
339,695
|
Accrued
expenses
|
579,447
|
|
(416,930)
|
Customer
deposits
|
196,417
|
|
35,964
|
Accrued compensation
and benefits
|
66,895
|
|
70,004
|
Deferred
revenue
|
422,638
|
|
13,290,000
|
Other long-term
liabilities
|
137,983
|
|
-
|
Net cash provided by
operating activities
|
2,816,403
|
|
5,996,007
|
Cash flows from
investing activities
|
|
|
|
Cash paid for
business combination
|
-
|
|
(225,829)
|
Change in restricted
cash
|
-
|
|
(15)
|
Expenditures for
property and equipment
|
(9,149)
|
|
-
|
Proceeds from sale of
property and equipment
|
9,754
|
|
-
|
Net cash provided by
(used in) investing activities
|
605
|
|
(225,844)
|
Cash flows from
financing activities
|
|
|
|
Payment of financing
costs
|
-
|
|
(261,982)
|
Repayments of
long-term debt
|
(82,236)
|
|
(80,222)
|
Proceeds from
issuance of preferred stock
|
-
|
|
13,300,000
|
Proceeds from
issuance of common stock
|
-
|
|
6,800,000
|
Contributions of
capital from noncontrolling interest
|
-
|
|
45,000
|
Net cash (used in)
provided by financing activities
|
(82,236)
|
|
19,802,796
|
Effect of exchange
rate changes on cash and cash equivalents
|
(683)
|
|
(2,062)
|
Net increase in
cash and cash equivalents
|
2,734,089
|
|
25,570,897
|
Cash and cash
equivalents - beginning of period
|
17,189,089
|
|
10,757,461
|
|
|
|
|
Cash and cash
equivalents - end of period
|
$
19,923,178
|
|
$
36,328,358
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Cash paid for
interest
|
$
10,520
|
|
$
15,241
|
Supplemental noncash
information:
|
|
|
|
Right of use asset
obtained in exchange for new operating lease
|
$
102,943
|
|
$
-
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ensync-reports-first-quarter-fiscal-year-2017-results-300360892.html
SOURCE EnSync, Inc.