Polar Power, Inc. (NASDAQ: POLA), a global provider of prime,
backup and solar hybrid DC power solutions, today reported its
financial results for the first quarter ended March 31, 2019.
Key Q1 2019 Results and
Highlights:
Financial Results for the Three Months
Ended March 31st, 2019
- Net sales for Q1 2019 were $7.75 million, which is a 59%
increase compared to $4.87 million in the same period last year
with a majority of the growth driven by sales of our DC power
systems to Tier-1 telecommunications customers in the
U.S.
- Backlog totaled $14.16 million at March 31, 2019.
- Gross profit during the quarter increased by $0.9 million, or
61%, to $2.4 million as compared to $1.5 million in the same period
last year. As a percent of sales gross profit was 31% for the
quarter as compared to 30% in the same period last year. The
increase in gross profit was attributable to improved overhead
absorptions resulting from higher revenues generated during the
quarter.
- Operating expenses increased to $2.3 million during the quarter
from $1.8 million in the same period last year. The increase over
last year is attributable primarily to an increase in research and
development expenses and an increase in salaries related to
expansion of production team to help increase production capacity
and production efficiencies.
- Net income in the quarter totaled $0.07 million, or $0.01 per
basic and diluted share, compared to net loss of $0.3 million or
($0.03) per basic and diluted share in the same period last
year.
- Cash at March 31, 2019 totaled $3.5 million, as compared to
$5.6 million at December 31, 2018. The reduction in cash balances
are associated with $2.0 million used by operating activities, of
which $1.6 million was associated with an increase in inventory,
and a $1.5 million increase in accounts receivable associated with
increased shipments to Tier-1 carriers with net 90-day payment
terms.
Management Commentary“During
the first quarter we saw continued strength from our domestic
Tier-1 telecom customers as we gained market share with our back-up
DC power generation systems,” said Polar Power CEO, Arthur Sams.
“In order to facilitate these growth opportunities both
domestically and internationally, we have been investing heavily in
our manufacturing and people. We are a growth company and have
numerous opportunities in front of us and need to position
ourselves to leverage what we believe to be our standing as the
leading producer of DC power systems and continue to grow revenues.
Although this investment is creating a modest negative effect on
our contribution margins, which we expect will continue over the
next two quarters as we continue to ramp-up manufacturing, we
believe that the benefits will significantly outweigh the
short-term negative impact on margins.”
“In the past year we have been limited by
production capacity and supply chain, which made it challenging to
pursue business outside of the U.S Tier-1 telecoms and in some
cases even to meet their demand in a timely fashion. In November of
2018, we opened our second manufacturing plant and this expansion
is expected to nearly double our production capacity when it is
operating at full efficiency. However, simply adding a
manufacturing facility is not enough on its own. We recently
completed a 6-month project to restructure our operations
management with industry-leading consultants with the goal of
reducing the number of responsibilities key management had and
increase the overall production management experience and
resources. As such, we have added several key personnel to the
organization as well, which we expect to leverage going
forward.”
“As our revenues increase, we expect to increase
our engineering staff to speed up new product development and
provide a higher level of pre-sales support. We also expect to
pursue R&D contracts with the military. We believe
diversification of sales into different markets will provide us
with long term stable growth and improved gross margins.”
Mr. Sams continued, “Internationally, we
experienced repeat orders during the quarter from customers we
acquired during the fourth quarter. This is encouraging, as we
currently have programs active in five countries and international
customers are becoming increasingly familiar with our products and
their advantages. As we have highlighted previously, infrastructure
growth in the international telecom market is significantly higher
when compared to the U.S. market, and therefore ideal target
markets for our hybrid renewable energy products, a key part of our
short-term and long-term growth strategy.”
“During the quarter, our technology road map
remained focused on three key products, our hybrid renewable energy
systems, our backup power systems, and our products for military
applications. We expect to launch our new LPG and natural gas DC
power systems designed for hybrid solar residential, natural
gas-powered air-conditioning and natural gas-powered electric
vehicle charging stations, during the second half of 2019. Military
opportunities continue with power for robotic vehicles and mobile
power systems,” concluded Mr. Sams.
Conference Call Details
Polar Power CEO Arthur Sams, COO Rajesh Masina
and CFO Luis Zavala will host the conference call, followed by a
question and answer period.
To access the call, please use the following information:
Date: |
Wednesday May
15, 2019 |
Time: |
10:00 a.m. ET, 7:00 a.m. PT |
Toll-free dial-in number: |
1-800-458-4121 |
International dial-in number: |
1-323-794-2093 |
Conference ID: |
1500529 |
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Integra Investor Relations at
415-233-7094.
The conference call will be broadcast live and available for
replay
at http://public.viavid.com/index.php?id=134601 and via
the investor relations section of the Company’s website
at www.polarpower.com.
A replay of the conference call will be available after 1:00
p.m. Eastern time through May 22, 2019.
Toll-free
replay number: |
1-844-512-2921 |
International replay number: |
1-412-317-6671 |
Replay ID: |
1500529 |
About Polar Power, Inc.
Gardena, California-based Polar Power, Inc.
(NASDAQ: POLA), designs, manufactures and sells direct current, or
DC, power systems, lithium battery powered hybrid solar systems for
applications in the telecommunications market and, in other
markets, including military, electric vehicle charging,
cogeneration, distributed power and uninterruptable power supply.
Within the telecommunications market, Polar’s systems provide
reliable and low-cost energy for applications for off-grid and
bad-grid applications with critical power needs that cannot be
without power in the event of utility grid failure. For more
information, please visit www.polarpower.com. or follow us on
www.linkedin.com/company/polar-power-inc/
Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995 This news
release contains certain statements of a forward-looking nature
relating to future events or future business performance.
Forward-looking statements can be identified by the words
“expects,” “anticipates,” “believes,” “intends,” “estimates,”
“plans,” “will,” “outlook” and similar expressions. Forward-looking
statements are based on management’s current plans, estimates,
assumptions and projections, and speak only as of the date they are
made. With the exception of historical information, the matters
discussed in this press release including, without limitation,
Polar Power’s belief that its investment in manufacturing and
people will have a negative impact on contribution margins for the
next two quarters; Polar Power’s belief that its new manufacturing
plant will nearly double the company’s production capacity; Polar
Power’s expectation that it will increase its engineering staff and
its belief that by increasing its engineering staff it will speed
up new product development and provide a higher level of pre-sale
support; Polar power’s belief that diversification of sales into
different markets will provide it with long-term stable growth and
improved gross margins; and Polar Power’s expectation that it will
launch its new LPG and natural gas DC power systems designed for
hybrid solar residential, natural gas-powered air-conditioning and
natural gas-powered electric vehicle charging stations during the
second half of 2019 are forward-looking statements and
considerations that involve a number of risks and uncertainties.
The actual future results of Polar Power could differ from those
statements. Factors that could cause or contribute to such
differences include, but are not limited to, adverse domestic and
foreign economic and market conditions, including demand for DC
power systems; trade tariffs on raw materials; changes in domestic
and foreign governmental regulations and policies; and other
events, factors and risks. We undertake no obligation to update any
forward-looking statement in light of new information or future
events, except as otherwise required by law. Forward-looking
statements involve inherent risks and uncertainties, most of which
are difficult to predict and are generally beyond our control.
Actual results or outcomes may differ materially from those implied
by the forward-looking statements as a result of the impact of a
number of factors, many of which are discussed in more detail in
our reports filed with the Securities and Exchange Commission.
Media and Investor Relations: Integra Investor
Relations Shawn M. Severson +1 415-233-7094 info@integra-ir.com
@Integra IR
Company Contact:Polar Power, Inc.249 E. Gardena
Blvd.Gardena, CA 90248Tel:
310-830-9153ir@polarpowerinc.comwww.polarpower.com
POLAR
POWER, INC. BALANCE
SHEETS
|
|
|
|
|
|
March 31, 2019 |
|
December 31, 2018 |
|
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents (including restricted cash $1,002,683 at
December 31, 2018) |
$ |
3,534,570 |
|
$ |
5,640,078 |
|
Accounts receivable |
|
9,216,756 |
|
|
7,726,919 |
|
Inventories, net |
|
10,116,949 |
|
|
8,471,769 |
|
Prepaid expenses |
|
1,254,056 |
|
|
468,666 |
|
Refundable income taxes |
|
231,444 |
|
|
715,916 |
|
Total current assets |
|
24,353,775 |
|
|
23,023,348 |
|
|
|
|
|
|
|
|
Operating lease right-of-use
assets, net |
|
2,640,911 |
|
|
— |
|
Property and equipment, net |
|
2,172,412 |
|
|
2,122,757 |
|
Deposits |
|
94,001 |
|
|
94,001 |
|
|
|
|
|
|
|
|
Total assets |
$ |
29,261,099 |
|
$ |
25,240,106 |
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
$ |
1,590,682 |
|
$ |
1,066,415 |
|
Customer deposits |
|
368,100 |
|
|
79,184 |
|
Accrued liabilities and other current liabilities |
|
935,571 |
|
|
504,559 |
|
Current portion of operating lease liabilities |
|
542,672 |
|
|
— |
|
Current portion of notes payable |
|
278,745 |
|
|
283,388 |
|
Total current liabilities |
|
3,715,770 |
|
|
1,933,546 |
|
Notes payable, net of current
portion |
|
880,016 |
|
|
924,539 |
|
Operating lease liabilities, net
of current portion |
|
2,133,645 |
|
|
— |
|
|
|
|
|
|
|
|
Total liabilities |
|
6,729,431 |
|
|
2,858,085 |
|
|
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity |
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no
shares issued and outstanding |
|
— |
|
|
— |
|
Common stock, $0.0001 par value, 50,000,000 shares authorized,
10,143,158 and, 10,143,158, shares issued and outstanding,
respectively |
|
1,014 |
|
|
1,014 |
|
Additional paid-in capital |
|
19,657,370 |
|
|
19,578,426 |
|
Retained earnings |
|
2,873,284 |
|
|
2,802,581 |
|
Total stockholders’ equity |
|
22,531,668 |
|
|
22,382,021 |
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity |
$ |
29,261,099 |
|
$ |
25,240,106 |
|
|
|
|
|
|
|
|
POLAR POWER, INC. STATEMENTS OF
OPERATIONS
|
|
|
Three Months
Ended |
|
March 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
Net sales |
|
$ 7,746,785 |
|
|
|
$ 4,871,912 |
|
|
|
|
|
Cost of sales |
|
5,354,760 |
|
|
|
3,388,274 |
|
|
|
|
|
Gross profit |
|
2,392,025 |
|
|
|
1,483,638 |
|
|
|
|
|
Operating Expenses |
|
|
|
Sales and Marketing |
|
630,034 |
|
|
|
610,337 |
|
Research and development |
|
562,270 |
|
|
|
464,101 |
|
General and administrative |
|
1,121,497 |
|
|
|
736,517 |
|
Total operating
expenses |
|
2,313,801 |
|
|
|
1,810,955 |
|
|
|
|
|
Income (loss) from
operations |
|
78,224 |
|
|
|
(327,317 |
) |
|
|
|
|
Other income
(expenses) |
|
|
|
Interest income |
|
(10,701 |
) |
|
|
(3,010 |
) |
Other income (expenses) |
|
3,180 |
|
|
|
11,525 |
|
Total other income
(expense) |
|
(7,521 |
) |
|
|
8,515 |
|
|
|
|
|
Income (loss) before income
taxes |
|
70,703 |
|
|
|
(318,802 |
) |
Income tax benefit |
|
— |
|
|
|
— |
|
|
|
|
|
Net income (loss) |
$ |
70,703 |
|
|
$ |
(318,802 |
) |
|
|
|
|
Net income (loss) per share – basic and
diluted |
$ |
0.01 |
|
|
$ |
(0.03 |
) |
Weighted average shares outstanding, basic
and diluted |
|
10,143,158 |
|
|
|
10,143,158 |
|
|
|
|
|
POLAR POWER, INC. STATEMENTS OF CASH
FLOWS
|
|
|
Three Months Ended March 31, |
|
2019 |
|
|
2018 |
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
Net income (loss) |
$ |
$ 70,703 |
|
|
$ |
(318,802 |
) |
Adjustments to reconcile net
income (loss) to net cash used in operating activities: |
|
|
|
|
|
Fair value of vested stock options |
|
78,944 |
|
|
|
24,719 |
|
Depreciation and amortization |
|
143,261 |
|
|
|
76,350 |
|
Amortization of operating lease right-of-use asset |
|
89,155 |
|
|
|
— |
|
Changes in operating assets and liabilities |
|
|
|
|
|
Accounts receivable |
|
(1,489,838 |
) |
|
|
(1,745,659 |
) |
Inventories |
|
(1,645,179 |
) |
|
|
57,305 |
|
Prepaid expenses |
|
(899,277 |
) |
|
|
(291,160 |
) |
Deposits |
|
— |
|
|
|
(1,000 |
) |
Refundable income taxes |
|
484,472 |
|
|
|
— |
|
Accounts payable |
|
524,267 |
|
|
|
(303,566 |
) |
Customer deposits |
|
288,916 |
|
|
|
66,557 |
|
Accrued expenses and other current liabilities |
|
461,321 |
|
|
|
27,561 |
|
Repayment of lease obligations |
|
(84,058 |
) |
|
|
— |
|
Net cash used in operating
activities |
|
(1,977,313 |
) |
|
|
(2,407,695 |
) |
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
Acquisition of property and
equipment |
|
(79,029 |
) |
|
|
(55,062 |
) |
Net cash used in investing
activities |
|
(79,029 |
) |
|
|
(55,062 |
) |
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
Repayment of notes |
|
(49,166 |
) |
|
|
(27,234 |
) |
Net cash used by financing
activities |
|
(49,166 |
) |
|
|
(27,234 |
) |
|
|
|
|
|
|
Decrease in cash and cash
equivalents |
|
(2,105,508 |
) |
|
|
(2,489,991 |
) |
Cash and cash equivalents,
beginning of period |
|
5,640,078 |
|
|
|
14,201,163 |
|
Cash and cash
equivalents, end of period |
$ |
3,534,570 |
|
|
$ |
11,711,172 |
|
|
|
|
|
|
|
SUPPLEMENTAL NON-CASH
INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
Initial recognition of
operating lease right-of-use assets and |
|
|
|
|
|
operating lease obligations
upon adoption of ASC Topic 842 |
$ |
2,760,375 |
|
|
|
— |
|
|
|
|
|
|
|
Reclass of prepaid asset to
property and equipment |
$ |
113,887 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
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