Polar Power, Inc. (NASDAQ: POLA), a global provider of prime,
backup and solar hybrid DC power solutions, today reported its
financial results for the second quarter and six months ended June
30, 2019.
Key 2Q 2019 Results and
Highlights:
Financial Results for the Three and Six
Months Ended June 30, 2019
- Net sales for Q2 2019 were $9.2
million, a 59% increase compared to $5.8 million in the same period
last year. Net sales for the six months ended June 30, 2019 were
$17.0 million, a 59% increase, as compared to $10.7 million in the
same period last year.
- Backlog as of the end of Q2 2019
was $7.6 million, compared to $5.8 million at end of Q2 2018. The
increase in sales backlog was primarily attributable to the
increased sales of DC power systems to Tier-1 telecom customers.
- Gross profit during the Q2 2019
increased by $0.9 million, or 44%, to $3.0 million, as compared to
$2.1 million in the same period in 2018. Gross margins during Q2
2019 decreased to 32.1%, as compared to 35.5% during Q2 2018 as a
result of sales discounts for higher volume sales received from
Tier-1 telecom customers. Gross profit during the six months ended
June 30, 2019, increased $1.8 million to $5.3 million, as compared
to $3.5 million for the same period in 2018. The gross margin
during the six months ended June 30, 2019 was 31.5%, as compared to
33.2% during the same period in 2018.
- Operating expenses were $2.4
million during Q2 2019, as compared to $1.8 million for Q2 2018.
Operating expenses for the six months ended June 30, 2019 were $4.7
million, as compared to $3.5 million for the same period in 2018.
The year-over-year increase in operating expenses is attributable
to an increase in sales support activities, added management to
support our production ramp-up, and the addition of office rent
related to our new facility. These initiatives are in part of our
ongoing strategy to increase our production capacity and diversify
our customer base.
- Net income for Q2 2019 totaled $0.6
million, or $0.06 per basic and diluted share, compared to a net
income of $0.2 million, or $0.02 per basic and diluted share in Q2
2018. Net income for the six months ended June 30, 2019 totaled
$0.6 million, or $0.06 per basic and diluted share, compared to a
net loss of $0.1 million, or $(0.01) per basic and diluted share
during the same period in 2018. The increase in net income is
attributed to higher shipment and improved production efficiency
during second quarter when compared to same period last year.
- Cash at June 30, 2019 totaled $5.4
million, as compared to $5.6 million at December 31, 2018. During
the six months ended June 30, 2019, we funded our operations
primarily from cash on hand and borrowings under our Supplier
Agreement with Citibank. These funds were also used to make capital
expenditures and to increase inventory to support a higher level of
production. As of June 30, 2019, we had working capital of $21.0
million, which had a slight increase of $217K from our total at
December 31, 2018.
Management Commentary
“During the first half of 2019, we are only just
starting to see the positive impact of our investments in
production equipment and inventory. Additional plant capacity
has positively impacted our revenue and production efficiency,
while simultaneously lowering our backlog and enabling us to
achieve our targeted lead times. We believe, our investments in
plant automation and capacity will give us additional flexibility
to optimize production schedules to achieve even higher labor
efficiencies and margins,” commented Arthur Sams, the CEO of Polar
Power.
Mr. Sams continued, “In the remainder of 2019 we
plan to roll out new products designed to increase our market share
with domestic Tier-1 and Tier-2 customers as well as in the with
overseas telecom markets as we build and automate our
production facilities.
The transition of telecom to 5G and “Edge
Computing at the cell tower” requires an increase in power and
reliability. There is also a desire among our telecom customers of
not increasing the use of land space at cell sites in this
transition to prevent increases in rent and permitting costs.
During 2019, we began demonstrating higher-power DC generators to
our Tier-1 customers without a change in weight or footprint of the
generators. AC generators can be up to twice the size and weight of
our DC generators, which are based on permanent magnet technology.
We believe that as the need for more power grows, the size and
weight difference between AC generators and our DC generators will
become another tipping point in favor of our DC generators.
Along with the need for increased power and
reliability, more compact and lower maintenance types of storage
solutions are required. We will be introducing significant
upgrades to our lithium-ion storage systems. We have upgraded our
battery management electronics and software along with adding
environmental controls for cell temperatures and the ability to
manage multiple battery modules in parallel configurations along
with improved cell protection from overcharge and discharge.
Lithium-ion batteries are approximately 1/4 the space and weight of
lead acid-based chemistries.
In 2012, we introduced DC power backup systems
that integrated our DC generators with supercapacitors to eliminate
the need for a backup battery. The energy stored in the
supercapacitors supplies power for the short-term grid disruptions
and the energy supplied in the fuel of the DC generator provides
the power needed for the extended power outages. The
supercapacitors also provided uninterrupted power to the load while
the DC generator starts up and take over the electrical load. This
solution is very compact, reliable, and low maintenance. During the
last three years, due to higher usage of supercapacitors in
electric vehicles and energy storage applications, there has been a
significant reduction in the cost of supercapacitors. This cost
reduction, together with market acceptance of supercapacitors as
reliable energy storage devices, has reinvigorated interest by
telecom companies in our compact DC power backup solution
introduced seven years ago.
Our increasing product and service offerings are
improving our competitiveness within our market space. And this is
helping to diversify our customer base along with building
revenues.
We believe our business from domestic Tier-1
telecom customers, which are still in the early stages of a
multiyear expansion cycle, is driven primarily by need for network
reliability. The telecom industry’s capital investment to
upgrade existing telecom sites with backup power systems is
competing with the capital needs for expansion of 5G and “cell site
Edge” networks. We believe these rollouts will exponentially expand
the use of data and video streaming services including IoT uses,
autonomous vehicles, industrial internet, etc., thereby requiring
robust backup systems that eliminate the smallest data disruptions.
We believe our higher capacity backup systems, which are more dense
in terms of storage and power, satisfy the need for next generation
cell sites.
Furthermore, increased production capacity along
with a stronger sales force allows us to pursue small to medium
size “Last Mile” telecom providers that address off-grid and rural
applications.
Overall, in 2019 we are pleased with the
progress we have made in: fending off tariffs, supply chain
disruptions, increasing production capacity and bending the gross
margin curve through improvements in production efficiency and
controlling manufacturing overhead costs. We believe our products
and technologies have significant opportunities in the military,
marine, EV-charging and renewable energy markets and we are just at
the beginning of becoming a diversified global company.”
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: |
|
Monday August
12, 2019 |
Time: |
|
4:30 p.m. ET, 1:30 p.m. PT |
Toll-free dial-in number: |
|
1-888-394-8218 |
International dial-in number: |
|
1-323-794-2588 |
Conference ID: |
|
8102366 |
|
|
|
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=135690 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 7:30
p.m. Eastern time through August 19, 2019.
Toll-free
replay number: |
|
1-844-512-2921 |
International replay number: |
|
1-412-317-6671 |
Replay ID: |
|
8102366 |
|
|
|
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 it is only starting to see the positive
impact of its investments in production equipment and inventory and
that such investments will provide Polar Power with additional
flexibility to achieve higher margins; Polar Power’s belief that
its products, which are lower in weight and smaller in size than
comparable AC generators is a tipping point in favor of Polar
Power’s DC generators; Polar Power’s belief that its business from
domestic Tier-1 telecom customers is still in the early stages of a
multiyear expansion cycle; Polar power’s belief that the telecom
industry’s rollout of 5G technology will exponentially expand the
use of data and video streaming services thereby requiring robust
backup systems; and Polar Power’s belief that it is at the
beginning of becoming a diversified global company 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 www.integra-ir.com
Company Contact:Polar Power, Inc.249 E. Gardena
Blvd.Gardena, CA 90248Tel:
310-830-9153ir@polarpowerinc.comwww.polarpower.com
POLAR POWER, INC.BALANCE
SHEETS |
|
|
|
|
|
|
|
|
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents (including restricted cash $1,002,683 at
December 31, 2018) |
|
|
$ |
5,430,916 |
|
|
|
$ |
5,640,078 |
|
Accounts receivable |
|
|
|
5,900,897 |
|
|
|
|
7,726,919 |
|
Inventories, net |
|
|
|
12,125,062 |
|
|
|
|
8,471,769 |
|
Prepaid expenses |
|
|
|
1,170,164 |
|
|
|
|
468,666 |
|
Refundable income taxes |
|
|
|
231,444 |
|
|
|
|
715,916 |
|
Total current assets |
|
|
|
24,858,483 |
|
|
|
|
23,023,348 |
|
|
|
|
|
|
|
|
|
|
Operating lease right-of-use
assets, net |
|
|
|
2,490,784 |
|
|
|
|
— |
|
Property and equipment,
net |
|
|
|
2,117,906 |
|
|
|
|
2,122,757 |
|
Deposits |
|
|
|
94,001 |
|
|
|
|
94,001 |
|
Total assets |
|
|
$ |
29,561,174 |
|
|
|
$ |
25,240,106 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
$ |
1,367,138 |
|
|
|
$ |
1,066,415 |
|
Customer deposits |
|
|
|
244,101 |
|
|
|
|
79,184 |
|
Accrued expenses and other current liabilities |
|
|
|
1,121,608 |
|
|
|
|
504,559 |
|
Current portion of operating lease liabilities |
|
|
|
562,126 |
|
|
|
|
— |
|
Current portion of notes payable |
|
|
|
278,465 |
|
|
|
|
283,388 |
|
Total
current liabilities |
|
|
|
3,573,438 |
|
|
|
|
1,933,546 |
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities,
net of current portion |
|
|
|
1,975,459 |
|
|
|
|
— |
|
Notes payable, net of current
portion |
|
|
|
834,878 |
|
|
|
|
924,539 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
6,383,775 |
|
|
|
|
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 shares issued and
outstanding |
|
|
|
1,014 |
|
|
|
|
1,014 |
|
Additional paid-in
capital |
|
|
|
19,736,314 |
|
|
|
|
19,578,426 |
|
Retained earnings |
|
|
|
3,440,071 |
|
|
|
|
2,802,581 |
|
Total stockholders’
equity |
|
|
|
23,177,399 |
|
|
|
|
22,382,021 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity |
|
|
$ |
29,561,174 |
|
|
|
$ |
25,240,106 |
|
|
|
POLAR POWER,
INC. CONDENSED STATEMENTS OF
OPERATIONS(Unaudited) |
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
2019 |
|
|
|
2018 |
|
|
Net Sales |
$ |
9,236,548 |
|
|
$ |
5,815,775 |
|
|
$ |
16,983,333 |
|
|
|
$ |
10,687,687 |
|
|
Cost of
Sales |
|
6,274,404 |
|
|
|
3,753,586 |
|
|
|
11,629,164 |
|
|
|
|
7,141,860 |
|
|
Gross
Profit |
|
2,962,144 |
|
|
|
2,062,189 |
|
|
|
5,354,169 |
|
|
|
|
3,545,827 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
695,438 |
|
|
|
639,832 |
|
|
|
1,325,472 |
|
|
|
|
1,250,169 |
|
|
Research and development |
|
541,380 |
|
|
|
336,580 |
|
|
|
1,103,650 |
|
|
|
|
800,681 |
|
|
General and
administrative |
|
1,152,748 |
|
|
|
847,517 |
|
|
|
2,274,244 |
|
|
|
|
1,584,034 |
|
|
Total operating
expenses |
|
2,389,566 |
|
|
|
1,823,929 |
|
|
|
4,703,366 |
|
|
|
|
3,634,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
572,578 |
|
|
|
238,260 |
|
|
|
650,803 |
|
|
|
|
(89,057 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expenses) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(10,012 |
) |
|
|
(2,394 |
) |
|
|
(20,713 |
) |
|
|
|
(5,404 |
) |
|
Other income (expense) |
|
4,221 |
|
|
|
(12,425 |
) |
|
|
7,400 |
|
|
|
|
(900 |
) |
|
Total other (expenses)
income, net |
|
(5,791 |
) |
|
|
(14,819 |
) |
|
|
(13,313 |
) |
|
|
|
(6,304 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
566,787 |
|
|
|
223,441 |
|
|
|
637,490 |
|
|
|
|
(95,361 |
) |
|
Net income
(loss) |
$ |
566,787 |
|
|
$ |
223,441 |
|
|
$ |
637,490 |
|
|
|
$ |
(95,361 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share –
basic and diluted |
$ |
0.06 |
|
|
$ |
0.02 |
|
|
$ |
0.06 |
|
|
|
$ |
(0.01 |
) |
|
Weighted average shares
outstanding, basic and diluted |
|
10,143,158 |
|
|
|
10,143,158 |
|
|
|
10,143,158 |
|
|
|
|
10,143,158 |
|
|
POLAR POWER, INC. STATEMENTS OF CASH
FLOWS(Unaudited) |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
637,490 |
|
|
|
$ |
(95,361 |
) |
|
Adjustments to reconcile net
income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Fair value of vested stock
options |
|
|
157,888 |
|
|
|
|
128,383 |
|
|
Depreciation and
amortization |
|
|
295,221 |
|
|
|
|
154,947 |
|
|
Amortization of operating
lease right-of-use asset |
|
|
239,282 |
|
|
|
|
— |
|
|
Changes in operating assets
and liabilities |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
1,826,022 |
|
|
|
|
(1,173,814 |
) |
|
Inventories |
|
|
(3,653,293 |
) |
|
|
|
(797,992 |
) |
|
Prepaid expenses |
|
|
(815,385 |
) |
|
|
|
(298,929 |
) |
|
Deposits |
|
|
— |
|
|
|
|
(26,705 |
) |
|
Refundable income taxes |
|
|
484,472 |
|
|
|
|
— |
|
|
Accounts payable |
|
|
300,723 |
|
|
|
|
(346,997 |
) |
|
Customer deposits |
|
|
164,917 |
|
|
|
|
158,124 |
|
|
Accrued expenses and other current liabilities |
|
|
647,358 |
|
|
|
|
4,616 |
|
|
Decrease in lease liability |
|
|
(222,790 |
) |
|
|
|
— |
|
|
Net cash from (used in)
operating activities |
|
|
61,905 |
|
|
|
|
(2,293,728 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Acquisition of property and
equipment |
|
|
(176,483 |
) |
|
|
|
(138,821 |
) |
|
Net cash used in investing
activities |
|
|
(176,483 |
) |
|
|
|
(138,821 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Repayment of notes |
|
|
(94,584 |
) |
|
|
|
(54,578 |
) |
|
Net cash used in financing
activities |
|
|
(94,584 |
) |
|
|
|
(54,578 |
) |
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash
equivalents |
|
|
(209,162 |
) |
|
|
|
(2,487,127 |
) |
|
Cash and cash equivalents,
beginning of period |
|
|
5,640,078 |
|
|
|
|
14,201,163 |
|
|
Cash and cash
equivalents, end of period |
|
$ |
5,430,916 |
|
|
|
$ |
11,714,036 |
|
|
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 |
$ |
2,847,495 |
|
$ |
— |
Reclassification of prepaid
expenses to property and equipment |
$ |
113,887 |
|
$ |
— |
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