Polar Power, Inc. (“Polar Power” or the “Company”) (NASDAQ: POLA),
a global provider of prime, backup and solar hybrid DC power
solutions, today reported its financial results for the three and
nine months ended September 30, 2023.
Financial Highlights:
-
Net sales for Q3 2023 were $1.9 million, representing a 12%
increase compared to $1.7 million sales during Q3 2022. Net sales
for the nine months ended September 30, 2023 were $11.7 million,
representing a 21% increase, compared to $9.7 million in the same
nine month period ending September 30, 2022.
-
Gross loss during Q3 2023 reduced by 56%, to $(108,000), compared
to a loss of $(247,000) in the same period in 2022.
-
Operating expenses decreased 26% to $1.5 million during Q3 2023, as
compared to $2.1 million during Q3 2022.
-
Net loss for Q3 2023 decreased by $537,000 to $1.8 million, or
$(0.14) per basic and diluted share, compared to a net loss of $2.3
million, or $(0.19) per basic and diluted share in Q3 2022.
-
Cash and cash equivalents of $296,000 as of September 30, 2023,
compared to $211,000 on December 31, 2022. Working Capital was
$13.3 million at the end of Q3 2023, compared with $17.3 million
ending December 31, 2022.
-
Backlog as of the end of Q3 2023 was $5.1 million.
Operating and Corporate
Highlights:
-
The Company’s customer and market diversification initiatives have
resulted in 24% sales to international customers during the first
nine months of year 2023, compared to 2% sales in the previous
year. In addition, during 2023, we experienced over 280% increase
in the number of Tier-2 telecom customers reported when compared to
number of Tier-2 telecom customers during the nine-month period in
year 2022. During the first nine months of 2023, our product
mix included 25% sales of lower emission natural gas and propane
(LPG) generators validating market transition towards lower
emissions in urban centers.
-
During Q3, 2023, the Company launched its lower emission line of
prime power and backup generators ranging in power from 10 kW to 27
kW, addressing commercial and industrial markets in urban
applications. The Company’s prime power DC generators incorporating
the Toyota 1KS engines optimized for propane, natural gas, and
extremely long operational life. Increased restrictions on use of
small diesel engines globally are increasing the transition towards
natural gas and propane (LPG) in telecom and other commercial
applications. LPG and natural gas are lower in cost than diesel in
many areas of the world further promoting its use. This will
provide strong opportunities for growth and diversification in line
with the Company’s long-term plan.
-
The Company introduced its Summit Series, 27 kW diesel fueled DC
generators to the U.S. 5G telecom market as U.S. Tier 1 telecom
providers upgrade their infrastructure to meet higher power
requirements needed for 5G applications to support increasing use
of wireless 5G communication in applications like self-driving
vehicles, video streaming, healthcare, robotics, and gaming amongst
others, requiring higher reliability and uptime. These requirements
have led to mandatory need for backup systems at 5G installations
increasing market size for both new and upgrade telecom tower
installations.
-
The Company completed shipment of over 300 15 kW generators to
South Pacific Islands Tier-1 telecom companies to power off-grid
telecommunication towers. Currently all units are operational
equipped with remote monitoring providing 24/7 power to telecom
towers in outdoors off-grid applications.
-
The Company began shipment of 15 kW hybrid generators to South
Pacific Islands to power telecommunication towers in remote areas.
This product utilizes solar to store energy into Lithium batteries
and uses generator for 24/7 backup power for off-grid outdoor
sites.
-
Customer and market diversification initiatives underway; with
international customers representing 24% of the total sales period
ending September 30, 2023 compared to 2% of the sales during the
nine-month period ending September 30, 2022.
-
Shipped and operational over 300 generators of 15 kW hybrid
products to South Pacific Islands to power off-grid
telecommunication towers, largest installation for the Company in
the South Pacific Islands.
-
Began shipment of 15 kW hybrid products to South Pacific Islands to
power telecommunication towers. Product combines Solar, Lithium
batteries and Generator to power off-grid sites 24/7.
-
The Company has been providing DC generators in limited quantities
for Marine hybrid electric sailing vessels for over 20 years. Past
engineering and marketing resource was focused on developing
telecom and military markets, as part of the Company’s
diversification effort, the Company is increasing its sales into
this niche market. The Company has begun to assemble its own marine
engine conversions which reduce the sales price on its DC
generators by 20%. Lowering the cost of a marine hybrid power
system increases the market potential for the Company.
Arthur Sams, CEO of Polar Power, commented, “We
continued to make progress on strategic growth objectives including
diversification of our customer base and markets. This strategy has
resulted in 21% growth this year reducing our losses due to
improved overhead absorption. During the third quarter of 2023 we
experienced lower than anticipated revenues due to rescheduling of
$2.8 million in deliveries by our largest Tier-1 telecom
customer.
Due to a steady improvement in our supply chain
lead times combined and improvements in employee turnover has
improved our gross profits during the first nine months.
Introduction of lower emission products and increased demand from
5G expansion for higher power products provides us a positive sales
outlook for the next year. We believe as the telecom market
transitions towards 5G our product mix will shift towards 27 kW
which has 50% higher average sales price than our current product
offerings which may result in additional $20 million in sales for
us within the next two to three years.
In anticipation of the industry shift towards
lower emission natural gas and LPG products we established a supply
chain relationship with engine manufacturer Toyota, which we
believe produces the industry’s most reliable and fuel-efficient
engine for industrial applications. To ensure on time delivery we
purchased over $9.0 million in natural gas and Propane (LPG)
engines after completion of required approvals and certifications.
Fixing software and hardware bugs within the engine controls along
with delayed acceptance tests and approvals from our Tier-1
customers has temporarily reduced our working capital. During the
third quarter, we began shipment of our natural gas and LPG
products which are currently used in 25% of our backlog.”
“During the past two years we have been
codeveloping products with OEM’s in the defense field who are
engaged in developing products like electronic warfare, robotics
and drones. In addition, we have provided initial products to
customers producing robotics, hybrid vehicles and marine vessels.
We have a large pipeline of product configurations that our
customers are testing and marketing to their end users. We believe
the military conflict in Europe, Middle East, and South Pacific is
driving demand for small DC diesel generators to power remote
facilities and equipment in these markets.” he added.
Third Quarter and Nine-Month 2023
Financial Details:
Net sales for Q3 2023 were $1.9 million,
representing a 12% year-over-year increase from $1.7 million in Q3
2022. Net sales for the nine months ended September 30, 2023 were
$11.7 million, representing a 21% increase, compared to $9.7
million in the same nine month period last year. For the third
quarter of 2023, sales to telecommunications customers represented
96% of total net sales, which includes 65% of the sales to our
largest Tier-1 customer. During Q3 2022, sales to
telecommunications customers represented 90% of total net sales,
with sales to the Company’s largest Tier-1 telecommunications
customer representing 87% of total net sales. During the nine
months ended September 30, 2023, sales to telecommunications
customers represented 96% of total net sales, with sales to the
Company’s largest telecommunications customer representing 52% of
total net sales.
Gross loss during Q3 2023 reduced by 56%, to
$(108,000), compared to a loss of $(247,000) in the same period in
2022.
Gross profit during the nine months ended
September 30, 2023, increased 23% to $2.1 million, compared to $1.7
million for the same period in 2022. The improvements in gross
profit resulted primarily from improved overhead absorption
resulting from 21% higher sales and improvement in labor
efficiency.
Operating expenses decreased 26% to $1.5 million
during Q3 2023, as compared to $2.1 million during Q3 2022.
Operating expenses for the nine months ended September 30, 2023
decreased 13% to $5.1 million, as compared to $5.9 million for the
same period in 2022. The decrease was primarily due to fixed cost
reductions and overhead reductions.
Net loss for Q3 2023 totaled $1.8 million, or
$(0.14) per basic and diluted share, compared to a net loss of
$2.3, or $(0.19) per basic and diluted share in Q3 2022. Net loss
for the nine months ended September 30, 2023 totaled $3.3 million,
or $(0.26) per basic and diluted share, compared to a net loss of
$4.2 million, or $(0.33) per basic and diluted share during the
same period in 2022.
The number of customers that purchased Polar DC
generators during Q3 2023 increased to seventeen, as compared to
six in Q3 2022. The number of customers that purchased Polar DC
generators during the nine months ended September 30, 2023
increased to thirty-one, as compared to fourteen for the same
period in 2022. International sales represented 24% of total net
sales for the nine-month ended September 30, 2023, compared to 2%
for the same period in 2022. This increase in customer count is a
result of ongoing demonstrations of Polar DC power systems
internationally.
About Polar Power, Inc.
Gardena, California-based Polar Power, Inc.
(NASDAQ: POLA), is a technology company that 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, EV charging, cogeneration, distributed power and
uninterruptable power supply. Within the telecommunications market,
Polar Power’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 the telecom market will continue to
transition towards 5G; Polar Power’s belief that the telecom market
will shift to higher powered units such as the 27 kW DC generator
and result in an increase in sales by $20 million within the next
two to three years; and Polar Power’s belief that Toyota prime
power engines will provide strong opportunities for growth and
diversification 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 its Summit Series, 27 kW DC
generator product line; trade tariffs on raw materials; changes in
domestic and foreign governmental regulations and policies; the
impact of inflation and changing prices on raw materials; supply
chain constraints causing significant delays in sourcing raw
materials; labor shortages as a result of the pandemic, low
unemployment rates, or other factors limiting the availability of
qualified workers; and other events, factors and risks. It
undertakes 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 Polar Power’s 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 Polar Power’s reports
filed with the Securities and Exchange Commission.
Media and Investor
Relations:CoreIRPeter Seltzberg, SVP Investor Relations
and Corporate Advisory+1 212-655-0924PR@CoreIR.co
www.CoreIR.com
Company Contact:Polar Power,
Inc.249 E. Gardena Blvd.Gardena, CA 90248Tel:
310-830-9153ir@polarpowerinc.comwww.polarpower.com
POLAR POWER,
INC.CONDENSED BALANCE SHEETS(in
thousands, except share and per share data)
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
296 |
|
|
$ |
211 |
|
Accounts receivable |
|
|
1,582 |
|
|
|
2,230 |
|
Inventories, net |
|
|
19,155 |
|
|
|
15,460 |
|
Prepaid expenses |
|
|
942 |
|
|
|
2,629 |
|
Employee retention credit receivable |
|
|
2,000 |
|
|
|
2,000 |
|
Income taxes receivable |
|
|
787 |
|
|
|
787 |
|
Total current assets |
|
|
24,762 |
|
|
|
23,317 |
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
Operating lease right-of-use
assets, net |
|
|
3,103 |
|
|
|
240 |
|
Property and equipment,
net |
|
|
423 |
|
|
|
538 |
|
Deposits |
|
|
108 |
|
|
|
93 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
28,396 |
|
|
$ |
24,188 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,988 |
|
|
$ |
230 |
|
Customer deposits |
|
|
1,720 |
|
|
|
2,126 |
|
Accrued liabilities and other current liabilities |
|
|
1,178 |
|
|
|
1,231 |
|
Operating lease liabilities, current portion |
|
|
1,045 |
|
|
|
268 |
|
Notes payable-related party, current portion |
|
|
233 |
|
|
|
— |
|
Notes payable, current portion |
|
|
88 |
|
|
|
211 |
|
Line of credit |
|
|
5,194 |
|
|
|
1,884 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
11,446 |
|
|
|
5,950 |
|
|
|
|
|
|
|
|
|
|
Notes payable, net of current
portion |
|
|
— |
|
|
|
57 |
|
Operating lease liabilities,
net of current portion |
|
|
2,162 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
13,608 |
|
|
|
6,007 |
|
|
|
|
|
|
|
|
|
|
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,
12,967,027 shares issued and 12,949,550 shares outstanding on
September 30, 2023, and 12,967,027 shares issued and 12,949,550
shares outstanding on December 31, 2022 |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
37,331 |
|
|
|
37,331 |
|
Accumulated deficit |
|
|
(22,504 |
) |
|
|
(19,111 |
) |
Treasury Stock, at cost (17,477 shares) |
|
|
(40 |
) |
|
|
(40 |
) |
Total stockholders’
equity |
|
|
14,788 |
|
|
|
18,181 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity |
|
$ |
28,396 |
|
|
$ |
24,188 |
|
POLAR POWER,
INC.UNAUDITED CONDENSED STATEMENTS OF
OPERATIONS(in thousands, except share and per
share data)
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net
Sales |
|
$ |
1,911 |
|
|
$ |
1,707 |
|
|
$ |
11,688 |
|
|
$ |
9,690 |
|
Cost of
Sales |
|
|
2,019 |
|
|
|
1,954 |
|
|
|
9,566 |
|
|
|
7,971 |
|
Gross profit
(loss) |
|
|
(108 |
) |
|
|
(247 |
) |
|
|
2,122 |
|
|
|
1,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
274 |
|
|
|
328 |
|
|
|
917 |
|
|
|
1,134 |
|
Research and development |
|
|
299 |
|
|
|
319 |
|
|
|
983 |
|
|
|
1,145 |
|
General and
administrative |
|
|
992 |
|
|
|
1,482 |
|
|
|
3,240 |
|
|
|
3,648 |
|
Total operating
expenses |
|
|
1,565 |
|
|
|
2,129 |
|
|
|
5,140 |
|
|
|
5,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(1,673 |
) |
|
|
(2,376 |
) |
|
|
(3,018 |
) |
|
|
(4,208 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and finance costs |
|
|
(171 |
) |
|
|
(12 |
) |
|
|
(375 |
) |
|
|
(39 |
) |
Other income (expense), net |
|
|
— |
|
|
|
7 |
|
|
|
— |
|
|
|
7 |
|
Total other income
(expenses), net |
|
|
(171 |
) |
|
|
(5 |
) |
|
|
(375 |
) |
|
|
(32 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,844 |
) |
|
$ |
(2,381 |
) |
|
$ |
(3,393 |
) |
|
$ |
(4,240 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share – basic and
diluted |
|
$ |
(0.14 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.33 |
) |
Weighted average shares
outstanding, basic and diluted |
|
|
12,949,550 |
|
|
|
12,848,466 |
|
|
|
12,949,550 |
|
|
|
12,967,027 |
|
POLAR POWER,
INC.UNAUDITED CONDENSED STATEMENTS OF CASH
FLOW(in thousands)
|
|
Nine Months EndedSeptember
30, |
|
|
|
2023 |
|
|
2022 |
|
Cash flows
from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(3,393 |
) |
|
$ |
(4,240 |
) |
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
309 |
|
|
|
387 |
|
Stock-based
compensation to officers, employees and consultants |
|
|
— |
|
|
|
515 |
|
Changes in
operating assets and liabilities |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
648 |
|
|
|
3,027 |
|
Inventories |
|
|
(3,695 |
) |
|
|
(6,608 |
) |
Prepaid expenses |
|
|
1,687 |
|
|
|
(322 |
) |
Deposits |
|
|
(15 |
) |
|
|
— |
|
Operating lease right-of-use asset |
|
|
(2,863 |
) |
|
|
503 |
|
Accounts payable |
|
|
1,758 |
|
|
|
97 |
|
Customer deposits |
|
|
(406 |
) |
|
|
2,672 |
|
Accrued expenses and other current liabilities |
|
|
(53 |
) |
|
|
(27 |
) |
Operating lease liability |
|
|
2,939 |
|
|
|
(536 |
) |
Net cash used in
operating activities |
|
|
(3,084 |
) |
|
|
(4,532 |
) |
|
|
|
|
|
|
|
|
|
Cash flows
from investing activities: |
|
|
|
|
|
|
|
|
Acquisition of
property and equipment |
|
|
(194 |
) |
|
|
(25 |
) |
Net cash used in
investing activities |
|
|
(194 |
) |
|
|
(25 |
) |
|
|
|
|
|
|
|
|
|
Cash flows
from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from
advances from credit facility |
|
|
3,310 |
|
|
|
— |
|
Proceeds from
notes payable, related party |
|
|
233 |
|
|
|
— |
|
Repayment of notes
payable |
|
|
(180 |
) |
|
|
(181 |
) |
Net cash provided
by (used in) financing activities |
|
|
3,363 |
|
|
|
(181 |
) |
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents |
|
|
85 |
|
|
|
(4,738 |
) |
Cash and cash
equivalents, beginning of period |
|
|
211 |
|
|
|
5,101 |
|
Cash and
cash equivalents, end of period |
|
$ |
296 |
|
|
$ |
363 |
|
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