Polar Power, Inc. (NASDAQ: POLA), a global provider of prime,
backup and solar hybrid DC power solutions, today reported its
financial results for the fourth quarter and full year ended
December 31, 2018.
Key 2018 and Subsequent
Highlights:
Financial Results for the Three and
Twelve Months Ended December 31, 2018
- Net sales in 2018 totaled $24 million, an increase of 67%, as
compared to $14.4 million in 2017. Net sales totaled $8.3 million
in Q4 2018, an increase of 108%, as compared to $4.0 million in Q4
2017. The increase in net sales was primarily a result of an
increase in sales of DC power systems to Tier-1 wireless carrier
customers, coupled with an increase in international and government
sales during 2018.
- Backlog totaled $16.0 million at December 31, 2018.
- Gross profit increased by $2.7 million to $7.4 million as
compared to $4.7 million in 2017; however, gross profit as a
percentage of sales decreased to 30.9% in 2018, as compared to
33.0% in 2017. The decrease in gross profit as percentage of net
sales was due to a combination of pricing concessions tied
significantly to higher volume from our Tier-1 telecom customers
and an increase in manufacturing overhead costs associated with the
expansion of our manufacturing facilities. In addition, the company
experienced higher raw material costs associated with new tariffs
on aluminum and other imports from China.
- Operating expenses increased to $8.5 million in 2018 from $5.6
million in 2017, an increase of $2.9 million. Of this amount, $0.6
million and $1.2 million was attributable to increased investments
in R&D and sales and marketing activities, respectively. The
increase in operating expenses in both periods was primarily due to
investments in several major R&D projects.
- Net loss in 2018 totaled $0.8 million, or ($0.08) per basic and
diluted share, compared to a net loss of $0.8 million, or ($0.07)
per basic and diluted share, in 2017. The decline in EPS is
attributable to a combination of lower gross profit rate and an
increase in operating expenses associated with investment in
R&D and sales.
- Cash at December 31, 2018 totaled $5.6 million, as compared to
$14.2 million at December 31, 2017. The substantial reduction in
cash balances are associated with a $7.8 million cash used by
operating activities, of which $2.9 million was associated with an
increase in inventory, and a $4.7 million increase in accounts
receivable associated with increased shipments to Tier-1 carriers
with net 90-day payment terms.
Management
Commentary
“During 2018 we experienced significant growth resulting from an
increase in shipments to Tier-1 telecom customers, which validated
our technology and price competitiveness in the DC backup power
generation market in the U.S.,” said Polar Power CEO, Arthur Sams.
“We also made progress in reducing our customer concentration
through sales to Tier-1 telecom providers. These improvements were
offset to some degree by volume discounts from those
customers.”
Mr. Sams continued, “International growth
remains a key strategic initiative for the company and towards the
second half of 2018 we made solid gains with increased sales to
customers in Namibia, Sri Lanka, Australia and Thailand. We would
like to note that our telecom customers in the emerging markets are
well established regional telecom providers and we are optimistic
that we will increase our market share as they gain more experience
and familiarity with our products and technologies.”
“During 2018 we made significant progress on our
renewable energy systems technology roadmap. Many of the emerging
markets lack reliable electric grid infrastructure and a large
portion of the telecom towers are located in off-grid or bad grid
areas. During 2018, we demonstrated the DC hybrid systems in Sri
Lanka, where our system is used as primary power, fully
integrated with lithium battery storage and solar modules.”
“During 2018, our diversification efforts beyond
telecom markets came to fruition as we delivered light weight,
compact liquid-cooled DC power system for use in the U.S. Army’s
Robotic Mule Project. We believe automated robotic vehicles
have numerous applications beyond military and we plan to develop
new technologies for commercial applications of these
vehicles.”
“We also recently launched our new LPG and
natural gas DC power systems designed for residential and mobile
electric vehicle charging stations. We believe this is an exciting
new opportunity for us and it’s the first product in a series
designed for residential applications. We also believe that using a
DC generator that is operating on natural gas, with or without a
solar PV array, will be instrumental in helping electric utilities
meet the increased power demand associated with electric car
charging. Many homes and commercial businesses are without
sufficient power to charge an EV or fleet of EVs and the cost to
increase electrical service can be cost prohibitive. In addition,
the utilities energy cost during peak demand may become too high
making natural gas a cost competitive alternative to the electric
grid,” 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: |
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Tuesday, March 26,
2019 |
Time: |
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4:30 p.m. ET,
1:30 p.m. PT |
Toll-free dial-in
number: |
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1-888-394-8218 |
International dial-in
number: |
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1-323-794-2588 |
Conference ID: |
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8959903 |
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
1-415-233-7094.
The conference call will be broadcast live and available for
replay http://public.viavid.com/index.php?id=133608 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 Tuesday, April 2, 2019.
Toll-free replay
number: |
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1-844-512-2921 |
International replay
number: |
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1-412-317-6671 |
Replay ID: |
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8959903 |
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 1995This 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
will increase its market share in international markets;
Polar Power’s belief that automated robotic vehicles have numerous
applications beyond military and its plans to deliver new
technologies for commercial applications of those vehicles; and
Polar Power’s belief that using a DC generator operating on natural
gas, with or without a solar PV array, will be instrumental in
helping electric utilities meet the increased power demand
associated with electric car charging 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
|
|
December 31, 2018 |
|
|
December 31, 2017 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and
cash equivalents (including restricted cash of $1,002,683 and
$1,001,180 at December 31, 2018 and December 31, 2017,
respectively) |
|
$ |
5,640,078 |
|
|
$ |
14,201,163 |
|
Accounts
receivable |
|
|
7,726,919 |
|
|
|
3,058,266 |
|
Inventories, net |
|
|
8,471,769 |
|
|
|
5,487,053 |
|
Prepaid
expenses |
|
|
468,666 |
|
|
|
236,670 |
|
Refundable income taxes |
|
|
715,916 |
|
|
|
629,316 |
|
Total
current assets |
|
|
23,023,348 |
|
|
|
23,612,468 |
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
2,122,757 |
|
|
|
824,076 |
|
Deposits |
|
|
94,001 |
|
|
|
87,496 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
25,240,106 |
|
|
$ |
24,524,040 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
1,066,415 |
|
|
$ |
757,753 |
|
Customer
deposits |
|
|
79,184 |
|
|
|
40,039 |
|
Accrued
liabilities and other current liabilities |
|
|
504,559 |
|
|
|
586,391 |
|
Current
portion of notes payable |
|
|
283,388 |
|
|
|
110,237 |
|
Total
current liabilities |
|
|
1,933,546 |
|
|
|
1,494,420 |
|
Notes payable, net of
current portion |
|
|
924,539 |
|
|
|
126,818 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,858,085 |
|
|
|
1,621,238 |
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
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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 |
|
|
19,578,426 |
|
|
|
19,250,955 |
|
Retained
earnings |
|
|
2,802,581 |
|
|
|
3,650,833 |
|
Total
stockholders’ equity |
|
|
22,382,021 |
|
|
|
22,902,802 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity |
|
$ |
25,240,106 |
|
|
$ |
24,524,040 |
|
POLAR POWER, INC. STATEMENTS OF
OPERATIONS
|
Three Months Ended |
|
Years Ended |
|
December 31, |
|
December 31, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
8,297,509 |
|
|
$ |
3,979,965 |
|
|
$ |
24,046,354 |
|
|
$ |
14,418,726 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
5,941,867 |
|
|
|
2,732,094 |
|
|
|
16,614,574 |
|
|
|
9,657,558 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
2,355,642 |
|
|
|
1,247,871 |
|
|
|
7,431,780 |
|
|
|
4,761,168 |
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
Sales and
Marketing |
|
611,305 |
|
|
|
487,224 |
|
|
|
2,579,457 |
|
|
|
1,348,455 |
|
Research
and development |
|
535,829 |
|
|
|
387,210 |
|
|
|
1,907,810 |
|
|
|
1,334,637 |
|
General and
administrative |
|
1,417,506 |
|
|
|
868,177 |
|
|
|
4,043,301 |
|
|
|
2,880,036 |
|
Total operating expenses |
|
2,564,640 |
|
|
|
1,742,611 |
|
|
|
8,530,568 |
|
|
|
5,563,128 |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(208,998 |
) |
|
|
(494,740 |
) |
|
|
(1,098,788 |
) |
|
|
(801,960 |
) |
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
Interest
expenses |
|
(11,989 |
) |
|
|
(3,166 |
) |
|
|
(20,170 |
) |
|
|
(17,822 |
) |
Interest
income |
|
10,213 |
|
|
|
18,966 |
|
|
|
55,706 |
|
|
|
54,791 |
|
Other
income (expenses) |
|
0 |
|
|
|
795 |
|
|
|
— |
|
|
|
7,575 |
|
Total other income (expense) |
|
(1,776 |
) |
|
|
16,595 |
|
|
|
35,536 |
|
|
|
44,544 |
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(210,774 |
) |
|
|
(478,145 |
) |
|
|
(1,063,252 |
) |
|
|
(757,416 |
) |
Income tax benefit (provision) |
|
215,000 |
|
|
|
(113,118 |
) |
|
|
215,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Net
Loss |
$ |
4,226 |
|
|
$ |
(591,263 |
) |
|
$ |
(848,252 |
) |
|
$ |
(757,416 |
) |
|
|
|
|
|
|
|
|
Net loss
per share – basic and diluted |
$ |
0.00 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.07 |
) |
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
|
|
Years Ended December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(848,252 |
) |
|
|
$ |
(757,416 |
) |
|
Adjustments
to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Fair value of vested stock options |
|
|
327,471 |
|
|
|
|
8,240 |
|
|
Depreciation and amortization |
|
|
385,583 |
|
|
|
|
255,631 |
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(4,668,653 |
) |
|
|
|
1,345,680 |
|
|
Inventories |
|
|
(2,984,716 |
) |
|
|
|
(647,462 |
) |
|
Prepaid expenses |
|
|
(231,996 |
) |
|
|
|
(58,101 |
) |
|
Deposits |
|
|
(6,505 |
) |
|
|
|
(20,700 |
) |
|
Refundable income taxes |
|
|
(86,600 |
) |
|
|
|
(629,316 |
) |
|
Deferred tax assets |
|
|
— |
|
|
|
|
160,637 |
|
|
Accounts payable |
|
|
308,662 |
|
|
|
|
98,398 |
|
|
Income taxes payable |
|
|
— |
|
|
|
|
(1,227,308 |
) |
|
Customer deposits |
|
|
39,145 |
|
|
|
|
(31,915 |
) |
|
Accrued expenses and other current liabilities |
|
|
(81,832 |
) |
|
|
|
(83,498 |
) |
|
Net cash
used in operating activities |
|
|
(7,847,693 |
) |
|
|
|
(1,587,130 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Acquisition
of property and equipment |
|
|
(574,990 |
) |
|
|
|
(342,121 |
) |
|
Net cash
used in investing activities |
|
|
(574,990 |
) |
|
|
|
(342,121 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Repayment
of notes |
|
|
(138,402 |
) |
|
|
|
(111,744 |
) |
|
Net cash
provided (used) by financing activities |
|
|
(138,402 |
) |
|
|
|
(111,744 |
) |
|
|
|
|
|
|
|
|
|
|
Decrease in
cash and cash equivalents |
|
|
(8,561,085 |
) |
|
|
|
(2,040,995 |
) |
|
Cash and
cash equivalents, beginning of period |
|
|
14,201,163 |
|
|
|
|
16,242,158 |
|
|
Cash and cash equivalents, end of period |
|
$ |
5,640,078 |
|
|
|
$ |
14,201,163 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
|
|
|
|
Interest
paid |
|
$ |
20,170 |
|
|
|
$ |
10,193 |
|
|
Taxes
Paid |
|
|
— |
|
|
|
|
2,424,417 |
|
|
Supplemental non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
Assets
acquired under notes payable |
|
$ |
1,109,275 |
|
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
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