TIDMPFLM
RNS Number : 4572Q
PowerFilm, Inc
02 September 2014
PowerFilm, Inc.
PowerFilm Reports 2014 First Half Results
02 September 2014, LONDON, UK and AMES, IOWA - PowerFilm(R) ,
Inc. (AIM: PFLM), ("PowerFilm" or "the Company"), the developer and
manufacturer of thin flexible solar panels, today announces its
preliminary results for the six months ended 30 June 2014.
Financial Highlights
-- Revenue of $3.1 million for the first half 2014 (first half 2013: $3.3 million).
-- Gross Margin of 8.4% for the first half 2014 (first half 2013: 4.7%).
-- Net Loss before taxes of $1.3 million for the first half 2014
(first half 2013: net loss before taxes of $1.5 million).
-- $12.0 million of cash and cash equivalents, certificates of
deposit, and securities at 30 June 2014 (30 June 2013: $12.5
million).
Operational Highlights
-- Next-generation custom OEM solar products are being
developing for long-term customers in the oil and gas exploration
market, as well as in the asset tracking market.
-- In July PowerFilm completed its development contract with the
US Army to develop a second-generation PowerShade solar field
shelter. Key results from PowerFilm research are a 25% reduction in
the cost per Watt, a 20% improvement in power output per square
foot of structure, and a 75% increase in power per weight of the
overall structure. The Army is evaluating ROI and then will make a
decision about ordering.
-- As was previously announced, the United States Marine Corps
(USMC) has selected PowerFilm for a contract to develop improved
thin film solar products for their equipment testing programs for
their SPACES and GREENS programs. This contract provides $634,000
of research funding over a period of 12 months.
-- As was previously announced, the Company has been awarded a
$3.0 million contract from the US Army for developing high
performance photovoltaic (PV) arrays which combine multiple solar
technologies, including Gallium Arsenide (GaAs) PV cells.
Approximately half of the $3.0 million will be going to PowerFilm,
and the balance to sub-contractors.
For further information, please contact:
PowerFilm, Inc. +1 (515) 292 7606
Frank Jeffrey
Mike Coon
Oriel Securities Ltd., Nominated Adviser +44 20 7710 7600
Giles Balleny
Juliet Thompson
A copy of this announcement will be available on the PowerFilm
website at http://www.powerfilmsolar.com. The common shares of
PowerFilm, Inc. are traded on the AIM Market of the London Stock
Exchange and are not registered under the US Securities Act 1933,
as amended. Such shares may not be offered or sold to residents of
the United States or to persons acting on their behalf, or to other
persons who are "United States Persons" within the meaning of
Regulation S as promulgated under the Securities Act of 1933,
unless such shares have been registered under the Securities Act or
there is an available exemption from registration.
Financial Review
For the first half of 2014 PowerFilm achieved $3,069,675 in
revenue. The Company's gross profit for the period was $257,249
resulting in an 8.4% gross margin. There was a net loss of
$1,290,440 for the first half of 2014.
The following is a comparison of the financial results for the
first half of 2014 compared to the first half of 2013:
In the first half of 2014 revenues decreased 7.4% to $3,069,675
from $3,316,298 in the first half of 2013. Product sales revenues
decreased in the first half of 2014 by 8.2% to $2,624,527 from
$2,858,312 in the first half of 2013. Contract revenue decreased to
$445,148 from $457,986 for the first half of 2013, a 2.8%
decrease.
No income tax benefit was booked for the first half 2014
compared to a $515,000 income tax benefit that was booked in the
first half of 2013. Net loss for the first half 2014 was $1,290,440
compared to a net loss of $972,289 for the first half of 2013.
Gross margins showed a change from 4.7% at half year for 2013 to
8.4% at half year 2014.
The Company continued to have a development contract in place
with the U.S. Army throughout the first half of 2014. This contract
finished in July 2014. A development contract with the U.S. Marines
began in the first half 2014 and will continue through the
remaining months of 2014. The Research and Development line in the
financial statements decreased to $573,227 for first half 2014
compared to $577,959 for the first half of 2013.
Sales, general, and administrative expenses decreased to
$936,387 for the first half of 2014 compared to $971,422 for the
first half of 2013, a 3.6% decrease as the Company continues its
efforts to drive down costs.
PowerFilm's balance sheet continues to have a strong position at
30 June 2014, which includes cash and cash equivalents of
$3,488,199, certificates of deposit of $7,500,785 ($5,194,483
short-term and $2,306,302 long-term), and $1,000,000 of U.S.
government agency backed debt securities. The securities had a
contractual maturity date of greater than 5 years as of 30 June
2014. The aggregation of all these accounts total $11,988,984.
The financial statements of PowerFilm are prepared on the basis
of US Generally Accepted Accounting Principles (US GAAP).
Financial Statements PowerFilm, Inc.
Statements of Operations
Mid-Years 2014, 2013, Full-Year
2013
Unaudited Unaudited Audited
6 months 6 months 12 months
ending ending ending
30-Jun-14 30-Jun-13 31-Dec-13
-------------------------------------- -------------- ------------ --------------
Operating Revenues:
Product Sales $2,624,527 $2,858,312 $6,960,215
Development Contracts 445,148 457,986 1,265,984
------------ --------------
3,069,675 3,316,298 8,226,199
Cost of Revenues 2,812,426 3,161,898 7,354,324
------------ --------------
Gross Profit 257,249 154,400 871,875
-------------- ------------ --------------
Operating Expenses:
Research and development 573,227 577,959 1,049,520
Selling, general, and administrative 936,387 971,422 1,845,524
------------ --------------
1,509,614 1,549,381 2,895,044
-------------- ------------ --------------
Operating (loss) (1,252,365) (1,394,981) (2,023,169)
-------------- ------------ --------------
Other income (expense):
Interest/Dividend income 33,382 50,800 101,146
Interest (expense) (83,712) (113,869) (194,382)
Other income (loss) 12,255 (28,239) 4,780
------------ --------------
(38,075) (91,308) ( 88,456)
-------------- ------------ --------------
(Loss) before income tax (benefit) (1,290,440) (1,486,289) (2,111,625)
Income tax expense (benefit) 0 (514,000) 727,000
------------ --------------
Net (loss) $ (1,290,440) $ (972,289) $ (2,838,625)
Basic and Diluted (loss) per share $ (0.04) $ (0.03) $ (0.08)
PowerFilm, Inc.
Balance Sheets
Mid-Years 2014, 2013 Unaudited Unaudited
30-Jun-14 30-Jun-13
-------------------------------- --------------- -----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents, net
of restricted cash $3,488,199 $4,190,207
Short-term certificates of
deposit 5,194,483 2,326,961
Accounts receivable, net 1,473,862 1,140,856
Inventories 3,431,681 4,278,423
Prepaid Expenses 158,311 306,932
Deferred Income Taxes 0 182,000
--------------- -----------------
Total current assets 13,746,536 12,425,379
--------------- -----------------
RESTRICTED INVESTMENT
SECURITIES 0 1,000,000
--------------- -----------------
RESTRICTED CERTIFICATES OF
DEPOSIT 0 4,000,000
--------------- -----------------
INVESTMENT SECURITIES 1,000,000 0
--------------- -----------------
LONG-TERM CERTIFICATES OF
DEPOSIT 2,306,302 1,027,303
--------------- -----------------
PROPERTY AND EQUIPMENT
Machinery and equipment 12,338,027 12,417,338
Leasehold improvements 272,276 272,276
Equipment construction in
progress 3,535,925 3,326,657
Land/Building 6,032,257 6,032,257
--------------- -----------------
22,178,485 22,048,528
Less accumulated depreciation (7,820,005) (6,739,193)
14,358,480 15,309,335
--------------- -----------------
OTHER ASSETS 127,080 135,137
--------------- -----------------
DEFERRED INCOME TAXES 0 1,096,000
--------------- -----------------
TOTAL ASSETS $31,538,398 $34,993,154
=============== =================
LIABILITIES & STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Current maturities of long term
debt $ 250,000 $ 250,000
Trade accounts payable 34,341 199,517
Other payables and accrued
expenses 953,850 827,071
Total Current Liabilities 1,238,191 1,276,588
--------------- -----------------
LONG-TERM LIABILITIES
Revenue bonds payable, less
current maturities 3,250,000 3,500,000
Total Long-Term Liabilities 3,250,000 3,500,000
--------------- -----------------
STOCKHOLDERS' EQUITY
Common stock 381,687 381,518
Additional paid in capital 32,721,490 32,714,613
Retained (deficit) (5,245,136) (2,088,359)
Treasury Stock (480,475) (453,420)
Accumulated other comprehensive
(loss) (327,359) (337,786)
--------------- -----------------
27,050,207 30,216,566
--------------- -----------------
TOTAL LIABILITIES &
STOCKHOLDERS'
EQUITY $31,538,398 $34,993,154
=============== =================
PowerFilm, Inc.
Statements of Cash Flows
Mid-Years 2014, 2013, Full-Year 2013
Unaudited Unaudited Audited
6 months 6 months 12 months
ending ending ending
30-Jun-14 30-Jun-13 31-Dec-13
-------------------------------------------- --------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $(1,290,440) $ (972,289) $ (2,838,625)
Adjustments to reconcile net (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 611,954 544,452 1,331,733
Provision for doubtful accounts 0 0 (14,652)
Deferred income taxes 0 (515,000) 735,000
Stock-based compensation expense 1,848 4,077 7,292
Changes in working capital components:
Accounts receivable 651,957 1,363,086 392,775
Inventories (5,342) (463,940) 388,144
Prepaid expenses (23,866) 58,810 231,297
Income tax receivable 8,000 41,087 33,087
Trade accounts payable (67,351) 124,848 27,023
Other payables and accrued expenses 127,639 (301,167) (263,398)
Net cash provided by (used in) operating
activities 14,399 (116,036) 29,676
--------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (168,329) (40,963) (311,960)
Purchase of restricted certificates
of deposit 0 (29,842) (7,000,000)
Proceeds from maturities of restricted
certificates of deposit 0 0 7,000,000
(Increase) decrease in certificates
of deposit (410,649) 0 234,286
Decrease in restricted cash 0 1,093,159 1,093,159
Increase in other assets (1,200) (5,428) (5,428)
Net cash provided by (used in) investing
activities (580,178) 1,016,926 1,010,057
--------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (125,000) (125,000) (250,000)
Repurchase of common stock (12,175) 0 (14,703)
Proceeds from issuance (repurchase)
of common stock, net 780 (26) 1,000
--------------- -------------- --------------
Net cash (used in) financing activities (136,395) (125,026) (263,703)
--------------- -------------- --------------
Net increase (decrease) in cash and cash
equivalents ( 702,174) 775,864 776,030
CASH AND CASH EQUIVALENTS
Beginning 4,190,373 3,414,343 3,414,343
--------------- -------------- --------------
Ending 3,488,199 4,190,207 4,190,373
=============== ============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION, cash payments for:
Interest, net of capitalized $48,925 $113,869 $ 210,373
Income taxes 0 0 (41,000)
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING
ACTIVITIES
Gain (loss) on interest rate swap
agreement,
net of tax $ (43,159) $127,700 $ 183,251
Restricted shares awarded from treasury
shares, net of forfeitures 0 (2,625) 777
Operational Review
Company Focus, Market Dynamics, and Competitive Position
In the first half of 2014 PowerFilm focused on developing
next-generation versions of products in its diversified product
line, in coordination with longstanding strategic partners, to lay
the groundwork for growth going forward. As a consequence, demand
for existing designs of products for some major customers has been
impacted as they wait for the release of the next-generation
products.
The first half saw a continued shakeout of the solar industry in
the US including key competitors in the military segment. As a
result, these dynamics give PowerFilm additional potential for
market share gains going forward.
Projections in the solar field can be quite challenging with the
current level of upheaval in competitors, markets and prices. Our
prime competitors have disappeared and our major customers are
working with us on new module designs and indicate the follow-on
potential for significant future orders which gives us a fairly
positive view. On the other hand, timing from these customers and
vagaries of the economy could prevent many things from happening.
Indeed, delays in customer timing have caused the year to date
results to be much lower than expected. PowerFilm is working to
pursue a strategy which allows us to respond to a broad set of
scenarios.
Custom Engineering Power Solutions
PowerFilm custom engineers solar products and power solutions
for customers with diverse power needs in a variety of application
markets. The custom engineering takes many forms, ranging from
variation of form factor to encapsulation, to fastening, to
electrical termination and connection. In some cases the PowerFilm
engineering group works with customers to optimize the overall
power system: solar panel power generation, power storage, and
application power use. As a result, the Company is able to provide
customers with differentiated optimized solutions that are not
generically available in the market.
Integration of storage technology is an important strategic
focus for the Company.
Military Market and Products
PowerFilm has been engaged in a number of developmental and
upgrade projects on military applications. These include
development of a new generation of portable amorphous silicon
foldable arrays for the Marine Corps, development and delivery of
high-performance gallium arsenide-based foldable arrays for the
Army, and development of a second-generation PowerShade solar field
shelter for the Army.
Marine Corps Contract
As was previously announced, the United States Marine Corps
(USMC) has selected PowerFilm for a contract to develop improved
thin film solar products for their equipment testing programs for
their SPACES and GREENS programs.
This contract provides $634,000 of research funding over a
period of 12 months and will result in the delivery of a set of
improved thin film photovoltaics arrays for field testing by the
USMC. Two types of arrays are being developed under this contract:
a new generation of the PowerFilm 60 Watt foldable panel which is
extremely light weight for portability and a larger 240 Watt
foldable panel. The latter will be used as base power and therefore
needs to have adaptable mounting options.
Army Contract
As was previously announced, PowerFilm has been awarded a $3.0
million contract from the US Army for developing high performance
photovoltaic (PV) arrays which combine multiple solar technologies.
Approximately half of the $3.0 million will be going to PowerFilm,
and the balance to sub-contractors.
This program will evaluate approaches for use of high
performance PV technologies to make more power dense foldable
arrays for specialized military applications. The program will
evaluate Gallium Arsenide (GaAs) PV cells, high performance
Heterojunction with Intrinsic Thin layer (HIT) PV cells along with
more traditional crystalline Silicon (Si) PV cells.
Under the contract, subject to meeting certain development
obligations, PowerFilm will receive approximately $3.0 million in
funding over two years. In order to bring in the requisite
expertise in these diverse areas, the Company has partnered with
Micro-Link, a high-tech GaAs semiconductor manufacturing company
with a unique GaAs fabrication process and Arizona State University
which has expertise in HIT cells. PowerFilm will provide expertise
in mounting, interconnect, lamination, and general module design.
It is expected that these arrays will have higher output per square
foot than any other technologies, but to date these technologies
have not been more widely available on account of the high cost of
the materials.
Completion of Next-Generation PowerShade Contract
In July, the Company successfully completed the development
contract with the Army to develop a second generation PowerShade
tent structure. Key results from PowerFilm research are a 25%
reduction in the cost per Watt, a 20% improvement in power output
per square foot of structure, and a 75% increase in power per
weight of the overall structure. At the same time PowerFilm
increased expected lifetime from three years to ten years and
significantly improved human factors in putting up the tent. Under
the completed Army PowerShade improvement contract, PowerFilm
Engineering designed, fabricated, and assembled a system that will
automate the fabrication of tent modules, rollables, and other
double wide solar panels. This system will be capable of cutting
web to length, aligning, taping, tabbing, and finally laminating
the rollable series of product. This system will increase assembly
capacity, improve consistency, quality, and reduce the cost of
manufacturing tent modules, rollables and other double wide solar
panels.
The second-generation PowerShade product now is with the Army
for evaluation of the ROI which, if satisfactory, is the first step
to receiving a production order.
Custom OEM Solar Products and Power Solutions
The Company engineers and supplies custom solar panels optimized
to meet the specific power needs of diverse OEM customers in a wide
range of applications.
Asset Tracking
In 2014 PowerFilm is experiencing increased interest in this
solar product application for semi trailers, rail cars, and
containers. Also there is interest in solar power solutions for
refrigeration units.
Oil and Gas Exploration
The demand for the Company's solar panels for remote power for
oil and gas exploration continues to grow as we are developing a
next-generation product for this expanding market.
CPAP Machine Remote Power
Continuous positive airway pressure (CPAP) therapy is a common
treatment for obstructive sleep apnea. The therapy includes a small
machine that supplies a constant and steady air pressure, a hose,
and a mask or nose piece. Demand for using CPAP machines in remote
locations, such as for camping, is causing product sales of
PowerFilm's custom solar panels for this application to
increase.
Consumer Market and Products
PowerFilm's strategic partner Bushnell Outdoors continues to
sell its line of POWERSYNC(TM) custom solar products to major
outdoor retailers. With the benefit of additional market
experience, the product line is evolving.
In late 2013, Bushnell was acquired by Alliant Techsystems,
Inc., commonly known as ATK (NYSE: ATK), and is now part of their
Sporting Group. ATK Sporting Group is a portfolio-based consumer
branded products company dedicated to producing top-quality
products for hunters, shooting enthusiasts, military, homeland
security and law enforcement agencies.
Manufacturing Improvements
The manufacturing team continues to focus on cost reduction
efforts. Lean initiatives in the 2014 first half included the OEM
product line, rollable products finishing cell, and outdoor product
testing areas. The team is also continuing to make improvements to
the roll PV production process. These efforts have resulted in
improved on-time delivery, reduced scrap rates, and improved
throughput in many areas.
Research and Development
The R&D Department has made important strides in reducing
materials costs in the manufacture of our solar material.
Additionally, we have improved the testing and sampling methodology
that helps us identify loss causes that are then fed back to the
Engineering and Manufacturing Departments which they can use to
remedy process deficiencies. Further development and use of
in-house engineered solar simulators has greatly improved product
through-put as well as consistency and standardization of product
testing.
Outlook
The overall global solar economy is generally viewed as
improving. The thin film solar industry shakeout is of an extended
duration, and after such a prolonged period, there is not much left
to shake. Many thin film solar companies have been eliminated.
PowerFilm survives, with very few thin film competitors.
PowerFilm is making progress on the elements needed to become
profitable at lower manufacturing volumes, as the Company works to
increase volume by capturing increased market share with its
differentiated solar products and custom power solutions in its
niche target markets.
PowerFilm and PowerShade are trademarks of PowerFilm, Inc.
Bushnell and PowerSync are trademarks of Bushnell Outdoor
Products.
Forward-looking Statements
This release includes forward-looking statements which are based
on certain assumptions and reflect management's current
expectations as contemplated under the Safe Harbor provisions of
the U.S. Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to a number of risks and
uncertainties that could cause actual results or events to differ
materially from current expectations. Some of these factors
include: uncertainty as to whether our strategies, partnerships and
business plans will yield the expected benefits; general global
economic conditions; general industry and market conditions and
growth rates; increasing competition; the ability to identify,
develop and achieve commercial success for new products, services
and technologies; changes in technology; changes in laws and
regulations, including government incentive programs; intellectual
property rights; our ability to secure and maintain strategic
relationships, including key supply relationships; the availability
and cost of capital; the availability of, and our ability to
retain, key personnel; and the failure of the Company to
effectively integrate acquisitions. Additional factors are
discussed in our public disclosure materials from time to time. We
disclaim any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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