Beacon Power Corporation (Nasdaq:BCON), a leading provider of
advanced products and services to support a more stable, reliable
and efficient electricity grid, announced its financial results for
the first quarter ended March 31, 2011.
Recent Company Highlights
- Commenced commercial operation at its Stephentown, New York,
frequency regulation plant in January, and successfully integrated,
operated and earned revenue from up to 14 megawatts (MW) of
capacity (140 flywheels) during the first quarter of 2011.
- Shipped and installed all 200 flywheels at the Stephentown
facility and expects to have all 20 MW online during the second
quarter of 2011.
- Increased revenue from $235,000 in the first quarter of 2010 to
$446,000 in the first quarter of 2011, an increase of
89%. During the same periods, gross margin increased from 27%
to 47%.
- Signed a lease agreement with NorthWestern Energy for a 1 MW
Smart Energy Matrix flywheel system that will operate in
conjunction with a gas-fired regulation plant recently commissioned
in Montana. The system is expected to be operational by the end of
2011.
- The Federal Energy Regulatory Commission (FERC) issued a Notice
of Proposed Rulemaking in February to require each of the grid
operators under its jurisdiction to structure their regulation
market tariffs to provide pay-for-performance – a market rule
change from which Beacon stands to benefit
significantly.
Summary of Financial Results
For the first quarter of 2011, Beacon Power reported revenue of
$446,000, as compared to revenue of $235,000 for the same quarter
in 2010, an increase of 89%. Average gross margin on frequency
regulation services during the first quarter of 2011 was 47%,
compared to 27% during the same period in 2010. This improvement
was primarily driven by higher margins in Stephentown as compared
to those earned in Tyngsboro. Net loss from operations was $4.9
million in the first quarter of 2011, as compared to a net loss
from operations of $5.5 million in the same quarter of 2010. In the
first quarter of 2011, we recorded a non-cash charge of $6.5
million related to the extinguishment of debt which, along with net
interest and other expenses, resulted in a net loss for the quarter
of $11.7 million, or $(0.49) per share. This compares to a net loss
of $5.5 million, or $(0.32) per share, in the first quarter of
2010. Without this non-cash charge, our net loss for the quarter
would have been approximately $5.2 million. These results have been
restated to reflect the 1-for-10 reverse stock split effective
February 25, 2011.
Revenue and Gross Margin
Revenue increased by $210,000, or 89%, in the first quarter of
2011 as compared to 2010. Frequency regulation revenue was $269,000
and $143,000, respectively, in 2011 and 2010, representing an
increase of $126,000 or 88%.
Beacon's Stephentown plant began earning revenue in late January
2011, ramping from 1 MW on January 18, 2011, to 14 MW in March
2011. All 200 flywheels have been manufactured, shipped and
installed in Stephentown and are expected to be online during the
second quarter of 2011. Beacon is operating the facility at an
average capacity of 10 MW during the second quarter as adjustments
required as part of its commissioning process are
completed.
Frequency regulation revenue from the ISO-NE pilot program was
lower during the first quarter of 2011 than during the equivalent
period in 2010, due to the Company's transfer of 2 of the 3 MW of
capacity from the ISO-NE pilot program to its Stephentown site.
Contract revenue of $164,000 during the first quarter 2011 was
earned primarily from the ARPA-E contract, whereas contract revenue
of $79,000 during the first quarter 2010 related primarily to the
Tehachapi contract (which is now substantially complete), and the
Pacific Northwest National Laboratory contract, which was completed
in 2010.
Beacon's average gross margin on frequency regulation services
during the first quarter of 2011 was 47%, compared to 27% during
the same period in 2010. This improvement was primarily driven by
higher margins in Stephentown as compared to those earned in
Tyngsboro. Approximately 70% of Beacon's cost of energy in
Tyngsboro represents retail transmission and distribution charges
billed by the local service provider. Because its New York facility
is connected to the grid at transmission level, Beacon does not
incur T&D charges at that facility. The Company expects the
margins in Stephentown to improve as the plant reaches full
capacity.
Operating Expenses
For the first quarter ended March 31, 2011, Beacon's operations
and maintenance expenses decreased by $343,000, or 36%, compared to
the equivalent period in 2010. The decrease was due primarily to
higher absorption of overhead related to the construction of our
Stephentown plant. Research and development expenses decreased by
$843,000, or 41%, in comparison to the equivalent period in 2010,
due primarily to decreased spending for R&D material along with
an increase in overhead absorption. Selling, general and
administrative expenses increased by $487,000 for the first quarter
of 2011 compared to the first quarter of 2010. This increase is
primarily related to expanded marketing efforts, commissions
related to preferred stock warrant exercises, and legal and
professional fees. Total operating expenses for the three months
ended March 31, 2011, were $5.1 million, compared to $5.5 million
for the same period in 2010.
Cash and Liquidity
As of March 31, 2011, the Company had $5.5 million in cash
and cash equivalents as compared to $10.9 million at December 31,
2010. Working capital as of March 31, 2011 was ($10.0)
million. In addition to the cash on hand, Beacon has approximately
$3.4 million of restricted cash as of March 31, 2011. Working
capital is negative in part due to the accounting treatment
required for the preferred stock, preferred warrant and common
stock liabilities that were issued in December 2010, which required
the Company to record these instruments as liabilities at fair
value. However, Beacon expects these liabilities, which totaled
$4.8 million as of March 31, 2011, to be settled in stock rather
than cash. The other factor impacting the Company's working capital
relates to the timing of disbursements from the DOE loan. The
Company is only able to draw on this loan once per month, and at
any given point in time its liabilities may include a substantial
amount that it will be able to include in future loan draws.
Conference Call Details
The Company will host a conference call today, May 10, 2011, at
11:00 a.m. Eastern Time. During the call, Company management will
review the Company's operations and results, followed by a question
and answer session. Beacon Power invites all those interested in
hearing management's discussion to join the call by dialing (708)
290-1368 and entering participant access code 59491858 when
prompted. A live webcast of the call will also be available via the
Company's website, at www.beaconpower.com. Please connect at least
15 minutes prior to the webcast to ensure adequate time for any
software download that may be needed.
A replay of the event will be available two hours after its
completion, and for seven days following the call, by dialing (706)
645-9291 and entering access code 59491858 when prompted. The
webcast will also be archived on the Beacon website at
www.beaconpower.com.
About Beacon Power
Beacon Power Corporation designs, develops and commercializes
advanced products and services to support stable, reliable and
efficient electricity grid operation. The Company's primary
business strategy is to build merchant plants and sell turnkey
regulation facilities to meet both domestic and international grid
requirements using its patented flywheel energy storage technology.
Beacon's Smart Energy Matrix, which is now in production, operating
and earning revenue, is a non-polluting, megawatt-level,
utility-grade flywheel-based solution to provide sustainable
frequency regulation services. Beacon is a publicly traded company
with its research, development and manufacturing facility in the
U.S. For more information, visit www.beaconpower.com.
Safe Harbor Statements under the Private Securities
Litigation Reform Act of 1995: The Material
contained in this press release may include statements that are not
historical facts and are considered "forward-looking" statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements reflect Beacon Power
Corporation's current views about future events, financial
performances, and project development. These "forward-looking"
statements are identified by the use of terms and phrases such as
"will," "believe," "expect," "plan," "anticipate," and similar
expressions identifying forward-looking statements. Investors
should not rely on forward-looking statements because they are
subject to a variety of risks, uncertainties, and other factors
that could cause actual results to differ materially from Beacon's
expectation. These factors include: a short operating history; a
history of losses and anticipated continued losses from operations;
the complexity and other challenges of arranging project financing
and resources for one or more frequency regulation power plants,
including uncertainty about whether we will be able to comply with
the conditions or ongoing covenants of the Federal Financing Bank
loan for our Stephentown, New York, facility; our need to comply
with any disbursement or other conditions under the DOE Smart Grid
grant program; a need to raise additional equity to fund Beacon's
projects and our other operations in uncertain financial markets;
conditions in target markets, such as that some ISOs are taking
longer than others to comply with FERC's requirement to update
market rules to include new technology such as ours, and also such
as that frequency regulation pricing is lower in the short-term
than at many times in the past; our ability to obtain site
interconnection approvals, landlord approvals, or other zoning and
construction approvals in a timely manner; limited experience
manufacturing commercial products or supplying frequency regulation
services on a commercial basis; limited commercial contracts for
revenues to date; the dependence of revenues on the achievement of
product optimization, manufacturing and commercialization
milestones; dependence on third-party suppliers; intense
competition from companies with greater financial resources,
especially from companies that are already in the frequency
regulation market; possible government regulation that would impede
the ability to market products or services or affect market size;
possible product liability claims and the negative publicity which
could result; any failure to protect intellectual property;
retaining key executives and the possible need in the future to
hire and retain key executives; the historical volatility of our
stock price, as well as the volatility of the stock price of other
companies in the energy sector, especially in view of current
conditions in the financial markets generally. These factors are
elaborated upon and other factors may be disclosed from time to
time in Beacon Power filings with the Securities and Exchange
Commission. Beacon Power expressly does not undertake any duty to
update forward-looking statements.
|
|
BEACON POWER
CORPORATION AND SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
|
|
|
March 31, |
December 31, |
|
2011 |
2010 |
|
(Unaudited) |
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$5,445,335 |
$10,865,760 |
Accounts receivable, trade |
459,816 |
279,376 |
Unbilled costs on government
contracts |
120,074 |
66,725 |
Prepaid expenses and other current
assets |
618,678 |
725,862 |
Total current assets |
6,643,903 |
11,937,723 |
|
|
|
Property and equipment, net |
64,989,601 |
56,192,205 |
Restricted cash |
3,350,575 |
3,228,933 |
Deferred financing costs |
3,378,881 |
3,496,120 |
Advance payments to suppliers |
255,366 |
851,984 |
Other Assets |
243,474 |
230,270 |
Total assets |
$78,861,800 |
$75,937,235 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$5,517,262 |
$6,172,210 |
Accrued compensation and benefits |
1,562,884 |
1,205,071 |
Other accrued expenses |
2,906,453 |
4,260,769 |
Advance billings on contracts |
7,272 |
26,409 |
Accrued contract loss |
996,326 |
1,045,545 |
Deferred rent |
170,746 |
164,308 |
Current portion of long term debt |
674,533 |
661,215 |
Mandatorily redeemable convertible
preferred stock |
283,964 |
2,900,170 |
Preferred stock warrant liability -
current |
710,537 |
1,009,388 |
Common stock warrant liability |
3,801,115 |
3,242,600 |
Total current liabilities |
16,631,092 |
20,687,685 |
Long term liabilities: |
|
|
Deferred rent - long term |
536,305 |
582,210 |
Long term debt, net of discount |
31,413,225 |
25,169,568 |
Preferred stock warrant liability |
-- |
864,012 |
Total long term liabilities |
31,949,530 |
26,615,790 |
Stockholders' equity: |
|
|
Common stock |
255,453 |
209,675 |
Additional paid-in-capital |
271,098,261 |
257,772,383 |
Deficit accumulated during the
development stage |
(240,359,697) |
(228,635,459) |
Less: treasury stock, at cost |
(712,839) |
(712,839) |
Total stockholders' equity |
30,281,178 |
28,633,760 |
|
|
|
Total liabilities and stockholders'
equity |
$78,861,800 |
$75,937,235 |
|
|
|
BEACON POWER
CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited) |
|
|
|
|
Three months ended March
31, |
|
2011 |
2010 |
|
|
|
Revenue |
$ 445,552 |
$ 235,480 |
Cost of goods sold |
305,796 |
183,093 |
Gross profit |
139,756 |
52,387 |
Operating expenses: |
|
|
Operations and maintenance |
623,691 |
966,982 |
Research and development |
1,229,931 |
2,072,437 |
Selling, general and
administrative |
2,432,540 |
1,945,535 |
Depreciation and
amortization |
785,971 |
529,837 |
Total operating expenses |
5,072,133 |
5,514,791 |
Loss from operations |
(4,932,377) |
(5,462,404) |
Interest and other income (expense), net |
(289,276) |
(77,502) |
Loss on extinguishment of debt |
(6,502,585) |
-- |
Net loss |
$ (11,724,238) |
$ (5,539,906) |
|
|
|
Loss per share, basic and diluted |
$ (0.49) |
$ (0.32) |
Weighted-average common shares
outstanding |
24,064,795 |
17,552,729 |
CONTACT: Chris Witty
Darrow Associates
646.438.9385
cwitty@darrowir.com
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