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 second quarter and six months ended June 30, 2011.
Recent Company Highlights
- Achieved full 20 MW capacity at the Company's Stephentown, New
York, plant in June 2011.
- Increased revenue by 216%, from $166,000 in the second quarter
of 2010 to $525,000 in the second quarter of 2011. For the six
months ended June 30, 2011, revenue increased by $569,000, or 142%,
compared to the first six months of 2010.
- Entered into a collaboration and development agreement with a
subsidiary of the Gaelectric Group of Ireland, a significant wind
developer worldwide.
Summary of Financial Results
For the second quarter of 2011, Beacon Power reported revenue of
$525,000, as compared to revenue of $166,000 for the same quarter
in 2010, an increase of 216%. Average gross margin on frequency
regulation services during the second quarter of 2011 was 56%,
compared to 23% 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 $6.2
million in the second quarter of 2011, as compared to $5.5 million
in the second quarter of 2010. In the second quarter of 2011,
Beacon recognized non-cash interest income of $2.0 million related
to preferred stock and associated warrants, which was partially
offset by a non-cash charge of $0.9 million related to the
extinguishment of debt. Beacon's net loss for the quarter was $5.3
million, or $(0.18) per share. This compares to a net loss of $5.6
million, or $(0.29) per share, in the second quarter of 2010.
For the six months ending June 30, 2011, Beacon Power reported
revenue $970,000, as compared to revenue of $401,000, for the same
period in 2010, an increase of 142%. Net loss from operations was
$11.1 million for the six months ending June 30, 2011, as compared
to a net loss from operations of $11.0 million in the same period
of 2010. During the first half of 2011, Beacon recorded a
non-cash charge of $7.4 million related to the extinguishment of
debt, which was partially offset by $2.5 million in non-cash
interest income related to preferred stock and associated warrants.
Beacon's net loss for the six months ended June 30, 2011, was $17.0
million, or $(0.67) per share, compared to $11.0 million, or
$(0.61) per share, in 2010.
Revenue and Gross Margin
Revenue increased by $359,000, or 216%, in the second quarter of
2011 as compared to 2010. Frequency regulation revenue was $310,000
and $124,000 in the second quarters of 2011 and 2010, respectively,
representing an increase of $186,000, or 150%. Revenue for
the six months ended June 30, 2011, increased $569,000, or 142%, as
compared to 2010. Frequency regulation revenue was $578,000
and $267,000 in 2011 and 2010, respectively, representing an
increase of $311,000, or 116%.
The Company began to earn revenue in January 2011 from 8 MW of
flywheel energy storage at the Stephentown plant. During the
first and second quarters of 2011, Beacon continued to integrate
and energize additional capacity. On June 21, 2011, the
Company announced that the plant had reached its full 20 MW
capacity.
Revenue from frequency regulation from the ISO-NE pilot program
was lower during the first half of 2011 than during the same period
in 2010, as the Company moved two of the three megawatts of
capacity to Stephentown, New York, during the third quarter of
2010. In late April 2011, Beacon temporarily discontinued its
participation in the ISO-NE pilot program in order to prepare the
remaining 1 MW of capacity for shipment to NorthWestern Energy in
Montana.
Contract revenue of $195,000 and $359,000 during the second
quarter and first half of 2011, respectively, was earned primarily
from the ARPA-E contract, whereas contract revenue of $31,000 and
$110,000 during the second quarter and first half of 2010,
respectively, related primarily to the Tehachapi contract and the
Pacific Northwest National Laboratory contract, which was completed
in 2010. The Tehachapi contract was completed as of June 30,
2011.
Beacon's average gross margin on frequency regulation services
during the second quarter of 2011 was 56%, compared to 23% during
the same period in 2010. For the six months ended June 30, 2011,
gross margin on frequency regulation services was 52% compared to
25% 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.
Operating Expenses
For the three and six months ended June 30, 2011, operations and
maintenance expenses increased by $364,000, or 44%, and $21,000, or
1%, respectively, compared to the same periods in 2010. The
increase was due primarily to higher equipment repair costs,
partially offset by higher absorption of overhead related to the
construction of the Stephentown plant and lower material costs.
Research and development expenses for the three- and
six-month periods ended June 30, 2011, decreased by $486,000, or
26%, and $1,330,000, or 34%, respectively, from the same periods in
2010. The decrease was due primarily to lower spending for R&D
material along with an increase in overhead absorption. Selling,
general and administrative expenses increased by $486,000, or 20%,
and $973,000, or 22%, respectively, for the second quarter and
first half of 2011 compared to the equivalent periods in 2010. This
increase was primarily related to expanded marketing efforts,
commissions related to preferred stock warrant exercises, and legal
and professional fees. Total operating expenses for the three and
six months ended June 30, 2011, were $6.4 million and $11.5
million, respectively, compared to $5.5 million and $11.1 million,
respectively, for the same periods in 2010.
Cash and Liquidity
As of June 30, 2011, the Company had $5.4 million in cash
and cash equivalents as compared to $10.9 million at December 31,
2010. Working capital as of June 30, 2011, was ($3.4) million.
In addition to the cash on hand, Beacon had approximately $3.2
million of restricted cash as of June 30, 2011. Working capital was
negative in part due to the accounting treatment required for the
preferred stock 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 $2.7 million as of June 30, 2011,
to be settled in stock rather than cash.
Conference Call Details
The Company will host a conference call today, August 9, 2011,
at 11:00 a.m. Eastern Time. During the call, management will review
the Company's operations and results, followed by a question and
answer session. Beacon Power invites all those interested to join
the call by dialing (708) 290-1368 and entering participant access
code 85801344 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 (404)
537-3406 and entering access code 85801344 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 fast-response, 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 |
|
|
June 30, |
December 31, |
|
2011 |
2010 |
|
(unaudited) |
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 5,376,784 |
$ 10,865,760 |
Accounts receivable, trade |
690,043 |
279,376 |
Unbilled costs on government
contracts |
110,950 |
66,725 |
Prepaid expenses and other current
assets |
588,997 |
725,862 |
Total current assets |
6,766,774 |
11,937,723 |
|
|
|
Property and equipment, net |
66,528,904 |
56,192,205 |
Restricted cash |
3,202,856 |
3,228,933 |
Deferred financing costs |
3,407,866 |
3,496,120 |
Advance payments to suppliers |
478,828 |
851,984 |
Other Assets |
268,256 |
230,270 |
Total assets |
$ 80,653,484 |
$ 75,937,235 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 2,185,150 |
$ 6,172,210 |
Accrued compensation and benefits |
1,430,920 |
1,205,071 |
Other accrued expenses |
2,089,783 |
4,260,769 |
Advance billings on contracts |
3,572 |
26,409 |
Accrued contract loss |
940,508 |
1,045,545 |
Deferred rent |
177,183 |
164,308 |
Current portion of long term debt |
688,410 |
661,215 |
Mandatorily redeemable convertible
preferred stock |
529,545 |
2,900,170 |
Preferred stock warrant liability -
current |
-- |
1,009,388 |
Common stock warrant liability |
2,132,760 |
3,242,600 |
Total current liabilities |
10,177,831 |
20,687,685 |
Long term liabilities: |
|
|
Deferred rent - long term |
490,399 |
582,210 |
Long term debt, net of unamortized
discount |
40,973,168 |
25,169,568 |
Preferred stock warrant liability -
long-term |
-- |
864,012 |
Total long term liabilities |
41,463,567 |
26,615,790 |
Stockholders' equity: |
|
|
Common stock |
281,073 |
209,675 |
Additional paid-in-capital |
275,097,762 |
257,772,383 |
Accumulated deficit |
(245,653,910) |
(228,635,459) |
Less: treasury stock, at cost |
(712,839) |
(712,839) |
Total stockholders' equity |
29,012,086 |
28,633,760 |
|
|
|
Total liabilities and stockholders'
equity |
$ 80,653,484 |
$ 75,937,235 |
|
|
BEACON POWER
CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited) |
|
|
Three months ended June
30, |
Six months ended June
30, |
|
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
Revenue |
$ 524,577 |
$ 165,540 |
$ 970,129 |
$ 401,020 |
Cost of goods sold |
325,294 |
72,048 |
631,091 |
255,141 |
Gross profit |
199,283 |
93,492 |
339,038 |
145,879 |
Operating expenses: |
|
|
|
|
Operations and maintenance |
1,186,942 |
823,184 |
1,810,632 |
1,790,166 |
Research and development |
1,402,500 |
1,889,331 |
2,632,432 |
3,961,768 |
Selling, general and administrative |
2,915,922 |
2,430,113 |
5,348,462 |
4,375,648 |
Loss on contract commitments |
-- |
(99,650) |
-- |
(99,650) |
Depreciation and amortization |
903,043 |
545,642 |
1,689,014 |
1,075,478 |
Total operating expenses |
6,408,407 |
5,588,620 |
11,480,540 |
11,103,410 |
|
|
|
|
|
Loss from operations |
(6,209,124) |
(5,495,128) |
(11,141,502) |
(10,957,531) |
Interest and other income (expense), net |
1,791,792 |
(55,941) |
1,502,516 |
(133,444) |
Loss on extinguishment of debt |
(876,880) |
-- |
(7,379,465) |
-- |
Net loss |
$ (5,294,212) |
$ (5,551,069) |
$(17,018,451) |
$(11,090,975) |
|
|
|
|
|
Loss per share, basic and diluted |
$ (0.18) |
$ (0.29) |
$ (0.67) |
$ (0.61) |
Weighted-average common shares
outstanding |
26,441,665 |
18,531,901 |
25,259,796 |
18,045,020 |
CONTACT: Chris Witty
Darrow Associates
646.438.9385
cwitty@darrowir.com
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