Ideal Power Inc. (NASDAQ: IPWR), a developer of innovative power conversion technologies, reported results for the third quarter ended September 30, 2016.
Key Third Quarter 2016 and Subsequent Highlights:
Received 4 Megawatt purchase order from JLM Energy to supply 30kW and 125kW power conversion systems (PCS) for JLM’s portfolio of commercial BESS and microgrid projects.
Selected to supply power conversion systems for NEC Energy Solutions’ newly launched DSS™ distributed energy storage solution.
Alliance partner Sonnen launched a commercial system offering, the sonnenBatterie pro, utilizing Ideal Power’s 30kW products.
Semiconductor foundry partner completed fabrication of prototypes of Bi-Directional Bipolar Junction TRANsistor (B-TRAN™).
Provided 30kW PCS for EVgo’s DC fast charging project that was recently named Energy Storage North America’s (ESNA) 2016 Innovation Award winner in mobility project category. Ideal Power products were featured in four of six projects named as distributed storage and mobility finalists for ESNA 2016 Innovation Awards.
Teamed up with University of Dayton Research Institute and EnerDel for mobile hybrid solar plus battery energy storage system for the U.S. Air Force Forward Operating Base of the future.SunDial™ PV String Inverter recognized as a Top 20 Energy Storage Disruptor by PV-Tech.
Order backlog of $4.5 million at September 30, 2016.Strengthened patent estate; currently have 59 issued patents, including 22 issued patents for B-TRAN™ and approximately 100 patent applications pending.”Although the July announcement of the resolution in California’s Self Generation Incentive Program (SGIP) is a clear positive for the storage market, our top line revenue was modest in the third quarter as storage projects in California were slow to commence,” said Dan Brdar, chairman and CEO. “We are encouraged by the developments in late September as California passed legislation that doubled the incentives for energy storage projects throughout California for calendar years 2017-2019, allocating an additional $187 million for energy storage projects under the SGIP, and raised the energy storage target for 2020 from 1,325 megawatts to 1,825 megawatts.”
Continued Brdar: “We are seeing renewed momentum in our business with the announcement with NEC Energy Solutions and 4 MW purchase order from JLM Energy. We also recently announced our semiconductor foundry partner successfully completed the fabrication of prototypes of our B-TRAN™. Later this year, we will begin to perform initial testing of fully packaged devices mounted on a circuit board, a key step in the potential commercialization of this technology.”
“While third quarter results fell short of our expectations, we continued to deliver progress with our commercialization strategy and penetration with large system integrators entering the commercial storage market. This progress, combined with the favorable resolution with the SGIP in California and indications that additional addressable markets in the US and abroad are now, or soon will be, opening up, positions us for growth in 2017.”
Third Quarter 2016 Financial Results
Q3 2016 product revenue totalled $0.4 million versus $0.9 million in Q3 2015.
Excluding a $0.3 million inventory charge related to the discontinuation of our legacy first generation IBC-30 battery converter, our Q3 2016 gross margins were 6.8%. Our next generation 30kW PCS, launched in the second quarter of 2015, is replacing the IBC-30 as it offers enhanced features and functionality. Including the inventory charge, our Q3 2016 gross margins were negative 68.0% compared to 5.9% gross margins in Q3 2015.
Our Q3 2016 net loss of $2.9 million was flat compared to Q3 2015. The negative impact of the Q3 2016 inventory charge was offset by a decline in operating expenses on the timing of development spending and cost management activities during the quarter.
Cash and cash equivalents totalled $6.8 million as of September 30, 2016 with no long-term debt outstanding.”Third quarter revenue was negatively impacted by the slow commencement of projects post-SGIP resolution in California,” said Tim Burns, Chief Financial Officer. “On a positive note, after backing out the one-time inventory charge in the quarter, we were still able to maintain positive gross margins on a low revenue base. Furthermore, we expect to reduce cash usage in upcoming quarters as revenue ramps and we realize the leverage and positive working capital benefits of our business model.”