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20.09.2017 22:23:00
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EnSync Energy Reports Fiscal Year 2017 Results
MILWAUKEE, Sept. 20, 2017 /PRNewswire/ -- EnSync, Inc. (NYSE American: ESNC), dba EnSync Energy Systems, a leading developer of innovative distributed energy resources (DERs), today announced results for the fiscal year 2017, ended June 30, 2017.
Recent Highlights
- Fiscal 2017 revenues of $12.5 million increased by 6 times that of fiscal 2016 revenues of $2.1 million;
- In fiscal year 2017, EnSync Energy sold 12 power purchase agreements (PPAs) across both commercial and industrial (C&I), as well as residential, applications including Spectrum (formerly Time Warner), University of the Nations, Easter Seals, and the Villages of Kapolei;
- Introduced DER Flex™, EnSync Energy's proprietary technology that enables aggregation and monetization of distributed energy resources, such as solar and energy storage, in utility and ISO markets;
- Non-PPA deployments of the Matrix Energy Management platform and DER Flex Internet of Energy software occurred with key customers, including Schneider Electric, ENMAX, a major utility in Calgary, Alberta, the Chemehuevi Native American tribe's community center in San Bernardino County, and the Alliance for Sustainable Colorado in Denver;
- Signed collaboration agreement with Schneider Electric to explore distributed energy resource technology and market opportunities;
- Announced an expanded focus on the utility market segment through the creation of a utility market vertical in the company;
- Designed and managed the Smart Energy Microgrid Marketplace on-site microgrid demonstration system at Solar Power International (SPI), one of North America's biggest solar trade conferences;
- Initial deployment of the EnSync Energy SuperModule™, 20-foot containers that can quickly be placed and connected at the site, containing both power controls and energy storage;
- Acquired DCfusion, a direct-current (DC) system consulting, engineering and policy expertise firm which strategically aligns with EnSync Energy's technologies and target markets;
- The Company's backlog as of today totals approximately $13.0 million in estimated value at time of sale, up 125% from the Q4 2016 earnings call; and
- Cash balance at the end of June 2017 was $11.8 million.
Management Discussion
"Our commercialization strategy of selling custom designed distributed energy resource systems or DERs, is fundamentally solid. We have outstanding project development and sales capabilities, innovative and differentiated products like the Matrix Energy Management System and DER Flex, our Internet of Energy platform, and an assortment of storage alternatives that meet virtually any combination of applications you would ever need to perform," commented Brad Hansen, President and Chief Executive Officer of EnSync Energy Systems. "We continue to see an expanding market for our DER systems for commercial and industrial, and microgrid installations, whether financed, owned and operated through power purchase agreements, or directly sold to an end customer. We are pleased with the progress made in such a short period of time, including an expanding pipeline in both Hawaii and California, collaborations in place with industry leaders such as Schneider Electric, and the launch of products to address the utility market. We look forward to continued growth in fiscal 2018 and beyond."
Mr. Hansen continued, "The expansion and success of our business model during fiscal 2017 helped drive a six time increase in revenues, as we successfully sold 12 PPA projects that we had developed in Hawaii. These projects included key collaborations with Spectrum (formerly Time Warner), University of Nations, Easter Seals, and Villages of Kapolei, and supported key Hawaiian industries such as agriculture, food processing, telecommunications, hospitality, education, real estate and nonprofit. The market for our solutions continues to remain robust within Hawaii, with current backlog as of today up more than 125% from the Q4 2016 earnings call."
Mr. Hansen concluded, "Fiscal 2017 was a year of many records and accomplishments, while also positioning EnSync for continued growth into the future. In particular, we believe our collaboration with Schneider Electric to deploy systems to address the changing grid landscape through DER deployments provides an exciting opportunity to work with one of the largest companies in the industry. Additionally, we are also enthusiastic about our entry into the utility vertical. Our goal for the year is to penetrate more utilities and ISOs for asset management, utilizing our DER Flex technology, and leverage that success to other products and services in fiscal 2019 and beyond. Overall, our project pipeline is robust and with our addition of the California market and contribution from our efforts with the utility market vertical, we are well positioned to meet our growth initiatives."
Financial Results
Total revenue for the fourth quarter was $3.1 million compared to $1.3 million in the year ago period. Total revenue for the fiscal year ended June 30, 2017 was $12.5 million compared to $2.1 million in fiscal 2016. The increase in revenue this year is primarily attributable to the company's shift to a PPA-based sales model where the company successfully sold 12 PPA projects for a total of $17.2 million, 11 of which had at least partial revenue recognition during fiscal 2017 as we progressed on constructing and commissioning those projects. In addition to the PPA sales, revenue was also recognized from system sales of the Company's Matrix Energy Management System and DER Flex platform.
Total costs and expenses for the fourth quarter were $7.1 million compared to $7.0 million in the year ago period. Total costs and expenses during fiscal 2017 were $30.0 million, compared to $20.1 million for the fiscal year 2016. The cost of product sales, which includes the cost of goods sold for the revenue recognized on PPA projects as they are constructed, was $2.9 million for the quarter and $12.6 million for fiscal 2017. In the fourth quarter our gross margin on product sales revenue was 5.5%.
Advanced Engineering and Development costs decreased to $4.8 million in the fiscal 2017, compared to $6.2 million in the year ago period. Selling, General and Administrative costs totaled $11.1 million in fiscal 2017, compared to $9.0 million during fiscal 2016. The Company intends to hold at or below these levels going forward.
The Company derecognized a deferred revenue liability of $13.3 million tied to the now-terminated SPI supply agreement and recognized non-operating gain of $13.3 million pertaining to the same event.
Net loss attributable to common shareholders was $(4.4) million, or $(0.09) per basic and diluted share, for fiscal 2017, compared to $(18.2) million, or $(0.39) per basic and diluted share, in fiscal 2016.
Cash balance at June 30, 2017 was $11.8 million compared to $17.2 million at June 30, 2016.
Estimated backlog value for PPA projects, components and systems as of the date of this announcement is approximately $13.0 million.
Conference Call Information
Date: Wednesday, September 20, 2017
Time: 4:30 p.m. ET (3:30 p.m. CT)
Domestic participant dial in #: (877) 870-4263 or (412) 317-0790
Conference code #: 10112129
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.
Interested parties can also listen to a live internet webcast available in the investor section of the Company's website at www.ensync.com.
A teleconference replay of the call will be available at (877) 344-7529 or (412) 317-0088, confirmation code 10112129, through September 27, 2017. A webcast replay will be available in the investor section of the Company's website at www.ensync.com for 90 days.
About EnSync Energy Systems
EnSync, Inc. (NYSE American: ESNC), dba EnSync Energy Systems (EnSync Energy), is creating the future of electricity with innovative distributed energy resource (DER) systems and internet of energy (IOE) control platforms. EnSync Energy ensures the most cost-effective and resilient electricity, delivered from an electrical infrastructure that prioritizes the use of all available resources, such as renewables, energy storage and the utility grid. As project developer, EnSync Energy's distinctive engagement methodology encompasses load analysis, system design consulting, and technical and financial modeling to ensure energy systems are sized and optimized to meet our customers' objectives for value and performance. Proprietary direct current (DC) power control hardware, energy management software, and extensive experience with numerous energy storage technologies uniquely positions EnSync Energy to deliver fully integrated systems that provide for efficient design, procurement, commissioning, and ongoing operation. EnSync Energy's IOE control platform adapts easily to ever-changing generation and load variables, as well as changes in utility prices and programs, ensuring the means to make or save money behind-the-meter, while concurrently providing utilities the opportunity to use DERs for an array of grid enhancing services. In addition to direct system sales, EnSync Energy includes power purchase agreements (PPAs) in its portfolio of offerings, which enables electricity savings for customers and provides a stable financial yield for investors. EnSync Energy is a global corporation, with joint venture Meineng Energy in AnHui, China, and energy project development subsidiary Holu Energy LLC in Hawaii, and DCfusion LLC, a power system engineering and design, consultancy and policy firm. For more information, visit www.ensync.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the "safe harbor" created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "could," "seek," "intend," "plan," "goal," "estimate," "anticipate" or other comparable terms. All statements other than statements of historical facts included in this press release regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding project completion timelines, our ability to monetize our PPA assets, statements regarding the sufficiency of our capital resources, expected operating losses, expected revenues, expected expenses and our expectations concerning our business strategy, Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our historical and anticipated future operation losses and our ability to continue as a going concern; our ability to raise the necessary capital to fund our operations and the risk of dilution to shareholders from capital raising transactions; our ability to successfully commercialize new products, including our Matrix TM Energy Management, DER Flex TM, DER Supermodule TM, and Agile TM Hybrid Storage Systems; our ability to lower our costs and increase our margins; our product, customer and geographic concentration, and lack of revenue diversification; the length and variability of our sales cycle; our dependence on governmental mandates and the availability of rebates, tax credits and other economic incentives related to alternative energy resources and the regulatory treatment of third-party owned solar energy systems; and the other risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our most recently filed Annual Report on Form 10-K and our subsequently filed Quarterly Report(s) on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Investor Relations Contact:
Lytham Partners, LLC
Robert Blum, Joseph Diaz, or Joe Dorame
(602) 889-9700
EnSync Media Contact:
Michelle Montague
(262) 735-5676
EnSync, Inc. | |||
Consolidated Statements of Operations | |||
Year ended June 30, | |||
2017 | 2016 | ||
Revenues | |||
Product sales | $ 12,319,184 | $ 1,730,851 | |
Engineering and development | 175,000 | 369,172 | |
Total revenues | 12,494,184 | 2,100,023 | |
Costs and expenses | |||
Cost of product sales | 12,586,458 | 3,486,542 | |
Cost of engineering and development | 937,725 | 583,137 | |
Advanced engineering and development | 4,829,840 | 6,234,083 | |
Selling, general and administrative | 11,109,038 | 9,038,602 | |
Depreciation and amortization | 551,680 | 772,332 | |
Total costs and expenses | 30,014,741 | 20,114,696 | |
Loss from operations | (17,520,557) | (18,014,673) | |
Other income (expense) | |||
Equity in loss of investee company | (217,898) | (242,902) | |
Interest income | 41,661 | 46,438 | |
Interest expense | (50,474) | (51,825) | |
Other income | 15,405 | - | |
Gain on termination of SPI Supply Agreement | 13,290,000 | - | |
Total other income (expense) | 13,078,694 | (248,289) | |
Loss before benefit for income taxes | (4,441,863) | (18,262,962) | |
Benefit for income taxes | - | (468) | |
Net loss | (4,441,863) | (18,262,494) | |
Net loss attributable to noncontrolling interest | 352,327 | 386,436 | |
Net loss attributable to EnSync, Inc. | (4,089,536) | (17,876,058) | |
Preferred stock dividend | (313,286) | (291,995) | |
Net loss attributable to common shareholders | $ (4,402,822) | $ (18,168,053) | |
Net loss per share | |||
Basic and diluted | $ (0.09) | $ (0.39) | |
Weighted average shares - basic and diluted | 48,070,993 | 47,156,928 | |
EnSync, Inc. | |||
Consolidated Balance Sheets | |||
June 30, 2017 | June 30, 2016 | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 11,782,962 | $ 17,189,089 | |
Accounts receivable, net | 469,906 | 172,633 | |
Inventories, net | 2,482,013 | 1,869,942 | |
Prepaid expenses and other current assets | 239,340 | 600,591 | |
Customer intangible assets | 8,249 | 76,293 | |
Note receivable | 171,140 | 171,140 | |
Costs and estimated earnings in excess of billings | 87,318 | - | |
Deferred PPA project costs | - | 5,690,307 | |
Deferred customer project costs | 104,800 | 419,765 | |
Project assets | 114,971 | 1,190,853 | |
Total current assets | 15,460,699 | 27,380,613 | |
Long-term assets: | |||
Property, plant and equipment, net | 3,446,253 | 3,889,106 | |
Investment in investee company | 1,947,728 | 2,165,626 | |
Goodwill | 809,363 | 809,363 | |
Right of use assets-operating leases | 150,214 | 27,264 | |
Total assets | $ 21,814,257 | $ 34,271,972 | |
Liabilities and Equity | |||
Current liabilities: | |||
Current maturities of long-term debt | $ 317,497 | $ 332,707 | |
Accounts payable | 487,185 | 569,226 | |
Billings in excess of costs and estimated earnings | 456,950 | - | |
Accrued expenses | 743,948 | 501,031 | |
Customer deposits | 90,876 | 201,352 | |
Accrued compensation and benefits | 396,890 | 257,087 | |
Total current liabilities | 2,493,346 | 1,861,403 | |
Long-term liabilities: | |||
Long-term debt, net of current maturities | 740,586 | 1,057,720 | |
Deferred revenue | 422,638 | 13,290,000 | |
Other long-term liabilities | 249,920 | 25,789 | |
Total liabilities | 3,906,490 | 16,234,912 | |
Commitments and contingencies (Note 15) | |||
Equity | |||
Series B redeemable convertible preferred stock ($0.01 par value, | |||
$1,000 face value), 3,000 shares authorized and issued, 2,300 shares outstanding, preference in liquidation of$5,631,086 and $5,317,800 as of June 30, 2017 and June 30, 2016, respectively | 23 | 23 | |
Series C convertible preferred stock ($0.01 par value, $1,000 face value), 28,048shares authorized, issued, and outstanding, preference in liquidation of$12,276,682 and $12,719,260 as of June 30, 2017 and June 30, 2016, respectively | 280 | 280 | |
Common stock ($0.01 par value),300,000,000 authorized, 55,200,963 and 47,752,821 shares issued and outstanding as of June 30, 2017 and June 30, 2016, respectively | 1,260,324 | 1,185,843 | |
Additional paid-in capital | 141,822,317 | 137,585,233 | |
Accumulated deficit | (124,639,644) | (120,550,108) | |
Accumulated other comprehensive loss | (1,584,578) | (1,585,583) | |
Total EnSync, Inc. equity | 16,858,722 | 16,635,688 | |
Noncontrolling interest | 1,049,045 | 1,401,372 | |
Total equity | 17,907,767 | 18,037,060 | |
Total liabilities and equity | $ 21,814,257 | $ 34,271,972 | |
EnSync, Inc. | |||
Consolidated Statements of Cash Flows | |||
Year ended June 30, | |||
2017 | 2016 | ||
Cash flows from operating activities | |||
Net loss | $ (4,441,863) | $(18,262,494) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation of property, plant and equipment | 483,636 | 679,303 | |
Amortization of customer intangible assets | 68,044 | 93,029 | |
Stock-based compensation, net | 2,145,765 | 1,274,616 | |
Impairment of PPA project costs | - | 1,890,357 | |
Equity in loss of investee company | 217,898 | 242,902 | |
Provision for inventory reserve | 182,647 | (102,651) | |
Gain on sale of property and equipment | (1,911) | - | |
Interest accreted on note receivable | (12,000) | (12,033) | |
Gain on termination of SPI Supply Agreement | (13,290,000) | - | |
Changes in assets and liabilities | |||
Accounts receivable | (297,273) | (59,540) | |
Inventories | (794,718) | (569,174) | |
Prepaids and other current assets | 361,405 | (154,470) | |
Costs and estimated earnings in excess of billings | (87,318) | - | |
Deferred PPA project costs | 5,690,307 | (7,580,664) | |
Deferred customer project costs | 314,965 | (419,765) | |
Project assets | 1,075,882 | (1,003,631) | |
Accounts payable | (82,041) | (487,518) | |
Billings in excess of costs and estimated earnings | 456,950 | - | |
Accrued expenses | 198,147 | (749,667) | |
Customer deposits | (110,476) | (975,803) | |
Accrued compensation and benefits | 139,803 | 21,736 | |
Deferred revenue | 422,638 | 13,290,000 | |
Other long-term liabilities | 145,013 | - | |
Net cash used in operating activities | (7,214,500) | (12,885,467) | |
Cash flows from investing activities | |||
Cash paid for business combination | - | (225,829) | |
Change in restricted cash | - | 60,193 | |
Expenditures for property and equipment | (46,366) | (406,917) | |
Proceeds from sale of property and equipment | 8,432 | - | |
Payments from note receivable | 12,000 | - | |
Net cash used in investing activities | (25,934) | (572,553) | |
Cash flows from financing activities | |||
Payment of financing costs | - | (261,982) | |
Repayments of long term debt | (332,344) | (319,607) | |
Proceeds from equipment financing | - | 331,827 | |
Payments for finance leases | - | (13,521) | |
Proceeds from issuance of preferred stock | - | 13,300,000 | |
Proceeds from issuance of common stock | 2,095,840 | 6,800,000 | |
Proceeds from the exercise of stock options | 69,960 | - | |
Contributions of capital from noncontrolling interest | - | 53,614 | |
Net cash provided by financing activities | 1,833,456 | 19,890,331 | |
Effect of exchange rate changes on cash and cash equivalents | 851 | (683) | |
Net increase (decrease) in cash and cash equivalents | (5,406,127) | 6,431,628 | |
Cash and cash equivalents - beginning of year | 17,189,089 | 10,757,461 | |
Cash and cash equivalents - end of year | $11,782,962 | $ 17,189,089 | |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest | $ 51,134 | $ 47,568 | |
Supplemental noncash information: | |||
Right of use asset obtained in exchange for new operating lease | 122,950 | 41,048 | |
Asset retirement obligation | - | 18,527 | |
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SOURCE EnSync, Inc.
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