TIDMPFLM
RNS Number : 8909I
PowerFilm, Inc
30 March 2015
PowerFilm, Inc.
PowerFilm Announces Results for the Year Ended 31 December
2014
30 March 2015, LONDON, UK and AMES, IOWA - PowerFilm, Inc. (AIM:
PFLM) ('the Company' or 'PowerFilm'), the developer and
manufacturer of thin flexible solar panels, today announces its
results for the year ended 31 December 2014.
Highlights for the Full Year 2014
-- Revenue of $7.5 million for the year ended 31 December 2014 (2013: $8.2 million).
-- Net Loss after tax of $2.2 million for the year ended 31 December 2014 (2013: $2.8 million).
-- As at 31 December 2014, the Company had $12.2 million in cash
and cash equivalents, certificates of deposit, and investment
securities (2013: $12.3 million).
-- Gross margin for the year ended 31 December 2014 was 7.7%
(2013: 10.6%). This was driven largely by lower product sales
volume and a relatively fixed cost base.
-- Development contract revenue was higher at $1.9 million in
2014 versus $1.3 million the prior year. Progress continues on two
contracts with the U.S. military.
Frank Jeffrey, Co-Founder and CEO of PowerFilm, commented, "In
2014 we held steady in a number of key markets where we have built
a good product reputation over several years. The level of the oil
price drop was unexpected and eliminated our sales to the oil and
gas exploration market, hurting our overall financial results.
Military sales have not recovered as quickly as we would have
wished but, in the interim, we have redesigned and are in advanced
testing of improved versions of our major military product which
should put us in a good position as the spending resumes."
For further information, please contact:
PowerFilm, Inc. +1 (515) 292 7606
Frank Jeffrey
Mike Coon
Stifel Nicolaus Europe Limited, Nominated Adviser +44 20 7710 7600
Giles Balleny
A copy of the Full Report and Accounts 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.
Chairman and CEO's Statement
The changes impacting some of PowerFilm's key markets, and the
solar market in general, over the past three years have been
extremely challenging.
-- Defense spending has been limited since early 2013 due to the
Budget Control Act of 2011 (i.e., Sequestration) delaying full
scale implementation of products developed for the Army -- The
price of oil dropped 50 percent during the second half of 2014
causing severe cutbacks in exploration and stopped our shipments to
this important market -- The commoditization of glass-backed solar
panels driven by aggressive capacity buildup within Asia resulted
in prices dropping significantly.
Amid these developments, it would be perhaps quite natural to
become discouraged. While we certainly cannot impact the price of
oil or Congress' ability to work together on a budget, we are
taking care of those things under our control and proactively
planning for growth with some exciting new products in a wider
range of markets.
Specifically, we've:
-- Reduced expenses by 27% over the past two years while
retaining the core of our talented workforce
-- Closely monitored cash so that we can continue to "buy time"
as we wait for key markets to turn around and develop new ones
-- Supported a strong uptick in customer inquiries for our
engineering support of potential new products that truly value our
unique advantages (light weight and durability), and have been able
to successfully charge for these services
-- Made significant progress against our strategy of "moving up
the value chain" to supply total power systems
Although it hasn't always been pleasant, we're convinced that
the challenges of the past three years have forced us to become a
leaner company with a more diversified customer base. Focusing on
the things we can control leaves us optimistic that PowerFilm's
best days are yet to come.
Rick Brimeyer
Chairman
Frank R. Jeffrey
CEO
Operational Review
Competitive Landscape and Position
The solar market in 2014 remained clearly segmented. The
significant majority is for large utility scale projects, as well
as residential and commercial buildings. In those markets, products
are a commodity and the basis of competition is nearly exclusively
on low price. Asia-based manufacturers dominate this segment.
A niche segment is for custom solar panels. PowerFilm continues
to believe that its positioning as a developer, manufacturer, and
supplier of high-quality solar panels custom engineered to solve
customer power problems is a sustainable differentiated proposition
in the market.
Sales and Marketing
PowerFilm develops, manufactures, markets, and sells a full and
diversified line of solar products for the military, custom OEM,
and select consumer markets. The Company sells both modules to
other businesses, as well as finished solar products ready
out-of-the-box for end-users.
2014 sales revenue fell short of the Company's goals. PowerFilm
did maintain its strong presence in the Military, Custom OEM
(excluding Oil and Gas Exploration), and Consumer markets, and
continued to develop and release improved products to strengthen
the Company's market position going forward.
Custom Engineering
PowerFilm custom engineers products 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.
In addition to our capability of customizing OEM solar panels,
we also engineer total power systems which is a growing area of
emphasis for the Company. This is an area where PowerFilm has a
competitive edge versus other companies, especially those solar
companies with generic commodity products.
Military and Government
PowerFilm has been developing ruggedized lightweight "Made in
USA" solar products for the military for more than a decade.
Due to PowerFilm's ability to provide durable lightweight solar
panels, custom engineered and tested for the battlefield
environment, the military market continued to be a key business
area for PowerFilm in 2014.
The Company has a longstanding research, development, and supply
relationship with the U.S. Army. That highly valued relationship
continues. In addition, PowerFilm has expanded its Department of
Defense presence with the award of an important United States
Marine Corps research and development contract with the purpose of
providing the Marines with a man-portable advanced expeditionary
solar system capable of 280 plus watts.
Continuing its Amorphous Silicon success in the Army dismounted
capability area, PowerFilm added Gallium Arsenide to its technology
suite and began providing this low bandgap solar material in the
man-portable foldable panel footprint in 2014.
PowerFilm also made major gains in the military basing arena
with its next generation family of PowerShades solar tent
structures. These new 1.8kW, 3.6kW, and 5.4kW solar shades have
potential for sales in 2015 to the U.S. Army and U.S. Air
Force.
With even lighter solar panels in higher wattage panel
offerings, PowerFilm continues to be a leading solar panel of
choice for the conventional military, special operations command,
and defense industrial community in meeting their tactical and
operational remote power needs.
PowerFilm Brand Foldable and Rollable Solar Chargers
PowerFilm offers a full line of ready-to-use USB+AA solar
chargers, as well as foldable solar chargers and rollable solar
chargers that can be used to recharge and power consumer
electronics and other devices. These products are commercially
available through select distributors and are available on
Amazon.
Original Equipment Manufacturer (OEM) Custom Panels
The Company engineers and supplies custom solar panels optimized
to meet the specific power needs of diverse OEM customers in a wide
array of applications.
The core OEM products are available in a variety of voltage and
current configurations and form factors. The core solar panels are
encapsulated in different materials depending upon the application
need. The encapsulated solar panels are bonded to and integrated
with a broad range of materials and power systems. PowerFilm's
ability to custom engineer integrated products and total power
solutions is a strong source of competitive advantage in the
industry. Each prospective custom product inquiry is evaluated for
market and technical viability, volume, margin, and total value to
the Company.
In 2014 sales of solar panels to the oil and gas exploration
market failed to materialize as oil and gas exploration came to a
sudden halt with the dramatic drop in oil prices.
The Company continues to supply custom solar panels to a broad
range of OEM customers at various stages of product development,
product launch, and growing sales volume. Some applications have
significant volume potential yet it is premature to indicate
specific volume projections given the current wide range of
potential outcomes.
Research and Development
In 2014 PowerFilm research and development included a
development program for Gallium Arsenide solar panels in
combination with Amorphous Silicon solar panels.
Share Buyback
As was previously announced, PowerFilm, Inc. acquired 96,065
common shares in the Company at an average share price of US$.12
per share. Following this acquisition, these shares are being held
in Treasury. The PowerFilm, Inc. Board of Directors approved the
share repurchase based on the view of the management of the Company
that the current trading prices of the shares of the Company (on
the LSE AIM) were substantially below their inherent value.
PowerFilm and PowerShade are trademarks of PowerFilm, Inc.
Financial Review
Financial Results
Revenue of $7,472,722 was realized for the year ended 31
December 2014, compared with $8,226,199 for the year ended 31
December 2013; a 9.2% decrease. The decrease in 2014 over 2013 was
attributable to a $1,409,304 (20.2%) decrease in product sales.
There was a $655,827 (51.8%) increase in development contract
revenue.
Gross Margin for the year ended 31 December 2014 was 7.7%,
compared with 10.6% for the year ended 31 December 2013. The net
loss was $(2,217,927) for the year ended 31 December 2014, compared
with a net loss of $(2,838,625) for the year ended 31 December
2013. Continued cost containment measures were enacted which
reduced SG&A expenses and R&D expenses in 2014 by $227,145
compared to 2013. Cost of revenues only decreased by $455,539, even
though revenues were lower, due to fixed costs of production.
The Company's balance sheet remains strong as at 31 December
2014 it includes cash and cash equivalents of $3,659,271,
short-term certificates of deposit of $5,298,403, long-term
certificates of deposit of $2,219,363, and securities
held-to-maturity of $1,000,000. These accounts total $12,177,037 at
31 December 2014, compared to a total of $12,280,509 at 31 December
2013. The securities held-to-maturity consists entirely of one
United States Government agency-backed debt securities. The bank
that issued the letter of credit on the industrial revenue includes
a covenant requiring the Company to maintain $3.5 million in liquid
unrestricted assets.
The Company had an increase in 2014 of development contracts in
place which led to a decreased amount of internally funded research
and development. Internal research and development for 2014 was
$947,748, compared to $1,049,520 for 2013. Selling, general and
administrative expenses were $1,720,151 in 2014, compared to
$1,845,524 for 2013 reflecting cost reductions achieved during the
year.
Interest and dividend income for the year ended 31 December 2014
was $73,417, compared to $101,146 for the previous year. The
Company's policy is to place its cash and certificates of deposit
with high credit quality financial institutions in order to limit
the amount of credit exposure. Although globally interest rates
still are at a very low level, the Company seeks investments in
higher yielding certificates of deposit and U.S. agency-backed debt
securities held-to-maturity to get the maximum yields for highly
secure investments.
Related Party Transactions
As was disclosed at the time of the initial public offering in
the AIM Admission document, PowerFilm's Co-Founder and CEO Frank
Jeffrey, a related party, leases his industrial building to
PowerFilm, Inc. The 2014 annual lease amount was $90,000. The lease
currently extends to December 31, 2016, with a renewal option.
Richard Brimeyer, non-executive director, received 2014
compensation as an independent consultant in the amount of $1,350
in addition to his director's compensation as listed below.
2014 Board of Directors Remuneration
The 2014 remuneration for the PowerFilm, Inc. Board of Directors
is presented in the table below.
Director Name 2014 Compensation in USD
Richard Brimeyer $ 18,000.00
Derrick Grimmer $ 18,000.00
David Lindop $ 18,000.00
Frank Jeffrey * $ 110,777.31
* Frank Jeffrey received no board compensation beyond his
compensation of $110,777.31 as CEO.
Shown below are the Company's employee costs.
2014 2013
-------------------------------------------- --- ---------- ----------
Total Wages and Salaries $ 2,908,544 $ 3,260,724
Total Health Insurance Expense $ 251,990 $ 386,484
Average monthly number of employees during
the year 63 72
Accounts Audited
The financial information in this announcement is from the
Company's audited accounts for the years ended 31 December 2014 and
2013. The Company's complete financial statements and footnotes
will be included in the Company's annual report and will be posted
on PowerFilm's website, www.powerfilmsolar.com. A hard copy will be
sent to shareholders, with additional copies available upon
request.
The information presented herein has been prepared on the basis
of current accounting principles generally accepted in the United
States of America (US GAAP).
Financial Statements
PowerFilm, Inc. and Subsidiary
Consolidated Statements of Operations
Years Ended December 31, 2014 and 2013
12 Months Ended 12 Months Ended
31-Dec-14 31-Dec-13
--------------------------------------------------------- ------------------------ -------------------------
Operating revenues:
Sales $ 5,550,911 $ 6,960,215
Development contracts 1,921,811 1,265,984
------------------------ -------------------------
7,472,722 8,226,199
Cost of revenues 6,898,785 7,354,324
------------------------ -------------------------
Gross profit 573,937 871,875
------------------------ -------------------------
Operating expenses:
Research and development 947,748 1,049,520
Selling, general and administrative 1,720,151 1,845,524
------------------------ -------------------------
2,667,899 2,895,044
------------------------ -------------------------
Operating (loss) (2,093,962) (2,023,169)
------------------------ -------------------------
Other income (expense):
Interest and dividend income 73,417 101,146
Interest (expense) (166,706) (194,382)
Other income (expense) (10,676) 4,780
------------------------ -------------------------
(103,965) (88,456)
------------------------ -------------------------
(Loss) before income tax expense (2,197,927) (2,111,625)
Income tax expense 20,000 727,000
------------------------ -------------------------
Net (loss) $ (2,217,927) $ (2,838,625)
======================== =========================
Basic and diluted (loss) per share $ (0.06) $ (0.08)
======================== =========================
PowerFilm, Inc. and Subsidiary
Consolidated Statements of Comprehensive
(Loss)
Years Ended December 31, 2014 and 2013
12 Months Ended 12 Months Ended
31-Dec-14 31-Dec-13
--------------------------------------------------------- ------------------------ -------------------------
Net (loss) $ (2,217,927) $ (2,838,625)
Other comprehensive income (expense),
unrealized derivative gain (loss), net
of tax (58,042) 183,251
Comprehensive (loss) $ (2,275,969) $ (2,655,374)
PowerFilm, Inc. and Subsidiary
Consolidated Balance Sheets
December 31, 2014 and 2013
31-Dec-14 31-Dec-13
--------------------------------------------------------- ------------------------ -------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,659,271 $ 4,190,373
Short-term certificates of deposit 5,298,403 5,336,013
Accounts receivable, less allowance
for doubtful accounts
2014 $13,545; 2013 $26,915 1,346,018 2,125,819
Inventories 3,214,859 3,426,339
Prepaid expenses and other assets 157,430 134,445
Income tax receivable 5,000 8,000
------------------------ ---------------------
Total current assets 13,680,981 15,220,989
------------------------ ---------------------
LONG-TERM CERTIFICATES OF DEPOSIT 2,219,363 1,754,123
------------------------ ---------------------
SECURITIES HELD-TO- MATURITY 1,000,000 1,000,000
------------------------ ---------------------
PROPERTY AND EQUIPMENT
Land 972,432 972,432
Building and improvements 5,059,825 5,059,825
Machinery and equipment 12,433,888 12,305,034
Leasehold improvements 272,276 272,276
Construction in progress 3,309,060 3,404,293
------------------------ ---------------------
22,047,481 22,013,860
Less accumulated depreciation (8,423,766) (7,216,357)
------------------------ ---------------------
13,623,715 14,797,503
------------------------ ---------------------
OTHER ASSETS 122,478 130,482
------------------------ ---------------------
$ 30,646,537 $ 32,903,097
======================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 250,000 $ 250,000
Trade accounts payable 185,467 101,692
Other payables and accrued expenses 463,040 353,436
Total current liabilities 898,507 705,128
------------------------ ---------------------
LONG-TERM LIABILITIES
Revenue bonds payable, less current
maturities 3,125,000 3,375,000
Derivative financial instrument, interest
rate swap 487,658 429,616
------------------------ ---------------------
Total long-term liabilities 3,612,658 3,804,616
------------------------ ---------------------
STOCKHOLDERS' EQUITY
Common stock 381,687 381,639
Additional paid-in capital 32,744,770 32,718,910
Retained earnings (deficit) (6,172,622) (3,954,695)
Treasury stock, at cost (476,220) (468,300)
Accumulated other comprehensive (loss) (342,243) (284,201)
------------------------ ---------------------
Total stockholders' equity 26,135,372 28,393,353
------------------------ ---------------------
$ 30,646,537 $ 32,903,097
======================== =====================
PowerFilm, Inc. and Subsidiary
Consolidated Statements of Cash Flows
Years Ended December 31, 2014 and 2013
12 Months Ended 12 Months Ended
31-Dec-14 31-Dec-13
--------------------------------------------------------- ------------------------ ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $ (2,217,927) $ (2,838,625)
Adjustments to reconcile net (loss)
to net cash provided by
operating activities:
Depreciation and amortization 1,536,963 1,331,733
Provision for doubtful accounts (10,971) (14,652)
Loss on disposal of equipment 46,300 -
Deferred income taxes 25,000 735,000
Stock-based compensation expense 4,387 7,292
Changes in working capital components:
Accounts receivable 790,772 392,775
Inventories 211,480 388,144
Prepaid expenses and other assets (22,985) 231,297
Income tax receivable 3,000 33,087
Trade accounts payable 83,775 27,023
Other payables and accrued expenses 109,604 (263,398)
Net cash provided by operating
activities 559,398 29,676
------------------------ ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (400,271) (311,960)
Purchase of certificates of deposit (5,763,643) (7,000,000)
Proceeds from maturities of certificates
of deposits 5,336,013 7,000,000
Redemption of certificates of deposit - 234,286
Decrease in restricted cash - 1,093,159
(Increase) in other assets (1,200) (5,428)
------------------------ ---------------------
Net cash provided by (used in)
investing
activities (829,101) 1,010,057
------------------------ ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (250,000) (250,000)
Repurchase of common stock (12,179) (14,703)
Proceeds from issuance of common stock,
net 780 1,000
------------------------ ---------------------
Net cash (used in) financing activities (261,399) (263,703)
------------------------ ---------------------
Net increase (decrease) in cash
and
cash
equivalents (531,102) 776,030
CASH AND CASH EQUIVALENTS
Beginning 4,190,373 3,414,343
Ending $ 3,659,271 $ 4,190,373
======================== =====================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments (receipts) for:
Interest, net of capitalized $ 201,059 $ 210,373
============= ===========
Income taxes $ (8,000) $ (41,000)
============= ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Gain (loss) on interest rate swap agreement $ (58,042) $ 183,251
============= ===========
Restricted shares awarded from treasury shares,
net of forfeitures $ 4,259 $ 777
============= ===========
Outlook
The outlook for 2015 is for growing our product sales volume in
the military market on the back of new products developed over the
past couple years. Several geopolitical areas of instability could
result in increased demand for our products also by NATO and other
allies.
In addition, the general improvement in the US economy is
expected to result in additional sales to the custom OEM and
consumer markets. The strong US dollar could negatively impact
international sales.
We do not anticipate a return of the oil and gas exploration
market during the coming year.
Our balance sheet remains strong, with limited debt and
sufficient cash.
PowerFilm keeps leaning forward as it outlasts competitors, and
keeps a focus on differentiated niche opportunities to provide
remote and portable power.
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 US 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.
Notes on PowerFilm Technology
The thorough technology evaluation and choices that PowerFilm
made in the early days of the Company are withstanding the test of
time. PowerFilm's technology choices-highlighted in the table
below-enable both differentiated low-cost mass customization of
products and low-cost industrial scale manufacturing.
Criteria PowerFilm Selection
--------------------------- -------------------------- -------------------------------
Core Manufacturing Industrial scale low-cost Roll-to-Roll Manufacturing
Process manufacturing process (not batch processing)
--------------------------- -------------------------- -------------------------------
Semiconductor Absorber Abundant supply Amorphous Silicon
Layer (After extensive evaluation,
Positive environmental PowerFilm eliminated
profile the Copper Indium Gallium
Selenide (CIGS) semiconductor
absorber layer option
out of concerns regarding
the economic viability
of CIGS technology at
industrial scale, given
the limited world supply
of Indium and competition
for that supply from
the flat panel display
industry. The materials
costs for CIGS solar
panels are currently
high and potentially
going to become extremely
high cost. CIGS has
some manufacturing wastes
that are negative from
an environmental standpoint.
--------------------------- -------------------------- -------------------------------
Cell Connection Technology Low cost and durable Printed Interconnect
cell connection process
--------------------------- -------------------------- -------------------------------
Substrate To work with printed Flexible Plastic Substrate
interconnect and to
be lightweight and
flexible
--------------------------- -------------------------- -------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFFSVRIIVIE
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