MILWAUKEE, May 15, 2018 /PRNewswire/ -- EnSync, Inc.
(NYSE American: ESNC), dba EnSync Energy Systems ("EnSync Energy,"
"we," "us," "our," or the "Company"), a leading developer of
innovative distributed energy resources (DERs) and business models
for commercial, residential and utility installations, today
announced third quarter fiscal year 2018 financial results for the
period ended March 31,
2018.
Financial Highlights
- Revenue during the third quarter of fiscal 2018 increased to
$3.1 million, compared to
$0.1 million in the year ago period,
with revenue during the quarter largely being contributed by 10
power purchase agreement ("PPA") projects;
- Gross margins improved to 27.2% during the third quarter,
compared to a gross margin loss in the year ago quarter, and gross
margins of 24.2% in the immediately preceding quarter as the
Company becomes more efficient and profitable on its PPA
construction and sales efforts;
- The Company has 12 PPA projects in backlog in various stages of
execution. Estimated backlog value for PPA projects, components and
systems as of the date of this announcement is approximately
$16 million, an increase of 40.4%
compared to $11.4 million on
February 13, 2018; and
- Sold the Company's Menomonee
Falls corporate headquarters for net proceeds of
$1.7 million during the third
quarter.
Recent Business and Product Backlog Highlights
- In May 2018, EnSync Energy
announced the signing of the largest scope PPA in company history,
a 750 kW solar and 500 kWh energy storage system at the Keahumoa
Place affordable housing development, utilizing our recently
launched residential solution, the EnSync Home Energy System;
- In January 2018, the Company
announced the signing of the second largest PPA in its history, a
>790 kW solar PPA project at a Hawaii residential community;
- During the third quarter, signed and subsequently sold a PPA
project for 350 kW Phase 2 solar expansion with Hawai'i
Pacific University, making it downtown
Honolulu's largest solar
project;
- In January 2018, signed a 20-year
PPA with the Polynesian Cultural Center for a 396 kW PV and
inverter system;
- During the third quarter, completed commissioning of two Hawaii
PPA projects;
- In February 2018, sold a 20-year
PPA for the J. Walter Cameron Center project; and
- In February 2018, announced a
purchase order for a Micro-Utility system that will ship to
East Africa, the first order for
EnSync Energy on the continent.
Expansion into Residential "DER" Market with EnSync Home
Energy System
In May 2018, EnSync Energy
formally launched the company's leapfrog EnSync Home Energy System
for property developers and residential customers which will allow
for a completely integrated system with solar, energy storage,
power electronics and an Internet of Energy control platform that
delivers state-of-the-art functionality and modularity, with
industry benchmark economics, safety and system efficiency.
The EnSync Home Energy System:
- Expands upon the innovation and expertise that enabled EnSync
Energy's leadership in the commercial and industrial ("C&I")
market to solve the significant market challenges and product
shortcomings for residential properties, delivering breakthroughs
in performance, functionality, economic benefit and future-enabling
capabilities;
- Brings a phenomenal differentiator to the market with EnSync
Energy's True Peer-to-Peer™ energy exchange
technology, which enables individual residential units in a
property to be linked into a network behind the utility meter to
provide highly efficient, direct energy exchange between units;
and
- Includes high-efficiency "LFP" lithium-ion batteries, a Matrix
Energy Management system with 9 kW AC output capacity, modular
energy storage capacity of 9 kWh increments, modular DC-DC
converters for photovoltaic and energy storage and the DER
Flex™ Internet of Energy control platform, which
enables a home to access the same DER Flex™
cloud-based computing platform utilized by EnSync Energy for
connectivity between the asset owner, grid network and real-time
market data for its C&I customers.
Management Discussion
Brad Hansen, CEO of EnSync
Energy, commented, "Our commercialization strategy of selling
custom designed DER systems and distributed generation systems,
positions us in one of the largest market growth opportunities that
will exist in the next 20 years. To meet this growth
opportunity, we have expanded our product portfolio beyond our
historic commercial and industrial application to now include
utility and residential system applications. On the utility side,
through projects like the Africa Micro-Utility system we recently
announced, we have entered the independent utility systems
business, where we are effectively a proxy for a utility. For our
residential application, we recently debuted our new EnSync Home
Energy System and subsequently announced our first practical
application of what will be its game changing capability – True
Peer-to-Peer™ energy exchange -- at the Keahumoa Place
affordable property development in Oahu,
Hawaii. I am pleased with the progress we have made in
developing best-in-class product applications to meet these growth
opportunities for years to come."
"Operationally, we increased our backlog of PPA projects by 40%
to a record $16 million compared to
our last reporting period, improved our gross margins to their
highest levels yet, and signed the largest PPA in the Company's
history – for our new residential vertical. Due to the uniqueness
of accounting rules surrounding our PPA projects, we recognize
revenue as we make progress on execution of our projects which are
triggered by 6 to 10 project milestones. Some of these milestones
are outside our control which will cause lumpiness in our revenue
recognition. All told, I am pleased with the execution during the
quarter."
Mr. Hansen concluded, "We have outstanding project development
and sales capabilities, innovative and differentiated products and
technology, and an ability to mass customize bankable systems
capable of addressing virtually any combination of applications you
would ever need to perform. Importantly, our products are modular
in design, enabling lower cost manufacturing, and rapid site
deployment and faster time to money for our clients. These key
competitive advantages should allow for us to capitalize on the
rapidly growing trends in the marketplace for years to come."
Financial Results
Total revenue for the third quarter of fiscal 2018 was
$3.1 million, compared to
$0.1 million in the year ago
period. Revenue during the third quarter of fiscal 2018
quarter was largely derived from 10 PPA contracts in Hawaii.
Gross margins improved to 27.2% during the third quarter,
compared to a gross margin loss in the year ago quarter, and
compared to gross margins of 24.2% in the immediately preceding
second quarter. The improved gross margin is attributable to a
favorable mix of projects in the current quarter and continued
efficiencies in the procurement, construction and sale
process. The Company's expectation is that gross profit
margins on future PPA sales should be between 15% and
25%.
Advanced Engineering and Development costs were $1.2 million during the third quarter, compared
to $1.4 million in the year ago
period. Selling, General and Administrative expenses
decreased to $2.5 million during the
third quarter, compared to $2.7
million in the year ago period, due to a decrease in
stock-based compensation. Total Advanced Engineering and
Development costs and Selling, General and Administrative expenses
(excluding stock-based compensation of $0.2
million and $0.5 million,
respectively) was $3.5 million during
the third quarter, compared to $3.6
million in the year ago period. The Company intends to hold
at or below current levels going forward.
Net loss attributable to common shareholders was $(3.0) million, or $(0.05) per basic and diluted share, for the
third quarter of fiscal 2018, compared to $(4.5) million, or $(0.09) per basic and diluted share, in the third
quarter of fiscal 2017.
Cash and cash equivalents at March 31,
2018 was $5.3 million,
compared to $5.9 million at
December 31, 2017.
Estimated backlog value for PPA projects, components and systems
as of the date of this announcement is approximately $16.0 million.
Conference Call Information
Date: Tuesday, May 15, 2018
Time: 4:30 p.m. ET (3:30 p.m. CT)
Domestic participant dial in #: (877) 283-0524 or (412)
317-5232
Conference code #: 10120148
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 10120148, through
May 22, 2018. 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,
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 EnSync Home Energy
System, Matrix™ Energy Management, DER
Flex™, DER Supermodule™, and
Agile™ 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; the inherent
uncertainties and risks associated with our lawsuit with SPI Solar,
Inc.; 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.
Media Relations Contact:
Antenna
Shreema Mehta
ensync@antennagroup.com
(646) 416-9853
EnSync Energy Media Contact:
Michelle Montague
mmontague@ensync.com
(262) 735-5676
Investor Relations Contact:
Lytham Partners,
LLC
Robert Blum, Joseph Diaz, or Joe Dorame
esnc@lythampartners.com
(602) 889-9700
EnSync,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months
ended March 31,
|
|
Nine months
ended March 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Revenues
|
$
3,073,078
|
|
$
50,505
|
|
$
10,281,833
|
|
$
9,443,635
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
Cost of product
sales
|
2,238,445
|
|
206,157
|
|
7,977,861
|
|
9,703,858
|
Cost of engineering
and development
|
-
|
|
-
|
|
-
|
|
937,725
|
Advanced engineering
and development
|
1,184,427
|
|
1,414,858
|
|
3,470,355
|
|
3,493,326
|
Selling, general and
administrative
|
2,482,084
|
|
2,743,618
|
|
7,561,435
|
|
8,331,773
|
Depreciation and
amortization
|
63,516
|
|
98,318
|
|
246,926
|
|
454,387
|
Impairment of
long-lived assets
|
-
|
|
-
|
|
447,000
|
|
-
|
Total costs and
expenses
|
5,968,472
|
|
4,462,951
|
|
19,703,577
|
|
22,921,069
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(2,895,394)
|
|
(4,412,446)
|
|
(9,421,744)
|
|
(13,477,434)
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Equity in loss of
investee company
|
(246,980)
|
|
(170,084)
|
|
(385,443)
|
|
(171,816)
|
Interest
income
|
5,918
|
|
10,809
|
|
19,913
|
|
33,436
|
Interest
expense
|
(8,795)
|
|
(11,115)
|
|
(30,970)
|
|
(37,219)
|
Other
income
|
61,509
|
|
-
|
|
138,034
|
|
8,432
|
Total other income
(expense)
|
(188,348)
|
|
(170,390)
|
|
(258,466)
|
|
(167,167)
|
|
|
|
|
|
|
|
|
Loss before benefit
for income taxes
|
(3,083,742)
|
|
(4,582,836)
|
|
(9,680,210)
|
|
(13,644,601)
|
|
|
|
|
|
|
|
|
Benefit for income
taxes
|
-
|
|
-
|
|
-
|
|
-
|
Net loss
|
(3,083,742)
|
|
(4,582,836)
|
|
(9,680,210)
|
|
(13,644,601)
|
Net loss attributable
to noncontrolling interest
|
150,298
|
|
128,722
|
|
319,289
|
|
271,061
|
Net loss
attributable to EnSync, Inc.
|
(2,933,444)
|
|
(4,454,114)
|
|
(9,360,921)
|
|
(13,373,540)
|
Preferred stock
dividend
|
(87,495)
|
|
(79,264)
|
|
(256,131)
|
|
(232,040)
|
Net loss
attributable to common shareholders
|
$
(3,020,939)
|
|
$
(4,533,378)
|
|
$
(9,617,052)
|
|
$
(13,605,580)
|
|
|
|
|
|
|
|
|
Net loss per
share
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
(0.05)
|
|
$
(0.09)
|
|
$
(0.17)
|
|
$
(0.28)
|
|
|
|
|
|
|
|
|
Weighted average
shares - basic and diluted
|
56,077,230
|
|
48,010,347
|
|
55,825,507
|
|
47,870,082
|
EnSync,
Inc.
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
(Unaudited)
|
|
|
|
March
31,
2018
|
|
June 30,
2017
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
5,349,640
|
|
$
11,782,962
|
Accounts receivable,
net
|
1,512,630
|
|
469,906
|
Inventories,
net
|
1,448,797
|
|
2,482,013
|
Costs and estimated
earnings in excess of billings
|
248,156
|
|
87,318
|
Prepaid expenses and
other current assets
|
1,041,849
|
|
630,998
|
Total current
assets
|
9,601,072
|
|
15,453,197
|
Long-term
assets:
|
|
|
|
Property, plant and
equipment, net
|
664,515
|
|
3,446,253
|
Investment in
investee company
|
1,562,285
|
|
1,947,728
|
Goodwill
|
809,363
|
|
809,363
|
Right of use
assets-operating leases
|
1,135,174
|
|
150,214
|
Other
assets
|
93,862
|
|
7,502
|
Total
assets
|
$
13,866,271
|
|
$
21,814,257
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Current maturities of
long-term debt
|
$
47,272
|
|
$
726,256
|
Accounts
payable
|
1,564,475
|
|
487,185
|
Billings in excess of
costs and estimated earnings
|
39,740
|
|
456,950
|
Accrued
expenses
|
1,153,947
|
|
1,231,714
|
Total current
liabilities
|
2,805,434
|
|
2,902,105
|
Long-term
liabilities:
|
|
|
|
Long-term debt, net
of current maturities
|
331,827
|
|
331,827
|
Deferred
revenue
|
538,937
|
|
422,638
|
Other long-term
liabilities
|
1,106,117
|
|
249,920
|
Total
liabilities
|
4,782,315
|
|
3,906,490
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
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 $5,887,217 and $5,631,086
as of March 31, 2018 and June 30, 2017,
respectively
|
23
|
|
23
|
|
|
|
|
Series C convertible
preferred stock ($0.01 par value, $1,000 face value), 28,048 shares authorized, issued, and
outstanding, preference in
liquidation of$3,196,739 and $12,276,682 as of March 31,
2018 and June 30, 2017,
respectively
|
280
|
|
280
|
|
|
|
|
Common stock ($0.01
par value),300,000,000 authorized, 56,405,507and 55,200,963 shares issued and
outstanding as of March 31, 2018
and June 30, 2017, respectively
|
1,272,370
|
|
1,260,324
|
Additional paid-in
capital
|
142,664,782
|
|
141,822,317
|
Accumulated
deficit
|
(134,000,565)
|
|
(124,639,644)
|
Accumulated other
comprehensive loss
|
(1,584,646)
|
|
(1,584,578)
|
Total EnSync, Inc.
equity
|
8,352,244
|
|
16,858,722
|
Noncontrolling
interest
|
731,712
|
|
1,049,045
|
Total
equity
|
9,083,956
|
|
17,907,767
|
Total liabilities
and equity
|
$
13,866,271
|
|
$
21,814,257
|
EnSync,
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
Nine months ended
March 31,
|
|
2018
|
|
2017
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
(9,680,210)
|
|
$
(13,644,601)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation of
property, plant and equipment
|
238,677
|
|
379,450
|
Amortization of
customer intangible assets
|
8,249
|
|
68,044
|
Stock-based
compensation, net
|
796,500
|
|
1,554,567
|
Equity in loss of
investee company
|
385,443
|
|
171,816
|
Provision for
inventory reserve
|
57,988
|
|
234,675
|
Gain on sale of
property, plant and equipment
|
(137,650)
|
|
(8,432)
|
Interest accreted on
note receivable
|
(9,008)
|
|
(3,008)
|
Impairment of
long-lived assets
|
447,000
|
|
-
|
Changes in assets and
liabilities
|
|
|
|
Accounts
receivable
|
(1,042,724)
|
|
(64,632)
|
Inventories
|
975,228
|
|
(312,715)
|
Costs and estimated
earnings in excess of billings
|
(160,838)
|
|
-
|
Prepaids and other
current assets
|
(428,077)
|
|
859,670
|
Deferred PPA project
costs
|
-
|
|
5,690,307
|
Other
assets
|
(86,360)
|
|
(4,727)
|
Accounts
payable
|
1,077,290
|
|
60,895
|
Billings in excess of
costs and estimated earnings
|
(417,210)
|
|
-
|
Accrued
expenses
|
(207,259)
|
|
(120,754)
|
Deferred
revenue
|
116,299
|
|
422,638
|
Other long-term
liabilities
|
-
|
|
137,983
|
Net cash used in
operating activities
|
(8,066,662)
|
|
(4,578,824)
|
Cash flows from
investing activities
|
|
|
|
Expenditures for
property and equipment
|
(34,377)
|
|
(46,364)
|
Proceeds from sale of
property, plant and equipment
|
2,268,817
|
|
15,325
|
Payments from note
receivable
|
18,000
|
|
-
|
Net cash provided
by (used in) investing activities
|
2,252,440
|
|
(31,039)
|
Cash flows from
financing activities
|
|
|
|
Repayments of long
term debt
|
(678,984)
|
|
(248,533)
|
Proceeds from
issuance of common stock
|
96,674
|
|
-
|
Proceeds from the
exercise of stock options
|
-
|
|
68,400
|
Payments of tax
withholding related to stock-based compensation
|
(38,663)
|
|
-
|
Contribution of
capital from noncontrolling interest
|
1,956
|
|
-
|
Net cash used in
financing activities
|
(619,017)
|
|
(180,133)
|
Effect of exchange
rate changes on cash and cash equivalents
|
(83)
|
|
578
|
Net decrease in
cash and cash equivalents
|
(6,433,322)
|
|
(4,789,418)
|
Cash and cash
equivalents - beginning of period
|
11,782,962
|
|
17,189,089
|
|
|
|
|
Cash and cash
equivalents - end of period
|
$
5,349,640
|
|
$
12,399,671
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Cash paid for
interest
|
$
33,294
|
|
$
37,612
|
Supplemental noncash
information:
|
|
|
|
Right of use asset
obtained in exchange for new operating lease
|
984,960
|
|
178,124
|
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multimedia:http://www.prnewswire.com/news-releases/ensync-energy-reports-third-quarter-fiscal-year-2018-results-300648990.html
SOURCE EnSync, Inc.