Information  X 
Enter a valid email address

PowerFilm, Inc (PFLM)

  Print      Mail a friend

Monday 30 March, 2015

PowerFilm, Inc

PowerFilm Reports 2014 Full Year Results

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.

·    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

 31-Dec-14

12 Months Ended

 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

 31-Dec-14

12 Months Ended

 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

(Increase) in other assets

-     

(1,200)

 1,093,159

(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 Process

Industrial scale low-cost manufacturing process

Roll-to-Roll Manufacturing (not batch processing)

Semiconductor Absorber Layer

Abundant supply

 

Positive environmental profile

 

 

 

Amorphous Silicon

 (After extensive evaluation, PowerFilm eliminated 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 cell connection process

Printed Interconnect

Substrate

To work with printed interconnect and to be lightweight and flexible

Flexible Plastic Substrate

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR LLFFSVRIIVIE

a d v e r t i s e m e n t