Quantum Technologies Reports Fiscal 2008 Third Quarter Financial Results
IRVINE, Calif., March 11, 2008 /PRNewswire-FirstCall/ — Quantum Fuel Systems Technologies Worldwide, Inc. (Nasdaq: QTWW), a leader in the development and production of advanced propulsion systems, energy storage technologies, and alternative fuel vehicles and applications including hydrogen fuel cell, hybrid, plug-in hybrid, and alternative fuel vehicles, today reported results for the three and nine month periods ended January 31, 2008. Conference call information is provided below.
Third Quarter Results
Total revenue in the third quarter of fiscal 2008 was $7.1 million compared to $2.3 million in the third quarter of fiscal 2007, a net increase of 209%. The increase in consolidated net revenue was mainly due to increased hydrogen-based hybrid and fuel cell hybrid vehicle product sales and higher development program revenues. The Company’s consolidated operating loss decreased from $5.8 million in the third quarter of fiscal 2007 to $3.8 million in the third quarter of fiscal 2008. The decline was primarily due to the expanded revenue base and higher margins on product sales and development programs.
The Quantum Fuel Systems operating segment loss decreased $1.6 million, or 53%, from $3.0 million in the third quarter of fiscal 2007 to $1.4 million in the third quarter of fiscal 2008. Corporate segment expenses decreased $0.3 million, or 11%, from $2.8 million in the third quarter of fiscal 2007 to $2.5 million in the third quarter of fiscal 2008. The share-based compensation expense related to FAS 123R was $0.6 million and depreciation and amortization expense was $1.0 million during the third quarter of fiscal 2008. Cash used from operations during the third quarter of fiscal 2008 was $3.6 million.
Product sales for the Quantum Fuel Systems segment increased $1.7 million, or 213%, from $0.8 million in the third quarter of fiscal 2007 to $2.5 million in the third quarter of fiscal 2008. Product sales during the third quarter of fiscal 2008 primarily consisted of hydrogen fuel storage systems for General Motors’ fuel cell hybrid vehicle program and sales of hydrogen-fueled Toyota Prius hybrid vehicles. Contract revenue for the Quantum Fuel Systems segment increased $3.1 million, or 207%, from $1.5 million in the third quarter of fiscal 2007 to $4.6 million in the third quarter of fiscal 2008. The increase was primarily due to higher development program revenues to support the GM Fuel Cell Hybrid Equinox program, the Fisker Karma plug-in hybrid development program and other hybrid development programs.
The Tecstar Automotive Group business segment ceased operations on January 16, 2008 upon transfer of substantially all of its assets to an affiliate of our lender. Accordingly, the activities of the Tecstar Automotive Group reporting segment are reported as discontinued operations for the third quarter and nine month period ending January 31 for both fiscal 2007 and 2008. The disposal of Tecstar resulted in a gain of $8.7 million which was recognized during the third quarter of fiscal 2008 and recorded in discontinued operations. The gain was partially offset by a $6.2 million loss from business operations for Tecstar during the third quarter prior to the date of disposal, resulting in income from discontinued operations, net of tax effects, of $2.5 million in the third quarter of fiscal 2008. This compared to a loss, net of tax effects, of $16.0 million for the third quarter of fiscal 2007.
The Company’s net loss from continuing operations decreased from $5.5 million, or $0.08 a share, in the third quarter of fiscal 2007 to $3.8 million, or $0.05 a share, in the third quarter of fiscal 2008. The Company’s net loss decreased from $21.6 million, or $0.33 a share, in the third quarter of fiscal 2007 to $1.4 million, or $0.02 a share, in the third quarter of fiscal 2008.
Nine Month Results
For the nine month period ended January 31, 2008, the Company had consolidated revenues of $16.8 million compared to nine month fiscal 2007 revenues of $14.6 million, a net increase of 15%. The increase in revenues was primarily a result of higher development program revenues. The Company’s consolidated operating loss decreased from $18.1 million for the first nine months of fiscal 2007 to $14.1 million for the first nine months of fiscal 2008.
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Quantum Fuel System segment revenues increased $2.2 million, from $14.6 million in the first nine months of fiscal 2007 to $16.8 million in the first nine months of fiscal 2008. The increase was due to the higher development program revenues, which were partially offset by lower product sales. The operating loss for the Quantum Fuel Systems segment decreased $3.5 million, or 36%, from $9.8 million in the first nine months of fiscal 2007 to $6.3 million in the first nine months of fiscal 2008. The decrease in operating loss was primarily the result of higher margins earned on customer programs due to the shift in product mix over the last year.
The Corporate segment expenses decreased from $8.3 million in first nine months of fiscal 2008 to $7.9 million in the first nine months of fiscal 2007. During the first nine months of fiscal 2008, depreciation and amortization expense was approximately $2.8 million.
The discontinued operations of the Tecstar Automotive Group business segment generated losses, net of tax effects, of $66.1 million in the first nine months of fiscal 2008 compared to a loss, net of tax effects, of $107.2 million in the first nine months of fiscal 2007.
The Company’s net loss from continuing operations decreased from $17.1 million, or $0.28 a share, in the first nine months of fiscal 2007 to $14.3 million, or $0.19 a share, in the first nine months of fiscal 2008. The Company’s net loss decreased from $124.3 million, or $2.05 a share, in the first nine months of fiscal 2007 to $80.3 million, or $1.06 a share, in the first nine months of fiscal 2008.
Disposal of Tecstar Business Segment
On January 16, 2008, Quantum completed a series of transactions that restructured Quantum’s outstanding debt obligations to its secured lender and transferred substantially all of the assets of the company’s Tecstar Automotive Group business segment to an affiliate of our secured lender, WB Automotive Holdings, Inc.
In connection with the series of transactions. Tecstar Automotive Group and WB Automotive executed a Strict Foreclosure Agreement, pursuant to which, under Article 9 of the Uniform Commercial Code, Tecstar assigned to WB Automotive all of its right, title and interest in and to the equity interests in Tecstar’s operating subsidiaries, Tecstar’s interest in the Amstar joint venture, receivables owed to Tecstar by the operating subsidiaries and Tecstar’s interest in a $1 million cash collateral account, in full payment and satisfaction of $15.5 million owed by Tecstar under a convertible promissory note, which was guaranteed by the Company.
Pursuant to release agreements executed by the Company and WB Automotive, WB Automotive released the Company from approximately $20.5 million of debt obligations relating to the Tecstar Convertible Note and a $5 million term note owed to the lender by Tecstar. In exchange for the foregoing release, the Company caused Tecstar to enter into and complete the transactions described above, paid $1 million to WB Automotive and agreed to assume $0.7 million in unpaid interest owed under the Tecstar convertible note.
As a result of the transactions described above that resulted in the disposal of the Tecstar businesses, the historical activities of the Tecstar Automotive Group business segment are reported as discontinued operations in the condensed consolidated statements of operations for all periods presented in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets.” The disposal of the Tecstar businesses resulted in a gain of $8.7 million included in discontinued operations, net of taxes, for the three and nine month periods ended January 31, 2008.
Alan P. Niedzwiecki, President and CEO, stated, “The operating results during the quarter improved dramatically as a result of expanding hybrid vehicle programs and shipment of hydrogen fuel systems to General Motors under its recently unveiled Equinox Fuel Cell Hybrid Vehicle program. Over the next year, we are expecting continued growth in our hybrid business as a result of our programs with Fisker Automotive and other automotive OEM customers, the military and government agencies.’
Niedzwiecki continued, “Over the last several quarters, we have focused considerable attention on the disposition of Tecstar, and we are obviously very pleased that has been completed. We can now refocus our efforts on “green vehicle” technology, alternative energy products, and our emerging solar business.” |
