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CST: 18/07/2019 23:01:17   

Polar Power Reports First Quarter 2019 Financial Results

64 Days ago

Management to Host Conference Call Today at 10:00 a.m. EDT

GARDENA, Calif., May 15, 2019 (GLOBE NEWSWIRE) -- Polar Power, Inc. (NASDAQ: POLA), a global provider of prime, backup and solar hybrid DC power solutions, today reported its financial results for the first quarter ended March 31, 2019.

Key Q1 2019 Results and Highlights:

Financial Results for the Three Months Ended March 31st, 2019

  • Net sales for Q1 2019 were $7.75 million, which is a 59% increase compared to $4.87 million in the same period last year with a majority of the growth driven by sales of our DC power systems to Tier-1 telecommunications customers in the U.S.
     
  • Backlog totaled $14.16 million at March 31, 2019.
     
  • Gross profit during the quarter increased by $0.9 million, or 61%, to $2.4 million as compared to $1.5 million in the same period last year. As a percent of sales gross profit was 31% for the quarter as compared to 30% in the same period last year. The increase in gross profit was attributable to improved overhead absorptions resulting from higher revenues generated during the quarter.
     
  • Operating expenses increased to $2.3 million during the quarter from $1.8 million in the same period last year. The increase over last year is attributable primarily to an increase in research and development expenses and an increase in salaries related to expansion of production team to help increase production capacity and production efficiencies.
     
  • Net income in the quarter totaled $0.07 million, or $0.01 per basic and diluted share, compared to net loss of $0.3 million or ($0.03) per basic and diluted share in the same period last year.
     
  • Cash at March 31, 2019 totaled $3.5 million, as compared to $5.6 million at December 31, 2018. The reduction in cash balances are associated with $2.0 million used by operating activities, of which $1.6 million was associated with an increase in inventory, and a $1.5 million increase in accounts receivable associated with increased shipments to Tier-1 carriers with net 90-day payment terms.  

Management Commentary
“During the first quarter we saw continued strength from our domestic Tier-1 telecom customers as we gained market share with our back-up DC power generation systems,” said Polar Power CEO, Arthur Sams. “In order to facilitate these growth opportunities both domestically and internationally, we have been investing heavily in our manufacturing and people. We are a growth company and have numerous opportunities in front of us and need to position ourselves to leverage what we believe to be our standing as the leading producer of DC power systems and continue to grow revenues. Although this investment is creating a modest negative effect on our contribution margins, which we expect will continue over the next two quarters as we continue to ramp-up manufacturing, we believe that the benefits will significantly outweigh the short-term negative impact on margins.”

“In the past year we have been limited by production capacity and supply chain, which made it challenging to pursue business outside of the U.S Tier-1 telecoms and in some cases even to meet their demand in a timely fashion. In November of 2018, we opened our second manufacturing plant and this expansion is expected to nearly double our production capacity when it is operating at full efficiency. However, simply adding a manufacturing facility is not enough on its own. We recently completed a 6-month project to restructure our operations management with industry-leading consultants with the goal of reducing the number of responsibilities key management had and increase the overall production management experience and resources. As such, we have added several key personnel to the organization as well, which we expect to leverage going forward.”

“As our revenues increase, we expect to increase our engineering staff to speed up new product development and provide a higher level of pre-sales support. We also expect to pursue R&D contracts with the military. We believe diversification of sales into different markets will provide us with long term stable growth and improved gross margins.”

Mr. Sams continued, “Internationally, we experienced repeat orders during the quarter from customers we acquired during the fourth quarter. This is encouraging, as we currently have programs active in five countries and international customers are becoming increasingly familiar with our products and their advantages. As we have highlighted previously, infrastructure growth in the international telecom market is significantly higher when compared to the U.S. market, and therefore ideal target markets for our hybrid renewable energy products, a key part of our short-term and long-term growth strategy.”

“During the quarter, our technology road map remained focused on three key products, our hybrid renewable energy systems, our backup power systems, and our products for military applications. We expect to launch our new LPG and natural gas DC power systems designed for hybrid solar residential, natural gas-powered air-conditioning and natural gas-powered electric vehicle charging stations, during the second half of 2019. Military opportunities continue with power for robotic vehicles and mobile power systems,” concluded Mr. Sams. 

Conference Call Details

Polar Power CEO Arthur Sams, COO Rajesh Masina and CFO Luis Zavala will host the conference call, followed by a question and answer period.

To access the call, please use the following information:

Date: Wednesday May 15, 2019
Time: 10:00 a.m. ET, 7:00 a.m. PT
Toll-free dial-in number: 1-800-458-4121
International dial-in number: 1-323-794-2093
Conference ID: 1500529

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Integra Investor Relations at 415-233-7094.

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=134601 and via the investor relations section of the Company’s website at www.polarpower.com.

A replay of the conference call will be available after 1:00 p.m. Eastern time through May 22, 2019.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 1500529

About Polar Power, Inc.

Gardena, California-based Polar Power, Inc. (NASDAQ: POLA), designs, manufactures and sells direct current, or DC, power systems, lithium battery powered hybrid solar systems for applications in the telecommunications market and, in other markets, including military, electric vehicle charging, cogeneration, distributed power and uninterruptable power supply. Within the telecommunications market, Polar’s systems provide reliable and low-cost energy for applications for off-grid and bad-grid applications with critical power needs that cannot be without power in the event of utility grid failure. For more information, please visit www.polarpower.com. or follow us on www.linkedin.com/company/polar-power-inc/

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 
This news release contains certain statements of a forward-looking nature relating to future events or future business performance. Forward-looking statements can be identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “plans,” “will,” “outlook” and similar expressions. Forward-looking statements are based on management’s current plans, estimates, assumptions and projections, and speak only as of the date they are made. With the exception of historical information, the matters discussed in this press release including, without limitation, Polar Power’s belief that its investment in manufacturing and people will have a negative impact on contribution margins for the next two quarters; Polar Power’s belief that its new manufacturing plant will nearly double the company’s production capacity; Polar Power’s expectation that it will increase its engineering staff and its belief that by increasing its engineering staff it will speed up new product development and provide a higher level of pre-sale support; Polar power’s belief that diversification of sales into different markets will provide it with long-term stable growth and improved gross margins; and Polar Power’s expectation that it will launch its new LPG and natural gas DC power systems designed for hybrid solar residential, natural gas-powered air-conditioning and natural gas-powered electric vehicle charging stations during the second half of 2019 are forward-looking statements and considerations that involve a number of risks and uncertainties. The actual future results of Polar Power could differ from those statements. Factors that could cause or contribute to such differences include, but are not limited to, adverse domestic and foreign economic and market conditions, including demand for DC power systems; trade tariffs on raw materials; changes in domestic and foreign governmental regulations and policies; and other events, factors and risks. We undertake no obligation to update any forward-looking statement in light of new information or future events, except as otherwise required by law. Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and are generally beyond our control. Actual results or outcomes may differ materially from those implied by the forward-looking statements as a result of the impact of a number of factors, many of which are discussed in more detail in our reports filed with the Securities and Exchange Commission.

Media and Investor Relations:
Integra Investor Relations
Shawn M. Severson
+1 415-233-7094
info@integra-ir.com
@Integra IR

Company Contact:
Polar Power, Inc.
249 E. Gardena Blvd.
Gardena, CA 90248
Tel: 310-830-9153
ir@polarpowerinc.com
www.polarpower.com



POLAR POWER , INC.
BALANCE SHEETS 

         
  March 31,
2019
  December 31,
2018
 
ASSETS            
Current assets            
Cash and cash equivalents (including restricted cash $1,002,683 at December 31, 2018) $ 3,534,570   $ 5,640,078  
Accounts receivable   9,216,756     7,726,919  
Inventories, net   10,116,949     8,471,769  
Prepaid expenses   1,254,056     468,666  
Refundable income taxes   231,444     715,916  
Total current assets   24,353,775     23,023,348  
             
Operating lease right-of-use assets, net   2,640,911      
Property and equipment, net   2,172,412     2,122,757  
Deposits   94,001     94,001  
             
Total assets $ 29,261,099   $ 25,240,106  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities            
Accounts payable $ 1,590,682   $ 1,066,415  
Customer deposits   368,100     79,184  
Accrued liabilities and other current liabilities   935,571     504,559  
Current portion of operating lease liabilities   542,672      
Current portion of notes payable   278,745     283,388  
Total current liabilities   3,715,770     1,933,546  
Notes payable, net of current portion   880,016     924,539  
Operating lease liabilities, net of current portion   2,133,645      
             
Total liabilities   6,729,431     2,858,085  
             
Commitments and Contingencies            
             
Stockholders’ Equity            
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding        
Common stock, $0.0001 par value, 50,000,000 shares authorized, 10,143,158 and, 10,143,158, shares issued and outstanding, respectively   1,014     1,014  
Additional paid-in capital   19,657,370     19,578,426  
Retained earnings   2,873,284     2,802,581  
Total stockholders’ equity   22,531,668     22,382,021  
             
Total liabilities and stockholders’ equity $ 29,261,099   $ 25,240,106  
             

POLAR POWER, INC.
STATEMENTS OF OPERATIONS

   
  Three Months Ended
  March 31,
    2019       2018  
       
Net sales   $ 7,746,785       $ 4,871,912  
       
Cost of sales   5,354,760       3,388,274  
       
Gross profit   2,392,025       1,483,638  
       
Operating Expenses      
Sales and Marketing   630,034       610,337  
Research and development   562,270       464,101  
General and administrative   1,121,497       736,517  
Total operating expenses   2,313,801       1,810,955  
       
Income (loss) from operations   78,224       (327,317 )
       
Other income (expenses)      
Interest income   (10,701 )     (3,010 )
Other income (expenses)   3,180       11,525  
Total other income (expense)   (7,521 )     8,515  
       
Income (loss) before income taxes   70,703       (318,802 )
Income tax benefit          
       
Net income (loss) $ 70,703     $ (318,802 )
       
Net income (loss) per share – basic and diluted $ 0.01     $ (0.03 )
Weighted average shares outstanding, basic and diluted   10,143,158       10,143,158  
       

POLAR POWER, INC.
STATEMENTS OF CASH FLOWS

   
  Three Months Ended
March 31,
  2019     2018  
       
Cash flows from operating activities:          
Net income (loss) $ $ 70,703     $ (318,802 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Fair value of vested stock options   78,944       24,719  
Depreciation and amortization   143,261       76,350  
Amortization of operating lease right-of-use asset   89,155        
Changes in operating assets and liabilities          
Accounts receivable   (1,489,838 )     (1,745,659 )
Inventories   (1,645,179 )     57,305  
Prepaid expenses   (899,277 )     (291,160 )
Deposits         (1,000 )
Refundable income taxes   484,472        
Accounts payable   524,267       (303,566 )
Customer deposits   288,916       66,557  
Accrued expenses and other current liabilities   461,321       27,561  
Repayment of lease obligations   (84,058 )      
Net cash used in operating activities   (1,977,313 )     (2,407,695 )
           
Cash flows from investing activities:          
Acquisition of property and equipment   (79,029 )     (55,062 )
Net cash used in investing activities   (79,029 )     (55,062 )
           
Cash flows from financing activities:          
Repayment of notes   (49,166 )     (27,234 )
Net cash used by financing activities   (49,166 )     (27,234 )
           
Decrease in cash and cash equivalents   (2,105,508 )     (2,489,991 )
Cash and cash equivalents, beginning of period   5,640,078       14,201,163  
Cash and cash equivalents, end of period $ 3,534,570     $ 11,711,172  
           
SUPPLEMENTAL NON-CASH INVESTING AND

FINANCING ACTIVITIES:
         
Initial recognition of operating lease right-of-use assets and          
operating lease obligations upon adoption of ASC Topic 842 $ 2,760,375        
           
Reclass of prepaid asset to property and equipment $ 113,887     $  
               

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