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Active Power Inc. Reports Operating Results (10-Q)

August 03, 2012 | About:

10qk

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Active Power Inc. (ACPW) filed Quarterly Report for the period ended 2012-06-30.

Active Power, Inc. has a market cap of $75.7 million; its shares were traded at around $0.82 with and P/S ratio of 1.

Highlight of Business Operations:

Product revenue for the three-month period ended June 30, 2012 increased by approximately $1.3 million, or 8%, compared to the same period of 2011. This increase is primarily attributable to an increase in sales of data center infrastructure solutions , as our solutions have gained market acceptance, and from an increase in sales of our UPS products. Sales related to our infrastructure solutions comprised 45% of our product revenue for the second quarter of 2012, compared to 14% for the second quarter of 2011. Due to timing of customer projects, there were no sales of our CPS products in the second quarter of 2012 as compared to CPS product sales of $8.4 million, or 52%, of our product revenue in the second quarter of 2011. Due to the small number of customers and large order values, the amount of revenue from our CPS and infrastructure solutions can fluctuate materially between quarters based on the timing of product shipments and we would expect continued large fluctuations in quarterly revenue from each of these product lines. UPS product sales comprised 55% of our product revenue for the second quarter of 2012, as compared to 34% for the second quarter of 2011. Sales of our UPS products for the second quarter of 2012 increased by 75% from the second quarter of 2011. This increase was primarily due to large UPS installations in the second quarter of 2012 in Europe, the Middle East and Africa (“EMEA”) and a broader increase in the number of UPS customers as we have re-focused our sales activities on improving UPS product sales after several quarters of lower than expected sales of our UPS products.

Product revenue from Active Power branded products through our direct and manufacturer s representative channels was $7.9 million, or 45% of our product revenue, for the three-month period ended June 30, 2012, compared to $9.9 million, or 61%, in the same period of 2011, and $6.3 million, or 39% of our product revenue, for the first quarter of 2012. For the six-month period ended June 30, 2012, product sales of Active Power branded products through our direct and manufacturer s representative channels were $14.2 million, or 42% of our product revenue, compared to $17.3 million, or 56%, for the same period of 2011. As direct sales typically have higher profit margins than sales through our OEM and IT channels, we will continue to focus on our direct sales channel to increase revenue and improve profit margins and to decrease our dependency upon our OEM and IT channels.

Product revenue from our OEM channels for the three-month period ended June 30, 2012 was $1.7 million, a decrease of approximately $132,000, or 7%, compared to $1.8 million for the second quarter of 2011. For the six-month period ended June 30, 2012, product revenue from our OEM channel was $2.7 million, a decrease of $4.4 million, or 62%, as compared to $7.1 million for the same period in 2011. Product revenue from our OEM channels for the three-month period ended June 30, 2012 increased by $607,000, or 58%, compared to $1.0 million for the first quarter of 2012. The second quarter of 2011 included several multi-megawatt UPS installations in Europe that resulted in significant OEM channel revenue that period. The size and volume of orders from our OEM channels can fluctuate significantly on a quarterly basis and in 2012 we have seen fewer, but larger value transactions from our OEM channel. We have supported our OEM partners efforts to sell total solutions to their customers that include generators and switchgear that they manufacture along with our UPS systems as a total solution. If our OEM partners are successful with this strategy, we believe that it will help drive an increase in our UPS product revenue. However, as our OEM partners sell more solutions, the quarterly volume of revenue becomes more variable. Sales to Caterpillar, our primary OEM channel, represented $1.7 million and $2.7 million, or 9% and 8% of our product revenue, for the three-month and six-month periods ended June 30, 2012, respectively, compared to $1.8 million and $7.1 million, or 11% and 23% of our product revenue, in the comparable periods of 2011. Caterpillar remains one of our largest customers as well as our largest OEM customer.

North America product revenue was $12.1 million, or 69% of our product revenue for the three-month period ended June 30, 2012, compared to $8.5 million, or 52%, for the same period in 2011 and $10.6 million, or 65% of product revenue, in the first quarter of 2012. For the six-month period ended June 30, 2012, our North America product revenue was $22.7 million, or 67% of our total product revenue, which compared to $16.2 million, or 53%, for the same period in 2011. The increase in North American sales has been driven by an increase in sales to HP.

We also sell products directly to customers in Asia and Western Europe and we have a network of international distributors in other territories that sell products for us. In these markets, customers are more likely to purchase a total power solution from us rather than a stand-alone UPS system. This usually results in a longer selling cycle and makes quarterly results from these regions more volatile. Thus the amount of revenue from our international markets can fluctuate significantly on a quarterly basis. Product sales to customers in Asia were $1.0 million, or 6% of our total product revenue, in the three-month period ended June 30, 2012, compared to $4.0 million, or 25%, for the same period in 2011 and $1.5 million, or 9%, for the first quarter of 2012. Product revenue in EMEA was $4.4 million, or 25% of product revenue, in the three-month period ended June 30, 2012, compared to $3.7 million, or 23%, for the same period of 2011 and $4.3 million, or 26%, for the first quarter of 2012. These fluctuations are primarily attributable to variations in sales of our CPS products in each region in the relevant periods and illustrate the impact of larger orders from fewer customers on quarterly revenue for each of these regions.

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