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

October 31, 2012 | About:
10qk

10qk

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Active Power Inc. (ACPW) filed Quarterly Report for the period ended 2012-09-30.

Active Power, Inc. has a market cap of $67.7 million; its shares were traded at around $0.72 with and P/S ratio of 0.9.

Highlight of Business Operations:

Total product revenue for the three-month period ended September 30, 2012 did not vary significantly from the same period of 2011. Product mix did change significantly, however, we saw a 147% increase in sales of our UPS products and an 83% decrease in our MIS solutions revenue compared to the prior year. The increase in UPS product revenue was primarily due to large UPS installations in the third quarter of 2012 in Europe, the Middle East and Africa (“EMEA”) and Asia and a broader increase in the number of UPS customers as we re-focused our sales activities on growing UPS product sales. Included in UPS systems revenue this quarter was approximately $5.6 million of ancillary equipment related to completion of a large integrated UPS system deployment in Europe. Excluding ancillary equipment, UPS system revenue was approximately flat with the previous quarter s revenue levels and up by 51% compared to the third quarter of 2011. There was also a 114% increase in OEM sales of UPS products compared to the previous year. UPS product sales comprised 89% of our product revenue for the third quarter of 2012, as compared to 35% for the third quarter of 2011. The decrease in MIS solutions revenue reflects the small number of customers and large order values inherent in this business that can result in large short-term fluctuations in MIS solution revenues. Due to timing of customer projects, there was $499,000 or 3% of product revenue in sales of CPS products in the third quarter of 2012, compared to CPS product sales of $7.0 million, or 41% of our product revenue, in the third quarter of 2011. Sales of infrastructure solutions decreased by $2.6 million, or 66%, compared to the third quarter of 2011 due to lower customer orders.

Product revenue from Active Power branded products through our direct and manufacturer s representative channels was $10.2 million, or 61% of our product revenue, for the three-month period ended September 30, 2012, compared to $5.1 million, or 30% of our product revenue, in the same period of 2011, and $7.9 million, or 45% of our product revenue, for the second quarter of 2012. For the nine-month period ended September 30, 2012, product sales of Active Power branded products through our direct and manufacturer s representative channels were $24.5 million, or 48% of our product revenue, compared to $22.4 million, or 47% of our product revenue, for the same period of 2011.

Product revenue from our OEM channels for the three-month period ended September 30, 2012 was $5.0 million, an increase of approximately $3.0 million, or 149%, compared to $2.0 million for the third quarter of 2011. This reflected several large multi-megawatt UPS systems sales in Asia in the current quarter and increased OEM activity in the EMEA market. For the nine-month period ended September 30, 2012, product revenue from our OEM channel was $7.8 million, a decrease of $1.4 million, or 15%, compared to $9.2 million for the same period in 2011, reflecting lower OEM activity in the US market compared to 2011. Product revenue from our OEM channels for the three-month period ended September 30, 2012 increased by $3.4 million, or 205%, compared to $1.7 million for the second quarter of 2012. 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. Sales to Caterpillar, our primary OEM channel, represented $5.0 million and $7.8 million, or 30% and 15% of our product revenue, for the three-month and nine-month periods ended September 30, 2012, respectively, compared to $2.0 million and $9.1 million, or 12% and 19% of our product revenue, in the comparable periods of 2011. Caterpillar remains one of our largest UPS customers as well as our largest OEM customer.

North America product revenue was $5.9 million or 35% of our product revenue for the three-month period ended September 30, 2012, compared to $14.5 million, or 85% of our product revenue, for the same period in 2011 and $12.1 million, or 69% of product revenue, in the second quarter of 2012. This decrease reflects lower MIS revenues which historically have largely originated in the North American market. For the nine-month period ended September 30, 2012, our North America product revenue was $28.6 million, or 57% of our total product revenue, compared to $30.8 million, or 64%, for the same period in 2011. The decrease in North American sales has been driven by the decrease in sales of MIS solutions.

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 $2.0 million, or 12% of our total product revenue, in the three-month period ended September 30, 2012, compared to $842,000, or 5%, for the same period in 2011 and $1.0 million, or 6%, for the second quarter of 2012. Product revenue in EMEA was $8.8 million, or 53% of product revenue, in the three-month period ended September 30, 2012, compared to $1.6 million, or 10%, for the same period of 2011 and $4.4 million, or 25%, for the second quarter of 2012. These fluctuations are primarily attributable to variations in sales of our MIS 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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