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Northern Power Systems reports Q3 2014 revenue growth

Submitted by tim on

Northern Power Systems Corp.(TSX:NPS), a next generation renewable energy technology company, featuring wind turbines, based in Barre, hasannounced financial results for its three and nine month periods ended September 30, 2014."We are very pleased with the commercial traction of our technology and products. Seeing an expansion of orders based on our next generation, higher energy output distributed turbine at the same time as WEG's successful installation of utility class turbines based on our proprietary design, reflects the continuing commercial proof of Northern Power's technology," said Troy Patton, president and chief executive officer. "As we transition from production to sales of our next generation distributed turbine, we anticipate that our improved product design will in turn be driving Northern Power's profitability." Northern Power employees about 100, most of whom work in its Vermont manufacturing and development facility.

Third Quarter 2014 Highlights:

  • Expanded quarterly revenues to $15 million from $5.6 million in the prior year third quarter driven by strong continued demand for the Company's distributed class turbines.
  • Grew order backlog at September 30, 2014 to $47 million.
  • Reduced quarterly net loss to $0.3 million from $3.1 million in the prior year third quarter and delivered quarterly adjusted non-GAAP EBITDA income of $0.5 million as compared to an adjusted non-GAAP EBITDA loss of $2.2 million in the prior year third quarter.
  • Launched full production of next generation distributed class turbine offering improved performance.
  • Brazilian partner WEG commenced shipment of first utility class units based on Northern Power technology.

"Achieving adjusted non-GAAP EBITDA po sitive results for our third quarter was a key milestone," commented Ciel Caldwell, chief financial officer. "Our gross margin was particularly strong in the quarter due to recognition of license fee revenue and initial royalty revenues based on WEG's shipment of utility class turbines to customer sites in Brazil. By keeping gross margins in line with our operating model and continuing our commercial expansion, we expect to deliver sustainable profitability as we maintain a controlled investment in operating expenses to drive the long-term growth of Northern Power."

Mr. Patton continued, "In addition to our progress with WEG, following the close of the quarter we commissioned four NPS 100 wind turbines for a hybrid energy project in South Korea which is being undertaken in collaboration with national grid operator KEPCO (Korean Electric Power Corporation). We're pleased to have the opportunity to bring our solution for hybrid microgrids to Asia."

Consol idated Financial Metrics:

  • Revenue for the third quarter of fiscal year 2014 grew to $15 million, a 168 percent increase over revenue of $5.6 million reported in the prior year third quarter and an increase of 9 percent sequentially as compared to the second quarter of 2014.
  • Order backlog at September 30, 2014 was $47 million, a 31 percent increase over backlog of $36 million at September 30, 2013.
  • Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the third quarter of fiscal year 2014 was 32.2 percent, up from gross margin of 12.7 percent in the prior year third quarter.
  • GAAP net loss for the third quarter of fiscal year 2014 was $0.3 million, representing a 90 percent reduction compared to a $3.1 million loss in the prior year third quarter.
  • Non-GAAP adjusted EBITDA income for the third quarter of fiscal year 2014 was $0.5 million, representing a $2.7 million improvement compared to a non-GAAP adjusted EBITDA loss of $2.2 million in the prior year third quarter.
  • Cash at September 30, 2014 was $16.3 million. Long-term debt at September 30, 2014 was $0 as compared to $12.5 million at December 31, 2013. $4.0 million was outstanding on the working capital line of credit at September 30, 2014 as compared to $0 outstanding at December 31, 2013.

About non-GAAP financial measures

To supplement Northern Power Systems' consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), Northern Power Systems has used a non-GAAP financial measure, specifically non-GAAP adjusted EBITDA income (loss). Non-GAAP adjusted EBITDA income (loss) is defined as net income (loss), excluding share-based compensation expense, amortization of acquisition-related intangibles, depreciation of property, plant and equipment, interest expense, tax provision or benefit, and certain other non-cash impacts as applic able.

The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on non-GAAP adjusted EBITDA, please see the table captioned "Reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net income (loss)" included at the end of this release. The table has more details on the GAAP financial measure that is most directly comparable to non-GAAP adjusted EBITDA and the related reconciliation between these financial measures.

Northern Power Systems' management believes that this non-GAAP financial measure provides meaningful supplemental information in assessing our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, which could be non-cash charges or discrete cash charges that are infrequent in nature. This non-GAAP financial measure als o has facilitated management's internal comparisons to Northern Power Systems' historical performance and our competitors' operating results, as well as reflects measurements which are used by creditors and other third parties in assessing our performance.

About Northern Power Systems

Northern Power Systems designs, manufactures, and sells wind turbines and power technology products, and provides engineering development services and technology licenses for energy applications, into the global marketplace from its US headquarters and European offices.

* Northern Power Systems has almost 40 years' experience in technologies and products generating renewable energy.

* Northern Power Systems currently manufactures the NPS™ 60 and NPS™ 100 turbines. With over 5 million run time hours across its global fleet, Northern Power wind turbines provide customers with clean, cost effective, reliable renewable energy.

* Pat ented next generation permanent magnet/direct drive (PM/DD) technology uses fewer moving parts, delivers higher energy capture, and provides increased reliability due to reduced maintenance and downtime.

* Northern Power Systems' FlexPhase® power converter platform uses patented converter architecture and advanced controls technology for advanced grid support and generation applications.

* Northern Power Systems offers comprehensive in-house development services, including systems level engineering, advanced drivetrains, power electronics, PM machine design, and remote monitoring systems to the energy industry.

* Some of the world's largest manufacturers license the company's next generation technology and IP for their utility and distributed wind products and markets.

To learn more about Northern Power Systems, please visitwww.northernpower.com.

NORTHERN POWER SYSTEMS CORP.
FORMERLY KNOWN AS WIND POWER HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013
(In thousands, except share and per share amounts)
For the three months ended For the nine months ended
September 30, September 30,
2014 2013 2014 2013
REVENUES:
Net revenue $ 15,032 $ 5,616 $ 42,558 $ 11,600
Cost of revenues 10,185 4,904 34,325 11,112
Gross profit 4,847 712 8,233 488
Gross margin 32.2% 12.7% 19.3% 4.2%
OPERATING EXPENSES:
Sales and marketing 990 716 2,668 2,044
Research and development 1,321 834 3,537 2,845
General and administrative 2,312 1,696 6,793 4,729
Restructuring charges - 4 - 23
Total operating expenses 4,623 3,250 12,998 9,641
Income (loss) from operations 224 (2,538) (4,765) (9,153)
Change in fair value of warrants - (488) - 173
Interest income - - 5 -
Interest expense (40) (101) (312) (230)
Other (expense) income - net (61) (11) 41 (36)
Income (loss) before provision (benefit) for income taxes 123 (3,138) (5,031) (9,246)
Provision (benefit) for income taxes 412 (16) 441 13
NET LOSS $ (289) $ (3,122) $ (5,472) $ (9,259)
Net loss applicable to common shareholders $ (289) $ (4,098) $ (5,472) $ (12,946)
Net loss per common share - basic and diluted (0.01) (1.84) (0.29) (15.21)
Weighted average number of common shares outstanding - basic and diluted 22,720,090 2,226,096 18,919,146 850,950
Non-GAAP adjusted EBITDA net income (loss) $ 501 $ (2,230) $ (3,210) $ (8,154)
NORTHERN POWER SYSTEMS CORP.
FORMERLY KNOWN AS WIND POWER HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013
(In thousands)
September 30, December 31,
ASSETS 2014 2013
CURRENT ASSETS:
Cash and cash equivalents $ 16,318 $ 4,534
Accounts receivable - net 3,820 1,175
Unbilled revenue 2,030 786
Inventories - net 15,000 11,682
Other current assets 2,616 2,808
Total current assets 39,784 20,985
Property, plant and equipment - net 1,624 1,414
Asset held for sale - 1,300
Intangible assets - net 369 509
Goodwill 722 722
Other assets 531 2,615
Total Assets $ 43,030 $ 27,545
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Current portion of long-term debt $ - $ 141
Revolving working capital line of credit 4,000 -
Senior secured convertible notes - 12,107
Accounts payable 2,004 2,148
Accrued expenses 6,341 4,365
Deferred revenue 5,124 4,221
Customer deposits 6,860 10,917
Other current liabilities 533 3,327
Total current liabilities 24,862 37,226
Deferred revenue, less current portion 1,531 1,163
Other long-term liability 278 558
Total Liabilities 26,671 38,947
STOCKHOLDERS'EQUITY (DEFICIENCY):
Common stock 165,339 128
Additional paid-in capital 7,831 139,804
Accumulated deficit (156,811) (151,334)
Total Stockholders' Equity (Deficiency) 16,359 (11,402)
Total Liabilities and Stockholders' Equity (Deficiency) $ 43,030 $ 27,545
NORTHERN POWER SYSTEMS CORP.
FORMERLY KNOWN AS WIND POWER HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013
(In thousands)
For the three months ended For the nine months ended
September 30, September 30,
2014 2013 2014 2013
OPERATING ACTIVITIES:
Net loss $ (289 ) $ (3,122 ) $ (5,477 ) $ (9,259 )
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of warrants - 488 - (173 )
Provision for inventory obsolescence 32 (13 ) 125 35
Provision for (recovery of) doubtful accounts 173 (23 ) 224 (22 )
Stock-based compensation expense 144 85 746 264
Depreciation and amortization 194 234 763 771
Noncash restructuring charges - 4 - 23
Deferred income taxes 7 3 10 10
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenue 235 (393 ) (4,113 ) (37 )
Inventories and deferred costs (1,047 ) (3,713 ) (3,089 ) (4,344 )
Other current and noncurrent assets (564 ) (218 ) (317 ) (517 )
Accounts payable (1,313 ) 1,666 (146 ) 1,662
Accrued expenses 673 392 2,171 778
Customer deposits 420 1,930 (4,057 ) 2,948
Other liabilities (1,634 ) 2,232 1,187 1,974
Net cash used in operating activities (2,969 ) (448 ) (11,973 ) (5,887 )
INVESTING ACTIVITIES:
Proceeds from sale of property - - 1,218 -
Purchases of property and equipment (96 ) (124 ) (696 ) (195 )
Net cash (used in) provided by investing activities (96 )

Soruce: BARRE, VT--(Marketwired - November 10, 2014) - Northern Power