Press Release Source: Quantum Fuel Systems Technologies Worldwide, Inc. On Monday March 15, 2010, 8:00 am EDT
IRVINE, Calif., March 15 /PRNewswire-FirstCall/ — Quantum Fuel Systems Technologies Worldwide, Inc. (Nasdaq:QTWW – News), a leader in the development and production of advanced propulsion systems, energy storage technologies, and alternative fuel vehicles and applications including hybrid, plug-in hybrid, hydrogen, and alternative fuel vehicles, today reported results for the third quarter of fiscal 2010. Conference call information is provided below.
Third Quarter and Nine Month Operating Results
Revenues decreased $4.4 million, from $5.9 million in the third quarter of fiscal 2009 to $1.5 million in the third quarter of fiscal 2010, and decreased $9.8 million, from $17.0 million in the first nine months of fiscal 2009 to $7.2 million in the first nine months of fiscal 2010. The decrease in revenue for the third quarter and first nine months of fiscal 2010 is primarily related to customer delays on the Q-Drive development program as Fisker Automotive finalized its $528 million loan from the Department of Energy. Despite lower revenues, the Company’s overall operating loss decreased $5.8 million, from $11.9 million in the third quarter of fiscal 2009 to $6.1 million in the third quarter of fiscal 2010, and decreased $5.5 million, from $20.8 million in the first nine months of fiscal 2009 to $15.3 million in the first nine months of fiscal 2010. The decrease in operating losses was primarily due to the amortization and impairment of the intangible asset related to the Company’s strategic alliance with General Motors that was written off in the third quarter of fiscal 2009.
Contract revenue for the Quantum Fuel Systems segment decreased $4.7 million, from $5.7 million in the third quarter of fiscal 2009 to $1.0 million in the third quarter of fiscal 2010. The decrease was primarily related to customer delays on the Q-Drive development program and the completion in fiscal year 2009 of the fuel cell development programs for General Motors.
Operating loss for the Quantum Fuel Systems segment decreased $6.2 million, from $9.1 million in the third quarter of fiscal 2009 to $2.9 million in the third quarter of fiscal 2010, and decreased $4.8 million, from $12.5 million in the first nine months of fiscal 2009 to $7.7 million in the first nine months of fiscal 2010. The decreased loss was primarily due to the impairment of the General Motors intangible asset that was recorded in the third quarter of fiscal 2009.
Corporate segment expenses increased by $0.4 million in the third quarter of fiscal 2010 from $2.8 million in fiscal 2009 to $3.2 million in fiscal 2010, and decreased by $0.7 million in the first nine months of fiscal 2010 from $8.3 million in fiscal 2009 to $7.6 million in fiscal 2010. Corporate segment expenses reflect the general and administrative expenses that indirectly support the Company’s ongoing Quantum Fuel Systems operating segment and anticipated future operating segments and consist primarily of personnel costs, share-based compensation costs, and related general and administrative costs for executive, finance, legal, human resources, investor relations and the board of directors. The share-based compensation expense was $0.7 million and depreciation and amortization expense was $0.9 million for the first nine months of fiscal 2010. Cash used from operations during the first nine months of fiscal 2010 was $11.1 million.
The financial statements include fair value adjustments for the bifurcation of the derivative liabilities associated with conversion features contained within the Company’s convertible notes and term note debt instruments and the derivative liabilities associated with certain common stock purchase warrants. Fair value adjustments of the derivative instruments, which represent non-cash unrealized gains or losses, amounted to a $24.9 million gain in the third quarter of fiscal 2010 compared to a loss of $5.1 million in the third quarter of fiscal 2009. The share price of our common stock represents the primary underlying variable that impacts the value of the derivative instruments. Additional factors include the volatility of the Company’s stock price, the Company’s credit rating, discount rates, and stated interest rates. The gain in fiscal 2010 and the loss in fiscal 2009 were primarily attributable to the decrease and increase, respectively, in the Company’s share price during those periods. Also reflected in the financial statements for the third quarter of fiscal 2010 is a loss on modification of derivative instruments of $5.1 million resulting from (i) extending the stated maturity dates on the Company’s three convertible notes from August 31, 2010 to March 31, 2011, (ii) extending the expiration date of the $10.0 million lender commitment from August 31, 2009 to March 31, 2011, and (iii) issuing a new debt instrument in satisfaction of a fee negotiated with the Company’s lender to obtain the lender’s consent, as required by our Credit Agreement, on the Company’s planned acquisition of Schneider Power.
The Company recognized $0.1 million and $0.6 million in the three and nine months ended January 31, 2010, respectively, representing the Company’s equity share in earnings of its affiliate, Asola.
The Company reported net income of $14.1 million in the third quarter of fiscal 2010, compared to a net loss of $18.5 million in the third quarter of fiscal 2009. The Company’s net loss increased from $24.8 million for the first nine months of fiscal 2009 to $40.8 million in the first nine months of fiscal 2010.
Alan P. Niedzwiecki, President and CEO, stated, “Over the next several quarters, we anticipate an increase in revenues as well as an improvement in bottom line results driven by the Fisker program, our solar initiatives and with the anticipated consolidation of Schneider Power in April 2010. We continue to see traction in the solar industry, both in the local markets and throughout Europe and Asia. Our equity share in earnings of our affiliate, Asola, has improved dramatically year over year as Asola’s new 45 MW production facility is now at full capacity.”
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