EnSync Energy Reports Fiscal Year 2017 Results
MILWAUKEE, Sept. 20, 2017 /PRNewswire/ -- EnSync, Inc. (NYSE American: ESNC), dba EnSync Energy Systems, a leading developer of innovative distributed energy resources (DERs), today announced results for the fiscal year 2017, ended June 30, 2017.
Recent Highlights
-- Fiscal 2017 revenues of $12.5 million increased by 6 times that of
fiscal 2016 revenues of $2.1 million;
-- In fiscal year 2017, EnSync Energy sold 12 power purchase agreements
(PPAs) across both commercial and industrial (C&I), as well as
residential, applications including Spectrum (formerly Time Warner),
University of the Nations, Easter Seals, and the Villages of Kapolei;
-- Introduced DER Flex(TM), EnSync Energy's proprietary technology that
enables aggregation and monetization of distributed energy resources,
such as solar and energy storage, in utility and ISO markets;
-- Non-PPA deployments of the Matrix Energy Management platform and DER
Flex Internet of Energy software occurred with key customers, including
Schneider Electric, ENMAX, a major utility in Calgary, Alberta, the
Chemehuevi Native American tribe's community center in San Bernardino
County, and the Alliance for Sustainable Colorado in Denver;
-- Signed collaboration agreement with Schneider Electric to explore
distributed energy resource technology and market opportunities;
-- Announced an expanded focus on the utility market segment through the
creation of a utility market vertical in the company;
-- Designed and managed the Smart Energy Microgrid Marketplace on-site
microgrid demonstration system at Solar Power International (SPI), one
of North America's biggest solar trade conferences;
-- Initial deployment of the EnSync Energy SuperModule(TM), 20-foot
containers that can quickly be placed and connected at the site,
containing both power controls and energy storage;
-- Acquired DCfusion, a direct-current (DC) system consulting, engineering
and policy expertise firm which strategically aligns with EnSync
Energy's technologies and target markets;
-- The Company's backlog as of today totals approximately $13.0 million in
estimated value at time of sale, up 125% from the Q4 2016 earnings call;
and
-- Cash balance at the end of June 2017 was $11.8 million.
Management Discussion
"Our commercialization strategy of selling custom designed distributed energy resource systems or DERs, is fundamentally solid. We have outstanding project development and sales capabilities, innovative and differentiated products like the Matrix Energy Management System and DER Flex, our Internet of Energy platform, and an assortment of storage alternatives that meet virtually any combination of applications you would ever need to perform," commented Brad Hansen, President and Chief Executive Officer of EnSync Energy Systems. "We continue to see an expanding market for our DER systems for commercial and industrial, and microgrid installations, whether financed, owned and operated through power purchase agreements, or directly sold to an end customer. We are pleased with the progress made in such a short period of time, including an expanding pipeline in both Hawaii and California, collaborations in place with industry leaders such as Schneider Electric, and the launch of products to address the utility market. We look forward to continued growth in fiscal 2018 and beyond."
Mr. Hansen continued, "The expansion and success of our business model during fiscal 2017 helped drive a six time increase in revenues, as we successfully sold 12 PPA projects that we had developed in Hawaii. These projects included key collaborations with Spectrum (formerly Time Warner), University of Nations, Easter Seals, and Villages of Kapolei, and supported key Hawaiian industries such as agriculture, food processing, telecommunications, hospitality, education, real estate and nonprofit. The market for our solutions continues to remain robust within Hawaii, with current backlog as of today up more than 125% from the Q4 2016 earnings call."
Mr. Hansen concluded, "Fiscal 2017 was a year of many records and accomplishments, while also positioning EnSync for continued growth into the future. In particular, we believe our collaboration with Schneider Electric to deploy systems to address the changing grid landscape through DER deployments provides an exciting opportunity to work with one of the largest companies in the industry. Additionally, we are also enthusiastic about our entry into the utility vertical. Our goal for the year is to penetrate more utilities and ISOs for asset management, utilizing our DER Flex technology, and leverage that success to other products and services in fiscal 2019 and beyond. Overall, our project pipeline is robust and with our addition of the California market and contribution from our efforts with the utility market vertical, we are well positioned to meet our growth initiatives."
Financial Results
Total revenue for the fourth quarter was $3.1 million compared to $1.3 million in the year ago period. Total revenue for the fiscal year ended June 30, 2017 was $12.5 million compared to $2.1 million in fiscal 2016. The increase in revenue this year is primarily attributable to the company's shift to a PPA-based sales model where the company successfully sold 12 PPA projects for a total of $17.2 million, 11 of which had at least partial revenue recognition during fiscal 2017 as we progressed on constructing and commissioning those projects. In addition to the PPA sales, revenue was also recognized from system sales of the Company's Matrix Energy Management System and DER Flex platform.
Total costs and expenses for the fourth quarter were $7.1 million compared to $7.0 million in the year ago period. Total costs and expenses during fiscal 2017 were $30.0 million, compared to $20.1 million for the fiscal year 2016. The cost of product sales, which includes the cost of goods sold for the revenue recognized on PPA projects as they are constructed, was $2.9 million for the quarter and $12.6 million for fiscal 2017. In the fourth quarter our gross margin on product sales revenue was 5.5%.
Advanced Engineering and Development costs decreased to $4.8 million in the fiscal 2017, compared to $6.2 million in the year ago period. Selling, General and Administrative costs totaled $11.1 million in fiscal 2017, compared to $9.0 million during fiscal 2016. The Company intends to hold at or below these levels going forward.
The Company derecognized a deferred revenue liability of $13.3 million tied to the now-terminated SPI supply agreement and recognized non-operating gain of $13.3 million pertaining to the same event.
Net loss attributable to common shareholders was $(4.4) million, or $(0.09) per basic and diluted share, for fiscal 2017, compared to $(18.2) million, or $(0.39) per basic and diluted share, in fiscal 2016.
Cash balance at June 30, 2017 was $11.8 million compared to $17.2 million at June 30, 2016.
Estimated backlog value for PPA projects, components and systems as of the date of this announcement is approximately $13.0 million.
Conference Call Information
Date: Wednesday, September 20, 2017
Time: 4:30 p.m. ET (3:30 p.m. CT)
Domestic participant dial in #: (877) 870-4263 or (412) 317-0790
Conference code #: 10112129
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.
Interested parties can also listen to a live internet webcast available in the investor section of the Company's website at www.ensync.com.
A teleconference replay of the call will be available at (877) 344-7529 or (412) 317-0088, confirmation code 10112129, through September 27, 2017. A webcast replay will be available in the investor section of the Company's website at www.ensync.com for 90 days.
About EnSync Energy Systems
EnSync, Inc. (NYSE American: ESNC), dba EnSync Energy Systems (EnSync Energy), is creating the future of electricity with innovative distributed energy resource (DER) systems and internet of energy (IOE) control platforms. EnSync Energy ensures the most cost-effective and resilient electricity, delivered from an electrical infrastructure that prioritizes the use of all available resources, such as renewables, energy storage and the utility grid. As project developer, EnSync Energy's distinctive engagement methodology encompasses load analysis, system design consulting, and technical and financial modeling to ensure energy systems are sized and optimized to meet our customers' objectives for value and performance. Proprietary direct current (DC) power control hardware, energy management software, and extensive experience with numerous energy storage technologies uniquely positions EnSync Energy to deliver fully integrated systems that provide for efficient design, procurement, commissioning, and ongoing operation. EnSync Energy's IOE control platform adapts easily to ever-changing generation and load variables, as well as changes in utility prices and programs, ensuring the means to make or save money behind-the-meter, while concurrently providing utilities the opportunity to use DERs for an array of grid enhancing services. In addition to direct system sales, EnSync Energy includes power purchase agreements (PPAs) in its portfolio of offerings, which enables electricity savings for customers and provides a stable financial yield for investors. EnSync Energy is a global corporation, with joint venture Meineng Energy in AnHui, China, and energy project development subsidiary Holu Energy LLC in Hawaii, and DCfusion LLC, a power system engineering and design, consultancy and policy firm. For more information, visit www.ensync.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the "safe harbor" created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "could," "seek," "intend," "plan," "goal," "estimate," "anticipate" or other comparable terms. All statements other than statements of historical facts included in this press release regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding project completion timelines, our ability to monetize our PPA assets, statements regarding the sufficiency of our capital resources, expected operating losses, expected revenues, expected expenses and our expectations concerning our business strategy, Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our historical and anticipated future operation losses and our ability to continue as a going concern; our ability to raise the necessary capital to fund our operations and the risk of dilution to shareholders from capital raising transactions; our ability to successfully commercialize new products, including our Matrix TM Energy Management, DER Flex TM, DER Supermodule TM, and Agile TM Hybrid Storage Systems; our ability to lower our costs and increase our margins; our product, customer and geographic concentration, and lack of revenue diversification; the length and variability of our sales cycle; our dependence on governmental mandates and the availability of rebates, tax credits and other economic incentives related to alternative energy resources and the regulatory treatment of third-party owned solar energy systems; and the other risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our most recently filed Annual Report on Form 10-K and our subsequently filed Quarterly Report(s) on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Investor Relations Contact:
Lytham Partners, LLC
Robert Blum, Joseph Diaz, or Joe Dorame
(602) 889-9700
EnSync Media Contact:
Michelle Montague
(262) 735-5676
EnSync, Inc.
Consolidated Statements of Operations
Year ended June 30,
-------------------
2017 2016
---- ----
Revenues
Product sales $12,319,184 $1,730,851
Engineering and development 175,000 369,172
Total revenues 12,494,184 2,100,023
Costs and expenses
Cost of product sales 12,586,458 3,486,542
Cost of engineering and
development 937,725 583,137
Advanced engineering and
development 4,829,840 6,234,083
Selling, general and
administrative 11,109,038 9,038,602
Depreciation and
amortization 551,680 772,332
Total costs and expenses 30,014,741 20,114,696
---------- ----------
Loss from operations (17,520,557) (18,014,673)
Other income (expense)
Equity in loss of investee
company (217,898) (242,902)
Interest income 41,661 46,438
Interest expense (50,474) (51,825)
Other income 15,405 -
Gain on termination of SPI
Supply Agreement 13,290,000 -
Total other income (expense) 13,078,694 (248,289)
---------- --------
Loss before benefit for
income taxes (4,441,863) (18,262,962)
Benefit for income taxes - (468)
--- ----
Net loss (4,441,863) (18,262,494)
Net loss attributable to
noncontrolling interest 352,327 386,436
Net loss attributable to
EnSync, Inc. (4,089,536) (17,876,058)
Preferred stock dividend (313,286) (291,995)
Net loss attributable to
common shareholders $(4,402,822) $(18,168,053)
=========== ============
Net loss per share
Basic and diluted $(0.09) $(0.39)
Weighted average shares -
basic and diluted 48,070,993 47,156,928
EnSync, Inc.
Consolidated Balance Sheets
June 30, 2017 June 30, 2016
------------- -------------
Assets
Current assets:
Cash and cash equivalents $11,782,962 $17,189,089
Accounts receivable, net 469,906 172,633
Inventories, net 2,482,013 1,869,942
Prepaid expenses and other current
assets 239,340 600,591
Customer intangible assets 8,249 76,293
Note receivable 171,140 171,140
Costs and estimated earnings in excess
of billings 87,318 -
Deferred PPA project costs - 5,690,307
Deferred customer project costs 104,800 419,765
Project assets 114,971 1,190,853
Total current assets 15,460,699 27,380,613
Long-term assets:
Property, plant and equipment, net 3,446,253 3,889,106
Investment in investee company 1,947,728 2,165,626
Goodwill 809,363 809,363
Right of use assets-operating leases 150,214 27,264
Total assets $21,814,257 $34,271,972
=========== ===========
Liabilities and Equity
Current liabilities:
Current maturities of long-term debt $317,497 $332,707
Accounts payable 487,185 569,226
Billings in excess of costs and
estimated earnings 456,950 -
Accrued expenses 743,948 501,031
Customer deposits 90,876 201,352
Accrued compensation and benefits 396,890 257,087
------- -------
Total current liabilities 2,493,346 1,861,403
Long-term liabilities:
Long-term debt, net of current
maturities 740,586 1,057,720
Deferred revenue 422,638 13,290,000
Other long-term liabilities 249,920 25,789
Total liabilities 3,906,490 16,234,912
Commitments and contingencies (Note 15)
Equity
Series B redeemable convertible preferred stock ($0.01 par value,
$1,000 face value), 3,000 shares authorized and issued, 2,300 shares outstanding, preference in liquidation of$5,631,086 and $5,317,800 as of June 30, 2017 and June 30, 2016, respectively 23 23
280 280
Series C convertible preferred stock ($0.01 par value,
$1,000 face value), 28,048shares authorized, issued,
and outstanding, preference in liquidation
of$12,276,682 and $12,719,260 as of June 30, 2017 and
June 30, 2016, respectively
1,260,324 1,185,843
Common stock ($0.01 par value),300,000,000 authorized,
55,200,963 and 47,752,821 shares issued and
outstanding as of June 30, 2017 and June 30, 2016,
respectively
Additional paid-in capital 141,822,317 137,585,233
Accumulated deficit (124,639,644) (120,550,108)
Accumulated other comprehensive loss (1,584,578) (1,585,583)
Total EnSync, Inc. equity 16,858,722 16,635,688
Noncontrolling interest 1,049,045 1,401,372
Total equity 17,907,767 18,037,060
---------- ----------
Total liabilities and equity $21,814,257 $34,271,972
=========== ===========
EnSync, Inc.
Consolidated Statements of Cash Flows
Year ended June 30,
-------------------
2017 2016
---- ----
Cash flows from operating activities
Net loss $(4,441,863) $(18,262,494)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation
of
property,
plant
and
equipment 483,636 679,303
Amortization
of
customer
intangible
assets 68,044 93,029
Stock-
based
compensation,
net 2,145,765 1,274,616
Impairment
of PPA
project
costs - 1,890,357
Equity in
loss of
investee
company 217,898 242,902
Provision
for
inventory
reserve 182,647 (102,651)
Gain on
sale of
property
and
equipment (1,911) -
Interest
accreted
on note
receivable (12,000) (12,033)
Gain on
termination
of SPI
Supply
Agreement (13,290,000) -
Changes in assets and liabilities
Accounts
receivable (297,273) (59,540)
Inventories (794,718) (569,174)
Prepaids
and
other
current
assets 361,405 (154,470)
Costs and
estimated
earnings
in
excess
of
billings (87,318) -
Deferred
PPA
project
costs 5,690,307 (7,580,664)
Deferred
customer
project
costs 314,965 (419,765)
Project
assets 1,075,882 (1,003,631)
Accounts
payable (82,041) (487,518)
Billings
in
excess
of costs
and
estimated
earnings 456,950 -
Accrued
expenses 198,147 (749,667)
Customer
deposits (110,476) (975,803)
Accrued
compensation
and
benefits 139,803 21,736
Deferred
revenue 422,638 13,290,000
Other
long-
term
liabilities 145,013 -
Net cash
used in
operating
activities (7,214,500) (12,885,467)
Cash flows from investing activities
Cash paid
for
business
combination - (225,829)
Change in
restricted
cash - 60,193
Expenditures
for
property
and
equipment (46,366) (406,917)
Proceeds
from
sale of
property
and
equipment 8,432 -
Payments
from
note
receivable 12,000 -
Net cash
used in
investing
activities (25,934) (572,553)
Cash flows from financing activities
Payment
of
financing
costs - (261,982)
Repayments
of long
term
debt (332,344) (319,607)
Proceeds
from
equipment
financing - 331,827
Payments
for
finance
leases - (13,521)
Proceeds
from
issuance
of
preferred
stock - 13,300,000
Proceeds
from
issuance
of
common
stock 2,095,840 6,800,000
Proceeds
from the
exercise
of stock
options 69,960 -
Contributions
of
capital
from
noncontrolling
interest - 53,614
Net cash
provided
by
financing
activities 1,833,456 19,890,331
Effect of
exchange
rate
changes
on cash
and cash
equivalents 851 (683)
Net
increase
(decrease)
in cash
and cash
equivalents (5,406,127) 6,431,628
Cash and
cash
equivalents
-
beginning
of year 17,189,089 10,757,461
---------- ----------
Cash and
cash
equivalents
-end of
year $11,782,962 $17,189,089
=========== ===========
Supplemental disclosures of cash flow
information:
Cash paid
for
interest $51,134 $47,568
Supplemental noncash information:
Right of
use
asset
obtained
in
exchange
for new
operating
lease 122,950 41,048
Asset
retirement
obligation - 18,527
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SOURCE EnSync, Inc.
