Polar Power, Inc. (“Polar Power” or the “Company”) (NASDAQ: POLA),
a global provider of prime, backup and solar hybrid DC power
solutions, today reported its financial results for the three and
six months ended June 30, 2023.
Key Q2 2023 Results and
Highlights:
Financial Results for the Three and Six
Months Ended June 30, 2023
• Net sales
for Q2 2023 were $5.5 million, a 31% increase compared to $4.2
million in the same period last year. Net sales for the six months
ended June 30, 2023 were $9.7 million, a 22% increase, as compared
to $7.9 million in the same period last year.
• Gross
profit during the Q2 2023 increased 39%, to $1.4 million, as
compared to $1.0 million in the same period in 2022. Gross margins
during Q2 2023 increased to 26.4%, as compared to 24.8% during Q2
2022. Gross profit during the six months ended June 30, 2023,
increased 13%, to $2.2 million, as compared to $1.9 million for the
same period in 2022. The increases in gross profit during the
three- and six-months periods ended June 30, 2023 were primarily a
result of improved labor efficiencies in manufacturing and
utilization of previously written off obsolete inventory of
$173,000 during Q2 2023 and $195,000 during the six-month period
ended June 30, 2023.
• Operating
expenses remained constant at $1.7 million during Q2 2023, as
compared to $1.7 million for Q2 2022. Operating expenses for the
six months ended June 30, 2023 decreased 6% to $3.5 million, as
compared to $3.7 million for the same period in 2022. The decrease
was primarily due to staff reductions in sales and engineering.
• Net loss
for Q2 2023 totaled $436,000, or $(0.03) per basic and diluted
share, compared to a net loss of $739,000, or $(0.06) per basic and
diluted share in Q2 2022. Net loss for the six months ended June
30, 2023 totaled $1.5 million, or $(0.12) per basic and diluted
share, compared to a net loss of $1.8 million, or $(0.15) per basic
and diluted share during the same period in 2022.
• Cash and
cash equivalents at June 30, 2023 were $292,000, as compared to
$211,000 at December 31, 2022. We had $17.7 million in inventory at
June 30, 2023, as compared to $15.4 million at December 31, 2022.
Working capital was $15.4 million at June 30, 2023, as compared to
$17.3 million at December 31, 2022
• Backlog as
of the end of Q2 2023 was $5.9 million, of which 68% is from orders
of the Company’s DC power generators from telecommunications
customers in the U.S., 23% from telecommunications customers in
international markets, 6% from customers in the military market, 2%
from customers in the marine market, and 3% from customers in other
markets.
Management Commentary
The Company’s net sales increased 31% in Q2
2023, as compared to Q2 2022, and gross profit increased 39% during
Q2 2023 when compared to Q2 2022. During Q2 2023, sales to
telecommunications customers in the U.S. represented 68% of total
net sales, sales to telecommunications customers outside the U.S.
represented 29%, sales to customers in the military market
represented 2%, and sales to other markets represented less than
1%. During Q2 2022, sales to telecommunications customers in the
U.S. represented 97% of total net sales, sales to
telecommunications customers outside the U.S. represented 2%, and
sales customers other markets represented less than 2%.
For the six months ended June 30, 2023, the
Company’s net sales increased 22% when compared to the same period
in 2022, and gross profit increased 13% for the six months ended
June 30, 2023, as compared to the same period in 2022. During the
six months ended June 30, 2023, sales to telecommunications
customers in the U.S. represented 68% of total net sales, sales to
telecommunications customers outside the U.S. represented 28%,
sales to customers in the military market represented 3%, and sales
to other markets represented less than 1%. During the six-month
period ended June 30, 2022, sales to telecommunications customers
in the U.S. represented 98% of total net sales, sales to
telecommunications customers outside the U.S. represented 1%, and
sales to customers in other markets represented less than 1%.
The Company’s ongoing sales and marketing
efforts overseas resulted in an increase of approximately 2100% in
sales of DC generators to telecommunications customers in
international markets during the three- and six-months ended June
30, 2023, as compared to the same periods in 2022. The Company has
several telecommunications customers in the south pacific region
using the Company’s DC generators to develop the telecommunications
infrastructure in this region and supply rural areas with broadband
services. As of June 30, 2023, 25% of the total backlog, or $1.5
million, represents purchase orders of DC generators for customers
in international markets.
Telecommunications customers in international
markets are primarily purchasing the Company’s DC generators for
off-grid (i.e., areas where wireless towers are not connected to an
electrical grid) and bad-grid (i.e., areas where wireless towers
are connected to an electrical grid that loses power more than
eight hours) applications. The Company’s solar hybrid power
systems, which integrate solar energy storage with natural gas/LPG
powered generators, are ideal for off-grid and bad-grid
applications. The Company’s backlog as of June 30, 2023, includes
approximately $1.1 million in orders for solar hybrid power
systems, which are expected to ship during the Q3 2023.
The Company believes the implementation and
ongoing development of 5G networks along with programs to develop
the telecommunications infrastructure in rural and underdeveloped
countries will continue to fuel the Company’s growth in the
telecommunications market over the next five to ten years.
The Company launched the Toyota 1KS during Q1
2023. The Company believes the Toyota prime power engines, when
configured into generators, will provide strong opportunities for
growth and diversification in line with the Company’s long-term
plan. This engine platform is expected to easily facilitate the
shift from diesel to natural gas and LPG (liquid petroleum gas, aka
propane or butane). LPG and natural gas fuel reduce carbon
emissions between 16% to 27% and, when combined with the increased
fuel efficiency of DC generators and solar technologies, emissions
become very minimal. The Toyota 1KS prime power engines have much
lower maintenance requirements when compared to diesel engines and
the current LPG and natural gas backup generators from the major
brands. The Toyota 1KS engine will be focused on applications in
telecommunications, microgrids, electric vehicle (“EV”) charging,
and CHP (combined heat and power).
Company has purchased a large number of Toyota
engines over the last three years in anticipation of launching the
Toyota engine, requiring significant working capital, but believes
it is well positioned to meet anticipated demand. This inventory is
expected to convert back to cash as product sales accelerate. As a
hedge against the world supply chain problems, Polar Power has
maintained large inventory levels on critical items.
The Company is in the process of upgrading its
mobile EV charging systems to the universal combined charging
system standard (CCS) to reach the mobile EV charging market. The
Company is taking orders for the Company’s new line of EV chargers
and expects to have them available before the end of the first
quarter of 2024. Mobile EV chargers are used for emergency roadside
service, providing a fast-charging solution for EVs that have run
out of charge before reaching a stationary charging facility.
About Polar Power, Inc.
Gardena, California-based Polar Power, Inc.
(NASDAQ: POLA), designs, manufactures and sells direct current, or
DC, power systems, lithium battery powered hybrid solar systems for
applications in the telecommunications market and, in other
markets, including military, EV charging, cogeneration, distributed
power and uninterruptable power supply. Within the
telecommunications market, Polar Power’s systems provide reliable
and low-cost energy for applications for off-grid and bad-grid
applications with critical power needs that cannot be without power
in the event of utility grid failure. For more information, please
visit www.polarpower.com. or follow us on
www.linkedin.com/company/polar-power-inc/.
Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995
This news release contains certain statements of
a forward-looking nature relating to future events or future
business performance. Forward-looking statements can be identified
by the words “expects,” “anticipates,” “believes,” “intends,”
“estimates,” “plans,” “will,” “outlook” and similar expressions.
Forward-looking statements are based on management’s current plans,
estimates, assumptions and projections, and speak only as of the
date they are made. With the exception of historical information,
the matters discussed in this press release including, without
limitation, Polar Power’s belief that the implementation and
ongoing development of 5G networks along with programs to develop
the telecommunications infrastructure in rural and underdeveloped
countries will continue to fuel the Company’s growth in the
telecommunications market over the next five to ten years; Polar
Power’s belief that Toyota prime power engines will provide strong
opportunities for growth and diversification; Polar Power’s
expectation that its line of EV chargers will be available in the
year 2024; and Polar Power’s expectations that it’s large
investments in inventory, including engines, will convert back to
cash as product sales accelerate are forward-looking statements and
considerations that involve a number of risks and uncertainties.
The actual future results of Polar Power could differ from those
statements. Factors that could cause or contribute to such
differences include, but are not limited to, adverse domestic and
foreign economic and market conditions, including demand for its
solar hybrid power systems and mobile EV chargers; trade tariffs on
raw materials; changes in domestic and foreign governmental
regulations and policies; the impact of inflation and changing
prices on raw materials; supply chain constraints causing
significant delays in sourcing raw materials; labor shortages as a
result of the pandemic, low unemployment rates, or other factors
limiting the availability of qualified workers; and other events,
factors and risks. It undertakes no obligation to update any
forward-looking statement in light of new information or future
events, except as otherwise required by law. Forward-looking
statements involve inherent risks and uncertainties, most of which
are difficult to predict and are generally beyond Polar Power’s
control. Actual results or outcomes may differ materially from
those implied by the forward-looking statements as a result of the
impact of a number of factors, many of which are discussed in more
detail in Polar Power’s reports filed with the Securities and
Exchange Commission.
Company Contact:Polar Power,
Inc.249 E. Gardena Blvd.Gardena, CA 90248Tel:
310-830-9153ir@polarpowerinc.comwww.polarpower.com
POLAR POWER,
INC.CONDENSED BALANCE
SHEETS(in
thousands, except share and per share data)
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
292 |
|
|
$ |
211 |
|
Accounts receivable |
|
|
3,718 |
|
|
|
2,230 |
|
Inventories, net |
|
|
17,689 |
|
|
|
15,460 |
|
Prepaid expenses |
|
|
1,050 |
|
|
|
2,629 |
|
Employee retention credit receivable |
|
|
2,000 |
|
|
|
2,000 |
|
Income taxes receivable |
|
|
787 |
|
|
|
787 |
|
Total current assets |
|
|
25,536 |
|
|
|
23,317 |
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
Operating lease right-of-use
assets, net |
|
|
2,178 |
|
|
|
240 |
|
Property and equipment,
net |
|
|
505 |
|
|
|
538 |
|
Deposits |
|
|
93 |
|
|
|
93 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
28,312 |
|
|
$ |
24,188 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,429 |
|
|
$ |
230 |
|
Customer deposits |
|
|
1,535 |
|
|
|
2,126 |
|
Accrued liabilities and other current liabilities |
|
|
1,242 |
|
|
|
1,231 |
|
Operating lease liabilities, current portion |
|
|
717 |
|
|
|
268 |
|
Notes payable-related party, current portion |
|
|
160 |
|
|
|
— |
|
Notes payable, current portion |
|
|
135 |
|
|
|
211 |
|
Line of credit |
|
|
4,927 |
|
|
|
1,884 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
10,145 |
|
|
|
5,950 |
|
|
|
|
|
|
|
|
|
|
Notes payable, net of current
portion |
|
|
8 |
|
|
|
57 |
|
Operating lease liabilities,
net of current portion |
|
|
1,527 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
11,680 |
|
|
|
6,007 |
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no
shares issued and outstanding |
|
|
— |
|
|
|
— |
|
Common stock, $0.0001 par value, 50,000,000 shares authorized,
12,967,027 shares issued and 12,949,550 shares outstanding on June
30, 2023, and 12,967,027 shares issued and 12,949,550 shares
outstanding on December 31, 2022 |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
37,331 |
|
|
|
37,331 |
|
Accumulated deficit |
|
|
(20,660 |
) |
|
|
(19,111 |
) |
Treasury Stock, at cost (17,477 shares) |
|
|
(40 |
) |
|
|
(40 |
) |
Total stockholders’
equity |
|
|
16,632 |
|
|
|
18,181 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity |
|
$ |
28,312 |
|
|
$ |
24,188 |
|
POLAR POWER,
INC.UNAUDITED CONDENSED STATEMENTS OF
OPERATIONS(in
thousands, except share and per share data)
|
|
Three Months EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net
Sales |
|
$ |
5,587 |
|
|
$ |
4,274 |
|
|
$ |
9,777 |
|
|
$ |
7,983 |
|
Cost of
Sales |
|
|
4,112 |
|
|
|
3,213 |
|
|
|
7,548 |
|
|
|
6,017 |
|
Gross
profit |
|
|
1,475 |
|
|
|
1,061 |
|
|
|
2,229 |
|
|
|
1,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
310 |
|
|
|
400 |
|
|
|
642 |
|
|
|
805 |
|
Research and development |
|
|
338 |
|
|
|
350 |
|
|
|
684 |
|
|
|
826 |
|
General and
administrative |
|
|
1,137 |
|
|
|
1,036 |
|
|
|
2,248 |
|
|
|
2,167 |
|
Total operating
expenses |
|
|
1,785 |
|
|
|
1,786 |
|
|
|
3,574 |
|
|
|
3,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(310 |
) |
|
|
(725 |
) |
|
|
(1,345 |
) |
|
|
(1,832 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and finance costs |
|
|
(126 |
) |
|
|
(14 |
) |
|
|
(204 |
) |
|
|
(27 |
) |
Total other income
(expenses), net |
|
|
(126 |
) |
|
|
(14 |
) |
|
|
(204 |
) |
|
|
(27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(436 |
) |
|
$ |
(739 |
) |
|
$ |
(1,549 |
) |
|
$ |
(1,859 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share – basic and
diluted |
|
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.15 |
) |
Weighted average shares
outstanding, basic and diluted |
|
|
12,949,550 |
|
|
|
12,788,203 |
|
|
|
12,949,550 |
|
|
|
12,788,203 |
|
POLAR POWER,
INC.UNAUDITED CONDENSED STATEMENTS OF CASH
FLOW(in
thousands)
|
|
Six Months EndedJune 30, |
|
|
|
2023 |
|
|
2022 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,549 |
) |
|
$ |
(1,859 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
226 |
|
|
|
264 |
|
Changes in operating assets
and liabilities |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(1,488 |
) |
|
|
249 |
|
Inventories |
|
|
(2,229 |
) |
|
|
(2,968 |
) |
Prepaid expenses |
|
|
1,579 |
|
|
|
(380 |
) |
Decrease in operating lease right-of-use asset |
|
|
454 |
|
|
|
334 |
|
Accounts payable |
|
|
1,199 |
|
|
|
(193 |
) |
Customer deposits |
|
|
(591 |
) |
|
|
2,588 |
|
Accrued expenses and other current liabilities |
|
|
11 |
|
|
|
8 |
|
Decrease in operating lease liability |
|
|
(416 |
) |
|
|
(354 |
) |
Net cash used in operating
activities |
|
|
(2,804 |
) |
|
|
(2,311 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Acquisition of property and
equipment |
|
|
(194 |
) |
|
|
(15 |
) |
Net cash used in investing
activities |
|
|
(194 |
) |
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Proceeds from advances from
credit facility |
|
|
3,044 |
|
|
|
— |
|
Proceeds from notes payable,
related party |
|
|
160 |
|
|
|
— |
|
Repayment of notes
payable |
|
|
(125 |
) |
|
|
(119 |
) |
Net cash provided by (used in)
financing activities |
|
|
3,079 |
|
|
|
(119 |
) |
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
and cash equivalents |
|
|
81 |
|
|
|
(2,445 |
) |
Cash and cash equivalents,
beginning of period |
|
|
211 |
|
|
|
5,101 |
|
Cash and cash
equivalents, end of period |
|
$ |
292 |
|
|
$ |
2,656 |
|
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