ZBB Energy Corporation had record revenue in fiscal year 2012. It expects revenue to accelerate in 2013 and expects to be cash positive in 2013.
In Q4, ZBB shipped four ZBB units to clients around the world and shipped components for 10 of the ZBB EnerStore to its China joint venture partner for assembly. It received repeat orders from its China joint venture partner for $600,000.
It also signed a contract with the Department of Defense to provide a power management system to Smart Power Infrastructure Demonstration for Energy Reliability (SPIDERS) in Pearl Harbor.
In Q4, ZBB also successfully installed and commissioned a 500 kilowatt hour energy management system, including ZBB EnerStore storage and ZBB EnerSection inverters on the Illinois Institute of Technology Campus. The installation includes an EnerSystem comprised of 500 kilowatt hour modules. The modules are capable of both grid tie and off grid operations via 250 kilowatt EnerSection consisting of two 125 kilowatt inverters.
Finally, ZBB received the Edison Testing Laboratory (ETL) listing to UL 1741 standards for its 125 kilowatt inverters.
A number of ZBB's competitors are starting to follow ZBB's use of smart storage versus centralized storage. However, they do not have an EnerSection platform to allow them to operate efficiently in this mode.
ZBB believes it is at the growth part of an inflection point. Since July 1st, it has shipped 25 EnerStore V3 modules together with EnerSection power and energy control components that will be used in multiple projects throughout the United States and Hawaii.
As it works toward commercial deployment of its EnerStore and EnerSecton products, it is simplifying the components for the system and the system itself in order to reduce costs and reduce lead times. ZBB is on track to meet its goal of 30 percent materials cost reduction.
ZBB is delaying the introduction of its 60 kilowatt inverter because it believes it can manage grid time needs through its 25 and 125 kilowatt inverters. It will re-introduce the 60 kilowatt in the future if a need develops.
In the electronics business, ZBB is seeing increased success with its Hybrid Bus Controller program. It expects the product line to be at or above its target margins and its partner is planning to growing the product line.
Overseas, ZBB will being rolling out and marketing products in Korea. It expects orders from Korea to be placed in the fall. In China, its China JV Meineng Energy is increasing activity and the official opening will take place on July 25. They are building 10 EnerStores, which should be installed and commissioned by the end of the year. The market looks very strong and there are opportunities for lead acid battery replacement , wind energy, and micro grids. ZBB also expects good opportunities in Japan, since Japan just instituted a $0.53 per kilowatt hour feed in tariff renewable energy. ZBB expects to be a significant player in this process with help of its strategic partner in Korea, Honam (a plastics and battery components company) and its parent company, the Lotte Group. ZBB would like to find a strategic partner in India.
Financials.
Revenue in Q4 declined by 21 percent. With the commercialization of the new ZBB EnerSystems, the model is changing and product sales will be a larger part of revenue. Product sales in Q4 increased by 29 percent. Engineering sales declined by 68 percent. Because engineering sales are "lumpy," it is difficult to compare quarters.
Revenue for fiscal year 2012 increased by 167 percent. For the year, product revenue increased by 145 percent and engineering services increased by 189 percent.
Total costs for Q4 increased by $2.1 million, which consisted of:
(1) product cost increases of $704,000, which included $149, 000 of year end accounting adjustments. The remaining increased costs was due to higher start-up costs due to low volume production.
(2) advanced engineering and development expenses increased by $1.5 million for the ZBB EnerStore and ZBB EnerSection systems, which includes preproduction development and pilot plant operations, prototype production and ETL testing in the June 2012 quarter.
Net loss in Q4 was $.13 versus a net loss of $.08 in Q4/2011. Net loss for fiscal year 2012 was $.37 versus a net loss of $.38 a year ago.
On June 19, 2012, ZBB closed it secondary offering, which yielded net proceeds of $10.8 million. On July 5, 2012, ZBB closed an overallotment option for $1.6 million. The total net proceeds were $12.4 million. The company used the proceeds from the offering to regain its previously issued convertible debt.
Current backlog is $6.2 million, which includes $5.7 million in product backlog and $500,000 in engineering contract backlog. ZBB expects the backlog to result in a net cash flow of $4 million. Cash burn is currently $900,000 per month, but it should decline during the year when ZBB receives cash flow from the backlog.
ZBB believes it should reach a positive EBITDA in fiscal year 2013. It expects blended product margins to reach the mid 30s in fiscal year 2015. The storage market is projected to grow 200 percent over this period.
The transcript of the conference call can be found on Seeking Alpha at the following link:
http://seekingalpha.com/article/854131-zbb-energy-corporation-s-ceo-discusses-f4q2012-results-earnings-call-transcript?part=single
Copyright 2012 Jaygo's Earnings Conference Call Summaries
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
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