A123 Systems Announces First Quarter 2011 Financial Results

/ Source: GlobeNewswire

WALTHAM, Mass., May 9, 2011 (GLOBE NEWSWIRE) -- A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate™ lithium ion batteries and systems, today announced financial results for the first quarter ended March 31, 2011.

"Our first quarter results were in-line with our expectations," said David Vieau, CEO of A123 Systems. "Even more importantly, in the first quarter, we commenced volume production of battery systems for Fisker. The ramping of this program reinforces our expectation for a revenue inflection point beginning in the second quarter. We continue to expect strong revenue growth throughout the second half of the year as well, which is supported by our customers already in production, as well as a number of customer programs that are expected to enter production during the year, including BMW, Daimler, and Navistar. Additionally, we advanced our relationship with Smith Electric Vehicles by entering into a production and supply agreement, and we anticipate delivering batteries under this program in the second half of this year."

Vieau added, "The $254 million in funding we raised early in the second quarter further strengthens our ability to continue our rapid capacity expansion plans. The second phase of our Michigan build-out is under way, and we are expecting to more than double our current worldwide manufacturing capacity. This expansion supports our plans to capture significant market share and drive rapid revenue growth, with the goal of achieving profitability in the years ahead."

Financial Highlights

Revenue: Total revenue for the first quarter of 2011 was $18.1 million, compared to $24.5 million for the first quarter of 2010. Within total revenue, product revenue was $15.5 million, compared to $19.8 million in the first quarter of 2010, and services revenue was $2.6 million, compared to $4.7 million in the first quarter of 2010.

Gross Profit/(Loss): Gross loss was ($15.5) million in the first quarter of 2011, compared to a gross loss of ($2.0) million in the first quarter of 2010. 

Net Income/(Loss): Net loss was ($53.6) million, or ($0.51) per common share, based on 105.5 million weighted average common shares outstanding in the first quarter of 2011. This compared to a net loss of ($29.0) million in the first quarter of 2010, or ($0.28) per common share, based on 103.3 million weighted average common shares outstanding. 

Adjusted EBITDA: Adjusted EBITDA, a non-GAAP financial measure, was ($45.4) million in the first quarter of 2011, compared to ($22.8) million in the first quarter of 2010. 

A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included at the end of this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Cash: A123 Systems had cash and cash equivalents of $136.8 million at March 31, 2011, compared to $216.8 million at December 31, 2010. Cash and cash equivalents does not include $254 million in net proceeds from the concurrent common stock and convertible notes offerings completed early in the second quarter.

Other First Quarter Business Metrics

Revenue Mix: During the first quarter of 2011, transportation revenue was $12.3 million, electric grid revenue was not material, as anticipated, and commercial revenue was $3.1 million. This compares to a revenue mix of $10.3 million, $5.2 million and $4.3 million, respectively, in the first quarter of 2010. 

Product Shipments: During the first quarter of 2011, A123 Systems recorded product shipments equivalent to 14.3 million watt hours, compared to 16.3 million watt hours in the first quarter of 2010. 

Non-GAAP Financial Measures 

This press release contains a non-GAAP financial measure under the rules of the U.S. Securities and Exchange Commission for adjusted EBITDA. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with disclosures required by generally accepted accounting principles. Non-GAAP financial measures are used internally to manage the business, such as in establishing an annual operating budget. Non-GAAP financial measures are used by A123 Systems management in its operating and financial decision-making because management believes these measures reflect ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, A123 Systems believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the company's current financial results with past financial results. The primary limitations associated with the use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect operations. A123 Systems management compensates for these limitations by considering the company's financial results and outlook as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release.

A123 Systems defines "Adjusted EBITDA" as operating loss plus depreciation and amortization of tangible and intangible assets and stock-based compensation expense.

Conference Call Information   

About A123 Systems

A123 Systems, Inc. (Nasdaq:AONE) develops and manufactures advanced lithium ion batteries and battery systems for the transportation, electric grid services and commercial markets. Headquartered in Massachusetts and founded in 2001, A123 Systems' proprietary nanoscale electrode technology is built on initial developments from the Massachusetts Institute of Technology. For additional information please visit .

The A123 Systems, Inc. logo is available at

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding the Company's revenue expectations for the second quarter of 2011 and the second half of 2011, expectations regarding the number of customer programs that will commence production in 2011, the Company's ability to rapidly expand manufacturing capacity, the Company's ability to capture market share, the Company's ability to rapidly increase revenue and the Company's expectations regarding customer demand for its products.       

These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "might," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond A123 Systems' control.

A123 Systems' actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, the timing and terms of the Company's U.S. government funding, delays in customer and market demand for and adoption of the Company's products in the transportation, electric grid and other target markets, the Company's ability to expand its U.S. manufacturing capacity to address anticipated market demand, delays in the development of the Company's new products, the Company's ability to attract new customers and retain existing customers, continued delays in volume production by the Company's customers, increases in production start-up expenses, interruption in the supply of key materials due to the earthquake in Japan, adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which the Company operates, failure to negotiate acceptable contract terms with new customers or early termination of the Company's agreements with key customers, and other risks detailed in A123 Systems' other publicly available filings with the Securities and Exchange Commission.

Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent A123 Systems' views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. A123 Systems undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing A123 Systems' views as of any date subsequent to the date of this press release.

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CONTACT: Public Relations: A123 Systems Dan Borgasano 617-972-3471 dborgasano@a123systems.com Edelman Courtney Kessler 212-277-3720 courtney.kessler@edelman.com Investor Relations: ICR Garo Toomajanian 617-972-3450 ir@a123systems.com