AlTi Global, Inc.
Q4 2012 Earnings Call Transcript

Published: 28 Mar 2013

[Executives:]

Alexander S. Lee - Chief Executive Officer and Director Stephen B. Huang - Chief Financial Officer, Principal Accounting Officer and Corporate Secretary

[Operator:]

Good day, ladies and gentlemen, and welcome to the Altair Nanotechnologies Fourth Quarter and Full Year 2012 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the call over to our host for today, Mr. Tom Loffman [ph]. Sir, please go ahead.

[Unknown Executive:]

Thank you, and welcome, everyone to today's call. I've been asked to make the following statement. The statements in this conference call that relate to future results, markets, growth plans or performance are forward-looking and involve certain risks and uncertainties including those associated with uncertain demand for our products and services, the early stage of development of many of our products and services and related markets and other risks identified in the company's SEC filings, including its most recent annual report on Form 10-K and quarterly reports on Form 10-Q. Actual results, events and performance may differ materially. Conference call participants are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Altair Nano undertakes no obligation to update these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events. With us today on this call would be Alex Lee, Chief Executive Officer; and Stephen Huang, Vice President and Chief Financial Officer. I would like to now turn the call over to the company's Chief Executive Officer, Mr. Alex Lee. Alex?

[Alexander S. Lee:]

Thanks, Tom, and good morning to everyone who's just joined the call. It's really hard to believe that 1 year has passed since [indiscernible] and I joined the company. It's certainly been an interesting year, one of the many highs and lows and one that certainly brought many changes to the company. As you may have seen already in our earnings release this morning, we recognized about $1.5 million of revenue on about nearly $6 million in customer payments that we received in 2012. I'd like to hit this issue head-on because the financial results really shouldn't overshadow all the good work that we actually did this year. Here's why

[Stephen B. Huang:]

Thanks, Alex, and good morning to everyone. For the year ended December 31, 2012, revenues were $1.5 million compared to the year of 2011 revenue of $5.2 million. Deferred revenues grew to $7.2 million as of December 31, 2012, compared to $1.6 million as of December 31, 2011. Gross loss was $1.3 million in 2012, compared to $571,000 in 2011. The net loss for 2012 was $18 million or $1.55 per share compared to a net loss of $19.9 million or $2.55 per share for 2011. For the fourth quarter ended December 31, 2012, revenues were $476,000 compared to the fourth quarter of 2011 revenues of $1.3 million. Gross loss was $114,000 in the fourth quarter of 2012, compared to $445,000 in the fourth quarter of 2011, primarily due to the reversal of inventory reserve previously recorded. Operating expenses were $4.1 million in the fourth quarter of 2012 compared to $5.6 million for the same period in 2011, primarily due to the impairment of fixed asset in the fourth quarter of 2011. The net loss for the fourth quarter of 2012 was $3.6 million or $0.31 per share compared to a net loss of $5.1 million or $0.51 per share for the same period in 2011. The basic and diluted weighted average shares outstanding for the year of 2012 were $11.6 million compared to $7.8 million for the year of 2011. Revenues were decreased by $3.7 million in 2012 while the deferred revenues were increased by $5.6 million in 2012, primarily due to timing of when we recognize revenue based on revenue recognition guidelines. Gross loss was increased by $754,000 in 2012, primarily due to cost increases associated with the launch of new electric grid product. Operating expenses were decreased by $3.2 million in 2012 compared to 2011. This decrease was due to achieving planned reductions overall in research and development, sales and marketing, and general and administrative expenses in 2012. Recording impairment of fixed assets of approximately $900,000 in 2001 -- I'm sorry, 2011 and recording severance expenses of approximately $900,000 in 2011. Net loss was decreased by $1.9 million in 2012, primarily due to overall decreases in operating expenses. Altair's cash and cash equivalents decreased by $34.1 million from $46.5 million as of December 31, 2011, to $12.4 million as of December 31, 2012. This was primarily due to the $20.6 million of cash used in operating activities during 2012. The bulk of the cash used in operations went to cover our net loss of $18 million, offset by $6.7 million in proceeds from 3 short-term note payable used for the $5.5 million through up of work-in-process inventory related to the fulfillment of customer sales backlog, of which $2.4 million is included in deferred contract cost. Northern Altair also received cash grant incentive of $11.8 million from the Wu'an government and recorded it as restricted cash, which can be used subject to meeting certain guidelines agreed upon by the Wu'an government and the company. A summary of the cash position as of December 31, 2012, included cash and cash equivalents of $12.4 million. In addition, the company has $18 million in restricted cash, of which $6.2 million is classified as short-term. The remaining $11.8 million in restricted cash relates to the grant incentives, which is classified as long-term. Our overall cash position, including restricted and long-term restricted classifications was $30.4 million as of December 31, 2012. As Alex mentioned earlier, some of the restricted cash is earmarked for our expansion plans in China. We received $5.9 million in customer visits during 2012. The company is expecting an estimated $2 million in cash received during 2013, which relates to 3 large projects sitting in our deferred revenue as of December 31, 2012. Of this amount, $1 million has already been invoiced and is in the accounts receivable balance as of December 31, 2012, and the other $1 million is expected to be invoiced for these large projects in the first half of 2013. With that, I'd like to turn it back over to Alex.

[Alexander S. Lee:]

Thanks, Stephen. I can see that there are quite a few callers online today, so I'd like to just quickly turn it over to the Q&A period, if we can do that.

[Operator:]

[Operator Instructions]

[Alexander S. Lee:]

It just looks like there aren't any questions at this point.

[Operator:]

I see no questions in the queue.

[Alexander S. Lee:]

Give them another minute.

[Operator:]

[Operator Instructions]

[Alexander S. Lee:]

While we're waiting, just perhaps in conclusion -- looks like a question is coming in.

[Operator:]

We do have a question from the line of Robert Cousins [ph], a private investor.

[Unknown Shareholder:]

Yes. I was wondering if you could reveal more information on the utility on the East Coast that you delivered an ESS system to?

[Alexander S. Lee:]

Unfortunately, that one is -- again, we entered into agreements with the companies and what ends up happening is we're bound by mutual confidentiality provisions and basically, until we typically install or commission those systems, we abide by those restrictions. So the best I can say is that it's on the East Coast and that is with a utility company. So at this point, I can't disclose the name, unfortunately. I'd love to talk about it more, but I'm sorry about that.

[Unknown Shareholder:]

All right. But you think that you might be able to in the future?

[Alexander S. Lee:]

Oh sure, yes. That should be up and running very soon, so that's something that we can certainly talk about, once they've been commissioned. Yes.

[Operator:]

And we have another question now from the line of Patrick Getard [ph], another private investor.

[Unknown Shareholder:]

I was wondering with the Proterra Bus Company, how much how long is the contract you have with them to supply the batteries for their buses?

[Alexander S. Lee:]

Basically, the orders that we have are basically for the 2013 time frame, at this point. The orders were placed or rather the contract was entered into back in May. There was some testing and validation work that we have to do in 2012, mostly because our cell size had changed over the years from a 50-amp power to the 60-amp power cells, so we -- what's common in the automotive industry is to go through a what's called the PPAP process, which is production parts acceptance procedures and essentially go through that with Proterra. So the orders kick in, in 2013 and basically, are pretty evenly spaced throughout the year.

[Unknown Shareholder:]

Do you know how many batteries or how many buses they plan on producing this year?

[Alexander S. Lee:]

Again, unfortunately, this is one of those things that falls under the NDA again, and I would certainly love to give guidance to the market as to how much revenue we can expect from Proterra and so forth, but due to the competitive state of the industry for Proterra and also the NDA provisions, we've typically not disclosed how many buses that we would be supplying batteries for. That NDA kind of works to our judgment here, but we do honor that request from our customer.

[Unknown Shareholder:]

Okay. Is there any reason why you could not get at least a 3-year supply agreement with them as did UQM Motors that are supplying the motors for their buses?

[Alexander S. Lee:]

Well, that order I did see in, I guess, there's some information in the press about that. Certainly, we would like to enter into long-term agreements with all of our customers and certainly that's something that our sales team will take a look into and see what we can do.

[Operator:]

And I have no further questions at the moment.

[Alexander S. Lee:]

Okay. Well, thank you very much to everyone who joined the call, and I would like to thank the Altair team. 2012 was certainly an interesting year for us, and I do think that the team performed very well under some difficult market conditions. Certainly, the battery industry is not in the best shape. To all our investors, I do want to make a very clear point, which is that Altair Nano is not a cell manufacturer. Many of the battery companies in the U.S. that are facing some difficulties basically are weighed down by issues related to having a lot of plants and equipment associated with cell manufacturing. That is something that Altair does not have. In the past, that did provide some challenges for us because, let's say 5 years ago, there weren't many cell manufacturers out there in the market that could produce the types of cells that we needed. However, today, there's overcapacity in the market. There are many high-quality cell manufacturers around the world, and we are working to identify more and more of them, and basically, we are not weighed by -- weighed down by that infrastructure, which allows us to basically survive these difficult market conditions. That being said, we see good promise for our various products in the different market segments that we're operating in. And certainly, we view the China market as something that will expand our market opportunities, not contract them. There are a lot of favorable policies that are geared towards the electrification of transportation, for example. And we intend to work with a number of different companies there to attack that market opportunity. So with that said, thanks to everyone, and we appreciate your time.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone, have a good day.