Polar Power(POLA) - 2023 Q4 - Annual Results

Executive Summary 2023 Financial Highlights Polar Power faced declining revenue and gross profit, an expanded net loss in FY2023, but reduced operating expenses, while making progress in customer diversification and international expansion, securing over $5 million in new Q1 2024 orders Key Financial Data Comparison for FY2023 (million USD) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $15.3 | $16.1 | -5.0% | | Gross Profit | $0.7 | $2.1 | -66.7% | | Operating Expenses | $6.7 | $7.7 | -13.0% | | Net Loss | $(6.5) | $(5.6) | +16.1% | | Basic and Diluted Loss Per Share | $(0.49) | $(0.43) | +13.9% | Balance Sheet and Order Status as of End of 2023 (million USD) | Metric | Dec 31, 2023 | Dec 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Working Capital | $11.8 | $17.4 | -32.2% | | Total Liquidity | $1.0 | - | - | | Backlog Orders | $3.9 | - | - | | Q1 2024 New Orders | $5.1 | - | - | | Current Backlog (April 1, 2024) | $7.7 | - | - | - The company completed a public offering of common stock in December 2023, raising $1.84 million in gross proceeds. The top two customers' share of total sales decreased from 89% to 68%, and international sales accounted for over 20% of total sales for the second consecutive year, indicating progress in customer diversification[8] Recent Operating Highlights and Outlook Despite 2023 order volatility, the company achieved nearly 90% sequential Q4 revenue growth, secured over $5 million in new Q1 2024 orders, and made significant progress in customer diversification and international expansion, planning sales and marketing investments for 2024 improvement - Q4 2023 revenue reached $3.6 million, a nearly 90% sequential increase from Q3[4] - Over $5 million in new orders were announced in Q1 2024, with expectations for continued orders from Tier 1 telecom customers and other international telecom providers[4] - Progress in customer diversification includes significant product deliveries to Southeast Asian customers, repeat orders from Puerto Rico's largest telecom provider, and healthy growth in military sales[5] - The company plans to invest in its sales and marketing organization in 2024 to accelerate sales growth and is committed to managing operating expenses for simultaneous revenue and profit improvement[6] About Polar Power, Inc. Polar Power, Inc. is a global leader in DC advanced power and cooling systems, dedicated to transforming power generation through innovation and reducing environmental impact, with a broad product portfolio across various industrial sectors and support for multiple energy sources - Polar Power is a leading provider of DC advanced power and cooling systems, committed to technological transformation in power generation and reducing environmental impact[7] - The company's product portfolio spans telecom, military, renewable energy, marine, automotive, residential, commercial, oilfield, and mining applications, known for innovation, durability, and efficiency[7] - Its systems are configurable to use various energy sources, including solar PV, diesel, liquefied petroleum gas (propane and butane), and renewable fuels[7] - The company offers diverse solutions, including power systems providing significant cost savings for telecom, compact and fuel-efficient power for military applications, mobile fast-charging technology for EVs, residential systems with combined heat and power, and micro/nano-grid solutions[9] Safe Harbor Statement This press release contains forward-looking statements regarding future events or business performance, based on management's current plans, estimates, assumptions, and projections, which inherently involve risks and uncertainties where actual results may differ materially - Forward-looking statements are identified by words such as 'anticipate,' 'expect,' 'believe,' 'intend,' 'estimate,' 'plan,' 'will,' 'outlook,' and are based on management's current plans, estimates, assumptions, and projections[11] - Actual future results may vary due to various factors, including adverse domestic and international economic and market conditions, raw material trade tariffs, changes in government regulations and policies, inflationary impacts, supply chain constraints, and labor shortages[11] Financial Statements BALANCE SHEETS As of December 31, 2023, Polar Power's total assets and liabilities increased, while total stockholders' equity decreased, driven by higher cash and cash equivalents, lower receivables, increased inventory, and a significant rise in accounts payable and total current liabilities Key Balance Sheet Data (thousand USD) | Metric | Dec 31, 2023 | Dec 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | $549 | $211 | +160.2% | | Accounts Receivable | $1,676 | $2,230 | -24.9% | | Inventory | $16,522 | $15,460 | +6.9% | | Total Current Assets | $21,989 | $23,317 | -5.8% | | Total Assets | $25,259 | $24,188 | +4.4% | | Accounts Payable | $1,762 | $230 | +666.1% | | Line of Credit | $4,238 | $1,884 | +124.9% | | Total Current Liabilities | $10,214 | $5,950 | +71.7% | | Total Liabilities | $12,070 | $6,007 | +100.9% | | Total Stockholders' Equity | $13,189 | $18,181 | -27.4% | CONDENSED STATEMENTS OF OPERATIONS Polar Power reported decreased net sales and expanded net losses for both Q4 and the full year 2023, with gross profit turning negative in Q4 and significantly reduced for the full year, as operating expense reductions could not offset the negative impact of declining sales and gross profit Key Condensed Statements of Operations Data (thousand USD) | Metric | Q4 2023 | Q4 2022 | Full Year 2023 | Full Year 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $3,605 | $6,366 | $15,293 | $16,056 | | Cost of Sales (incl. inventory write-down) | $5,032 | $5,960 | $14,598 | $13,931 | | Gross Profit (Loss) | $(1,427) | $406 | $695 | $2,125 | | Total Operating Expenses | $1,545 | $1,731 | $6,685 | $7,658 | | Operating Loss | $(2,972) | $(1,325) | $(5,990) | $(5,533) | | Net Loss | $(3,155) | $(1,344) | $(6,548) | $(5,584) | | Basic and Diluted Loss Per Share | $(0.24) | $(0.10) | $(0.49) | $(0.43) | STATEMENTS OF CASH FLOWS In 2023, Polar Power saw reduced cash outflow from operating activities, increased cash outflow from investing activities, and significantly higher cash inflow from financing activities, primarily due to common stock issuance and increased credit line, resulting in a net increase in cash and cash equivalents at year-end Key Statements of Cash Flows Data (thousand USD) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(3,430) | $(6,507) | +47.3% | | Net Cash Used in Investing Activities | $(194) | $(25) | +676.0% | | Net Cash Provided by Financing Activities | $3,962 | $1,642 | +141.3% | | Net Increase (Decrease) in Cash and Cash Equivalents | $338 | $(4,890) | - | | Cash and Cash Equivalents at End of Period | $549 | $211 | +160.2% | - In 2023, cash flow from financing activities primarily stemmed from net proceeds of $1,556 thousand from common stock sales and a $2,354 thousand increase in the line of credit[18]