WALLINGFORD, Conn., Nov. 7 /PRNewswire-FirstCall/ -- Distributed Energy
Systems Corp. (Nasdaq: DESC - News) reported today that revenues rose to a record
$12.3 million for the third quarter ended September 30, 2005, compared with
$4.8 million in the same period one year ago. The company sharply reduced its
third quarter net loss to $3,587,000, or $0.10 per share, from $5,780,000, or
$0.16 per share, during the same period in 2004.
Third-quarter results primarily reflect strong performance at Northern
Power Systems, where revenue growth derived largely from power installations
for building and industrial applications. In addition, due to sufficient and
positive warranty experience, Proton Energy Systems recognized $1.6 million in
previously deferred revenue during the quarter from the sale of the mid-sized
HOGEN® S Series hydrogen generators.
Through nine months of 2005, Distributed Energy Systems had revenue of
$33.9 million, and a net loss of $12.8 million, or $0.36 per share. One year
ago, the company reported nine-month revenue of $11.1 million, and a net loss
of $18.4 million, or $0.52 per share.
Northern Power and Proton Energy merged to form Distributed Energy Systems
in late 2003. The combined company provides industrial and commercial markets
with products and services offering greater control over the supply and cost
of power, as well as increased efficiency and reliability.
"We made solid progress in the third quarter toward every one of our
objectives," said Walter W. (Chip) Schroeder, president of Distributed Energy
Systems. "Revenues at Northern Power continue to grow, reflecting the strong
position of our engineering, procurement and construction (EPC) business in
the remote and on-grid distributed power segments. Northern's current year-to-
date revenues are more than 250% above the comparable period one year ago." He
also noted successful progress on signing long-term contracts for Northern
Power's PowerAdvantage(TM) operations and maintenance program for distributed
generation facilities.
Mr. Schroeder commented on Proton Energy as follows: "There was notable
progress at Proton, where we began to see early shipment and order progress
from distributor agreements we signed with Airgas, Praxair and Linde earlier
in the year."
"These distribution partners tell us that order flow is a function of not
only the compelling value of Proton products, but also because of the volatile
condition of today's hydrogen supply market," Mr. Schroeder continued. "End
users are taking a fresh look at onsite hydrogen generation as an alternative
to truck-delivered supplies, and they like the idea of gaining more control
over their hydrogen resources."
Mr. Schroeder noted the increased demand and the "value proposition" of
the use of onsite hydrogen for electric generator cooling, where the savings
to the plant owner typically result in a payback of less than a year. He
pointed out that this enables Proton to sell its large HOGEN H Series systems
at better margins and into this and other markets, where the company is seeing
promising product line acceptance.
"On the financial front," Mr. Schroeder stated, "we moved closer to
breakeven," emphasizing the sharp reduction in the third quarter's net loss.
"This is our best bottom line since the merger of Northern Power and Proton
Energy," he said, "and our improved results also demonstrate the positive
effects of remaining focused on the goal of becoming profitable within our
existing capital resources."
DESC reported that the company's gross margins were positive for the
fourth consecutive quarter. In addition, cash and marketable securities as of
September 30, 2005, were $42.7 million compared with $45.8 million as of June
30, 2005. The change primarily reflects the net loss for the quarter, with
working capital requirements remaining essentially unchanged. The company
defines working capital as current assets minus current liabilities excluding
cash and marketable securities.
3rd Quarter Highlights:
Distributed Energy Systems noted several major developments since the
regular August 5th investor conference call, including:
-- An agreement with Linde Gas to distribute Proton's HOGEN hydrogen
generators in the United States, Mexico and the Caribbean.
-- A $2.05 million contract for Northern Power to design and install
independent remote power systems for three offshore natural gas
drilling platforms in the Gulf of Mexico for Construcciones Mecanicas
Monclova S.A. de C.V.
-- A contract for Northern Power to provide two TelePrime(TM) power
systems for the Sakhalin-II Pipeline project on Russia's Sakhalin
Island. The contract valued at $1.5 million, brings Northern Power's
total contractual involvement in Sakhalin oil and gas development
projects to more than $6 million.
-- Announced the promotion of Darren Jamison to president of the Northern
Power Systems subsidiary.
-- The purchase by Northern Power of a $1.5 million, 110,000 square-foot
manufacturing and engineering facility in Barre, VT, to improve
production efficiencies.
-- An increase in original contract award from the Anchorage-based Alaska
Village Electric Cooperative for Northern Power to install three
additional NorthWind 100® wind turbines, including remote monitoring
and controls valued at $1.8 million.
-- Announced a multi-million dollar agreement to provide PowerAdvantage
O&M service to former DTE Energy distributed generation customers.
Outlook:"Developments such as these -- together with the momentum from customers
who see the need to think smarter and differently about their electric power
priorities -- continue to bolster our optimism," Mr. Schroeder concluded. "We
are in the right business at the right time, now and for the foreseeable
future, and we believe our operational improvements should enable us to report
continuing progress over the next several quarters."
Conference Call:
The Company will host a conference call today, Monday, November 7, 2005 at
11:00 a.m. EST to discuss third quarter results and other matters of interest
to investors and shareholders. Individuals wishing to participate in the
conference call should dial (866) 578-5801, pass code 14801101, or for
international calls (617) 213-8058. A replay will be available through
November 21, 2005 by dialing (888) 286-8010, pass code 31406506 or on the
company's website. A slide presentation and the call will also be broadcast
live over the Internet, and can be accessed by all interested parties at
http://www.vcall.com or through the investors' section of the Distributed
Energy Systems website at http://www.distributed-energy.com.
About Distributed Energy Systems Corp.
Distributed Energy Systems Corp. (Nasdaq: DESC - News) creates and delivers
products and solutions to the emerging decentralized energy marketplace,
giving users greater control over their energy cost, quality and reliability.
As the parent company of Proton Energy Systems (http://www.protonenergy.com)
and Northern Power Systems (http://www.northernpower.com), Distributed Energy
Systems delivers a combination of practical, ready-today energy solutions and
the solid business platforms for capitalizing on the changing energy
landscape. For more information visit http://www.distributed-energy.com.
This press release contains forward-looking statements for purposes of the
safe harbor provisions under The Private Securities Litigation Reform Act of
1995. Statements contained herein concerning Distributed Energy's goals,
future revenue and profitability, financial sustainability, and marketing
arrangements and other statements that are not statements of historical fact
may be deemed to be forward-looking information. Without limiting the
foregoing, words such as "anticipates," "believes," "could," "estimate,"
"expect," "intend," "may," "might," "should," "will," and "would" and other
forms of these words or similar words are intended to identify forward-looking
information. Distributed Energy's actual results may differ materially from
those indicated by these forward-looking statements as a result of various
important factors. Distributed Energy disclaims any obligation to update these
forward-looking statements. Factors that could cause results to differ
materially from those contained in Distributed Energy's forward-looking
statements include, but are not limited to, our failure to perform contracts
for customers profitably, or complete development of our products, the failure
of our products to achieve commercial acceptance, our inability to expand our
production facilities, manufacture our products at commercially acceptable
costs or establish distribution relationships, the impact of competitive
products, and other factors detailed in Distributed Energy's Form 10-Q for the
quarter ended June 30, 2005, and other filings Distributed Energy may make
from time to time with the SEC.
Distributed Energy Systems Corp.
Financial Results
(Unaudited)
Income Statement Data:
Quarter Ended September 30,
2005 2004
Net revenue $12,277,000 $4,820,000
Net cost of sales 10,806,000 4,816,000
Research and development 1,222,000 1,500,000
General and administrative 3,966,000 4,528,000
Loss from operations (3,717,000) (6,024,000)
Interest income, net and other 130,000 244,000
Net loss $(3,587,000) $(5,780,000)
Loss per share, basic and diluted $(0.10) $(0.16)
Weighted average shares outstanding 36,426,938 35,505,492
Nine Months Ended September 30,
2005 2004
Net revenue $33,980,000 $11,094,000
Net cost of sales 30,607,000 11,516,000
Research and development 3,800,000 4,830,000
General and administrative 12,777,000 13,769,000
Loss from operations (13,204,000) (19,021,000)
Interest income, net and other 403,000 594,000
Net loss $(12,801,000) $(18,427,000)
Loss per share, basic and diluted $(0.36) $(0.52)
Weighted average shares outstanding 36,042,775 35,435,868
Balance Sheet Data:
September 30, June 30, December 31,
2005 2005 2004
Cash and marketable securities $42,740,000 $45,792,000 $59,135,000
Deferred costs 4,069,000 4,165,000 3,731,000
Total assets 113,309,000 115,748,000 124,571,000
Deferred revenue 4,090,000 4,739,000 4,302,000
Total current liabilities 16,945,000 16,377,000 16,308,000
Total long-term liabilities 8,594,000 8,578,000 8,829,000
Total stockholders' equity 87,770,000 90,793,000 99,434,000
Total liabilities and
stockholders' equity 113,309,000 115,748,000 124,571,000
