2Q22 Results: Revenue Down 11.8% Y/Y; Gross Margins Improve 4.8% Y/Y; Overseas Interest Rises
|52 Week Range||$1.77-$7.59|
|Avg. Daily Vol. (30 day)||94,314|
|Shares Out (MM)||12.79|
|Market Cap (MM)||$47.19|
|Enterprise Value ($MM)||$44.92|
|Revenue TTM (MM)||$17.32|
|Fiscal Year End||December|
- Polar Power reported 2Q22 revenue of $4.3 million, down 11.8% Y/Y from $4.8 million in 2Q21. The company’s domestic sales are driven by its telecommunications clients, as its DC Generators support the rollout of 5G infrastructure throughout the US. Supply chain issues hindered the company’s manufacturing and delivery throughout the quarter. Twelve percent of expected shipments for the quarter have been delayed. Complete results can be accessed here.
- At the end of 2Q22, Polar’s revenue backlog stood at $14.0 million (added $9.9 million in 2Q22), of which 52% and 45% were attributed to the US and international telecom clients, respectively, and 3% to other markets.
- Gross profit increased by 9.7% Y/Y to $1.1 million (24.8% of revenue) compared with $1.0 million in 2Q21, primarily due to improved labor efficiency in manufacturing and utilization of inventory that was written off as obsolete inventory in 2020.
- Operating expenses were on par with last year’s figure of $1.8 million. The increase in marketing and administration expenses was offset by the decrease in R&D costs related to the US market as the company primarily focused on product design and customization for its international clients.
- Net loss decreased by $0.13 million to $0.7 million from a net loss of $0.9 million in 2Q21. Basic & Diluted EPS improved to -$0.06 from -$0.07 in 2Q21.
- At the end of 2Q22, cash stood at $2.7 million, while debt outstanding was at $0.2 million. Polar has an option to avail of a $2.8 million revolving credit facility against its assets until September 2022, which it can further extend with the bank for an additional year. The company had working capital of $20.1 million.
- Polar’s overseas telecom sales are rising. A South Pacific Islands telecommunications client ordered $6.2 million in DC power generators in 2Q22. These generators will provide grid backup and off-grid connectivity to remote communities. The order will be fulfilled by the year’s end.
- Telecommunications customers constituted 99% of sales compared with 92% in 2Q21. The company intends to diversify away from the highly concentrated telecom industry and expand its presence in new markets that can utilize its DC power platform.
- Increasing geopolitical concerns are prompting increased interest in DC power systems for robots and drones. In addition, the commercial and residential markets are compelled to pursue greater energy independence via higher energy efficiency and renewable energy, creating new opportunities for the company to explore.
- Eighty-eight percent of 2Q22 revenues were generated from the company’s largest customer, a Tier-1 telecommunications wireless carrier in the US. Sales to international customers accounted for 2%. Ninety-four percent of the company’s accounts receivable were from the company’s largest customer, indicating the highly concentrated nature of the business.
- As part of this diversification effort, Polar has been expanding the power range of its portfolio. In March 2022, it received EPA certification on its 4Y Toyota (non-diesel) engine project aimed at expanding the power range to 35 kW from the existing 10 kW on natural gas and LPG. This certification brings clean fuel (non-diesel) engines to the market with low maintenance and lower operating costs.
- The company is focused on efficiently navigating the disruptions attributable to supply chain shortages, extended lead times, inflation, and labor shortages. To counter this, it will continue to implement automation, expand vertical manufacturing processes to reduce the number of outside processes, and source materials internationally.
- Polar plans to complete the development of natural gas and propane-fueled CHP generators. However, no timetable for further launches has been provided by the management.
- Our prior content on POLA can be accessed here.
Polar Power reported 2Q22 revenue of $4.3 million, down 11.8% Y/Y from $4.8 million in 2Q21. The company’s domestic sales are driven by its telecommunications clients, as its DC Generators support the rollout of 5G infrastructure throughout the US. Supply chain issues hindered the company’s manufacturing and delivery throughout the quarter. Twelve percent of expected shipments for the quarter have been delayed. Complete results can be accessed here.
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