Active Power's CEO Discusses Q4 2013 Results - Earnings Call Transcript

| About: Active Power, (ACPW)

Active Power, Inc. (NASDAQ:ACPW)

Q4 2013 Earnings Conference Call

February 18, 2014 08:30 AM ET

Executives

Mark Ascolese - President and CEO

Jay Powers - CFO and VP of Finance

Analysts

Carter Driscoll - Ascendiant Capital Markets

JinMing Liu - Ardour Capital

Jeff Osborne - Stifel Nicolaus

Operator

Good morning everyone. Thank you for participating in today’s conference call to discuss Active Power’s financial results for the fourth quarter and full year ended December 31, 2013. With us today is Mr. Mark Ascolese, President and Chief Executive Officer of Active Power and Mr. Jay Powers, Chief Financial Officer and Vice President of Finance.

Following their remarks we will open up the call for questions. Then before the conclusion of today’s call, I’ll provide the necessary cautions regarding forward-looking statements made by management during this call. I would like to remind everyone this call will be available for replay via Active Power’s website at www.activepower.com.

I would now like to turn the call over to the President and Chief Executive Officer of Active Power Mr. Mark Ascolese, please go ahead Sir.

Mark Ascolese

Good morning everyone and thank you for joining us today. We issued a press release earlier this morning announcing our results for the fourth quarter and the full year ended December 31, 2013. Despite a challenging 2013 due to setbacks in China and executive transitions, we believe, we exited the year in a strong position to grow the business. Our successful big wrap on increasing bookings and we believe the organization is now in a better position to support or sales and service organizations.

We restructured and streamlined the business with new appointments to our executive team and sales organization. We also reassigned keep personnel to better exploit their skill set. Our first CleanSource HD UPS units were shipped in the fourth quarter and I’m proud of our team for having achieved this important milestone.

In 2013 we announced a number of significant customer deployments for both our CleanSource UPS and CleanSource powerhouse products for a variety of applications including pharmaceutical, oil and gas, and core location data centres. During the fourth quarter, we booked and shipped a large UPS order to our IT partner IO for deployment at a world-class university’s high performance computing Centre on the East Coast.

Before we go further, I would like to turn the call over to Jay to give us financial details about the quarter and the full year. I’ll then come back to provide more color around our go-forward strategy, highlight areas where we are making positive momentum and perspective on the market. Jay?

Jay Powers

Thank you Mark, and good morning everyone. Revenues totaled $13.9 million for the quarter, this was an increase of 6% sequentially and a decrease of 9% from the prior year quarter. The sequential increase came from our MIS revenue which was up $1.9 million partially offset by declines in UPS and service revenue. For the full-year 2013, our revenue decreased by 19% to $61.7 million compared to 2012. This decline was due to a 36% decrease in UPS sales and a 19% decrease in MIS sales, partially offset by 23% increase in our service revenue.

By region, revenue for the year was $50.4 million for Americas, up 5% yea-over-year. In EMEA, revenue was $6.9 million down $15 million. The decrease in EMEA as well as the decrease in UPS sales mentioned above was due to a large deal that represented more than 10% of total revenue in 2012 which was not repeated in 2013. In Asia, revenue was $4.4 million down 29%. Please refer to our supplemental information on our press release for more details on our revenue split by product and geography.

Now containing down the income statement, gross margin in this quarter was 30%, compared to 39.5% in the fourth quarter last year. The year-over-year decline was due to exceptionally high product margin in the fourth quarter 2012 from strong margins on ancillary products as well as higher unabsorbed manufacturing costs this year. Sequentially, margins were flat, with improved product margins through the MIS offset by lower service margins in professional services.

In the full-year, margins decreased to 31.4% from 32.4%. Service margins improved significantly year-over-year due to better professional service margins. These were offset by lower product margins due to unabsorbed cost related to the lower manufacturing production in the period.

Total operating expenses were $8 million for the fourth, up $1.1 million sequentially and up $1.7 million versus the same quarter last year. The sequential increase was due to several unexpected items including severance, CEO transition costs, stock-based compensation, relocation, and legal fees, partially offset by a reversal of bad debt expense and lower product development expense. These unexpected costs amounted to approximately $1.4 million in the fourth quarter compared to $400,000 in the third quarter of 2013.

The year-over-year increase was also due to unexpected cost I just mentioned, partially offset by lower depreciation expense in temporary labor cost. For the full-year, operating expenses increased to $27 million from $26.4 million in 2012. This increase was driven by higher product development expense from the investment in our next generation UPS product line. Severance, relocation related to executive transitions, stock-based compensation, and legal fees, partially offset by lower recruiting and contract labor expenses and depreciation.

Adjusted EBITDA was a negative $3 million in the fourth quarter of 2013 compared to a negative $2.3 million in the third quarter 2013 and a positive $487,000 in the fourth quarter of 2012. For the year, adjusted EBITDA was negative $5.1 million compared to positive $1.3 million last year. The year-over-year decrease in adjusted EBTIDA is due to the larger net earnings loss that occurred in 2013. Our press release contains details on how we calculate adjusted EBITDA.

Net loss for the fourth quarter 2013 was $4.1 million or a loss of $0.21 a share. This compares to a net loss of $3.1 million or a loss of $0.16 per share in the prior quarter and a net loss of $418,000 or a loss of $0.02 per share in the fourth quarter 2012. For the full year 2013, net loss was $8.4 million or a loss of $0.44 per share compared to a net loss of $1.9 million or a loss of $0.10 per share in 2012.

Now turning to the balance sheet; the reduction in prepaid expenses and other assets from September 2013 was due to the reclassification of the $1.6 million of returned inventory from Qiyuan which was carried in other assets in September and moved to inventory where we took possession in the fourth quarter. Looking at cash flow, the fourth quarter 2013 compared to the third quarter 2013, cash from operations was negative $2.2 million compared to negative $558,000. The change was primarily due to higher net cash losses in the period and the $1.5 million use of cash related to reduction in accounts payable driven by lower raw material purchases in the period. This change was partially offset by $2.5 million source of cash related to inventory reduction in the quarter inclusive of the Qiyuan reclassification.

For the year, cash from operations was negative $1.3 million versus negative $6 million in 2012. The improvement compared to last year is due to significantly low receivables offset by higher operating losses and lower deferred revenue. As a reminder and as we mentioned last quarter, we will not provide guidance due to the continued variability in our business. However, we will continue to provide perspective on market trends that impact our business and growth prospects. This completes the financial portion of the presentation. I’d now like to turn the call back over to Mark.

Mark Ascolese

Thank you, Jay. Active Power was built on its unique flywheel technology and associated power electronics. It is his foundational technology that enables us to introduce our CleanSource DC product, CleanSource UPS, CAD UPS and CleanSource PowerHouse systems. Today, five core product offerings revolve around this technology that includes mission critical which is served by our CleanSource UPS and CleanSource HD products, energy storage supported by our CleanSource DC product which was our first offering we introduced to the market in 1997 and one we planned to reintroduce to sell into Smart Grid and Microgrid applications, Modular systems which represents our CleanSource PowerHouse line and modular IT solution for our strategic IT partners including HP.

Software, which started with CleanSource View that supplies operational data on the flywheel and is sensing all of it to the control software product to support CleanSource PowerHouse, and service which really all was intended to support the products we sold but is sensing all (Ph) to improve systems’ integration, commissioning and consultancy services. Our strategy moving forward and aimed at leverage our flywheel technology and power electronics to intelligently grow those five core offerings and the overall business. This foundational technology is an enabler for us. We will use it as a template to ensure we make the right decisions on whether to enter in new market establish a new sales channel or develop the new product or product line extension.

We are now executing against the priorities we laid out last quarter. These priorities are aimed at generating consistent sales performance, maximizing the products and solutions we have in house now to grow the business and positioning the business as a mission critical energy storage company. I’d like to highlight a few actions we have taken in support of these priorities; first, we have added a number of talented sales professionals to our U.S. sales team to strengthen our efforts and to help us generate bookings. More specifically, we hired a sales director dedicated to helping us grow our MIS sales as well as manage our relationship with HP. We added an UPS sales vendor (Ph) to our strategic accounts team responsible for the Northeastern United States. This region is significant for the business as it’s densely populated with mission critical end users as well as key specifying engineers’ electrical contractors.

Also we now have personnel employees to support our efforts to sell them to the federal market, enabling us to expand our addressable market. We market and sell engineered products and solutions to customers who are highly technical, general contractors, electrical contractors, specifying engineers and end users. To be successful this requires a sales force made up of highly confidence sales professionals that posses the sound technical and product knowledge. These new additions to the team bring a wealth of UPS sales experience to the table and we believe they will be value contributors. Second, we completed organizational changes to improve our go-to-market support and field strategies. We believe these changes will enable us to better respond to customer needs, support our sales and service teams and increase our order rate. We have also integrated our engineering, manufacturing and product management organizations, so that they are now more closely aligned in the design and delivery of products that meet our customer’s requirements. We believe the exceptional talent and creativity we have in our engineering and product management organizations is a distinct competitive advantage and one that needs to be exploited. We believe this new structure will allow for this.

Third, we’re also improving on our product differentiation versus our competition and building product line extensions that leverage our core flywheel technology and power electronics. As I stated in our call last quarter, Active Power has exceptional and passionate people who are dedicated to our customers on the company’s success. I believe these enhancements to an already great team will bode well for us as we go forward.

Now a few comments about the market. Active Power has a serve addressable market of more than $2 billion, with the modular systems and UPS market taking the lions share followed by the energy storage, software and service markets respectively. At our current revenue levels, we believe that business has room to grow in these markets that continue to expand worldwide. This fact reinforces our priorities to sell the products we currently have available versus allocating resources to research and development to design new products.

We see a number of positive indicators that we believe will drive demand for our UPS and MIS products particularly the data center market. For example, total investments and facility equipment and IT optimization for data centers in North America is forecasted to increase 10.4% in 2013 and 2014 to $36.2 billion. The majority of this investment is aimed at meeting growing power requirements, increasing sustainability, reducing operating costs and improving space usage, according to data center dynamics intelligence 2013 industry census.

Although slowing power usage and data center worldwide also continues to climb, in the same report data center dynamics stated power use increase more than 7% globally in 2013 versus a 19% experienced in 2012. We believe Active Power is well positioned to address these trends with products and solutions that provide an unmatched combination of power density, reliability and total cost of ownership. Our CleanSource 750 HD, for example, takes up less than half the floor space of leading competitors, which freeze up room for additional revenue generating server equipment.

Our modular power solutions enables operators to recover indoor space and deploy their electrical infrastructure some place more convenient and less value, such as rooftop as in the instance of Verizon Terremark, a project we announced in late January. I am confident in our strategy and the priorities we have laid out for 2014. As we execute on these priorities, we believe there is ample room for margin improvement as we look to improve sales with our existing products and solutions and in turn increase factory utilization.

We’re also taking actions to reallocate and refocus our resources without making substantial changes to the expense side of the business, but simply we believe that business is scalable as we increase our order flow. With our focus on our enabling technology and solving customer problems with unique products that deliver true cost benefits, the entire team at Active Power is poised to excel and meet the challenges ahead.

Now with that we will be happy to open up the call for your questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question is from Carter Driscoll with Ascendiant Capital.

Carter Driscoll - Ascendiant Capital Markets

Welcome aboard Jay. First question, do you feel comfortable that you have the sales force at a level that you are comfortable that you can really begin to drive the CleanSource, you have sales obviously that took a big hit in the fourth quarter, are you still looking to add people in few geographies or maybe to comment on your staffing levels in that area? And then I have a couple of follow ups.

Mark Ascolese

I would say Carter that it’s still work in progress, we’re probably 70% complete in terms of reorganization structure, we’re complete. In terms of recruitment and bringing in additional talent and filling out the openings that we have on a global basis, we still have some work to do. But we’re in a very good position as we start the year to address these markets and get into some specific markets like the Northeastern United States and Federal Government where we have not participated in the last few years. I am feeling good about where we are with the sales organization.

Carter Driscoll - Ascendiant Capital Markets

You were talking about your relationships with HP; it sounds as maybe IO is gaining ground in terms of its importance on the partnership side and maybe just talks about that vis-à-vis in terms of Kindle and the HP relationship. And then on the cost structure, there were a number of changes HP was looking for last year on product changes; you talked about where that relationship stands.

Mark Ascolese

The relationship with HP is excellent. We have had, we continue to have, I think in our last call I mentioned meeting with those folks early on in my tenure here. We have continued to have meetings with them, most recently was last week. We continue to talk about ways to support them and to give them products and services that will help them deliver unique solutions to their customers. As I mentioned in our prepared remarks here, we got an order, one of the number of orders we got from IO in the quarter. We believe that we are uniquely positioned with this technology to help a number of, what I call strategic players, in the marketplace to help fill out their solution set for their customers. And I wouldn’t say that, obviously wouldn’t say that one customer is more important than another or that one customer is doing better than another.

We are looking to grow our relationships and help our customers grow their market share in all cases but there is nothing negative to be said about our relationships with our large strategic counts.

Carter Driscoll - Ascendiant Capital Markets

Fair enough. And then just lastly and then I will get back in the queue. You talked about the spending environment, to the MIS side you typically tend to see a little bit of budget flush in the fourth quarter. I realized that it really didn’t first sales of your CleanSource start, the first shipment I should say of your CleanSource product that might not be a factor of this particular quarter but you have seen like you said some slowdown in the power usage within data centers, still large market opportunity that seems to be a bit slower. How important is your ability to grow laterally or adjacently in other end markets, like you mentioned ESS in terms of supporting the core end market, the data center and co-location markets?

Mark Ascolese

Okay. Let’s just talk about our core which is the data center co-location market. We have established channels into that market. We have established relationships into that market and we have established products into that market. What we have done in the last three or four months is, let’s just talk about MIS for example. We have deployed additional resources, get up every morning and worry about selling our modular power solutions into that market. We are not out developing or redesigning or reengineering products to sale there. We are just getting much more focus on the opportunities that exist.

Some of the adjacent markets that I have talked about Microgrid and Smart Grid, generally speaking those involve missionary sales work, those are evolving markets. It is unclear in some cases which of our products best fit in those markets. We are, let’s say from a strategic standpoint, responding to inquiries we have there and opportunities we have there. Without in any way limiting our focus on the core business which is the data center market today and our modular power systems. I don’t see any conflict at this point and I have been pleasantly surprised by the interest that we have seen in some of these adjacent markets at this point.

Carter Driscoll - Ascendiant Capital Markets

And maybe just one follow-up, I am sorry, for Jay. Obviously you talked about some one-time items on the OpEx line potential, if you strip those out and kind of grow at a commensurate rate with sales will that be fair, just to hoc on the P&L, will that be a fair level to kind of to drag back one-time items and grow from there?

Jay Powers

Yeah, I think as I mentioned there are two major items that impacted the quarter and the year. The management transition cost of the severance free location all cost associated with the change we have made to the management team in the quarter that was about $1.1 million into the year is nearly $1.4 million for the year. And then the China matter, a total cost of $759,000 that’s for legal fees and bad debts associated with that matter in the quarter that was $335,000 and we did have some in the early period. I think it’s fair to say that those matters would not repeat going forward but also I think on the kind of go-forward basis, there are some items that are probably understated and a normal run rate and that’s really the variable compensation. So, as the sales grows the sales commission would grow and the management incentive plan would grow we think responsibility.

Operator

And our next question is from JinMing Liu with Ardour Capital.

JinMing Liu - Ardour Capital

First the question about the federal market, can you share with us how big that market is and why you guys didn’t participate in that market for the past few years?

Mark Ascolese

I can talk to the size of the market, since I wasn’t here I can’t really talk to why we or did not participate. We have, I guess I should say that we have always sold some product into the federal market place and we have our products disbursed among a number of agencies in the federal government. This is more an issue focus and dedicating some additional resource specifically into that market mainly because of the thrust coming out of the federal government for efficient use of electricity and for the deployment of clean technologies. And both the Department of Energy and the Department of Defense specifically are spending billions of dollars to bring those technologies into their agency. So in the case of the DoE they are funding and enabling demonstration projects and research projects about existing technologies, in the case of the Department of Defense, they’re actually deploying these new clean technologies and green technologies on the military bases around the world and in other applications. So we see an opportunity in that multibillion dollar market to deploy our battery free UPS solutions specifically because they take up less workplace because they have very clean technology, we’re not using lead or chemical reactions in our processes in our deployment. In terms of our modular systems, the federal government has announced repeatedly that they’re going to consolidate and downsize the terms the number of data centers they have. There’s been no evidence of that to this point, they keep talking about it, we believe that there’s going to be opportunity for our modular systems within the [indiscernible] infrastructure of the federal government because of their need for smaller footprints and more reliable electrical distribution technology, we have that. And so that’s the reason for our focus.

JinMing Liu - Ardour Capital

Okay, to switch to the couple of issues you had in the past year, were there only revenue recognized from the previous distributor issues And secondly what is your effort, as you try and are you going to go back or just increase your efforts over there.

Mark Ascolese

Could you, I didn’t hear the first part of the question, Jin.

JinMing Liu - Ardour Capital

The first question is whether you have recognized any revenue from the previous problems associated with distributors which happened earlier this year.

Mark Ascolese

Yes we have and we’ve recognized some revenue in China in 2013, as we mentioned in our prepared remarks we did get our inventory back for example and we are actively quoting projects in China and throughout Asia Pacific at this point. Our focus over there now is not singularly on China it is more on the Asia Pacific region, so we are setting up structures and relationships in places like Singapore and Korea and Taiwan and Japan and other places in addition to China. And your second question was?

JinMing Liu - Ardour Capital

Was, whether did you recognize, I mean revenue from previous statement that was put into and was delayed due to some problem with distributors.

Jay Powers

JinMing, this is Jay, in the first quarter and prior we did recognize about $4.2 million of revenue and as we disclosed with the brief statement we made at the end of the third quarter we reversed the portion of revenue for which we had not received cash proceeds and that was about $1.8 million. So subsequent to that period of time we reckon that’s $1.8 million, that was primarily in the third quarter and then in the fourth quarter we did repossess all of the inventory that we had not been paid for and that inventory in our possession that’s good inventory and we expect to be able to fully liquidate and manage that, but in the fourth quarter there were no significant sales associated with that prior distribution agreement.

Operator

(Operator Instructions) We’ll go next to Jeff Osborne with Stifel.

Jeff Osborne - Stifel Nicolaus

Great, good morning guys, just a follow up on the last line of question, is the $1.8 million of inventory that you repossessed is that written off to zero so that as you sell it it’s a higher margin than would be typical or how do we think about that.

Mark Ascolese

Now essentially it’s about $1.6 million of inventory at cost in, it is all good current inventory it is not written down matter of fact we’re still quoting that, we anticipate be able to turn that inventory relatively quickly within 2014, so it’s not, we’ve been customize our specialized inventory for a particular application it is in current inventory that we don’t expect any issues in being able to sell.

Jeff Osborne - Stifel Nicolaus

Excellent, and just to follow up on that distribution line of questioning we talked a bit about HP, but can you just touch on Caterpillar and what your intent is in China in general I understand you have leadership on the ground now but are you focused more on a direct model or could you just update us on any new potential partnerships for that region.

Mark Ascolese

Okay, let’s talk about Caterpillar, as you know we have a very long standing relationship with Caterpillar going back almost 15 years. on average we do $10 million a year with them, our relationship today with Caterpillar is excellent, I personally have had numerous conversations with them, they’ve been here to visit us, I’ve been to a couple of their facilities in Georgia to visit with them, we’re actively engaged in discussions to figure out a way to grow the business that we do together. Instead of averaging $10 million a year, it would nice if we could average $20 million to $30 million a year, so we’re both engaged talking about the possibilities of figuring out ways to do more business together and that includes, your other question, that would include working with them on a global basis not just here in the United States, we see opportunities for example in Asia Pacific with Caterpillar and in places in Europe where they may be very interested in reengaging with us in helping us get market penetration. And part of your question specifically about China, we do have distributors there today we’re looking for more distributors in China and the Asia Pacific region. We still think that is a very large and lucrative market. We think there is lots of opportunity and we believe that our products that we’ve been selling there for over 10 years now have been accepted into that market and have many applications outside of the data center world in the Asia Pacific region. So we’re quite bullish on the market and initial results from the conversations we’ve had so far is it doesn’t appear that we’re going to have problems locating inciting the types of distributors and partners that we think we would need to be successful in that market.

Jeff Osborne - Stifel Nicolaus

That’s great to hear. I recognize the rationale for not giving guidance just giving all the moving pieces, but with all of the hiring that’s going on in some the onetime items masking the results this quarter, would it be possible to give a targeted kind of breakeven business model? Is that something you contemplated articulating?

Mark Ascolese

Have we contemplated articulating, I guess the answer that would be yes? The answer obviously has been no as we stated again today we’re not going to give guidance for the foreseeable future until we get a better hang on the moving parts of this business and we can be more predictable when we share.

Jeff Osborne - Stifel Nicolaus

I guess I wasn’t looking for revenues going up or down ex-percentage just more, do you see yourself as a 35% or 40% gross margin company over 6 to 18 months, should the OpEx run rate be 8 million or with open racks that you have in 6 months do you expect it’d be spending $9 million to $10 million? I’m just trying to reconcile the focus on new sales and marketing initiatives coupled with the product cycle also to corroborate with you comment about less focus R&D and new products again several moving pieces that will be helpful to try to square away what this company looks like just to be breakeven again not looking for what the March or June quarter revenue number is?

Unidentified Company Representative

Right, so in my experience in this industry is that to be profitable and to generate the cash that you need to be successful in the business, you need to have gross margins in the 30% to 34% range. If you look at most of competitors whether small or large that’s kind of where they’re. Obviously, we’re not different our models got to be similar to that. We’re not reducing our spend you’re looking that the numbers especially around the research and development, SG&A we’re not reducing our spend we’re just not increasing our spend. And we’re going to try to get much more efficiency and productivity out of the money that we’re spending. The model it takes to gets profitability here is well known throughout the industry and out company is going to be no different they know that they have proceeded us in terms of revenue and margin and sales growth and expense control.

Jeff Osborne - Stifel Nicolaus

Got you. And just switching gears on last question for me as you’ve mentioned in your prepared remarks Microgrid and Smart Grid is that something that you need a separate distribution partnership for some type of validation, I assume you’ve focused on the frequency regulation market but maybe just expand on that comment?

Mark Ascolese

Okay, actually, we’re not focused on a frequency regulation market. We are and have had discussions with a number of potential partners about Microgrid. It turns out that our technology is very deployable into Microgrid applications. In terms of significant new partnerships, no, we don’t need those to do that. We need to sign a distributor or two or rep or two in a give a specific area the answer that is yes. There are a number of functioning for example Microgrids around the world to today, some of them are actually economically paying for themselves, others are not they’re move like demonstration projects. But our technology has a role to play specifically when you look to renewable. So when you’re talking about having photovoltaics and wind generation on a Microgrid and a large storage systems setting there for wind-to-wind is not blowing if the sun is not shining, we have a role to play in the interface between the renewable sources and between that energy storage systems that maybe in place.

Typically that’s a battery or some type, typically it’s lead acid and typically it’s measured in megawatt hours. We have a role to play in isolating that batter from the vagrancies of the photovoltaics in the wind when they’re available and when they’re not when a cloud comes over et cetera. And so that’s the role that we see ourselves playing and the result of that to a customer is that they get longer life out of their energy storage system and they would be able to reduce footprint of that system, so the real economic benefits to deploying our to technology in that environment.

Jeff Osborne - Stifel Nicolaus

Excellent. Thanks for all the detail.

Operator

This concludes our question and answer session. I would now like to turn the call back over to Mr. Ascolese.

Mark Ascolese

Thank you. Thank you also everybody for being on the call this morning. On behalf of the entire senior management team here, our employees and our board, I would like to express our appreciation for your interest in Active Power. And thank you for your continued support and we look forward to speaking you again next quarter.

Operator

Thank you. Before we end today’s call, I would like to take a moment to read the company’s safe harbor statement. On this call the company’s management made forward-looking statements that involve risks and uncertainties, including statements relating to our product plans, our strategy, our market position, margin improvement, our business being scalable and our priorities. Any forward-looking statements and all other statements made on this call that are not historical facts are subject to a number of risks and uncertainties and actual results may differ materially.

Factors that could cause the actual results to differ materially from the results predicted include among others our dependence on our relationships with Hewlett-Packard, Caterpillar, other original equipment manufacturers, OEM, other strategic IT partners and on our distributors, our increased emphasis on larger and more complex system solutions, the success of our product development efforts and our ability to manufacture and deliver products in a timely manner, the level of acceptance of our current and future products in the market, the deferral or cancellation of sales commitments as a result of general economic conditions or uncertainty, risks related to our international operations, our ability to borrow under credits agreement or raise capital as needed to support our business, and product performance and quality issues.

For more information on the risk factors that could cause actual results to differ from these forward looking statements, please refer to Active Power’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2012; its Quarterly Reports on Form 10-Q, and its current reports on the Form 8-K filed since then. Active Power assumes no obligation to update any forward-looking statements or information, which are in effect as of their respective dates.

This now concludes today’s call. Thank you for joining us. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!