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  • ECOtality, Inc. (ECTY) is “One to Watch” 1 comment
    Mar 28, 2011 2:21 PM | about stocks: ECTYQ
    ECOtality, Inc., headquartered in San Francisco, California, leads the industry in clean electric transportation and storage technologies. Through innovation, acquisitions, and strategic partnerships, the company focuses on accelerating the market applicability of advanced electric technologies to replace carbon-based fuels.

    Fully committed to developing and commercially advanced clean energy solutions and environmentally friendly products, ECOtality’s products, technologies and services currently include:

    Electric Vehicles: ECOtality North America is a recognized leader in the research, development and testing of advanced transportation and energy systems. The subsidiary specializes in the fields of alternative-fuel, hybrid (NASDAQ:HEV), plug-in hybrid (PHEV) and electric vehicles (NYSE:EV) and infrastructures. With a history in electric transportation that dates back to 1989, ECOtality North America has worked on every EV initiative in North America since the 1990’s.

    Fast Charging: Specifically developed for electrical vehicles, airport ground support equipment, material handling, neighborhood electric vehicle operations, and marine and transit applications, the exclusively patented ECOtality North America Minit-Charger line of battery fast-charging systems is based on advanced algorithms that allow faster charging with less heat generation and longer battery life than any other fast charge system available.

    Blink: The Blink network offers residential and commercial charge stations for electric vehicles. The network allows businesses and individuals to safely and efficiently charge their electric vehicles at the lowest utility rates. The company has designed Blink too not only be iconic and modern, but also practical and safe.

    EV Micro-Climates: ECOtality’s EV Micro-Climate program is designed to advance select areas for the adoption of electric transportation. Beginning with extensive feasibility and infrastructure planning studies, the program provides a blueprint for a comprehensive EV infrastructure system and provides detailed action plans for its successful execution and continued maintenance.

    Energy Storage: Innergy Power Corporation, another subsidiary of ECOtality, manufactures and develops high-quality ThinLine energy cells and rechargeable batteries that are used in a wide variety of applications where form factor is an essential design element. Innergy Power produces the world’s thinnest SLA (ThinLine) batteries, which offer significant advantages in reliability, safety, and run time, while having no memory effect.

    Solar: Innergy Power Corporation also manufactures a variety of solar photovoltaic (PV) products that address the burgeoning worldwide demand for renewable solar energy products. The subsidiary’s fiberglass reinforced panel (NASDAQ:FRP) solar modules are designed to meet a broad range of applications for emergency preparedness and recreation, where quality, durability, rugged construction and light weight are important in the outdoor environment.

    Fuel Cells: ECOtality also the parent company of Fuel Cell Store, the leading international retailer of fuel cell products. A website-based business, Fuel Cell Store features quality products from more vendors than any other site as well as an experienced and knowledgeable staff for technical and product support, conferences, workshops, laboratory development and consulting services.

    On Wednesday, March 23, 2011, ECOtality announced that it has expanded the installation of its flagship Blink™ Level 2 Residential Charging Station to Tucson, Arizona residences. As project manager of The EV Project, the largest rollout of electric vehicle (EV) infrastructure and EVs in history, the company will install Blink home EV chargers in homes throughout project regions nationwide to support the launch of 8,300 EVs.

    Colleen Crowninshield, manager of the Clean Cities Coalition at Pima Association of Governments (NYSE:PAG), stated, “PAG Tucson Regional Clean Cities Coalition is proud to be a part of the largest deployment of electric vehicle infrastructure in the nation’s history. Working with our Clean Cities Coalition Members and ECOtality, PAG’s Clean Cities Program is excited to begin the residential installation of electric vehicle charging infrastructure, here in Tucson, to help secure America’s energy independence for our future.”

    Please see disclaimer on QualityStocks website: disclaimer.qualitystocks.net
    Stocks: ECTYQ
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    Analyst report from Roth Capital Partners:

     

    Our Investment Thesis
    We view ECTY as the industry leader in establishing EV charger ecosystems in the U.S. and
    potentially other markets. We expect the EV market to grow aggressively in the years ahead.
    President Obama highlighted a target of one million EVs on the road by 2015 in his recent
    State of the Union address. With the recent $10 million investment by ABB, we believe the
    company is well-positioned for the competitive dynamics ahead. We acknowledge that the
    company remains in the early stages of its development and that it still must prove its
    business and revenue model. Thus, while we rate the company as a Buy, we also highlight
    the long-term risks and challenges that face the company.

     

    A. Key Strategic Partnership Established

     

    Our view: The ABB/ECTY strategic partnership positions the company for success
    beyond the EV Project. It provides the company a competitive advantage vs. its peers.

     

    ABB transaction resulted in a 17% premium for existing shareholders.
    On January 10, 2011, ECTY announced that ABB would invest $10 million for an equity
    position in the company. The transaction closed on January 13, 2011 at $3.84 per share with
    ~40% warrant coverage at $4.91 per share. ABB now owns 2.6 million shares of ECTY and
    approximately 19% of the company. Given a share price of $3.29 prior to the transaction
    announcement, $3.84 represents a 17% premium for existing shareholders. (NB: The
    analysis below does not include 7.9 million shares of preferred stock as of September 30,
    2010, which have a one-to-one conversion and the right to convert at any time. If these
    shares are included, ABB would own approximately 12% of common plus converted
    preferred shares.)

     

    Exhibit 1: ABB transaction conducted at a 17% premium vs. share price on 1/9/11.
    ECTY/ABB Transaction Summary
    ABB investment (000s) $10,000
    Investment share price $3.84
    (1) Common shares issued to ABB (000s) 2,604
    (2) Warrants (40% coverage at $4.91/share) 1,042
    Implied common shares outstanding 11,096
    Common share count post-deal (Source: ABB conf call) (000s) 13,700
    ECTY share price on 1/9/11 $3.29
    Implied market capitalization on 1/9/11 (000s) $36,505
    Implied market capitalization of ABB deal (000s) $52,608
    ABB ownership 19%
    Existing shareholders 81%
    Total 100%
    Transaction premium vs. 1/9/11 share price 16.7%
    Source: Company reports and filings; ROTH Capital Partners.

     

    $20MM of additional capital may be required in 2011.
    On the ABB conference call, the company reiterated its need to raise a total of $30 million to
    support the EV Project roll-out, implying an additional $20 million following the ABB
    investment will likely be required. By design, ECTY management plans to establish a diverse
    set strategic partners, which explains why ABB did not provide the entire investment.

     

    ECOtality, Inc. (ECTY)
    Buy

     

    Page 3 of 13
    ECOtality, Inc. Company Note - February 22, 2011
    Partnership Key Takeaways
    • Partnership validates market leadership and technology. ABB operates in more
    than 100 countries and has a $53 billion market cap. The company is a global leader
    in power technologies for utility and industrial customers. ABB’s investment validates
    ECTY’s market leadership and technology. Moreover, ECTY is now partnered with
    one of the top global players, and, in our view, enables ECTY to compete effectively
    against the other majors, such as GE, Siemens, Schneider Electric, and Eaton.
    • Synergistic partnership. ABB’s core competence is providing services and
    equipment from the “pole back to the utility.” ECTY’s value proposition is from the
    “home to the pole.” The ABB/ECTY partnership allows the company to service the
    entire EV supplier equipment value chain and provide customers a one-stop solution.
    • Preferred supplier. ABB will become a preferred supplier for ECTY. The company,
    however, is not stuck with ABB if the pricing is not competitive. If pricing for a
    particular component is greater than 5% of market value, ECTY has the right to
    secure components from ABB’s competitors.
    • Pursuing international markets, such as China. ABB-ECTY framework agreement
    lasts five years and establishes a steering committee for key strategic decisions. The
    companies have already initiated discussions for establishing a presence in China.
    Moreover, the agreement lays out a process to establish presences in other markets
    outside of North America.

     

    B. The EV Project Overview and Status

     

    Our view: The EV Project establishes ECTY as the industry leader given the volumes
    of chargers that will be deployed over the next year. Although the project has been
    delayed a quarter or more, we expect Leaf deliveries—and charger installations—to
    accelerate in the near-term.

     

    Overview
    In August 2009, the DOE awarded ECTY, in partnership with Nissan, a grant of $99.8 million
    to manage the largest deployment of electric vehicles and charging infrastructure in US
    history. Dubbed the EV Project, ECTY serves as the project manager and is responsible for
    installing ~15,000 chargers in 16 cities over six states and the District of Columbia by 2013.
    There are three different types of chargers: Level 2 residential charger (240V), Level 2
    commercial charger (240V), and a Level 3 fast charger (480V). Under the project, the grant
    provides (1) a home charger at no cost to qualified EV owners and a credit of $1,200 to offset
    the charger installation costs, and (2) commercial chargers at no cost to qualified partners.
    The goal of the project is to “collect and analyze data to characterize vehicle use in diverse
    topographic and climatic conditions, evaluate the effectiveness of charge infrastructure, and
    conduct trials of various revenue systems for commercial and public charge infrastructure.”

     

    The EV Project has been expanded from ~11,000 to ~15,000 chargers.
    Since August 2009, several additional grants and extensions have been granted to expand
    the EV Project. The California Energy Commission provided an $8 million grant; the DOE
    extended its grant by $15 million and added the Los Angeles and Washington, D.C., and the
    Bay Area Air Quality Management District awarded ECTY $2.9 million to expand the project
    to San Francisco. The original DOE grant called for ~11,000 chargers. With the DOE
    expansion, we now estimate that ~15,000 chargers will be installed by 2013. Exhibit 2 below
    highlights the EV Project locations throughout the U.S. Exhibit 4 below provides an overview
    of the EV project.
    1 Apr 2011, 02:32 AM Reply Like
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