Time code: 2: 16
Frank Gibbard (FG):
Good-morning everybody and thank-you for finding us today.
It’s my pleasure to welcome you to our conference call to discuss our
recently released 2011 financial results along with a quick overview of our plan
At last quarter’s call there were a couple of
priorities we communicated and I would like to report our progress in those
areas. One of those priorities we
mentioned is being more transparent and communicative with you, our
shareholders. I haven’t been able
to deliver on that promise and I’d like to explain why.
Two major activities for the management have
been the preparation of a comprehensive business plan for the five year period
2012-2016, and secondly, planning for expansion into China.
First it required 5 months, many hours of
management time, and four iterations of the business plan before it was
acceptable to both management and the board of directors. Now
I’m pleased to say that task has been completed and our business plan was
approved unanimously by the board on February 1st 2012.
With the plan approved we’re moving forward
with a precise focus and a great sense of urgency.
Next, the executive management, the sales team,
and the financial group all spent a large amount of time in Asia preparing for
our entry of Altair into China. Personally
I visited China 4 times since last October with the last visit lasting 3 weeks.
These visits didn’t yield results that could be recorded publicly at this time
but I will comment on the kinds of ground-laying activities that were carried
out there during the Q&A session if there are questions on it.
Now the hard groundwork of the past 6 months has
begun to produce results. And we believe we will be able to improve the recent
scarcity of information in the first half of 2012 and beyond as our plans begin
to come to actionable reportable events and we look forward to starting to bring
in some key business news this year.
As a reminder the three target markets for our
battery system technologies are first, the electric grid, second,
transportation, and third, industrial.
Another of our top priorities was to achieve
financial stability. As you will
see when we file our 10K in the next day or two, we plan on further reducing
staff and closing our Reno Nevada manufacturing facility by the end of 2012.
On the other hand, to meet new and existing
customer orders we will be adding staff to our Anderson Indiana operation.
This facility is the core of our activities in complete customer
solutions. It houses our team of
experts who are responsible for cell design, battery control systems, and the
design testing and assembly of complete products and systems some of these large
enough to generate megawatts of power.
The planned concentration in Anderson will allow
us to meet customer orders and execute prototyping programs directed at initial
Now I’ll turn the call over to Steven Wong,
Chief Financial Officer of Altair, for his review of our financials.
Steven Wong (SW): Thanks Frank, and good-morning to everyone.
For the year ended December 31st
2011, revenues were $5.2 million compared to 2010 revenues of $7.8 million.
Gross loss was $571K in 2011 compared to gross profit of $2 million in 2010.
Operating expenses were $20.5 million in 2011 compared to $22.5 million
in 2010. The 2011 net loss was $19.9 million, or 43 cents per share compared to
a net loss of $22.3 million or 84 cents per share in 2010.
The basic and diluted weighted average shares outstanding for 2011 were
$46.9 million compared to $26.6 million for 2010.
Gross profit was lower by $2.6 million in 2011 primarily as the result of
reduced sales volume associated with the elimination of our military sales in
2011, a loss on the sale of product to a Chinese entity that we anticipate will
assist in facilitating our entry into the China market and charges to inventory
reserves related to quality problems with a battery cell supplier.
Operating expenses were down $2 million, or 9 percent during 2011compared
to 2010. This reduction is the result of reductions in product development
expenses and include increased efficiencies in the marketing area. Altair’s
cash and cash equivalents increased by $41.8 million from $4.7 million at
December 31st 2010 to $46.5 million at December 31st 2011.
This is primarily due to two capital raises net of issuance costs
totaling $57.8 million in 2011 reduced by cash used in operations of
approximately $14.7 million. The
bulk of the cash used in operations went to cover normal compensation in
non-labor expenses and a $900K decrease in deferred revenue offset by a $3
million increase in accounts payable related to financing related to legal
With that I’d like to turn it back over to
FG: Thanks Steven. Before we open the call to your questions I’d like to
provide an update on several items as well as discuss our future growth
On January 11th we issued a news
release that we received a bid product deficiency notice from NASDAQ.
This is because our stock price fell below a dollar per share during the
time period from November 21st 2011 to January 5th 2012.
We have until July the 5th of this year to have the stock
price trade above the dollar price range for 10 days to retain our listing.
If we’re unable to achieve this there are a couple of action steps that
we could institute to try to retain our listing.
Those steps include applying for a six month extension and the
possibility of a reverse stock split. As
you can imagine maintaining our NASDAQ listing is extremely important to us and
we will take the necessary steps to do that. We believe that between now and
July 5th we will have sufficient good news of orders in hand to help
drive our valuation. We continue
our work with INE in El Salvador to establish the regulatory framework necessary
to enable energy storage in that market. This
is the equivalent of work done in the US over the last several years and we
remain confident that we’re close finalizing the regulations that will allow
us to proceed with our existing contract with INE for a 10 megawatt turnkey
system. We believe that Honduras
and Guatemala will become viable markets in 2012 once the regulations in El
Salvador are completed, and we’re actively talking to customers in both
countries. The cost of heavy fuel
power generation in these countries, along with the higher grid instability,
makes our energy storage solution very attractive there.
In 2011 we also accepted orders from ESH a
subsidiary of Nextera for a demonstration that will go into service in the next
few months and from a global wind turbine manufacturer.
This unit is also scheduled to enter production in mid summer along with
the previously announced units in Hawaii.
Combined, these demonstration projects will
allow Altairnano to demonstrate its capability for frequency regulation and the
integration of solar and wind renewable energy.
2011 marked a year of executing our new market
strategy to include both commercial vehicles in the transportation segment and
industrial applications to help diversify company growth away from complete
dependency on the grid market. While
Altairnano has developed perhaps the strongest available application engineering
and grid knowledge in the energy storage market, we recognize that the slow
adoption of energy storage in the United States requires that we focus on
During 2011 we also began working with a number
of customers in the transportation and industrial segments to provide prototypes
for applications that leverage our unique characteristics of long cycle life,
safety, wide operating temperature range, and the ability to charge faster than
any other technology.
The majority of transportation and industrial
customers are Original Equipment Manufacturers, or OEMs.
These customers typically purchase our product first to prototype in
their equipment and then launch into production over several quarters. As a
result it takes some time to achieve significant revenue traction.
We’ve been successful in selling prototypes to several multi-billion
dollar transportation and industrial OEMs.
Each of these OEMs is evaluating the capabilities of our technology and
we believe that they will be a major source of growth for our company.
These customers typically require battery
technology that can accept very fast charging, can operate over a wide operating
temperature range, and will last a long time, and, more and more important these
days, is inherently safe.
Before we close let me reiterate that we’re
enthusiastic as ever about the potential opportunities that lie ahead for Altair.
We have a lot of work ahead as a management team but we’re supported by a
group of dedicated employees who are totally committed to maximizing the
opportunities and delivering shareholder value.
Now we’re ready to take your questions so
I’ll turn it over to the operator to facilitate the Q&A session.
Operator (Op): Our
first question comes from Eliot Hinman, with S&H Finance.
Eliot Hinman (EH): Hi. Can you hear me?
listen, I got on a little bit late. I represent a company called S&H Finance
and we’ve been involved with Altairnano almost since the inception.
I want to get you to clarify something for me that you said regarding the
NASDAQ listing because, and please do not get me wrong about what I’m going to
say next, because everybody on this conference call will understand what I’m
saying. You sounded to me very Terry Copeland-like with one statement
which was about the NASDAQ listing. Are
you talking about another reverse stock split… again? Once again? Another…
Reverse stock splits do not work 90 percent of the time in the
marketplace. Everybody that’s
market savvy, every Wall Street analyst will tell you that the chances are 1 in
10 of a reverse stock split working. We
saw what happened last time with a reverse stock split – OK?
Number…Another point I’d just like to make here:
When you reverse stock split you have to have a continual stream of
excellent news, orders, and revenues in order to keep the short sellers from
totally degenerating the value of your stock.
Okay? We’ve already seen
this with this company so my question to you is;
Are you SERIOUSLY considering yet another reverse stock split?
a very (dutiful?) and well-balanced question.
Let me answer that question. I’ve
given you two opportunities. Two
ways and, uh, you’re still not listening.
The first one is to get a stream of good news is related to new orders
and business opportunity is by far the preferred solution. I only mention a
reverse stock split because that’s the last resort to maintaining our NASDAQ
listing. So, from the standpoint of
what we intend to do, our strategy is to release good news consistently in a
stream over the next several months and hopefully going beyond that.
We have good news to release, I believe, and the problem with that is
that when you deal with large companies, these multi-billion dollar companies
that I was talking about, they hesitate to allow their names to be used when
they’re dealing with a small company. And
we’re making every effort to write into our agreements, our Memorandums of
Understanding, and our contracts, that, the right to announce our deals with
them shall not be unreasonably withheld. So, good news is our first preferred
solution to retaining our NASDAQ listing. The
possibility of a reverse stock split is remote, in my mind, and is the last
next line is from the line Russell Atwater, private investor.
your line is open.
Russel Atwater (RA): Yes, hello. My
question is, a couple of quarters back, you mentioned to be involved with the
forklift industry. To have a quick
charge battery is an awesome thing for that industry because it takes 8 hours to
recharge a lead battery. Do you still have that connection?
TC: We still are working in that area, yes.
all I wanted to know. Thank-you.
Op: Our next question comes from the line of
Patrick Assard, private investor.
Patrick Assard (PA): Good-morning, Frank. I was
wondering… Did you guys prerelease when your were giving out your earnings out
today? Because today was the first
time that I noticed any news that I noticed that you guys were having an
earnings conference call today.
we did prerelease it.
PA: OK, because, I never did see it in any of
the headlines anywhere out there. Also,
can you elaborate a little bit more on these multi-billion dollar companies as
to whether or not they’re in the U.S., Europe, or in China?
Because you also mention that you look forward with our investments with
Canon there that that’s gonna give us some income from China there, so can you
elaborate more where these multi-billion dollar companies are located?
hit it right on the head when you said the U.S. and Europe. At this point we are
having discussions also in China but nothing has matured in China.
Things are moving right along with the kinds of demonstrations, product
demonstrations, at the module level and the pack level with those companies,
that’s US and European companies, and the initial results have been uniformly
positive. I’ll tell you a little bit more about that; What we’re finding,
and this is a very optimistic statement but I believe it from the very bottom of
my heart. What we’re finding is that the people to whom we are shipping
prototypes are finding that we are unique in the energy storage universe of
products available in the characteristic attributes that they need for their
applications particularly in the areas of high rate charge acceptance, safety
and wide operating temperature range. So
I think that probably answers the question that you asked.
We’re very optimistic about that and we’re pushing with all of the
people that we’re dealing with, as I’ve said before, to allow us to use
their names in connection with orders from them.
PA: Also, the good news that you’re expecting
to share with us in the next couple of months that will expected to boost our
share price here. Is that gonna be coming from the US, or Europe?
Do you have anything… what’s your general feeling on that?
feeling is that the U.S., Europe, and China can all contribute to that good news
scenario that you just described.
PA: OK, thank-you very much.
next question comes from the line of Frank Cho who’s a private investor.
Frank Cho (FC): Hello. I have
two questions. The first, I
thought, domestication. After the vote we got the 8K filing noting the board
will decide whether and when implement domestication. So can you talking little
bit more about that? Your
consideration? That’s the first
question. The second is about kind of industry extension so. We found lots of
news in Chinese, you know, mention about that. So, can you talking about a
little more? Why you keep silent
here? No any English published about that progress.
think that Steven Wong will address that and I can follow up.
address the domestication. I do
remember you Frank, attending the shareholder meeting.
the shareholders have approved it. The
board of directors have approved it and we moving along with the process.
We expect to have the process completed within April.
I’ll let Frank answer the next part of the question. If you don’t mind to repeat the question again – the
the second part is about the China business expansion. You know, we read lot of
news about the progress talking about the Altairnano China, you know. The
problems they maybe founding the new company there.
In English we did not see any report or any upgrade for that.. yeah.. can
you explain that, little bit, detail?
now that I hear your question again, Steven has been intimately involved in the
business discussions that are taking place in China and I think he is the best
one to answer that point also.
so, I’ve been assigned as the authorized representative to go over to China
and expand operations in China. So
we looking to the China market and we were in the process of establishing a
wholly foreign-owned enterprise over there.
And we actually have various different discussions with various different
levels of Chinese government officials over there.
So if you have seen certain articles or press in Chinese I think may be
reasonable, you know, that we have something out there given how it operates in
me expand on, the subject of China has come up. I did say, in my initial remarks, that I might say more about
what we found in China when we visit there.
We have, the management team, and the sales team, and the financial
people have all been involved in going various places and visiting various
institutions in China. And these include potential vendors who can source
products that are less expensive, and (muffled) to use in a China operation. We
have talked to government institutions at the municipal level, at the um, um,
what I would call County level, which is an assembly of, they call it a metacity
but, it also would be in the US, considered a product consisting of, perhaps, 10
or 15 smaller cities assembled into one political unit, and also at the
provincial level. And what we have
found is quite remarkable in my experience and that is an overwhelming
enthusiasm for American battery energy storage technology in general and
Altairnano’s particular unique technology in particular.
So, um, while I think that we were received well. We were met by
officials from the lowest levels to the provincial government of one province.
And we, after we gave our presentations, we typically got the comments:
“Don’t tell us too much about the technology. We understand that you, in the
United States, and Altairnano in particular, have superior battery energy
storage technology. Tell us about your needs. What do you need to relocate part
of your operations in China? How can we help you, with incentives, to achieve
those goals? So we came home from those kinds of meetings quite enthusiastic
about the possibility of doing business operations in China. I can’t be more particular at this moment but we do expect
to talk much more about that in the not very distant future.
Very good. Thank-you.
Op: Next on the line we have Brian Hatch,
who’s a private investor.
Brian Hatch (BH): Hello. I have
two questions. One is why isn’t
there news here in the United states. It seems like this organization has been
unable to find any kind of news at all. And
the other question is that as you approach the market in China, what safeguards
are you using to protect your intellectual property?
you repeat the first question? There’s a little distortion in our speaker
first question was relating to investor news.
I’ve not seen, over 6 months, any news stories at all about your
company’s activities in the usual outlets that I follow.
I kind of alluded to that. With
respect to things that are going in the United States we have grid-related
activities with which we are dealing, and some of which are in advanced
discussions, and which we are unable to talk about that because of a lack of
ability to do that to our memorandums of understanding.
I addressed this question, perhaps not adequately, but all of the big
companies that we’re dealing with, without exception, have told us that they
do not want us to use their name without their explicit permission and we
don’t have their explicit permission so far. The question is do we
(indiscernible)? But that explains to you, I believe, to you why we haven’t
been able to talk about them. We have a specific activity relating to a large
industrial application, the one with a Fortune 100 company for unusual
applications relating to power needs within business buildings.
Another application that we’re unable to talk about right now but we
are evaluating with one of the world’s leading electrical and electronics
companies has to do with offroad (offload?) vehicles that need the ability to
yield power in large bursts and again, although we have supplied equipment
prototypes to them, to that company, we are not able to talk about them in
detail at this time. So, there’s
good news which we have in-hand and would like to talk about but have been
unable to at this time. We continue to push United States and European companies
that we’re dealing with to be able to be allowed to present those materials
and as soon as we’re able to we’ll certainly do so.
The second question related to safeguards to
intellectual property in China. And
this has been a major issue for various different companies.
What I can say is that we are acutely aware of the problems of losing
intellectual property. Many of the aspects of IP that we’re most concerned about
are, fall in the area of trade secrets and so we are putting up safeguards in
any China operation to maintain that kind of information by not allowing venders
to have more information than they need to supply a particular part that they
need for application.
Steven, do you want to say anything more about
SW: Um… so… there are a laws protecting
intellectual property in China. We had discussions with intellectual property
attorneys on that. So, as I
mentioned, we are in the process of expanding into China and looking into that
and make sure that our intellectual properties are protected.
paraphrase what Steven just said we are aware of the problem and we are taking
steps to that we can with our own internal knowledge, and we have some very
knowledgeable people working on our staff.
In addition to this we are working with intellectual property lawyers to
ask them their expert opinion about how best to protect our intellectual
Can I follow up on that?
think, several months ago, there was some discussion that you would keep certain
processes to be done here in the United States to avoid intellectual property
loss in that regard. Is that still
the plan or you figure out a different way to approach it?
sorry I’m not aware of what initially what you’re speaking about.
Has that been since last September because I
can’t really speak to what happened before then.
next question comes from the line of Tim Butler who’s a private investor.
Tim Butler (TB): Yeah, right, thanks for taking the call.
Can you talk more about your domestication strategy and also talk about
the LTO production strategy in China?
FG: Let’s get Steven to the first part and
I’ll handle the second part
sorry would you like to repeat your question.
The strategy with related to domestication.
So as I mentioned earlier, the board of directors and shareholders have
approved the domestication. Our
strategy is to basically domesticate from Canada into the U.S. to become a
Delaware company. There are
differences in terms of the law and regulations and so forth and so it will
allow us to be more flexible in terms of how we operate.
That will also reduce the cost because, you know, instead of having also
lawyers and CPA’s and other professionals involved we should be able to save a
substantial amount. And, you know, it will also allow us to operate more
effectively and efficiently from a timeline standpoint, you know, whatever we
need to do in terms of a transactions. And
there are a lot more benefits to that and I hope that answers your question.
you repeat the second half? We
didn’t capture it.
Yeah the LTO Production strategy in China. Do you know how much you’ll
be producing? When you’ll be
producing it? What you think
you’ll sell it for?
FG: All of those things have been planned.
I don’t think I can speak to them in detail at this time.
Let me put it this way; We do expect to be able to produce all of our
needs for all of the products that me make by making, transferring technology,
and perhaps, equipment to China for LTO production and that’s associated with
our closing down of Reno operations where our LTO is made today.
next question comes from the line of Richard Gianinni, with private investor
Richard Gianinni (RG):
Good-morning. Thank-you, gentlemen. I guess we all know that sales heals
everything and that’s the most precious news. What everybody, I think, is
hoping for more than production capacity in China. Obviously it fails to dictate
that I think we all encourage this from. My
question is more to the domestic market and to your competitors, and I’m sure
that there are many more than I know of, but Extreme Power is one impressive,
who seems to be plugging in successfully to the grid. What particular barriers
are unique to Altair that someone like Extreme seems to not be dealing with?
What encouraging signs have you to tell me why you’re going to be a
valid domestic competitor in the grid business?
Let me say first of all what is, in the grid business, that is uniquely
an advantage to our company. I
already mentioned that our LTO technology, the chemistry of LTO, exceeds, when
there are huge demands for power, and some of our competitors can address that
to some extent, but also when it’s possible to, and necessary to, achieve very
high charge rates. In that area there is no technology in the world that exceeds
ours in the ability to do both. That is to accept charge, and deliver charge in
very short periods of time. We’re
talking about response times in the order of milliseconds.
And, in considerably less that one second, is able to go from charging at
the rate of one megawatt to discharging at the rate of one megawatt and that
gives us a unique capability in, for example, frequency regulation.
Not a terribly large niche but a very important one in terms of
profitability in the United States. I
will also say with respect to the role of energy storage in regulated
applications in the United States is taking off very slowly because the
customers are electric utilities and there is hardly an industry that you could
mention that is more conservative, and careful and long-planning, and requires
long life on its equipment than the utility industry.
And so, based on my conversations with people in the utility industry and
organizations that serve the utility industry I would say that it’s unlikely
that there’s going to be any large scale grid implementation of energy storage
technology for grid applications for the next 2 to 3 years.
We’re talking about people trying to sort out why energy storage is
necessary, how it is useful in integrating renewables into grid applications,
how many grids can use this kind of technology, and so forth.
I will tell you that we are playing a key role there.
We are talking with technology people with very well-received products
into that industry. We continue to perceive that as something that we can do
better than others in particular applications.
Now I’ll give you another part of it which is
that it is not particularly at this time our sweet spot to be doing bulk energy
storage and bulk energy storage is a strong interest of many utility companies
for the future. Particularly for off-selling time of day operations so that if
there’s a big difference in electricity costs at a particular time then you
can store energy and then return it to the grid.
That is not a sweet spot for our technology. We specialize in the ability
to be agile and fast and safe. Also
those applications where customers are demanding very long lives because you can
project using critical methodologies that are widely accepted, you can project a
16 to 20 year life for our product and that begins to look particularly
attractive for a long view company (indiscernible) or market segment such as the
electric grid. So, in the near
term, we won’t compete strongly in bulk energy storage.
That’s not our prime business. We
do, however, have initiatives that are looking at the possibility of hybrid
systems in which our capabilities for extremely fast rapidly charged can be
combined with bulk energy storage from other systems and hybridized into a
single system. We have done studies on this we have (indiscernible) from a
standpoint of initial provability and it’s looking promising for some
applications which I would hope to be able to talk to you more about more later.
That would allow us a wider lane of market activity. We still find lots of
interest in the U.S., we find lots of interest in Hawaii, where they’re
looking at wind power and solar power and I’m bullish and optimistic about
that. It just takes a long time for that market to develop and as I mentioned in
my initial remarks. That’s why
we’re bringing along transportation and industrial markets to get near-term
I appreciate that.
do have a follow-up question from Frank Cho who’s a private investor.
Frank Cho (FC): Yeah, yeah. Hello?
(pause)… Hello… (pause)
have another two questions. The
first one is about inventor suicide. So,
how do you think that will impact the company?
That’s the first question. The
second is did YTE already use our (indiscernible) product
If they not use in their production what is the
sorry. Due to the speaker I’m sorry we couldn’t hear the first part of the
first part of the question is about our inventor. I heard that he already
suicide. Can you comment how that will impact the company?
Op: Pardon me, Tom, it looks like the other
speakers have maybe disconnected.
you hear my question? (Pause)
and gentlemen, please stand by.
Tom: Are they dialing in?
Op: Um, I’m dialing out to them now.
Op: Ladies and gentlemen please stand by your
conference call will begin again momentarily.
are you there? (long pause)
(Indiscernible words and muffled whispering)
Op: The speakers are back on the line.
FG: OK, sorry for the interruption.
I believe that the first question was relating to an employee of ours who
had passed on?
think so. The inventor of our dust
FG: What I can say about that is that we were
think we lost the connection.
Op: We may have lost them again.
FC: Oh, O.K. (laughs)
Tom: I think he was in mid sentence there.
Op: I’ll try dialing out to them again.
They’re still connected it shows.
(long pause) Ladies and gentlemen please remain
on your lines by your conference call will begin again momentarily.
Ladies and gentlemen thank-you for your
participation in today’s conference. You
may all disconnect now. Everyone
have a great day.
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