Press Release
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For the second quarter, revenue increased 110% to $2.1 million versus the second quarter of 2001, exceeding consensus revenue estimates of $1.9 million. On a sequential quarterly basis, revenue grew 47% versus $1.5 million in revenue for the first quarter of 2002. For the first six months of 2002, revenue improved 90% to $3.6 million versus $1.9 million for the same period a year ago.
Revenue gains for both the quarter and first half were driven primarily by growth in the company's bulk Liquidmetal(R) alloys business, and from strong demand for Liquidmetal coatings products. Growth in bulk alloys mainly reflected defense-related research and development revenues derived from the company's contracts with the U. S. Department of Defense. The growth is also attributable to revenue from prototyping parts for customers working with the company to develop new products in anticipation of mass production. Demand for Liquidmetal coatings remained strong from the oil drilling industry as well as other markets looking for high-performance coatings for wear and corrosion resistance.
For the second quarter, the company reported a loss from continuing operations of ($4.3) million, or ($0.11) per share, beating consensus estimates of a loss of ($0.14) per share, and comparing with a loss of ($0.7) million, or ($0.02) per share, for the same period in 2001. For the first six months of 2002, the loss from continuing operations was ($8.8) million, or ($0.24) per share, compared with a loss of ($1.1) million, or ($0.04) per share, for the same period in 2001. The loss from continuing operations was primarily due to expenditures made in SG&A and R&D to support growth of the company's bulk Liquidmetal alloy business.
Including discontinued operations, the company reported a net loss of ($3.2) million for the second quarter of 2002, or ($0.09) per share, compared to a loss of ($3.0) million, or ($0.09) per share, for the second quarter of 2001.
Gross margin for the quarter was 44.6% compared to 48.0% for the second quarter of 2001. For the first half of 2002, the company achieved a gross margin of 48.2%, compared with 48.7% in the first half of 2001. Gross margin decreased 3.4% in the second quarter as cost of sales increased to $1.2 million, or 55.4% of revenue versus $0.5 million, or 52.0% of revenue, in the second quarter of 2001. Cost of sales was primarily impacted by a greater mix of both government research and development contracts and prototyping for our customers. These two sources of revenue have a lower gross margin than the company's Liquidmetal coatings business.
During the second quarter, on May 22, 2002, the company completed its initial public stock offering and commenced trading on the Nasdaq National Market under the trading symbol LQMT. Net proceeds from the IPO totaled $70.7 million, with a portion to be used for building out the company's manufacturing capacity. In the second quarter, the company used $2.0 million to build and equip its South Korean manufacturing facility, and plans to use an additional $18.0 million on the build-out by year-end. The balance of the proceeds will be used for general corporate purposes, including working capital and capital expenditures.
"We are pleased with the success of our public offering and with our results from operations for the second quarter," said John Kang, President and Chief Executive Officer of Liquidmetal. "The IPO has allowed us to invest in the scale-up of our manufacturing operations and to strengthen our balance sheet. In addition, we have seen customer interest in our technology increase dramatically as the revolutionary attributes of the Liquidmetal alloy have gained visibility in the marketplace," Kang added.
Liquidmetal's strategy includes significantly increasing its manufacturing capacity in 2002. Currently, the initial 13,000 square foot section of the company's Pyongtaek, South Korea facility is operational. A larger, adjoining manufacturing plant under construction is slated for completion by September 30, 2002, and will provide an additional 153,000 square feet.
"Our facility was originally planned for 110,000 square feet, but we were able to take advantage of a better layout to maximize the utilization of the land, thus maximizing the size and ultimately the capacity of the current facility. As a result, we also expect to be able to delay the need for future manufacturing expansion," stated Kang.
Since the IPO in May of 2002, Liquidmetal has announced development agreements with a number of leading companies in various industries, including Cleveland Golf, LVMH's Jewelry and Watch Group, the United States Army and Surgical Specialties.
"We're delighted to be able to add such industry leaders across a wide array of sectors to our list of current partners, which includes Samsung, Motorola, Johnson & Johnson, LG Electronics, TCL Mobile, General Dynamics, Ping Golf and Head Sports," Kang said. "We believe these world class partners, as well as the rapid pace of demand we are experiencing, clearly demonstrates the diverse applicability of Liquidmetal alloys and validates the powerful potential of this technology."
In conjunction with this release, Liquidmetal Technologies will host a webcast hosted by the company's Chief Executive Officer, John Kang, and Chief Financial Officer, Brian McDougall at 8:30 AM ET on August 6. Listeners may access the conference call live over the Internet from Liquidmetal Technologies' web site http://ir.liquidmetal.com or at www.companyboardroom.com. The dial-in-number to access this operator-assisted call is toll free 1-800-915-4836 or toll 1-973-317-5319 for International callers. Institutional investors can also access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com).
About Liquidmetal Technologies
Liquidmetal Technologies (www.liquidmetal.com) is the leading developer, manufacturer, and marketer of products made from amorphous alloys. Amorphous alloys are unique materials that are characterized by a random atomic structure, in contrast to the crystalline atomic structure possessed by ordinary metals and alloys. Bulk Liquidmetal(R) alloys are two to three times stronger than commonly used titanium alloys, harder than tool steel, and relatively non-corrosive and wear resistant. Bulk Liquidmetal alloys can also be molded into precision net-shaped parts similar to plastics, resulting in intricate and sophisticated engineered designs. Liquidmetal Technologies is the first company to produce amorphous alloys in commercially viable bulk form, enabling significant improvements in products across a wide array of industries. The combination of a super alloy's performance coupled with unique processing advantages positions Liquidmetal alloys for what the company believes will be The Third Revolution TM in material science.
This press release may contain "forward-looking statements" that involve risks and uncertainties, including statements regarding our plans, future events, objectives, expectations, forecasts, or assumptions. Any statement in this press release that is not a statement of historical fact is a forward-looking statement, and in some cases, words such as "believe," "estimate," "project," "expect," "intend," "may," "anticipate," "plans," "seeks," and similar expressions identify forward-looking statements. These statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the anticipated outcomes or result, and undue reliance should not be placed on these statements. These risks and uncertainties may include: our limited operating history in developing and manufacturing products from bulk amorphous alloys; the adoption of our alloys by customers; the commercial success of our customer's products; our ability to identify, develop, and commercialize new applications for our alloys; competition with suppliers of incumbent materials; the development of new materials that render our alloys obsolete; the ability to manage our anticipated growth; our limited direct experience in manufacturing bulk alloy products; scaling-up our manufacturing facilities; protecting our intellectual property; problems associated with manufacturing and selling our alloys outside of the United States; and other risks and uncertainties discussed in filings made with the Securities and Exchange Commission (including risks described in subsequent reports on Form 10-Q, Form 10-K, Form 8-K, and other filings). Liquidmetal Technologies disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
June 30, December 31,
2002 2001
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 58,200 $ 2,230
Trade receivables (net of allowance
for doubtful accounts of $70 in 2002
and $30 in 2001) 2,148 911
Inventories 885 503
Prepaid expenses and other current assets 866 967
----------- -----------
Total current assets 62,099 4,611
PROPERTY, PLANT AND EQUIPMENT, NET 3,457 1,163
INTANGIBLE ASSETS, NET 935 723
OTHER ASSETS 156 183
----------- -----------
Total assets $ 66,647 $ 6,680
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 3,484 $ 2,706
Net liabilities of discontinued operations 3,263 7,492
Deferred revenue 902 830
Other liabilities 94 167
Current portion of notes
payable to shareholders -- 2,988
----------- -----------
Total current liabilities 7,743 14,183
OTHER LONG-TERM LIABILITIES 84 --
----------- -----------
Total liabilities 7,827 14,183
----------- -----------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 154 --
----------- -----------
SHAREHOLDERS' EQUITY (DEFICIENCY):
Preferred stock, no par value; 10,000,000
shares authorized and none outstanding at
June 30, 2002 and 1,416,225 outstanding at
December 31, 2001 -- 5,577
Common stock, no par value; 200,000,000 shares
authorized and 40,993,245 issued and outstanding
at June 30, 2002 and 35,023,515 issued and
outstanding at December 31, 2001 106,519 29,752
Paid in capital 20,857 22,401
Unamortized stock-based compensation (1,975) (6,717)
Accumulated deficit (66,844) (58,588)
Accumulated foreign exchange
translation gain 109 72
----------- -----------
Total shareholders' equity (deficiency) 58,666 (7,503)
----------- -----------
Total liabilities and
shareholders' equity (deficiency) $ 66,647 $ 6,680
=========== ===========
LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share data)
(unaudited)
For the Three For the Six
Months Ended June 30, Months Ended June 30,
---------------------- ----------------------
2002 2001 2002 2001
---- ---- ---- ----
REVENUE $ 2,144 $ 1,022 $ 3,607 $ 1,896
COST OF SALES 1,187 531 1,869 973
--------- ---------- -------- ---------
Gross Profit 957 491 1,738 923
--------- ---------- -------- ---------
OPERATING EXPENSES:
Selling, general
and administrative 2,860 634 5,129 1,049
Research
and development 1,660 270 4,356 522
--------- ---------- -------- ---------
Total expenses 4,520 904 9,485 1,571
--------- ---------- -------- ---------
LOSS BEFORE INTEREST
EXPENSE AND INCOME,
MINORITY INTEREST AND
DISCONTINUED
OPERATIONS (3,563) (413) (7,747) (648)
Interest expense (791) (299) (1,103) (487)
Interest income 96 -- 96 --
--------- ---------- -------- ----------
LOSS BEFORE MINORITY
INTEREST AND
DISCONTINUED
OPERATIONS (4,258) (712) (8,754) (1,135)
Minority interest in
income of
consolidated subsidiary (10) -- (10) --
--------- ---------- -------- ---------
LOSS FROM CONTINUING
OPERATIONS (4,268) (712) (8,764) (1,135)
DISCONTINUED OPERATIONS:
Loss from operations
of discontinued retail
golf segment, net -- (2,251) -- (4,138)
Gain from disposal of
discontinued retail
golf segment, net 1,038 -- 508 --
--------- ---------- -------- ---------
NET LOSS (3,230) (2,963) (8,256) (5,273)
Foreign exchange
translation gain (loss) 161 (2) 37 (1)
--------- ---------- -------- ---------
COMPREHENSIVE LOSS $ (3,069) $ (2,965) $ (8,219) $ (5,274)
========= =========== ========= ==========
PER COMMON SHARE
BASIC AND DILUTED:
Loss from continuing
operations $ (0.11) $ (0.02) $ (0.24) $ (0.04)
======== ========= ========= =========
Income (loss) from
discontinued
operations $ 0.03 $ (0.07) $ 0.01 $ (0.13)
======== ========= ========= =========
Net loss $ (0.09) $ (0.09) $ (0.23) $ (0.16)
======== ========= ========= =========
CONTACT: Liquidmetal Technologies Investors David Townsend, 813/314-0280 ext. 225 or Liquidmetal Technologies Media Otis Buchanan, 813/314-0280 ext. 109
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