Press Release
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Quarterly Revenues of $5.9 Million Exceeded Prior Year by 572% and Grew 61% On a Sequential Quarterly Basis
TAMPA, Fla., Feb 20, 2003 (BUSINESS WIRE) -- Liquidmetal Technologies (Nasdaq:LQMT) today announced results for its 2002 fourth quarter and fiscal year ended December 31, 2002.Revenues for the fourth quarter achieved a nearly seven-fold increase to $5.9 million from revenues of $874,000 in the fourth quarter of 2001. On a sequential basis, fourth-quarter revenues were 61% higher than the $3.7 million in revenues reported for the 2002 third quarter ended September 30. Revenues for the year grew to $13.1 million compared to $3.9 million in 2001, a 238% increase.
"These results mark an exciting milestone for the company: the start of full production at our new state-of-the-art manufacturing facility," said John Kang, Liquidmetal Technologies' President and Chief Executive Officer. "Perhaps more important, they signal our trajectory of growth as we enter 2003. With each passing week and month, we are gaining momentum and demonstrating the viability of our revolutionary material technology in a high-volume manufacturing environment."
The revenue gains largely resulted from a sharp rise in volume of products manufactured from the company's proprietary bulk Liquidmetal(R) alloys. Construction of the company's first full manufacturing plant was completed in September, accelerating the ramp-up of manufacturing capacity and providing a platform for the growth in sales of bulk alloy products and related revenues achieved in the fourth quarter.
The company's bulk alloy segment accounted for 88% of 2002 fourth quarter revenues, while sales of Liquidmetal coatings contributed 12%. This compared to 19% and 81%, respectively, in the prior year fourth quarter, reflecting the company's strategic shift in product mix. Although led by production of parts made from Liquidmetal alloys, bulk alloy segment results also include research and development revenues and furnace equipment sales. Liquidmetal(R) coatings are sold mainly to the oil drilling and power generation industries as a protective application in extreme-wear conditions.
As expected, higher expenses stemming from the company's rapid scale-up resulted in losses for the fourth quarter and full year. For the quarter, the company reported a loss from continuing operations of $5.9 million, or $0.14 per share, compared with a loss of $2.9 million, or $0.08 per share, in the fourth quarter of 2001. For the year, the loss from continuing operations was $19.9 million, or $0.51 per share, compared with a loss of $5.2 million, or $.15 per share, from continuing operations in 2001. Including the effect of discontinued operations, the net loss for the quarter totaled $6.3 million, or $0.15 per share. This compared with net income of $3.0 million, or $0.09 per share, in the prior-year fourth quarter, which included a non-recurring gain of $5.8 million, or $0.17 per share, from a change in management's estimate of the loss on disposal of a discontinued, pre-IPO business. For the full year, the net loss including discontinued operations amounted to $18.4 million, or $0.47 per share, compared with a net loss of $23.1 million, or $0.69 per share, in 2001.
Earnings per share calculations were based on 40,995,375 weighted average shares outstanding for the 2002 fourth quarter and 38,713,878 shares for the full year, compared with 34,993,723 and 33,323,217 shares in the respective prior year periods.
Fourth quarter and full year gross profits were sharply higher on the strength of the company's revenue growth; however, gross margins were lower than in the prior year as an anticipated outgrowth of the accelerated shift in product mix toward a greater percentage of bulk alloy sales. Bulk alloy revenues currently carry a lower margin than the substantially higher-margin coatings sales that dominated the company's smaller base of revenues in preceding quarters and the prior year. As a result, the gross margin was 27.1% in the current fourth quarter versus 54.0% in the fourth quarter of 2001. For the year, the gross margin was 33.9% versus 50.4% in 2001.
Manufacturing during the fourth quarter centered on production of cell phone casing components for Samsung Electronics, as well as prototyping of various products in development with other customers representing the company's four main target markets for its bulk alloy products -- electronic casings, medical devices, sports and leisure products, and defense products.
Capital expenditures totaled $11.2 million for the fourth quarter and $23.8 for the year, principally reflecting the costs of construction and equipment for build-out of the company's manufacturing operations. Cash and marketable securities totaled $29.1 million at December 31.
"In virtually all respects, 2002 was a year of tremendous progress completed in an extraordinary timeframe and against the inevitable challenges of building a new manufacturing company literally from the ground up," Kang said.
Among its significant accomplishments in 2002, the company:
-- Successfully completed its initial public offering and on May 22, 2002 began trading of its common stock on the Nasdaq National Market;
-- Entered new product development agreements with leading global customers, including TAG Heuer (watch casings and components), LVMH (luxury goods), the U.S. Army/General Dynamics Corporation (armor-piercing ammunition), Surgical Specialties (ophthalmic blades), DePuy Orthopaedics (knee replacement systems) and Lockheed Martin (defense armor systems), while continuing product development programs with Rawlings, Head Sports, PING, Cleveland Golf, Samsung Electronics, LG Electronics, Motorola and the U.S. Department of Defense;
-- Achieved an additional $5.25 million allocation for ongoing Department of Defense research and testing of Liquidmetal alloys for defense-related applications;
-- Completed construction of its first full-scale manufacturing plant -- a state-of-the-art, 166,000 square foot facility in Pyongtaek, South Korea -- in September 2002 and accelerated the ongoing ramp-up of its production capacity;
-- Began mass production of Liquidmetal parts from the newly dedicated plant during the fourth quarter.
"While we are gratified by these and other accomplishments, our focus now is on taking Liquidmetal Technologies to dramatically higher levels of operating performance and achieving our objective of profitability in 2003," Kang said. "As we enter 2003, many of our customers are poised to launch their first Liquidmetal products. We are excited by the prospect of multiple Liquidmetal products entering multiple markets and the momentum this will build for our company."
These results and other highlights of the 2002 fourth quarter and year will be presented in a webcast conference call hosted by Kang and Brian McDougall, Executive Vice President and Chief Financial Officer, at 8:30 a.m. EST today (February 20). Interested parties are invited to access the conference call live via the Internet from Liquidmetal Technologies' Web site at http://ir.liquidmetal.com or at www.companyboardroom.com. The dial-in number for investors participating in the operator-assisted call is toll-free 800/915-4836 or toll 973/317-5319 for international callers. Institutional investors can also access the call via CCBN's password-protected event management site, www.streetevents.com. A rebroadcast of the call will be available after 11 a.m. today on the company's Web site at http://ir.liquidmetal.com or at toll-free 800/428-6051 or 973/709-2089 for international callers, access code 28174.
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 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
(unaudited)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
-------------------- ---------------------
2002 2001 2002 2001
---- ---- ---- ----
REVENUE $ 5,877 $ 874 $ 13,139 $ 3,882
COST OF SALES 4,286 402 8,679 1,924
-------- -------- -------- --------
Gross Profit 1,591 472 4,460 1,958
-------- -------- -------- --------
OPERATING EXPENSES:
Selling, general and
administrative 3,726 1,837 12,767 3,970
Research and development 4,817 1,171 11,825 2,057
-------- -------- -------- --------
Total expenses 8,543 3,008 24,592 6,027
-------- -------- -------- --------
LOSS BEFORE INTEREST AND
OTHER INCOME, INCOME TAXES,
MINORITY INTEREST AND
DISCONTINUED OPERATIONS (6,952) (2,536) (20,132) (4,069)
Interest expense (4) (319) (1,113) (1,103)
Interest income 117 5 510 8
Gain on sale of
marketable securities 832 -- 832 --
-------- -------- -------- --------
LOSS BEFORE INCOME TAXES,
MINORITY INTEREST AND
DISCONTINUED OPERATIONS (6,007) (2,850) (19,903) (5,164)
Income taxes (123) -- (123) --
-------- -------- -------- --------
LOSS BEFORE MINORITY
INTEREST AND DISCONTINUED
OPERATIONS (6,130) (2,850) (20,026) (5,164)
Minority interest in income
of consolidated subsidiary 204 -- 118 --
-------- -------- -------- --------
LOSS FROM CONTINUING
OPERATIONS (5,926) (2,850) (19,908) (5,164)
Loss from operations of
discontinued retail golf
segment, net -- -- -- (5,973)
Gain (loss) from disposal
of discontinued retail
golf segment, net (418) 5,837 1,556 (11,949)
-------- -------- -------- --------
NET (LOSS) INCOME (6,344) 2,987 (18,352) (23,086)
Foreign exchange
translation gain (loss) 306 (23) (28) (24)
Net unrealized gain on
marketable securities
held-for-sale 1,486 -- 1,668 --
-------- -------- -------- --------
COMPREHENSIVE LOSS $ (4,552) $ 2,964 $(16,712) $(23,110)
======== ======== ======== ========
PER COMMON SHARE BASIC
AND DILUTED:
Loss from continuing
operations $ (0.14) $ (0.08) $ (0.51) $ (0.15)
======== ======== ======== ========
Income (loss) from
discontinued operations $ (0.01) $ 0.17 $ 0.04 $ (0.54)
======== ======== ======== ========
Net income (loss) $ (0.15) $ 0.09 $ (0.47) $ (0.69)
======== ======== ======== ========
LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
December 31, December 31,
2002 2001
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 26,003 $ 2,230
Marketable securities held-for-sale 3,068 --
Trade receivables (net of allowance
for doubtful accounts of $319 in
2002 and $30 in 2001) 6,404 911
Inventories 2,506 503
Prepaid expenses and other current
assets 2,142 967
--------- ---------
Total current assets 40,123 4,611
PROPERTY, PLANT AND EQUIPMENT, NET 23,505 1,163
INTANGIBLE ASSETS, NET 785 723
GOODWILL 184 --
OTHER ASSETS 408 183
--------- ---------
Total assets $ 65,005 $ 6,680
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ 11,174 $ 2,706
Net liabilities of discontinued
operations 1,148 7,492
Deferred revenue 1,397 830
Other liabilities 19 167
Current portion of notes payable
to shareholders -- 2,988
--------- ---------
Total current liabilities 13,738 14,183
OTHER LONG-TERM LIABILITIES 74 --
--------- ---------
Total liabilities 13,812 14,183
--------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 21 --
--------- ---------
SHAREHOLDERS' EQUITY (DEFICIENCY):
Preferred stock, no par value;
10,000,000 shares authorized and
none outstanding at September 30,
2002 and 456,857 outstanding at
December 31, 2001 -- 5,577
Common stock, no par value;
200,000,000 shares authorized and
41,009,245 issued and outstanding
at December 31, 2002 and 35,023,515
issued and outstanding at December
31, 2001 106,554 29,752
Paid-in capital 20,326 22,401
Unamortized stock-based compensation (480) (6,717)
Accumulated deficit (76,940) (58,588)
Accumulated comprehensive (loss)
income 1,712 72
--------- ---------
Total shareholders' equity
(deficiency) 51,172 (7,503)
--------- ---------
Total liabilities and
shareholders' equity
(deficiency) $ 65,005 $ 6,680
========= =========
CONTACT: Liquidmetal Technologies David Townsend (investors), 813/314-0280 ext. 127 david.townsend@liquidmetal.com or Otis Buchanan (media), 949/206-8020 otis.buchanan@liquidmetal.com
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