Axion Power Reports Second Quarter Results for 2011

NEW CASTLE, Penn., Aug. 16, 2011 /PRNewswire/ -- Axion Power International, Inc. (OTC Bulletin Board: AXPW), the developer of advanced lead-carbon PbC® batteries and energy storage systems, today announced results for its second quarter ended June 30, 2011.

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Net sales for the second quarter of 2011 were $ 2.1 million, compared to $0.5 million during the second quarter of 2010.  The increase was primarily due to greater product sales from the production and shipment of a series of orders for flooded lead-acid batteries, with the purchaser carrying the cost of inventory and providing the raw materials required for that production. The Company reported a net loss of $ 1.3 million, or $0.02 per share, for the second quarter of 2011, as compared to a net loss of $1.9 million, or $0.02 per share, for the second quarter of 2010. The decrease in net loss of $0.6 million was the result of the increase in net sales and lower operating costs.  

At June 30, 2011, cash, net of debt, was $6.5 million. Total assets were $21.4 million and total stockholders' equity was $15.1 million.

Chairman and CEO Thomas Granville commented, "In the second quarter of 2011, we continued to make significant progress on the planned initiatives we began in 2010 and have continued in 2011:

• Our robotic electrode manufacturing line, delivered in March 2011, has undergone full alignment in our Green Ridge Road Facility in New Castle, PA. The line is capable of running end to end and we are currently working on improving throughput times to match our contract specifications. The basic components of this line will be improved and then duplicated as additional robotic electrode production lines are added to allow us to achieve commercial levels.
• Manufacturing activity has consisted of continued production of PbC prototype and test batteries, as well as the manufacture of traditional lead-acid batteries pursuant to sales orders. In addition to providing cash flow, manufacturing traditional batteries enables us to train factory personnel, test systems, and make production and quality improvements that we believe will ultimately benefit future PbC battery production, which is substantially similar in assembly.
• Our work with Norfolk Southern ("NS") on the hybrid locomotive continues, and we received and filled a purchase order from NS for our proprietary PbC batteries in amounts sufficient to enable NS to platform-test our product, and the battery management system, in large string configurations. At the same time here at our facilities, under a service contract with NS, we are performing duplicate hybrid locomotive battery testing of our PbC product and our battery management system.
• Work also continues on our PbC solution for the emerging hybrid vehicle market, and testing continues with European OEMs. We are also working with a large US vehicle manufacturer and, this month, we will be shipping our latest PbC batteries to them for continued testing in the hybrid vehicle program.
• We have finished assembling our onsite PowerCube™ and we are testing all four of the 160 battery strings. All batteries are now hooked up to our battery management system and communication links have been fully established with the system electronics.  As we have previously indicated, the onsite PowerCube will allow us to test our product in numerous grid applications including: dispatchable power, backup power, power quality, load leveling and potential arbitrage utilization. We will also be able to test large strings of batteries for other applications such as the hybrid locomotive, distributed and renewable power and backup and ancillary service systems for applications such as oil rigs.
• We announced on March 8, 2011, that we had received a series of orders for the production and immediate delivery of flooded lead-acid batteries. The batteries will be branded by the purchaser, and will not carry an Axion Power identification label. Axion began shipping this product in the first quarter and anticipates the continuation of weekly shipments of these batteries throughout 2011.  Our initial estimates, that the total minimum purchase price for this series of orders for 2011 would be in excess of $3.5 million dollars and the potential maximum purchase price of $8 million dollars, has not changed. The maximum number is based on the purchaser's forecast, which was projected from their historical data. The flooded lead-acid batteries will be built by Axion Power with the purchaser carrying the cost of inventory and providing the raw materials required. The battery order is well suited to production on the newly renovated, and currently under-utilized, manufacturing lines at our Clover Lane facility in New Castle, PA. These battery types have been produced on the manufacturing lines at New Castle for decades and we are now shipping three qualified battery types. Production and shipment of these batteries has continued to ramp up and will impact our revenue and margins in 2011.
• Although we have made very significant progress with our PbC technology, the adoption process, and the general path to commercial viability, has been longer than we originally anticipated. In addition, we will need working capital to fund our anticipated continued growth of sales in traditional batteries and PbC products. Consequently, we initiated prudent and proactive steps in the second quarter to explore funding strategies that will ensure that we have the flexibility to access capital resources when they are needed to meet our business goals. We believe that currently available funds at June 30, 2011, along with internally generated funds, will provide sufficient financial resources for ongoing operations, working capital and capital expenditures through the second quarter of 2012. At some point, however, we will require further financing to fund our transition from our current developmental stage to commercialization.
• On July 22, 2011, subsequent to shareholder approval at our annual meeting on July 20, 2011, we filed an amendment to our Certificate of Incorporation that increased our authorized shares of Common Stock to 200 million.  The increase in 75 million available common shares provides us flexibility in raising new funds

Granville continued, "We believe that 2011 will see our first significant PbC commercial order, and that is likely to be from Norfolk Southern if we and they adhere to the timeline they have communicated to us. We see three major markets for our PbC batteries and our PbC technology going forward: (1) transportation including hybrid vehicles that incorporate stop/start, regenerative braking and beyond; and battery-driven locomotives both in the new and conversion markets; (2) off-grid power storage and supply, such as for oil rigs, and for storing renewable energy at the source; and (3) the myriad types of energy storage tasks that will help electric utilities make better use of their current generating facilities and will allow them to better service "peak demand." We are working in partnership with an integrator to bring our PowerCube online, as a grid-connected energy storage unit, and believe that our first such application will be completed in 2011."

Granville concluded, "We believe Axion Power's PbC technology will be the low-cost leader in advanced batteries for transportation and electric utilities both on- and off-grid. Our components are inexpensive, re-cycleable and not sourced from politically unstable areas around the world.  Our manufacturing processes are straightforward and are easily adaptable to existing lead-acid manufacturing facilities worldwide.  Our PbC total life cycle cost structure is a fraction of what is required to build other advanced battery chemistries.  PbC is a better mousetrap, and we will be tireless in taking it to market."

Conference Call / Webcast

Today at 11:00 am ET (8 a.m. Pacific) a conference call will be held to review the AXPW results. Interested parties should call 877-317-6789 (domestic) or 412-317-6789 (international), to access the call. You may also access this call via the Internet by visiting the company's website at www.axionpower.com and clicking on the Investors link. Access to the webcast will be available for 90 days.

For those who are unavailable to listen to the live broadcast, a replay will be available for 7 days and can be accessed by dialing 877-344-7529 (domestic) and 412-317-0088 (international) and using conference number 10002770.

About Axion Power International, Inc.

Axion has developed and patented a next generation energy storage device that won the prestigious Frost & Sullivan Technology Award for North America in the field of lead-acid batteries. According to Frost & Sullivan, Axion's new PbC batteries have "the potential to revitalize the lead-acid battery industry by breathing new life into an established technology that is not well suited to the requirements of important new applications like hybrid electric vehicles and renewable power."

Axion Power International, Inc. is the industry leader in the field of lead-acid-carbon energy storage technologies. Axion believes this new battery technology is the only class of advanced battery that can be assembled on existing lead-acid battery production lines throughout the world utilizing Axion's proprietary carbon electrodes. Axion's future goal, after filling their plant's lead-carbon battery production capacity, is to become the leading supplier of carbon electrode assemblies for the global lead-acid battery industry.

For more information, visit www.axionpower.com

Forward-looking Statements

Certain statements in this Press Release are "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risk factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include the risk for the Company to complete its development work, as well as the risks inherent in commercializing a new product (including technology risks, market risks, financial risks and implementation risks, and other risks and uncertainties affecting the Company), as well as other risks that have been included in filings with the Securities and Exchange Commission, all of which are available at www.sec.gov. We disclaim any intention or obligation to revise any forward-looking statements, including, without limitation, financial estimates, whether as a result of new information, future events, or otherwise.

Contacts

Axion Power International, Inc.
Charles Trego, CFO
[email protected]
(724) 654-9300

Allen & Caron Inc
Rudy Barrio (Investors)
[email protected]
(212) 691-8087

Len Hall (Media)
[email protected]  
(949) 474-4300

SOURCE Axion Power International, Inc.