Aqua Metals, Inc. (NASDAQ: AQMS) ("Aqua Metals" or the "Company"),
which is reinventing lead recycling with its AquaRefining™
technology, today announced financial and operational results for
its third quarter ended September 30, 2019.
"I’m pleased to report that, as we have guided throughout 2019
and for the first time in the company’s history, we are on track
with our plan of commissioning all 16 modules in their final
production configuration by the end of the year,” stated Steve
Cotton, President and Chief Executive Officer. "This is a major
inflection point for Aqua Metals, and in early 2020 we intend to
run all 16 modules, the entirety of the AquaRefinery, with
increasing run time. Coupled with other portions of the plant, we
intend to continuously improve efficiency and utilization
throughout the year. We are determined to demonstrate that our
innovative technology is both an economic and environmental success
story."
Third Quarter 2019 Financial Results
During the quarter ended September 30, 2019, the Company
recognized revenue of $2.4 million, a gain of 102% compared to $1.2
million for the third quarter of 2018. Product sales consisted of
high-purity lead from the AquaRefining process, resulting from
increased production, as well as lead bullion, lead compounds and
plastics.
Cost of product sales increased by approximately 28% in the
quarter to $8.2 million compared to $6.5 million in the third
quarter of 2018. However, costs as a percentage of revenue
decreased by 37%. Costs were driven by materials and supplies
related to increased production.
General and administrative expenses for the third quarter of
2019 were $5.1 million, compared to $2.2 million in the third
quarter of 2018. This included several non-cash expense items,
comprised of $0.8 million of expenses related to the Veolia
agreement for operations, maintenance and management services, $1.7
million for the recognition of non-cash Veolia agreement warrant
expense, and $0.8 million in non-cash stock-based compensation.
For the quarter ended September 30, 2019, the Company had an
operating loss of $11.3 million compared to an operating loss of
$8.4 million for the third quarter of 2018. The net loss for the
third quarter of 2019 was $11.3 million, or ($0.20) per diluted
share, compared to a net loss of $9.3 million, or ($0.24) per
diluted share, in the third quarter of 2018. The net loss for the
third quarter of 2019 included $4.4 million of non-cash items
including the $0.9 million in stock-based compensation and $2.5
million of expenses related to the Veolia agreement. Excluding the
impact of the Veolia non-cash compensation, the Company’s adjusted
net loss(1) was $8.8 million or ($0.16) per basic and diluted
share. Weighted average shares outstanding for the quarter was 57.1
million.
For the nine months ended September 30, 2019, the Company
recognized revenue of $4.3 million (inclusive of pure AquaRefined
lead) and had an operating loss of $30.5 million compared to $3.4
million of revenue (with no AquaRefined lead) and an operating loss
of $24.6 million in the prior year period. The net loss for the
first nine months of 2019 was $33.5 million, or ($0.66) per diluted
share, compared to a net loss of $26.7 million, or ($0.82) per
diluted share for the first nine months of 2018. Non-cash expenses
for the first nine months of 2019 totaled $11.9 million.
As of September 30, 2019, the Company had $15.5 million in cash
and cash equivalents.
(1) This is a non-GAAP measure; refer to the non-GAAP
adjusted net loss section of this Press Release for additional
detail.
Outlook for 2019
The Company has set in place and expects to complete
commissioning of the key components of capital upgrade equipment
including - concentrate production improvements, electrolyte
chiller system, briquetting, evaporator systems, water recovery
tanks and AquaRefining. The drying system is expected to be
mechanically complete during the fourth quarter and commissioned in
the first two weeks of January.
"Through our tireless efforts, coupled with the commitment and
support of our partners, we have delivered on our previously guided
schedule. We are very proud to have accomplished the goals
established early this year and can now report on this progress and
the positive outlook for the remainder of the fourth quarter. This
is quite an exciting time for Aqua Metals as we set our eyes on
completing our key metrics of the AquaRefinery and the licensing
and partnering opportunities with key global companies in the
battery industry we are already working on," added Cotton.
Conference Call and Webcast
Aqua Metals will hold a conference call on Tuesday, November 12,
2019 at 1:30 p.m. PST (4:30 p.m. EST) to discuss these results and
corporate developments. Interested parties are invited to listen to
the call live over the Internet at
https://ir.aquametals.com/ir-calendar. The live call is also
available by dialing 1-855-327-6837 or for international callers
1-631-891-4304. A replay of the teleconference will be available at
https://ir.aquametals.com/ir-calendar. A replay will also be
available until December 12, 2019 by dialing 1-844-512-2921 or
1-412-317-6671 and using pin number 10008042.
About Aqua Metals
Aqua Metals, Inc. (NASDAQ:AQMS) is reinventing lead recycling
with its patented AquaRefining™ technology. Unlike smelting,
AquaRefining is a room temperature, water-based process that emits
less pollution. The modular systems are intended to allow the
Company to vastly reduce environmental impact and scale lead acid
recycling production capacity by licensing the AquaRefining
technology to partners. This could help to meet growing demand for
lead to power new applications including stop/start automobile
batteries which complement the vehicle’s main battery, lead acid
batteries which are in electric vehicles, Internet data centers,
alternative energy applications including solar, wind, and grid
scale storage. Aqua Metals is based in McCarran, NV, and has built
its first recycling facility in Nevada’s Tahoe Reno Industrial
Complex. To learn more, please visit www.aquametals.com.
Safe Harbor
This press release contains forward-looking statements
concerning Aqua Metals, Inc. Forward-looking statements include,
but are not limited to our plans, objectives, expectations and
intentions and other statements that contain words such as
“expects,” “contemplates,” “anticipates,” “plans,” “intends,”
“believes” and variations of such words or similar expressions that
predict or indicate future events or trends, or that do not relate
to historical matters. The forward looking statements in this
release include expectations for the Company’s commissioning of all
16 modules by year-end, increased efficiency and positive
contribution resulting from the operation of all 16 modules,
relationships with Clarios and Veolia, the strength and efficacy of
Aqua Metals’ portfolio of patent applications and issued patents,
the lead acid battery recycling industry, the future of lead acid
battery recycling via traditional smelters, the Company’s
development of its commercial lead acid battery recycling
facilities and the quality and efficiency of the Company’s proposed
lead acid battery recycling operations. Those forward-looking
statements involve known and unknown risks, uncertainties and other
factors that could cause actual results to differ materially. Among
those factors are: (1) the risk that the Company may not be able to
commission all 16 modules by year-end or realize the expected
efficiencies and positive contribution from their operation, (2)
the risk that the Company may not enter into an equipment leasing
transaction or a transaction for the pre-sale of its AquaRefined
lead, be able to, (3) the risk that the Company may not produce and
market AquaRefined lead on a commercial basis or, if the Company
achieves commercial operations, that such operations will be
profitable; (4) the fact that the Company only recently commenced
production of AquaRefined lead and has not generated any
significant revenue from the sale of AquaRefined lead to date, thus
subjecting the Company to all of the risks inherent in an
early-stage company; (5) the risk that the Company may not be able
to realize the expected benefits of its relationships with Clarios
and Veolia, (6) the risk no further patents will be issued on the
Company’s patent applications or any other application that it may
file in the future and that those patents issued to date and any
patents issued in the future will be sufficiently broad to
adequately protect the Company’s technology; (7) the risk that the
Company’s initial patents and any other patents that may be issued
to it may be challenged, invalidated, or circumvented, (8) risks
related to Aqua Metals’ ability to raise sufficient capital, as and
when needed, to develop and operate its recycling facilities and
fund continuing losses from operations as the Company endeavors to
achieve profitability; (9) changes in the federal, state and
foreign laws regulating the recycling of lead acid batteries; (10)
the Company’s ability to protect its proprietary technology, trade
secrets and know-how and (11) those other risks disclosed in the
section “Risk Factors” included in the Company’s Quarterly Report
on Form 10-Q filed on November 12, 2019 and subsequent SEC filings.
Aqua Metals cautions readers not to place undue reliance on any
forward-looking statements. The Company does not undertake, and
specifically disclaims any obligation, to update or revise such
statements to reflect new circumstances or unanticipated events as
they occur, except as required by law.
Non-GAAP Adjusted net loss
The Company believes the use of adjusted net loss allows
management, investors, and analysts to understand its net loss
related to its primary business. For the three and nine months
ended September 30, 2019, effects of the Veolia non-cash share
payments have been excluded from net loss. Net loss is reconciled
to adjusted net loss in the table below (in thousands, except per
share amounts):
AQUA METALS, INC. |
Reconciliation to Non-GAAP Net Loss |
(Unaudited) |
|
|
|
|
|
Three months ended September 30, 2019 |
|
Nine months ended September 30, 2019 |
Net loss |
$ |
(11,316 |
) |
|
$ |
(33,525 |
) |
Veolia non-cash share
payments |
$ |
2,493 |
|
|
$ |
6,146 |
|
Adjusted net
loss |
$ |
(8,823 |
) |
|
$ |
(27,379 |
) |
|
|
|
|
Net loss per share,
basic and diluted |
$ |
(0.20 |
) |
|
$ |
(0.66 |
) |
Veolia non-cash share
payments |
$ |
0.04 |
|
|
$ |
0.12 |
|
Adjusted net loss per
share, basic and diluted |
$ |
(0.16 |
) |
|
$ |
(0.54 |
) |
Note About Non-GAAP Financial Measures
In addition to the unaudited results presented in accordance
with generally accepted accounting principles, or GAAP, in this
press release, Aqua Metals presents adjusted net loss and adjusted
net loss per share, which are non-GAAP financial measures. Adjusted
net loss and adjusted net loss per share are determined by taking
net loss and eliminating the impacts of our issuance of shares of
our common stock to Veolia in consideration of services provided to
us by Veolia. Our definitions of adjusted net loss and adjusted net
loss per share may not be comparable to the definitions of
similarly titled measures used by other companies. We believe that
these non-GAAP financial measures, viewed in addition to and not in
lieu of our reported GAAP results, provides useful information to
investors by providing a more focused measure of operating results.
These metrics are used as part of our internal reporting to
evaluate our operations and the performance of senior management. A
table reconciling this measure to the comparable GAAP measure is
available in the accompanying financial tables above.
AQUA METALS, INC. |
Condensed Consolidated Balance Sheets |
(in thousands, except share and per share amounts) |
(Unaudited) |
|
|
September 30, 2019 |
|
December 31, 2018 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
15,541 |
|
|
$ |
20,892 |
|
Accounts receivable, net |
1,714 |
|
|
725 |
|
Inventory, net |
1,823 |
|
|
765 |
|
Prepaid expenses and other current assets |
876 |
|
|
370 |
|
Total current assets |
19,954 |
|
|
22,752 |
|
|
|
|
|
Non-current assets |
|
|
|
Property and equipment, net |
51,649 |
|
|
45,548 |
|
Intellectual property, net |
1,044 |
|
|
1,271 |
|
Other assets |
4,273 |
|
|
1,800 |
|
Total non-current assets |
56,966 |
|
|
48,619 |
|
|
|
|
|
Total assets |
$ |
76,920 |
|
|
$ |
71,371 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
5,288 |
|
|
$ |
2,088 |
|
Accrued expenses |
3,582 |
|
|
5,196 |
|
Lease liability, current portion |
536 |
|
|
121 |
|
Deferred rent, current portion |
— |
|
|
8 |
|
Notes payable, current portion |
277 |
|
|
311 |
|
Convertible note payable, current portion |
— |
|
|
4,075 |
|
Total current liabilities |
9,683 |
|
|
11,799 |
|
|
|
|
|
Deferred rent, non-current
portion |
— |
|
|
27 |
|
Lease liability, non-current
portion |
1,005 |
|
|
110 |
|
Asset retirement
obligation |
779 |
|
|
745 |
|
Notes payable, non-current
portion |
8,488 |
|
|
8,600 |
|
Total liabilities |
19,955 |
|
|
21,281 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
Common stock; $0.001 par
value; 100,000,000 shares authorized; 57,292,874 and 38,932,437
shares issued and outstanding as of September 30, 2019 and December
31, 2018, respectively, |
57 |
|
|
39 |
|
Additional paid-in capital |
185,529 |
|
|
145,147 |
|
Accumulated deficit |
(128,621 |
) |
|
(95,096 |
) |
Total stockholders’ equity |
56,965 |
|
|
50,090 |
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
76,920 |
|
|
$ |
71,371 |
|
AQUA METALS, INC. |
Condensed Consolidated Statements of Operations |
(in thousands, except share and per share amounts) |
(Unaudited) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
Product sales |
$ |
2,361 |
|
|
$ |
1,169 |
|
|
$ |
4,281 |
|
|
$ |
3,378 |
|
|
|
|
|
|
|
|
|
Operating cost and
expense |
|
|
|
|
|
|
|
Cost of product sales |
8,231 |
|
|
6,453 |
|
|
20,097 |
|
|
16,489 |
|
Research and development cost |
282 |
|
|
967 |
|
|
1,240 |
|
|
3,645 |
|
General and administrative expense |
5,107 |
|
|
2,174 |
|
|
13,458 |
|
|
7,862 |
|
Total operating expense |
13,620 |
|
|
9,594 |
|
|
34,795 |
|
|
27,996 |
|
|
|
|
|
|
|
|
|
Loss from operations |
(11,259 |
) |
|
(8,425 |
) |
|
(30,514 |
) |
|
(24,618 |
) |
|
|
|
|
|
|
|
|
Other income and
(expense) |
|
|
|
|
|
|
|
Interest expense |
(142 |
) |
|
(919 |
) |
|
(3,234 |
) |
|
(2,225 |
) |
Interest and other income |
85 |
|
|
81 |
|
|
225 |
|
|
123 |
|
|
|
|
|
|
|
|
|
Total other expense, net |
(57 |
) |
|
(838 |
) |
|
(3,009 |
) |
|
(2,102 |
) |
|
|
|
|
|
|
|
|
Loss before income tax
expense |
(11,316 |
) |
|
(9,263 |
) |
|
(33,523 |
) |
|
(26,720 |
) |
|
|
|
|
|
|
|
|
Income tax expense |
— |
|
|
— |
|
|
(2 |
) |
|
(2 |
) |
|
|
|
|
|
|
|
|
Net loss |
$ |
(11,316 |
) |
|
$ |
(9,263 |
) |
|
$ |
(33,525 |
) |
|
$ |
(26,722 |
) |
|
|
|
|
|
|
|
|
Weighted average shares
outstanding, basic and diluted |
57,053,982 |
|
|
38,779,710 |
|
|
50,491,786 |
|
|
32,553,939 |
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share |
$ |
(0.20 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.66 |
) |
|
$ |
(0.82 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact: Glen Akselrod, Bristol Capital(905) 326-1888, Ext.
1glen@bristolir.com
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