Flexible Solar from PowerFilm
In a past article, we highlighted Ascent Solar, a publicly traded, flexible photovoltaics company with a market cap of around $46 million. While Ascent is targeting very niche markets with innovative solar charging products, their financial situation does not look so good. Ascent has about $1.6 million cash on hand and incurred a loss of around $30 million during 2013 on revenues of $1.3 million. The company is currently sitting on a deficit of nearly $300 million.
While Ascent seems to be burning through lots of cash and suffering large losses on small revenues, another publicly traded, flexible photovoltaics company, PowerFilm, seems to offer much more value for investors looking for exposure in this space.
PowerFilm, Inc. is an American manufacturer of flexible thin-film solar panels which trades on AIM in the UK under the symbol (LON:PFLM). PowerFilm was founded in 1988 by two former research physicists from 3M, Dr. Jeffrey and Dr. Grimmer. The two doctors first collaborated on thin-film solar cell research whilst employed at 3M’s research laboratories. When 3M made the strategic decision not to pursue thin-film technology any further, they resigned to establish PowerFilm. The Company was founded to develop and manufacture thin-film solar panels in high volume and at low cost. Until their IPO in May 2006, the Company’s development since incorporation was largely funded through approximately US$14 million of development contracts and grants received from U.S. Government bodies to support the Company’s development of a manufacturing process for low-cost solar panels and specific product development for the U.S. Army.
PowerFilm has a market cap of $4.6 million, just one-tenth the size of Ascent Solar. PowerFilm’s revenues for 2013 were $8.2 million with losses of $2.1 million compared to Ascent which had 2013 revenues of $1.3 million with losses of $30 million. Powerfilm’s revenues for 2013 were down -20% from the year prior. This is the second year in a row that Powerfilm’s revenues have decreased. As of the end of 2013, PowerFilm had $12.3 million in cash and cash equivalents compared to $12.8 million in 2012. Net of their debt, the company has $8.4 million in cash resources which is nearly twice the size of the company’s market cap.
Holding shares in PowerFilm has not been very rewarding for investors so far. An investor who would have bought shares on the day of the IPO in 2006 and held the shares until today would have paper losses of -94%, all the while having to tolerate high volatility and very low liquidity. PowerFilm announced a share buyback plan at the beginning of this year which would imply they believe their shares are undervalued.
PowerFilm is addressing the Military, Custom OEM (especially Oil and Gas Exploration) and Consumer markets with a diversified line of solar products which they develop, manufacture, and market. In September 2012, the company announced a $3 million purchase order from the US Army for foldable solar panel chargers and a $2.2 development contract from the US Army to reduce the cost and to increase the power output from PowerFilm’s PowerShade solar field shelter. In May of this year, PowerFilm partnered with Bushnell Outdoors to launch a line of POWERSYNC custom solar products including the Bushnell Bear Grylls SolarWrap Mini USB Charger.
Like Ascent, PowerFilm also sells portable solar charging devices to niche markets. The 20W foldable charger from PowerFilm is compact and lightweight, the size of a laptop and weighs just over 20 ounces. Currently selling for around $275 on Amazon, the charger can be used to power handheld GPS units, cell and satellite phones, and digital cameras or camcorders. The below pocket-sized solar charger from PowerFilm is a USB charger that also has two AA rechargeable batteries which can be fully charged in four hours of full sun:
While PowerFilm has some unique products that target niche markets, some real potential for value creation could be realized from large future orders made by the US Army. Although PowerFilm has a strong balance sheet with minimal cash burn, company management seems concerned about threats from solar thin-film Chinese companies that have strong backing from the Chinese government. While PowerFilm seems like a much better play on flexible solar than Ascent from a valuation perspective, both of these flexible solar companies seem highly speculative. Any signs of revenue growth from either company should merit a second look.
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