Fourth Quarter Revenues Up 64% Over Previous Quarter

AUSTIN, Texas (Feb. 9, 2010) – Critical backup power systems manufacturer Active Power, Inc. (NASDAQ: ACPW) announced results for its fourth quarter and fiscal year ended Dec. 31, 2009.

Q4 and Full Year 2009 Highlights:

·   Achieved revenue growth of 64% over the previous quarter and the second highest quarterly revenue in company history.

·   Increased direct channel revenues in the fourth quarter by 69% over the previous quarter and 20% in the full year of 2009 compared to 2008.

·   Service revenue in the fourth quarter increased 98% to $2.7 million, from $1.4 million in the previous quarter, due primarily to project revenue.

·   Improved gross margins from the previous year and reduced annual operating losses by 22%.

·   Received more than $8 million in PowerHouse orders in the second half of 2009, exceeding all of the company’s containerized sales in 2008.

·   Shipped 86 flywheel based uninterruptible power supply (UPS) systems at an average selling price of $90,000 per unit during the fourth quarter of 2009. This compares to 56 shipped in the previous quarter at an average selling price of $78,000.

·   Deployed single largest order in company history.

Q4 and Full Year 2009 Financial Results

Revenue for the fourth quarter increased 64% from the previous quarter to $14.0 million, and decreased 14% from the fourth quarter of 2008. Revenue for the full year was $40.3 million, a decrease of 6% from $43.0 million in 2008.

Fourth quarter net loss was $2.2 million or 3 cents per share. This compares to a net loss of $3.0 million or 4 cents per share in the third quarter, and a net loss of $431,000 or 1 cent per share in the same year-ago period. Net loss for the year was $11.0 million or 17 cents per share, a reduction of 18% from the net loss of $13.4 million or 22 cents per share in 2008.

Fourth quarter gross profit margin was 19%, as compared to 22% in the prior quarter and 32% in the fourth quarter of 2008. For the full year, gross profit margin was 23%, compared to 19% in 2008.

Cash and investments decreased by $0.5 million during the fourth quarter to $7.5 million at Dec. 31, 2009. This compares to a decrease in cash and investments balance of $3.7 million during the third quarter of 2009, and a decrease of $0.6 million during the fourth quarter of 2008.

Management Commentary

“Our strong sequential quarterly revenue growth reflects the expansion of our direct sales business, which grew by 20% in 2009,” said Jim Clishem, president and CEO of Active Power. “This expansion included introducing a new IT channel business, which offset the decline in our industrial OEM channel. These efforts allowed us to achieve a 54% sequential quarterly increase in flywheel unit sales at a 15% higher average selling price and helped us reach the higher end of our stated expectations for the fourth quarter and full year.”

"In 2010, we believe our continued aggressive marketing efforts and unique product offerings will grow our market share across all geographies and further improve our financial results. As the cost and demand for energy increases and with datacenter floor space at a premium, Active Power is well positioned to leverage these trends, offering compelling solutions that improve our customer’s overall efficiencies and reduce operating expenses.” 

Outlook

Active Power expects first quarter 2010 revenues, which traditionally is the slowest period of the year, to be between $9 million and $12 million. First quarter loss is expected to range between 2 to 4 cents per share. Cash and investments at the end of the first quarter of 2010 are expected to be unchanged from the previous year end.

Conference Call Details

Active Power will host a conference call today, Tuesday, Feb. 9, 2010, at 11:00 a.m. (ET) to discuss its fourth quarter and fiscal 2009 results. Investors and interested parties may listen via Webcast here. A replay of the Webcast will be available until Feb. 23, 2010, via Active Power’s Web site at www.activepower.com.

About Active Power

Active Power (NASDAQ: ACPW) provides efficient, reliable and green critical power solutions and uninterruptible power supply (UPS) systems to enable business continuity in the event of power disturbances. Founded in 1992, Active Power’s flywheel based UPS systems protect critical operations in datacenters, healthcare facilities, manufacturing plants, broadcast stations and governmental agencies in more than 40 countries. With expert power system engineers and worldwide services and support, Active Power ensures organizations have the power to perform. For more information, please visit www.activepower.com.