The advanced battery market almost had a headline day yesterday when Valence Technology (Nasdaq: VLNC ) announced a narrow loss of $0.01 per share. The long road to profitability for battery makers appears to be showing a light at the end of the tunnel, at least for this commercial vehicle supplier.
Here are a few highlights from the earnings release:
- Revenue was up 234% from last year to $13.8 million as Smith Electric, Segway and Howard Medical ramped up purchases.
- Gross margin improved to 20% from 12% a year ago, although margins were flat from last quarter.
- Revenue in the fourth quarter is expected to be $13 million to $15 million.
Interestingly, Valence sees marine, industrial, and health-care markets as its next growth engine, not the electric grid or passenger vehicles its competitors have targeted.
The pressure is now on A123 Systems (Nasdaq: AONE ) and Ener1 (Nasdaq: HEV ) to show they can make steps toward profitability this quarter. Both have built massive amounts of capacity and have a longer path to profitability but in turn have a greater upside than Valence.
Speaking of demand, FedEx (NYSE: FDX ) CEO Fred Smith has thrown his weight firmly behind the company's all-electric fleet of vehicles. Smith put out an opinion piece yesterday, highlighting how we need to reduce our reliance on oil and how he sees electric vehicles filling the gap. FedEx currently uses Navistar trucks, which are built with A123 battery packs.
We may be seeing the start of a turn toward profitability for Valence, and if buyers like FedEx pick up commercial vehicles, we should see more growth going forward. Investors have their fingers crossed.
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