Dr. Sankar Das Gupta reports

ELECTROVAYA REPORTS FINANCIAL RESULTS FOR FISCAL 2016

Electrovaya Inc. has released its financial results for the fiscal year ended Sept. 30, 2016. All numbers are in U.S. dollars unless otherwise stated.

Financial highlights:

• Fiscal 2016 revenue is $19.5-million ($26.4-million (Canadian)) for the year ended Sept. 30, 2016, a 17.5-per-cent increase over fiscal 2015 revenue of $16.6-million ($22.5-million (Canadian)).
• The net loss for fiscal 2016 is $8.8-million ($11.9-million (Canadian)) compared with the net loss for fiscal 2015 of $3.2-million ($4.3-million (Canadian)). This increase in net loss of $5.6-million ($7.6-million (Canadian)) was mainly attributed to:
  • Increased research investment to develop the high-value and easily usable battery modules, battery management systems (BMS) and systems engineering for multiple original equipment manufacturer (OEM) customers, which resulted in an increase in research and development expenditures of $1.6-million ($2.2-million (Canadian));
  • Significant non-cash expenses in the fourth quarter at the company's German operations of $3.8-million ($5.2-million (Canadian)) including a provision for inventory revaluation and obsolescence of $1.3-million ($1.8-million (Canadian)) and an allowance for credit losses of $2.5-million ($3.4-million (Canadian)) as the company's German operations transitioned from component sales to valued-added products.
• Inventory is $18.2-million ($24.7-million (Canadian)) as at Sept. 30, 2016, of which $8.1-million ($11.0-million (Canadian)) is in finished goods and $5.9-million ($8.0-million (Canadian)) in semi-finished goods as the company prepares to meet confirmed forward orders for fulfilment in 2017.

Business highlight

Fiscal 2016 was pivotal for Electrovaya as the company developed its value-added products and several major OEM customers/relationships. These developments, although, not significant in fiscal 2016 revenue, are expected to have a strong influence on calendar year 2017 revenue. The company is focusing on applications where its competitive advantage is more accentuated, namely applications that have higher duty cycles and greater requirements for cycle life and safety.

Business highlights by target industrial sectors:

• Miscellaneous sales of cells: Certain battery and other companies have purchased cells and components, which provided revenues in fiscal 2016. These revenues are expected to continue; however, the company does not expect significant growth in this sector. Growth in calendar year 2017 onward is expected to come from recent activities and product launches in newly targeted industrial sectors as mentioned below.
• Residential energy storage sector: Electrovaya in May, 2016, announced its intelligent 48-volt, 2.3-kilowatt-hour module (Litastore 2.3), with an integrated BMS as building blocks for OEMs. Electrovaya signed a non-binding letter of intent with a major residential-energy-storage OEM in June, 2016, followed by signing a multiyear strategic supplier agreement in October, 2016, and received a purchase order for about 6.9 million euros ($7.2-million) in November, 2016.
• Material-handling sector sales to OEM: Electrovaya announced in May, 2016, a multiyear master service agreement (MSA) with a New York Stock Exchange Fortune 1000 OEM for the supply of lithium ion battery modules. Initial functional product deliveries have started under this MSA with Hyster-Yale.
• Material-handling sector sales directly to the end-user: Electrovaya announced on Nov. 14, 2016, battery products for the forklift material-handling market, which can be delivered directly to the forklift user and are a drop-in replacement for the user's lead acid battery. Trials are under way with multiple users in this sector.
• Electric bus sector: Electrovaya's subsidiary Litarion in June, 2016, announced a non-binding memorandum of understanding with a leading European OEM, with operations in Europe and Asia, to deliver lithium ion cells for electric buses. The development work is continuing.
• Electric-mobility and electric delivery truck sector: Electrovaya's subsidiary Litarion in July, 2016, signed a non-binding MOU with a major global OEM in the electro-mobility industry, for the delivery of lithium ion battery cells and modules later in calendar year 2017. Development work on this project is continuing. Electrovaya has started working with other companies in this sector, including, as announced in September, 2016, an NYSE Fortune 1000 company, where Electrovaya is designing, under a purchase order, the complete battery system for integration into the OEM's off-road electric vehicle.
• Utility and grid-connected systems: The system for ConEdison will have cells with the Separion ceramic-embedded separator to give longer cycle life and higher safety to the system. The Electrovaya system will also have the latest battery management system with advanced capabilities. The system is expected to be delivered by first half 2017.

Other market developments

Marketing developments in addition to the above are:

• Branding: A new website was launched in August, 2016. The ceramic separator technology is a key differentiator, and often the Electrovaya battery is named as the lithium ion ceramic battery.
• Trade shows, expositions and financial conferences: Electrovaya showcased its technology in key trade shows in Europe, North America and Asia. The trade shows were in sectors, including utility energy storage, electric mobility, solar energy, alternative energy, materials handling and batteries. In the financial sector, Electrovaya spoke at the Barclays Energy Revolution Conference, Exane BNP Paribas's disruptive technology, Berenberg's battery conference and Canaccord Genuity's growth conference and attended the Roth New Industrial Conference.

Technology developments

Electrovaya's research group continued to develop technology in a number of areas:

• Cell energy density: A continuous development program is under way to increase the energy density of its cells, and in August, 2016, a 44Ah cell was announced, which increased the energy density of the 40Ah cell announced earlier in November, 2015. A road map for continual increase in energy density is an important research objective for Electrovaya.
• Product innovation: A range of products, including a one-kilowatt-hour module and a 2.3-kilowatt-hour 48-volt Litastore module, as well as a 36-volt forklift battery system, was developed.
• A 20-micron Separion: A thinner ceramic-embedded separator was developed.
• Intelligent battery management systems (iBMS) have been developed and are continuously updated to provide good control and monitoring of the Electrovaya batteries. This also positions Electrovaya for Internet-of-things capability.

Commenting on the results, Electrovaya executive vice-president and chief financial officer Richard Halka stated: "FY2016 has been transitional for us, the critical element being our working capital facility, which we expect will allow us to expand production and grow sales. Our inventory is at levels where we can execute on planned deliveries."

"FY2016 has been an important pivotal year, and Electrovaya, with its new products, growth in relationships and emphasis on new markets, is well positioned to grow from CY2017," said Dr. Sankar Das Gupta, chair and chief executive officer of Electrovaya.

In fiscal 2016, the company's long-term board member, Dr. Bernard Fleet, PhD, DSc, FRSC, passed away. The company will miss Dr. Fleet's great passion for climate-change mitigation, for electric vehicles and electrochemistry, along with his inimitable sense of humour and sage advice.

The company's complete annual audited financial statements, management's discussion and analysis, and annual information form for the year ended Sept. 30, 2016, are available at SEDAR or on the company's website.

Conference call details

The company will hold a conference call on Dec. 29, 2016, at 8 a.m. Eastern Time (ET), to discuss the fiscal 2016 results for the period ended Sept. 30, 2016, and to provide a business update.

Conference ID:  13652135

United States and Canada toll-free:  877-407-8291

International:  1-201-689-8345

To help ensure that the conference begins in a timely manner, please dial in 10 minutes prior to the start of the call.

For those unable to participate in the conference call, a replay will be available for two weeks beginning on Dec. 29, 2016, through Jan. 12, 2017. To access the replay, the U.S. dial-in number is 877-660-6853 and the non-U.S. dial-in number is 1-201-612-7415. The replay conference ID is 13652135.

About Electrovaya

Electrovaya designs, develops and manufactures proprietary lithium ion superpolymer batteries, battery systems and battery-related products for energy storage, clean electric transportation and other specialized applications. Electrovaya, through its fully owned subsidiary, Litarion GmbH, also produces cells, electrodes and Separion ceramic separators and has manufacturing capacity of about 500 megawatt-hours per annum. Electrovaya is a technology-focused company with extensive intellectual property. Headquartered in Ontario, Canada, Electrovaya has production facilities in Canada and Germany with customers around the globe.

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