A123 Systems Inc. Earnings Cheat Sheet: Fifth Straight Quarter of Shrinking Margins

A123 Systems, Inc. ‘s (NASDAQ:AONE) loss widened in the third quarter, as the company’s results were dragged down by higher costs. A123 Systems designs, develops, manufactures, and sells advanced rechargeable lithium-ion batteries and battery systems for hybrid electric vehicles, or HEVs, plug-in hybrid electric vehicles, or PHEVs, and electric vehicles, or EVs.

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A123 Systems Earnings Cheat Sheet for the Third Quarter

Results: Loss widened to $63.7 million (51 cents per diluted share) from $43.7 million (loss of 42 cents per share) in the same quarter a year earlier.

Revenue: Rose more than twofold to $64.3 million from the year earlier quarter.

Actual vs. Wall St. Expectations: AONE fell short of the mean analyst estimate of a loss of 37 cents per share. It fell short of the average revenue estimate of $66.3 million.

Quoting Management: “The ramp in production volumes that began during the second quarter continued into the third quarter, resulting in record quarterly revenue of $64.3 million and record quarterly shipments of 67.7MWh,” said David Vieau, CEO of A123 Systems. “Last week, we revised our 2011 revenue guidance based on a reduction in fourth-quarter orders from Fisker Automotive as it balances inventory levels from all suppliers for the Karma plug-in hybrid electric vehicle. We have taken actions to address the near-term challenges associated with this reduction in volume, and remain optimistic about Fisker and our long-term growth across each of our target markets.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 18.7 percentage points to -30.5% from the year earlier quarter. Over that time, margins have contracted on average 34.7 percentage points per quarter on a year-over-year basis.

The company has now missed analyst estimates for the last four quarters. It fell short by 3 cents in the second quarter, by 6 cents in the first quarter, and by 7 cents in the fourth quarter of the last fiscal year.

The company’s revenue has now risen for two straight quarters. In the second quarter, revenue increased 60.8% to $36.4 million from the year earlier quarter.

Looking Forward: The average estimate for the fourth quarter remains unchanged at 34 cents a share. For the fiscal year, the average estimate has moved from a loss of $1.70 a share to a loss of $1.64 over the last thirty days.

Competitors to Watch: Valence Technology, Inc. (NASDAQ:VLNC), Ener1, Inc. (NASDAQ:HEV), EnerSys (NYSE:ENS), Advanced Battery Tech., Inc. (NASDAQ:ABAT), C&D Technologies, Inc. (CHHPD), Ultralife Corp. (NASDAQ:ULBI), Arotech Corporation (NASDAQ:ARTX), China Ritar Power Corp. (NASDAQ:CRTP), Johnson Controls, Inc. (NYSE:JCI), and Exide Technologies (NASDAQ:XIDE).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)