financial health of li-ion companies

Financial Health of Li-ion CompaniesJordan BairdHC 399

Goals1) Financial data2) Analyze the health3) Find trends

Why Li-ion Companies?• Li-ion is a relatively new and growing market• Trends in growth industries

▫ High capital investment▫ Losing money in the beginning▫ Materials cost/production cost affects price

competativeness

Financial Data•Public companies report financial data•Data makes up financial health•Financial ratios go one step further

Companies•C&D Technologies - Manufacture•Valence Technology – Research and

manufacture•A123 Systems – Research and

manufacture•Enersys - Manufacture•Exide Technologies - Manufacture•China BAK - Manufacture

And one financial statement

Profitability•Gross Profit Margin

▫A percent profit made on each product saleCompany 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 AverageC&D Technologies 26.7% 28.7% 27.2% 23.4% 23.6% 16.1% 16.7% 14.0% 10.4% 12.7% 19.9%Valence Technology -108.6% -122.9% -77.6% -329.7% -68.5% -53.1% -47.9% 1.8% 8.8% 1.8% -79.6%A123 Systems -3.6% -17.9% -10.8%Enersys 23.9% 25.4% 23.6% 21.6% 20.7% 18.8% 21.0% 22.1%Exide Technologies 25.2% 24.0% 21.0% 21.9% 20.4% 15.3% 14.4% 16.1% 16.0% 18.5% 19.3%China BAK 25.4% 27.6% 17.6% 12.6% 20.8%

Liquidity•Quick Ratio

▫How quick a company can pay up without needing to sell anymore inventory/productCompany 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Average

C&D Technologies 0.92 0.87 0.70 0.93 1.09 1.26 0.94 0.83 0.84 0.97 0.94 Valence Technology 1.93 1.08 0.12 0.97 0.32 0.44 0.24 0.67 0.91 0.92 0.76 A123 Systems 1.14 1.14 1.14 Enersys 0.94 0.85 0.97 0.96 0.98 1.00 1.49 1.03 Exide Technologies 0.64 0.55 0.19 0.60 0.48 0.56 0.96 1.05 1.04 1.02 0.71 China BAK 0.59 0.51 0.61 0.57

Efficiency•Inventory turnover

▫How quickly inventory is soldCompany 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 AverageC&D Technologies 6.2 6.3 4.9 4.7 5.2 5.6 5.2 5.2 3.6 4.3 5.1 Valence Technology 1.9 6.0 2.3 4.1 5.2 5.6 9.6 3.1 2.3 2.6 4.3 A123 Systems 2.0 3.8 2.9 Enersys 6.1 6.1 6.0 6.2 5.8 5.8 5.7 6.0 Exide Technologies 3.5 4.0 4.2 4.6 4.9 5.6 5.9 6.0 6.2 5.4 5.0 China BAK 2.2 2.2 3.4 2.6

Cash Flow Statement•Shows where cash is being spent•Three categories

▫Operations▫Investing activities▫Financing activities

Cash Flow Statement• Most recent data,

million USD• Cash flow trends

▫ Expanding infrastructure

▫ Making money▫ Taking debt

Company Operations Investing FinancingC&D Technologies 9.3 (12.7) 0.1 Valence Technology (15.4) (3.6) 20.4 A123 Systems (35.0) (41.1) 123.0 Enersys 219.4 (46.8) (23.2) Exide Technologies 120.5 (101.1) (29.4) China BAK 2.7 (50.6) 67.2

Summary•Profitability

▫20% margins•Liquidity

▫1 to 1•Efficiency

▫5 days•Cash from Operations

▫Making money

Cost of Li-Ion• Does the cost of each

company’s product decrease with time?▫ Maintained margins by

lowering price

Sales of Li-Ion• Are the companies selling

more li-ion batteries?▫ Not the companies I

looked at

Private companies•Many companies do not publicly provide

financial data▫Tesla▫Boston Power

•Can draw rough conclusions about Boston Power’s performance▫Tesla too different for such a projection

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