Quantum Fuel Systems Technologies Worldwide Inc. is reassessing its position in the renewable-energy sector while implementing an array of cost-cutting moves.
The developments follow the May 10 resignations of Chief Executive Alan Niedzwiecki—tapped to lead Quantum nearly a decade ago when it went public—and Chairman Dale Rasmussen.
Quantum plans to make “strategic assessments of its renewable energy projects and minority-owned investments,” which fall outside its core business of powertrain and fuel tank manufacturing, according to a recent filing with the Securities and Exchange Commission.
It will only consider making new investments in that sector with “minimal capital commitment,” the Irvine-based company said.
Resignations
Niedzweicki, a cofounder of Irvine-based luxury, hybrid automaker Fisker Automotive Inc., and Rasmussen resigned on the same day the company reported a broadened first quarter loss of $7.8 million with a 12% drop in quarterly revenue to $6 million.
The resignations were tendered and accepted by Quantum’s board following a discussion on the direction of the company, according to regulatory filings.
Brian Olson, the company’s finance chief since 2002, was appointed interim chief executive. Bradley Timon, corporate controller and chief accountant since 2004, was named interim chief financial officer. The resignations created two vacancies on the board. Trimming board size is among a series of cost-cutting goals announced after the executive shake-up.
Those include:
• Reducing the board from seven members to five, while lowering total director salaries by 30%.
• Eliminating “unnecessary” and “duplicative administrative expenses”.
• Streamlining organizational structure.
• Consolidating corporate staff now based in Irvine into its Lake Forest operations and subletting the Irvine property for a projected $1.4 million annual savings.
The company aims to trim, in total, about $4.1 million annually through operational initiatives and another $2.1 million through executive salary reductions. Some company observers had criticized the $725,000 and $600,000 annual salaries of Niedzwiecki and Rasmussen, respectively, as Quantum struggled for profitability.
Shares
Quantum shares have traded at less than $1 for the most of 2012 on a recent market value of about $29 million. That prompted a letter from the Nasdaq in late April notifying the company its closing share price for 30 consecutive trading sessions no longer met the exchange’s $1 per share requirement.
Quantum has until Oct. 29 to regain compliance, or file an extension.
The company’s strategic reassessment comes nearly two years after Quantum announced plans to gut its Irvine headquarters and convert it to a solar-panel production plant capable of powering 20,000 to 40,000 homes. At capacity, the plant had the potential to generate $100 million in yearly revenue, officials estimated.
The solar panel push “will turn the company to profitability,” Niedzwiecki said at the time.
Quantum’s Renewable Energy business posted a $300,000 operating loss in the recently ended quarter, on $100,000 in revenue.
• Headquarters: Irvine
• Business: alternative-energy systems, solar panels
• Founded: 2000
• Ticker symbol: QTWW (Nasdaq)
• Market value: about $29.3 million
• Notable: recent turnover in chief executive, chairman posts
Many Lines
Quantum, established in 2000, has tinkered with many business lines beyond its primary revenue source—making the engine, transmission, fuel tank and other parts that make hybrid vehicles go.
The company has acquired wind farms, developed propulsion systems, energy storage devices and alternative fuel technologies, among others. That led some analysts to question the vision and direction of the company.
“These guys are all over the place,” Jon Hickman, then-director of research at MDB Capital Group LLC, a Santa Monica-based investment bank, told the Business Journal shortly after Quantum’s move into solar. “Why don’t they focus on one thing and be good at that?”
It appears Quantum’s board is heeding the message.
Revenue from its Electric Drive & Fuel Systems unit accounted for almost all sales in the March quarter. The company supplies Fisker with hybrid drive systems and is seeing fuel-storage system sales increase as adoption grows for vehicles running on natural gas.
Quantum plans to grow the segment by expanding manufacturing for compressed natural gas and hydrogen storage systems, while boosting sales and marketing for the lines, according to regulatory filings.
Quantum has pushed its annual stockholder meeting from June 15 to Aug. 9 due to the recent developments.
