Solar Revenue Increases 77% Over Prior Year Gross
Margin Increases to 18% Total Cash and Investments Position
Improves to $206 Million Technology Roadmap Updated to 14%
Efficiency and $0.65 Cost per Watt
Energy Conversion Devices, Inc. (ECD) (Nasdaq:ENER), a leading
global provider of thin-film flexible solar laminate products and
systems to the building-integrated, commercial and residential
rooftop markets, today announced financial results for its first
fiscal quarter of 2011, ended September 30, 2010.
Total consolidated revenue for the quarter was $68.4 million, an
increase of 59% over the first fiscal quarter of 2010, and a
decrease of 21% from the previous quarter. Solar product and system
sales were $65.0 million, an increase of 77% over the previous
year, and a decrease of 20% from the previous quarter. Consolidated
gross margin for the quarter was 18% or $12.5 million, as compared
to 3% or $3.0 million in the prior quarter. During the quarter, ECD
shipped 30.6 megawatts of its UNI-SOLAR® brand PV laminates, and
produced 33.6 megawatts.
The company reported a net loss of $13.5 million, or $0.29 per
share. This compares to a net loss of $12.0 million, or $0.28 per
share, in the first fiscal quarter of 2010, and a net loss of $20.9
million, or $0.49 per share, in the prior quarter.
As of September 30, 2010 the Company had $206.5 million in cash,
cash-equivalents, restricted cash and short-term investments, an
increase of $1.8 million over the prior quarter's ending balance.
Operating cash flow for the quarter was $19.2 million driven by
strong working capital management.
Included in the company's first quarter results were $0.5
million of restructuring charges, and $1.0 million of costs
including expenses associated with the company's facilities
consolidation which are included in selling, general and
administrative costs. The company also recognized a $1.2 million
non-cash gain from the early retirement of long-term debt.
Mark Morelli, ECD's President and Chief Executive Officer, said,
"We continue to make progress on our path to profitability. Our
capacity utilization was higher and our net loss was lower as
compared to our previous quarter; this was the third straight
quarter of improvement on these two very important metrics. Our
higher gross margin was driven primarily by a reduction in our cost
per watt, but also continuing stability in pricing."
"We expect to realize further cost reductions due to high
factory utilizations and the execution of the initial stages of our
technology roadmap. First shipments of our new PowerBond product
will begin in the first half of calendar year 2011 and our High
Frequency 10% aperture-area efficiency products will begin
production in the summer. We anticipate that once fully ramped, end
of next year, we will achieve a $1.15 cost per watt for this
technology," Morelli continued.
The Company also updated the future stages of its technology
roadmap, which includes the introduction of its proprietary
Nano-Crystalline cell structure in the fall of 2012. "The
introduction of Nano-Crystalline technology allows us to provide
outstanding energy density while maintaining our flexible,
lightweight, non-penetrating core rooftop product attributes. We
now believe that we can achieve 14% aperture-area efficiency at a
production cost of $0.65 per watt by 2015," said Dr. Subhendu Guha,
Chairman of United Solar, and Chief Technology Officer of ECD.
The company provided guidance for its second fiscal quarter of
2011 and adjusted its guidance for the full fiscal year as
follows:
| |
Q2'11 |
FY 2011 |
| Shipments (MW) |
28-33 |
120-140 |
| Production (MW) |
30-33 |
120-140 |
| Consolidated Revenue ($M) |
68-78 |
290-330 |
| Consolidated Gross Margin (%) |
18-20% |
16-20% |
| SG&A and R&D Expense ($M) |
~20 |
75-80 |
| Interest Expense ($M) |
~7 |
~28 |
| Restructuring Charges ($M) |
~0 |
1-2 |
| Tax Expense ($M) |
~0.5 |
1-2 |
| Capital Expenditures ($M) |
~10 |
~40 |
Morelli concluded, "Our guidance reflects the continued traction
that our business model is gaining around the world, but especially
in our core markets of Italy, France and North America. We are
adjusting our full year guidance with confidence in our expanding
pipeline and market share growth going into calendar year 2011. We
have increased the lower end of our full year revenue guidance to
$290 million, and we have increased our gross margin guidance range
to 16-20%. We have also increased our capital expenditures to
reflect the acceleration of the upgrade of our next High Frequency
line to improve our path to higher energy density and lower cost
products. The strengthening of the markets where our products
perform best, the continued adoption of our BAPV product offerings
and the growth in the U.S. residential market represent significant
opportunities for our company. Despite any quarterly unevenness, we
believe the trend of our revenue is up, our costs are down, and we
continue to expect a return to profitability in calendar year
2011."
Conference Call / Webcast
Details
Management of Energy Conversion Devices will review these
financial results on a conference call on Tuesday, November 9,
2010, at 10:00 a.m. ET. To participate in the conference call,
please dial (877) 858-2512 or (706) 643-3219 (international) at
least 10 minutes prior to the start of the call. Callers will need
to reference conference ID number 18689375. The conference call
will be webcast live over the Internet and can be accessed in the
Investor Relations – Events section of the company's website at
www.energyconversiondevices.com.
An audio replay of the call will be available approximately two
hours after the conclusion of the call. The replay will remain
available until 11:59 p.m. EST November 11, 2010 and can be
accessed by dialing (800) 642-1687 or (706) 645-9291
(international) and providing conference ID number 18689375. The
webcast will also be archived on the Company's website.
About Energy Conversion
Devices
Energy Conversion Devices is a leading global provider of
thin-film flexible solar laminate products and systems for the
building integrated, commercial and residential rooftop markets.
The company manufactures, sells and installs thin-film solar
laminates that convert sunlight to energy using proprietary
technology. ECD's UNI-SOLAR® brand products are unique because of
their flexibility, light weight, ease of installation, durability,
and real-world efficiency. The company also designs, manufactures
and installs rooftop photovoltaic systems which enable customers to
transform unused space on the rooftop into a value-generating
asset. In addition, ECD's Ovonic Materials Division is the pioneer
in NiMH battery technology and other material science technologies
for the alternative energy industry. For more information, please
visit www.energyconversiondevices.com.
This release may contain forward-looking statements within the
meaning of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements
include statements concerning our plans, objectives, goals,
strategies, future events, future net sales or performance, capital
expenditures, financing needs, plans or intentions relating to
expansions, business trends and other information that is not
historical information. All forward-looking statements are
based upon information available to us on the date of this release
and are subject to risks, uncertainties and other factors, many of
which are outside of our control, that could cause actual results
to differ materially from the results discussed in the
forward-looking statements. Risks that could cause such results to
differ include: our ability to maintain our customer relationships;
the worldwide demand for electricity and the market for solar
energy; the supply and price of components and raw materials for
our products; and our customers' ability to access the capital
needed to finance the purchase of our product. The risk factors
identified in the ECD filings with the Securities and Exchange
Commission, including the company's most recent Annual Report on
Form 10-K and most recent Quarterly Report on Form 10-Q, could
impact any forward-looking statements contained in this release.
Energy Conversion Devices, Inc. assumes no responsibility to update
any forward-looking statements contained herein.
| ENERGY CONVERSION
DEVICES, INC. and SUBSIDIARIES |
| CONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) |
| (In thousands, except
per share data) |
| |
| |
Three Months
Ended September 30, |
| |
2010 |
2009 (1) |
| Revenues |
|
|
| Product sales |
$ 53,397 |
$ 34,143 |
| System sales |
11,650 |
2,567 |
| Royalties |
2,115 |
1,959 |
| Revenues from product development
agreements |
827 |
3,991 |
| License and other revenues |
408 |
284 |
| Total Revenues |
68,397 |
42,944 |
| Expenses |
|
|
| Cost of product sales |
45,016 |
24,107 |
| Cost of system sales |
10,555 |
3,726 |
| Cost of revenues from product development
agreements |
329 |
3,281 |
| Product development and research |
2,399 |
2,245 |
| Preproduction costs |
64 |
10 |
| Selling, general and administrative |
17,644 |
16,202 |
| Net (gain) loss on disposal of property,
plant and equipment |
(76) |
974 |
| Restructuring charges |
491 |
677 |
| Total Expenses |
76,422 |
51,222 |
| Operating Loss |
(8,025) |
(8,278) |
| Other Income (Expense) |
|
|
| Interest income |
344 |
292 |
| Interest expense |
(6,986) |
(7,170) |
| Gain on debt extinguishment |
1,189 |
-- |
| Distribution from joint venture |
-- |
1,309 |
| Other nonoperating income, net |
132 |
885 |
| Total Other Income (Expense) |
(5,321) |
(4,684) |
| Loss before Income Taxes and Equity Loss |
(13,346) |
(12,962) |
| Income tax expense (benefit) |
155 |
(915) |
| Loss before Equity Loss |
(13,501) |
(12,047) |
| Equity loss |
(34) |
-- |
| Net Loss |
(13,535) |
(12,047) |
| Net Loss Attributable to Noncontrolling
Interest |
(79) |
(74) |
| Net Loss Attributable to ECD
Stockholders' |
$ (13,456) |
$ (11,973) |
| |
|
|
| Loss Per Share, Attributable to ECD
Stockholders' |
$ (0.29) |
$ (0.28) |
| |
|
|
| Diluted Loss Per Share, Attributable to ECD
Stockholders' |
$ (0.29) |
$ (0.28) |
| |
|
|
| Basic weighted shares outstanding |
46,128 |
42,299 |
| Diluted shares outstanding |
46,128 |
42,299 |
| |
| (1) As adjusted due to the
implementation of FASB ASC 470-20. |
| |
| |
| ENERGY CONVERSION
DEVICES, INC. and SUBSIDIARIES |
| CONSOLIDATED BALANCE
SHEETS |
| (in
thousands) |
| |
| |
September 30,
2010 |
June 30,
2010 (1) |
| |
(Unaudited) |
|
| ASSETS |
|
|
| Current Assets: |
|
|
| Cash and cash equivalents |
$ 68,963 |
$ 79,158 |
| Short-term investments |
125,369 |
113,771 |
| Accounts receivable, net |
58,366 |
72,021 |
| Inventories, net |
63,596 |
61,495 |
| Other current assets |
33,321 |
27,237 |
| Total Current Assets |
349,615 |
353,682 |
| |
|
|
| Property, Plant and Equipment, net |
303,296 |
301,056 |
| |
|
|
| Other Assets: |
|
|
| Restricted cash |
12,157 |
11,749 |
| Lease receivable, net |
10,592 |
10,854 |
| Other assets |
13,727 |
14,606 |
| Total Other Assets |
36,476 |
37,209 |
| |
|
|
| Total Assets |
$ 689,387 |
$ 691,947 |
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
| Current Liabilities: |
|
|
| Accounts payable and accrued
expenses |
$ 60,383 |
$ 56,035 |
| Current portion of warranty
liability |
11,166 |
12,125 |
| Other current liabilities |
10,523 |
9,130 |
| Total Current Liabilities |
82,072 |
77,290 |
| |
|
|
| Long-Term Liabilities: |
|
|
| Convertible senior notes |
239,645 |
243,654 |
| Capital lease obligations |
19,988 |
20,296 |
| Warranty liability |
30,952 |
29,210 |
| Other liabilities |
19,268 |
19,872 |
| Total Long-Term Liabilities |
309,853 |
313,032 |
| |
|
|
| Commitments and Contingencies (Note 10) |
|
|
| |
|
|
| Stockholders' Equity |
|
|
| Common stock, $0.01 par value, 100
million shares authorized, 49,863,710 and 48,554,812 issued at
September 30, 2010 and June 30, 2010, respectively |
499 |
486 |
| Additional paid-in capital |
1,087,005 |
1,079,910 |
| Treasury stock |
(700) |
(700) |
| Accumulated deficit |
(787,844) |
(774,388) |
| Accumulated other comprehensive loss,
net |
(1,306) |
(3,570) |
| Total ECD stockholders' equity |
297,654 |
301,738 |
| Accumulated deficit – noncontrolling
interest |
(192) |
(113) |
| Total Stockholders'
Equity |
297,462 |
301,625 |
| Total Liabilities and Stockholders'
Equity |
$ 689,387 |
$ 691,947 |
| |
| (1) As adjusted due to
the implementation of FASB ASC 470-20. |
| |
| |
| ENERGY CONVERSION
DEVICES, INC. and SUBSIDIARIES |
| CONSOLIDATED STATEMENTS
OF CASH FLOWS (Unaudited) |
| (in
thousands) |
| |
| |
Three Months
Ended September 30, |
| |
2010 |
2009 (1) |
| Cash flows from operating
activities: |
|
|
| Net loss |
$ (13,535) |
$ (12,047) |
| Adjustments to reconcile net loss to net
cash provided by (used in) operating activities: |
|
|
| Depreciation and amortization |
5,409 |
8,892 |
| Amortization of debt discount and
deferred financing fees |
4,242 |
4,115 |
| Share-based compensation |
881 |
1,051 |
| Gain on debt extinguishment |
(1,189) |
-- |
| Net (gain) loss on disposal of property,
plant and equipment |
(76) |
974 |
| Equity loss |
34 |
-- |
| Changes in operating assets and
liabilities, net of foreign exchange: |
|
|
| Accounts receivable |
14,350 |
8,924 |
| Inventories |
(868) |
(29,880) |
| Other assets |
(229) |
446 |
| Accounts payable and accrued
expenses |
9,410 |
(7,442) |
| Other liabilities |
769 |
(954) |
| Net cash provided by (used in) operating
activities |
19,198 |
(25,921) |
| |
|
|
| Cash flows from investing
activities: |
|
|
| Purchases of property, plant and
equipment |
(12,068) |
(12,157) |
| Acquisition of business, net of cash
acquired |
-- |
(2,088) |
| Purchases of investments |
(45,478) |
-- |
| Proceeds from maturities of
investments |
14,200 |
34,069 |
| Proceeds from sale of investments |
19,259 |
9,771 |
| Proceeds from sale of property, plant and
equipment |
126 |
-- |
| Development loans |
(3,275) |
-- |
| Increase in restricted cash |
(408) |
-- |
| Net cash (used in) provided by investing
activities |
(27,644) |
29,595 |
| |
|
|
| Cash flows from financing
activities: |
|
|
| Principal payments under capitalized
lease obligations and other debt |
(426) |
(174) |
| Repayment of revolving credit
facility |
-- |
(5,705) |
| Net cash used in financing
activities |
(426) |
(5,879) |
| |
|
|
| Effect of exchange rate changes on cash and
cash equivalents |
(1,323) |
233 |
| Net decrease in cash and cash
equivalents |
(10,195) |
(1,972) |
| Cash and cash equivalents at beginning of
period |
79,158 |
56,379 |
| Cash and cash equivalents at end of
period |
$ 68,963 |
$ 54,407 |
| |
| (1) As adjusted due to the
implementation of FASB ASC 470-20. |
| |
| |
| ENERGY CONVERSION
DEVICES, INC. and SUBSIDIARIES |
| RECONCILIATION OF Q4
2010 AS ADJUSTED FOR THE IMPLEMENTATION OF |
| FASB ASC
470-20 |
| (In thousands, except
per share data) |
| |
| |
Quarter Ended
June 30, 2010 |
| |
As previously reported in the
Form 10-K press release |
ASC 470-20 |
As Reported |
| Revenues |
|
|
|
| Product sales |
$ 66,889 |
$ -- |
$ 66,889 |
| System sales |
14,362 |
-- |
14,362 |
| Royalties |
1,852 |
-- |
1,852 |
| Revenues from product development
agreements |
2,187 |
-- |
2,187 |
| License and other revenues |
864 |
-- |
864 |
| Total Revenues |
86,154 |
-- |
86,154 |
| Expenses |
|
|
|
| Cost of product sales |
67,756 |
-- |
67,756 |
| Cost of system sales |
13,645 |
-- |
13,645 |
| Cost of revenues from product development
agreements |
1,775 |
-- |
1,775 |
| Product development and research |
2,530 |
-- |
2,530 |
| Preproduction costs |
223 |
-- |
223 |
| Selling, general and administrative |
16,645 |
-- |
16,645 |
| Net gain on disposal of property, plant
and equipment |
(188) |
-- |
(188) |
| Restructuring charges |
1,276 |
-- |
1,276 |
| Total Expenses |
103,662 |
-- |
103,662 |
| Operating (Loss) Income |
(17,508) |
-- |
(17,508) |
| Other Income (Expense) |
|
|
|
| Interest income |
371 |
-- |
371 |
| Interest expense |
(6,740) |
(231) |
(6,971) |
| Gain on debt extinguishment |
4,294 |
(291) |
4,003 |
| Other nonoperating income (expense),
net |
(988) |
-- |
(988) |
| Total Other Income (Expense) |
(3,063) |
(522) |
(3,585) |
| (Loss) Income before Income Taxes |
(20,571) |
(522) |
(21,093) |
| Income tax (benefit) expense |
(293) |
-- |
(293) |
| (Loss) Income before Equity Loss |
(20,278) |
(522) |
(20,800) |
| Equity loss |
(74) |
-- |
(74) |
| Net (Loss) Income |
(20,352) |
(522) |
(20,874) |
| Net Loss Attributable to Noncontrolling
Interest |
(73) |
-- |
(73) |
| Net (Loss) Income Attributable to ECD
Shareholders |
$ (20,279) |
$ (522) |
$ (20,801) |
| |
|
|
|
| (Loss) Earnings Per Share |
$ (0.48) |
$ (0.01) |
$ (0.49) |
| |
|
|
|
| Diluted (Loss) Earnings Per Share |
$ (0.48) |
$ (0.01) |
$ (0.49) |
| |
|
|
|
| Basic weighted shares outstanding |
42,544 |
-- |
42,544 |
| Diluted shares outstanding |
42,544 |
-- |
42,544 |
CONTACT: Energy Conversion Devices, Inc.
Michael E. Schostak, Head of Investor Relations
(248) 299-6063
investor.relations@energyconversiondevices.com
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