Announces Departure of President and CEO; Jay
Knoll Named Interim President Restructuring Expected to Provide at
Least $20 Million in Annual Savings
Energy Conversion Devices, Inc. (ECD) (Nasdaq:ENER), a leading
global provider of flexible thin-film solar laminate products and
systems to the building-integrated and commercial rooftop markets,
today reported financial results for its third fiscal quarter of
2011 ended March 31, 2011, and said it will implement a strategic
corporate restructuring to better position and focus the company
for success in the rapidly evolving solar industry.
Total consolidated revenue for the quarter was $21.5 million, a
decrease of 70% over the third fiscal quarter of 2010, and a
decrease of 69% over the previous quarter, due primarily to
significant industry-wide disruptions in the company's key European
solar markets. The company reported a net loss of $243.2 million,
or $4.88 per share, which included non-cash impairment charges of
$222.8 million, or $4.47 per share, compared to a net loss of
$385.0 million, or $9.10 per share, in the third fiscal quarter of
2010, which included a non-cash impairment charge of $358.0
million, or $8.46 per share. Excluding impairment charges, the net
loss in the third fiscal quarter of 2011 was $20.4 million, or
$0.41 per share, compared to a net loss of $27.0 million, or $0.64
per share, in the third fiscal quarter of 2010.
As of March 31, 2011, the company had $172 million of cash,
cash-equivalents, restricted cash and short-term investments.
Corporate Restructuring
The company said it is implementing a strategic corporate
restructuring that will include a reduction in its workforce of
approximately 300 employees or 20% of the company's current
associates worldwide. In addition, the Board of Directors appointed
Jay Knoll as Interim President, replacing former President and CEO
Mark Morelli, who has resigned. Knoll formerly served as Executive
Vice President, General Counsel and Chief Administrative Officer.
In addition, Ted F. Amyuni, Executive Vice President, Global Sales;
William C. "Kriss" Andrews, Executive Vice President and Chief
Financial Officer; Joseph P. Conroy, Executive Vice President,
Operations and Dr. Subhendu Guha, Executive Vice President,
Photovoltaic Technology and Chairman, United Solar Ovonic will
continue in their current roles and work with Knoll as members of
the senior leadership team. The Board has also initiated a search
for a permanent CEO.
"These actions will enable ECD to better meet the needs of the
dynamic global solar market and will strengthen our ability to
respond to this changed industry environment," said Stephen
Rabinowitz, Chairman of the ECD Board of Directors. "Our Board is
confident that Jay Knoll and the other members of the senior
management team, who have extensive experience in our business and
industry, executive management and corporate restructuring, will
provide strong leadership as we search for a permanent chief
executive to lead the organization."
Rabinowitz continued, "We firmly believe that the restructuring,
the continuing implementation of our technology roadmap and our
strong cash balance position the company for success as a leader in
flexible thin-film PV technology and its applications."
As part of its restructuring, ECD will focus on its growing
North American business, concentrate on its two-step distribution
model with existing and new channel partners, and pursue
opportunities in fast-growing emerging markets. At the same time,
the company will maintain its commitment to key European markets as
they stabilize. The company will continue to focus on the
commercialization of its next-generation technologies, including
its High Frequency and Nano-Crystalline technologies to improve
conversion efficiency and lower costs. ECD's technology
roadmap is designed to enable the company's flexible solar products
to compete more effectively with standard grid electricity,
particularly on rooftop applications.
The company incurred restructuring charges of approximately $2
million in the third quarter and expects to incur additional
restructuring charges of approximately $4 million in the fourth
quarter. The company's actions will provide annualized savings of
at least $20 million in manufacturing operations and corporate
overhead.
The impairment charge in the third quarter is an accounting
adjustment that does not affect the cash position of the company or
the usability of its assets. Going forward, this charge will
mean lower depreciation expense by approximately $3 million per
quarter.
Quarterly Results
Third fiscal quarter solar product and system sales were $18.7
million, a decrease of 71% over the third fiscal quarter of 2010,
and a decrease of 72% over the previous quarter. Consolidated gross
margin was 16.3% as compared to 2.0% in the year-ago quarter, and
21.4% in the second fiscal quarter of 2011. During the
quarter, ECD shipped 12 megawatts of its UNI-SOLAR® brand PV
products, and produced 26 megawatts.
"Industry-wide disruptions in key European markets impacted our
business in the quarter as many of our projects and orders were
postponed," said Jay Knoll, Interim President. "The abrupt
shifts in European solar policies are having a profound impact on
the outlook for the global solar industry and our business. Our
restructuring actions are designed to align our business with these
new realities in the solar industry. However, we remain confident
in the growing adoption of solar technology."
Knoll added, "Besides our continuing opportunities in Europe, we
anticipate future growth in solar demand will occur more rapidly in
regions such as North America, where we have already gained
meaningful traction with our unique solar products in large
projects. We are also expanding our network of channel
partners in the Americas through our Business Alliance Program and
we are opening a manufacturing facility in Southern Ontario that
will allow projects with our products to qualify for that region's
excellent solar incentive program. Our joint venture in
Tianjin, China is starting to see shipment growth and we continue
to win orders in emerging markets in the Middle East and Asia. Our
new Open Solar initiative will seek to find new applications for
our unique products and we are optimistic that it can drive future
volume for our business."
"The cornerstone of our refocused strategy is the execution of
our technology roadmap. Our High Frequency product will be
available later this year, and we have already started retrofitting
equipment with our next-generation Nano-Crystalline technology at
our Greenville campus. We are confident we are taking the right
steps toward sustainable growth and profitability," Knoll
concluded.
Conference Call / Webcast Details
Management of Energy Conversion Devices will discuss this
announcement and review the third fiscal quarter financial results
on a conference call today, May 10, 2011, 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 63346919. The conference call will be webcast live
over the Internet and can be accessed in the Investor Relations
section of the company's website at energyconversiondevices.com
under "Events". The webcast will also be archived on the
Company's website.
About Energy Conversion Devices
Energy Conversion Devices (ECD) (Nasdaq:ENER) is a leading
global provider of thin-film flexible solar laminate products for
the building-integrated and commercial rooftop markets. The
company manufactures sells and installs thin-film solar laminates
that convert sunlight to clean, renewable 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, and installs rooftop photovoltaic systems which enable
customers to transform unused rooftop space 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 renewable energy industry. For more information, please
visit energyconversiondevices.com and follow ECD on Twitter
@ECD_ENER.
This release contains forward-looking statements within the
meaning of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking
statements do not constitute guarantees of future
performance. Forward-looking statements include statements
concerning our plans, objectives, goals, strategies, future events,
future net sales or performance, capital expenditures, financing
needs, restructuring, 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 and
establish new relationships; the worldwide market for solar energy
systems; changes to government incentives related to solar energy;
our customers' ability to access capital to finance the purchase of
our products; our ability to achieve expense reductions and levels
of one-time costs, including restructuring charges; and our ability
through technology improvements to reduce cost and improve the
conversion efficiency of our solar products. 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 March 31, |
Nine Months
Ended March 31, |
|
2011 |
2010 (1) |
2011 |
2010 (1) |
Revenues |
|
|
|
|
Product sales |
$ 17,601 |
$ 55,593 |
$125,730 |
$ 133,562 |
System sales |
1,067 |
9,483 |
24,542 |
15,419 |
Royalties |
1,865 |
1,919 |
5,923 |
6,132 |
Revenues from product development
agreements |
562 |
2,580 |
1,980 |
9,578 |
License and other revenues |
399 |
2,831 |
1,263 |
3,571 |
Total Revenues |
21,494 |
72,406 |
159,438 |
168,262 |
Expenses |
|
|
|
|
Cost of product sales |
16,743 |
60,368 |
104,690 |
135,754 |
Cost of system sales |
1,000 |
8,614 |
23,102 |
19,442 |
Cost of revenues from product development
agreements |
245 |
1,949 |
794 |
7,624 |
Product development and research |
2,562 |
3,442 |
7,354 |
8,817 |
Preproduction costs |
-- |
72 |
93 |
82 |
Selling, general and administrative |
15,660 |
16,730 |
49,358 |
50,152 |
Net loss on disposal of property, plant
and equipment |
130 |
31 |
75 |
1,296 |
Impairment loss |
222,803 |
357,975 |
222,803 |
359,228 |
Restructuring expense |
1,678 |
338 |
2,100 |
3,460 |
Total Expenses |
260,821 |
449,519 |
410,369 |
585,855 |
Operating Loss |
(239,327) |
(377,113) |
(250,931) |
(417,593) |
Other Income (Expense) |
|
|
|
|
Interest income |
1,154 |
404 |
2,224 |
960 |
Interest expense |
(6,208) |
(7,200) |
(19,891) |
(21,414) |
Gain on debt extinguishment |
-- |
-- |
3,327 |
-- |
Distribution from joint venture |
-- |
-- |
-- |
1,309 |
Other nonoperating income (expense),
net |
1,189 |
(1,257) |
1,114 |
(1,333) |
Total Other Income (Expense) |
(3,865) |
(8,053) |
(13,226) |
(20,478) |
Loss before Income Taxes and Equity Loss |
(243,192) |
(385,166) |
(264,157) |
(438,071) |
Income tax expense (benefit) |
128 |
(55) |
295 |
(1,955) |
Loss before Equity Loss |
(243,320) |
(385,111) |
(264,452) |
(436,116) |
Equity gain (loss) |
118 |
148 |
103 |
(185) |
Net Loss |
(243,202) |
(384,963) |
(264,349) |
(436,301) |
Net (Loss) Income Attributable to
Noncontrolling Interest |
(99) |
113 |
(277) |
(40) |
Net Loss Attributable to ECD
Stockholders' |
$(243,103) |
$(385,076) |
$(264,072) |
$(436,261) |
|
|
|
|
|
Loss Per Share, Attributable to ECD
Stockholders' |
$ (4.88) |
$ (9.10) |
$ (5.60) |
$ (10.31) |
|
|
|
|
|
Diluted Loss Per Share, Attributable to ECD
Stockholders' |
$ (4.88) |
$ (9.10) |
$ (5.60) |
$ (10.31) |
|
|
|
|
|
Basic weighted shares outstanding |
49,798 |
42,307 |
47,165 |
42,307 |
Diluted shares outstanding |
49,798 |
42,307 |
47,165 |
42,307 |
(1) As adjusted due to the
implementation of FASB ASC 470-20 (See Note 1). |
|
|
ENERGY CONVERSION
DEVICES, INC. and SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
(in
thousands) |
|
|
March 31, 2011 |
June 30,
2010 (1) |
|
(Unaudited) |
|
ASSETS |
|
|
Current Assets: |
|
|
Cash and cash equivalents |
$ 52,683 |
$ 79,158 |
Short-term investments |
109,001 |
113,771 |
Accounts receivable, net |
30,765 |
72,021 |
Inventories, net |
94,863 |
61,495 |
Other current assets |
23,985 |
27,237 |
Total Current Assets |
311,297 |
353,682 |
|
|
|
Property, Plant and Equipment, net |
88,339 |
301,056 |
|
|
|
Other Assets: |
|
|
Restricted cash |
10,350 |
11,749 |
Lease receivable, net |
10,304 |
10,854 |
Other assets |
11,199 |
14,606 |
Total Other Assets |
31,853 |
37,209 |
|
|
|
Total Assets |
$ 431,489 |
$ 691,947 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current Liabilities: |
|
|
Accounts payable and accrued
expenses |
$ 49,173 |
$ 56,035 |
Current portion of warranty
liability |
14,748 |
12,125 |
Other current liabilities |
9,096 |
9,130 |
Total Current Liabilities |
73,017 |
77,290 |
|
|
|
Long-Term Liabilities: |
|
|
Convertible senior notes |
228,754 |
243,654 |
Capital lease obligations |
19,349 |
20,296 |
Warranty liability |
26,950 |
29,210 |
Other liabilities |
18,275 |
19,872 |
Total Long-Term Liabilities |
293,328 |
313,032 |
|
|
|
Commitments and Contingencies (Note 10) |
|
|
|
|
|
Stockholders' Equity |
|
|
Common stock, $0.01 par value, 150
million and 100 million shares authorized, 53,273,831 and
48,554,812 issued at March 31, 2011 and June 30, 2010,
respectively |
533 |
486 |
Additional paid-in capital |
1,104,838 |
1,079,910 |
Treasury stock |
(700) |
(700) |
Accumulated deficit |
(1,038,364) |
(774,388) |
Accumulated other comprehensive loss,
net |
(773) |
(3,570) |
Total ECD stockholders' equity |
65,534 |
301,738 |
Accumulated deficit – noncontrolling
interest |
(390) |
(113) |
Total Stockholders'
Equity |
65,144 |
301,625 |
Total Liabilities and Stockholders'
Equity |
$ 431,489 |
$ 691,947 |
(1) As adjusted due to the
implementation of FASB ASC 470-20 (See Note 1). |
|
|
ENERGY CONVERSION
DEVICES, INC. and SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF CASH FLOWS (Unaudited) |
(in
thousands) |
|
|
Nine Months
Ended March 31, |
|
2011 |
2010 (1) |
Cash flows from operating
activities: |
|
|
Net loss |
$(264,349) |
$ (436,301) |
Adjustments to reconcile net loss to net
cash used in operating activities: |
|
|
Impairment loss |
222,803 |
359,228 |
Depreciation and amortization |
16,092 |
27,302 |
Amortization of debt discount and
deferred financing fees |
12,466 |
12,571 |
Share-based compensation |
3,219 |
3,440 |
Gain on debt extinguishment |
(3,327) |
-- |
Net loss on disposal of property, plant
and equipment |
75 |
1,296 |
Equity (gain) loss |
(103) |
185 |
Changes in operating assets and
liabilities, net of foreign exchange: |
|
|
Accounts receivable |
42,138 |
(3,417) |
Inventories |
(31,329) |
3,328 |
Other assets |
2,877 |
(14,285) |
Accounts payable and accrued
expenses |
(1,801) |
(17,492) |
Other liabilities |
(1,563) |
(579) |
Net cash used in operating
activities |
(2,802) |
(64,724) |
|
|
|
Cash flows from investing
activities: |
|
|
Purchases of property, plant and
equipment |
(29,810) |
(26,904) |
Acquisition of business, net of cash
acquired |
-- |
(2,088) |
Purchases of investments |
(87,316) |
(68,089) |
Proceeds from maturities of
investments |
14,200 |
174,644 |
Proceeds from sale of investments |
75,069 |
10,120 |
Proceeds from sale of property, plant and
equipment |
219 |
-- |
Proceeds from development loans |
7,177 |
-- |
Decrease (increase) in restricted
cash |
1,399 |
(6,510) |
Net cash (used in) provided by investing
activities |
(19,062) |
81,173 |
|
|
|
Cash flows from financing
activities: |
|
|
Principal payments under capitalized
lease obligations and other debt |
(1,313) |
(1,131) |
Repayment of revolving credit
facility |
-- |
(5,705) |
Repayment of convertible notes |
-- |
(8,000) |
Net cash used in financing
activities |
(1,313) |
(14,836) |
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
(3,298) |
252 |
Net (decrease) increase in cash and cash
equivalents |
(26,475) |
1,865 |
Cash and cash equivalents at beginning of
period |
79,158 |
56,379 |
Cash and cash equivalents at end of
period |
$ 52,683 |
$ 58,244 |
(1) As adjusted due to the
implementation of FASB ASC 470-20 (See Note 1). |
|
|
ENERGY CONVERSION
DEVICES, INC. and SUBSIDIARIES |
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES (Unaudited) |
|
|
Three Months
Ended |
Nine Months
Ended |
|
March 31,
2011 |
March 31,
2011 |
|
Net Loss |
EPS |
Net Loss |
EPS |
Net Loss |
$ (243,202) |
$ (4.88) |
$ (264,349) |
$ (5.60) |
Less: Impairment Loss |
222,803 |
4.47 |
222,803 |
4.72 |
Net Loss |
$ (20,399) |
$ (0.41) |
$ (41,546) |
$ (0.88) |
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
March 31,
2010 |
March 31,
2010 |
|
Net Loss |
EPS |
Net Loss |
EPS |
Net Loss |
$ (384,963) |
$ (9.10) |
$ (436,301) |
$ (10.31) |
Less: Impairment Loss |
357,975 |
8.46 |
359,228 |
8.49 |
Net Loss |
$ (26,988) |
$ (0.64) |
$ (77,073) |
$ (1.82) |
CONTACT: Michael E. Schostak
Head of Investor Relations
(248) 299-6063
investor.relations@energyconversiondevices.com
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