* Company achieved its fourth quarter sales targets as revenues grew 29
percent to $36.0 million. Fiscal year 2007 revenues grew 11 percent to
$113.6 million
* Ramp up of solar production capacity at Auburn Hills 2 facility
progressing according to plan. Current aggregate nameplate capacity has
reached 58MW
* Construction of Greenville solar cell facilities (120MW) on schedule and
on budget; Tijuana solar module assembly facility on schedule and on budget
* Phase 1 of restructuring plan substantially complete as of June 30, 2007;
Phase 2 underway and expected to be substantially complete by the end of
the calendar year 2007
ROCHESTER HILLS, Mich., Aug. 29 /PRNewswire-FirstCall/ -- Energy
Conversion Devices, Inc. (ECD) (Nasdaq: ENER) today reported financial
results for the fiscal year and fourth quarter ended June 30, 2007.
The company's revenues grew 29 percent in the fourth quarter of fiscal
2007 to $36.0 million from $27.9 million in the fourth quarter of fiscal
2006. Fiscal year 2007 revenues rose to $113.6 million, an 11 percent
increase from the $102.4 million reported in fiscal 2006. Product sales at
United Solar Ovonic, the company's wholly owned subsidiary, drove revenue
growth, principally due to increases in international sales.
For the fourth quarter, the company reported a net loss of $13.1
million (or $0.33 per share), compared to a net loss of $769,000 (or $0.02
per share) in the fourth quarter of fiscal 2006. The company also reported
a net loss of $25.2 million (or $0.64 per share) for the fiscal year 2007,
as compared to a net loss of $18.6 million (or $0.57 per share) last year.
The net loss for the fourth quarter and fiscal year 2007 includes $5.4
million (or $0.14 per share) related to ECD's restructuring charges and
$1.0 million (or $0.03 per share) accrual related to the retirement of its
co-founder. The increase in the company's net loss for the year was
impacted by ECD's aggressive capacity expansion efforts and restructuring
program. The company ended the fiscal year with cash and short-term
investments of $205.8 million.
"Our results reflect the solid progress we have made toward our
previously announced operating objectives of (1) enhancing our sales and
marketing function at United Solar Ovonic to increase sales to existing
customers and add new customers; (2) rapidly growing international markets
and adding new products to our portfolio; (3) aggressively expanding our
solar production capacity, and (4) implementing our restructuring plan to
simplify our business model and direct our resources on actions that
accelerate our move toward sustainable profitability," said James R.
Metzger, chief operating officer and interim president of ECD, who will
resume the responsibility of Executive Vice President effective September
1, 2007.
Metzger continued, "In conjunction with our manufacturing capacity
expansion, United Solar Ovonic has added new sales people as well as new
customers. In European markets, we have seen an increase in commercial
activity, particularly in Italy. Solar production capacity is on the
upswing, and the restructuring program is on track. We are pleased with the
progress we have achieved so far on all these fronts, setting the stage for
continued growth in 2008."
United Solar Ovonic Segment
ECD's revenue performance in the fourth quarter was led by the
company's United Solar Ovonic segment, where product sales grew 36 percent
to $29.5 million compared to $21.7 million in the fourth quarter of 2006,
reflecting increased demand for UNI-SOLAR(R) thin-film photovoltaic
products, particularly in growing European markets, like Germany, Italy and
Spain. For the full year, United Solar Ovonic's product sales totaled $91.2
million, an 11 percent increase over fiscal year 2006.
United Solar Ovonic reported gross margins of 15.8 percent and 17.6
percent for the fourth quarter and for the full year, respectively,
compared to 23.6 percent and 21.8 percent, respectively, for the comparable
periods a year ago. As previously disclosed, the company's aggressive
production capacity expansion at United Solar Ovonic affected gross margins
in the fourth quarter and is expected to impact fiscal 2008 results as
well.
Mr. Metzger added, "Going forward, improvements in the
energy-conversion efficiency of our products and our cost-reduction
initiatives will drive gross margin improvement. The recent $19 million
cooperative agreement awarded to us by the Department of Energy under the
Solar America Initiative program will provide significant funding, and
enable us to accelerate these improvements as part of our technology
development roadmap and cost reduction strategy."
United Solar Ovonic reported an operating loss of $908,000 for the
fourth quarter compared to operating income of $2.5 million during the
prior year. For the full year 2007, United Solar Ovonic had operating
income of $2.0 million compared to $8.2 million in fiscal 2006. Operating
income in 2007 was impacted primarily by costs associated with
preproduction activities and capacity ramp up at the new Auburn Hills 2
facility, which became operational in December 2006.
Key Operating Milestones at United Solar Ovonic
-- United Solar Ovonic continues to bolster the sales and marketing
functions, adding 11 new sales people in the last four months.
-- During the fourth quarter, United Solar Ovonic added six important new
customers, mostly in Italy and Germany. These additions contributed to
the company's strong sales growth in Europe during the quarter.
-- The company recently announced an agreement with Advanced Green
Roofing Technologies, Inc. for $108 million over the next three years.
This is United Solar Ovonic's largest ever distributor agreement, which
will further the successful installations of building integrated solar
power systems and demonstrate the use of UNI-SOLAR(R) products for
improved energy self-reliance in both commercial and residential
applications.
-- The company expanded its product offerings by introducing a new ground
mounted system design. A 1.1-megawatt system at Paramount Farm in
California showcases the new robust, cost effective ground mounted
system. United Solar Ovonic also recently unveiled a new soon-to-be
introduced residential system to address this rapidly growing market.
-- The company's ramp up of solar production capacity is on track.
During 2007, nameplate capacity increased from 28MW to 58MW, and the
company plans to increase its nameplate capacity to 178MW by the end of
fiscal 2008, as the new Greenville 1 and 2 solar cell manufacturing
facilities and the new China joint venture and Mexican solar module
assembly facilities all come on stream.
Ovonic Materials Segment
The Ovonic Materials segment recorded a decreased operating loss for
the fourth quarter of $2.7 million in fiscal 2007 compared to an operating
loss of $3.9 million for the same period in 2006. For the full year 2007,
the operating loss totaled $13.7 million compared to a loss of $14.8
million in 2006, due principally to improved margins on increased product
sales and a warranty accrual adjustment.
Revenues in the fourth quarter increased to $4.4 million compared to
$2.9 million in the same period last year. For the full year, revenues
totaled $14.6 million compared to $13.5 million the prior year led by an
increase in positive electrode nickel hydroxide sales to $4.8 million in
2007 from $1.9 million in 2006 due primarily to an increase in demand in
2007 from the company's principal customer.
"As a result of the restructuring plan, Ovonic Materials now focuses
principally on self-funded R&D projects with a clear path to
commercialization," noted Mr. Metzger. "This focus -- and the shift away
from unfunded projects -- will continue to improve this segment's financial
performance and ECD's technology roadmap."
Corporate Activities
The Ovonyx joint venture, which specializes in high-performance
nonvolatile semiconductor memory and information process devices, is seeing
acceleration in the commercialization activities of products based on OUM
technology. "Ovonyx has extended phase-change memory throughout the entire
semiconductor eco-system using licenses and joint development programs,"
said Mr. Metzger. "We continue to be excited about the opportunities for
Ovonyx."
The company, along with its joint venture partner Chevron, continues to
explore strategic alternatives for its Cobasys joint venture to further
capitalize on global opportunities for integrated energy storage systems
solutions in the growing hybrid electric vehicle and stationary power
industries.
Restructuring
The company substantially completed the initial phase of its
restructuring plan during fiscal 2007, generating annual cost savings of
approximately $17 million that will be fully realized beginning in fiscal
year 2008. In connection with this phase, the company incurred
restructuring costs of $5.4 million, due principally to severance costs
associated with a reduction-in- force of approximately 110 positions in the
Ovonic Materials segment and Corporate Activities. The second phase will be
completed by the end of fiscal 2008, and the company expects to incur
additional restructuring costs of $3-5 million in fiscal year 2008 related
to this phase.
Succession Planning
The company recently named Mark D. Morelli as its president and chief
executive officer, succeeding Robert Stempel effective September 1, 2007.
The executive management changes are part of the company's announced
succession planning activities, which are nearing completion. Over the past
18 months, the company has taken steps to strengthen its management team
with the addition of a new chief financial officer, general counsel and
vice president of manufacturing, among others.
"We look to the future with confidence, particularly as we transition
the company's leadership to our new president and chief executive officer,
Mark Morelli," said Robert Stempel, chairman of the board and outgoing CEO.
"Mark has a record of impressive performance in bringing technology
products to market, from concept to customer. With a new structure and
emerging new leadership, ECD is poised to enter a new chapter focused on
sustainable profitability based on the company's leadership in the solar
business."
Stempel continued, "Stan Ovshinsky, our co-founder and principal
inventor, is retiring from ECD effective August 31, 2007. Words cannot do
justice to the pioneering work and lasting contribution of Stan that have
resulted in ECD's growth over these many years. Stan's passion and vision
to use science and technology to solve important societal problems and
create new industries are remarkable. Fortunately for us and the world, he
will now fully focus in research and development activities, concentrating
on future advances in the energy and information fields. All of us at ECD
wish him the very best."
Looking Ahead
The company expects that its consolidated revenues for the first fiscal
quarter of 2008 will be between $40 million and $45 million, and United
Solar Ovonic product sales will be between $35 million and $40 million.
Consolidated revenues for the fiscal year 2008 are expected to be between
$220 million and $245 million. The company expects United Solar Ovonic 2008
product sales between $205 million and $225 million. Preproduction costs
for the year will be between $6 million and $9 million, and restructuring
costs for 2008 will be between $3 million and $5 million.
Conference Call Information
ECD will discuss these results in a conference call scheduled for
today, Wednesday, August 29, at 10:00 a.m. (EDT). To participate in the
conference call, please call (877) 858-2512 or (706) 634-1291. Investors
may also access a live audio webcast of this conference call at
http://investor.shareholder.com/ovonics/events.cfm or through the company's
website at http://www.ovonic.com. An audio replay of the call will be available
approximately two hours after the conclusion of the call. The audio replay
will remain available until 11:59 p.m. Saturday, September 1, 2007 and can
be accessed by dialing (800) 642-1687 or (706) 645-9291. Callers should use
conference ID 12383445 to access the conference call and the replay.
About Energy Conversion Devices
Energy Conversion Devices is the leader in the synthesis of new
materials and the development of advanced production technology and
innovative alternative energy products and solutions. The company's
portfolio of alternative energy solutions and proprietary information
processing technologies features the latest advances in solar electric
power generation, NiMH batteries, and fuel cell, solid hydride storage and
phase-change memory technologies. ECD designs and builds manufacturing
machinery that incorporates its proprietary production processes, maintains
ongoing research and development programs to continually improve its
products and develops new applications for its technologies. ECD holds the
basic patents in its fields. More information on the Company is available
at http://www.ovonic.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. Such forward-looking statements are based on assumptions,
which ECD, as of the date of this release, believes to be reasonable and
appropriate. ECD cautions, however, that the actual facts and conditions
that may exist in the future could vary materially from the assumed facts
and conditions upon which such forward-looking statements are based. 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,
could impact any forward- looking statements contained in this release.
ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year Ended June 30, Quarter Ended June 30,
2007 2006 2007 2006
(Unaudited)
Revenues
Product Sales $96,014 $84,431 $31,284 $22,082
Royalties 3,323 4,246 926 1,028
Revenue from Product
Development Agreements 11,934 10,045 3,184 2,597
Revenue from
License Agreements 1,047 1,322 313 538
Other 1,249 2,375 302 1,684
Total Revenues 113,567 102,419 36,009 27,929
Expenses
Cost of Product Sales 81,241 67,271 27,119 17,182
Product Development and
Research Expenses
(combined) 27,430 27,619 6,366 7,749
Preproduction Costs 3,614 427 2,019 196
Operating, General
and Administrative
(including patents) 38,399 34,323 11,422 8,722
Restructuring Charges 5,385 - 5,385 -
Total Expenses 156,069 129,640 52,311 33,849
Loss from Operations (42,502) (27,221) (16,302) (5,920)
Other Income (Expense)
Interest Income 17,543 8,671 3,168 5,141
Other (2) (197) (2) -
Equity Loss in Joint
Ventures - (150) - -
Other Nonoperating
Income (Expense) (270) (13) (9) 10
Total Other Income 17,271 8,311 3,157 5,151
Net Loss from Continuing
Operations (25,231) (18,910) (13,145) (769)
DISCONTINUED OPERATIONS
(including gain on
disposition of discontinued
operations of $739,602
in 2006) - 314 - -
Net Loss $(25,231) $(18,596) $(13,145) $(769)
Basic Net Loss Per Share
Continuing Operations $(.64) $(.58) $(.33) $(.02)
Discontinued Operations - .01 - -
Basic Net Loss Per Share $(.64) $(.57) $(.33) $(.02)
Diluted Net Loss Per Share
Continuing Operations $(.64) $(.58) $(.33) $(.02)
Discontinued Operations - .01 - -
Diluted Net Loss Per Share $(.64) $(.57) $(.33) $(.02)
Shares used in calculation
of net loss per share:
Basic 39,389 32,496 39,655 39,015
Diluted 39,389 32,496 39,655 39,015
ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
Year Ended June 30,
2007 2006
ASSETS
Cash and cash equivalents $80,770 $164,962
Short-term investments 125,004 239,505
Accounts receivable (net) 36,498 27,885
Inventories 38,692 21,527
Assets held for sale 1,524 -
Property, plant and equipment (net) 311,369 138,231
Other 6,822 4,232
TOTAL ASSETS $600,679 $596,342
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other liabilities $49,376 $33,727
Long-term liabilities 25,796 25,594
Total Liabilities 75,172 59,321
Stockholders' equity 525,507 537,021
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $600,679 $596,342
ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Ended June 30,
2007 2006
(Unaudited)
OPERATING ACTIVITIES:
Net loss $(25,231) $(18,596)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 12,170 7,627
Bad debt expense 10 290
Amortization of premium (discount)
on investments 529 (912)
Stock and stock options issued
for services rendered 1,763 2,382
Other 16 (1,395)
Changes in working capital (11,071) (10,815)
NET CASH USED IN OPERATING ACTIVITIES (21,814) (21,419)
INVESTING ACTIVITIES:
Purchases of property, plant and
equipment (including construction
in progress) (net) (186,988) (67,979)
Purchase (proceeds from sale)
of investments 113,975 (226,788)
Investment in Ovonyx, Other Investment (200) (300)
NET CASH USED IN INVESTING ACTIVITIES (73,213) (295,067)
NET CASH PROVIDED BY FINANCING ACTIVITIES 11,016 397,448
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (181) (296)
NET CASH FLOW (84,192) 80,666
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 164,962 84,296
CASH AND CASH EQUIVALENTS AT END OF PERIOD $80,770 $164,962
ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES
SEGMENT REVENUE AND OPERATING INCOME/(LOSS)
(In Thousands)
Quarter Ended June 30,
2007 2006 2007 2006
(Unaudited)
Revenues Income (Loss)
from Operations
United Solar Ovonic $31,468 $23,439 $(908) $2,517
Ovonic Materials(1) 4,372 2,984 (2,748) ( 3,895)
Corporate Activities 257(2) 1,611(2) (12,241) (3,991)
Consolidating Entries (88) (105) (405) (551)
Consolidated $36,009 $27,929 $(16,302) $(5,920)
Year Ended June 30,
2007 2006 2007 2006
Revenues Income (Loss)
from Operations
United Solar Ovonic $98,363 $87,508 $1,962 $8,187
Ovonic Materials(1) 14,635 13,451 (13,706) (14,819)
Corporate Activities 1,147(2) 1,920(2) (28,769) (19,798)
Consolidating Entries (578) (460) (1,989) (791)
Consolidated $113,567 $102,419 $(42,502) $(27,221)
(1) Excludes discontinued operations.
(2) Revenues consist primarily of services, facilities and miscellaneous
administrative and laboratory and machine shop services provided to
certain affiliates; expense primarily includes corporate operations,
including facilities, human resources, legal, finance, information
technology, business development, purchasing and restructuring. The
loss from operations for 2007 includes restructuring costs of
$5.4 million associated with the first phase of the Company's
restructuring plan.
SOURCE Energy Conversion Devices, Inc.
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Related links:
http://www.ovonic.com
http://investor.shareholder.com/ovonics/events.cfm
CONTACT:
Sanjeev Kumar, Vice President and CFO, or
Ghazaleh Koefod, Investor Relations, both of Energy Conversion
Devices, Inc., +1-248-293-0440
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