- Revenues Increase 73 Percent On Strong Solar Sales
- Solar Sales Pipeline Nearly Doubles - Momentum Continues to Build
- Expects to Reach Sustainable Profitability in Fiscal Q4
ROCHESTER HILLS, Mich., Nov. 8 /PRNewswire-FirstCall/ -- Energy
Conversion Devices, Inc. (ECD) (Nasdaq: ENER), a leading global
manufacturer of solar products, today reported financial results for the
first quarter of fiscal 2008, ended September 30, 2007.
Revenues in the first quarter of fiscal 2008 were $47.0 million, up 31
percent from prior-quarter revenues of $36.0 million and up 73 percent from
$27.2 million in the first quarter of fiscal 2007. Revenues from the
company's solar business represented 89 percent of total revenues, or $41.9
million, a 33 percent sequential increase, and a 76 percent increase over
the prior-year quarter. The substantial increase in demand for UNI-SOLAR(R)
laminates came from growing domestic orders, as well as strong
international demand from customers in Italy and Germany.
ECD reported a net loss for the period of $7.6 million, or $0.19 per
share, compared to a net loss of $13.1 million, or $0.33 per share, in the
fourth quarter of fiscal 2007, and $2.3 million, or $0.06 per share, in the
year-ago period. First quarter results included $2.5 million, or $0.06 per
share, of restructuring charges principally for costs associated with the
company's management transition. Results in the quarter were also impacted
by approximately $2.5 million, or $0.06 per share, of preproduction costs
for the manufacturing lines and higher selling, general and administrative
expenses to support growth in the solar business, as well as lower interest
income. ECD ended the quarter with cash and short-term investments of
approximately $156 million.
Mark Morelli, ECD's new president and CEO, commented, "Since joining
ECD as CEO in September, I have focused our organization on accelerating
the growth and enhancing the profitability of our solar business. We are
rapidly transitioning from an R&D orientation to a company with a
performance-based culture that is expanding production capacity to meet
increasing global demand for our solar laminates. Our primary near-term
objective is to improve sales and operating efficiencies as we ramp up
significant new production capacity. Our laminates continue to gain
momentum in the marketplace as demonstrated by our growing pipeline of
business. For example, our supply agreements and commitments for the second
quarter of fiscal 2008 exceed our available capacity."
Key Developments
-- In September, Uni-Solar signed an 18-month agreement with EDF Energies
Nouvelles (EDF EN), one of the world's largest renewable utilities, to
supply up to 30 MW of thin-film PV laminates for large-scale
installations on industrial and commercial buildings.
-- Uni-Solar laminates will be installed on the roof of the General Motors
facility in Fontana, California, one of the largest solar power
installations in corporate use in the United States. This project is
the second installation of Uni-Solar laminates for GM after the 1MW
solar installation in Rancho Cucamonga, California.
-- Uni-Solar currently has 58MW of annual production capacity, and is
expected to be 148MW by the end of fiscal 2008. The first 30MW line at
Uni-Solar's Greenville, Michigan facility went online November 1, one
month ahead of schedule.
-- Ovonyx, the company's joint venture, signed a technology and licensing
agreement for phase-change memory with Hynix, one of the world's
top-tier memory semiconductor suppliers offering DRAM and Flash memory
chips.
Sanjeev Kumar, ECD's chief financial officer, said, "We produced 10.4
MW and shipped 13.1MW in the quarter. The gross margin in our solar
business was 18 percent in the quarter, including an approximately six
percent adverse impact primarily related to the ramp up of Auburn Hills 2
and manufacturing- related issues at Auburn Hills 1. We have taken steps to
resolve these issues. We are now starting to ramp our first Greenville
facility and expect that it will impact our overall gross margins beginning
the second quarter of fiscal year 2008. As we continue to implement
production process changes that improve our yield and throughput, increase
the dawn-to-dusk operating output of our laminates and reduce materials and
labor cost, we continue to expect longer-term to achieve our 25 percent
gross margin target in our Uni-Solar business."
"Our restructuring program, for which we took additional charges of
$2.5 million in the quarter, has taken more than $17 million of annualized
costs out of Corporate Activities and our Ovonic Materials segment in the
past few months. We are moving toward our goal of making Ovonic Materials
self-funded, and the business is near breakeven. Since our highest priority
is to invest in our growing solar business, we will now only invest in
areas that have a clear near-term path to commercialization. Additionally,
we have recently begun Phase 2 of our restructuring, focused principally on
general and administrative expenses, and expect to aggressively reduce our
costs in this area by the end of the fiscal year," Kumar added.
Reiterating Full-Year Revenue Guidance; Targeting Sustainable
Profitability in Fiscal Q4
The company reiterated its prior revenue guidance provided at the end
of the fiscal fourth quarter. Fiscal year 2008 consolidated revenues are
expected to be in the range of $220 million to $245 million, of which
Uni-Solar's fiscal 2008 product sales are expected to be $205 million to
$225 million. Preproduction costs for the year are expected to be between
$6 million and $9 million and restructuring costs for 2008 are expected to
be between $3 million and $5 million. Fiscal second quarter total
consolidated revenues are expected to be $50 million to $55 million, of
which solar product sales are expected to be $45 to $49 million. Gross
margins on solar product sales for the second fiscal quarter are expected
to be approximately 15 to 16 percent, reflecting the ramp up of the
company's first Greenville facility. The company also expects restructuring
charges of $2.0 to $2.5 million and preproduction costs of approximately $2
to $3 million in the quarter. Gross margins in the Uni-Solar business are
expected to approach 21 percent to 23 percent in the fourth quarter fiscal
2008, at which time the company expects to reach sustainable profitability.
Morelli concluded, "Our compelling solar products and strong sales
momentum position ECD well for profitable growth. We are placing
significant focus on improving operating efficiencies, and are already
achieving important progress. During the quarter, we launched a new
laminate that delivers six percent greater conversion efficiency, an
improvement that both increases our effective capacity and favorably
impacts income. We are instilling operational excellence across the company
and are focused on improving product and manufacturing efficiencies that
will enable us to reach sustainable profitability in the fourth fiscal
quarter and deliver steadily increasing value for shareholders. I am
encouraged by our opportunities and our progress."
Conference Call / Webcast Details
Management of Energy Conversion Devices will host a conference call
today at 10:00 a.m. EST to review the financial results. The dial-in number
for the live audio call is 877-858-2512 or 706-634-1291 (international)
with conference ID number 22023805. The conference call will be webcast
live over the Internet and can be accessed in the "Investor Relations --
Conference Calls -- section of 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., November 9, 2007, and can be accessed by dialing (800)
642-1687 or (706) 645-9291 (international), with conference ID number
22023805. The webcast will also be archived on the company's website.
About Energy Conversion Devices
Energy Conversion Devices, Inc. (Nasdaq: ENER) manufactures and sells
thin-film solar laminates that convert sunlight to energy. Distributed
globally under the UNI-SOLAR(R) brand, the company's products are based on
proprietary technology and offer superior cost-effective solutions for
roofing applications because they are lightweight, durable, flexible, can
be integrated directly with building materials, and generate more energy in
real- world conditions. ECD pioneers other alternative technologies,
including a new type of nonvolatile digital memory technology that is
significantly faster and less expensive, ideal for use in a variety of
applications, including cell phones, digital cameras and personal
computers. For more information on our company, please visit
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
and most recent Quarterly Report on Form 10-Q, 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)
Three Months Ended
September 30,
2007 2006
(Unaudited)
Revenues
Product Sales $42,467 $22,858
Royalties 1,015 664
Revenues from Product Development Agreements 2,877 3,105
Revenues from License and Other Agreements 683 555
Total Revenues 47,042 27,182
Expenses
Cost of Product Sales 35,069 18,010
Cost of Revenues from Product Development
Agreements 1,709 2,014
Product Development and Research 3,462 4,741
Preproduction Costs 2,545 354
Operating, General and Administrative
(including patents) 11,694 9,407
Restructuring Charges 2,516 -
Total Expenses 56,995 34,526
Loss from Operations (9,953) (7,344)
Interest and Other Income (Expense), Net 2,392 5,042
Net Loss Before Income Taxes (7,561) (2,302)
Income Taxes 6 -
Net Loss $(7,567) $(2,302)
Basic Net Loss Per Share $(.19) $(.06)
Diluted Net Loss Per Share $(.19) $(.06)
Shares used in calculation of net loss per share:
Basic 39,838 39,070
Diluted 39,838 39,070
Non-GAAP Financial Measures
To supplement its financial statements presented in accordance with
Generally Accepted Accounting Principles (GAAP), ECD uses the following
measures as defined by the Securities and Exchange Commission as non-GAAP
measures:
Three Months Ended
September 30,
2007 2006
(in thousands)
Net Loss $(7,567) $(2,302)
Add:
-- Preproduction Costs 2,545 354
-- Restructuring Charges 2,516 -
Net Loss as Adjusted (non-GAAP) $(2,506) $(1,948)
Net Loss (basic and fully diluted) per share
as reported $(.19) $(.06)
Net Loss (basic and fully diluted) per share
as adjusted (non-GAAP) $(.06) $(.05)
ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
Three Months Ended Year Ended
September 30,2007 June 30, 2007
(Unaudited)
ASSETS
Cash and cash equivalents $71,699 $80,770
Short-term investments 84,274 125,004
Restricted Investments 5,594 -
Accounts receivable (net) 44,890 36,498
Inventories 34,258 38,692
Assets held for sale 1,539 1,524
Property, plant and equipment (net) 337,313 311,369
Other 7,887 6,822
TOTAL ASSETS $587,454 $600,679
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other liabilities $35,785 $42,940
Long-term liabilities 32,315 32,232
TOTAL LIABILITIES 68,100 75,172
STOCKHOLDERS' EQUITY 519,354 525,507
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $587,454 $600,679
ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
Three Months Ended
September 30,
2007 2006
Unaudited)
OPERATING ACTIVITIES:
Net loss $(7,567) $(2,302)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 3,693 1,982
Bad debt expense 250 1,051
Restructuring charge 664 -
Amortization of premium (discount) on
investments (1) 534
Stock and stock options issued for
services rendered 268 603
Other (208) 147
Changes in working capital (11,908) (2,034)
NET CASH USED IN OPERATING ACTIVITIES (14,809) (19)
INVESTING ACTIVITIES:
Purchases of property, plant and
equipment (including construction
in progress) (net) (30,118) (26,472)
Purchase (proceeds from sale) of
investments 34,979 (75,370)
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 4,861 (101,842)
NET CASH PROVIDED BY FINANCING ACTIVITIES 758 226
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 119 33
NET CASH FLOW (9,071) (101,602)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 80,770 164,962
CASH AND CASH EQUIVALENTS AT END OF PERIOD $71,699 $63,360
ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES
SEGMENT REVENUE AND OPERATING INCOME/(LOSS)
(In Thousands)
September 30, September 30,
2007 2006 2007 2006
(Unaudited)
Revenues Income (Loss) from Operations
United Solar Ovonic $41,887 $23,860 $(468) $1,487
Ovonic Materials 5,092 3,241 (700) (3,908)
Corporate Activities 169 243 (8,833) (4,392)
Consolidating Entries (106) (162) 48 (531)
Consolidated $47,042 $27,182 $(9,953) $(7,344)
Segment Operations - United Solar Ovonic
(In Thousands)
Quarterly Periods Ended
Fiscal
Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Year
2007 2007 2007 2006 2006 2007
(Unaudited)
PV Product Sales $39,870 $29,467 $22,143 $17,445 $22,127 $91,182
Megawatts
Produced 10.4 10.7 8.8 6.8 6.2 32.5
Megawatts
Shipped 13.1 10.2 7.4 5.3 6.5 29.4
Cost of Product
Sales $32,622 $24,798 $18,303 $15,029 $16,966 $75,096
Gross Margin $7,248 $4,669 $3,840 $2,416 $5,161 $16,086
Gross Margin % 18.18% 15.84% 17.34% 13.85% 23.32% 17.64%
Other Revenues:
Research &
Development $2,017 $2,000 $1,696 $1,748 $1,730 $7,174
Other Operating
Revenues $1 $2 $1 $3 $7
Other Revenues
Total $2,017 $2,001 $1,698 $1,749 $1,733 $7,181
Other Expenses:
Research &
Development $2,275 $1,865 $1,945 $1,451 $1,398 $6,659
Preproduction $2,545 $2,019 $491 $750 $354 $3,614
Operating, Selling,
General and
Administrative
Expenses $4,913 $3,693 $2,584 $1,100 $3,655 $11,032
Total Expenses $9,733 $7,577 $5,020 $3,301 $5,407 $21,305
Income (Loss)
from Operations $(468) $(907) $518 $864 $1,487 $1,962
Segment Operations - Ovonic Materials
(In Thousands)
Quarterly Periods Ended
Fiscal
Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Year
2007 2007 2007 2006 2006 2007
(Unaudited)
Product Sales $2,615 $1,817 $1,062 $1,222 $731 $4,832
Cost of Product
Sales $2,568 $1,992 $1,098 $925 $651 $4,666
Other Revenues:
Royalties $1,015 $925 $770 $964 $664 $3,323
Research &
Development $860 $1,185 $1,193 $1,014 $1,388 $4,780
Licenses $513 $313 $238 $238 $258 $1,047
Other Operating
Revenues $89 $133 $178 $142 $200 $653
Other Revenues
Total $2,477 $2,556 $2,379 $2,358 $2,510 $9,803
Other Expenses:
Research &
Development $2,915 $4,501 $5,740 $5,180 $5,369 $20,790
Operating, General
and Administrative
Expenses $309 $628 $789 $339 $1,129 $2,885
Total Expenses $3,224 $5,129 $6,529 $5,519 $6,498 $23,675
Loss from
Operations $(700) $(2,748) $(4,186) $(2,864) $(3,908) $(13,706)
Segment Operations - Corporate Activities
(In Thousands)
Quarterly Periods Ended
Fiscal
Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Year
2007 2007 2007 2006 2006 2007
(Unaudited)
Other Operating
Revenues $169 $257 $291 $356 $243 $1,147
Other Expenses:
Restructuring $2,516 $5,385 $- $- $- $5,385
Operating,
General and
Administrative
Expenses $6,486 $7,113 $7,088 $5,695 $4,635 $24,531
Total Expenses $9,002 $12,498 $7,088 $5,695 $4,635 $29,916
Loss from
Operations $(8,833) $(12,241) $(6,797) $(5,339) $(4,392) $(28,769)
SOURCE Energy Conversion Devices, Inc.
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Related links:
http://www.ovonic.com
CONTACT:
Investors, David Pasquale of The Ruth Group,
+1-917-921-8031; or Media, Brad Wilks or Mac McNeer of Sard
Verbinnen & Co., +1-312-895-4700, all for Energy Conversion
Devices, Inc.
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