updated 2/9/2011 7:17:02 AM ET 2011-02-09T12:17:02

United Solar Revenue Increases 44% Over Prior Year
Returns to Positive Cash Operating Performance (EBITDARS)
Achieves World Record 12% Efficiency for Thin-Film Silicon

AUBURN HILLS, Mich., Feb. 9, 2011 (GLOBE NEWSWIRE) -- 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 reported financial results for its second fiscal quarter of 2011 ended December 31, 2010.

Total consolidated revenue for the quarter was $69.5 million, an increase of 31% over the second fiscal quarter of 2010, and an increase of 2% over the previous quarter. Solar product and system sales were $66.5 million, an increase of 44% over the second fiscal quarter of 2010, and an increase of 2% over the previous quarter. Consolidated gross margin was 21% as compared to (15%) in the year-ago quarter, and 18% in the first fiscal quarter of 2011. During the quarter, ECD shipped 28 megawatts of its UNI-SOLAR® brand PV products, and produced 33 megawatts.

The company reported a net loss of $7.6 million, or $0.16 per share. This compares to a net loss of $39.3 million, or $0.93 per share, in the second fiscal quarter of 2010, and a net loss of $13.5 million, or $0.29 per share, in the prior quarter. Earnings before interest, taxes, depreciation and amortization and excluding restructuring and stock expense (EBITDARS) were $4.4 million in the quarter, compared to about zero in the prior quarter and ($20.4) million in the year-ago quarter.

As of December 31, 2010 the company had $182.6 million of cash, cash-equivalents, restricted cash and short-term investments.

"ECD generated meaningfully positive EBITDARS for the first time in four quarters, which is an effective measure of the company's progress on our path to profitability. We demonstrated significant improvement in reducing our cost structure during the second quarter. Gross margin increased to 21% and operating expenses declined significantly," said Mark Morelli, ECD's President and Chief Executive Officer.

"We are achieving the milestones in our technology roadmap laid out last year. First, we are on track to begin production this summer of our new PowerBond product with our next-generation High Frequency technology and 10% aperture-area conversion efficiency. At full production, we expect to manufacture this technology at a cost of approximately $1.15 per watt. In addition, we recently announced NREL confirmation of our Nano-Crystalline technology with an initial conversion efficiency of 12% in a large-area encapsulated cell, a world record for thin-film silicon. Both of these technological advancements will enable us to deliver our flexible, lightweight PV products at lower prices, thereby positioning us amongst the best-in-class on the cost of solar energy."

"North America is rapidly growing as a large core market for us. For example, last quarter we sold 5.4 megawatts to Constellation Energy for a large rooftop project in New Jersey, further demonstrating our traction with large-scale projects in the United States," Morelli continued.

The company provided guidance for the second half and full fiscal year of 2011 as follows:

  Q3'11 Q4'11 FY 2011
Shipments (MW) 27-33 33-38 120-130
Production (MW) 27-33 30-33 125-130
Consolidated Revenue ($M) 55-65 115-130 310-335
Consolidated Gross Margin (%) 19-22% 12-15% 17-18%
SG&A and R&D Expense ($M) ~19 ~18 ~75
Restructuring Charges ($M) ~2 ~1 ~3
Pre-Production Expense ($M) ~0 ~2 ~2
Interest Expense ($M) ~6 ~6 ~27
Tax Expense ($M) ~0.1 ~0.1 ~1
Capital Expenditures ($M) ~10 ~15 ~45

Morelli concluded, "Our guidance for the third quarter reflects a decrease in revenue but an increase in shipments compared to the second fiscal quarter. Specifically, we expect an increase in the relative amount of system shipments in the coming quarters. Due to the timing of project construction, revenue from system shipments is not recognized contemporaneously. Thus, the revenue for the system shipments in the third quarter will be recognized over subsequent quarters. Additionally, our fourth quarter guidance anticipates projects that include sourced products not included in our shipment guidance. Our fourth quarter revenue guidance and our increased full fiscal year revenue guidance reflect the shift in our business mix from product sales to system sales. As we continue to implement our technology roadmap and execute on our path to profitability, I am confident that we are doing the right things to continue moving the company forward."

Conference Call / Webcast Details

Management of Energy Conversion Devices will review these financial results on a conference call on Wednesday, February 9, 2011, at 10:00 a.m. ET. To participate in the conference call, please dial (800) 480-3596 or (706) 643-3219 (international) at least 15 minutes prior to the start of the call. Callers will need to reference conference ID number 40062151. 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 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 February 11, 2011 and can be accessed by dialing (800) 642-1687 or (706) 645-9291 (international) and providing conference ID number 40062151. 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 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, 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 renewable energy industry. For more information, please visit energyconversiondevices.com.

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, 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; 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

December 31,
Six Months Ended

December 31,
  2010 2009 (1) 2010 2009 (1)
Revenues        
Product sales $ 54,732 $ 43,826 108,129 $ 77,969
System sales 11,825 3,369 23,475 5,936
Royalties 1,943 2,254 4,058 4,213
Revenues from product development agreements 591 3,007 1,418 6,998
License and other revenues 456 456 864 740
Total Revenues 69,547 52,912 137,944 95,856
Expenses        
Cost of product sales 42,931 51,279 87,947 75,386
Cost of system sales 11,547 7,102 22,102 10,828
Cost of revenues from product development agreements 220 2,394 549 5,675
Product development and research 2,393 3,130 4,792 5,375
Preproduction costs 29 -- 93 10
Selling, general and administrative 16,054 17,220 33,698 33,422
Net loss (gain) on disposal of property, plant and equipment 21 291 (55) 1,265
Impairment loss -- 1,253 -- 1,253
Restructuring (income) expense (69) 2,445 422 3,122
Total Expenses 73,126 85,114 149,548 136,336
Operating Loss (3,579) (32,202) (11,604) (40,480)
Other Income (Expense)        
Interest income 726 264 1,070 556
Interest expense (6,697) (7,044) (13,683) (14,214)
Gain on debt extinguishment 2,138 -- 3,327 --
Distribution from joint venture -- -- -- 1,309
Other nonoperating expense, net (207) (981) (75) (76)
Total Other Income (Expense) (4,040) (7,761) (9,361) (12,425)
Loss before Income Taxes and Equity Loss (7,619) (39,963) (20,965) (52,905)
Income tax expense (benefit) 12 (985) 167 (1,900)
Loss before Equity Loss (7,631) (38,978) (21,132) (51,005)
Equity gain (loss) 19 (313) (15) (333)
Net Loss (7,612) (39,291) (21,147) (51,338)
Net Loss Attributable to Noncontrolling Interest (99) (79) (178) (153)
Net Loss Attributable to ECD Stockholders' $  (7,513) $ (39,212) $ (20,969) $ (51,185)
         
Loss Per Share, Attributable to ECD Stockholders' $ (0.16) $ (0.93) $ (0.46) $ (1.21)
         
Diluted Loss Per Share, Attributable to ECD Stockholders' $ (0.16) $ (0.93) $ (0.46) $ (1.21)
         
Basic weighted shares outstanding 46,431 42,299 45,869 42,299
Diluted shares outstanding 46,431 42,299 45,869 42,299
(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)
 
  December 31,

2010
June 30,

2010 (1)
  (Unaudited)  
ASSETS     
Current Assets:    
Cash and cash equivalents $   65,988 $   79,158
Short-term investments 105,683 113,771
Accounts receivable, net 61,666 72,021
Inventories, net 66,191 61,495
Other current assets 38,695 27,237
Total Current Assets 338,223 353,682
     
Property, Plant and Equipment, net 307,269 301,056
     
Other Assets:    
Restricted cash 10,924 11,749
Lease receivable, net 10,458 10,854
Other assets 11,725 14,606
Total Other Assets 33,107 37,209
     
Total Assets $  678,599 $   691,947
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current Liabilities:    
Accounts payable and accrued expenses $ 58,578 $ 56,035  
Current portion of warranty liability 9,855 12,125
Other current liabilities 9,274 9,130
Total Current Liabilities 77,707  77,290
     
Long-Term Liabilities:    
Convertible senior notes 225,362 243,654
Capital lease obligations 19,672 20,296
Warranty liability 31,127 29,210
Other liabilities 18,733 19,872
Total Long-Term Liabilities 294,894 313,032
     
Commitments and Contingencies (See Note 10 of Form 10-Q)    
     
Stockholders' Equity    
Common stock, $0.01 par value, 150 and 100 million shares authorized, 53,274,101 and 48,554,812 issued at December 31, 2010 and June 30, 2010, respectively 533  486
Additional paid-in capital 1,103,322 1,079,910
Treasury stock (700) (700)
Accumulated deficit (795,261) (774,388)
Accumulated other comprehensive loss, net (1,605)  (3,570)
Total ECD stockholders' equity 306,289 301,738
Accumulated deficit – noncontrolling interest (291) (113)
Total Stockholders' Equity 305,998 301,625
Total Liabilities and Stockholders' Equity $ 678,599  $   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)
  Six Months Ended

December 31,
  2010 2009 (1)
Cash flows from operating activities:    
Net loss $ (21,147) $ (51,338)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 10,715 18,300
Amortization of debt discount and deferred financing fees 8,492 8,229
Share-based compensation 1,703 2,266
Gain on debt extinguishment (3,327) --
Net (gain) loss on disposal of property, plant and equipment (55) 1,265
Impairment loss -- 1,253
Equity loss 15 333
Changes in operating assets and liabilities, net of foreign exchange:    
Accounts receivable 11,035 4,632
Inventories (3,755) (22,430)
Other assets (7,430) (1,773)
Accounts payable and accrued expenses 4,348 (21,348)
Other liabilities (869) 502
Net cash used in operating activities (275) (60,109)
     
Cash flows from investing activities:    
Purchases of property, plant and equipment (19,053) (18,759)
Acquisition of business, net of cash acquired -- (2,088)
Purchases of investments (71,944) --
Proceeds from maturities of investments 14,200 120,119
Proceeds from sale of investments 64,062 9,921
Proceeds from sale of property, plant and equipment 145 --
Proceeds from development loans 1,420 --
Decrease in restricted cash 825 --
Net cash (used in) provided by investing activities (10,345) 109,193
     
Cash flows from financing activities:    
Principal payments under capitalized lease obligations and other debt (902) (734)
Repayment of revolving credit facility -- (5,705)
Repayment of convertible notes -- (8,000)
Net cash used in financing activities (902) (14,439)
     
Effect of exchange rate changes on cash and cash equivalents (1,648) (368)
Net (decrease) increase in cash and cash equivalents (13,170) 34,277
Cash and cash equivalents at beginning of period 79,158 56,379
Cash and cash equivalents at end of period $ 65,988 $ 90,656
(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
  December 31, 2010 September 30, 2010 December 31, 2009
  (in thousands)
Net Loss $ (7,612) $ (13,535) $ (39,291)
Plus:      
Interest income (726) (344) (264)
Interest expense 6,697 6,986 7,044
Income tax expense (benefit) 12 155 (985)
Depreciation and amortization 5,306 5,409 9,408
Restructuring (income) expense (69) 491 2,445
Share-based compensation 822 881 1,215
EBITDARS $ 4,430 $  43 $ (20,428)
CONTACT: Michael E. Schostak
         Head of Investor Relations
         (248) 299-6063
         investor.relations@energyconversiondevices.com

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