Announces Departure of President and CEO; Jay Knoll Named Interim President
Restructuring Expected to Provide at Least $20 Million in Annual Savings
AUBURN HILLS, Mich., May 10, 2011 (GLOBE NEWSWIRE) -- 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.
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.
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.
CONTACT: Michael E. Schostak Head of Investor Relations (248) 299-6063 firstname.lastname@example.org